Sc Asks Mpeb For Fresh Decision On Escrow
The Supreme Court has directed the Madhya Pradesh Electricity Board (MPEB) to take a fresh decision on the escrow cover to be given to independent power producers (IPPs) within two months.
The apex court in its order said "MPEB is directed to take a fresh decision for giving priority to escrow coverage after considering its escrowable capacity and other relevant factors."
The order further said "MPEB shall do so within two months from the date (February 16) of the order".
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The Supreme Court also quashed the decision to give priority to the Pench power project and dismissed all appeals filed by the
Mukund-promoted ITPL, the Jindal group, the Bhilai group,
the Madhya Bharat Power Company and the Global
Board Ltd.
The court, however, partly allowed the appeal filed by the STI Power, promoters of a 300 mw liquid fuel power project in the state.
The court found no fault with the least tariff criteria
followed by the board for the escrow cover and upheld the board's decision to recommend escrow to Maheshwar hydel project (82 mw), the Daewoo promoted Korba project (1,070 mw) and the Bina project
(578 mw).
On the move to give escrow cover to the Pench power project, which was shortlisted for the cover along with Bina and Daewoo projects, the Supreme Court stated that the project cost was not properly evaluated and the cost for supplying water from the dam was not taken into consideration.
The apex court also found that the coal linkage, which was suggested by the state government, was neither approved by the coal companies nor by the railways.
As contended by some of the companies, the state's commitment to give an escrow cover under the PPAs, the court in its order said "opening and maintaining of an escrow account or an escrow agreement are not the statutory requirements and therefore, merely because PPAs contemplate maintaining escrow accounts, that obligation cannot be regarded as statutory."
The Supreme Court also dismissed appeals on the least tariff principle followed by the state for awarding the escrow cover and stated that "to give priority to that project, which will supply electricity to MPEB at a cheaper rate far from being a hoax or as an excuse must be regarded as a rational criteria because it will be more beneficial to MPEB and the general public who are the ultimate consumers of electricity."
The Supreme Court's verdict comes after some IPPs in the state challenged the high court judgement which asked the state government to proceed on the escrow allocation to the shortlised IPPs and the state government to process the escrow cover for liquid fuel projects.