GMR Power drags TNEB to SC over non-payment of R600-crore dues

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: May 3 2012, 08:41am hrs
GMR Power Corporation (GPC) has dragged the Tamil Nadu Electricity Board (TNEB) to the Supreme Court over non-payment of tariff invoices to the tune of around R600 crore, saying that such delay has adversely impacted its other contractual obligations.

It has also challenged a part of the electricity tribunals order, which directed that the reimbursements received by it from Hindustan Petroleum Corporation Ltd (HPCL) by way of fuel credits should be paid or set-off against dues payable by the Tamil Nadu Electricity Board (TNEB) to the power company.

A bench headed by Chief Justice SH Kapadia has sought reply from HPCL as to whether such credit has been given by it gratuitously to GMR as claimed by the latter.

However, it asked the parties to maintain status-quo as far as inter-se adjustment is concerned. Senior counsel Gopal Subramaniam, appearing for GPC, argued that the credit received by the power company from HPCLwas a gratuitous credit for payment of cost of fuel. Challenging the Aptels order, GPC said that the boards application seeking reimbursement of the amount received by it by way of fuel credit from HPCL is misconceived.

Besides, the power company said that the Aptels order holding that the credit period allowed by HPCL did not have any impact on the variable charges payable under the PPA was not correct.

The payment terms including any credit period availed on account of delayed payment to HPCL under the FSA, is totally outside the purview of PPA and is unrelated to computing the interest on working capital or variable charge payment under the PPA, the petition stated, adding GPC had been subjected to extreme hardship and distress which is evident from the fact that out of total 191 tariff invoices till July 2008, TNEB paid only seven tariff invoices on time.

According to GPC, its only source of revenue was tariff payments, and the untimely payments by TNEB had adversely impacted its contractual commitments with other vendors and suppliers.

GPC had entered into a power purchase agreement (PPA) with TNEB in September 1996 for setting up a 200 MW power plant in Chennai.

The infrastructure company had also entered into a fuel supply agreement with HPCL in December 1996 for purchase of low sulphur heavy stock fuel for its diesel engine based power plant and onward sale of power to the electricity board.

GPC had a dispute with the state electricity board with respect to PPA, land lease rentals among others.

Tamil Nadu Electricity Regulatory Commission by its order dated April 16, 2010 had allowed the claims of GPCL and directed TNEB to pay approximately R480 crore with interest in six equal monthly installments to the former. However, aggrieved by the regulators decision, TNEB had moved Aptel, which had ruled in favour of GPC. However, the tribunal, on the TNEBs interlocutory application, had directed that the interest to be computed on the amount of fuel invoices payable by GPC to HPCL for credit periods should be paid or set-off against payments due to GPC from TNEB.