Lodha panel to hear PSPCL’s claim of Rs 951-cr damages

Aman Sood

Tribune News Service

Patiala, August 25

An arbitration panel headed by former Chief Justice of India RM Lodha has started the process of hearing a recovery claim filed by Punjab State Power Corporation Limited (PSPCL).

The power corporation has sought liquidation damages to the tune of Rs951 crore from Sterlite group-backed 1980 MW thermal power plant at Banawala village in Talwandi Sabo. The group has failed to commission the three units as per the scheduled time as mention in the power purchase agreement (PPA) signed by it with the PSPCL.

The hearing assumes significance as it is one of the biggest arbitration cases that initially went to the Punjab State Electricity Regulatory Commission (PSERC), but the latter passed it for arbitration as the amount was large. The power utility opposed the decision and filed a petition with the Appellate Tribunal for Electricity (APTEL). However, APTEL upheld the PSERC decision.

As per the PPA, the first of the three units of 660 MW each of Talwandi Sabo thermal plant was to be commissioned by 31 August 2012, second by December 31, 2012, and third by April 30, 2013, but no unit was commissioned as per the schedule.

As per the agreement, the PSPCL could have encashed Rs150 crore bank guarantees within 10 days of expiry of one year from the scheduled date of commissioning. Sources said the PSPCL officials failed to ensure penalty by giving the defaulting company a few months breathing period instead of encashing the bank guarantee with immediate effect.

The plant management objected to it on the grounds that the delay did not cause any loss to the power utility and therefore, the damages need not to be paid. In the power sector, liquidation damages are agreed upon by both parties entering into a contract to ensure that in case of any breach of trust in terms of the agreement, the aggrieved party can claim as compensation.

The Aam Admi Party has already accused the PSPCL management of not making “enough efforts to recover the penalty amount from the firm”.

KD Chaudhri, CMD, PSPCL, said they had opposed the matter being referred to the arbitration panel, but after the PSERC passed written orders they had to follow it. “There was no delay from our side ever in this case and the sole aim is to recover the damages from the private firm for the delay in commissioning the plant,” he said.

The 1,980-MW Talwandi Sabo thermal plant was awarded to Vedanta Group company Sterlite Energy Ltd on build, own and operate (BOO) basis and the PPA was signed on September 1, 2008.