Adani, Tata to charge higher tariffs, claim arrears from state utilities

NEW DELHI: Adani Power and Tata Power will be able to charge higher tariffs from March 2014 to make up for the unexpected increase in the cost of Indonesian coal following a favourable regulatory order.

The Appellate Tribunal for Electricity (Aptel) issued an interim order on Monday saying the two firms can claim arrears from March 2014 when the Central Electricity Regulatory Commission (CERC) allowed compensatory tariff, not from April 2012 as sought by the companies. The utilities that had contracted power from the plants had approached to appellate authority against the order.

Tata Power and Adani Power have been seeking higher tariff after the Indonesian government changed their law governing coal exports, making the fuel very costly, and plants that depend on such imports unviable.

“As per the interim order pronounced in the court of Aptel, state utilities will have to pay arrears of March to May 2013 in six equal installments to Tata Power and Adani Power. The bills raised for June will be settled during this month. The order will ease the cash flow for both the companies,” said Amit Kapur, advocate Partner with the law firm JSA that represented both Tata Power and Adani Power.

He added that exact financial implications on both power producers will be known only after the written interim order is issued by Aptel.

Tata Power’s supplies electricity from its 4,000 MW plant to Maharashtra, Gujarat, Rajasthan, Haryana and Punjab, while Adani Power has long term agreements to supply 2,424 MW to Gujarat and Haryana. Both the diversified groups have commissioned ultra mega power generation complexes at Mundra in Gujarat.

Tata Power said its unit Coastal Gujarat Power Limited (CGPL), which runs the Mundra plant, has been supplying electricity to the beneficiary states despite making losses in its operations, and that alternative sources of supply would be more costly for the customers.

“CGPL will do its utmost to continue to honour its commitment towards the nation’s energy security by providing reliable & competitive power supply through the project and hope for quicker resolution of the issues,” Tata Power said in a statement.

“The indicative compensatory tariff of about Rs 2.80 per unit is much lower and very competitive compared to the average purchase price in all five states and is also substantially lower than the current market rate for providing replacement power at a cost upwards of Rs 4.10 per unit, which could leave all five states prone to load shedding. If Mundra UMPP were to be rendered unviable, the cost of purchasing replacement power would mean higher tariffs by at least Re 1 for all such states,” Tata Power said.