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APTEL Overturns CERC's Ruling in Brahmani Thermal Power Case

In a significant verdict, the Appellate Tribunal for Electricity (APTEL) has overturned the decision of the Central Electricity Regulatory Commission (CERC) in the case of M/s. Brahmani Thermal Power Pvt. Ltd. (formerly Navbharat Power Private Limited). The tribunal ruled in favor of the power company, acknowledging that the delays in its 1050 MW thermal power project in Odisha were caused by genuine force majeure events.

Background of the Case

Brahmani Thermal Power Pvt. Ltd. had entered into a Long-Term Open Access (LTOA) agreement with the Power Grid Corporation of India Limited (PGCIL) to transmit 720 MW of power from its proposed plant. However, the company faced significant challenges, including delays in land acquisition and the overlap of the project site with the Rengali Right Canal System, leading to stalled progress.

Citing these unforeseen and uncontrollable circumstances, Brahmani issued a force majeure notice in 2013, seeking to relinquish its LTOA without liability and reclaim its bank guarantee of Rs36 crores.

CERC's Ruling

In its April 2017 order, CERC dismissed the company's claims, asserting that Brahmani abandoned the project for commercial reasons. It directed the company to pay transmission and relinquishment charges under Regulation 18 of the Connectivity Regulations. Additionally, the commission held that the bank guarantee would not be refunded.

APTEL's Verdict

Upon appeal, APTEL reversed the CERC's decision. The tribunal concluded that the challenges faced by Brahmani were indeed force majeure events and not commercially motivated. It emphasized that the company had made considerable efforts to progress with the project, including obtaining necessary approvals and investing Rs118.79 crores, with Rs67.71 crores paid towards land acquisition.

Furthermore, APTEL criticized CERC for its lack of detailed reasoning in the order, stating that well-reasoned decisions are essential for maintaining judicial transparency and fairness.

Conclusion

APTEL directed PGCIL to return the Rs36 crore bank guarantee within two weeks and relieved Brahmani of any liability concerning transmission and relinquishment charges. This ruling is seen as a major relief for developers facing unforeseen regulatory and administrative challenges in executing large-scale infrastructure projects.

The judgment also serves as a reminder to regulatory bodies to ensure decisions are supported with clear reasoning, enhancing confidence in the judicial process within the power sector.