CERC relief to Adani Power for higher fuel costs

New Delhi, April 3 (IANS) The Central Electricity Regulatory Commission (CERC) has in a landmark order proposed a compensation package for Adani Power to offset higher fuel costs at its Mundra (Gujarat) power project.

Adani Power had appealed to CERC after its customers in Gujarat and Haryana refused to pay higher rates for the electricity generated from the imported coal-based plant at Mundra. The company had said it was forced to hike tariffs owing to rise in prices of imported coal and shortage of domestic supplies.

“The petition needs to be compensated with a compensation package over and above the tariff discovered through competitive bidding. The compensation package, to be called compensatory tariff, could be variable in nature commensurate with the hardship the petitioner is suffering on account of unforeseen events leading to increased coal price which has affected its performance under the Power Purchase Agreement (PPA),” CERC said in its order.

CERC has ordered setting up a committee which will work out the exact quantum of the compensation over the current tariff for the 4,620 MW Mundra plant.

The order comes as a boost to investors in the energy sector apprehensive about the government not allowing changes in contract conditions post-bidding.

Tata Power and Reliance Power have similar cases pending before the CERC.

A CERC member, S. Jayaraman, however, dissented with the order passed by a three-member panel.

“The decision will be the precedent to be followed in future. The exercise of regulatory power in such cases will have a cascading effect. In case there is again some development of similar nature, will the Commission interfere again at the instance of the project developer? Will such an exercise of power not jeopardise the consumers’ interest,” Jayaraman asked in his separate order.

Adani Power has entered into two power purchase agreements of 1,000 megawatts (MW) each with the Gujarat government at Rs.2.35 per unit and Rs.2.89 per unit for its imported coal-based project. It has a similar agreement with the Haryana government for sale of power at Rs.2.94 per unit.

The power regulator’s ruling pushed up the company’s share prices Wednesday. The scrip closed at Rs.47.65, up 8.79 percent from its previous price on the Bombay Stock Exchange (BSE).

The opinions, beliefs and viewpoints expressed by authors, news service providers on this page do not necessarily reflect the opinions, beliefs and viewpoints of Hill Post. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual. Hill Post makes no representations as to the accuracy or completeness of any information on this site page.

Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.