MPPTC Moves SC against Lanco

Madhya Pradesh Power Trading Company (MPPTC) has moved the Supreme Court against Hyderabad based Laco Amarkantank Power alleging that it has arbitrarily terminated its contract for supplying electricity to the state.

Refusing to restrain Lanco from selling electricity generated by its plant in Chhattisgarh to parties except Power Grid Corporation of India, a bench headed by Justice BN Agarwal posted the matter for hearing on July 31.

It may be mentioned that MPPTC had challenged a previous judgment by the Madhya Pradesh High Court judgment which dismissed its plea on the grounds that electricity generation was not a public function.

Attorney General G E Vahanvati and G Umapati submitted that Lanco should be directed to meet the terms of contract for supplying electricity to PTC India (intermediary) to enable MPPTC to supply power to consumers in the state.

According to the petition, the High Court had erred in holding that the generation and supply of electricity by Lanco cannot be considered as a public utility function and there is no public involvement.

While Lanco, a generating company, had entered into a power purchase agreement (PPA) with PTC on May 11, 2005, for sourcing electricity, the latter had entered into a power supply agreement (PSA) with MPPTC’s predecessor Madhya Pradesh State Electricity Board for distribution in the state, the petition stated.

It further added that under the PPA, PTC was required to enter into a back-to-back power sale agreement with the purchaser (erstwhile Madhya Pradesh State Electricity Board).

MPPTC has been functioning as an intermediary licensee to pool the power purchase arrangements in the state on behalf of the three distribution licensees and make electricity available to them for retail supply.

According to the petition, Lanco is forcing consumers to buy costly power at Rs 10 per unit against Rs 2.20 per unit as required under the PPA.