R-Power moves for arbitration on tariffs
R-Power moves for arbitration on tariffs
Mumbai: Anil Ambani-controlled Reliance Power Ltd (R-Power) has begun arbitration proceedings against 11 power distribution companies (discoms) to push for an increase in tariff from its Krishnapatnam Ultra Mega Power Project (UMPP).
A statement issued by R-Power on Monday said it was forced to move the Indian Council of Arbitration (ICA) since the 11 discoms belonging to the four state governments of Andhra Pradesh, Tamil Nadu, Karnataka and Maharashtra, had failed to respond to the dispute resolution notice it had sent them in March. ICA is the apex dispute resolution services body authorized to appoint a panel of arbitrators to resolve contentious issues. R-Power is developing a 4,000 megawatts (MW) UMPP project on the coast of Andhra Pradesh that will be fuelled by coal imported from Indonesia. In September, the Indonesian government changed the pricing policy for exported coal, and linked it to the international spot market price. The move made Indonesian coal dearer by around by 150%, according to a claim by industry lobby group Association of Power Producers (APP) in a presentation to the power ministry. The move also nullified the long-term coal procurement contracts signed by Indian companies such as Tata Power Co. Ltd, Adani Power Ltd, R-Power, and JSW Energy Ltd. Around 15,000 MW of power projects with approximate investment of 75,000 crore based on imported coal were affected by the Indonesian decision.
Similarly, JSW Energy also moved the Maharashtra Electricity Regulatory Commission (MERC) for a revision of the tariff agreement it signed with the Maharashtra government-owned Mahavitaran. However, MERC rejected JSW Energy’s plea and JSW Energy has moved the ATE against MERC’s decision. Its appeal is pending before ATE.
Last month, union power minister Sushilkumar Shinde said in an interview to business news channel CNBC-TV18 that “the central government is going to refer the issue of tariff revision to the Central Electricity Regulatory Commission (CERC)."
Shinde said in a telephonic conversation with Mint on Monday that the matter has not been referred to CERC as yet “due to some technical issues".
Kameswara Rao, executive director and leader of energy, utilities and mining practice at audit and consulting firm PricewaterhouseCoopers Pvt. Ltd said, “Arbitration seems to be the only way out of current impasse. There is no deficiency in the tender documents as such, but the situation has arisen out of an extraordinary action of the Indonesian government, which upset the bid model that developers have relied on. As this is bid-specific, a standard solution cannot be prescribed for all, and an individual work-out seems the only way out." A managing director of one of the state utilities which has signed the power purchase agreement with R-Power said any solution had to be in the interest of all the stakeholders. The person asked not to be identified.
R-Power has sued HT Media Ltd, publisher of Mint, in the Bombay high court over a 12 May 2010 front-page story in Mint that it disputed. HT Media is contesting the case.
makarand.g@livemint.com
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