Merc Doubtful Over Patalganga Ppa

The Maharashtra Electricity Regulatory Commission (MERC), the power regulator for Maharashtra, in a ruling today declared that the amended power purchase agreement (PPA) signed between the Reliance group and the Maharashtra State Electricity Board (MSEB) for the Patalganga power project is of "doubtful legal validity".

The final amended PPA was signed on February 4, 2000. The commission has further stated that "if MSEB should, if it so desires, approach it before signing or amending any PPA with any power company". Further, the tariff for such projects should be approved by the regulator.

A Reliance spokesman declined to speak on the issue. Till late night, no comment was available from MSEB officials on the ruling.

The ruling was in response to two petitions filed by Pune-based non-government organisation Prayas and P G Hogade, chairman Kolhapur District Cooperative Textiles Federation.

Prayas' basic contention was that the regulator's prior approval should have been sought before the amendments were incorporated in the PPA. MERC was set up in August 1999, while the final PPA was inked on February 4, 2000.

Prayas had argued in its petition that under Section 22 (1) (C) of the Electricity Regulatory Commission Act, 1998, MERC is duty-bound to regulate the price of power. Similarly, under Regulation No. 73 of the MERC (conduct of business), the regulator has to approve the tariff.

Prayas contended that this was a violation of the ERC Act and the MERC regulations as the regulator's prior approval should have been sought.

It prayed that the amended PPA be declared null and void. Besides, MSEB in future should seek the commission's approval before entering into or amending any PPA.

Hogade went a step further and said that the commission should stay the implementation of the original PPA signed in 1996.

MSEB contended in its submission that initially the project had been awarded to the Reliance group under the competitive bidding route and the initial PPA was inked in 1996. Later on, the Central Electricity Authority raised several objections and wanted to bring down the project cost.

The new PPA had to be inked in order to comply with these stipulations. It also said that there was no malafide intention to deny or overlook the commission's jurisdiction in such matters.