Companies

Private firms move CERC against NTPC's power-buy deals

Our Bureau New Delhi | Updated on May 13, 2011 Published on May 10, 2011

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It's PPAs anti-competitive in the run-up to tariff-based bidding regime





Private power developers, including Tata Power, Reliance Power, Essar, GMR and Jindal Power, have jointly moved the electricity regulator against state-owned NTPC Ltd.

The private players have alleged that the haste shown by NTPC in signing power purchase agreements (PPAs), in the wake of an impending shift to a tariff-based bidding regime from January 2011 was a clear “abuse of its dominant position” in the power sector.

NTPC, the country's largest generator, had inked PPAs with distribution firms for around 37,000 MW 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 petition, filed on Tuesday by the Association of Power Producers, has sought a “prudent examination” of the “anti-competitive conduct of NTPC” in inking these pacts “to escape regulatory oversight and somehow tie down and monopolise scarce resources of the economy.”

‘Uncompetitive'

The APP, representing an upcoming project portfolio of around 120,000 MW and with nearly all major private developers among its members, filed the petition through law firm J Sagar Associates.

The main contention is that by going on a PPA signing spree, NTPC insulated itself against competition for bagging new projects, at least for a better part of the next 10 years. At the same time, the larger objective of projects being awarded to players based on a fair bidding process — in line with the provisions of the Government's Tariff Policy and subsequent ruling by the CERC — have been flouted. The reason for the PPA signing spree, the private players allege, becomes clearer in the context of “NTPC's continuous failures in competitive bidding.”

The petition wants the Commission to invoke its authority under “Section 60 and 66 of the Electricity Act 2003 and direct NTPC not to execute the contracts” and declare PPAs entered between October 1, 2010 and January 5, 2011, as being “null and void”.

By January 5 cut-off date, NTPC had managed to wrap up deals for around 1,00,000 MW capacity. Of this, 191 PPAs for over 47,000 MW were inked during 2010, a majority of which came in the last three months of the year. The company currently has a capacity of 33,000 MW and another 15,000 MW is under construction.

Published on May 10, 2011
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