DPC firm on legal action over disclosure of papers

Sanjay Jog

Mumbai, Aug 8: The Dabhol Power Company’s (DPC) warning to Maharashtra State Electricity Board (MSEB) was not a maiden exercise as the company on January 22, 25 and February 26 had already hinted at possible legal action in the wake of disclosure of “confidential” papers related to the Dabhol project to a third party.

However, DPC’s warning on Tuesday has a special significance especially when the Maharashtra Electricity Regulatory Commission (MERC) in its order delivered on July 31 had directed the MSEB to release relevant “confidential” documents to the Pune-based non government organisation, ‘Prayas’. MERC had ruled that MSEB must supply all documents asked by Prayas under Section 26 of the Electricity Regulatory Commission Act, 1998, upholding the basic principle of maintaining transparency while exercising discretionary powers and discharging duties of the Commission.

Prayas had asked documents related to Dabhol phase-I and II which comprised operation and maintenance agreement, construction contracts, management agreement, gas supply contract and liquid fuel contract, fuel management agreement, liquified natural gas transportation agreement and financing agreements.

However, DPC has been consistent in its views that disclosure of information about the project and financial documents to third parties “would violate confidentiality restrictions incorporated in the Clause 21 of the power purchase agreement and result in irreparable consequences to international and domestic banks, contractors and gas suppliers with competititve business interests.” DPC has made it amply clear that MSEB would be exposed to the risk of claim for damages for the breach of confidentiality clause from it and also from the lenders and other agencies, which are parties to these documents.

DPC has pointed out that disclosure of “confidential” documents are not required even on the basis of the provisions of Maharashtra Right to Information Act, 2000. According to these provisions, documents protected by confidentiality obligations, the disclosure of which has not been consented to by document counter-parties, international agreements and information, the unwarranted disclosure of which would harm the competitive position of a third party would not necessarily have to be disclosed to a third party.

Ironically, MSEB’s demand for indemnification against all possible legal costs and damages in the wake of DPC’s action has not been accepted by the MERC.

According to MSEB insiders “it is a catch-22 situation for the MSEB.” If it does not follow MERC’s order, it will come under attack for the contempt. Further, if MSEB shares these “confidential” documents with Prayas, it will be exposed to damages from DPC as “Clause 21.1 of the power purchase agreement (PPA) requires both DPC and MSEB to keep certain data information and documents confidential during the continuance of the PPA and for a period of three years following its termination or expiry.” This condition is still applicable for the MSEB although it has rescinded its PPA with DPC on May 23.

MSEB’s legal advisors and solicitors Little & Co had recently asked the MSEB to claim confidentiality before MERC regarding the documents, disclosure of which has been objected by DPC and “avoid the risk of being sued by DPC and/or other parties to the said documents.”