The Appellate Tribunal for Electricity (Aptel) delivered a technical knockout to 1,424 MW Adani Power.
The Appellate Tribunal for Electricity (Aptel) delivered a technical knockout to 1,424 MW Adani Power over the weekend, quite similar to the one it delivered against 4,000 MW Coast Gujarat Power Limited (Tata Power) on September 15. The main case about giving compensatory tariffs to the two companies, however, continues in Aptel.
Given the 18-month delay in the case already, a quick resolution is not expected, putting further strain on both Tata Power and Adani Power. Tata Power’s consolidated losses in the three months to June, 2014 were R111 crore and the firm did not take into any compensatory tariff.
Adani Power reported a loss of R179.72 crore in Q1FY15, despite accounting for compensatory tariff, in its stand-alone accounts, of R260 crore during the quarter.
After the Indonesian government changed its rules on exporting coal by imposing a minimum export price in September 2010, both Adani and Tata approached the Central Electricity Regulatory Commission (CERC) asking for relief on grounds of ‘force majeure’ and ‘change of law’.
CERC, however, rejected both on April 4 last year, arguing that changes in Indonesian law cannot be considered ‘force majeure’.
It, however, ordered compensatory tariffs based on Section 61 and 79 of the Electricity Act. While Section 79 gives CERC the power to regulate, Section 61 says CERC has to safeguard the consumer interest while at the same time ensure ‘recovery of the cost of electricity in a reasonable manner’. The compensatory tariff, determined by a Deepak Parekh-led committee took into account the extra money earned by the companies from their mines in Indonesia as a result of the higher coal export price.
The discoms in Haryana, Rajasthan, Maharashtra and Gujarat, however, challenged the CERC ruling at Aptel which, while asking for current charges to be paid based on the new CERC formula, said it would take a call on past dues. Haryana challenged this in the Supreme Court which remanded the matter back to Aptel with instructions to hear the case afresh.
With the case in the Supreme Court, both Tata and Adani challenged the Central Electricity Regulatory Commission’s (CERC) rejection of ‘force majeure’ and ‘change of law’ in Aptel as a matter of caution — if Aptel rejected the CERC compensatory tariff, they must have reasoned, they could possibly resurrect their ‘force majeure’ petition.
With Aptel rejecting this part of the challenge against the CERC ruling, Tata has already appealed the matter in the Supreme Court and Adani Power will likely follow suit soon.
At the same time, the CERC ruling on compensatory tariff is currently being heard by Aptel and, whatever the ruling, that will end up in the Supreme Court as well.