SC refuses to interfere with proceedings for recovery of ₹7,114 cr from MSEDCL

The Supreme Court has refused to interfere with the execution proceedings initiated by RGPPL to recover around ₹7,114 crore from MSEDCL. RGPPL had approached the Central Electricity Regulatory Commission in 2012 for resolution of issues arising from non-availability of domestic gas and directions to MSEDCL to clear outstanding payments. The court held that MSEDCL was liable to pay fixed charges to RGPPL and that prior approval was not required for changing fuel for power generation.

MUMBAI: The supreme court recently refused to interfere with the execution proceedings initiated by Ratnagiri Gas and Power Pvt Ltd (RGPPL) for recovery of around ₹7,114 crore from the Maharashtra State Electricity Distribution Company Ltd (MSEDCL).

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RGPPL, which has taken over the Dabhol power project in Konkan, had in 2012 approached the Central Electricity Regulatory Commission (CERC) for resolution of issues arising out of the nonavailability of domestic gas and directions to MSEDCL to clear the fixed charges and other payments due from it.

On April 10, 2007, RGPPL stated that the MSEDCL had agreed to purchase 95% of the power generated at the Dabhol power plant and was to pay fixed and variable charges to the generating company under the Power Purchase Agreement executed between them.

By its order dated 30 July 2013, CERC held MSEDCL liable to pay fixed charges to RGPPL. The order was upheld by the Appellate Tribunal for Electricity (APTEL) on April 22, 2015, and though MSEDCL carried the matter further to the supreme court, the court had on May 13, 2015, disposed of its plea, terming it academic in absence of coercive steps for recovery of the pending amounts of fixed charges. The apex court, however, granted MSEDCL liberty to approach it again, whenever required.

Following the liberty granted earlier, MSEDCL recently moved the apex court again after RGPPL filed an execution application before APTEL for recovery of an amount of ₹7,114 crore, including fixed charges of ₹5,287.76 crore.

Before the apex court, MSEDCL took a stand that it was not liable to pay the excess amount demanded by RGPPL, as under the power purchase agreement it was obligated to obtain prior approval from the MSEDCL before agreeing to purchase alternate fuel and therefore it was not liable to pay additional amounts required to be paid on account of change in fuel.

The apex court, however, refused to accept the argument and held that prior approval of MSEDCL was not required for changing fuel for power generation, as the power purchase agreement envisaged recycled liquid natural gas as an alternate primary fuel. “An arrangement involving a transition from one primary fuel to another primary fuel is permissible by the clause (of the power purchase agreement), even without the appellant’s (MSEDCL’s) approval,” the court said.

The court also noted that the change in fuel was necessitated on account of an unprecedented nationwide shortage of domestic gas and therefore to meet the target availability, an alternative arrangement was required to be made.