Andhra power utility seeks dismissal of RPower petition

Invoking bank guarantees in compliance with Krishnapatnam PPA, says discom

Andhra Pradesh Central Power Distribution Company (APCPDCL) has sought the dismissal of a petition filed by Reliance Power (RPower) against invoking bank guarantees relating to an ambitious power project in the state. The discom says the key contention of a rise in Indonesian coal prices or the change in laws in that country had no relevance to the power purchase agreement (PPA) or its force majeure clauses. APCPDCL is one of the procurers of the proposed Krishnapatnam ultra mega power project in the state.

RPower had "abandoned" the project in mid-June last year "under the guise of the Indonesian government’s decision" to revise the term of sale of coal, APCPDCL said in its affidavit filed in the Delhi High Court on April 16. "There is neither a change in law as per the PPA, nor is there a force majeure event as claimed by the petitioner," it added.

It was after having waited for "quite a long time" and after issuing notices earlier that the the procurers/respondents decided to terminate the agreement, state power utility said. In pursuance thereof, the discom decided to invoke bank guarantee, which "is strictly in compliance with the provisions of the PPA", it maintained.

An RPower spokesman, when contacted, said the company could not comment on the issue since the matter was sub judice.

In its earlier petition, the Anil Ambani-headed company said procurers were, on the other hand, under an obligation to discharge certain conditions, with which they failed to comply. Result: "the petitioner has been prevented from discharging its obligations under the PPA."

Also, Rpower was "still awaiting" the possession of the entire land required for the project, and the issuance of an irrevocable letter to the lenders accepting the rights provided to the lenders under the PPA.

On Tuesday, the Delhi High Court posted the matter for further hearing on May 15 after acknowledging APCPDCL’s reply. It also granted two weeks’ time as sought by other respondents (the other procuring states of Tamil Nadu, Karnataka and Maharashtra), for filing their reply. It is expected that RPower would file its rejoinder, if any, after other respondents filed their replies. Till such time, the stay granted by the court would continue.

On March 20, the Delhi High Court passed an interim order directing against coercive steps "for the time being" against Mumbai-based RPower on behalf of any of the states procuring power from the Andhra Pradesh project. RPower was awarded the project after it emerged as the successful bidder with a levelised tariff of Rs 2.33 per kwh. Also, in January 2008, it had also got transferred in its name the entire shareholding of the Coastal Andhra Power Limited, the special purpose vehicle for the project.

The company had moved the high court after APCPDCL, as the lead procurer, issued notices demanding the payment of Rs 400 crore to the procurers with a rider: the bank guarantee of Rs 300 crore would be invoked for the alleged abandonment of the construction of the project by Coastal Andhra Power Ltd, a subsidiary of the 2007-founded RPower.

The power utility refuted the charge that the procurers had failed to promptly fullfil the obligations in terms of providing land for the project or the facilitation of the coal import corridor at Krishnapatnam. In its affidavit, the respondent stated that there was no element of arbitration in the matter. If there was any, "it is to be adjudicated by the Central Electricity Authority as per the clauses of the PPA", it added. Therefore, the court "has no jurisdiction" to entertain the petition.

APCPDCL also said though RPower had intimated that it had achieved the obligations as per the articles of the PPA, the company failed to provide any documentary evidence in support of its claim.

The petitioner, it said, had "stated that they have communicated the progress of the project vide letter March 25, 2011, indicting that they have executed the coal supply agreement dated April 8, 2010, with Reliance Coal Resources Private Limited (RCRPL) to supply imported coal from mines located at Musi Rawas regions in South Sumatra, Indonesia, is baseless and false". RPower has not provided a copy of the contract executed between RCRPL and the Indonesian mining company "in spite of repeated requests" by the procurers, it added.

The power utility also alleged that though the petitioner said it had achieved the financial closure and awarded the EPC (engineering, procurement and construction) contract for placing the order for boiler, turbine and generator for the project, the company failed to submit supporting documentary evidence.