The Supreme Court of India has appointed a third arbitrator in the ongoing dispute between Talwandi Sabo Power Ltd (TSPL), a Vedanta Ltd subsidiary, and Chinese construction company Sepco Electric Power Construction Corporation (SEPCO). This development comes as a setback to TSPL’s plan to demerge its parent company, Vedanta, into five separate entities. The dispute dates back to 2009 when TSPL and SEPCO entered into several engineering, procurement, and construction agreements for a 3×660 MW thermal power project in Punjab. However, in 2015, multiple disputes arose, and SEPCO invoked arbitration under the contracts. A settlement was reached in 2016, but SEPCO failed to fulfill its contractual obligations, including the terms of the settlement.
As a result, SEPCO, which is owed ₹1,251 crore by TSPL, has challenged the demerger plan. The National Company Law Tribunal (NCLT) has rejected TSPL’s demerger plan, potentially delaying the planned restructuring of Vedanta. To resolve the issue, Vedanta is considering trimming its demerger plan from five units to four. The original plan was to demerge Vedanta into six units. The appointment of a third arbitrator is expected to facilitate the resolution of the dispute, which has been ongoing for several years.