Adani Power Ltd’s plan to scrap an agreement to supply power to state-run utility Gujarat Urja Vikas Nigam Ltd has been dashed with an appellate tribunal dismissing its petition, according to four people familiar with the development.
Adani Power had agreed to supply 1,000 megawatts (MW) of power at Rs.2.35 a unit to Gujarat Urja for 25 years. The pact was signed in 2007. But in November 2008, Adani sent a notice to the state utility seeking termination of the agreement as it could not secure fuel from a local source.
Adani was banking on fuel supply from Gujarat Mineral Development Corp. Ltd’s (GMDC) coal mines in Morgha block in Chhattisgarh but this did not materialize.
“Imported coal sourced from countries like Indonesia is becoming dearer and it is not feasible to sell at the earlier decided tariff,” an executive at Adani group had said earlier. An official of the state powerregulator said the tribunal has confirmed the regulator’s order. He did not want to be identified.
The regulator last year ruled in favour of Gujarat Urja, saying Adani Power can’t terminate the agreement on the basis of its failure to execute a fuel supply agreement with GMDC.
Following this, Adani Power approached the appellate tribunal challenging the order.
An executive at Adani group declined to comment. The official spokesperson of the Adani group did not respond to telephone calls on Wednesday.
Several companies including Essar Power and Shapoorji Pallonji have approached the Gujarat government for scrapping power purchase agreements.
Tata Power Co. Ltd sought a revision in the tariff for its Mundra power project but the Gujarat government refused to consider allowing higher rates, as Mint reported on 5 September.
Adani Power had participated in the bidding for GMDC’s pithead power project at Morgha to develop 1,000MW of power, using coal available locally. GMDC was to supply four million tonnes of coal a year from the Morgha block to the winning developer.
Confident of winning the bid, Adani signed a power purchase accord with Gujarat Urja but lost the Morgha project to Torrent Power.