PSPCL’s pact with energy firms “one-sided, tilted in favour of pvt discoms”, says Punjab AG

PUNJAB ADVOCATE GENERAL Atul Nanda on Thursday slammed these liable for drafting PPAs for the state with energy firms, calling them “one-sided” and “tilted in favour of personal energy producer.” The transfer comes a fortnight after Punjab Chief Minister Captain Amarinder Singh sought a authorized opinion on renegotiating controversial PPAs with GVK Energy and Damodar Valley Company (DVC) for Raghunathpur Thermal Energy Plant.

In his authorized opinion submitted to the CM, Nanda has additionally mentioned that the PPAs have been drafted in a fashion that PSPCL can by no means terminate such agreements until it consciously breaches them. In that case, the utility must face big monetary implications. He has mentioned that the PPAs have put PSPCL in an “extraordinarily weak bargaining place”. He opined that the federal government ought to repair accountability as to how such PPAs have been executed within the first place.

The Advocate Basic has additionally sought an inquiry into the “wrongdoing” whereas stating, “On the one hand the facility producers get pleasure from excessive mounted prices through the time period of the PPA after which turn out to be entitled to very large damages in regulation when PSPCL has to breach the PPA merely with the intention to exit it. It should be inquired as as to if the language of those PPAs, as executed, have been appropriately legally vetted, whether or not the exorbitant recurring, mounted long run prices — amounting to lots of if not hundreds of crores of rupees — was taken into consideration and whether or not the folks liable for authorising the execution of those agreements as drafted have been aware of the monetary and authorized implications of the identical.”

The authorized opinion locations on report the allegations that the earlier SAD-BJP authorities has been dealing with flak for coming into into PPAs to allegedly “profit the personal energy vegetation.” It additionally brings into focus the dearth of motion by the incumbent authorities even because it had promised a white paper on the difficulty. Even after finishing 4 and a half years, the federal government has not been in a position to do something in regards to the PPAs but.

Not too long ago, the difficulty was raised by a number of Congress MLAs throughout their assembly with Mallikarjun Kharge. In its report, the Kharge panel requested the CM to renegotiate the PPAs. The CM mentioned the federal government was within the technique of doing so. However with the AG’s opinion now, the federal government has hit one other roadblock, because the phrases of agreements have been drafted in such a means that the facility utility will likely be unable to terminate the agreements.

In his opinion, the AG has mentioned, “I need to report my concern as to the way wherein these PPAs have been structured and signed. The language of each these PPAs places PSPCL into an especially weak bargaining place, loaded with astronomical mounted expenses and with all rights are tilted in favour of the personal energy producers. The doc reads like a one-sided settlement in favour of the personal energy producer and towards PSPCL.”

The AG notes that that the PPA dated April 14, 2000, signed with GVK Energy, obligates PSPCL to pay big Annual Fastened Prices which is pending adjudication earlier than the PSERC. As per the PSERC calculations, that is prone to be decided at Rs 500 crore each year, versus GVK’s declare of Rs 900 crore each year. The PPA doesn’t even give a proper to termination to PSPCL. It is just when the PSPCL breaches the PPA beneath clause 14.2 that GVK has the choice to both terminate the PPA or power PSPCL to carry out its obligations by looking for particular efficiency of the PPA.

“Even when and when GVK chooses to decide to terminate, as per Clause 14.4, then for a interval of three years PSPCL must proceed to pay capability expenses of Rs 1295 crores. No get together, a lot much less a public utility whose final endeavour must be to guard the general public exchequer, might ever have entered into/executed such a defective and one-sided settlement,” the AG has mentioned.

He has additional said that the place of DVC is even worse, the place PSPCL is paying an exorbitant price of Rs 4.56 kwh. “Right here, a 25-year-PPA has been signed which has no termination clause in any respect. As per the PPA, after each 5 years, PSPCL can solely submit — with regard to the Ragunathpur Plant — to DVC a proposal to overview the PPA and even that is to be on a mutually agreed foundation. Thus, PSPCL is burdened with a 25-year-agreement involving mounted expenses, whether or not or not such electrical energy is drawn and with out even a authorized choice to terminate.”

The one course left accessible is for PSPCL to cease performing the PPA which is able to put it in a authorized breach of the settlement after which permit DVC to assert damages in regulation. The DVC on Might 10, 2020, in actual fact rejected PSPCL’s proposal to cease drawing energy beneath this PPA.

“I might strongly urge PSPCL and the division of energy to look at as to how such PPAs might have been executed within the first place and to repair accountability. The PPAs have been drafted in a fashion that PSPCL can by no means terminate such agreements until it consciously breaches them,” he says.

The AG has additionally mentioned that for the reason that PPA doesn’t include any provision on this respect, if DVC doesn’t agree for termination, it’s prone to mount a authorized problem.

Apparently, the federal government was within the technique of making ready a white paper and the CM had referred to as a gathering of some ministers to run it by them. Jails Minister Sukhjinder Singh Randhawa and Rural Improvement Minister Tript Rajinder Singh Bajwa had rejected the white paper stating it skipped fixing accountability. Randhawa had later mentioned that the officers who have been liable for drafting of the PPAs have been those making ready the white paper additionally.

The authorized opinion was sought from Advocate Basic after the intervention of the Chief Minister himself, who’s realized to have made a noting on the file that the matter is referred to the AG. Earlier than this, the CMD of PSPCL had in June said that there was no appreciable development in energy consumption within the state in the previous couple of years and solar energy was accessible at Rs 2.50 to Rs 2.75 per unit. The CMD had demanded that the prevailing expensive PPAs have to be reviewed and a authorized opinion be sought. A day later, ACS, Energy, Anurag Agarwal had said that the PSPCL ought to first do due diligence after which include choices. Agarwal had mentioned that the matter must be referred to a reputed advocate with expertise within the energy sector or the AG.

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