Adani Mundra: Gujarat cites ‘data gaps’ for delay in calculating compensation

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Published: June 2, 2020 3:15 AM

Adani Power’s 4,620-MW Mundra unit had tied up two separate power purchase agreements (PPAs) of 1,000 MW each with Guja

The coal price claimed by Adani is also higher than the price reported by Tata Power’s Coastal Gujarat Power for similar quality of coal imported from Indonesia.The coal price claimed by Adani is also higher than the price reported by Tata Power’s Coastal Gujarat Power for similar quality of coal imported from Indonesia.

State-owned discom Gujarat Urja Vikas Nigam (GUVNL) said it needs more time to ascertain the compensation to be paid to Adani Power’s Mundra plant as it feels there are ‘data gaps’ between the cost of imported Indonesian coal claimed by the company and actual prices.

GUVNL’s lawyer’s said the company is claiming the fuel cost based on Indonesian benchmarked prices, while coal is being exported from Indonesia at lower than benchmark rates. The coal price claimed by Adani is also higher than the price reported by Tata Power’s Coastal Gujarat Power for similar quality of coal imported from Indonesia.

Adani Power’s 4,620-MW Mundra unit had tied up two separate power purchase agreements (PPAs) of 1,000 MW each with Gujarat. The compensation, to be calculated retrospectively from January 2010, pertains to the second PPA.

Adani Power, as per the Supreme Court’s July 2019 order, had approached the Central Electricity Regulatory Commission (CERC) to receive compensatory tariff for additional costs incurred in supplying 1,000 MW power from its Mundra plant, after the Gujarat Mineral Development Corporation reneged on its promise to supply local coal from mines in Chhattisgarh.

After the SC order, GUVNL has discontinued procuring electricity under this specific PPA and the plant is currently selling power from this surplus capacity in the open market.

Lawyers representing GUVNL argued in the CERC that the company has placed on record voluminous documents on financial details relating to fixed and energy charges, and “perusal of these documents reveals that there are various data gaps/issues therein”. The Gujarat discom also claimed that its officials were unable to analyse the documents in detail because of lockdown. Analysts estimate the compensation could be in the range of Rs 4,500-6,000 crore.

Adani’s Mundra unit had accumulated losses of about Rs 12,215 crore as on March 31, 2020. Further, its current liabilities (including Rs 665 crore for related parties) exceed current assets by Rs 1,991 crore. Based on the latest financial statements, the net worth of the unit has completely been eroded. It was the first plant to benefit from the Supreme Court’s October 29, 2018 ruling that had extended the lifeline to troubled imported-coal-based power plants in Gujarat by allowing the CERC to amend their PPAs to facilitate pass-through of future fuel price escalation, subject to a ceiling.

These power plants had got into trouble due to an unforeseen hike in Indonesian coal prices.

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