The Hindu Business Line : APTransco issues legal notice to Spectrum Power

THE Transmission Corporation of Andhra Pradesh (APTransco) has issued a legal notice to Spectrum Power Generation Ltd (SPGL), an independent power project, to show cause why it "should not reduce" the capital cost of Rs 748.43 crore of the project by Rs 97.71 crore.

The notice dated January 30, 2004 pointed out at the statement made by the former Managing Director of SPGL before the Enforcement Directorate on April 26, 2002.

As per the statement, the notice stated that Towanda Services Ltd (TSL) was established by Mr M. Kishan Rao in British Virigin Islands and it was "fully owned and controlled" by him. APTransco also cited that TSL was solely established to receive amounts from Rolls Royce as business development charges for arranging EPC and O&M contracts between Rolls Royce and SPGL.

As per the agreement, TSL was entitled to receive an agency commission of $19.3 million (Rs 60.8 crore @ Rs 31 per dollar as in the power purchase agreement) Ponds 1.5 million (Rs 7.11 crores @ Rs 47.4 per pound as in PPA).

This apart, the notice stated that SPGL had entered into "five (bogus) contracts for various civil works, amounting to Rs 29.3 crore". APTRansco had pointed out that while assessing the income tax returns of Blue Star Constructions, one of the civil contractors of SPGL, the Joint Commissioner of Income Tax had established that the assessee company had "lent its name to facilitate transfer of funds and the contract entered is a sham transaction and has not executed any work on behalf of SPGL".

The notice also said that the Commissioner and Inspector General of Registration and Stamps, Andhra Pradesh had "confirmed that the stamp papers on which the agreements were entered for civil contracts were not sold to the persons indicated in the stamp papers. It can therefore be construed that the agreement entered for civil works are bogus".

Besides, the City Civil Court, Hyderabad, in its judgement dated August 23, 2002, had directed SPGL to rectify the register of shareholders by deleting shares to the extent of Rs 50 lakhs held by Bambino Finance Ltd, as they have been issued against no consideration.

In view of the above, APTransco asked SPGL to show cause why it should not reduce the capital cost of SPGL by Rs 97.71 crore (Rs 60.8 crores + Rs 7.11 crore + Rs 29.3 crore + Rs 0.5 crore).

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