After Free Electricity Guarantee, Karnataka Govt to Revisit Power Purchase Agreements

The new Congress government in Karnataka is in a fix with a financial burden staring at it, owing to its five poll guarantees that will be implemented in the coming months.

For instance, the Gruha Jyothi scheme of providing 200 units of free electricity to households in the state is likely to cost around Rs 13,000 crore per annum.

The state’s energy department which is already staring at a financial crisis is now planning to revisit several power purchase agreements. For this, the government is planning to renegotiate power purchase cost wherever possible without getting dragged into a legal tangle.

“The rates in earlier Power Purchase Agreements (PPA) were higher, now it has come down. So we are reviewing all of them. We will visit the plants also. We have to see the agreements since it’s a sovereign commitment. We can negotiate but they will also have to agree, it will be problematic if they go to court. Fuel cost and power purchase agreements are the reason for higher rates,” said Karnataka Energy Minister K J George.

In 2022-2023, Karnataka’s total power purchase cost was Rs 39,223 crore for 71,646 Million Units with Rs 5.48 being the average cost per unit. But 18,073 Million Units of this came from 12 sources which account for 25% of the average cost coming at Rs 7.37.

A committee formed to recommend reform in power sector under the leadership of former bureaucrat Gurucharan had also suggested re-negotiation of high cost PPAs.

How much will the free power scheme cost?

There are 2.16 crore household power connections in the state, out of which 2.14 crore households consume less than 200 Units in a month.

The energy department calculations indicate that these households consume 53 units on an average every month.

“About 99% of the users are eligible. Tenants are also eligible and the land owners are also eligible. Everybody is eligible for this scheme. It will cost approximately about 13,000 crores, state government will reimburse. It won’t have any burden on the CESCOM or BESCOM,” George said.

Congress says BJP was responsible for power tariff hike

The energy minister was quick to respond to BJP’s criticism about the recent power tariff hike, blaming the saffron party’s tenure for creating a situation where the tariff had to be hiked.

“They have done this. This hike could have happened much earlier. They postponed it. Also, this hike is because of the expense of the fuel as well as the PPA expenditure. Recently, when they were the ruling party, Rs 1400 crores of dues we had to pay. If you would have paid regularly, this would have not come on the people now,” explained the minister.

People wanting to avail the Gruha Jyothi scheme will have to apply between June 15th and July 5th on the Seva Sindhu portal or at Grama One, Karnataka One, Bangalore One centers.