Nod to supplementary PPA with Adani firm

Subject to legal opinion, concurrence of Haryana advocate general

CHANDIGARH: The Haryana cabinet on Monday gave in-principle approval for signing of a supplementary power purchase agreement (PPA) with Adani Power Ltd (APL) for supply of about 1,090 MW power generated from domestic coal at Rs 3.20 per unit (agreed tariff of Rs 2.94 plus about 26 paisa). However, about 200MW of power produced from imported coal would be surrendered by the government.

The cabinet’s decision also entailed withdrawal of all pending cases, appeals and claims pertaining to the PPA before various forums. The state government will also have to make payment to the tune of about Rs 2,600 crore to Adani Power following the withdrawal of pending litigation.

The signing of supplementary PPA, however, will be subject to the legal opinion and concurrence of Haryana advocate general, BR Mahajan as the matter is sub judice. Also, certain issues have been raised in a legal opinion taken by the power department from lawyer, MG Ramachandran on the draft supplementary PPA. The state government has come under fire for going soft on APL by not enforcing the supply of 1,424MW contracted power to Haryana, thus adding to the state’s power woes. The APL, which has a contract with Haryana government since 2008 for supplying 1,424 MW power from its Mundra power project at a levelised tariff of Rs 2.94 per unit for 25 years, has consistently defaulted on supplying power for the last several months.

It has taken a plea that the increase in the price of imported coal has made generation at the PPA tariff uneconomical. However, the Supreme Court in its April 11, 2017 order had disallowed the enactment of Indonesian regulation (which as per APL led to an increase in the imported coal price) as change in law or force majeure as per the PPA.

‘Completely stopped power supply after getting notice of default’

Power officials said that Adani has not been supplying full contracted capacity to Haryana since December 2020 on one pretext or the other. The Haryana Power Purchase Centre (HPPC) had on June 14, 2021 served a preliminary default notice to APL under Article 14 of the PPA for not achieving the required average availability. However, the APL stopped power generation from all its units after receiving preliminary default notice.

Khattar met APL representatives to negotiate

Chief minister ML Khattar had on April 23 held a meeting with APL director Rajesh Adani to resolve the issue. Following negotiations, it was decided in the meeting that a supplementary PPA will be inked whereby APL will supply 70% of the contracted capacity based on domestic coal.

The PPA between APL and Haryana is based on 70:30 ratio of contracted capacity based on domestic and imported coal respectively.

‘We will get 83% power of retained capacity’

Additional chief secretary (ACS), power, PK Das said that after the cabinet’s approval, the state will get supply of 83% power of the 1,320 MW – the capacity retained by the distribution companies as PPA capacity with units 7 and 8 of Mundra Power Plant dedicated to their PPA. The ACS said that the state will forego 17% power (about 200 MW) generated from the imported coal.

“We will pass through the cost if the power generated from imported coal is requisitioned by us. For the un-requisitioned power, we will allow its sale to third parties for which profit sharing will be done as per the PPA and fixed charges will be paid on the power produced from the imported coal,” the ACS said. Das said that the long-term power they will get at Rs 3.20 per unit would be cheaper any day as compared to about Rs 5.50 per unit they will have to incur on power generated from the new installed capacity.

We will pass through the cost if the power generated from imported coal is requisitioned by us. PK DAS , ACS power

If it is to be a fair settlement, Adani Power should also forego the carrying cost on outstanding dues. MG RAMACHANDRAN, lawyer

‘Supplementary PPA draft favours Adani

In his legal opinion, lawyer MG Ramachandran said the draft of supplementary PPA is completely one-sided, favouring Adani and is contrary to Haryana’s interests. “If it is to be a fair settlement and Haryana is giving up its claims pending before the Supreme Court, Adani Power should also forego the carrying cost on outstanding dues,” he said. Ramachandran has also pointed out that the SC order of February 16, 2021 has directed the continuation of the generation and supply of electricity by Adani Power, based on 70% domestic coal and 30% imported coal.

“If this proportion is accepted, there will be no compensation admissible to Adani Power so long Indian coal companies made available 70% of the domestic coal and the remaining 30% of imported coal is to be arranged by Adani Power with no compensation for higher price of imported coal,” he said.

Haryana’s claims on APL for non-supply will also get relinquished

Officials said the supplementary agreement will also lead to relinquishment of certain claims of HPPC against APL for not supplying contracted power in the past. “There is a demand notice for Rs 1,144 crore on account of shortfall in the power availability and APL is still in default in terms of Article 14 of the PPA during the period May 2021 to April 2022.

The HPPC has raised claims of additional cost of Rs 982 crore (till March 2022) incurred by it for purchase of power from alternate source because of non-supply by the APL,” said an official.