Lanco asks UP discoms to buy out its Anpara C plant

Feb 25 2013, 01:44 IST
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Uttar Pradesh Power Corporation Uttar Pradesh Power Corporation
SummaryLanco Infratech, which has stopped supplying power to the Uttar Pradesh Power Corporation due to mounting unpaid dues, has asked the four distribution companies of the state power utility to enter into discussions with it to “commence the process of buyout of its Anpara C plant” in Sonebhadra district of the state.

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“The project has become commercially unviable with the average plant availability factor of around 40% over past more than 270 consecutive days….” the termination notice states, adding that “on account of the complete inaction on part of the buyers (discoms) and UPPCL in remedying the alterations highlighted by it, Lanco exercises its right under Clause 13.6 of the PPA and terminates the PPA. The buyers are requested to enter into discussions to commence the process of buyout of the Anpara C plant in accordance to the terms laid out in Schedule 10 of the PPA.”

The petition to UPERC also states that the four discoms are in “material breach of their obligation under the PPA signed on November 12, 2006, inasmuch as they have defaulted in making timely and complete payment to the company for supply of electricity under the PPA and have also failed to institute the requisite payment security mechanism as mandated under the PPA”. It has made a strong plea that the regulator direct the four discoms to clear all outstanding dues amounting to Rs 431 crore for October-December 2012.

Arguing that the significant amount of outstanding dues coupled with the absence of a payment security mechanism has severely impacted the company’s ability to operate Anpara C at optimum capacity, the petition states that it has “unduly increased the financial burden on it resulting from the penal interest charged on delayed payments by consortium lenders and various vendors of the project...”, adding that it has made repeated requests to the respondents to institute a payment security mechanism that would “enable it to refinance the project and consequently alleviate the financial burden on the project cash flows”.

However, with the situation not being remedied, the company stated that it was “constrained to issue a preliminary termination notice to the respondents” on December 12, 2012.

“The petitioner is constrained to exercise this right to terminate the PPA in case any of its material obligations is significantly prevented, hindered or delayed or the average availability factor of the plant is less than 65% in any period of 270 consecutive days”, the petition states, adding that it is “not in a position to supply the entire capacity of contractually stipulated power to the buyers”. It has also submitted that till the time the discoms institute the payment mechanism and clear outstanding dues, it is entitled to regulate the power supply to correspond

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