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SC asks CERC to decide on amendments in PPAs of Adani, Tata and Essar groups in 8 weeks

The power companies had earlier claimed that due to increase in price of coal imported from Indonesia, they were not being able to pass on the compensatory tariffs to consumers due to the PPA's.

twitter-logo PTI   New Delhi     Last Updated: October 30, 2018  | 08:54 IST
SC asks CERC to decide on amendments in PPAs of Adani, Tata and Essar groups in 8 weeks
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The Supreme Court Monday asked the Central Electricity Regulatory Commission to give a decision in eight weeks on the proposed amendments in the power purchase agreements of coal-based plants of the Adani, Tata and Essar groups in Gujarat. The top court said a high-powered committee headed by former Supreme Court judge justice R K Agrawal had recommended for amendments in the power purchase agreements (PPAs). "Having perused the high-powered committee report, it will be appropriate to the applicant to approach the CERC for approval of the proposed amendments made to the PPA's," a bench of justices R F Nariman and Navin Sinha said.

It said earlier apex court judgments rejecting compensatory tariffs will not stand in the way of maintaining of petitions and each of the consumer groups party to the litigations should be heard by the CERC, which can decide the issue in accordance with the law. The court said consumer groups such as 'Energy Watchdog' can raise the objections related to the qua proposed amendments before the Central Electricity Regulatory Commission (CERC). It asked the CERC to decide the issue expeditiously in not less than a period of eight weeks while allowing the impleading application of the Gujarat government.

At the outset, senior advocate Mukul Rohatgi, appearing for the power companies said the high-powered committee has recommended for amendment to the PPAs and said consumers will be affected if such amendments are not carried out at the earliest. Advocate Prashant Bhushan, appearing for petitioner NGO 'Energy Watchdog' said they should be granted liberty to approach the CERC for raising the objections on the proposed amendments. The bench said it can certainly do so before the CERC. The Gujarat government had sought the apex court's opinion on the implementation of the high-powered panel's recommendation on the PPA's.

Adani Power, Tata Power and Essar Power operate three coal-based power plants in Gujarat and several power distribution companies, including those in Maharashtra, Punjab and Haryana, have PPA's with them. The power companies had earlier claimed that due to increase in price of coal imported from Indonesia, they were not being able to pass on the compensatory tariffs to consumers due to the PPA's. The power companies sought reconsideration of their terms of agreements to be able to pass on compensatory tariff to the consumers. The high-powered committee was formed by the Gujarat government in July to look into the possibility of contribution by each stakeholders, including banks, project developers and others.

The panel has recommended for amendments in the power purchase agreements to rescue the coal-based power projects from the loss. The State Bank of India (SBI) has also moved the apex court seeking implementation of a high power panel's recommendation to amend the PPAs. SBI is part of a consortium of banks that funded the three power producers -- Tata Mundra, Adani and Essar -- who were not allowed by the apex court to charge compensatory tariff in lieu of the increase in cost of coal they were importing from Indonesia. The apex court had earlier set aside the decision of an appellate tribunal for electricity that allowed Adani Power and Tata Power to charge compensatory tariff against the increased cost of imported coal.

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