In a setback to the Anil Dhirubhai Ambani Group-controlled Reliance Power, the Delhi High Court on Monday dismissed a writ petition against a Rs 400-crore penalty notice served by the power procurers of the proposed Krishnapatnam ultra mega power project (UMPP). Following the high court judgement, the procurers would encash the bank guarantee of Coastal Andhra Power Limited (CAPL), Reliance Power’s wholly-owned subsidiary.
The company responded by filing an appeal against the single judge order. Simultaneously, it filed for arbitration against the power procurers on Monday. Andhra Pradesh distribution companies, however, dismissed the filing, saying it was not in consonance with the power purchase agreement. The power procurers would encash the available amount of Rs 320 crore by invoking a bank guarantee, besides initiating action to collect the balance amount demanded from the company, P Shiva Rao, legal advisor to AP Transco told Business Standard. “The court has dismissed the petition in our favour, maintaining there are no grounds to grant interim injunction,” he said.
The notice was served by 11 power procurers, led by Andhra Pradesh Southern Power Distribution Company Limited. In a statement issued on Monday, RPower said it had filed for arbitration against the procurers of power to be produced from its 4,000 Mw UMPP at Krishnapatnam in Andhra Pradesh. “Reliance Power has filed its statement of claim in the Indian Council of Arbitration, under the Indian Arbitration and Conciliation Act, 1996, against the 11 procurers from its Krishnapatnam UMPP,” the company stated.
- The notice was served by 11 procurers, led by Andhra Pradesh Southern Power Distribution Company
- CAPL said the change in regulations in Indonesia had hit all projects run on imported coal in the country
- AP Transco maintained there was no case for arbitration, as CERC has sole jurisdiction in rate matters
- CAPL had won the project in November 2007, quoting a rate of Rs 2.33 a unit for 25 years
Rao, however, said the statement of claim filed by the company before the council was not valid, as the Central Electricity Regulatory Authority had the sole jurisdiction in deciding rates. In an earlier response to a petition filed by Reliance Power before the Delhi High Court, the state power utility had maintained the stance, arguing there was no element of force majeure, as claimed by the company.
CAPL has maintained the change in regulations in Indonesia, which was beyond its control, had hit all projects run on imported coal in the country.
The company had won the project in November 2007, quoting a rate of Rs 2.33 a unit for 25 years. Power was scheduled to be supplied to four distribution companies in Andhra Pradesh, five in Karnataka and one each in Tamil Nadu and Maharashtra. The UMPP has been stuck, after the Indonesian government decided to link the price of coal with the international market last year. This made imported coal more expensive. Since then, Reliance Power has sought a rise in the rate of power to be supplied from Krishnapatnam. However, the Centre has said procurers and power producers should resolve the matter among themselves.
In March, the Delhi High Court had granted a stay on a notice for penalty of Rs 400 crore by procurers of power from Reliance Power’s Krishnapatnam UMPP.
The company said it had sent a dispute resolution notice for an amicable solution to procurers in March, but did not receive any response. It said the statement of claim had cited relevant clauses under the power purchase agreement signed between CAPL and the procurers. The agreement provides for resolving disputes by arbitration, under the Indian Arbitration and Conciliation Act, 1996. “CAPL has already sent a dispute resolution notice dated March 13 for an amicable solution under the power purchase agreement between the parties. The procurers had not responded to CAPL's notice. Today’s filing is continuation of that,” the company said.
A senior official of the state energy department said it was in no hurry to decide on the company’s statement of claim. "We will take a view when it comes to us," the official said. However, officials of the legal department in AP Transco maintained there was no case for arbitration, as the Central Electricity Regulatory Commission had sole jurisdiction in rate matters.