Private power producers, including Reliance, Tata, Adani and Lanco, have filed a petition with the Central Electricity Regulatory Commission (CERC) against state-run NTPC Ltd for signing power purchase agreements (PPAs) for 37,000 Mw in an “anti-competitive manner”.
In their petition, the producers under the banner of the Association of Power Producers, said the conduct of NTPC during October 2010 and January 5, 2011, in rushing to sign PPAs for supply of 37,000 Mw electricity has caused an adverse effect on competition in the electricity industry. It was done to escape regulatory oversight, tie down and monopolise scarce resources of economy — fuel, transmission capacity and paying capacity of the off-taking state-owned companies.
The tariff policy had exempted public sector projects from competitive bidding for five years or when the regulatory commission considers the situation ripe to introduce such competition. This exemption was to expire on January 5, 2011, sensing this, NTPC signed PPAs for such a large capacity.
The petition said NTPC has added only 5,200 Mw generation capacity and its poor utilisation of the allocated coal mines has come for major criticism, which led to deallocation of five coal mines by the ministry recently.
When contacted, an NTPC executive said, “It is the prerogative of the state governments to sign PPAs. If they have wished to sign agreements with NTPC, that is because of the capabilities of our company.”
NTPC’s PPAs not only have an anti-competitive effect on the market, but would also result in higher prices for the customer/consumer.
There is no justification for NTPC’s PPA signing exercise except to subvert the tariff policy which recommended competitive bidding.
NTPC, through the instrument of PPAs, is attempting to maintain its dominance and achieve a near-monopoly status in the relevant market by foreclosing the complete market.
The petition has asked CERC to declare PPAs signed between the above-mentioned period as null and void. It has also asked the sectoral regulator to direct NTPC to discontinue such abuse of dominant position and not to enter in anti-competitive agreements in future.
