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CERC Refuses Compensation to Reliance Power against Sasan Power Plant

Central Electricity Regulatory Commission (CERC), in an order passed on 30th January 2021 refused to grant compensation to Reliance Power against the unforeseen rise in foreign exchange rates. The exchange rate fluctuation was responsible for considerable increase in Reliance Power’s debt servicing obligations against the company’s 4,000 MW Sasan Power Plant in Madhya Pradesh.

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According to the petition filed by Reliance Power, due to depreciation of the Indian Rupee, the Sasan plant’s US dollar-denominated debt service obligation over the repayment period will be about Rs 11,392 Cr against Rs 6,516 Cr which was estimated in 2007 when the company had submitted bid for the Sasan Power Project.

CERC recently resumed operations after Hon’ble Supreme Court of India’s ruling on 20th January.

In its ruling CERC stated that the bidding guidelines had insulated discoms buying power from the plant from any foreign exchange risk, and the bidder was expected to factor in all possible expenditures, including the impact of foreign exchange rate variations while quoting the tariff at which they will sell power. Therefore, demand for any kind of compensation from discoms is not considered valid.