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Tata-Adani tariff dispute with discoms may go to court - Want compensatory tariffs from five States

  • The court remains the only avenue for Tata Power and Adani Power to resolve their dispute with five State utilities, as the Power Ministry has refused to intervene in the matter. The two producers had approached the Ministry to resolve a dispute over compensatory tariffs with the distribution utilities of Haryana, Punjab, Rajasthan, Maharashtra and Gujarat on electricity sold from their plants in Mundra, Gujarat. They had sought the Centre’s help to convince the States not to challenge a Central Electricity Regulatory Commission (CERC) order before a superior authority.

  • While Power Minister Piyush Goyal was hoping for a resolution at a meeting on Tuesday with the parties concerned, his officials emphasised that the Centre had no locus standi on the matter, leaving no option for the Minister. Sources in the know of the development said the Ministry’s stand was based on the fact that the power purchase agreements were between the buyer (discoms) and the seller (power producers). These agreements are legally enforceable contracts, and there is no room for a third party.

  • In February, the CERC had allowed the two firms to charge a higher tariff after the Indonesian Government increased royalty rates on coal, which is used by Adani Power’s Ultra Mega Power Project and Tata Power’s Coastal Gujarat Power Ltd (CGPL), in Mundra. The State distribution utilities had challenged the CERC order in the Appellate Tribunal for Electricity (APTEL). But, in July, APTEL allowed an increase of 52 paise/unit for CGPL and 41 paise/unit for Adani. The order was again challenged by the discoms in the Supreme Court, following which the court gave a stay order. “Producers and buyers may contest the foreign exchange rate variation, effective date for recovery of compensatory tariff, station heat rate and revenue share for sales above normative availability under the respective power purchase agreements,” said a source.

  • In addition, the power producers also want the Centre to issue an ordinance and bring a change in the Competitive Bidding Guidelines. The producers want the power purchase agreement to allow for a change in tariff due to unforeseen events, such as the Indonesian Government’s decision to hike the royalty on coal exports. The five States faced a shortage of 4,741 MW during peak hours on August 27, when the Western Region Load Dispatch Centre reported a loss of 7,713 MW of generation capacity, which was mainly due to 4,570 MW of capacity being shut down by Adani Power and Tata Power at their Mundra facilities. NTPC, IndiaBulls and Lanco were among the others that shut down part of the capacity.

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