Adani Power unit to get relief for import of costlier coal

Siddhartha P. Saikia Updated - March 12, 2018 at 09:13 PM.

Committee to suggest measures by April 30

Gautam Adani, Chairman, Adani Power (file photo)

In a major relief for Adani Power, the Central Electricity Regulatory Commission (CERC) on Tuesday offered a ‘compensation package’ to cover the rise in cost of electricity production for its 4,620-MW Mundra plant.

However, this compensation is not permanent, says the commission.

“As and when the hardship is removed or lessened, the compensatory tariff should be revised or withdrawn,” the order said.

The Gautam S. Adani-promoted power company had petitioned the CERC that because of the rise in price of Indonesian coal, which the company imports to run its power plant, it had become economically unviable to sell electricity to Gujarat and Haryana State utilities at rates decided in 2007-08. The rates were derived through a competitive bidding process.

Dissent

The order passed by three members of CERC — Pramod Deo, M. Deena Dayalan and V.S. Verma — said the ‘compensatory tariff’ could be variable in nature. However, CERC member S. Jayaraman disagreed with the other members.

According to him, Adani Power’s petition does not satisfy the force majeure conditions, therefore “no relief can be granted to the petitioner under these provisions”. Jayaraman also said the power producer was using notifications of the Indonesian Government as an opportunity to cover some of its commercial risks or to improve its margins further.

In its order, the CERC called for setting up a committee within a week that would suggest various measures that can be taken up. The panel would submit its report to the regulatory commission by April 30. The committee would comprise the Principal Secretary (Power) of Gujarat and heads of Adani Power and discoms and an independent financial analyst or a banker.

Other orders

Other power companies awaiting similar relief are Tata Power and Reliance Power.

Tata Power has filed a petition seeking a re-look at electricity rates applicable to its Ultra Mega Power Project in Mundra.

“They are also in line. Maybe in a day or two, the judgement would come,” CERC Chairperson Pramod Deo told Business Line .

Tata Power is awaiting resolution of the tariff issue, which will determine future investments by the company.

“It all depends on how Mundra shapes up. That would be a major consideration for Tata Power. For us to make sure that Mundra becomes viable and does not eat into our cash flows is a very important factor,” Anil Sardana, Managing Director, Tata Power, told Business Line .

‘Positive development’

Meanwhile, Gautam Adani, Chairman, Adani Group, on Wednesday said the CERC order offering compensation tariff is a positive development not only for his company but also for the sector. “We welcome the CERC order, which will pave the way forward to bring back investor confidence into the power sector,” Adani said.

The order affirms the need for adequate return on the investment made which would improve the quality and supply of electricity to the consumers, the company said.

 

siddhartha.s@thehindu.co.in

 

 

Published on April 3, 2013 05:56