Adani, Tata Power shares plunge on Supreme Courts decision over compensatory tariff
Both Tata and Adani Power had sought the regulators involvement stating that they suffered losses due to high cost of imported coal.
Investors dumped shares of Adani Power and Tata Power on Tuesday, after when CNBC reported that Supreme Court has disapproved compensatory tariff to both the company.
At 1140 hours, Adani Power's stocks tumbled over Rs 7 or 16.46% on BSE, trading at Rs 37.05 a piece.
Adani added,"The copy of judgment of the court is awaited. Preliminary analysis reveals that the company will get benefit in respect of its PPA (1424 MW) to Haryana State Discoms as also qua PPAs (3300 MW) with Maharashtra Discoms as also PPA (1200 MW) with Rajasthan Discoms.
"Once the final order of SC is available, then the company would decide further course of action," said Adani.
While Tata Power was tradimg at Rs 82.55 a piece tanking over Rs 4 or 5.22%.
The apex court's ruling have fueled a decade old issue on compensatory tariff.
On March 31, 2017, the SC reserved its judgement to determine if an electricity regulatory body can amend competitively bid tariffs to award compensation to the companies involved.
Both Tata and Adani Power had sought the regulator’s involvement stating that they suffered losses due to high cost of imported coal.The Central Electricity Regulatory Commission (CERC) in April 2013, allowed Tata and Adani Power to hike power tariffs to compensate from a change in Indonesian law which unexpectedly increased coal cost in 2010.
Tata Power's subsidiary Coastal Gujarat Power Ltd (CGPL) and Adani Power's Mundra project in Gujarat have power purchase agreement (PPAs) with state discoms in Maharashtra, Rajasthan, Gujarat, Haryana and Punjab.
In the month December 2016, CERC ruled in favor of the two firms stating that they were entitled to relief in the form of compensation for higher coal cost for their flagship power plants in Gujarat.
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