MERC scraps amended PPA of MSEB, RPPL

Sanjay Jog

Mumbai, May 16: THE Maharshtra Electricity Regulatory Commission (MERC), in a major ruling on Wednesday, scrapped the amended power purchase agreement (PPA) between the Maharashtra State Electricity Board (MSEB) and the Reliance Patalganga Power Ltd (RPPL) for 447-MW combined cycle power project and termed it as “null and void.”

MERC’S ruling would also apply for the MSEB’s PPA with various cooperative sugar factories in the state for cogeneration projects, as a fresh approval would be required for it.

The MERC HAS directed that the MSEB, which had inked the amended PPA with RPPL on February 4, 2000, after MERC’S formation, would have to submit the fresh PPA for the Patalganga project with amendments to the original PPA of 1996, for its approval. Similarly, MERC’S approval henceforth would be necessitated for financial contracts, fuel cost and fuel supply agreements between MSEB and RPPL for the Patalganga project.
MERC chairman P Subrahmaniam, alongwith other members Venkat Chari and Jayant Deo on Friday, upheld the petition filed by the Pune-based non- government organisation Prayas in this regard.

Prayas had claimed that MSEB and RPPL had not sought the MERC’S approval and thereby violated the provisions of the Electricity Regulatory Commission Act 1998, and the MERC regulations.

It had prayed that MSEB should seek the MERC’S approval before entering into, or, amending any power purchase related contract such as PPA, fuel supply agreement, financial agreement.

Another petitioner and Janata Dal (s) leader Pratap Hogade had also demanded that the amended PPA between MSEB and RPPL should be scrapped. He had contended that the power generated from the proposed Reliance power project would not be affordable for the consumer.

According to the amended PPA, the fuel for powwer station would be arranged by RPPL through a fuel supply contract. In the event of natural gas/mixed fuel being used as fuel in power station, the installed capacity would be the capacity as approved by the Central Electricity Authority (CEA). MSEB would facilitate the transfer to RPPL of 1.4 million cubic meter of gas per day of MSEB’S allocation.

Furthermore, the amended PPA had incorporated a provision of default escrow agreement, whereby the MSEB and RPPL would open an account with a nationalised bank.

In the event of the energy offtake by MSEB being lower than the generation of declared capacity pursuant to the PPA at any time during the term of PPA, RPPL is not entitled to receive any incentive performance charge payment based on deemed generation, pursuant to the provisions of the agreement.

However, in the wake of this situation, RPPL would be entitled to sell the additional energy available at the power station above 68.5 per cent availability to Reliance Group companies in Maharashtra, having approved captive power generation to displace such captive power generation. Wheeling charges and transmission losses would be borne by RPPL for use of MSEB network for such sale.

Such wheeling charges and transmission losses for use of MSEB network would be determined in accordance with prevailing wheeling policy of MSEB on a general basis and without any undue discrimination against RPPL. According to the amended PPA, MSEB would not object to any such sale.