Cancellation of long-term contracts: Procedures are transparent, says Electricity Minister

THIRUVANANTHAPURAM: Electricity Minister K Krishnankutty said that the action of the government intervening in the Regulatory Commission's order cancelling the long-term power purchase agreement was transparent. The minister was responding to opposition leader VD Satheesan's allegation of corruption in the long-term contract issue.

"KSEB signed the contract by making irregular variations in tender terms. This is why the State Regulatory Commission cancelled the contract on May 10 this year. Although KSEB stated that the Regulatory Commission may not cancel the contract if the government approves the variations, the government refused to interfere in illegal matters. This was a transparent process. The government's position is that the procedures and standards for signing contracts should be followed," the minister said.

"However, the government decided to intervene in the issue as the state is facing an electricity crisis following the cancellation of the contract and purchasing electricity at a huge price to solve it will affect the people. The rate in the new tenders was higher than that of the cancelled contract. Due to reduced rainfall, there was a shortage of water in the dams to generate electricity. This caused a power crisis. It is in this situation that the government asked the Regulatory Commission to review the order cancelling the contract. The government did so by fully following the procedures. This was at the request of KSEB and after taking the report of the high-level committee headed by the Chief Secretary and the legal advice of the Law Department and the Advocate General. KSEB has approached the Electricity Appellate Tribunal on its own against the cancellation of the contract. The government has not taken any irregular action in the long-term power contract issue," he added.