Two months on, Adani Power restores power supply to Hry

SUPPLY RESTORED AFTER STATE GOVT MADE PAYMENT OF RS 485 CRORE; OVER RS 500 CR OF EXCESS PAYMENT RECOVERED FROM FIRM

CHANDIGARH: More than two months after it abruptly stopped supplying electricity to Haryana citing financial crunch, the Adani Power Limited (APL) has restored the power supply to the state from its power project at Mundra in Gujarat. The restoration would come as a relief to the state during the summer.

The supply was restored after the state government made a payment of Rs 485 crore to APL on account of reimbursement of expenditure for installation and operation of flue gas de-sulfurisation (FGD) plant at its Mundra power plant on the orders of the Central Electricity Regulatory Commission (CERC).

Interestingly, the power utilities have also recovered more than Rs 500 crore from APL which were “excessively” claimed by the APL.

The Haryana government had entered into a contract for 1,424 megawatt (MW) power from APL in 2007 from its power project at Mundra in Gujarat. APL’S bid was based on blend of domestic and imported coal in the ratio of 70:30.

Power from APL was contracted at a levelised tariff of Rs 2.94 per unit for 25 years at state periphery through its dedicated network.

Power utilities’ officials said the present APL tariff is Rs 3.19 per unit (total cost), which is lower than the tariff of any power generating stations in Haryana.

“We will now be getting around 950 MW from APL,’’ said a power official.

WHY SUPPLY WAS STOPPED?

The APL, which in 2014 also had stopped power supply to Haryana, had cited rising accumulated losses this time for its inability to run the Mundra power units, Haryana Power officials said.

“The APL was looking for payment of compensation from the state government on account of FGD plant installation. Since there was an order of the central regulator, the power utilities got an inspection done and also took legal opinion from the advocate general before making the payment of Rs 485 crore,’’ officials said.

Adani group chairman Gautam Adani did not respond to a query on the stoppage of power, posed on his Twitter account on April 25. An email sent to APL too didn’t elicit a response.

APL AND HARYANA

APL had earlier sought an increase in the power tariff due to change in Indonesian regulations on coal, invoking provisions of ‘force majeure’ (unforeseeable circumstances that prevent someone from fulfilling a contract) and change in law.

The central regulator though held that force majeure and change in law were not applicable in the case, but in a February 2014 order allowed APL a compensatory tariff of 61 paise to mitigate hardship on account of increase in imported coal prices in addition to allowing arrear payment with effect from date of operation.

Haryana power distribution companies had filed an appeal in the appellate tribunal (APTEL) against the CERC orders, along with a stay application on recovery of compensatory tariff, but APTEL declined. It decided that arrears for 2012-2013 may not be paid till final decision but directed the payment of dues thereafter regularly as per the CERC order.

The distribution companies then filed an application in the Supreme Court which granted a stay in Haryana’s favour on August 25, 2014 and ordered APTEL to decide the matter expeditiously.

The APTEL, in its April 7, 2016 order, said: “We hold that promulgation of Indonesian regulation has resulted in a force majeure impacting the projects of Adani Power and CGPL adversely. The generators would, therefore, be entitled to relief only as available under the power purchase agreements (PPAS).”

SC TO HARYANA’S RESCUE

Setting aside the orders of the APTEL, the Supreme Court disallowed APL to charge compensatory tariff from consumers.

“This being the case, we are of the view that though change in Indonesian law would not qualify as a change in law under the guidelines read with the PPA, change in Indian law certainly would,’’ said the apex court.