Essar Power refutes GEB's dues charge

Essar Power which operates a 515 MW power plant at Hazira in Gujarat, has refuted charges by the Gujarat Electricity Board (GEB) that the Board has to recover Rs 1200 crore from the private sector power producer.

Essar Power and GEB have already locked horns over a captive power plant and transmission issues in Hazira.

Essar Power managing director Arun K Srivastava denied that the company has ever received a notice from GEB on the claimed Rs 1200 crore pending amount. Instead, he said, the company has to recover Rs 251 crore from GEB for power sold to the Board from the Hazira plant.

"There is no claim pending against us. On the contrary, GEB owes more than Rs 250 crore to Essar Power for power supplied to the Board since April 1, 2004. We have been supplying 230 MW of power to GEB from our Hazira plant," Srivastava said.

"It is interesting to note that the alleged claim of Rs 1200 crore referred by GEB to the Gujarat government includes Rs 800 crore as interest on the original claim of Rs 400 crore. As the original claim never reached us, the question of charging interest does not arise," he said.

Srivastava alleged that certain changes in the Board's structure has lead to the two entities locking horns with each other. He, however, denied to elaborate on the changes.

It may be recalled that in February this year, GEB constituted a high-level committee to examine the issues for recovery of excess amount paid on account of deemed generation for naphtha based stations, under allocation made by Essar Power and other issues.

GEB worked out a recovery of Rs 401.64 crore from Essar Power and an interest component of Rs 853.32 crore aggregating to Rs 1254.96 crore on the account for the period from July, 1996 to October, 2004.

But Srivastava said that the issue was resolved and Essar paying Rs 64 crore to GEB. "After thorough negotiations, the claim was settled at Rs 64 crore, which GEB recovered from the invoice amounts payable to us. We cannot understand why GEB has now come up with a new claim for Rs 1254.96 crore towards deemed charges," questioned Srivastava.

GEB also raised issues related to variation on repayment of external commercial borrowings (ECBs). The matter has been forwarded to the high-level committee.

"As regards to this issue, the provisions of the PPA are quite explicit. GEB is obliged to compensate extra rupee liability towards interest payments arising out of foreign exchange rate variations over the base exchange rate. In any case, disallowance by GEB of part of our claim amounting to Rs 39.17 crore is improper and on imaginary grounds," said a letter signed by Srivastava, which was sent to the committee.

GEB officials denied to comment on the issue when contacted on Monday.

Srivastava said the matter has been raised with state chief minister Narendra Modi and minister of state for energy Saurabh Dalal.