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Gujarat gives 3 years to Essar Power to pay Rs 200 crore penalty

FE Bureau

In a relief to Essar Power Gujarat (EPGL), the Gujarat government has given three years’ time to the company to pay penalty exceeding Rs 200 crore for not supplying power as per the power purchase agreement (PPA) during the past two financial years.

Penalty dues of the company for the fiscal 2017-18 and 2018-19 were Rs 68.11 and Rs 134.17 respectively as on May 31, 2019, said a senior official with the state energy department, adding that as per the government’s decision, EPGL will have to pay the dues by June 2022 in 36 instalments. The decision of monthly instalments was taken considering the request from EPGL, said the official.

On February 26, 2007, the state-owned Gujarat Urja Vikas Nigam (GUVNL) had inked a PPA with EPGL for supplying power at Rs 2.40/unit’s levelised rate for 25 years. The agreement had a provision that tariff in future would be subject to ‘Change in Law’. Under this provision, factors like change or inclusion of clean energy tax, custom duty, GST etc. were to be considered for fixing the purchase rate.

As on May 31, 2019, on an average, power was being purchased at the rate of Rs 3.13 per unit. During 2017-18, power was purchased from the company at an average rate of Rs 3.36 per unit. Under PPA provisions, EPGL had to pay penalty by April 2018 for not supplying power during 2017-18 as per the terms and conditions. However, the company failed to pay the penalty in time. During 2018-19, the company’s power plant remained shut and hence it couldn’t supply power.