Adani Power (Mundra), GUVNL to now approach CERC for approval of amended PPA

• Under the settlement, Adani Power has agreed to continue the supply of 2,000-MW power to GUVNL and has withdrawn its demand for over Rs 10,000-crore compensatory tariff
• Both parties will now approach the Hon'ble CERC for approval of the amendment in the terms of both SPPAs, as agreed to in the Settlement agreement, said Adani Power

New Delhi: Adani Power (Mundra) and Gujarat Urja Vikas Nigam Ltd (GUVNL) have decided to resolve all disputes pertaining to Power Purchase Agreements (PPA), revive supply of power and approach the Central Electricity Regulatory Commission (CERC) for approval, said Adani Power in a regulatory filing to the stock exchanges on Saturday. The statement came days after the Supreme Court disposed of the curative petition filed by GUVNL and said that the relationship between the two companies will be governed by their settlement deed. Under the deed, Adani Power (Mundra) has agreed to continue the supply of 2,000-MW power to the state discom and has withdrawn its demand for over Rs 10,000-crore compensatory tariff, as sought before the Central Electricity Regulatory Commission (CERC).

"We would like to convey that Adani Power (Mundra) Ltd. ("APMuL"), wholly owned subsidiary of the Company, and Gujarat Urja Vikas Nigam Ltd. ("GUVNL"), have agreed to resolve all disputes pertaining to Power Purchase Agreements ("PPAs") dated 2nd February 2007 ("Bid-2 PPA") and 6th February 2007 ("Bid-1 PPA"), and Supplementary PPAs ("SPPAs") dated 5th December 2018 connected to both these PPAs, in a comprehensive and amicable manner and withdraw all related pending cases/petitions, claims filed by either side against each other," said Adani Power in the regulatory filing.

Adani Power (Mundra), GUVNL to now approach CERC

The filing said that the two companies have also agreed to "revive the cancelled Bid-2 PPA and its connected SPPA, which stood terminated by virtue of decision of the Hon'ble Supreme Court dated 2nd July 2019 and in turn, APMuL and GUVNL to not claim any compensation in terms of the said judgment in relation to termination of Bid-2 PPA."

Adani Power said that "both parties will now approach the Hon'ble CERC for approval of the amendment in the terms of both SPPAs, as agreed to in the Settlement agreement."

"Recommencement of supply of power under the amended terms of the Bid-2 PPA will allow the consumers of Gujarat access to reliable and affordable electricity, while the settlement reached between APMuL and GUVNL will aid APMuL with optimal utilization of Mundra power plant capacity by smooth operation of both PPAs and timely recovery of dues thereafter, for entire term of the original PPA," said Adani Power.

Background

In 2006, Adani Power had emerged as the successful bidder for the supply of 1,000-MW power at the rate of Rs 2.35 per Kwh from its thermal power project at Korba, Chhattisgarh, to GUVNL. Another agreement was entered in April 2007 for the supply of 1,000 MW against bid from Mundra Power Project in Gujarat. The bid was submitted on the basis of the assurance given by Gujarat Mineral Development Corporation (GMDC) to supply 4 MT of coal. Since the supply of coal was not made to Adani Power, the company wrote to GUVNL in January 2009, expressing its inability to supply the power to the discom in the absence of supply of coal by GMDC and conveyed its decision to terminate the PPA.

On December 28, 2009, Adani Power terminated the PPA. GUVNL challenged the termination before the CERC, which directed Adani to supply the power at the rate determined in the PPA. On appeal, APTEL upheld the CERC's order. GUVNL had argued that the procurer was not concerned with as to where Adani would arrange for its supply of coal. It submitted that it was the responsibility of Adani to make arrangement for an alternative source. In 2019, a bench led by Justice Arun Mishra had held both the notice of termination of the PPA and Adani's claim for compensatory tariff from GUVNL for additional costs incurred in supplying power from its imported coal-based Mundra plant as legal and valid.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)