An electricity-surplus Punjab? Fat chance

The Punjab government's dream to make the state power surplus will have to wait. Promoters of the 1,980 MW super critical Talwandi Sabo thermal power plant have pushed forward the deadline to commission the first unit of 660 MW by nine months - from November 8, 2012 to August 8, 2013.

The promoters of the project, Sterlite Energy Limited, a subsidiary of Vedanta Group, announced the slowdown after increasing uncertainty over fuel arrangements.

Coal India Limited reportedly announced cutting the coal quota by 50% of the earlier agreed amount of 7.7 million tonnes of domestic coal per annum for the project. In wake of non-availability of coal, and subsequent failure in signing a fuel supply agreement, Sterlite Energy has pushed the commissioning date of the first unit.

"A communication has been sent to the top levels in the power department and state government and we are shortly arranging a meeting of the project promoters with deputy chief minister Sukhbir Singh Badal," said a senior PSPCL official, seeking anonymity.

He, ominously, added: "Non-availability of coal is not the only reason for the slowdown - there is something else going on in the minds of the promoters."

Meanwhile, a representative of Talwandi Sabo Power Limited said they have already pumped Rs 4,500 crore into it and had incurred a further expenditure of the same amount, creating a total liability of Rs 9,000 crore. "So why would we just slow down the project?" he said.

A special purpose vehicle, Talwandi Sabo Power Limited was created to get the project executed. In 2008, the project was allotted to Sterlite Energy Limited, which is getting the work done from Larsen & Toubro and the China-based Shandong Electric Power Corporation.

Commissioning of unit 2 and 3 has also been postponed by nine months to November 8, 2013 and March 8, 2014, respectively.

Interestingly, till August last year, the promoters were trying to add capacity of the project with the fourth unit of 660 MW, which has now been called off.

Before signing of the power purchase agreement, when the erstwhile Punjab State Electricity Board (now Punjab State Power Corporation Limited or PSPCL) approached Coal India in 2007 for coal to run the project, it was given a letter of assurance for coal from Mahanadi coal fields.

Subsequently, on September 1, 2008, a power purchase agreement was signed in which it was decided that the power corporation would provide coal to the thermal plant.

The promoters of the project say according to the power purchase agreement, arranging coal is the responsibility of the PSPCL, while the state power corporation says coal was to be arranged by the promoters themselves.

The PSPCL has approached the Punjab State Electricity Regulatory Commission (PSERC), seeking directions for Talwandi Sabo Power Limited to expedite signing of fuel supply agreements with coal companies and further supply of electricity.

The PSERC has fixed May 22 as the date of hearing.