CERC comes to rescue of coal shortage hit Adani Power

Adani Power, which was disallowed by the Supreme Court to pass on higher imported coal prices to consumers, has got relief from Central Electricity Regulatory Authority (CERC).

The regulator has allowed full compensation to Adani Power for its Mundra Thermal Power Plant in Gujarat.

In September 2010, Indonesia had barred selling its coal to another country less than international prices, which spiralled generation costs of Adani Power.

Last month, the Supreme Court had ruled against claiming compensation from the electricity distribution companies for costlier imported coal due to policy changes by another country.

However, it allowed some reliefs under the provision of 'change in law' in India.

In April 2015, the government withdrew customs and countervailing duty on coal imports by Adani Power. In fact, even the imported coal used for the power plant was brought under the clean energy cess. Apart from these, it had also withdrawn service tax exemption.

After Adani Power filed a petition with CERC, the authority in its order has allowed 'change in law' for customs duty, clean energy cess, countervailing duty, service tax, etc.

"As per the Power Purchase Agreement with the Distribution Companies, the company is entitled to claim reimbursement of any increase in taxes as a change in law, which is a part of normal revenue for power sold," read Adani Power's clarification to BSE.

Adani Power did not respond DNA Money queries on this subject.

Mundra Thermal Power Plant has a generation capacity of 4,620 megawatt (mw). It has two power purchase agreements (PPAs) for 1,000 mw each with Gujarat Urja Vikas Nigam and another PPA with Uttar Harayana Bijli Vitran Nigam and Dakshin Haryana Bijli Vitran Nigam for supply of 1,424 mw.

On May 12, DNA Money had reported on stoppage of power generation at Mundra Thermal Power Station and Mundra Ultra Mega Thermal Power Plant due to factors like unavailability of coal, maintenance and technical faults.

As per Central Electricity Authority data, the problem at Mundra Thermal Power Station began on May 1 when Unit 6 generating 660 mw had to be shut due to coal shortage. The following day two more Units of 6 and 8 discontinued generating energy due to the same reason.

This had resulted in Gujarat getting 1,250 mw less power from Mundra and had to buy from open market during the summer when demand is at its peak.

Post changes in the Indonesian law on coal imports, Adani Power has been asking for higher tariff from power distribution companies.