SC admits Adani Power plea against Aptel order

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Aug 14 2012, 08:57am hrs
Adani refused power supply to GUVNL due to rising coal prices

The Supreme Court on Monday admitted Adani Powers appeal against the Appellate Tribunal for Electricitys order asking it to supply power to state utility Gujarat Urja Vikas Nigam Ltd (GUVNL) at an agreed price of R2.35 per unit for 25 years. Adani Power had, in December 2009, terminated its 2007 power purchase agreement (PPA) with the state utility for supply of 1,000 mw power on the grounds that it would not be possible to supply electricity at the earlier agreed tariff of R2.35 per unit due to high coal prices.

The electricity was to be supplied from Adani Powers 2x660-mw Mundra-II facility.

The issue assumes importance for the power sector as many power producers are seeking higher tariffs amid rising coal prices.

A bench headed by Justice SS Nijar, while admitting Adanis plea, posted the matter for hearing in November.

Adani Power, which was mainly relying on coal supply from Gujarat Mineral Development Corporations mines in the Morgha block in Chhattisgarh, said that supply was not possible as the fuel supply agreement with the fuel company could not materialise.

Adanis counsel Harish Salve submitted that as per the penalty clause of the agreement, the power firm was ready to pay damages of R100 crore to the Gujarat government to exit the accord.

Adani argued that the state commission as well the tribunal do not have powers to grant specific performance relief under the Electricity Act, 2003, and the Commission does not have the jurisdiction to deal with the present dispute as the same has to be governed by Article 17 of the PPA that provides for arbitration.

The tribunal had dampened Adanis plan to terminate its power purchase pact with GUVNL on the basis of higher coal prices by saying that sourcing of fuel is the responsibility of the seller and not the buyer.

Aptel had also dismissed the petition seeking the review of an earlier judgment of the tribunal that ruled in GUVNLs favour in 2010.

The Gujarat Electricity Regulatory Commission had also ruled that the PPA could not be terminated on the basis of the argument that the company was not getting domestic coal supply. The Commission in August 31, 2010 had set aside the termination notice sent by Adani Power to GUVN directing Adani to supply power to the state utility as per the PPA.

As per the tribunal, the PPA was not based on the assumption that Adani Power would get coal from only GMDC. It also represented that it had tied up for supply of imported coal with various companies in Germany and Japan as a source of fuel supply. Therefore, it is for the appellant to make arrangements for fuel from any source, the tribunal noted.