Supreme Court Rules Essar Power Must Compensate GUVNL for Wrongful Power Diversion
The Supreme Court has ruled that Essar Power must reimburse and compensate Gujarat Urja Vikas Nigam Limited (GUVNL) for wrongfully diverting electricity, ending a two-decade-old dispute. The case involves a 1996 Power Purchase Agreement where Essar Power was to supply 300MW to GUVNL. The court confirmed GUVNL's allegations of power diversion to Essar's sister companies, overturning previous rulings by GERC and APTEL. While the court established Essar's liability, it has tasked GERC with computing the final payment amount. Essar Power maintains no dues are payable, despite the ruling.
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In a significant ruling on a two-decade-old dispute, the Supreme Court has determined that Essar Power must reimburse and compensate Gujarat Urja Vikas Nigam Limited (GUVNL) for wrongfully diverting electricity. The verdict marks a crucial development in the long-standing conflict between the two energy entities.
Background of the Dispute
The case stems from a Power Purchase Agreement (PPA) signed in 1996 between Essar Power and GUVNL. Under the terms of this agreement, Essar Power's 515MW Hazira plant was obligated to supply 300MW of power to GUVNL and the remaining 215MW to its sister company, Essar Steel.
GUVNL's Claims
GUVNL alleged that Essar Power had diverted power away from its agreed 300MW quota to its sister companies, violating the terms of their agreement. This claim formed the crux of the legal battle that has now found resolution in the Supreme Court.
Supreme Court Verdict
The apex court's ruling confirms GUVNL's allegations of wrongful diversion of power by Essar Power. In its judgment, the Supreme Court stated that GUVNL is entitled to:
- Reimbursement of fixed charges
- Compensation for the wrongfully diverted electricity
This decision overturns previous rulings by the Gujarat Electricity Regulatory Commission (GERC) and the Appellate Tribunal for Electricity (APTEL), which had rejected GUVNL's claims for reimbursement.
Computation of Dues
While the Supreme Court has established Essar Power's liability, it has not specified the exact amount to be paid. Instead, the court has remanded the task of computing the final payment amount back to the GERC.
Essar Power's Stance
Despite the Supreme Court's ruling, Essar Power maintains its position that no dues are payable to GUVNL. The company has expressed confidence that the GERC's determination will not result in any financial obligation.
Implications and Next Steps
This ruling sets a precedent in the power sector regarding adherence to power purchase agreements and the consequences of breaching such contracts. The energy industry will be closely watching the GERC's computation process and the final amount determined for reimbursement and compensation.
As the case moves forward, both Essar Power and GUVNL will likely present their arguments before the GERC for the final computation of dues. The outcome of this process will have significant financial implications for both entities and could potentially impact future power purchase agreements in the sector.
The resolution of this long-standing dispute underscores the importance of contractual obligations in the power sector and the judiciary's role in settling complex energy-related conflicts.
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