Haryana to challenge Adani tariff power ruling

NEW DELHI (Reuters) - The government of Haryana will challenge the power regulator's ruling this week that allows Adani Power to raise tariffs for electricity supplied to existing clients in two states, its power minister told Reuters on Thursday.

The Central Electricity Regulatory Commission (CERC) has allowed Adani Power to charge "compensatory" tariffs for electricity from its Mundra plant in Gujarat, until supply conditions improve.

The regulator said Adani should be allowed such a tariff, citing what it called the "unforeseen" events of the rising cost of imported coal from Indonesia coupled with the shortage of domestic supplies from state-run Coal India Ltd .

The legal challenge threatens to undermine what Indian power companies had cheered as a major boost to a sector stricken by domestic fuel shortages and the rising cost of imported coal.

"Yes," Haryana state Power Minister Ajay Yadav told Reuters by phone, when asked whether the government was planning legal action. "Because we have signed an agreement with them (Adani). We will make the payment as per the rate at which we have signed the agreement."

Separately, D.J. Pandian, Gujarat state's energy secretary, told Reuters that "all options were open", when asked whether the state government would also challenge the regulator's order.

(Reporting by Matthias Williams and Nidhi Verma; Editing by Tony Munroe)