Maharashtra State Electricity Distribution Co. Ltd. directed to pay dues of Rs 2,300 crore to the Ratnagiri Gas and Power Pvt. Ltd.

Appellate Tribunal for Electricity (APTEL): While upholding the order of Central Electricity Regulatory Commission vide which Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) was directed to pay the capacity charges and energy charges as per terms and conditions of the Power Purchase Agreement, APTEL asked MSEDCL to pay dues of Rs 2,300 crore to the Ratnagiri Gas and Power Pvt. Ltd. (RGPPL). APTEL also dismissed the appeal filed by MSEDCL in the matter. In April 2007, RGPPL and MSEDCL had entered into a power purchase agreement by which RGPPL was to supply 95% of its generated power to MSEDCL. According to MSEDCL, the terms of the PPA showed it was legally bound to purchase only that power produced using domestic gas or LNG. However, due to a decline in the supply from the Krishna-Godavari Basin, RGPPL was forced to use imported gas, processed at its gas terminal to re-gasified liquefied natural gas (R-LNG). However, MSEDCL refused to purchase power, claiming that the cost of the power was higher than anticipated. In return, RGPPL demanded payment of the fixed costs, stating that though it was ready to supply power using R-LNG, MSEDCL was reluctant to buy it. MSEDCL refused to pay claiming that the power purchase agreement with RGPPL states that it must get a clearance from the Discom before entering into any gas purchase agreement but said clearance was not obtained in the matter. After perusal of relevant documents and hearing both the parties, APTEL noted, “The appellant (MSEDCL) is under obligation to pay capacity charges to respondent No. 2 (RGPPL), power generating company, even if the appellant does not give consent to GSA/GTA (Gas Supply/ Transportation Agreement) because the appellant in place of natural gas or fuel is using R–LNG (primary fuel).”Maharashtra State Electricity Distribution Co. Ltd. v. Central Electricity Regulatory Commission, 2015 SCC OnLine APTEL 1, decided on 22.04.2015

 

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