The Telegraph
Wednesday , July 23 , 2014
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HC rules to protect power from politics

Relief for CESC, Tata firm

Ranchi, July 22: Jharkhand High Court today came to the rescue of two private power firms that feared their 2012 agreement with the Jharkhand electricity board would be annulled under political pressure.

In its verdict, the court ruled that Jharkhand Urja Vikas Nigam Limited (JUVNL) wasn’t bound by the advice of the state government which had on July 4 ordered the cancellation of tenders based on which Calcutta Electric Supply Corporation (CESC) and Tata Power were contracted to distribute power in Ranchi and Jamshedpur, respectively.

Today’s order comes as a huge relief for Tata Power and CESC, which had moved court on July 8 praying that the state government and JUVNL be restrained from cancelling the December 2012 agreement under which it was granted power distribution rights for Ranchi.

“The order clearly mandates that JUVNL is not bound by the advice and recommendations of the government with regard to termination of the agreement,” said CESC’s counsel Ananda Sen.

Jharkhand State Electricity Board, now JUVNL, had signed agreements with CESC and Tata Power to handle power distribution in Ranchi and Jamshedpur, respectively, on December 5, 2012, after a successful tendering process.

But with the JMM-led Hemant Soren government backing the employee union’s stand of opposing the entry of private players in the power sector, apprehensions of the companies grew.

On July 4, state energy minister, the Congress’s Rajendra Prasad Singh, directed his department to ask JUVNL to cancel the tender under which power distribution contracts were handed over to the private firms.

He also directed the department to issue a notice inviting fresh tenders.

This prompted CESC to file a petition in the high court on on July 8, saying that its December 2012 agreement with then Jharkhand State Electricity Board for supply of power in Ranchi had not been implemented.

During a hearing on July 18, CESC counsel Sen pleaded that the company had already invested huge amounts for setting up power supply and distribution mechanisms in the state capital and that it would suffer massive losses if its agreement was terminated.

The court heard both sides, but reserved its order for today when it explicitly stated that JUVNL need not adhere to the state government’s directive.

Both CESC and Tata Power sounded relieved, but said they would have to study the court order before deciding on their next course of action.

“We shall take a final call after we receive a copy of today’s judgment,” Subroto Ghosh, CESC vice-president (contracts), told The Telegraph, adding that their stand had been vindicated.

“A lot of rumours were being floated against the power distribution franchisee agreements of December 2012 by vested interests. All such rumours are lies and misconceptions. CESC intends to ensure maximum consumer satisfaction to Ranchi residents through its highly efficient services,” he added.

Vivek Singla, CEO of a special purpose vehicle floated by Tata Power to distribute power in Jamshedpur, agreed.

“We have communicated today’s judgment to our management. The next course of action will be decided at a board meeting scheduled for July 30,” he said, adding that they welcomed the high court order.

However, he pointed out that Tata Power was unable to commence power distribution work in Jamshedpur as JUVNL was yet to hand over responsibility to them.

“One and a half years have elapsed since we had inked the agreement in December 2012 with Jharkhand State Electricity Board, now JUVNL,” Singla said.

The state power board is yet to fulfil a number of pre-conditions the December 12 agreement specified. These include conducting independent audits, surveys, and determining assets.

Minister Rajendra Prasad was guarded, but did not rule out the possibility of filing an appeal in court.

“We are yet to get a copy of the court order. However, in case we disagree with the court’s directive, we can again approach it again. The franchisee agreement is likely to cost the state exchequer Rs 15,000 crore in the next 15 years,” he said over telephone from New Delhi.

Prashant Chaturvedi, convener of coordination committee of power unions that opposed to the entry of private firms, also preferred to go through the court order first.

“The state government is the appointing authority for JUVNL and its three subsidiaries. However, we will have to go through the court’s decision before we air our views,” he said.