A Gujarat government electricity distribution company has slapped a record penalty of 2,300 crore on the Essar group for drawing more power than its sanctioned limit. Essar is contesting the fine and has clarified its stand to Dakshin Gujarat Vij Company, which supplies power to the group's units at Hazira in South Gujarat.
Essar refused to take queries on the penalty while state energy department officials could not be reached.
The Ruias-controlled group has been at loggerheads with state government-owned power holding firm body Gujarat Urja Vikas Nigam over power purchase agreements signed in 1996, 2007 and 2010. Gujarat Urja is the holding company for all state power distribution and transmission companies.
Essar Power is seeking a year's extension for its 1,320 mw coal-fired Salaya-2 power project in Jamnagar district after it failed to terminate a 25-year PPA it signed with GUVNL last year for 800 MW at 2.80 per unit.
Last month, it issued notice to GUVNL seeking to terminate the same PPA.
However, GUVNL refused to relent and told Essar Power to honour it.
"We believe rising coal price is compelling Essar Power to take a relook at its plans," said an official. Essar Power has already been given a 15-month extension for another PPA for 1,000mw signed in early 2007. Earlier, GUVNL was contemplating penalising Essar Power for delays in commissioning the plant.
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