SBI moves SC, seeks amendment in pacts between power companies, discoms

By: | Published: October 24, 2018 7:49 PM

SBI has moved the Supreme Court seeking implementation of a high power panel's recommendation to amend the PPAs between various discoms and three Gujarat-based electricity producers who were running losses as they could not hike tariffs to compensate for the rise in cost of coal imported from Indonesia.

SBI, SUPREME COURT, SBI NEWS, SBI NEWS NOW, sbi news today, sbi news,SBI is part of a consortium of banks that funded the three power producers — Tata Mundra, Adani and Essar — who were not allowed by the apex court to charge compensatory tariff in lieu of the increase in cost of coal they were importing from Indonesia. (Reuters)

SBI has moved the Supreme Court seeking implementation of a high power panel’s recommendation to amend the PPAs between various discoms and three Gujarat-based electricity producers who were running losses as they could not hike tariffs to compensate for the rise in cost of coal imported from Indonesia. SBI is part of a consortium of banks that funded the three power producers — Tata Mundra, Adani and Essar — who were not allowed by the apex court to charge compensatory tariff in lieu of the increase in cost of coal they were importing from Indonesia.

The top court by its order of April 11, 2017 had set aside the decisions of the Central Electricity Regulatory Commission (CERC) and Appellate Tribunal for Electricity allowing the power producers to charge compensatory tariff. Thereafter, all stakeholders including the firms had a meeting with Union Finance Minister Arun Jaitley. Subsequently, the central government recommended formation of the high powered committee, State Bank of India said in its application filed through advocate Sanjay Kapur.

Earlier this month, according to the plea, the panel recommended that the power purchase agreements (PPAs) which the three companies had with discoms in several states be amended based on the cost of coal imported from Indonesia. It also said that after the committee gave its recommendation, applications were moved by the Gujarat Urja Vikas Nigam Ltd (GUVNL) and the state government in the apex court for permission to amend the PPAs SBI, seeking to be impleaded in the matter and supporting the pleas of GUVNL and the state government, has contended that entire net-worth of the three companies has almost eroded and the monies loaned to them by the banks was “at serious and imminent risk”.

“So far as Essar Power Gujarat Ltd is concerned, it is already a non performing asset (NPA),” it has said, adding that the remaining two companies have sent letters saying they would be constrained to stop operation as they cannot run their plants at a loss. According to SBI’s plea, the consortium of banks have till March 31, 2017 lent Rs 19,127 crore to Adani Power, Rs 4,214 crore to Essar Power and Rs 10,159 crore to Tata Mundra to run their plants.

Verma said that not all influence that is exerted by the political government would be found explicitly or in writing. “More often than not, it is tacit and requires considerable courage to withstand,” the plea said. It referred to Section 4B of the Delhi Special Police Establishment (DSPE) Act, saying it statutorily secures the two-year period of the director’s tenure notwithstanding anything to the contrary. This is precisely to secure the independence of the CBI, but the same has been violated by these orders, it said.

“In any event, Section 4A of the Act constitutes a high powered committee of the Prime Minister, the Leader of Opposition and the Chief Justice of India for the purpose of appointing the Director of the CBI as also under Section 4B(2) to grant previous consent for his transfer. The exercise of power by the impugned orders has been to bypass the mandate of the committee,” it said. He sought quashing of three orders of October 23, one by CVC and two by the DoPT, as being without jurisdiction and in violation of Articles 14, 19 and 21 of the Constitution. He added that the orders were manifestly arbitrary, sans natural justice and without due process.

The petition has said whenever investigations were carried on, decisions regarding the direction of the probe were taken by an investigating officer and then approved at all levels right up to the Director CBI. After the appointment of Asthana in CBI, despite the pendency of cases against him and the reservations in this regard expressed by Verma, decisions that were crucial to the progress of certain probe were stymied by Asthana alone, it alleged, adding many of these concerned very sensitive cases including those monitored by the top court.

It said that yesterday, three “rapid fire” decisions were taken by the CVC and DoPT. The CVC passed an order under the DSPE Act divesting Verma of all functions regarding any cases registered or to be registered, after which the procedures of natural justice would follow, the plea said.

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