Relief for Adani on higher coal cost

Rules it is an interim relief for Tiroda project in Maharashtra

The Maharashtra Electricity Regulatory Commission (MERC) on Wednesday allowed 57 paise extra per unit for power to be supplied over and above the 520 Mw from Adani Power's Tiroda units 2 and 3 in Maharashtra’s Gondia district.

MERC clarified this was a temporary relief over and above the levelised power purchase agreement (PPA) rate of Rs 2.642 per unit for power supplied from these units beyond the first 520 Mw. The total generation capacity is 1,320 Mw.

This temporary charge will be applicable either for a maximum of one year from Wednesday or until a decision is taken on the recommendations by an in-house commitee, MERC said.

The order is on the lines of the interim relief provided by the Central Electricity Regulatory Commission to Tata Power and Adani Power.

MERC’s ruling on a petition filed by Adani Power said interim relief had been granted keeping in mind the interests of consumers, to safeguard the interest of the lenders and to promote a positive investment climate in the power sector. Further, MERC has directed Adani Power and Maharashtra State Electricity Distribution Company (MahaVitaran) to set up a committee to look into the issue of compensatory charges, to provide temporary financial relief to Adani Power. Adani Power had approached MERC for adjudication of the dispute pursuant to the termination of its PPA with MahaVitaran.

Adani Power had asked for a rate revision and to direct MahaVitaran to execute a new PPA, based substantially on the terms of the one dated September 8, 2008. It also appealed to MERC to consider a revised fuel cost for generation and supply of power from Tiroda.

However, MERC rejected the Adani Power's force majeure plea (being unable to supply as committed earlier due to circumstances beyond one’s reasonable control), saying procurement of coal under the competitive bidding process was their sole responsibility and pleading non-availability was not a valid reason for invoking such a clause.

MERC also took note of the fact that expensive coal had to be arranged to generate and supply power to consumers of Maharashtra. Therefore, MERC said, Adani Power might incur temporary financial losses in supplying power from units 2 and 3 of Tiroda at the rate quoted in the PPA, considering the present situation of coal supply for the project.