Shares of Tata Power and Adani Power tanked on Tuesday after Supreme Court quashed the ruling of the Appellate Tribunal for Electricity Regulation (APTEL) that allowed both the companies to charge compensatory tariff from consumers. In a span of 8 minutes, between 11:18 am and 11:26 am, Tata Power slumped 8.9 per cent from Rs 90 to Rs 82 on the NSE, while Adani Power slumped 17.7 per cent from Rs 45.75 to Rs 37.65, after reaching its 52-week high of Rs 46.35. Tata Power and Adani Power closed at Rs 85.50 and Rs 37.15 respectively.
The case was being fought in Appellate Tribunal for Electricity (APTEL) between Tata Power and Adani Power with state electricity distribution companies of Gujarat, Rajasthan, Maharashtra, Punjab and Haryana. Both companies had cited the term and conditions of the power purchase agreement (PPA) between them and the electricity distributors, to claim that the change in Indonesian regulations in 2010 that increased the cost of coal imported by the companies was a force majeure event and therefore the companies can pass on their increased costs to their consumers. Both Tata Power’s 4,000 MW Ultra Mega Power Project and Adani Power’s 1,980 MW power plant in Mundra Gujarat are run on imported coal.
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APTEL had ruled in April 2016 that both the power companies needed to be compensated because the change in Indonesian laws was beyond the control of these companies. It further ruled that as per the terms and conditions of PPA between the power generating companies and distributors, this change in Indonesian laws was a “force majeure event” hence the power generating companies can pass on their cost due to their consumers.
Setting aside the order of APTEL, Supreme Court bench comprising justices Pinaki Chandra Ghose and Rohinton F. Nariman said, “The impugned order is set aside. The only benefit we are allowing is if the force majeure event is related to Indian laws”.