Kerala State Electricity Board seeks regulator’s nod for medium-term power purchase deal with Damodar Valley Corporation

Kerala State Electricity Board seeks approval for a medium-term power deal with Damodar Valley Corporation amid procurement challenges.

The annulment of tenders for long-term power procurement under the Centre’s Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI) policy has prompted the Kerala State Electricity Board (KSEB) to explore a medium-term power purchase deal with the Damodar Valley Corporation (DVC).

The KSEB has sought the Kerala State Electricity Regulatory Commission’s (KSERC) approval for the procurement of 80 megawatts (MW) from the DVC for a five-year period. The power utility plans to procure 25 MW from the DVC’s Koderma Thermal Power Station (KTPS) and 55 MW from Mejia Thermal Power Station (MTPS).

In January this year, the DVC, which functions under the Union Power Ministry, had offered the KSEB a total allocation of 80 MW on a long-term basis. The DVC has offered rates which are “significantly more advantageous than previous tender outcomes,” the KSEB said in a petition which will be heard by the commission on March 26.

Apart from an anticipated spike in power demand, the KSEB has cited a number of reasons for its decision to go for the DVC proposal. The “severe crisis following the non-availability” of 465 MW under a contentious Design, Build, Finance, Own and Operate (DBFOO) contracts and subsequent inability to tie up power at reasonable rates has been cited as a reason.

Subsequently, the KSEB had decided to procure 500 MW of round-the-clock power for 15 years and 25 years respectively under the B(iii) and B(iv) components of the SHAKTI coal-linkage scheme. However, in both cases, the per-unit rates were on the higher side when the request for proposal (RfP) bids were opened. Consequently, the KSEB management had decided to annul the tenders.

The current proposal to procure power from the DVC is deeply rooted in the ‘Resource Adequacy Plan (Generation) for Kerala (2025-26 to 2035-36)’ prepared by the Central Electricity Authority (CEA), according to the KSEB. The estimated average tariff for the KTPS is ₹5.4 per unit and ₹5.5 for the MTPS. The KSEB is already availing 100 MW from the MTPS. The CEA report also identifies a thermal power shortfall of 112 MW to 400 MW in the coming years, the KSEB noted.