NTPC did not abuse dominant position, says CERC2 min read . Updated: 30 Apr 2013, 02:52 PM IST
Association of Power Producers had alleged that NTPC used its position for inking PPAs for supply of 37,000MW of electricity
New Delhi: Industry lobby group Association of Power Producers (APP) may approach the Competition Commission of India (CCI) or the Appellate Tribunal for Electricity (Aptel) after its petition alleging abuse of dominant position by NTPC Ltd was rejected by India’s apex power sector regulator on Monday.
APP in its petition to Central Electricity Regulatory Commission (CERC) had alleged that NTPC used its position for inking power-purchase agreements (PPAs) for supply of 37,000 megawatts (MW) of electricity.
“The PPAs signed by NTPC are within the framework and the time permitted under the tariff policy," CERC said, rejecting APP’s request to refer the matter to CCI.
“We will take a legal opinion whether to approach the Competition Commission of India or Aptel. NTPC has pre-empted the competition space and has cornered the medium for risk-free projects. The government doesn’t want to expose NTPC for competitive bidding," APP director general Ashok Khurana said.
APP had alleged that with the government’s tariff policy exempting the public sector projects from competitive bidding till 5 January 2011, India’s largest power generation utility signed PPAs of 37,000MW between 1 October 2010, till the exemption date of 5 January 2011. Starting in 2011, NTPC started to compete to secure power projects. Until then, it was building plants on a cost-plus basis, which means it gets to charge a price that factors in the cost and a certain return.
“The order further boosted the power utility plan to add 37,000MW by the 13th Plan and supply the electricity so produced to 37 beneficiaries, across the country through PPAs signed during the period," an NTPC spokesperson said.
NTPC will have to start competing in 2011 with private sector rivals for government projects, with the power ministry opposed to any extension of the current system under which these are awarded to public sector companies without a bidding process, Mint reported on 14 July 2010.
“The petitioner has submitted that NTPC had already signed PPAs for supply of 9,000MW of electricity between 1.4.2010 and 30.9.2010, thus making the PPAs signed during 2010-11 (up to 5.1.2011) for supply of about 47,000MW of power which is in sharp contrast to its signing of PPAs during 2008-09 and 2009-10 which were only for 5,820MW and 8,442MW respectively," CERC said.
“This is inherently wrong. NTPC has booked space for the 12th, 13th and even the 14th plan projects," APP’s Khurana said.
“NTPC cannot be said to be a dominant player in the market with only 19.5% of the total installed capacity in the country," CERC said in its judgement.
APP also alleged that NTPC by using its dominant position in the Indian power sector has foreclosed to its competitors the upstream market for coal and finance and the downstream markets for electricity sales.
NTPC is capable of generating 41,184MW of electricity with 30 projects, including the ones with the joint venture partners. India has a power generation capacity of 223,343.6MW. Of this, 130,221MW is coal-based. Coal demand in India is expected to grow from 649 million tonnes (mt) a year now to 730 mt a year in 2016-17, making the country heavily dependent on more expensive, imported coal, given that the projected local availability is only 550 mt per year.