The Madhya Pradesh Electricity Regulatory Commission (MPERC) has once again rejected Lanco Amarkantak’s plea for tariff revision for power generated from a unit of its power plant. Lanco Amarkantak is the unit of Lanco Infratech that operates the 1,920-MW thermal power plant in Chhattisgarh. The stressed power company had asked the regulator twice in 2016 to allow power tariff hikes to compensate for expenses incurred due to shifting of a metering point from the switch yard in its power plant to PGCIL’s Bilaspur station. It also sought Rs 8.4 crore from the Madhya Pradesh utility to make up for the aforementioned costs between FY15-FY17.
The metering point had to be shifted after a 2014 order from the Central Electricity Regulatory Commission (CERC) to comply with standards set by the Central Electricity Authority. Lanco appealed that this shifting should be termed as a ‘Change in Law’ event, under which it can claim compensatory tariff. The company claimed that the new tariff should compensate the revenue decrease due to the additional energy loss of 0.65% to 0.75% and operation and maintenance expenses for the 75 km transmission line that had to be installed after the CERC order.
Lanco entered into a 25-year power purchase agreement (PPA) for 300 MW of power with PTC India in May, 2005. PTC, in turn, signed a power sale agreement (PSA) with Madhya Pradesh State Electricity Board later in the same month for the same quantity of power. The power supply started from December, 2012 after the state electricity commission ratified the electricity tariff fixed for the transaction.
Lanco is one of the companies identified by the Reserve Bank of India (RBI) that are to be taken to bankruptcy court to mitigate the country’s Rs 9.63 lakh crore dab debt problem. RBI has directed the company’s lead lender, IDBI Bank, to initiate corporate insolvency solution process under the Insolvency and Bankruptcy Code, 2016.
Lanco had said that it hopes to bring in additional cash flows into the system through the approved corporate debt restructuring, cost overrun proposals for projects under construction, disposal of assets, and bringing new strategic investors. It had said that the steps taken by its management to address the challenged would enable a quick turnaround in the situation. The company’s net loss in FY17 was more than Rs 2,049 crore.