Power tribunal allows Essar to sell to PTC

The Appellate Tribunal of Electricity has set aside central regulator CERC's order prohibiting Essar Power from selling electricity to trading companies and enter into pacts with distribution companies directly for its 1,500 MW project in Gujarat.

The Central Electricity Regulatory Commission (CERC) while granting 'in-principle' clearance to Essar's Hazira project in August this year had told the company to sign power purchase agreement (PPA) directly with distribution firms and not with any trading company.

Essar, which is likely to commission 750 MW capacity by April 2007, had entered into an MoU with Power Trading Corporation India (PTC) in August 2004, under which it agreed to sell the entire power to the trading company for 25 years. PTC, in turn, was to sell the electricity to state utilities.

Following CERC directions, PTC, the country's largest electricity trader, and Madhya Pradesh Power Trading, challenged the regulator in the tribunal. PTC alleged that CERC's order was arbitrary and the regulator exceeded its jurisdiction in directing Essar to enter into PPA directly with distribution companies and not through the trader.

Agreeing with the contentions of PTC and MPPTCL, the tribunal held that CERC was not authorised to stop independent power producers from signing PPAs with any trading company.

"We hold that the IPPs cannot be directed or compelled to enter into PPA directly with distribution utilities exclusively and restriction imposed with respect to sale of power to licensed trader is set aside," a bench comprising Justice E Padmanabhan and Technical Member H L Bajaj said.