Blow for Tata Power, Adani Power; earnings under threat

SC disallowing compensatory tariff may make Mundra power plants unviable for the two companies

In an unexpected blow to Adani Power and Tata Power, with respect to their power projects at Mundra, the Supreme Court set aside the appeal for compensatory tariff filed by the companies with the Appellate Tribunal for Electricity (APTEL). Consequently, stocks of Tata Power and Adani Power plunged by 3.5 per cent and 16.6 per cent, respectively. Analysts say this was totally unexpected by the Street given that in December 2016, the Central Electricity Regulatory Commission (CERC) ruled that both companies were entitled to relief in the form of compensation for higher coal cost for power plants in Mundra. Even