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Tangedco told to pay dues to PPN Power Company

According to reports, the Appellate Tribunal for Electricity has upheld the decision of the Tamil Nadu Electricity Regulatory Commission in a case relating to a dispute between Tamil Nadu’s electricity distribution company, Tangedco, and a private power generator, PPN Power Company. The dispute involves payment by Tangedco to PPN an amount of Rs 190 crore plus running interest charges.

Tangedco had argued before the state regulatory commission, TNERC, that it was entitled to prompt payment rebates even if it settled only a part of its dues within the stipulated time. Upholding the Commission’s verdict, APTEL has observed in its recent judgment that “there is no substance in the argument of the Appellant (Tangedco) that they are entitled to the rebate if a portion of the invoice amount or substantial payment of the invoice is made.”

The PPN Power Company runs a 330 MW gas-based power station in Tamil Nadu, which started generating power in April 2001. In its order, TNERC had observed that there had been “from the beginning” continued failure on the part of the Electricity Board (part of which later became Tangedco) in paying its dues.

TNERC observed that “in spite of receipt of more than 100 letters from the PPN Power Company, there was no response. At last, the PPN Power Company sent a last letter on 1.4.2009 that the amount of Rs.178 crore was due and payable to the power company and if not received by 16.4.2009 together with interest, PPN Power Company would file an appropriate petition before the State Commission. Thereafter, the respondent board sent a short reply on 16.4.2009 that the matter was under scrutiny and examination.”

From a reading of TNERC’s and APTEL’s verdicts, it is evident that Tangedco made some payments, on ad-hoc basis, and claimed prompt-payment rebate and refused to pay interest on late payment dues.

APTEL has said that it did not see “any substance in the claim of the Appellant for the non-payment of interest for late payment of the monthly invoices.” PPN, it said, “is entitled to interest on late payments of dues as per the provisions of the PPA.”

Incidentally, two other “payment” cases are coming up for hearing before TNERC. Two other private sector power producers, Samalpatti Power Company and Madurai Power Corporation have petitioned the Commission praying for directing Tangedco to pay up their dues, amounting to Rs 240 crore and Rs 232 crore respectively.

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