The Central Electricity Regulatory Commission (CERC) has admitted Adani Power’s petition to adjudicate its dispute with utilities from Gujarat and Haryana over their power purchase agreement (PPA).
In its petition, Adani Power, a subsidiary of Adani Enterprises, raises several issues relating to the effect of Indonesian Regulations on its obligations to supply power at the rate discovered through the competitive bidding process and deviations in the fuel supply agreement (FSA) signed with Coal India.
Pramod Deo, chairman of CERC, told Business Standard: “Adjudication of the dispute relating to tariff involving Adani as a generating company is within the CERC’s jurisdiction under clause (f) of sub section (1) of section 79 of the Electricity Act, 2003. CERC will hold a hearing on November 6.”
A similar petition has been filed by Tata Power.
There has been a sharp 79 per cent year-on-year increase in Adani’s fuel cost due to coal imports at market prices, instead of a contracted price of $36 per tonne previously. This was following a change in Indonesian laws in September 2011, whereby all prior coal supply agreement from Indonesia were rendered null and void.
Adani Power had entered into a PPA in February 2007 with Gujarat Urja Vikas Nigam (GUVN) for supply of 1,000 Mw at Rs 2.89 per unit. The company also executed a PPA on August 7, 2008, with Uttar Haryana Bijli Vitran Nigam and Dakshin Haryana Bijli Vitran Nigam for supply of 1,425 Mw at Rs 2.94 per unit.
The company had calculated a Rs 2,89 rate considering the commitment made by Gujarat Mineral Devel-opment Corporation (GMDC) to supply four million tonnes per annum of coal. However, GMDC did not sign the FSA, following which the company decided to use the Indonesian coal for generation at the Mundra project to meet shortfall. Subsequently, the company, on December 28, 2009, terminated the PPA with GUVN. However, the Gujarat Electricity Regulatory Commission (GERC) on GUVN’s petition against termination of PPA asked Adani Power to supply power. Moreover, the Appellate Tribunal on Electricity dismissed Adani Power’s appeal against GERC’s order. The company’s second appeal is pending for an order before the Supreme Court.
On its PPA with Harayana utilities, Adani Power submitted that it has to depend upon Indonesian coal to maintain supply of the agreed quantum. The company pointed out that the FSA executed with Coal India does not ensure supply of even 80 per cent of the annual contracted quantity through domestic coal, as the FSA provides that Coal India can meet its obligation by importing coal in case of shortage of domestic coal and the cost to be borne by Adani. However, CERC has said that it had taken a serious note of Adani Power’s move not to place on CERC’s record its PPA with Haryana.
Adani Power had prayed for “evolving a mechanism for regulating including changing and /or revising tariff on account of frustration and/ or of occurrence of force majeure and/ or change in the law events under the PPA due to change in circumstances for the allotment of domestic coal by the government of India and Coal India (CIL) and enactment of new pricing regulations by Indonesian government”. The company has pleaded to declare the revised tariff be applicable from the scheduled commercial operation date of the PPAs. During the pendency of the application, the company prayed that Gujarat and Harayana utilities be asked to procure power on the cost-plus basis and, alternatively, suspend the operation of the PPAs till the final disposal.