Power pangs: Haryana, Adani Power to sign supplementary PPA to get 1,050MW power generated from domestic coal

Published on May 03, 2022 12:58 AM IST

Following negotiations, the Haryana government will sign a supplementary power purchase agreement (PPA) with Adani Power Ltd (APL) for supply of about 1,050MW power generated from domestic coal at the agreed tariff of ₹2

As per the existing PPA, the profit even on the 70% contracted power from domestic coal sold by APL in the open market would be shared with the Haryana government. (AFP)
As per the existing PPA, the profit even on the 70% contracted power from domestic coal sold by APL in the open market would be shared with the Haryana government. (AFP)
By, Chandigarh

Following negotiations, the Haryana government will sign a supplementary power purchase agreement (PPA) with Adani Power Ltd (APL) for supply of about 1,050MW power generated from domestic coal at the agreed tariff of 2.94 per unit.

The state government was criticised for not being able to force Adani Power to supply 1,424MW of contracted power to Haryana, thus compounding the power shortage.

The state is short of about 2,400MW power everyday because of non-supply of 1,424MW of Adani Power, 380MW of Coastal Gujarat Power Ltd (CGPL) and 600MW of Rajiv Gandhi Thermal Power Plant in Hisar.

Adani Power, which has a contract with the Haryana government since 2008 for supplying 1,424MW electricity from its Mundra power project at a levelised tariff of 2.94 per unit for 25 years, has not been supplying any power to the state for the last six months, thus contributing to the ongoing power shortage.

The APL has taken the plea that the increase in the price of imported coal has made generation at the power purchase agreement (PPA) tariff uneconomical.

The APL had sought signing of a supplementary PPA for supply of power generated from imported coal on a higher tariff as per the recommendation of a high-powered committee.

Chief minister Manohar Lal Khattar had on April 23 held a meeting with APL director Rajesh Adani and chief executive officer and managing director Anil Sardana to resolve the issue.

30% contracted power from imported coal to be dropped

Top officials said since the energy charges as per the PPA between Adani Power and the Haryana government were based on 70:30 ratio of contracted capacity based on domestic and imported coal respectively, the two entities have decided that APL will supply about 1,050MW electricity generated from the domestic coal at the agreed tariff of 2.94 per unit.

“This means that we will drop the 30% contracted capacity based on the imported coal in the supplementary PPA. And there will be no pass through of costs,’’ said an official.

The move will also ward off any controversy as any plans of allowing a pass through of costs on 30% contracted capacity generated from imported coal would have been hard to defend in light of the Supreme Court ruling of April 11, 2017. Allowing a pass through would have meant buying energy from APL at a higher cost instead of 2.94 per unit, which is non-escalable as per the PPA.

‘Practical decision, would ward off controversy’

Power officials said to go for 70% domestic coal generated power was a practical decision under the circumstances as their plans to procure 500MW of short-term power from private companies have been delayed. The move will also ward off any controversy.

“The power situation will improve in the coming 10-15 days since Adani has agreed to restore the supply of about 1,050MW even before the supplementary PPA is executed. The APL has started de-sealing its Mundra plant and flushing of equipment is on,’’ said an official.

As per the existing PPA, the profit even on the 70% contracted power from domestic coal sold by APL in the open market would be shared with the Haryana government.

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 power purchase agreement. The APL had contended before the central regulator that a change in law in Indonesia took place in 2010 and 2011, which aligned the export price of coal from Indonesia to international market prices instead of the price that was prevalent for the last 40 years.

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