Compensation case: Sasan Power directed to submit proposal to discoms

M. Ramesh Chennai | Updated on March 22, 2013 Published on March 22, 2013

The Central Electricity Regulatory Commission (CERC) has asked Sasan Power Ltd to submit a “concrete proposal” to the companies that have contracted to buy power from it.

The issue relates to Sasan Power’s petition to the Commission seeking compensation on account of “changes in law during the construction period and compensation due to unprecedented, unforeseen and uncontrollable depreciation of the Indian rupee”.

Sasan Power Ltd is a special purpose vehicle of Reliance Power Ltd, which is putting up a 3,960 MW coal-based power project at Sasan, Madhya Pradesh. Reliance Power won the bid in 2007, quoting a tariff of Rs 1.19 per kWhr for 25 years.

The company is now seeking compensation for both the depreciation of the rupee and other “change of law”. A Reliance Power spokesman has been quoted as naming water charges, royalty rates and changes in tax rates as some of the instances of the change of law.

Sasan Power told CERC last week that, following procedures set in the power purchase agreement, it had given a notice of dispute on December 15, 2012, and had subsequently convened a meeting of procurers on December 29. The procurers in this case are 14 electricity distribution companies across seven States. The ‘lead procurer’ is the M.P. Power Management Company.

Sasan Power also told the Commission that the lead procurer repudiated its (Sasan’s) claim on January 7, this year. After hearing the parties, the Commission directed Sasan Power to submit the “concrete proposal”. Following this, M.P. Power Management Company would convene a meeting of procurers to discuss the proposal on April 10.

UMPP saga

The project is one of the four ultra mega power projects of 4,000 MW each, which were created by the public sector Power Finance Corporation and then transferred through a bidding process to companies that offered to sell power at the least cost.

Reliance Power bagged three of the four — Sasan, Krishnapatnam (Andhra Pradesh) and Tilaiya (Jharkhand). Tata Power won the other — Mundra — quoting a tariff of Rs 2.26 per kWhr.

While four of the five units (800 MW each) of the Mundra project have been commissioned this year, the first of the six units (660 MW each) of Sasan began pumping electricity into the grid earlier this month.

There has been little progress on the other two UMPPs due to a variety of reasons. Now, Tata Power and Reliance Power want to be paid more. Tata Power has asked for hike in tariff, of at least 40 paise, while Reliance Power, through the petition to CERC has asked for “compensation”.

Published on March 22, 2013
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