PUNJAB ADVOCATE GENERAL Atul Nanda on Thursday slammed these answerable for drafting PPAs for the state with energy corporations, 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 way that PSPCL can by no means terminate such agreements until it consciously breaches them. In that case, the utility must face enormous 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 duty as to how such PPAs have been executed within the first place.
The Advocate Normal has additionally sought an inquiry into the “wrongdoing” whereas stating, “On the one hand the facility producers take pleasure in excessive mounted prices throughout the time period of the PPA after which turn out to be entitled to large damages in legislation when PSPCL has to breach the PPA merely in an effort 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 under consideration and whether or not the individuals answerable 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.
Just lately, 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 strategy 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 approach that the facility utility will probably be unable to terminate the agreements.
In his opinion, the AG has mentioned, “I need to report my concern as to the style during which 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 prices 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 enormous Annual Fastened Prices which is pending adjudication earlier than the PSERC. As per the PSERC calculations, that is more likely to be decided at Rs 500 crore every year, versus GVK’s declare of Rs 900 crore every year. The PPA doesn’t even give a proper to termination to PSPCL. It’s only when the PSPCL breaches the PPA underneath clause 14.2 that GVK has the choice to both terminate the PPA or pressure PSPCL to carry out its obligations by looking for particular efficiency of the PPA.
“Even when and when GVK chooses to choose to terminate, as per Clause 14.4, then for a interval of three years PSPCL must proceed to pay capability prices of Rs 1295 crores. No celebration, a lot much less a public utility whose final endeavour must be to guard the general public exchequer, may 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 evaluation the PPA and even that is to be on a mutually agreed foundation. Thus, PSPCL is burdened with a 25-year-agreement involving mounted prices, 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 enable DVC to assert damages in legislation. The DVC on Could 10, 2020, the truth is rejected PSPCL’s proposal to cease drawing energy underneath this PPA.
“I’d strongly urge PSPCL and the division of energy to look at as to how such PPAs may have been executed within the first place and to repair duty. The PPAs have been drafted in a way 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 more likely to mount a authorized problem.
Curiously, the federal government was within the strategy of getting 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 duty. Randhawa had later mentioned that the officers who have been answerable for drafting of the PPAs have been those getting ready the white paper additionally.
The authorized opinion was sought from Advocate Normal 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.