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Big relief for PSPCL as it wins legal battle against Nabha plant
The victory in the legal battle, which started in 2012, will now lead to ₹2,500 crore saving for the PSPCL as the power corporation is deducting 9.4 paise per unit from the NPL since it started operation.
Punjab State Power Corporation Limited (PSPCL) has won a decade-long battle against Nabha Power Limited (NPL) as the Supreme Court (SC) has rejected the plea of the private thermal plant to grant it the benefits of a mega power project.
The victory in the legal battle, which started in 2012, will now lead to ₹2,500 crore saving for the PSPCL as the power corporation is deducting 9.4 paise per unit from the NPL since it started operation.
The NPL entered into a power purchase agreement with the PSPCL in January 2010. Later in 2012, the NPL filed a petition before the Punjab State Electricity Regulatory Commission, Chandigarh, that it had considered and factored the benefits available to the project under the Mega Power Policy, 2009, when it submitted the bid and had passed on such benefits to the PSPCL by way of the tariff it quoted. It had quoted benefits of 9.4 paise per unit. It was demanding fiscal benefits due to customs duty exemptions to the tune of ₹2,500 crore in terms of PPA.
The state commission rejected the prayers. It held that the mega power status was made available to a project only when the state in which the project is being set up had undertaken the reforms mentioned in the ministry of power’s letter dated December 3, 2009, that these reforms were undertaken by the government of Punjab only on April 16, 2010, and intimated to the central government.
The NPL had demanded that a press release be issued in 2009 listing the benefit of the mega power project, thus they calculated it before giving the bid.
The Supreme Court has now said that the benefit of the mega power status cannot be granted with effect from October 1, 2009, considering the fact that it was only after a gazette notification that the public at large were informed of the decisions of the government, and the gazette notification was issued only in December 2009.
The SC stated that in the NPL case with the press release on October 1, 2009, a new legal regime commences, and, on that basis, it is contended that the NPL in its bid of October 9, 2009, factored the altered position, including the fiscal benefits due to customs duty exemptions.
The SC while rejecting the appeal of the NPL upheld the observation of the PSERC rejecting its plea made on the basis of the press release. The press release in not a “law” as per the PPA, it said.
“It’s a big respite for the PSPCL as we were deducting 9.4 paise per unit and in the PPA of 25 years this amount is nearly ₹2,500 crore,” said a PSPCL official. He said that the PSPCL has fought a decade-long battle to protect the interest of consumers.
