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SC admits Centre’s plea against power producers

Posted by on July 5, 2011 0 Comment

The Supreme Court has admitted the Centre’s plea that the power generators are reluctant to adopt the competitive bidding but go for the MoU with the discoms for Power Purchase Agreements which adversely affects the consumers and derails the electricity sector reforms in the country.

The government reached the apex court challenging the order of the Appellate Tribunal for Electricity which had upheld the legality of the MoU signed between Maithon Power and Tata-owned discom NDPL. It was signed without following the bidding process.

A three-judge bench headed by Chief Justice SH Kapadia on Monday said, “This is a very important issue which ultimately affects the consumers at large. We straightaway admit the appeal” . “There is reluctance on the part of the power generators not to adopt competitive bidding but to go for MoU which will derail and delay the progress of power sector reform and availability of cheaper power to the ultimate consumers in the society and also increase the possibility of favouritism,” said centre in its appeal. The government said, “It is pertinent to submit that if competitive bidding route is adopted the rate would be very reasonable and profiteering could be restricted and ultimately the consumers will be benefited to the lower tariff.”

It said the competitive bidding process for the power purchase agreement should be followed as it brings down the tariff rates benefitting the consumers at large. Such route adopted for the mega power projects have brought the competitive rates very low. It was Rs 1.196 per kw/h for Sasan power project in MP, Rs 2.264 per kw/h for Mundra power project in Gujarat, Rs 2.33 per kw/h for Krishnapatnam project and Rs 1.77 per kw/h for Tilaiya power project , said centre. Maithon Power Ltd and NDPL had signed the Power Purchase Agreement on April 30, 2009. It was singed without the generator company following the bidding process for it.

It was upheld by the Tribunal in its order passed on March 31, 2010. The Centre, said, “in case the contention of the Tribunal is accepted then section 63 of the Electricity Act, 2003 will become redundant and nugatory and there will not be any takers adopting competitive bidding route for tariff determination”. Economic Times

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