Petition No. 155/MP/2012. Case: Adani Power Limited Vs Uttar Haryana Bijli Vidyut Nigam Ltd., Dakshin Haryana Bijli Vidyut Nigam Ltd. and Gujarat Urja Vikas Nigam Ltd.. Central Electricity Regulatory Commission

Case NumberPetition No. 155/MP/2012
JudgesDr. Pramod Deo, Chairperson, Shri S. Jayaraman, Member, Shri V.S. Verma, Member and Shri M. Deena Dayalan, Member
IssueElectricity Act, 2003 - Sections 125, 62, 63, 64, 64(5), 79, 79(1)(b), 79(1)(f), 86, 95
Judgement DateOctober 16, 2012
CourtCentral Electricity Regulatory Commission

Order:

(New Delhi)

  1. The present petition filed by Adani Power Limited under Section 79 of the Electricity Act has its roots in the Power Purchase Agreements (PPAs) signed by the petitioner with the utilities in the States of Gujarat and Haryana. The petitioner has made the following prayers:

    1. to evolve a mechanism to restore the Applicant to the same economic condition prior to occurrence of Subsequent Events mentioned in respective Part I & II hereinabove by adjudicating the disputes between the Applicant and the Respondent(s) in relation to regulate including changing and/or revising the price/tariff under PPAs dated 7.8.2008 with UHBVNL and DHBVNL and 2.2.2007 with GUVNL;

    2. in the alternative, to declare that the Applicant is discharged from the performance of the PPAs on account of frustration of the PPAs due to Subsequent Events in respective Part I & II;

    3. this Hon'ble Central Commission be pleased to declare that the revised tariff shall be applicable from the Scheduled Commercial Operation Date (SCoD) of the PPAs;

    4. that during the pendency of the present Application Hon'ble Central Commission may direct the Respondent(s) to procure power on the cost plus basis, alternatively, the Hon'ble Central Commission may suspend the operation of the PPAs till the final disposal of the Application;

    5. pass such further or other orders as the Hon'ble Central Commission may deem just and proper in the circumstances of the case.

    The petitioner, Adani Power Limited (hereafter called 'Adani'), a subsidiary of Adani Enterprises Ltd is in the process of establishing thermal power projects in various parts of the country. It has already set up a generating station, Mundra Power Project, with a total capacity of 4620 MW at Mundra in the State of Gujarat.

  2. On 1.2.2006, Gujarat Urja Vikas Nigam Ltd (GUVNL) issued a public notice inviting bids for supply of power on long-term basis. In response to the notice, Adani submitted its bid quoting a levelised tariff of Rs. 2.3495/kWh. On 4.1.2007, Adani was selected as the successful bidder. The Letter of Intent dated 11.1.2007 was issued in favour of Adani. Subsequently, the Power Purchase Agreement (PPA) dated 2.2.2007 was signed between GUVNL and Adani for supply of 1000 MW of power at the rate of Rs. 2.35/kWh. Adani signed another PPA dated 6.2.2007 with GUVNL for supply of additional 1000 MW of power at Rs. 2.89/kWh. However, the dispute raised in the present petition is limited to the PPA dated 2.2.2007. At the instance of GUVNL, Gujarat Electricity Regulatory Commission (GERC) is said to have adopted the tariff under Section 63 of the Electricity Act.

  3. Haryana Power Generation Company Ltd (HPGCL) on 25.5.2006 issued the Request for Qualification ("RFQ") on behalf of the distribution companies in the State of Haryana, namely, Uttar Haryana Bijli Vitran Nigam Ltd (UHBVNL) and Dakshin Haryana Bijli Vitran Nigam Ltd (DHBVNL) to procure 2000 MW power on long-term basis. Adani participated in the bidding. On 4.6.2007, HPGCL issued the Request for Proposal ("RFP") to the qualified bidders which included Adani. In response, Adani on 24.11.2007 submitted RFP to supply 1425 MW power at levelised tariff of Rs. 2.94/kWh from Mundra Power Project. Adani was declared successful. Accordingly PPAs were executed between Adani and UHBVNL/DHBVNL on 7.8.2008. Haryana Electricity Regulatory Commission adopted the tariff under Section 63 of the Electricity Act.

  4. In the instant petition, Adani has stated that at the time of submission of bid to GUVNL it calculated the tariff considering the commitment made by Gujarat Mineral Development Corporation (GMDC) to supply 4 MTPA of coal from Morga-II coal block. Adani has further submitted that despite the strenuous efforts made at various levels, including at the level of the State Government, GMDC did not sign the FSA for supply of coal. Meanwhile, Adani had signed an agreement dated 15.4.2008 with its holding company, Adani Enterprises Ltd for supply of coal imported from Indonesia to meet its shortfall in fuel supply. Adani by its letter dated 28.12.2009 terminated the PPA dated 2.2.2007 executed with GUVNL on the ground of non-materialization of supply of coal by GMDC. GUVNL, feeling aggrieved by termination of the PPA by Adani, filed a petition, being Petition No 1000/2010 under clause (f) of sub-section (1) of Section 86 and Section 95 of the Electricity Act, 2003 (hereinafter "the Act") before Gujarat Eelectricity Regulatory Commission(GERC). This petition was allowed by GERC by its order dated 31.8.2010 directing Adani to supply power to GUVNL under the PPA since Adani had already decided to use the Indonesian coal for generation of electricity at Mundra Power Project and had signed agreement for supply of coal by its holding company. An appeal (Appeal No. 184/2010) filed by Adani against the order of GERC dated 31.8.2010 before the Appellate Tribunal was dismissed by the judgment dated 7.9.2011. Adani has filed the second appeal (Civil Appeal No. 11133/ 2011) before the Hon'ble Supreme Court under Section 125 of the Electricity Act and this appeal is pending. In view of the directions of GERC, also upheld by the Appellate Tribunal, Adani is said to be supplying power to GUVNL since 2.2.2012 on commercial operation of Units 5 and 6 of Mundra Power Project.

  5. As regards the PPAs with the distribution companies in Haryana, Adani has submitted that the tariff of Rs. 2.94/kWh was quoted having regard to the Central Government's policy of allocation of coal linkage for the power projects, the market conditions relating to the price and availability of fuel at the time the bids were invited by HPGCL. Adani has stated that after submission of RFP to HPGCL, it made an application to Coal India Ltd on 28.1.2008 for grant of coal linkage and was issued Letter of Assurance (LoA) dated 25.6.2009 for coal linkage equivalent to 70% of the capacity proposed to be supplied to Haryana based on the decision taken by Coal India Ltd to restrict coal linkage to coastal power plants, though prior thereto the Central Government had proposed 100% allocation of coal to the power projects. It has been claimed that under the circumstances it became necessary to secure remaining 30% of fuel requirement for supply of agreed quantum of power to Haryana from other sources and Adani decided to use the coal imported from Indonesia by its holding company, Adani Enterprises Ltd with which Adani already entered into an arrangement on 15.4.2008 for supply of coal.

  6. Adani has contended that the provisions of the FSA ultimately signed with Coal India Ltd on 9.6.2012, are unfavourable to Adani and are also contrary to the New Coal Distribution Policy in force since 18.10.2007. Adani has pointed out that under the FSA, the 'take or pay' commitment has been pegged at 80% of Annual Contracted Quantity, which cannot meet the entire requirement of coal for supply of power at 85% Normative Availability committed in the PPAs with Haryana distribution companies, causing shortfall in meeting the obligation of power supply committed. In order to meet the shortfall, it would have to use the imported Indonesian coal, Adani has averred. It has been further stated that the FSA executed with Coal India Ltd does not ensure even supply of coal of 80% of Annual Contracted Quantity through domestic coal as the FSA provides that Coal India Ltd can meet its obligation to supply coal of 80% of the Annual Contracted Capacity by importing coal in case of shortage of domestic coal, the cost of which is also to be borne by Adani. It has been further stated that in case of failure of Coal India Ltd to meet the committed supply of coal, no penalty is payable by the latter during the initial contract period of three years; and thereafter the meager penalty of 0.01% is imposable. Thus, according to Adani, substantial changes in the conditions of supply of coal since submission of RFP and the signing of the PPAs with Haryana has come to the fore consequent to signing of FSA with Coal India Ltd, the use of the imported coal is bound to increase. According to Adani, these developments have eroded the very foundation of the PPAs signed with the Haryana distribution companies. During the course of the proceeding it has been informed that Adani has synchronized one unit of Mundra Power Project with the Grid during July this year for supply of electricity to Haryana State.

  7. The...

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