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Regulator upholds NTPC's power buy pacts

State-run generator had inked power purchase agreements with 37 beneficiaries for 37,000 Mw of new generation capacity

Sanjay Jog  |  Mumbai 

The Central Electricity Regulatory Commission (CERC) has dismissed a petition filed by private power companies that claims state-run generator NTPC Ltd “abused its dominant position” in the sector by entering into long-term purchase deals with distribution companies (discoms).

NTPC, the country's largest power producer, had inked power purchase agreements (PPAs) with 37 beneficiaries for around 37,000 Megawatt of new generation capacity between October 1, 2010 and January 5, 2011 — the cut-off date for a mandatory shift to a tariff-based competitive bidding regime.

The Association of Power Producers (APP), which represents private power companies in the country, in its petition, alleged NTPC had achieved near-absolute horizontal foreclosure in the power sector through its PPAs, making it difficult for new players to enter the market.

In its ruling, the electricity regulator said NTPC’s move could not be termed as abuse of its position or anti-competitive. Further, CERC ruled the petitioner’s allegation of escape of regulatory oversight in the matter of tariff charged or chargeable by NTPC could not be sustained.

“We hold that the PPAs signed by NTPC are within the framework and the time permitted under the tariff policy and therefore, no direction is called for under the section 60 of the Electricity Act, 2003. We do not consider it necessary to refer the matter to the Competition Commission of India for its opinion,” CERC said.

APP argued NTPC’s move to sign PPAs was with a clear intention of bypassing the impending competitive bidding. Besides, the petitioner contended that cost-plus tariff, which NTPC proposed to charge for supply of power would be prejudicial to the interest of the consumers.

“We would not like to comment on CERC’s judgement. However, these large number of PPAs foreclose the space for the private sector and does not expose the public sector to competitive pressure as envisaged in the Electricity Act, 2003,” Ashok Khurana, director general of APP, told Business Standard.

NTPC declined to comment for this story.

According to CERC, it needs to be emphasised that the discoms and state electricity boards, which have signed PPAs with NTPC, have planned their future requirement of power accordingly. “It’s therefore in the interest of the consumers that these projects are implemented in a time-bound manner. We expect NTPC to take expeditious action to complete all projects for which PPAs have been signed within the 13th five-year Plan.”

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First Published: Tue, April 30 2013. 00:47 IST