The Delhi High Court has dismissed the petition of Reliance Power against four utilities, allowing them to encash bank guarantees of Rs300 crore for delay in the implementation of the Krishnapatnam ultra mega power project.
Reliance Power has gone in appeal against the verdict, while the utilities said they would encash the bank guarantees.
In their arguments Reliance Power had said the project had been rendered unviable due to changes in the Indonesian law that made coal very costly, amounting to a force majeure situation.
Earlier in March, 11 power procurers from Andhra Pradesh, Tamil Nadu, Maharashtra and Karnataka, which would buy power from Krishnapatnam, imposed a fine of Rs400 crore for failure over project implementation which made Reliance secure a stay order from the court. The stay order now stands vacated.
Meanwhile Reliance said in a statement, "The Company has already filed an appeal against the order of Single Judge, Delhi High Court. The Company has already filed for Arbitration as per provisions of the Power Purchase Agreement against the Eleven Procurers in four states.''
In addition to slapping fines and threatening to encash bank guarantees, the state-owned power utilities had also notified Coastal Andhra Power Ltd (CAPL), which is in the process of setting up the Krishnapatnam project, that the power purchase agreements would be terminated and they would initiate the process for recovery of land allotted to the project.
Reliance Power which has approached the Indian Council of Arbitration (ICA) against the procurers in the matter said in a statement that it was forced to move the Indian Council of Arbitration (ICA) since the 11 state government-owned discoms of Andhra Pradesh, Tamil Nadu, Karnataka and Maharashtra, had failed to respond to the dispute resolution notice it had sent them in March.
ICA, the apex dispute resolution services body is authorised to appoint a panel of arbitrators to seek a resolution of contentious issues.