Telangana Discoms Incur ₹6,000 Crore Loss Due to Chhattisgarh Power Deal

Telangana’s power distribution companies, NPDCL and SPDCL, have suffered losses amounting to ₹6,000 crore following a power purchase agreement (PPA) signed in 2015 by the previous Bharat Rashtra Samithi (BRS) government with Chhattisgarh State Power Distribution Company Ltd (CSPDCL). The judicial commission, led by retired Chief Justice L Narasimha Reddy, was informed that the PPA lacked final approval from the Telangana State Electricity Regulatory Commission (TSERC), leading to an interim order with a tentative rate of ₹3.90 per unit. However, unexpected overheads and transmission costs raised the effective per-unit cost to ₹5.64, significantly exceeding initial projections.

The PPA, intended to alleviate Telangana’s power shortage, fell short as Chhattisgarh consistently under-delivered on the promised 1,000 MW supply, providing only 700 MW initially and dwindling to 200 MW by 2022. To compensate for the irregular supply, Telangana Discoms had to procure additional power from the open market, incurring an extra ₹2,083 crore. Further compounding the financial strain, the Discoms were obligated to pay substantial transmission line charges to Power Grid Corporation India Ltd (PGCIL), whether or not the power was supplied, resulting in further losses of ₹638 crore.

The decision to lease a transmission corridor from PGCIL and book an additional power corridor, which was later canceled, added another ₹261 crore in compensation charges. The cumulative financial burden from these decisions has drawn sharp criticism and led to a call for a thorough investigation into the irregularities surrounding the PPA, highlighting the long-term damage to Telangana’s power sector.

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