Biomass plant owners threaten to shut ops

Punjab State Power Corporation Limited’s (PSPCL) move to reduce the rate of electricity generated by biomass units by nearly Rs 2 per unit is likely to take its toll on plant owners, who have threatened to shut operations. These plants play a key role in tackling stubble burning.

This comes as the power demand is set to rise during the paddy sowing season.

They argue that the move threatens the financial viability of their operations, making it impossible for them to continue.

BS Jangra, CEO of a biomass plant that has been operational for about 13 years, expressed disappointment over the revised rate. “The PSPCL has reduced our power purchase rate from Rs 7.47 to Rs 5.40 per unit. According to our power purchase agreement (PPA), there should be a 5 per cent annual increase in the variable component, not a reduction. Although the PPA stated that the price will be re-determined after 13 years, at this new rate, running the plant is financially unviable," he said.

Jangra and other plant owners warned if the government failed to revise the recently offered rate, many units would be forced to shut operations.

Another plant owner said the neighbouring states were offering better support, due to which many industrialists from Punjab were investing in those states. He urged the PSPCL and the Punjab State Electricity Regulatory Commission (PSERC) to reconsider the price cut and support the biomass sector before the situation turned bad.

“The authorities here are not listening. If this situation continues, we will have no choice but to shut our plants. During the peak summer season, the PSPCL buys power at a higher price from the Central Grid. However, it is not ready to pay us a decent price. How will we survive? We have invested a huge amount of money," he said.

Ajoy Kumar Sinha, Chairman-cum-Managing Director (CMD) of the PSPCL, said, “The PPA is sacrosanct. The PEDA Director can provide the technical details about the revision of rates.”

MP Singh, Director of the Punjab Energy Development Agency (PEDA), said, “There was a provision in the PPA to revise the power rates for biomass plants after 13 years. Over time, the fixed capital cost of biomass plants has reduced, so the rates have been slashed. However, the matter is now before the PSERC. It will take a call on the issue."

Punjab