Power plants are contemplating taking legal action against a new Bill of the Punjab government proposing tariff revision of all renewable energy contracts and termination of contracts of two coal-based plants. The companies said they will also write to the Prime Minister's Office seeking intervention.
The Punjab Energy Security, Termination of PPAs and Redetermination of Power Tariff Bill, 2021 provides for referring all 63 renewable energy contracts totalling 750 MW and termination of agreements with 1,400 MW Nabha Power owned by Larsen & Toubro and Vedanta's Talwandi Sabo power plants. "Most developers are likely to move to the Punjab High Court to appeal against the Bill, which is totally unlawful," an industry expert said.
The state has renewable energy tie-ups with companies such as Azure Power, Acme Power, Mytrah Energy and Welspun Energy. Legal experts said many provisions in the Bill are unconstitutional. "It appears, government of Punjab is trying to achieve indirectly what it cannot achieve directly. Bare reading of various provisions of the Bill appears to suggest that the government is also doing empty formality to appease sections of the society.
State government has no competence to frame a legislation which goes against specific provisions of the central government legislation. I have no doubt in mind about the ultimate outcome of the litigation, however, I am only worried about investor sentiment,” said Aditya K Singh, associate partner, Link Legal.
National Solar Energy Federation of India (NSEFI) said it opposes this decision of Punjab government. “The sanctity of contracts cannot be changed at the whims and fancies of the government in power. We are going to escalate this issue to PMO to request the prime minister's urgent intervention in the issue as this move of Punjab government has the potential to damage India's image among the international investor community,” its CEO Subrahmanyam Pulipaka told ET.
The bill said, “Notwithstanding anything contained in any other law for the time being in force and any judgment, decree, order and decision of any court, tribunal or authority, the agreements of power generators with Punjab Corporation including the implementation agreements with the Punjab Energy Development Authority shall stand referred to the Punjab State Electricity Regulatory Commission for re-determination of tariff and all matters that impact tariff directly or indirectly in the agreements, after considering all the relevant cost parameters involved in generation of renewable power”.
It provides that the state’s electricity regulator shall determine a temporary tariff rate to be made applicable in the interregnum period till a final tariff is re-determined.
The bill also provides that “No suit, prosecution or other legal proceedings shall lie against the state government, nominated or designated agency or any person acting on their behalf, in respect of anything which is done or intended to be done in good faith under this Act”.
The bill also empowers the state government to make suitable provisions for removing difficulties found in implementing the Act.