PANJIM: A day after Reliance Infrastructure won an arbitration case against the State, the government has decided to order an inquiry into serious lapses in the Reliance Infrastructure contract signed around two decades ago.
The government also said it will challenge the Tribunal order in the district court and claimed that the State has strong grounds to win the appeal.
The decision was taken at a review meeting held by Power Minister Pandurang Madkaikar along with senior officials to discuss the course of action to be taken after Reliance Infrastructure won an arbitration award of Rs 292 crore against Goa in a case relating to non-payment of dues for electricity supplied by the former.
Speaking to Herald, Madkaikar said, “It was decided that an inquiry be ordered into the serious lapses in the Reliance Infrastructure contract right from when it was signed in 1999 as I have found some lapses in the contract which had been neglected during that phase.”
He added, “During that time precautionary measures could have been taken. We just cannot pay Reliance Infrastructure Rs 292 crore. We have also decided to challenge the Tribunal arbitration order in the district court as the State has strong grounds to win the appeal.”
According to the Minister the State has strong grounds to win the appeal as Reliance Infrastructure had charged a tariff higher than the one mentioned in the contract.
“The contract was signed in 1999 for a period of 15 years which expired in August 2014. They were asked to change from naphtha to gas so that the cost of power generation becomes less and with that the unit charged would also come down for which they agreed but they charged us the same rates and this is where the dispute began,” Madkaikar said.
The need for arbitration arose due to non-payment of dues by the State towards supply of electricity by Reliance Infrastructure from its 48 MW power plant in Sancoale.
The Reliance contention that the rate of energy for the period June 2013 to August 2014 was based on varying prices of fuel and the dollar exchange rate as was agreed to by the Goa government, was upheld by the Tribunal while the State stated the capacity of the plant was to be down-rated, right from the second year of operation, for calculation of fixed charges, since the parties had already agreed against down-rating in 2007 it was rejected by the Tribunal.
The Arbitration Tribunal, in its award on February 16, 2018, has ordered Goa to pay Rs 292 crore to Reliance Infrastructure Limited by April 15, 2018, the company said in a statement.
The Tribunal has also ordered the payment of interest at 15 percent per annum on the total award amount if the government fails to pay the entire award amount by the deadline, it said. The Joint Electricity Regulatory Commission (JERC) had constituted the Tribunal under the new rules laid down in 2015.
The total outstanding dues along with interest as on October 31, 2017 amount to Rs 278 crore. The Tribunal has also awarded Reliance Infrastructure interest from October 2017 till the date of the award, which amounts to Rs 14 crore.
