Thiruvananthapuram: The Kerala State Electricity Board’s (KSEB) technical study report has raised serious concerns regarding the GNA contract related to electricity procurement in the state. According to the report prepared by KSEB’s Commercial and Tariff Division, the implementation of this contract could impose an additional financial liability of approximately Rs 903 crore on the state.
Alongside a significant increase in electricity procurement costs, the report highlights legal and technical obstacles associated with the contract. This critical information was included in a study prepared by an Executive Engineer prior to the official report submitted by former KSEB Chairman M.G. Rajamanikyam to the government. The findings of the Commercial and Tariff Division, which evaluates economic and technical factors related to electricity purchases, also raise questions about the practicality of the GNA contract.
The most serious concern identified is that the OTP platform used for electricity transactions under the contract lacks approval from the Central Electricity Regulatory Commission (CERC). The report issues a warning that proceeding with electricity procurement through this platform despite existing regulatory legal challenges may lead to serious repercussions. It also states that when the state previously sought permission to purchase electricity via this platform amid severe power shortages, the relevant regulatory authority rejected the application.
It is in this context that the current move to purchase electricity relying again on the same system is a major point of criticism.
When compared to alternative procurement mechanisms, the GNA contract is considered financially disadvantageous for the state, the report indicates. Procuring electricity from Himachal Pradesh for five months according to the state’s requirements is estimated to cost around Rs 1,105 crore. However, purchasing electricity continuously 24 hours a day through the GNA arrangement raises the estimated cost to Rs 1,566 crore. This amounts to an additional financial burden of Rs 461 crore compared to the Himachal Pradesh scheme.
Another major drawback of the GNA contract is its inability to fully meet electricity demand during peak consumption periods. Although electricity is available uninterruptedly through the GNA contract, the report clarifies that reliance on other sources will be necessary to satisfy peak-time demand. Addressing this peak shortage by procuring additional electricity from outside sources is estimated to incur an extra cost of Rs 442.21 crore.
In contrast, the alternate agreement with Himachal Pradesh allows electricity purchase only during periods of higher demand, which is highlighted as a key advantage. This enables meeting peak-period demand without requiring electricity purchases from other sources.
Combining the higher cost of electricity procurement under the GNA contract with the additional expenses arising from peak period electricity shortfalls, the report estimates a total financial loss of Rs 903 crore for the state. This comprises Rs 461 crore due to the higher procurement cost compared to the Himachal Pradesh contract, and Rs 442.21 crore linked to extra expenses for meeting peak electricity needs. Together, these sum to Rs 903.21 crore in additional liabilities.
The technical evaluation conducted by KSEB’s Commercial and Tariff Division, responsible for matters related to electricity procurement and tariffs, formed the basis for the report submitted to the government by former Chairman M.G. Rajamanikyam. The emergence of such a warning from the very division tasked with assessing the economic benefits and risks of electricity procurement contracts underscores the seriousness of the issue.
The report advocates the need to explore alternative procurement mechanisms that protect the state’s financial interests while efficiently meeting electricity demand. It also emphasizes the necessity of a thorough examination of the GNA contract’s legal validity, financial responsibilities, and adequacy of electricity supply during peak periods.
At the same time, it clarifies that the estimated Rs 903 crore loss is a projection based on comparative analysis within the KSEB study report and does not confirm that this amount has already been lost following the contract’s implementation.
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Original Malayalam report: Malayalam Daily News
