Date:18/03/2005 URL: http://www.thehindubusinessline.com/2005/03/18/stories/2005031801350200.htm

Back Essar Power owes Rs 1,200 cr to Gujarat Electricity Board: Panel

Our Bureau

Ahmedabad , March 17

AN internal committee of the Gujarat Government has assessed that the Gujarat Electricity Board (GEB) is entitled to recover Rs 1,200 crore from Essar Power.

This represents, in the committee's view, the sum that the latter owes to the GEB towards electricity charges and interest due thereon for delayed payment.

The GEB had earlier represented to the Government that Essar Power had diverted power meant for it to Essar Steel, thereby depriving the board of its entitlement to power generated by Essar Power under the power purchase agreement (PPA) between the two.

Essar Power claims that under the terms of the PPA, the GEB has to file a claim for any outstanding amount rather than take the matter to the State Government.

In case the dispute is not resolved, the PPA provides for arbitration to settle the issue.

"Till date, we have not received any claim from the GEB," said Mr A.K. Srivastava, Managing Director, Essar Power.

"We were asked to appear before the committee, which we did only because we did not want a confrontation. We will contest the claim because we have already settled the matter by paying Rs 64 crore last year."

Moreover, in normal business practice, there can be no basis for charging interest if the original claim had not been filed, he added.

"Instead of Essar Power owing any money to the Board, it is the GEB that is supposed to clear its dues, that have climbed to Rs 251 crore. It is strange that they have decided to follow their own course of dispute settlement rather than go by the PPA," Mr Srivastava said.

When contacted, the GEB Member (Finance), Mr P.K. Taneja, refused to comment on the issue.

"We have taken an in-principle decision that we will have nothing to say on the issue," he said.

As per the PPA between the two companies, 300 MW is to be supplied to the GEB and the rest to Essar Steel.

On a weekly basis, the GEB is required to inform Essar Power about the amount of power it would lift.

If any power that is not taken by the GEB is supplied to Essar Steel over and above the company's quota as per the ratio, it is to be treated as deemed sale by the GEB to the private entity and the State Electricity Board has to be compensated for the power.

Essar Power runs a 515 MW combined cycle power plant at Surat.