Cabinet Approval Required For Power Purchase And Supply Agreements

02 Jun 2026 CW Team

The state will require cabinet approval before executing power purchase agreements (PPA) and power supply agreements (PSA).

The MP Power Management Company (PMCL) board recently decided that such agreements will proceed only after cabinet clearance and that implementation of board decisions will follow approvals from the energy minister and the chief minister.

Officials said the policy was amended because long term and mid term PPAs had imposed a significant financial burden on the state under the old system, where power was contracted despite lack of immediate necessity, and the cabinet will now scrutinise each proposed agreement to assess benefit and fiscal impact.

The government has made provision that the finance department must give approval in cases with budgetary implications so as to avoid creating contractual liabilities that could strain the state exchequer.

The government has received proposals for energy projects including biomass generation, solar battery storage systems, pump hydro storage and nuclear power, and each will be evaluated on technical and fiscal grounds with assessments considering current energy availability, projected demand and system flexibility.

The PMCL will coordinate technical appraisals and present findings to the energy department before matters are placed before the cabinet, and authorities indicated the revised approach seeks better oversight to ensure that any long term commitments are justified by demand and affordability.

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