Adani Power
Upholding the Adani Power's plea, the Central Electricity Regulatory Commission (CERC) in a landmark ruling has recently ordered that the company should be compensated for higher prices of Indonesian coal, brightening the prospects of Tata Group and Reliance Power projects locked in litigation with state utilities on this score. The CERC has directed state distribution companies in Haryana and Gujarat to compensate Adani Power for higher cost of Indonesian coal for which the player had argued that its 4,620mw project at Mundra, of which 2,424mw was contracted with state utilities, is suffering an annual loss of Rs. 1,370cr on account of higher fuel cost. In this connection, the state electricity boards had refused to revise contracted tariffs after the abrupt change in Indonesian laws that raised coal prices. The regulator has directed Adani Power and state utilities to form a joint committee to assess the impact of the price escalation on the project. The eight-member panel will suggest a compensation package over and above the tariff in the PPA by April 30.

Welcoming the CERC order, Adani Group Chairman Gautam Adani, said that the order will pave the way forward to bring back investors' confidence into the power sector.The order comes as a shot in the arm for the power sector, where thousands of megawatts of generation capacity is stranded because imported coal prices had jumped but companies were unable to pass on the additional cost on to customers. The regulatory order has direct implications for Tata Power's 4,000mw ultra mega power plants (UMPP) at Mundra, which has started operating but its customers have firmly opposed any renegotiation of tariff on the ground that the power purchase agreement does not have such a provision. Reliance Power's proposed UMPP at Krishnapatnam in Andhra Pradesh is also stranded because of a similar dispute with utilities over tariff. The CERC's move to effectively settle the issue in favour of developers has paved the way for viable commercial operations of power plants. While protecting the interests of consumers, the regulator has also taken care to address the issue of sanctity of the bidding process.