Adani Power agrees to sign supplementary PPA with Haryana
The development assumes significance in view of early onset of summer and rise in the demand for electricity. State expected to face a power deficit in the range of 168 MW to 2476 MW in 2023-24
Eight months after the Haryana Council of Ministers had approved the signing of a supplementary power purchase agreement (PPA) with Adani Power Ltd (APL) to resolve the impasse over the supply of 1,424 MW of contracted power to the state, the under-fire Adani conglomerate on Tuesday yielded.
The APL which had dithered from signing the mutually agreed supplementary PPA citing one condition or the other finally came around, top state officials said.
Power officials on Tuesday held a meeting with APL team, led by its director Rajesh Adani, at Chandigarh following which the firm agreed to inking the supplementary PPA.
“The APL wanted withdrawal of all pending cases, appeals and claims pertaining to the PPA before various forums. It was also pressing for withdrawal of demand notices for not achieving the required average availability. The state government did not agree to these demands. It has been decided that litigations and claims from either side should be allowed to run the logical course,’’ said PK Das chairman, Haryana Power Utilities, in reply to a query.
The development assumes significance in view of early onset of summer and rise in the demand for electricity. As per the Haryana Power Purchase Centre (HPPC), the state experiences substantial deficit in peak season and is expected to face a power deficit in the range of 168 MW to 2,476 MW in 2023-24. The state had experienced a deficit of 2,570 MW in April 2022 and 1,786 MW in May 2022 due to non-availability of power from APL, Coastal Gujarat Power Ltd and Faridabad Gas Power Plant. The state had to buy costly power at the rates 11.55 per unit in April 2022, ₹8.13 per unit in May 2022 and ₹7.30 per unit in June 2022.
However, the state will now get supply of 1,096 MW, which is 83% of the 1,320 MW – the capacity retained by the distribution companies as PPA capacity with units 7 and 8 of Mundra Power Plant dedicated to their PPA. It will forego 17% power (about 224 MW) generated from imported coal, officials said.
Adani defaulted on supplying power since Dec 2020
The APL, which has a contract with the state government since 2008 for supplying 1,424 MW power from its Mundra power project at a levelised tariff of ₹2.94 per unit for 25 years, has consistently defaulted on supplying contracted capacity since December 2020. The company took the plea that the increase in the price of imported coal has made generation at the PPA tariff uneconomical. However, the Supreme Court in its April 11, 2017, order had disallowed the enactment of Indonesian regulation (which as per APL led to an increase in the imported coal price) as change in law or force majeure as per the PPA. The HPPC had on June 14, 2021, served a preliminary default notice to APL under Article 14 of the PPA for not achieving the required average availability. However, the APL stopped power generation from all its units after receiving preliminary default notice. The state government had come under fire for going soft on APL by not enforcing the supply of 1,424MW contracted power to Haryana, thus adding to the state’s power woes.
Following parleys held by chief minister Manohar Lal Khattar last year to resolve the issue, it was decided that a supplementary PPA will be inked whereby APL will supply 70% of the contracted capacity based on domestic coal. The PPA between APL and Haryana is based on 70:30 ratio of contracted capacity based on domestic and imported coal respectively.
The Council of Ministers had on June 27, 2022, approved the supplementary PPA for supply of about 1,096 MW power generated from domestic coal at ₹3.20 per unit (agreed tariff of ₹2.94 plus about 26 paisa). The cost, however, is likely to increase to ₹3.48 per unit. The state will though forego 224 MW power capacity at Haryana periphery.
Officials said they will pass through the cost if the power generated from imported coal is requisitioned by the state government. For the un-requisitioned power, sale to third parties will be allowed for which profit sharing will be done as per the PPA and fixed charges will be paid on the power produced from the imported coal.
Haryana’s claims raised against APL stand
Officials said since the state government did not accede to the APL call for withdrawal of demand notices for not achieving the required average availability, the state’s claims of ₹2,436 crore will hold. There is a demand notice for ₹1,144 crore on account of shortfall in the power availability and APL is still in default in terms of Article 14 of the PPA during the period May 2021 to April 2022. The HPPC had also raised claims of additional cost of ₹982 crore (till March 2022) incurred by it for purchase of power from alternate source because of non-supply by the APL, officials said.
