Tata, Adani, Essar Power case: Experts hail SC order, say will help firms to provide power to states at competitive rates

Power sector experts have hailed the Supreme Court’s order asking the Central Electricity Regulatory Commission (CERC) to give its findings on the proposed amendments in power purchase agreements (PPAs) for the coal-based plants of Tata, Adani and Essar Power within eight weeks.

According to experts, this will help the companies with their plants in Gujarat to provide the necessary power to states at competitive power rates to meet their requirement.

The power companies had sought reconsideration of their agreements to be able to pass on the compensatory tariff to consumers. The companies cited a change in Indonesian rules in 2010 as a force majeure event that raised the cost of coal imported from that country to fuel their electricity plants. A two-judge bench headed by Justice Rohinton F Nariman sent the matter back to the CERC, asking the authority to decide on all issues relating to amendments to the PPAs.

CERC’s former chairman Pramod Deo told DNA Money, “CERC has got a clear mandate. It can reopen PPA and keeping consumer interest in mind can arrive at a viable price regime for both coal and electricity for consumers.’’

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It will be prudent not to ignore ground realities and make an adjustment so that the overall objective of affordable power can be achieved by all stakeholders, he said. PwC partner (grid) Kameswara Rao said that it’s a pragmatic resolution that rescues critical assets by getting all parties to bear some of the burden.

Source: DNA Money