Power Ministry sets up expert panels to resolve CPSU project disputes

The Ministry of Power has introduced a new system to settle contractual disputes in power projects executed by Central Public Sector Undertakings and statutory bodies under its oversight. The framework seeks to reduce delays in dispute resolution that often raise project costs and slow construction.

The centrepiece of the reform is the creation of Conciliation Committees of Independent Experts. These committees offer an alternative to arbitration and court proceedings, which can be slow and expensive.

Each committee includes three independent members drawn from former senior government officials at Secretary or Additional Secretary level, experts in power project development and operations and maintenance, and senior finance professionals from financial institutions. The scope was later widened to include coal mining specialists for matters linked to captive coal mines. The committees have a three year term that can be extended to five. Members receive Rs 50000 for each sitting, with a limit of five sittings for each dispute. Proceedings must conclude within three months, with a further three months allowed only in exceptional cases.

The process is based on conciliation and encourages the parties to work toward compromise rather than a legal contest. Participation remains voluntary and does not remove access to arbitration or courts unless both parties consent. The mechanism covers all ongoing and future contracts, and future tenders will include suitable clauses.

Two amendments have shaped the system. In April 2022 the ministry added a coal mining expert to address disputes involving captive coal mines tied to thermal power projects. In October 2023 a corrigendum confirmed that if conciliation does not succeed the parties may return to arbitration or any other legal remedy.

The initiative builds on a study by a group of board level officers from CPSUs. The study found that unresolved disputes consume staff time, raise legal expenses, and slow project execution. The new approach is expected to provide a quicker and more economical way to close disputes.

The Central Electricity Authority will maintain records of committee members, their workloads, and dispute assignments. Developers will meet the initial conciliation costs, which will then be shared equally between the parties.

The reform is intended to improve the business environment in the power sector and help ensure timely delivery of key infrastructure.

The featured photograph is for representation only.