Tata Power on Friday moved the Supreme Court against the Appellate Tribunal for Electricity (Aptel) order that upheld the Maharashtra power regulator’s decision to award a Rs 7,000-crore transmission contract on a nomination basis to Adani Electricity in March 2021. It has said in the appeal that the Maharashtra Electricity Regulatory Commission (MERC) should not have awarded such a large transmission licence, without following the process of tariff-based competitive bidding (TBCB) route and by “excluding other developers.”
Under the licence, Adani Electricity will develop a 1,000-mw high-voltage direct current (VSC-based) link between 400 KV Kudus and 220 KV Aarey EHV power stations.
A Bench led by Justice DY Chandrachud sought response from the Maharashtra government, MERC, Adani Electricity Mumbai Infra (AEMIL), Adani Electricity Mumbai and Maharashtra State Electricity Transmission Company on the Tata Power’s appeal, which challenged the legality, validity and propriety of the Aptel judgment.
The Aptel had on February 18 held that MERC’s decision to choose RTM (regulate tariff mode) route under Section 62 of the Electricity Act cannot be termed as “incorrect, perverse or inappropriate.”
Terming the Aptel’s order “perverse” and “liable to be set aside”, Tata Power, however, said that the tribunal had not examined the reasons for which MERC had opted for exclusion of TBCB while discharging its functions, thus rendering the entire process of electricity contracting susceptible to abuse and misuse.
Besides, Aptel had not given any finding that only Adani firm was capable of undertaking the project or that there existed any compelling reasons for awarding the project to the private project proponent, the Tata firm said, adding that the project was awarded under nomination basis in the garb of expediency.
This action of MERC, as upheld by the tribunal, vitiates the ethos of transparency and competition as enshrined under the Act, Tata Power said.
“The net effect of the licence order as well as the Impugned Order is that, not only has a 7,000-crore project been awarded to a private project proponent in exclusion of competitive bidding, but the importance of transparency and competition as enshrined under Section 63 read with Sections 86(3), 79(3), 178 and 181 of the Act has been completely vitiated, thereby creating a scenario where any State Regulatory Commission, on its choosing, can engage with a private project proponent for development of intrastate transmission assets without following the mandatory route of competitive bidding,” the appeal stated.
Tata Power stated that the SC judgements as well as the central government policies mandate competitive bidding as the dominant route for award of large infrastructure contracts, the tribunal has unsettled the regulatory framework developed over the years to achieve the objectives of the Act, it said.
The mandatory route of competitive bidding is not only enshrined in the Act but has been repeatedly professed by the central government through the Tariff Policies of 2006 and 2016 as well as its March 15 notification, the company stated in its appeal, while terming the actions of MERC and Aptel as “explicitly violative of the provisions of the statute” and also “run foul” to the settled law that auction/competitive bidding is the preferred route and that only under compelling circumstances can this route be avoided.