Adani Power Maha unit gets nod to charge more

Written by fe Bureau | Mumbai | Updated: Aug 23 2013, 06:45am hrs
Not only has the Maharashtra Electricity Regulatory Commission (MERC) followed the lead of central electricity regulator CERC by setting up a panel to look into a tariff hike for Adani Powers Tiroda plant, it has also provided major relief to the company, by allowing it to charge an extra 57.4 paise per unit in the interim period for power generated from units 2 and 3, totalling 800 MW, of the plant in the states Gondia district.

MERCs decision comes days after a panel headed by Deepak Parekh submitted its report to central electricity regulator on the quantum of tariff hike to be provided to Adani Power and Tata Power for their plants in Mundra, Gujarat. Reports say the panel has suggested a tariff hike of 45-55 paise per unit for Tata Powers 4,000-MW plant and up to 60 paise per unit for Adani Powers 4620 MW project.

The state regulator, however, rejected Adani Powers plea for a force majeure, saying sourcing coal under the competitive bidding process was the sole responsibility of Adani Power. Non-availability of coal from the local Lohara coal blocks from where the company had originally planned to source fuel for the Tiroda plant had prompted Adani Power to apply for a force majeure to be declared by MERC.

The sourcing of coal from Lohara extension coal blocks was an arrangement made by Adani Power Maharashtra Limited, without involvement of the procurer Maharashtra State Electricity Distribution Company (MSEDCL), the order said.

A force majeure is declared when a natural and unavoidable occurrence interrupts the expected course of events, exempting the affected party from meeting contractual obligations.

In line with CERCs Mundra orders, MERC has directed Adani Power and Maharashtra State Electricity Distribution Company to set up a committee within 10 days to look into the details of the case, evaluate the financial impact of non-availability of coal from Lohara coal blocks on units 2 and 3 of Tiroda and, accordingly, determine a compensatory charge to be provided to the company, if required, over and above the tariff agreed in the PPA. MERC took this step as it accepts that expensive coal had to be arranged to generate and supply power to consumers of Maharashtra, putting the company under financial strain.

The panel is expected to submit its final report outlining the precise mechanism for calculation of compensatory charge within three months. Once the committee, which will be formed along the lines of the CERC Mundra panel, submits its report, the state regulator will initiate proceedings to consider a final view on compensatory charge. The temporary charge will be applicable either for a maximum of one year from Wednesday or until a decision is taken on the recommendations by the committee, MERC said.

Adani Power had approached MERC in July last year to settle its dispute following the termination of its PPA with MSEDCL. Adani Power had asked the regulator for a tariff hike and to direct MSEDCL to execute a new PPA, based mainly on the terms of the one dated September 8, 2008. It also appealed to MERC to consider a revised fuel cost for generation and supply of power from the Tiroda plant, which has a total capacity of 1,320 MW.