In a blow to the Punjab State Power Corporation Limited (PSPCL), the Supreme Court has asked the state-run agency to pay Rs 1,100 crore to the Nabha Power Limited (NPL) as coal washing charges. NPL operates the Rajpura thermal power plant (RTPP).
Following the apex court order, PSPCL will end up paying around Rs 7,000-8,000 crore more for the power bought from the NPL over a period of 25 years, for which a long-term Power Purchase Agreement (PPA) was signed between the two in January 2010.
NPL, which is a subsidiary of the construction giant Larsen and Toubro (L&T), had set up the 1,400MW Rajpura thermal plant at Nalash village in the Patiala district. Sources in the PSPCL said that the additional cost which is to be paid to the NPL would eventually get passed on to the end consumers in Punjab. This could lead to a further rise in power tariffs, they claimed.
SC has asked PSPCL to refund the amount to NPL, which it has already paid from its pocket, within three months or else pay a simple interest of 12% additionally. This would mean the power utility will have to shell out an extra Rs 11 crore every month in case of delay in payment.
The dispute between the NPL and PSPCL had erupted after the corporation refused to pay for the coal washing charges claiming it was to be borne by the power producer. Contending that PSPCL had not specified any such term in the PPA, NPL moved the court.
NPL also listed other costs that were being incurred by it in terms of purchasing of coal, its washing and cost towards loss of quantity on account of washing. It said the annual charges for coal washing were Rs 350 crore.
Punjab power secretary A Venu Prasad, who is also holding the charge of chairman-cum-managing director of the PSPCL, said their legal experts were examining the court’s orders and the corporation would proceed as per their suggestions. “We will opt for a legal remedy to guard the interests of the PSPCL,” he said.
What’s the row about?
Rajpura thermal plant gets its coal from the South Eastern Coalfields Limited (SECL)
The railways provide a 1,600km linkage to transport coal from SECL to Rajpura in Patiala
Whether the coal washing charge should be borne by the power producer or the power procurer became the bone of contention between PSPCL and NPL
PSPCL refused to pay charges for liaising, transit, handling and third-party testing of coal
NPL claimed it had to bear Rs 350 crore annual cost for washing of coal
NPL also claimed it was also incurring the carriage charges for transporting coal from Rajpura railway station to the plant site on account of incomplete land acquisition by Punjab government for a rail link