Lanco told to supply 65% power from project to Haryana

Interim order issued by the Appellate Tribunal for Electricity.

In a major setback to its power sale plans, Lanco Power Trading Corporation has been directed to provide at least 65 per cent power to Haryana Power Generation Corporation Limited (HPGCL) from the 300-Mw Unit-2 of Lanco Amarkantak Power Private Limited (LAPPL) power project in Chhattisgarh.

In an interim order issued by the Appellate Tribunal for Electricity on March 23, Lanco and Power Trading Corporation (PTC) have been directed to do so.

The Lanco project achieved the full load in February 2010 but did not declare commercial operation. The sources in the HDGCL informed Business Standard that Lanco has been selling power to the Western Region Load Dispatch Centre at a rate higher than tariff quoted for HPGCL.

He said the dispute arose when LAPPL, after entering into a Power Purchase Agreement (PPA) with Power Trading Corporation on October 19, 2005, refused to supply the power being generated from this project to PTC, at the capped rate of Rs 2.3 per unit. LAPPL was seeking a revision in rates which would have resulted in huge losses to Haryana as PTC on September 21, 2006, had entered in a back-to-back power sale agreement with HPGCL for the sale of the above mentioned power as supply to Haryana for 25 years. He said the sole intention of LAPPL was to sell the power from the project, which rightfully belongs to Haryana as merchant power and to earn profits.

Lauding the order of the Tribunal as a significant achievement of HPGCL, the spokesman said HPGCL has been painstakingly pursuing this dispute at various legal forums and has finally succeeded in getting low cost power for the people of Haryana, at a very attractive rate of Rs 2.3 per unit.

He added, in anticipation of the corporate player moving the Supreme Court, the HPGCL has filed caveat with the apex court.

Giving background details he further informed that after getting the benefit of financial closure, on account of signing of above said PPA/PSA, LAPPL in March 2010, refused to supply the power being generated from this project to PTC/HPGCL, at the capped tariff of Rs 2.3 per Kwh. LAPPL also cited legally untenable force majeure circumstances of earthquake in China and change in visa policy of the Government of India for Chinese Engineers during construction of the unit. LAPPL intentionally has kept on delaying the commercial operation of the unit so as to be able to mint money by selling power at higher UI rates. Moreover, LAPPL made a mockery of the PPA and went on unscrupulously to sign an implementation agreement with Chattisgarh government on August 1, 2009, and further on January 12 , 2011 entered into a fresh PPA with Chattisgarh government, thereby committing 35 per cent of the power which already stood committed to PTC/HPGCL.

Earlier, taking cognisance of the recalcitrant attitude of Lanco, the Haryana Electricity Regulatory Commission (HERC) through its order dated February 2, 2011, fully supported the contention of HPGCL and held that no relief could be granted to LAPPL in terms of reduction in contracted capacity in view of the implementation agreement and due to change in coal policy of the Indian government. Further, regarding force majeure the commission decided that no relief other than extension in time as provided in PSA/PPA is admissible and HPGCL is entitled for payment from the UI pool for the infirm power, supplied to the western region by Lanco. The commission also restrained LAPPL from selling the power to a third party and inferred that Western Region Load Dispatch Centre (WRLDC) should make payment for infirm power, since the date of synchronisation of LAPPL Unit-2 from the UI pool, to HPGCL instead of LAPPL.