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BANGALORE, March 22

THE Comptroller & Auditor-General (CAG) has faulted the State Electricity Board's (SEB) power purchase decisions relating to at least three independent producers and said these have caused an additional liability of at least Rs 818.44 crore to the power body.

The report picks holes on at least five points in the power purchase agreements (PPAs) signed by Karnataka Power Transmission Corporation (KPTC) with Tanvir Bavi Power Co, Tata Power Co and Sree Rayalaseema Alkalis & Allied Chemicals which set up plants under the bid route till March 31, 2001.According to it, the actual tariff expenditure incurred from the three independent power producers (IPPs) was far above the proposed tariff.

As a result, the March 2001 tariff was higher by 64.5 to 96.95 per cent than the originally proposed tariff (see chart).

The Karnataka Electricity Regulatory Commission, which approved the 2000-01 tariff structure of KPTC, suggested that it should not purchase power at high cost, but instead pay deemed generation charges.

``Some of the clauses in the PPA dealing with variable cost, incentives, deemed generation and payment terms were detrimental to the interest of the board,'' the report submitted in the Legislature today said.

Though the Government was able to attract private sector investment in the power sector, " the board (KPTC) was burdened with high cost of energy'' which would ultimately be passed on to the consumers, according to the report.

KPTC also incurred an extra liability of Rs 78.88 crore per year towards fixed charges when it allowed two IPPS to raise capacity from 246.8 MW to 301.23 MW.

Inclusion of escalation clause in `other fixed charges' in the PPAs with Tanvir Bavi and Tata Power meant an additional burden of Rs 160. 07 crore

In the PPA with Tanvir Bavi, KPTC agreed to foot the bill for the actual fuel cost instead of fixed fuel cost in the first year. This shot up the burden by Rs 224.42 crore during the first year.

In the case of Jindal Tractebel, KPTC did not go by the consultant's advice to go in for a two-part tariff of power purchase. This led to an additional liability of Rs 355.07 crore.

KPTC has signed 37 PPAs with power producers, of which 14 projects have been commissioned till March 31, 2001.

The report said, "The board (KPTC) has extended undue benefits to private power producers by agreeing to higher tariff rates due to shorter agreement periods and by providing excess time for switching over to combined cycle...''

In the case of Tanvir Bavi, the PPA was for seven years against 12 with other producers. This also raised the fixed charges incurred by KPTC.

Nor did the SEB negotiate for a lower tariff while approving the company's plan to enhance its capacity to 220 MW from 200 MW.

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