TRANSMISSION CORPORATION OF ANDHRA PRADESH LTD. AND OTHERS Vs. M/S. GMR VEMAGIRI POWER GENERATION LTD. AND ANOTHER

JUDGEMENT

(1.) The controversy for determination in the present appeal is,   whether   the   word   'fuel'   as   used   in   clause   1.1.27   of   the Power   Purchase   Agreement   (hereinafter   referred   to   as   'PPA') means   "natural   gas   only"   or   includes   Regasified   Liquefied Natural Gas (hereinafter referred to as 'RLNG') also.

(2.) The Andhra Pradesh Electricity Regulatory Commission (hereinafter referred to as "the Commission"), in O.P. No. 20 of 2013 dated 08.08.2013, preferred by the respondent, held that the term 'fuel' as used in the PPA meant natural gas only in its natural form, and did not include RLNG.  Simply because the physical composition of natural gas and RLNG are similar, it does   not   automatically   entitle   the   respondent   to   generate power   with   RLNG,   which   was   more   expensive   and   not domestically available, affecting the per unit supply of power generated by it, as ultimately the consumer would have to pay more.

(3.) In Appeal No. 222 of 2013 preferred by the respondent, the   Appellate   Tribunal   by   the   impugned   order   dated 30.06.2014 held that use of the word "only" after "natural gas" in the PPA dated 02.05.2007 had to be understood in context of   the   deletion   of   other   alternate   fuel   such   as   Naphtha   etc. incorporated in the earlier PPAs, and it was never intended to restrict the meaning of the word natural gas to exclude RLNG, which was a variant of natural gas and did not come in the category of an alternate fuel.   It further held that the higher price of RLNG could not be a determinative factor to exclude it from   the   agreement   as   any   increase   in   price   of   gas   was   an accepted   risk,   especially   in   view   of   the   non­availability   of natural gas from the KG­D6 basin.  The use of RLNG had also been permitted on earlier occasions without any amendment to the PPA.