Compensatory tariff: SC dismisses Rajasthan discoms’ petition, rules in favour of Adani

• In August 2020, the apex court had ordered the three Rajasthan discoms to pay compensatory tariffs to Adani Power Rajasthan since 2013

• Adani Power had sought compensatory tariffs from Rajasthan discoms for the time period between 2010 and 2018 because it had to import coal at a higher cost

New Delhi: The Supreme Court has ruled in favour of Adani Power Ltd while dismissing review petitions filed by Rajasthan discoms in the case related to recovery of compensatory tariffs by the former. In August 2020, the apex court had ordered the three Rajasthan discoms — Jaipur Vidyut Vitran Nigam Limited, Ajmer Vidyut Vitran Nigam Limited, and Jodhpur Vidyut Vitran Nigam Limited — to pay compensatory tariffs to Adani Power Rajasthan since 2013 to allow the company's 1,200 MW Kawai thermal power plant to recover the higher cost of imported coal.

The ruling was in line with an order passed by the Appellate Tribunal of Electricity (APTEL) that had asked the discoms to pay compensatory tariff to Adani Power Rajasthan. 

"… we would like to inform that the Hon'ble Supreme Court ("SC") has dismissed the review petitions filed by Rajasthan Discoms in the matter of the SC Judgment dated August 31, 2020, pertaining to recovery of compensatory tariffs by Adani Power Rajasthan Limited, a wholly owned subsidiary of the Company," said Adani Power in a regulatory filing to the stock exchanges on Thursday.

Adani Power had to import coal due to non-supply of coal

Adani Power had contended that it had to import coal due to non-supply of domestic coal. The company had sought compensatory tariffs from Rajasthan discoms for the time period between 2010 and 2018 for not receiving domestic coal linkage to Kawai plant in Baran district of Rajasthan. From 2019 onwards, Adani Power got domestic coal linkage under SHAKTI scheme.

ALSO READ

1. Adani Green raises $1.35 bn for its under-construction RE asset portfolio

2. After Adani, Torrent Gas, GAIL acquires 5% stake in IGX

As part of the contract, the Rajasthan state government had promised 100 percent coal linkage to Adani Power. A power purchase agreement (PPA) was signed by Adani Power with the three state discoms in 2010. However, the thermal power unit did not figure in the Centre's list for supply of coal in 2013 and Adani Power had to import coal from Indonesia. Therefore, Adani Power staked a claim for compensatory tariffs before the Rajasthan Electricity Regulatory Commission (RERC), who ruled in its favour. However, the verdict was then challenged by the three discoms in the APTEL followed by the Supreme Court.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram and stay updated)