Transport of coal: Tribunal passes Rs 2,000 crore award in favour of Jindal ITF

NTPC’s ambitious plan to move coal from high seas to its generating station at Farakka via the inland waterways faces hurdles with an arbitration award of Rs 2,000 crore being slapped against it.

The arbitration under Justice Vikramjit Sen, Justice BP Singh and Justice Anil Kumar slapped the penalty since NTPC failed to lift the minimum guaranteed quantity for consecutive two years.

NTPC, Jindal ITF, the infrastructure arm of Jindal SAW, and Inland Waterways Authority of India, had signed a tripartite agreement in 2013, which entailed commitments of 3 million tonne of supply of coal to NTPC’s Farakka plant for seven years.

Jindal ITF made the investment of `650 crore for setting up the infrastructure of the project including a handling point, creating transhipment and conveyor facilities, among others.

The payment for transporting the coal was supposed to be made by the supplier appointed by NTPC from time to time.

But with NTPC failing to keep the commitment and seeking to terminate the tripartite agreement, JITF, the operator of the project, moved the tribunal and got the final order.

While the tribunal gave two interim orders in favour of JITF in excess of `158 crore for the first year and over `197 crore for the second year, including all applicable taxes and interest, it said NTPC’s termination, requisition and consultation notices to JITF on July 24, 2017 were “unlawful, invalid, non est and of no effect whatsoever”.

The tribunal directed NTPC to discharge all obligations under the tripartite agreement and pay JITF more than `1,108.93 crore along with taxes and interest as compensation for the damages caused for the termination notice, Gunita Pahwa, a counsel for JITF said, adding that NTPC paid the MCQ amount for the first year and the second year following the court’s interim order against a bank guarantee provided by JITF.

She said there was delay in completion of construction of both the phases of material handling system since NTPC delayed in handing over the 11 acres required for the job.

While mails to NTPC went unanswered, the official spokesperson, when contacted, denied commenting on the issue.

However, an NTPC official, on the condition of anonymity, said the requirement of imported coal came down since there was an augmentation in supply of domestic coal to the 2,100 MW Farakka unit.

There are also government directives to cut down on imports, the official explained.

The plan to handle coal at the high seas and then to ship it up to the Farakka stack yard was made to cushion the impact of expensive imported coal with inland water transport acknowledged among the cheapest form of transport for goods.

The delay in handing over the land by the Farakka barge authorities led to the delay, an official said.

However, as per the court directives, JITF should continue to transport coal to NTPC for the rest of the contract period as per the provisions of the tripartite agreement and that the entire 11 acres has to be utilised for the project as contemplated in the tripartite agreement, Pahwa said.