Adani Power and Tata Power have refused to share information relating to the compensatory tariff matter with other parties to the case, prompting the Central Electricity Regulatory Commission (CERC) to request for more time to rule on the issue.
The power producers have refused to share certain documents with the buyers and NGO Prayas, citing confidentiality agreements with their partners and associates. The regulator has directed them to clarify the “confidentiality clause” and file written submissions. The CERC has filed a petition in the Supreme Court seeking additional time to pass an order on awarding compensatory tariff.
Among the partners and associates referred to by the power generators are the Singapore-based Adani Global Pte (AGPte), a subsidiary of Adani Global, which trades in coal and power. The company executes contracts with owners of coalfields in Indonesia. Tata Power, which runs Coastal Gujarat Power has said the confidentiality relates to the shareholders agreement between Tata Power and the shareholders of Indonesian Coal Company, Kaltim Prima Coal.
After a recent hearing, the CERC observed it would take a view on sharing of the information provided by Tata Power and Adani with the buyers and Prayas, both parties to the case.
In 2012, Adani Power and Tata Power claimed compensation for their Mundra-based thermal power plants on account of an unforeseen increase in Indonesian coal prices. A sudden rise in the fuel’s price meant that companies were unable recover their costs since this had not been pencilled into their power purchase agreements (PPAs).
The case has since been heard by the electricity tribunal (Aptel) and the Supreme Court but a final decision has been elusive. The power plants in question supply a aggregate 6,424 MW to Rajasthan, Maharashtra, Haryana, Punjab and Gujarat.
In 2013, the commission rejected the companies’ argument of treating the matter under “force majeure” or “change in law” but it constituted a committee to determine compensation. However, the procurers rejected the committee’s recommendation and approached the tribunal against it. In June this year, Aptel remanded the case back to the commission and asked it to arrive at compensatory tariff under provision of force majeure.
Plants based on imported coal have suffered losses since 2012 as the Indonesian government decided to raise coal prices in accordance with international benchmark prices. This led to coal prices shooting up to over $100 per tonne from below $30 per tonne in a matter of months. Since then coal prices have hovered around $50 per tonne.
Although these companies had won PPAs through competitive bidding, they approached the commission for relief, a recourse usually reserved for regulated plants. The CERC’s decision will have a bearing on other power plants running on imported coal. For instance, Adani Power has sought similar relief from Aptel for its plants based in Maharashtra and Rajasthan.
