CERC Orders Trading Firm to Pay Dues for Power Procured from Bagasse-Based Project

The Central Electricity Regulatory Commission (CERC) has issued an order providing relief to Nirani Sugars Limited in a case concerning the payment of dues amounting to ₹110.9 million (~$1.59 million). Global Energy Private Limited owed the amount on account of the power it procured and sold to Telangana State Power Corporation Committee (TSPCC).

Nirani Sugars Limited had petitioned the central commission seeking intervention and ordering Global Energy Private Limited pay the outstanding dues related to the interstate open access and the cost of the petition.

After reviewing the petition, the CERC has observed that despite admitting its liability to pay the outstanding dues, Global Energy Private Limited has not failed to do.

The commission also noted that the supply of energy and the amount claimed under the invoices along with the demand letters issued by Nirani Sugars and the interest applicable for delayed payments were not disputed by Global Energy Private Limited.

The commission further noted that on June 9, 2015, Global Energy Private Limited had confirmed that the billing was correct and had requested to split the invoice into two separate contracts.

Then on May 19, 2017, Global Energy Private Limited had agreed to settle the pending amount, which indicates that the company did not dispute its liability. However, no amicable settlement was reached between the two parties.

The central commission further observed that Global Energy Private Limited had not ensured the timely payment of dues to the seller. Neither has it, as an interstate trading licensee of this commission, placed on record any documents that prove that it had a payment security mechanism in place for the power procured by it from Nirani Sugars.

In its order, the CERC added that the documents submitted by both the parties were insufficient to arrive at a due amount of ₹110.9 million (~$1.59 million). Consequently, it has directed them to reconcile the payments due in terms of the Letter of Intent (LoI).

Moreover, the central commission has asked Global Energy Private Limited to liquidate the outstanding dues within 30 days from the date of issue of this order. It has also asked Global Energy Private Limited to submit an affidavit to the effect that the charges claimed by it are within the limit allowed under Regulation 7(c) of the Trading License Regulations.

Meanwhile, the Maharashtra State Electricity Distribution Company Limited  (MSEDCL) had recently filed a petition before the Maharashtra Electricity Regulatory Commission (MERC) for the approval of procurement of bagasse-based co-generation power for FY 2018-19 for meeting its non-solar renewable purchase obligations. The commission has directed MSEDCL that the procurement of power from such projects will be through a competitive bidding process and the sale and purchase made under the interim arrangement should be adjusted with the rate discovered through the competitive bidding process.

Image credit: Ulka Industries