The energy department has decided to exit five expensive power purchase agreements (PPAs) worth 252 megawatts with National Thermal Power Corporation(NTPC) as an effort to lower the high cost of power.

The energy ministry has approved a decision to terminate PPAs signed in 1994 at a rate of Rs 15 per unit for the Anta Gas plant and Rs 10 for the Auraiya Gas plant.

The government expects to save Rs 200 crore per year as a result of this decision.

The decision to exit unsustainable PPAs comes after the Centre allowed distribution companies to terminate agreements with plants that have outlived their useful lives and are running on outdated, inefficient technology, resulting in higher production costs, in March.

With renewable energy sources providing power for less than Rs 2.50 per unit, the department is attempting to release as much high-cost thermal capacity as possible to reduce costs and provide lower-cost power to consumers.

Rajasthan Vidyut Utpadan Nigam Ltd (RUVNL) recently submitted a proposal to retire two Kota Super Thermal Power Ltd units, each producing 110 units.

These plants were built in 1984 using outdated technology and design. The cost of generation is much higher when compared to not only solar power but also new thermal projects.

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