DISCOM Asked to Settle Accumulated Interest Payments to Two Wind Developers

VRL Logistics and Maris Power Supply Company had filed the petitions

August 5, 2019


In a recent judgment, the Karnataka Electricity Regulatory Commission (KERC) ordered Hubli Electricity Supply Company Limited (HESCOM) to pay the dues to VRL Logistics Limited and Maris Power Supply Company Limited (MPSCPL) within a month.

VRL Logistics Limited (VRL) and Maris Power Supply Company Limited had filed separate petitions with the commission against Hubli Electricity Supply Company Limited’s delay in payment.

The petitions were against the delay in the payment of interest and tariff invoices to the tune of ₹6,892,159 (~$100,031) and ₹4,198,095 (~$60,930), respectively.

VRL Logistics Limited had asked the respondent (HESCOM) to pay a sum of ₹6,892,159 (~$100,031) towards the interest accrued on delayed payments against tariff invoices from January 2016 to December 2016 and ₹500,000 (~$7,256) as the compensation for breach of contract.

In the petition dated July 30, 2019, Maris Power Supply Company Private Limited had asked the respondent for the payment of interest to the tune of ₹4,198,095 (~$60,930) for the delayed payment against tariff invoices by the respondent between March 2016 and March 2018.

Maris Power, a Chennai-based company, has alleged that HESCOM has not made the payments for the energy supplied from its 8 MW wind project within the time prescribed in the power purchase agreement (PPA) signed on March 29, 2014, and another secondary power purchase agreement (SPPA) dated March 18, 2015.

Meanwhile, the respondent, in its statement of objections, has admitted that there was a “delay in payment of invoices due to a shortage of funds, but it was not intentional.” The respondent has also submitted that the interest as per the terms of the PPA “will be paid subject to reconciliation of accounts.”

After the petition was filed on July 23, 2019, HESCOM also filed a memo along with a statement showing the computation of interest payable as per the terms of the PPA, from March 2016 to March 2018 amounting to an amount of ₹4,198,095 (~$60,930).

The petitioner also agreed to the computation of interest, as stated by the respondent in its memo.

The commission’s order states that the respondent will pay ₹4,198,095 (~$60,930) towards the interest for the delayed payment against tariff invoices during the period from March 2016 to March 2018 within a period of one month.

Similarly, VRL Logistics Limited, a Karnataka-based company, which had filed a petition against HESCOM for the delay in payment of ₹6,892,159 (~$100,031). The company has 34 wind turbine generators with a generation capacity of 42.5 MW at Kappatgudda in Gadag, Karnataka. The company had signed six PPAs with HESCOM.

In the petition, VRL stated that it had regularly raised monthly invoices for the delivered energy and during the period from January 2016 to December 2016, “the respondent defaulted by not making the payment of the invoices within the 15 days’ period specified in Article 6.2 of the PPA”.

In a letter dated August 21, 2017, the petitioner had claimed ₹6,892,159 (~$100,031) towards the interest on delayed payments from January 2016 to December 2016. As no action was taken by HESCOM, this petition was filed later to resolve the issue.

In its statement of objections, HESCOM argued that the payment of some of the invoices was delayed due to the shortage of funds, adding that the delay was beyond its control and inadvertent.

Based on the memo submitted by the petitioner where it states that the respondent has admitted its liability to pay a sum of ₹6,454,914 (~$93,684.8) towards the interest for the delayed payment of tariff invoices during the said period, the state commission has said that HESCOM should pay the amount within a period of one month.

Earlier, Mercom reported on how delays in payments have become a recurring problem for solar and wind project developers in the country.

A few months ago, the KERC had dismissed a petition filed by Koppal Green Power Limited against Gulbarga Electricity Supply Company Limited (GESCOM) asking it to pay an interest of ₹4.2 million (~$60,678) towards the delayed payment of differential tariff for the power supplied through a 6 MW biomass project.

Anjana is a news editor at Mercom India. Before joining Mercom, she held roles of senior editor, district correspondent, and sub-editor for The Times of India, Biospectrum and The Sunday Guardian. Before that, she worked at the Deccan Herald and the Asianlite as chief sub-editor and news editor. She has also contributed to The Quint, Hindustan Times, The New Indian Express, Reader’s Digest (UK edition), IndiaSe (Singapore-based magazine) and Asiaville. Anjana holds a Master’s degree in Geography from North Bengal University, and a diploma in mass communication and journalism from Guru Ghasidas University, Bhopal.