CERC offers compensatory package to Adani Power; stk up

Moneycontrol Bureau

In a major relief for power producers, the Central Electricity Regulatory Commission (CERC) has decided to offer a compensation package to Adani Power following the Gujarat based company's appeal to regulator for permission to increase power tariffs.

Adani Power shares were up 13.7 percent to Rs 49.65

Adani Power appealed to CERC after its customers in Gujarat and Haryana refused to pay higher rates for the electricity generated from the company's Gujarat coal-based plant. Adani Power said it was forced to hike tariffs due to escalation in price of imported coal and scarcity of domestic coal.

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The regulator said that the compensation package will be called compensatory tariff and will be reviewed once the problems related to coal supply are resolved.

The order, however does not clearly mention the kind of compensatory tariffs Adani Power will get.

Adani Power has signed two power purchase agreements of 1,000 megawatts (MW) each with the Gujarat government at Rs.2.35 per unit and Rs.2.89 per unit for its Mundra plant. The company also has a similar agreement with Haryana government at Rs.2.94 per unit.

Shares of other power companies like Tata Power and Reliance Power gained percent and percent respectively as the market expects the CREC ruling to strengthen the case for higher power tariffs for other imported coal-based projects as well.

Power producers such as Adani Power, Tata Power and Reliance Power, which depend on coal imported from Indonesia, have been struggling after Indonesian government last year started levying higher royalty and income tax.