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In a first, CERC offers relief to Adani’s imported coal fuelled Gujarat project

In a pioneering move that may raise electricity tariffs, India’s apex power sector regulator the Central Electricity Regulatory Commission (“CERC”) on11th April has sanctioned the revised power purchase agreements (“PPA”) for Gautam Adani’s promoted Adani Power Ltd’s Gujarat plant on ground of unexpected increase in the prices of imported coal.

Considering that the issue had been pending since 2012, CERC approved the revised PPA agreements that contains changes in the fixed and variable costs of the tariff components from the Mundra power plant.

While the variable cost (fuel) will be revised every month and has maximum limit of $110 per tonne for coal having a GCVof 6322 kilocalorie per kg, the fixed cost has been reduced by 20 paise per KWH unit. The CERC order also allowed extension of the amended PPA by 10 years and Adani Power sharing its mining profit.

The Friday order cited recommendations of a committee constituted by the Gujarat government and chaired by former Supreme Court judge Justice R.K. Agrawal to look into the possibility of “contribution by each stakeholder, including banks, project developers and procurers, by way of concessions for mitigating hardship“.

The High Power Committee (HPC) comprised of S.S. Mundra, former Deputy Governor, RBI and Pramod Deo, former Chairman, CERC and observed that coal-based power projects needed to be salvaged and allowed to pass the impact of high fuel costs equitably to consumers, lenders and other stakeholders.

 

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