Editorial – December 2017

Supreme Court’s October 5 judgment is a big blow to the electricity consumers in the entire country while the impact will be immediately felt in Punjab. The judgment against Punjab disocm has allowed L&T, which operates a 1,400 MW thermal power plant at Nabha, a higher tariff than what they had quoted in their bids.

The flawed judgment has allowed the private company’s plea that it was ignorant about coal washing, transportation & place of GCV calculation while bidding for Energy Charges in the 2009 tender. While for Punjab, the impact would be Rs 9,000 crore in the 25 years contract period from this project alone, but the sector wide implications on discoms would run into several lakh crores of rupees.

The judgment turned down three arguments of Punjab State Power Corporation Ltd (PSPCL). PSPCL had said the coal was to be supplied (i) after washing, (ii) transported to the project site, and (iii) for a specific gross calorific value. And the cost for all these was built-in in the Energy Charges quoted by L&T at the bidding stage. This understanding was clear to all the other five bidders too. Not only these bidders, but all the private companies who participate in such tenders, include such costs while quoting Energy Charges in the bids invited by other states too.

But, later L&T claimed that these costs were not considered by them at the bidding stage and they must be paid over & above what they had quoted in the bid. This was a bizarre argument, but unfortunately, the apex court has backed it. This is our cover story.

The lead is yet another consumer related story in which the airlines had a free run for 72 hours from November 7 to 9, while the government did absolutely nothing to stop them from charging exorbitantly high tariff. They took advantage of the scheduled closure of one runway to cash-on the shortage. The one-way fare between Delhi and Mumbai touched as high as Rs 28,000, almost four to five times of the normal fare.

Besides pinching the pockets, this kind of unwarranted spike in fare has adverse impact about the image of India on the global tourists / visitors. The government has to come forward and fix a reasonable cap while giving airlines enough flexibility in fixing fares. A lakshman rekha has to be drawn.

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