Petition No. 159/MP/2012. Case: Coastal Gujarat Power Limited Vs Gujarat Urja Vikas Nigam Limited, Vadodara and Ors.. Central Electricity Regulatory Commission
| Case Number | Petition No. 159/MP/2012 |
| Counsel | For Appellant: Shri Aspi Chenoy, Sr. Advocate, Shri Amit Kapur, Advocate, Ms Sugandha Somani, Shri Apoorva Mishra, Shri Abhishek Munot, Shri Bijoy Mohanty and Shri B.J. Shroff, Advocates, CGPL, Shri R Subramanyam, Shri Saurabh Shankar, Shri Sandeep Mehta, Ms Smera Chawla and Shri Arun Srivastava, for Tata Power and For Respondents: Shri M.G. ... |
| Judges | Pramod Deo, (Chairperson), S. Jayaraman, V.S. Verma, M. Deena Dayalan, Members and A.K. Bakshi, Member (EO) |
| Issue | Electricity Act, 2003 - Sections 3, 61, 61, 62, 63, 64, 65, 66, 61(d), 62, 63, 64, 79, 79(1)(a), 79(1)(b), 86(1)(b); Income Tax Act, 1961 - Section 80IA; Indian Contract Act, 1872 - Section 56 |
| Judgement Date | April 15, 2013 |
| Court | Central Electricity Regulatory Commission |
Order:
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The Petitioner, Coastal Gujarat Power Limited, a subsidiary of Tata Power Company Limited is engaged in developing and implementing the 4000 MW Ultra Mega Power Project at Mundra in the State of Gujarat based on imported coal. The petitioner has filed the present petition seeking the following reliefs:
(a) Establish an appropriate mechanism to offset in tariff the adverse impact of:
(i) The unforeseen, uncontrollable and unprecedented escalation in the imported coal price and
(ii) the change in law by Government of Indonesia.
(b) Evolve a methodology for future fuel price pass through to secure the Project to a viable economic condition while building suitable safeguards to pass to Procurers benefit of any reduction in imported coal price.
(c) Pass any other order that this Commission may deem fit in the facts and circumstances of the present case.
Facts of the Case
The facts leading to the filing of the present petition are briefly summarized as under:
(a) Ministry of Power, Government of India issued the "Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees" on 19.1.2005 under section 63 of the Electricity Act, 2003 (hereinafter referred to as "the Act").
(b) The Central Government has been facilitating development of a number of Ultra Mega Power Projects by using the economy of scale which aims at making available comparatively cheaper power to more than one State. Mundra Ultra Mega Power Project (4000 MW) in the State of Gujarat was conceived with the purpose of supplying power to the distribution licensees in the States of Gujarat, Maharashtra, Rajasthan, Punjab and Haryana (hereinafter referred to as "the procurers"). In accordance with the Guidelines, Power Finance Corporation was notified as the Bid Process Coordinator and Coastal Gujarat Power Limited (CGPL) was incorporated on 10.2.2006 as a wholly owned subsidiary of Power Finance Corporation to undertake the process of bidding under Case 2 on behalf of the procurers.
(c) On 31.3.2006, Request for Qualification (RfQ) was issued by CGPL for selecting the successful bidder to build, own, operate and maintain Mundra UMPP to be located at Mundra in Gujarat for supply of contracted power to the procurers for 25 years based on imported coal.
(d) On 7.11.2006, 11 bidders including Tata Power Company Limited who were qualified at RfQ stage, were issued with Request for Proposal (RfP) documents. As per the RfP, the tariff to be quoted by the bidders consisted of two main components such as Energy charge and Capacity charge. As per the bidding guidelines, the above two components were further split into escalable and non-escalable components and bidders were allowed to quote based on their respective assumptions. Six bidders responded to the RfP including Tata Power Company Limited which submitted its bids on 7.12.2006. After evaluation of all the bids, Tata Power Company Ltd. was declared as the successful bidder having quoted a levelized tariff of ` 2.26367/kWh. Letter of Intent (LoI) was issued to the successful bidder on 28.12.2006.
(e) The Tata Power Company Limited acquired 100% of the shareholdings of CGPL on 22.4.2007. Thereafter CGPL as the seller entered into a Power Purchase Agreement with the procurers on 22.4.2007 for supply of 3800 MW power from Mundra UMPP at the tariff mentioned in Schedule 11 of the PPA calculated in accordance with Schedule 7 for each of the contract years during the term of the PPA.
(f) This Commission vide order dated 19.9.2007 in Petition No. 18/2007 adopted the tariff of the generating station discovered through competitive bidding under section 63 of the Act in the following terms:
Based on the facts placed on record, we find that the tariff discovery for the Mundra UMPP was the result of a transparent process of bidding in conformity with the "Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees". Accordingly, in terms of Section 63 of the Act, we adopt the tariff as quoted by the selected bidder, M/s. Tata Power Company Limited for Mundra Ultra Mega Power Project to supply power to the procurers as per their respective shares as indicated at para 4 above. The adopted tariff shall be charged in accordance with Schedule 7 of the PPA signed on 22.4.2007.
(g) The petitioner entered into a Supplemental PPA with the procurers on 31.7.2008 for advancement of the scheduled commercial operation dates in terms of Article 3.1.2(iv) of the PPA as per the following details.
(h) Mundra UMPP is envisaged to be executed based on imported coal and has an estimated coal requirement of approximately 12 MMTPA. The petitioner has made arrangement of imported coal from Indonesia by entering into Coal Supply Agreement dated 31.10.2008 with IndoCoal Resources (Cayman) Limited, a corporation organised and existing under the laws of Republic of Indonesia, for supply of 5.85 MMTPA (+/-20 %). Tata Power had also entered into an agreement with petitioner on 9.9.2008 for meeting the balance coal requirement of 6.15 MTTPA on best effort basis. Subsequently, Tata Power has assigned its agreement with IndoCoal Resources (Cayman) Limited for supply of 3.51 MMTPA (+/-20 %) (which was earlier meant for Coastal Maharashtra facility) in favour of the petitioner vide Assignment and Restatement Agreement dated 28.3.2011. The coal requirement of Mundra UMPP is stated to be met by sourcing coal on the basis of these two agreements.
(i) Government of Indonesia promulgated the "Regulation of Minister of Energy and Mineral Resources No. 17 of 2010 regarding Procedure for Setting Mineral and Coal Benchmark Selling Price" (hereinafter "Indonesian regulations") on 23.9.2010. According to the Indonesian Regulations, the holders of mining permits for production and operation of mineral and coal mines are required to sell mineral and coal in domestic and international markets including to their affiliates by referring to the benchmark price and the spot price of coal in the international market. All long term coal contracts for supply of coal from Indonesia are required to be adjusted with the Indonesian Regulations within a period of 12 months i.e. by 23.9.2011.
(j) On account of promulgation of Indonesian Regulations and escalation in international coal prices, the petitioner is stated to be supplying power to the procurers by purchasing coal at a higher price that what was agreed in the Coal Supply Agreements without any adjustment of tariff and is consequently stated to suffer a loss of ` 1873 crores per annum and ` 47,500 crores over a period of 25 years. The petitioner took up the matter with Gujarat Urja Vikas Nigam Limited (GUVNL) who is the lead procurer and the Ministry of Power, Government of India vide its letter dated 4.8.2011. The petitioner also took up the matters with the procurers in the Joint Monitoring Meeting dated 6.2.2012 for suitable adjustment in tariff. Ministry of Power, Government of India in its reply dated 30.9.2011 responded to the petitioner's representation by stating that "....PPA is a legally binding document exclusively between the procurers and the developer. Therefore, any issue arising therein is to be settled within the provisions of PPA by the contracting parties for which Gujarat being the Lead Procurer may take necessary action.....". The procurers sought some further details which the petitioner furnished by its letter dated 6.3.2012.
(k) The petitioner approached the Indonesian Government vide its letter dated 16.2.2012 requesting to exempt the existing coal supply contracts from the purview of Indonesian Regulations, without any success.
(l) IndoCoal Resources (Cayman) Limited which supplies coal to the petitioner under the Coal Supply Agreements (CSA) issued a notice to the petitioner on 9.3.2012 calling upon it to align the original CSAs with the Indonesian Regulations. The petitioner is stated to have amended the Coal Supply Agreements on 23.5.2012 and 22.6.2012 to align them with the Indonesian Regulations and to ensure uninterrupted supply of coal under the provisions on the PPA.
(m) Under these circumstances, the petitioner has filed the present petition seeking relief under Article 12 (Force Majeure) and Article 13 (Change in Law) of the PPA and section 79 read with section 61 and 63 of the Act.
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The matter was heard for admission on 19.7.2012. The Commission directed the petitioner to make a representation to the lead procurer with copy to other procurers regarding its claim for change in tariff in terms of Article 17.3 of the PPA and further directed the lead procurer, GUVNL to convene a meeting of the procurers to consider the proposal of the petitioner to resolve the issues and convey the decision to the petitioner. Pursuant to our directions, the petitioner made a proposal to all procurers on 27.7.2012 regarding revision of elements of tariff under the PPA to mitigate the impact of the unprecedented increase in the price of imported coal. On 3.8.2012, a Procurers' Meet was convened in which petitioner made a presentation on the revision of the Quoted Escalable Fuel Energy Charges in the PPA on account of increase in imported coal price. The procurers after considering the proposal subsequently conveyed their disapproval to the proposal of the petitioner for revision of energy fuel charge. The petitioner in its affidavit dated 13.9.2012 submitted to the Commission that since its proposal has not been accepted by the procurers, a dispute has arisen which the Commission should adjudicate in terms of Article 17.3.1 of the PPA. Thereafter, the matter was heard on admission and admitted vide the Commission's order dated 11.10.2012. The respondents including Prayas Energy Group were directed to file their objections to the petition on merit. The respondents and Prayas Energy Group have filed their replies to the petition and the petitioner has filed its rejoinders.
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The petition...
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