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Reliance Power Transmission's arm Talcher-II Transmission Company has served a force majeure notice to electricity distribution utilities in Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Orissa.
The company has cited unforeseen delays in clearances for a key transmission link being executed by it as one of the reasons for serving the notice. It has not started work on the Talcher-II transmission system that was to evacuate electricity from generation stations in the eastern region to mainly the southern States. The link was to be up by October 2012.
The force majeure clause releases a party to a contract from liability if some unforeseen event beyond its control prevents it from performing its obligations under the pact. The company has cited force majeure and a ‘change in law clause' of the transmission service agreement (TSA), specifically referring to “unforeseen and undue” delays in the grant of ‘164 Approval'.
Section 164 of the Electricity Act, 2003 pertains to the requisite permission for the placing of electric lines in accordance with the provisions of the Indian Telegraph Act, 1885.
In its notice, the company has claimed that the viability of the project has been impaired by “continuance of the force majeure event”, citing cost escalation in inputs — aluminium, steel, cement — between September 2009 and May 2011.
The Reliance Power-arm has also stated that the Power Ministry had, in end-May, asked for an affidavit to be submitted to the effect that ‘no objections' were received in respect of the project. This has been cited by the firm as a “new requirement” for the grant of the ‘164 Approval'.
The beneficiary States, led by Andhra Pradesh, have now asked Power Grid Corporation to ensure the project is executed in time. “The TSA does not provide any specific timeframe for grant of the ‘164 Approval'.
Besides, the Central Government seeking an affidavit on objections to the project clearly does not constitute any deviation in the set procedure,” a senior official from one of the beneficiary States told Business Line .
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