Apex court seeks response from Sasan UMPP on state utilities’ appeals

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Published: January 4, 2019 2:21:54 AM

A bench led by justice RF Nariman while admitting the appeals sought response from the UMPP as to why it should be allowed provisional increase in tariff on account of change in law.

A bench led by justice RF Nariman while admitting the appeals sought response from the UMPP as to why it should be allowed provisional increase in tariff on account of change in law.

The Supreme Court on Thursday sought response from Reliance Power-promoted Sasan Ultra Mega Power Project (UMPP) on appeals by four state utilities, which are opposing any claim in increase in tariff on account of change in law as sought by the former.

A bench led by justice RF Nariman while admitting the appeals sought response from the UMPP as to why it should be allowed provisional increase in tariff on account of change in law.

While partly ruling in favour of Sasan, the Aptel had asked CERC to decide afresh few issues like devising an adequate methodology/formula for the compensation on the grounds of change in law, among others.
The 4,000-MW Sasan UMPP, located in the Singrauli district of Madhya Pradesh, is an integrated power plant-cum-coal mining project at a single location, involving an investment of over Rs 27,000 crore.

Ajmer Vidyut Vitran Nigam, MP Management Company, Haryana Power Generation Corporation (now Haryana Power Purchase Centre), and Punjab State Power Corporation have challenged the Appellate Tribunal for Electricity’s November 20 order that reversed the Central Electricity Regulatory Commission’s February 2015 decision rejecting any compensation for increase in capital cost due to change in law events during the construction period of the UMPP, thus paving way for the UMPP to recover dues of over `1,000 crore from the procurers.

Stating that the Aptel’s decision is contrary to the PPA of August 2007, the state utilities stated that the tribunal misinterpreted the earlier decisions of the apex court.

They said that it in the absence of any specific provisions in the PPA, there cannot be any claim on grounds of equity, natural justice, fair play or the terms being onerous or erroneous or even on grounds that it is not rationale or contrary to any general understanding.

During the construction phase in June 2011, Sasan Power had sought customs duty exemption for mining equipment (for the captive coal block) being imported by it.

The ministry of power had clarified that the customs duty exemption was applicable only for the power equipment.

However, Sasan moved the CERC in February 2013 seeking increase in tariff on account of the alleged impact of change in law, thus affecting the PPA of August 7, 2008 on various aspects.

However, CERC partly allowed the UMPP’s three claims in 2015.

On appeal, the tribunal asked the Commission to decide afresh various issues like grant of compensation due to increase in cost of water intake system arising on account of change in location/lay out and exemption of custom duty on the equipment imported for captive coal mines at par with the power plant equipment, among others.

Even the allegation of procurers that there is diversion of coal to other projects and need for exclusive utilisation of captive coal mines for generation of power at Sasan UMPP is to be examined afresh by the Commission after obtaining further details from all the stakeholders.

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