CERC allows Tata Power, Adani to pass through high cost

Power regulator CERC has allowed Tata Power and Adani Power to pass through the losses suffered by them due to procuring high price coal from Indonesia to run their power plant.
However, implementation of the the Central Electricity Regulatory Commission order will be subject to approval of Supreme Court.
"In the light of the judgement of the Appellate Tribunal, it is held that the petitioner had Coal Sales Agreements or arrangement for the entire quantum of coal required for supply of power to the Procurers and the Indonesian Regulations has completely wiped out the premise on which the petitioner had quoted the tariff in the bid.

"The petitioner is entitled to relief for force majeure event in terms of Article 12.7 (b) of the PPA (power purchase agreement)," CERC said in its order.
Earlier in April, Appellate Tribunal for Electricity had set aside CERC's order for granting compensation for increase in fuel costs to projects won through competitive bidding.
The CERC in its order on February 21, 2014, had granted nearly Rs 830 crore compensation for Adani Power's 4,620 MW Mundra plant in Gujarat for making up for losses incurred by the project due to higher cost of imported Indonesian coal.

Similarly, the CERC had allowed higher tariff as well as compensation of Rs 329.45 crore for Tata Power's 4,000 MW Mundra project to compensate for increase in the price of imported coal.

The matter was however remanded back to the CERC to consider the relief to be granted to CGPL for force majeure event. CERC was also directed to conclude the said exercise expeditiously within a period of three months.
Commenting on today's CERC order, Tata Power said in statement, "This decision of the CERC is an important step in resolving the major impasse affecting imported coal based power projects in the country that got impacted due to extraneous factors well beyond the control of developers."
CGPL (Coastal Gujarat Power Ltd), has been delivering the full potential of Mundra across the five beneficiary states albeit with tremendous fiscal pain, it said.

"We look forward to Supreme Court permission to implement the order. We are studying the order and the detailed financial impact shall be worked out after analysis of the order."
Tata Power further said that even after considering the indicative compensatory tariff the cost would be much lower and competitive than the average purchase price of all five states, and is substantially lower than the current market.