Sembcorp Energy Seeks Recovery Of Late Payment Surcharge Under Electricity Act, 2003


Sembcorp Energy India Limited (now known as SEIL Energy India Limited) has filed a petition under the Electricity Act, 2003, seeking the recovery of a Late Payment Surcharge (LPS) from the distribution companies of the State of Telangana. The LPS is related to delayed payments for the power supply provided by Sembcorp Energy India Limited under Purchase Order No. 38 dated 4.2.2016 and Purchase Order No. 22 dated 20.07.2018. The petition is a result of the long-standing dispute between the petitioner and the Telangana State Power Coordination Committee (TSPCC), Southern Power Distribution Company of Telangana Limited (TSSPDCL), and Northern Power Distribution Company of Telangana Limited (TSNPDCL), collectively referred to as ‘the TS Discoms.’


Sembcorp Energy India Limited is a generating company engaged in the business of operating and maintaining generating plants, including the Sembcorp Energy India Limited (P1 Project) and Sembcorp Energy India Limited (P2 Project), with a total capacity of 1,320 MW. The company supplied power to the TS Discoms as per Purchase Order No. 38 for 300 MW Round-the-Clock (RTC) power from 27.5.2016 to 25.5.2017 and Purchase Order No. 22 for 50 MW RTC Power for the period from 1.8.2018 to 30.9.2018.


Under Purchase Order 38, compensation is levied for deviations of more than 30% in the offtake of contracted energy monthly, and a surcharge is applicable on unpaid dues beyond 30 days. Similarly, under Purchase Order 22, bills are to be raised weekly, and a surcharge is applicable on unpaid dues beyond 30 days.

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The petitioner claims that it raised invoices for compensation charges and LPS following the purchase orders, but the TS Discoms delayed payment. As a result, the TS Discoms are liable to pay LPS for the delay. The petitioner repeatedly sought payment from the TS Discoms but to no avail.

The dispute centers around the timeline for the filing of the petition. The TS Discoms argue that the petition is barred by limitation as it was filed in 2022 for a claim related to the financial year 2016-17. They contend that the petitioner’s right to sue had expired. However, the petitioner argues that the limitation period should commence from the date of the complete payment of outstanding compensation, which crystallized on 26.12.2019.

The dispute resolution authority considered the arguments of both parties and referred to a similar case, involving Sembcorp Energy India Ltd. In that case, the authority ruled that the right to sue commences only after the crystallization of LPS liability, which occurred on 26.12.2019. Therefore, the present petition, filed on 25.8.2022, falls within the limitation period.

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The TS Discoms raised objections to the delay in raising compensation invoices by the petitioner. However, the authority noted that the TS Discoms did not raise such objections earlier and had already made payments towards the principal amount without dispute.

Regarding LPS claims under Purchase Order 22, the authority found that these claims were not time-barred, even under the TS Discoms’ argument. The TS Discoms had not raised any objections to these claims.

The authority also considered the petitioner’s argument that the LPS claim constitutes a continuing cause of action, supported by the Udupi Judgment. The authority agreed that the failure of the TS Discoms to pay LPS for delayed payments constitutes a continuing breach, giving rise to a fresh cause of action with each day of non-payment.

In conclusion, the authority ruled that the petitioner’s LPS claims are not barred by limitation, and the TS Discoms are liable for interest on the outstanding LPS dues. The interest rate will be calculated based on the actual rate of interest paid by the petitioner for arranging working capital funds or the rate of interest on working capital as per the 2019 tariff Regulations or the late payment surcharge rate as per the Power Purchase Agreement, whichever is the lowest. The TS Discoms have a limited timeframe for reconciliation and payment; otherwise, the late payment surcharge provisions will apply. This decision marks an important development in the ongoing dispute between Sembcorp Energy India Limited and the Telangana State Power Coordination Committee and distribution companies, highlighting the significance of timely payments and the application of late payment surcharges under the Electricity Act, 2003.

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