Punjab’s biomass power plant operators have warned of shutting down their units after the Punjab State Power Corporation Limited (PSPCL) slashed the rate it pays for electricity from these units by nearly ₹2 per unit. The cut comes at a time when power demand is expected to rise with the start of the paddy sowing season, reported The Tribune.
The new tariff has drawn sharp criticism from plant owners, who say the lower rate threatens the financial viability of their operations. Many of these plants play a vital role in managing stubble burning by using crop residue to generate electricity.
BS Jangra, CEO of a biomass power plant that has been running for 13 years, expressed concern over the revised rate. “PSPCL has reduced our power purchase rate from ₹7.47 to ₹5.40 per unit. According to our power purchase agreement (PPA), there should be a 5% annual increase in the variable component, not a cut. The PPA did mention that the tariff could be re-evaluated after 13 years, but at this new rate, we cannot run the plant,” he said.
Jangra, along with other plant owners, said they would be forced to shut down unless the government reconsiders the revised rate. Another plant operator pointed out that neighbouring states offer better support to the biomass sector, prompting several Punjab-based industrialists to invest outside the state.
“The authorities here are not listening. If the situation continues, shutting down will be the only option. In the summer, PSPCL buys electricity at a higher price from the Central Grid but is unwilling to pay us a fair rate. How do we survive after investing so much money?” he said.
Ajoy Kumar Sinha, Chairman and Managing Director of PSPCL, said that the power purchase agreement must be followed. He referred further questions to the Punjab Energy Development Agency (PEDA).
MP Singh, Director of PEDA, confirmed that there is a provision in the PPA for a tariff review after 13 years. He said that due to a drop in the fixed capital cost of biomass plants over time, the rates were reduced. However, he added that the matter is now before the Punjab State Electricity Regulatory Commission (PSERC), which will make the final decision.
The future of Punjab’s biomass power sector now hangs in the balance, as plant owners await a response from state authorities.
