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| Edited By: Neeraj Thakur |Source: DNA |Updated: Mar 18, 2018, 05:09 AM IST
Indonesia’s move to hike coal prices retrospectively is beginning to set off litigations in the power sector.
The first instance of this is Coastal Andhra Power Ltd (CAPL), the special purpose vehicle of Reliance Power set up to construct the Krishnapatnam power project.
Eleven buyers of CAPL’s electricity have served a legal notice warning they will be compelled to file a court case if their power purchasing agreement (PPA) is not honoured.
The tariff at which Reliance agreed to supply power has become untenable after the Indonesian move.
Earlier, in a letter on January 28, CAPL’s clients threatened legal consequences if construction landmarks for the project were not reached.
But since last year, Reliance had stopped work on the AP project citing unviability.
Reliance is trying to invoke the force majeure clause in the PPA which provides relief under unforeseen and unavoidable circumstances.
On March 13, CAPL said it would not be able to provide electricity at the pre-contracted prices, adding it wasn’t able to get loans either from lenders as the project had become unviable at current tariffs.
CAPL’s buyers include Andhra Pradesh Central Power Distribution, Andhra Pradesh Northern Power Distribution and Andhra Pradesh Eastern Power Distribution, among others.
