Petition No.12 of 2005
Date of hearing: 25.4.2006
Date of order: May31, 2006

Brief facts of the case as stated by the petitioner are that M/s. Faridkot Cooperative Sugar Mills Ltd. set up a co-generation plant at its sugar mill for the generation of 5 MW of power. Later, the respondent offered to export 1 MW of power to PSEB. Guidelines for promotional and fiscal incentives by State Governments to encourage power generation from Non-Conventional Energy Sources (NRSE) were issued by the Ministry of Non-Conventional Energy Sources, Govt. of India, in September, 1993. On the basis of these guidelines, Govt. of Punjab, in its Notification dated 21st January, 1994 issued guidelines in respect of incentives that would be available for NRSE projects. The Ministry of Non-Conventional Energy Sources, Govt. of India in continuation of earlier guidelines of September 1993, issued further guidelines on purchase price of NRSE power in its letter dated November 25, 1994 which were in turn adopted by PSEB in instructions issued on October 26, 1998. In line with th! ese guidelines/instructions, a Power Purchase Agreement (PPA) was signed on November 28, 1998 between the petitioner and M/s. Faridkot Cooperative Sugar Mills Ltd. for export of 1 MW of power to PSEB which was valid for 10 years with the rate being Rs.2.73 per unit for 1998-99 and subsequent annual escalation of 5%. It is stated in the petition that the policy of 1994 expired in the year 1999 and new policy was notified in July, 2001 which provided that for old projects, PSEB would continue to purchase electricity at a price of Rs.3.01 per unit (base year 2000-2001) with 5% annual escalation upto 2004-05. The petitioner has prayed for amendment of the PPA entered into with the respondent for purchase of power with 5% annual escalation upto 2004-05 instead of annual escalation of 5% for entire period of the agreement i.e. upto 2008. It is further prayed that wheeling and banking clauses may also be amended in line with the new PPAs signed with M/S Chandigarh Distillers a! nd Bottlers Ltd. and with M/s. Rana Sugars Ltd.

The petition was admitted on January 19, 2006 and notice was issued to the respondent. Subsequently, Secretaries to the Government of Punjab of the Departments of Power and Science and Technology were also impleaded as respondents. The petition was taken up for hearing on February 28, 2006 on which date the respondent filed an application under Section 8 of the Arbitration and Conciliation Act, 1996.

PEDA filed a reply on behalf of the Principal Secretary, Government of Punjab, Department of Science, Technology, Environment and Non-conventional Energy. It is stated in the reply that as per the guidelines of 1994 issued by Ministry of Non-Conventional Energy Sources and PSEB notification dated October 26, 1998, the tariff envisaged is Rs.2.25 per unit taking the base year as 1994-95 with escalation at the rate of 5% per annum for 10 years from the date of signing of the PPA. It is further stated in the reply that as per NRSE Policy, 2001, ‘old projects category’ applies only to those projects for which MOU/Agreement had been signed by PEDA with the private developers before issue of NRSE Policy, 2001 and the same does not apply to the projects for which PPA had been signed before the issue of NRSE Policy, 2001. It is further stated that NRSE Policy, 2001 thus cannot be applied to the instant case as it clearly does not fall in the ‘old projects category’.

Arguments advanced by the parties were heard. The State Government has clarified that ‘old projects category’ as mentioned in the NRSE Policy, 2001 applies only to those projects where MOUs/agreements had been signed by PEDA with private developers before the issue of the Policy and not to such projects where PPAs had already been signed. In this case, the PPA stood signed between the parties well before the issue of the NRSE Policy, 2001. Accordingly, the petitioner cannot take benefit of NRSE Policy, 2001 to seek revision of rates of power supplied to it by M/s. Faridkot Cooperative Sugar Mills Ltd. The petitioners have further sought amendments to the Wheeling and Banking clauses of the PPA on the lines of other PPAs signed subsequently. A PPA in its entirety reflects the commercial arrangements between the NRSE generator and purchaser of power. Having once been signed, there is insufficient justification for its revision merely on the ground that there are diffe! rent provisions in subsequent such Agreements. For the above reasons, there is no merit in the petition which is dismissed.