Adani Power life saver may set point of reference

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New Delhi: In an unprecedented move, India's apex power sector regulator offered a bailout package to Adani Power Ltd in a late Tuesday order to offset losses on account of the unexpected increase in the prices of imported coal and the unavailability of domestic coal for the company's 4,620 megawatts thermal power project at Mundra in Gujarat.

Adani Power had entered into two power purchase agreements of 1,000MW each with the Gujarat government at Rs.2.35 per unit, and Rs.2.89 per unit for its 4,620MW plant in Mundra.

The judgement will also have a favourable bearing on other imported coal-based projects planned in the country such as those of Tata Power Co. Ltd and Reliance Power Ltd. Companies such as Adani Power, Tata Power and Reliance Power had acquired coal mines in Indonesia to feed their plants in India.

"The decision in the present case will be the precedent to be followed in future. The exercise of regulatory power in such cases will have a cascading effect. In case there is again some development of similar nature, will the commission interfere again at the instance of the project developer? Will such an exercise of power not jeopardize the consumers' interest?" Jayaraman wrote in his separate order.

A top power ministry official, requesting anonymity, said, "The utilities have the right to file a petition with the electricity commissions wherein every case is dealt on its merits." Tata Power has also approached CERC to consider an increase in its power tariffs after customers declined to pay higher rates for the electricity generated from its imported coal-based Mundra plant in Gujarat.

"There is no change in law as per the CERC order and Adani Power will have to continue to supply as per the power purchase agreement. The order has suggested a practical solution for a practical problem. The regulator wants the power developers and procurers to amicably reach a solution," said a GUVNL official requesting anonymity.

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