State advocate general dubs MSEBs claim justified

Sanjay Jog

Mumbai, May 22: THE Maharashtra State Electricity Board (MSEB) has received a major boost, as state advocate general Ghulam Vahanvati has remarked that the MSEB’s claim towards rebate of Rs 401 crore charged on the Dabhol Power Company (DPC) for misdeclaration and default on the availability of power on January 28 is justified.

“One would have to fall back on the basic principles of the law of contracts, under which, if the MSEB has a legitimate claim against DPC, it would be entitled to withhold payments to DPC. It cannot be that the MSEB should be required to continue to make payments to DPC, merely because the latter chooses to raise a dispute with regard to the rebate,” Mr Vahanvati said in a 22-page communication to the MSEB.

Mr Vahanvati said that the DPC has solemnly undertaken to operate the Dabhol plant in accordance with the dynamic parameters and it was binding on the company to specify a variation in the Availability Declaration in the preparation time required to commence start-up procedure. “No such thing was done in the Availability Declaration,” he added.

On January 28, 2001, although DPC had declared the baseload capacity of 657 mw, the actual generation of mere 156 mw against the MSEB’s instructed capacity of 657 mw during 6 pm to 7 pm. During 7 pm to 8 pm, the actual generation was 325 mw, against the declared baseload capacity and instructed capacities of 657 mw, during 9 to 10 pm, the actual generation was 325 mw against the declared and instructed capacities of 657 mw and during 11 pm to 12 am, the actual generation was 450 mw against the declared and instructed capacities of 657 mw.

“The moment there was a shortfall, apart from anything else, Clasue 10.2 of the power purchase agreement (PPA), which deals with availability, rebates and bonuses, came into operation,” Mr Vahanvati opined.

According to him, DPC in its communication on February 1 to MSEB, has conceded that it has breached its obligations, but “that it has not done so knowingly.” “One wonders how such a statement could be made, having regard to the confession that 180 minutes is insufficient to bring the plant to 657 mw. If this was an obligation and if DPC gave its Availability Declaration contrary to this, there could be no doubt that it did so knowingly,” he added.

Mr Vahanvati said that the DPC could have made changes to the Availability Declaration under article 3.4, but it did not do so. Clauses 6.1 and 6.2 of Schedule 6 also reiterate the importance of the dynamic parameters, since they provide that the DPC could not be required to operate the plant otherwise than within the Availability Declaration or the Dynamic Parameters. The company in another letter on February 14, admitted that the actual performance capability of the Dabhol plant is not in accordance with what is stated in the PPA.

Mr Vahanvati said that the rebate has to be adjusted and the contract provides for billing in terms of payment in Clause 11. The billing statement has to contain the computation of rebate in accordance with Clasue
10.2.