Rs 5,400-crore SC relief for PSPCL, power consumers

In a major financial relief to lakhs of power consumers in Punjab, the Supreme Court has dismissed appeals filed by two private power plants based in the state seeking over Rs 5,400 crore as compensation as it found the “appeals devoid of merit”.

The saved money would help Punjab State Power Corporation (PSPCL) to keep per unit cost down and ultimately benefit the consumers.

On August 19, the Supreme Court dismissed both appeals filed by Nabha Power Limited (NPL) and Talwandi Sabo Power Limited (TSPL) seeking compensation of Rs 5,460 crore from PSPCL under deemed export benefits and change in law.

It upheld the impugned judgment of Appellate Tribunal for Electricity of July 4, 2017, confirming that the appellants were not entitled to deemed export benefits and that no "change in law" event had occurred warranting compensation under the power purchase agreement (PPA).

The two private thermal power plants wanted to claim “deemed export benefits” under the Foreign Trade Policy 2009–2014. The IPPs eyed the compensation, citing a change in law under the terms of their PPAs with PSPCL.

The Supreme Court judgment mentions that the government decisions and clarifications could not be considered as “change in law” in PPAs .The judgment was given by a bench comprising Chief Justice Of India BR Gavai and Justice Augustine George Masih.

The Supreme Court held that power generators which entered into PPAs relying on the fiscal benefits, later withdrawn by the government, cannot seek compensation, arguing that the sudden withdrawal constituted the "change in law'.

NPL and TSPL had claimed a compensation of Rs 1,980 crore and Rs 3,480 crore, respectively, over the PPA terms. The Supreme Court held that the essence of deemed export benefits lay in the supply of goods to power projects, not in power procurement arrangements.

Hailing the judgment, a former power engineer with PSPCL said: “Former PSPCL CMD was instrumental in defending the PSPCL stance at every level to ensure that power cost remains unaffected."