Punjab power regulatory panel denies benefit to L&T for Rajpura thermal plant

CHANDIGARH: Acting on a petition filed by Larsen and Toubro Power Development Limited building the 1,400-mega watt thermal power plant in Rajpura, the Punjab State Electricity Regulatory Commission (PSERC) has rejected their claim for additional benefit and instead has issued directions to pass it on to consumers.

In its order of November 12, the regulatory commission has disposed of the petition filed after a dispute arising out of the power purchase agreement (PPA) between L&T and Punjab State Power Corporation Limited (PSPCL). Chairperson Romila Dubey and members Virinder Singh and Gurinderjit Singh signed the order.

The commission, in its order, disallowed the additional benefit of about Rs 600 crore already received by L&T in view of the mega power policy-2009, which was revised by the union cabinet on October 1, 2009 before the last date of the bid submission by them.

ORDERS FOR PASSING THE R600-CR BENEFIT ON TO CONSUMERS

According to the policy, the promoter of the mega power plant is entitled to reimbursement of 8.5% excise duty in case the equipment used in the plant is manufactured by the promoters indigenously from its own sources or reimbursement of the same amount of customs duty in case the equipment is imported.

The total cost of the project is Rs 7,000 crore and the promoters have already received Rs 600 crore from the central government.

But, according to the commission order, the benefit received by the promoters should be passed on to consumers, which has been transferred by reducing tariff by 10 paise per unit for the power generated from the thermal plant. The present power supply rate from the thermal plant is Rs 2.99 per unit. The capital benefit of Rs 600 crore, when converted into tariff comes out to a total benefit of Rs 100 crore per annum for a period of 25 years.

Earlier, submitting its reply to the commission, on the petition filed by L&T, PSPCL had contended that the cut-off date of the bid was October 2, 2009, whereas the notification for the mega power policy of 2009 under which the project got status as a mega power project (MPP) was issued by the ministry of power on December 11, 2009.

“The fiscal benefits of the mega power status were not available on the cut-off date and therefore the ‘Change in Law’ claim is required to be passed on to the PSPCL by way of reduction in tariff benefiting the consumers,” says the order.

Staking its claim, L&T had submitted that the union cabinet’s decision to modify the Mega Power Policy-2006, removing the condition of selling power to two or more states for thermal projects of 1,000 MW or more capacity to be eligible for benefits under the policy was taken on October 1, 2009 and as such the project became eligible as MPP for the benefits under the Mega Power Policy-2009.

The MPP status to the project was given on July 30, 2010 after the Punjab government agreed to fulfil the conditions required in respect of carrying out the necessary reforms for enabling a project being set up in the state for grant of the MPP status.

The commission ruled that the project became eligible for grant of the MPP status and acquired it only after the state government carried out the requisite reforms on April 16, 2010.