In a relief to Adani Power, the Supreme Court on Tuesday allowed the company to raise its two grounds — change in international law and unforeseeable circumstances — to defend its grant of compensatory tariffs from Haryana state power distribution companies.
However, it restrained Adani from using the argument to seek tariffs higher than compensatory tariff allowed by power regulator Central Electricity Regulatory Commission (CERC) for supplying power from its Mundra project because of hike in imported coal prices. Adani Power has been demanding that the ‘force majeure’ and ‘change in Indonesian law’ clauses in power purchase agreements should also be factored in while deciding the compensatory tariff.
It had sought hike in power tariffs on account of “unprecedented and unforeseen” circumstances leading to escalation in imported coal prices from Indonesia.
The tariff hikes could have been sharper if the CERC had allowed considered these clauses. The companies also want the recovery of compensatory tariff for pre-March 2013 arrears.
A bench headed by Justice J Chelameswar also asked Adani Power not to seek cancellation of the contracts on the basis of these grounds to prove the point that it affected the imported coal prices.
Earlier, the Supreme Court had stayed proceedings before the Appellate Tribunal for Electricity (Aptel) which is hearing Adani Power’s appeal over certain unmet demands.
A similar appeal by CGPL, a wholly-owned subsidiary of Tata Power Company, whose Mundra power station was allowed the compensatory tariff by CERC, also being heard by the tribunal, hasn’t been stayed, as it is pending before another bench headed by Justice JS Khehar.
Both companies had separately challenged a part of the April 2013 order (for non-invocation of force majeure) of the CERC before the Aptel, which rejected their pleas on the grounds of “inordinate delay” in filing appeals. CERC, while allowing compensatory tariff to CGPL and Adani Power in 2013, had asked the power procuring states to form a panel and decide on the quantum of compensation.
The committee, headed by HDFC Bank chairman Deepak Parekh, had recommended that CGPL be allowed an increase of 45-55 paise tariff in its Mundra plant. Based on the report, CERC had in February 2014 ruled power-generation companies be allowed to adjust compensation arising out of the increasing cost of domestic fuel and rising dependence on costly imported fuel. Aptel had on July 21 last year awarded the Tata Mundra UMPP compensatory tariff at 54 paise per unit and Adani’s Mundra project had got compensatory tariff at 41 paise unit.