NEW DELHI: India’s power producers have sought the intervention of the Union Minister for Power in convincing the state of Madhya Pradesh to reverse its decision not to pay independent electricity producers (IPP) their dues. According to the Association of Power Producers (APP), the state government has invoked the Force Majeure clause under the National Disaster Management Act order passed by the Centre on March 24, 2020 to deny payment.
Such a clause can be invoked by parties to a contract in the event of unforeseeable circumstances preventing its fulfilment. However,power producers note that since power comes under the essential services category, the force majeure clause cannot be used in this case.
“On behalf of independent power producers (IPPs), we request your intervention to advise the Government of Madhya Pradesh to reconsider this decision of denying the rightful dues of capacity charges to the IPPs, which you will appreciate is highly illegal and arbitrary,” the letter to Power Minister R K Singh said.
APP went on to note that several IPPs supplying power to state discom Madhya Pradesh Power Management Company Ltd (MPPMCL) have been sent Force Majeure notices dated March 31, which said that the discom will not schedule the power supplied by the IPPs and added that declared capacity will not be accepted from them or only accepted to the extent of what is scheduled from the plants.
MPPMCL also stated that no capacity charges would be payable by them for unscheduled power irrespective of Declared Capacity of IPPs till further notice, the letter alleged. This order was backdated despite the Ministry of Power clarifying on April 6, that the “obligation to pay for capacity charges as per the PPA (power purchase agreement) shall continue, as does the obligation to pay for transmission charges”.
The APP said that such non-payment of capacity charges would not only jeopardise IPPs debt payments, but also lead to non-payment of salaries and even retrenchment, since no IPP has adequate reserves to tide over the COVID-19 crisis. The APP also alleged that the state discom is paying the charges to state-run NTPC, while denying IPPs the same.
“Unfortunately, during this critical and challenging time, MPPMCL is attempting to deny legitimate and contractual payments… this action of MPPMCL has taken brazen discrimination to another level and may be the last straw that breaks the IPPs back,” the letter said.