J. Sagar Associates (JSA) represented GMR Vemagiri Power Generation Limited (GMR) in proceedings before the Central Electricity Regulatory Commission (CERC) challenging the refusal by Andhra Pradesh and Telengana Discoms to allow use of Deepwater Gas by GMR for its 370 MW gas-based power plant in Andhra Pradesh (District Vemagiri). The said Discoms had refused to accept availability and schedule power on the ground that price of Deepwater Gas was too high and the PPA did not permit use of Deepwater Gas.
a) “Fuel” under the PPA includes Deepwater Gas and as long as GMR in procuring domestic gas as pe Government of India price policy, GMR is entitled to declare availability and claim capacity charges.
b) A.P and Telengana Discoms’ rejection of use of Deepwater Gas was contrary to the terms of the PPA.
c) Due to dismantling of Administered Price Mechanism (APM) and change in pricing and allocation policy of Government of India, insistence on supply of gas through allocation route or AMP process cannot be countenanced.
Unavailability of gas from KG-D6 basin was a major factor identified by the 42nd Report in January 2019 of the Standing Committee on Energy for stresses assets for the gas-based power plants.
d) This order is a shot in the arm for similarly placed gas-based projects (approximately 6,259.5 MW of installed capacity) in Andhra Pradesh which have been stranded since 2013 due to reduced aupply of gas from KG-D6 Basin. The order enables these projects to tie up gas from a;ternate domestic sources and generate revenue.
JSA Team comprised Partner – Vishrov Mukerjee and Associate Yashaswi Sinha