Kerala State Electricity Board says power procurement plan on long-term basis ‘an immediate solution’ to crisis

KSEB plans to procure 500 MW RTC electricity to address Kerala's critical power shortage, seeking regulatory approval for deviations.

The Kerala State Electricity Board (KSEB) has described a plan to procure 500 megawatts (MW) of round-the-clock (RTC) electricity for 15 years as “an immediate solution to overcome the critical power position” of the State.

The proposal is designed to fill a gap left by the contentious discontinuation of the supply of 465 MW under a clutch of contracts on Design, Build, Finance, Own and Operate (DBFOO) mode in 2023, according to the KSEB. For the new procurement, the State-run power utility hopes to make use of coal linkage under the Union Coal Ministry’s Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India (SHAKTI).

The KSEB on Tuesday (December 3, 2024) approached the Kerala State Electricity Regulatory Commission (KSERC) seeking its approval for a number of deviations from the Model Bidding Documents issued by the Union Ministry of Power for long-term procurement from thermal power stations under DBFOO mode on tariff-based competitive bidding.

The ‘deviations’ suggested by the KSEB concern issues such as the delivery point of supply, minimum capacity, the payment security mechanism and calculation of fixed charge. In seeking the commission’s nod, the KSEB observed that “the power position of the State is very critical at present and it has a cascading effect on the financial position of KSEB. Also, the availability of power in the market is very meagre.”

The KSEB, which has been eyeing tie-ups with coal-based power plants elsewhere in the country to tap a 500 MW coal linkage allocation under SHAKTI, is hoping to get the RTC supply started by August 1, 2025.

Since the discontinuation of 465 MW supply in August 2023, electricity was being purchased from the market at higher rates to meet the increase in demand, according to the KSEB. While this has provided “some relief amidst the crisis”, it affected its own finances “very badly,” the KSEB said.

The Kerala government gave its permission for procuring 500 MW RTC power on a long-term basis (15 years) in May 2024.