NTPC didn’t abuse market dominance to gobble up scarce coal and bank credit, says CERC

NEW DELHI: NTPC scored a big victory over top private power firms, as the electricity regulator firmly rejected allegations that the state-run giant abused its market dominance to gobble up scarce coal and bank credit by hurriedly signing an abnormally large number of deals to sell power to utilities.

The Association of Power Producers, which represents top private firms, including Tata Power and Reliance Power, had approached the Central Electricity Regulatory Commission (CERC), seeking an order to cancel power purchase agreements (PPAs) that NTPC had signed just before it would have faced competitive tariffbased bidding. The association also wanted the regulator to refer NTPC’s alleged abuse of dominance to the Competition Commission of India. The CERC rejected both the requests.

Private power producers said that by signing “anti-competitive” PPAs for 37,000 MW of power between October 2011 and January 5, 2011, NTPC had staked a claim for 168 million tonnes of coal a year, leaving no fuel for private power producers. They also alleged that by hurriedly signing PPAs, it would leave no scope for private firms to enter into agreements with state utilities for selling electricity.

NTPC responded saying other power producers had signed PPAs for more than 1 lakh megawatts in five years to January 2011, which was double of what the state firm had signed. Also, it argued that all of NTPC’s PPAs were fully consistent with the prevailing government policy, which had not been challenged by private power producers. It also said it had not rushed into signing agreements as these involved negotiation, deliberation and discussion for a long period before they were signed.

On the allegation of capturing coal supply, the state firm said the fuel was allocated by the coal ministry, leaving no scope for NTPC to abuse its position or act in a manner that is anti-competitive.

The regulator said NTPC was not a dominant player. “As regards the market share in terms of installed capacity, we find that the total installed capacity of NTPC is approximately 41,000 MW, which is approximately 19.5% of the total installed capacity.

Therefore, NTPC cannot be said to be a dominant player in the market with only 19.5% of the total installed capacity in the country.” “We hold that the PPAs signed by NTPC are within the framework and the time permitted under the Tariff Policy and therefore, no direction is called for under Section 60 of the Act. The petitioner has requested to refer the matter to the Competition Commission of India under Section 21 of the Competition Act, 2002.”