PSPCL’s pact with power companies “one-sided, tilted in favour of pvt discoms”, says Punjab AG

PUNJAB ADVOCATE GENERAL Atul Nanda on Thursday slammed those responsible for drafting PPAs for the state with power companies, calling them “one-sided” and “tilted in favour of private power producer.” The move comes a fortnight after Punjab Chief Minister Captain Amarinder Singh sought a legal opinion on renegotiating controversial PPAs with GVK Power and Damodar Valley Corporation (DVC) for Raghunathpur Thermal Power Plant.

In his legal opinion submitted to the CM, Nanda has also said that the PPAs have been drafted in a manner that PSPCL can never terminate such agreements unless it consciously breaches them. In that case, the utility will have to face huge financial implications. He has said that the PPAs have put PSPCL in an “extremely weak bargaining position”. He opined that the government should fix responsibility as to how such PPAs were executed in the first place.

The Advocate General has also sought an inquiry into the “wrongdoing” while stating, “On the one hand the power producers enjoy high fixed costs during the term of the PPA and then become entitled to huge damages in law when PSPCL has to breach the PPA merely in order to exit it.

It must be inquired as to whether the language of these PPAs, as executed, were appropriately legally vetted, whether the exorbitant recurring, fixed long term costs — amounting to hundreds if not thousands of crores of rupees — was taken into account and whether the people responsible for authorising the execution of these agreements as drafted were conscious of the financial and legal implications of the same.”