Adani Power and Tata Power plunged by 3.8% and 5.1% at around 11:30 am after the Apellate Tribunal for Electricity (APTEL) on Thursday delivered its final order saying Central Electricity Regulatory Commission (CERC) was not authorized to fix tariffs. However the stocks rebounded sharply after management explanations to the effect that the tribunal had infact permitted the force majeure clause was applicable and that the change in the Indonesian law could be considered a ‘force majeure’ event.
Anil Sardana, Managing Director, clarified on a television channel the order had allowed a passthrough of the fixed fuel charges. However Sardana added the company needed to read the court’s order before it could reach any firm conclusion.
Adani power had opened at Rs 34.50 per scrip while Tata Power has opened at Rs 67.70 per stock during the day’s trade. The companies had sought hike in power tariffs from the apellate on account of “unprecedented and unforeseen” circumstances leading to escalation in prices of imported coal from Indonesia.
The judge hearing the matter on Thursday said that, change in Indonesian coal regulation does not amount to change in law. However it can be considered under force majeure and appropriate relief be provided to companies as per power purchase agreements (PPA).
In August 2014, the Supreme Court had stayed an interim order by APTEL allowing Tata Power and Adani Power to charge higher prices from procurers than agreed upon in the PPAs for electricity produced from their plants. The apex court had directed the tribunal to dispose of the matter speedily.