SC directs KPTCL to pay Tanir Bhavi 4 c for each unit

The Mangalore-based Tanir Bhavi Power Company has won in its case against the Karnataka Power Transmission Corporation Limited (KPTCL) with ...

The Mangalore-based Tanir Bhavi Power Company has won in its case against the Karnataka Power Transmission Corporation Limited (KPTCL) with arbitrators decreeing in its favour.

In an award passed last week, arbitrators ruled that the state-owned utility must pay the independent power producer (IPP) a dollar-denominated fixed charge of 4 cents per unit. The award came as a result of arbitration proceedings sought by both parties to settle their longstanding dispute over how much KPTCL must pay in dollar-denominated charges.

The IPP has been supplying power to KPTCL from June 1, 2001. The two, however, fell apart after KPTCL insisted that the dollar-denominated fixed charge of 4 cents a unit was only a ceiling and did not indicate the payment liability as per the power purchase agreement (PPA).

The Karnataka Electricity Regulatory Commission directed KPTCL to follow the mechanism provided in the PPA to settle the dispute. This led to Tanir Bhavi claiming that its dues be settled before arbitrations began. Finally, when the dues on the basis of 4 cents a unit accumulated to Rs 185.91 crore , the IPP invoked its escrow account with the State Bank of Mysore and got its dues settled.

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