State-owned Damodar Valley Corporation has opted out of a power purchase agreement with its joint venture firm that has Tata Power as its partner. The move is aimed at streamlining the operations of the power major as its own generation improves.

DVC officials said on Monday that a notice has been served to Maithon Power Limited (MPL), a 74:26 joint venture between Tata Power and DVC. The notice says DVC will no longer take the 150 MW of power that it sources from MPL from September 2021 onwards.

MPL, a public private partnership in the power generation sector, has an installed capacity of 1050 MW comprising two units of 525 MW each located at Maithon in Jharkhand and commissioned between 2011 and 2012.

The partnership involves DVC offering water from Maithon reservoir for thermal power generation. The project supplies power to the states of Jharkhand, Bihar, Bengal, Delhi and Punjab.

According to DVC officials, the joint venture agreement signed 10 years back has a clause to review the power purchase agreement every five years. In the first five years, DVC has surrendered 150 MW and now has communicated its intention to surrender the remaining 150 MW.

“DVC has many high tension consumers in Jharkhand and Bengal and earlier, many of our units were not stable suppliers because of their age. As a result, we needed these power purchase agreements. Over the last two years DVC has retired around 800 MW generation capacity and has improved its PLF (plant load factor) . We are now becoming self sufficient and can generate power ourselves at lower rates,” a DVC official said.

With a thermal power generation capacity of 6960 MW and hydel capacity of 147.2 MW, DVC had achieved a PLF of 60.52 per cent in 2019-20 against a national PLF of 55.99 per cent. In August this year, the PLF has improved to 62.17 per cent.

Elusive dues

DVC officials also said that there is no near-term solution to clear the pending dues from the Jharkhand discom that has accrued to Rs 5,500 crore over the last five years despite the Centre urging all states, including Jharkhand, to take credit from PFC and REC at lower rates and clear the dues of their discoms.