Nirma gets reprieve in power case

FMCG major Nirma has got a reprieve after the Gujarat Electricity Regulatory Commission last week directed Gujarat Energy Transmission Corporation Ltd (Getco) to withdraw bills worth Rs 1 crore slapped on the company.

The Ahmedabad-based company had moved GERC after it received massive electricity bills even as it claimed it never used the grid for the billing period in question.

Quashing the demand notices issued by Getco, the regulatory commission had in its order dated March 26 said the notices for transmission charges were to be treated as "improper". "Therefore, we quash and set aside the said demand notices as well as demand notices for the period from April 2006 to November 2006 for transmission charges ..." it stated.

In 2006, Getco had issued four separate notices to Nirma Ltd demanding transmission charges for using power grid. Nirma was asked to pay over Rs 1 crore as wheeling and transmission charges. The detergent-maker filed a petition demanding "quashing and setting aside the demand notices for transmission charges" on the grounds that the charges were "unjust, unreasonable, discriminatory, irrational and harsh and untenable in law".

Nirma, in order to achieve the synergy in production and marketing at a cost-effective basis, has set up plants by way of backward integration in order to control the raw material prices.

The company has set up chemical complex at Kalatalav in Bhavnagar, where it manufactures soda ash, fatty acid, toilet soap, industrial salt and detergents among others. It has also set up a LAB plant at Alindra village in Vadodara. It invested Rs 150 crore to set up a captive power plant for the projects. Nirma argued that it had not undertaken wheeling/transmission of power after June 2005. "This is one of the main reasons the petitioner company was shocked to receive the bills as there was no outstanding due of the petitioner company towards any of the energy charges/bills," said the petition.

The company also claimed that it had informed Gecto regarding its decision to stop using transmission grid since June 2005. During the hearing, Getco confirmed that Nirma did not use transmission grid since June 2005.

Getco had issued the bills on the basis of open access system and a government resolution regarding captive power projects.

However, according to the contract between the erstwhile Gujarat Electricity Board (GEB) and Nirma, a consumer had the right to stop using grid without any preconditions.

The petitioners pleaded that the change of tariff rate applicable to their various establishments was "sudden, arbitrary and without notice and was not justifiable".