The Hindu Business Line : KPTCL's power pacts to be reassigned to DisComs

POWER purchase agreements (PPA) of the State-owned utility Karnataka Power Transmission Corporation Ltd are expected to be reassigned to the distribution companies (DisCom).

Sources said that KPTCL would become a full transmission company from next month.

This arrangement had necessitated that the PPAs signed by KPTCL with the generating companies, that include the Karnataka Power Corporation Ltd (KPCL) , Central generating stations and a clutch of independent power projects be transferred to the four distribution companies - the Bangalore Electricity Supply Company Ltd (BESCom), Mangalore Electricity Supply Company Ltd (MESCom), Hubli Electricity Supply Company Ltd (HESCom) and the Gulbarga Electricity Supply Company Ltd (GESCom).

However, the sources said, the original payment terms of the PPAs would remain intact, including the payment security mechanisms, involving letter of credit, the escrow covers and the State Government guarantees.

The PPAs would be reassigned on the basis of the load pattern of each of the distribution companies. This would mean that distribution companies with the largest number of consumers/connected load would end up having the highest proportion of the PPA.

Currently BESCom is the largest among all the four DisComs, accounting for over 60 per cent of the consumption in the Karnataka. Accordingly BESCom was likely to have the highest proportion of the PPA reallocation.

But some of the PPAs with IPPs are on a short-term basis and are expected to be allowed to lapse. DisComs would have to seek approval of the regulator before entering into fresh purchase arrangements.

For any such fresh PPA, the sources said that merit order would be given priority, in line with recommendations of the regulators. As per the merit order despatch, the lowest tariff producer would be given priority.

The sources said that the reassignment of the PPAs would result in transferring a large part of KPTCL's liabilities to the DisComs. The DisComs would be responsible for meeting the payment obligations to the generating companies.

KPTCL would function only as a monopoly transmission entity responsible only for wheeling of electricity to the DisComs. As per the new arrangement, generators would be given the first charge on the revenues of the distribution companies and the transmission utility would have no charge on the revenues of any of the DisComs.

But sources said that some of the generating companies were already worried about settlement of the outstanding dues. So far the KPTCL has accorded priority for settlement of dues to the Central utilities and the IPPs. This was partly because both these classes of the generating companies are backed by a watertight payment security mechanism.

In the process the KPTCL currently has accumulated payment arrears to the extent of Rs 2,000 crore to the KPCL.

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