The Orissa High Court has appointed an arbitrator to settle the dispute between Orissa Power Generation Corporation (OPGC) and Grid Corporation of Orissa (Gridco) over payment of power purchase bills.
OPGC has raised a claim of Rs 210 crore against Gridco, which buys electricity from the two units of 210 MW each owned by the former in Ib valley, towards non-payment of power sale dues, interest and surcharge as pending till July 2, 2001.
The High Court has ordered that the dispute be resolved by the arbitrator by passing the final order within three months.
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The court order assumes significance in view of the fact that 49 per cent stake in OPGC held by the US utility major AES Transpower, which was recently in news for its tussle with the Orissa government over running of Central Electricity Supply Company (Cesco), a power distribution firm, in which the US company holds controlling 51 per cent shares.
Gridco, which is a bulk supplier of power to private distribution firms in the state including Cesco, has maintained that it is unable to clear OPGC bills because it is not receiving payment from Cesco against the power supply. Gridco claims on Cesco runs into over Rs 460 crore.
Meanwhile, with AES last month deciding to pull out of Cesco before the end of lock-in period in the shareholders agreement, the Orissa Electricity Regulatory Commission (OERC) has appointed an administrator to manage the day to day affairs of Cesco.
While disposing of a petition filed by OPGC for appointment of arbitrator to settle the payment problem, the court has observed that since there is a clause in the power purchase agreement (PPA) between the two companies for referring the disputes to the arbitrator, "the matter be referred to the arbitrator".
Accordingly the court has appointed L Rath, a retired justice as the arbitrator as suggested by the counsel for the petitioner. "If the respondent (Gridco counsel) has any objection, he can file the same before the arbitrator", the court observed.
In its petition, OPGC pointed out that the company had entered into a PPA with Gridco in August 1996 for supply of bulk power. It alleged that Gridco had committed breaches of its obligation under PPA by failing to make full payment against the monthly invoices raised by it.
As a result, the accumulated arrears had mounted to more than Rs 210 crore, including interest and surcharge as applicable under the PPA, till July 2, 2001.
The petition further alleged that despite reminders and demands, Gridco had failed to pay the outstanding dues to OPGC.
In fact, in a coercive tactics to recover the dues, the AES appointed managing director of OPGC Edward Grayson Harvell ordered suspension of power generation from the second unit (210 mw) of Ib station in May this year setting off a crisis in the state grid. Following a week-long stand off the Ib unit was finally reopened on May 24 after both OPGC and Gridco agreed to work out a joint plan for liquidation of the outstanding dues in mediation of the state government.