SC asks Punjab discom for details of payment to genco for imported coal

The issue relates to the procurement of domestic coal from Mahanadi Coalfields (MCL) to undertake generation of electricity at Talwandi’s 2×660-MW unit and supply of electricity to PSPCL for distribution in the state.

“During the period from June, 2017 to October, 2018, TSPL had not procured the entire coal available under the coal linkage, for reasons best known to TSPL. Having failed in its obligation to procure the available coal, TSPL claiming higher tariff for coal arranged from imported/alternate sources, which was refused by PSCPL,” the appeal stated.
“During the period from June, 2017 to October, 2018, TSPL had not procured the entire coal available under the coal linkage, for reasons best known to TSPL. Having failed in its obligation to procure the available coal, TSPL claiming higher tariff for coal arranged from imported/alternate sources, which was refused by PSCPL,” the appeal stated.

The Supreme Court on Monday asked Punjab State Power Corporation (PSPCL) to give details of the payments made to genco Talwandi Sabo Power (TSPL), towards the incremental cost incurred in procurement of imported coal for supplying power to the state discom, along with other charges.

The Appellate Tribunal for Electricity (APTEL) had in July 2021 asked PSPCL to pay around Rs 500 crore, including interest, to TSPL for default in payment for purchase of imported coal in 2017.

The issue relates to the procurement of domestic coal from Mahanadi Coalfields (MCL) to undertake generation of electricity at Talwandi’s 2×660-MW unit and supply of electricity to PSPCL for distribution in the state.

A bench led by Justice JK Maheshwari, while seeking a response from TSPL, asked PSPCL to give details of the payments made under various heads as directed by the tribunal. It also posted the matter for further hearing in July after PSCPL informed the judges that it had so far paid Rs 350 crore to the generator.

PSPCL has moved the Supreme Court against APTEL’s judgment that set aside the Punjab State Electricity Regulatory Commission’s orders and allowed the incremental cost incurred by TSPL in procuring alternate/imported coal for supplying power to PSPCL and other charges, including deemed capacity charges and late payment surcharge. It held that signing of a fuel supply agreement (FSA), arrangement of coal for the project and payment of coal charges was the obligation of PSPCL.

PSCPL said that the tribunal had proceeded to allow the claim of TSPL for procurement of alternate coal, despite the fact that TSPL did not choose to requisition the total domestic coal available under the coal linkage with MCL and even when the documents on record clearly establish that TSPL had requisite quantum of coal available from MCL.

As part of the energy charges formula in the PPA, PSPCL was required to pay the cost of coal purchased by the seller (TSPL). However, as per the tribunal’s impugned order, PSCPL is now also required to purchase coal for TSPL and pay the cost of coal as a part of energy charges to TSPL, which would be conflicting, the appeal filed by the state discom said.

Pursuant to a tariff-based competitive bid process, PSCPL and TSPL had in 2008 entered into a long-term PPA for 25 years. The state discom was supposed to arrange for the fuel linkage of 7.72 million tonne per annum from MCL and assign the same to TSPL. “And thereafter, it was for TSPL to procure the coal on a regular basis during the term of the PPA. In any event the actual procurement of coal required from MCL on a continuous basis is the obligation of and had to be undertaken by TSPL and not by the discom,” the appeal said.

“During the period from June, 2017 to October, 2018, TSPL had not procured the entire coal available under the coal linkage, for reasons best known to TSPL. Having failed in its obligation to procure the available coal, TSPL claiming higher tariff for coal arranged from imported/alternate sources, which was refused by PSCPL,” the appeal stated.

While TSPL had moved the state commission in 2018 seeking cost of alternate coal for June to September 2017 and October 2017 to September 2018, respectively, the state commission rejected its petition in April 2019 on the grounds that though the generating company had claimed force majeure due to a fire incident, it had abandoned this claim and TSPL had been consistently short-requisitioning coal since October 2016 onwards ,and had never utilised the full storage capacity available at the plant site.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

Most Read In Economy
Photos