NTPC to challenge Rs 2,000-crore arbitration award to Jindal ITF

NTPC would have to shell out around Rs 2,300 crore in the end going by the arbitration panel's decision, according to one of its lawyers

State-owned power producer NTPC Ltd (National Thermal Power Corporation Limited) said it would “take up legally” the arbitration tribunal’s order against it to shell out over Rs 2,000-crore to Jindal ITF in interest payments.

Jindal ITF is a subsidiary of Jindal SAW. 

NTPC would have to pay extra interest depending on time between the date of filing of the arbitration and when they pay up, Jindal ITF lawyer Manoj K Singh founding partner at Singh & Associates, said. “So this future interest component and other costs, such as the cost of litigation, will come to around Rs 300 crore, which takes the total sum awarded to somewhere around Rs 2,300 crore,” Singh said. 

In 2011, NTPC had signed a contract with Inland Water Authority of India (IWAI) and Jindal ITF for transportation of coal to its 2,100-Mw power plant located at Farakka, West Bengal through inland waterways. As a part of the contract, Jindal ITF was mandated to move coal from the high seas to NTPC’s Farakka thermal power plant. 

NTPC had also assured Jindal ITF that a minimum of 3 million metric tonnes (MMT) of coal would be transported per year through the latter. The agreement also mandated if NTPC didn't stick by the volume, it would pay Jindal ITF transportation fee for 90 per cent of 3MMT of coal.

During arbitration proceedings, Jindal ITF claimed it has spent more than Rs 650 crore on the purchase of a transhipper, 30 barges, and also invested in creating necessary infrastructure such as conveyor belts. The project, however, ran into problems, first with the Environment ministry approving the transport of only 1.5 MMT and, later, the coal ministry's decision to stop the import of coal altogether. 

While the environment ministry later gave its nod to the transport of 3 MMT of coal, the government’s decision to stop the import of coal held up work on the Farakka thermal power plant. The Centre had blocked the import of coal between 2014 and 2018, but resumed it in the later half of 2018 owing to the fossil fuel's shortage in India.