SC order seen as shot in arm for Adani Power; puts discoms on the mat

ksenia kondratieva Mumbai | Updated on November 22, 2018

In what may seem as a double win for Adani Power and a boost to the private power sector players that have been struggling to recover dues from distribution companies, the Supreme Court has directed Rajasthan State distribution companies (discoms) to pay 50 per cent compensation to Adani’s Kawai plant.

Adani Power Rajasthan, operating the 1320 MW (2X660 MW) Kawai power plant, has been demanding a compensation of around ₹5,000 crore from the Rajasthan discoms on account of additional costs incurred after the government amended its coal distribution policy in 2013.

For the Adani Group, the apex court order, which came last month, could potentially emerge a double win as another entity of Adani Power — Adani Power Maharashtra Ltd (APML) — operating the 3300 MW Tiroda power plant, is arguing a similar case against Maharasthra Discom. The case is currently pending before the Appellate Tribunal for Electricity (APTEL) and is listed for hearing on November 29.

Apart from Adani, GMR and KSK Energy are other private players that have been seeking compensations from discoms on the ground of shortage in coal supply due to the change in government policy.

According to Poonam Verma, Partner, J Sagar Associates, which represented Adani Group before the SC, while the case is now subject to the final order of APTEL (next hearing is scheduled for December), the order “sends a clear signal” to all the discoms and the government.

She noted, however, that as per the apex court order, the provisional payment that discoms will have to make to Adani in the next two months will be subject to refund in case the discoms win the case in the APTEL.

Case history

In May, after years of deliberations, the Rajasthan Electricity Regulatory Commission (RERC) had granted relief to Adani Rajasthan and directed discoms to pay the compensation. Discoms challenged RERC order with APTEL. APTEL in its interim order delivered on September, 24 has refused a stay and directed discoms to pay 70 per cent of the compensation claimed by Adani in two weeks as a provisional payment subject to final decision of the tribunal. Discoms then challenged this order in the Supreme Court.

In its order dated October 29 - the same day when the the apex court has ruled in favour of Tata and Adani’s imported coal-based power plants in Gujarat - the Supreme Court has upheld the interim order of the APTEL.

Published on November 22, 2018

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