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The Madras High Court has issued an interim injunction order restraining the GAIL India Ltd from enforcing their claim for the difference between the APM price and the non APM price from five power firms, for the period from June 2006 to October 2011, subject to conditions.
The order is in the backdrop of an action initiated by GAIL to raise debit notes from these firms following the report of Comptroller and Auditor General of India on “Undue benefit extended to power purchasers relating to GAIL” pointed out that the pricing mechanism of Administered Price Mechanism (APM) for a certain category of consumer to whom it was supposed to be calculated in terms of market-related price.
The draft paragraph of CAG said that the extension of the benefit of APM price to this category of consumers who were supplying power at commercially agreed rates, resulted in under-recovery of Rs 227.37 crore from seven consumers during the period from April 2006 to March 2010. This benefit, according to the Comptroller and Auditor General, had increased to Rs 246.16 crore by March 2011, it added.
With the CAG stating the reply of GAIL as unconvincing, the Government of India asked the company on November, 2011 to take action for recover of dues from the customers. In the individual communication sent to the applicants (the companies which approached court against the move), GAIL pointed out that the APM gas price would be applicable only for the quantity of gas which are used for generating electricity which is supplied to the grid for distribution to the consumers through the public utilities or licensed distribution companies.
Receiving the debit notes, five companies- OPG Energy Pvt. Ltd., Saheli Exports Pvt Ltd.,Kaveri Gas Power Limited, Coromandel Electric Co. Ltd and Arkay Energy (Rameswaram) Ltd – approached the Court seeking interim orders of injunction to restrain GAIL India from issuing or raising fresh invoices for the natural gas supplied to them in terms of agreement, or from enforcing the payment of amounts as demanded under the debit notes, or from discontinuing supply of agreed quantity of gas to their power plants.
Mails sent to GAIL India and to the various applicant companies were not answered till the time of going to press.
In the Order on petitions filed by, Justice V Ramasubramanian said, “There will be an interim order of injunction restraining the respondent from enforcing their claim for the difference between the APM price and the non APM price only in respect of the period from June 2006 to October 2011.”
However, the interim injunction as ordered in the preceding clause shall be subject to the condition that the applicants furnish security to the extent of the amount claimed by GAIL India for the period, within a time frame of four weeks from the date of receipt of a copy of the order.
“In so far as the future period is concerned, the applicants shall continue to pay as per the earlier orders of this Court dated December 23, 2011, at the rate as charged by the respondent (GAIL India), pending determination of the lis by the Arbitral Tribunal,” said the order.
According to CAG, there are four categories of consumers - Category A, which are State Electricity Boards and Government companies generating power for supply to grid for distribution to consumers, Category B, which are private companies generating power and selling to State Boards as IPP, Category C, consisting of consumers generating electricity for captive consumption without supplying to grid, and Category D, comprising of consumers generating electricity and supplying to various consumers using wheeling arrangement with State Electricity Boards.
According to a government decision, APM gas price would be applicable only for those quantities of gas used for generating electricity, which is supplied to the grid for distribution to the consumers through the public utilities or licensed distribution companies. The companies are paying the enhanced rate as demanded by GAIL India, from November 2011.
The companies argued that the action is after the contract itself has expired. They also replied GAIL India that they are also supplying to the consumer through the grid of Tamil Nadu Electricity Board (TNEB) and thus eligible for the APM rate.
