Letters: Not questionable, says Sasan Power

Reliance Power Limited, in response to an editorial published in Business Standard on January 15 ("A questionable principle"), has stated that the relief provided by the Central Electricity Regulatory Commission to its subsidiary, Sasan Ultra Mega Power Project, is on the basis of a true and correct interpretation of the provisions under the power purchasing agreement (PPA), which allows tariff changes as "Change in Law" events.

The company has stated that it did not use any legal alibi. It claimed what it was rightfully and legitimately entitled to under the PPA. In any case, the relief granted by the regulator is on account of the enactment of a new law passed by the Madhya Pradesh government, which qualifies as a change in law. The cess accounts for about 65 per cent of the relief granted to the Sasan project and the imposition of the cess on the sale of power is unique to the state of Madhya Pradesh. Hence, the excise duty change and the cess are not dynamic tools prone to fluctuation, the company has stated.

It also said that it did not make any low-tariff bids. Its competitive bid submitted had nothing to do with the reliefs provided and any other bidder or developer facing a similar situation would have been provided identical relief. There had been no attempt on the part of the company to repudiate the contract due to any cost pressures, it added.

The company said it has passed on Rs 22 crore per year to power procurers on account of electricity duty reduction. The company runs the Sasan project at a plant load factor of 95 per cent on a tariff of Rs 1.4 per Kwh, which, even after the relief, is substantially lower than the tariff of any other thermal power project in the country.

We take note of these statements and stand corrected.

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