Supreme Court Directs Punjab State Power Corporation Limited to Release Dues with Interest for Coal washing

Supreme Court Directs Punjab State Power Corporation Limited to Release Dues with Interest for Coal washing

The Supreme Court (SC) ordered Punjab State Power Corporation Limited (PSPCL) to pay two independent power producers (IPPs) costs of coal washing and transportation charges that are deducted by the PSPCL over seven years.

The Top Court directed the PSPCL to pay a principal amount of Rs. 1,070 crore along with an interest of Rs 680 crore to the two IPPs in the State. The SC passed this order against the Corporation after deductions were made by it while calculating coal washing and transportation charges.

The Apex Court further asked the State power utility to release the pending payments by 31 March 2021 and the remaining amount by 31 May 2021.

The usual practice is that IPPs procure coal and later bill the PSPCL for energy charges according to the power purchase agreement (PPA) between the parties. But, the PSPCL opined that the IPPs were not entitled to be paid washing and related charges.

On 5 October 2017, the Top Court had directed the PSPCL to pay the two IPPs "coal washing and transportation charges" but the PSPCL did not pay the entire amount. The IPPs approached the Apex Court and it again ordered in 2019 directing the PSPCL to follow the judgment of 2017.

After the said order of the SC, the PSPCL paid Rs 421.77 crore to Nabha Power Limited, Rajpura, and around Rs 1,002.05 crore to Talwandi Sabo Power Limited. However, it continued to make certain deductions under different heads, representatives of the two IPPs approached it, but all talks failed.

The power experts suggested that if the PSPCL had paid the amount to the IPPs in time then the said cost would have been almost half as the interest cost is too high. They added that this amount was spread over seven years and would not have hurt the consumers, if the PSPCL would have complied with the order of the SC within time.