Meghalaya: James ends faulty NTPC deal, takes stay-order from court to avert power-cut
Meghalaya Power Minister James Sangma on Friday said that the faulty power-purchase agreement (PPA) that the state had signed with National Thermal Power Corporation Ltd. (NTPC) in 2007, was terminated due to the higher-than-market rates of the firm which made payment “unviable, unnecessary, and burdensome.”
The NPP-legislator said that the decision came after NTPC had asked MeECL last month to clear dues of Rs. 416.72 crore and demanded that Rs. 294 crores be paid in April itself. This was despite MeECL surrendering its allocated power usage to NTPC in 2015 due to the high rates, James said.
“The NTPC, by its letter dated 04.05.2021, notified to MeECL that since dues are not paid, regulation of power would be done from 11.05.2021 onwards in the State of Meghalaya. In the present circumstances of growing COVID-19 cases, a decision to regulate power and subject the state to long power cuts would be disastrous,” James said in a release.
Following this, the minister highlighted that the firm was taken to the commercial court where a stay order was received on the NTPC letter, “averting possibility of power cuts in the State from 11.05.2021.”
Meghalaya has faced several power-cut issues in the recent and long past due to a tussle between NTPC and MeECL over a faulty PPA, signed in 2007 during the Congress government tenure. In March this year, NTPC had also imposed a six-hour load-shedding on the state due to issues in MeECL’s letter of credit.
“NTPC further intimated to the MeECL that in case the said amount was not paid, then the Letter of Credit of an amount of Rs. 18 crore (approximately), submitted by the MeECL, would be invoked and forfeited immediately,” James said in a release.
Simply put, a letter of credit is a bank guarantee given to a seller stating a buyer will pay the requisite amount in a stipulated time frame.
The release stated that a stay order on the invocation of the letter of credit same was also received from the court. However, NTPC issued the letter for power-cuts despite that, due to which MeECL had to approach the court once again.
(Edited by Anirban Paul)
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