ADANI POWER LIMITED Vs. UTTAR HARYANA BIJLI VIDYUT NIGAM LTD., DAKSHIN HARYANA BIJLI VIDYUT NIGAM LTD. AND GUJARAT URJA VIKAS NIGAM LTD.

JUDGEMENT

(1.) THE petitioner, a subsidiary of Adani Enterprises Ltd. has set up a generating station, Mundra Power Project, with a total capacity of 4620 MW in the Special Economic Zone at Mundra in the State of Gujarat. The generating station has four phases, namely, Phase I and II comprising Unit Nos. 1 to 4 (4x330 MW), Phase III comprising Unit Nos. 5 and 6 (2x660 MW) and Phase IV comprising Unit Nos. 7 to 9 (3x660 MW). The petitioner has entered into two PPAs dated 2.2.2007 and 6.2.2007 for supply of 2X1000 MW power to Gujarat Urja Vikas Nigam Limited (GUVNL) from Phase I and II and from Phase III and PPA dated 7.8.2008 with Uttar Haryana Bijli Vidyut Nigam Ltd. and Dakshin Haryana Bijli Vidyut Nigam Ltd. (Haryana Utilities) for supply of 1424 MW power from Phase IV of the generating station. The present petition is concerned with the sale of power through PPA dated 2.2.2007 to GUVNL and PPA dated 7.8.2008 to the Haryana Utilities. On account of the non -availability of domestic coal linkage, the petitioner is importing coal from Indonesia to meet the entire requirement of coal for supply of power to the third respondent under the PPA and about 58% of the requirement of coal for supply of power to the first and second respondents. To meet the coal requirement, the petitioner had entered into several Coal Supply Agreements with Adani Enterprises Limited of supply of imported coal from Indonesia which were merged into a Consolidated Coal Supply Agreement dated 26.7.2010 which provided for supply of 10 MMT of coal per annum for use in Phase I to IV of the Mundra Power Project at CIF USD 36/MT for a period of 15 years from the scheduled commercial operation date of last unit of Phase IV of the project.

(2.) ON 23.9.2010, Minister of Energy and Mineral Resources, Republic of Indonesia promulgated "Regulation of Ministry of Energy and Mineral Resources No. 17 of 2010" (hereinafter referred to as 'Indonesian Regulations') which recognized the direct sale contract (spot) and term sale contract (long term) which had been signed by the holders of mining permits and special mining permits and further provided that the existing direct sale contracts and term sales contracts would adjust to the regulations within a period not later than 6 months and 12 months respectively. In case of violation, the holders of mining permits and special mining permits were liable for administrative sanction in the form of written warning, temporary suspension of sales or revocation of mining operations permits. Accordingly, the Indonesian Regulations were to come into force in respect of term sale contract (long term) with effect from 23.9.2011. After promulgation of Indonesian Regulations, Adani Enterprise Ltd. vide its letter dated 27.9.2010 addressed to the petitioner had expressed its inability to perform its obligations under the CSA dated 26.7.2010 w.e.f. 24.9.2011. Further, PT Dua Samudera Perkasa in its letter dated 20.9.2011 addressed to Adani Global PTE Ltd. a subsidiary of Adani Enterprise Ltd. had conveyed that as coal supply at a price other than the Harga Batubara Acuan (HBA) prices would be considered as violation of Indonesian Regulations resulting in suspension of license, suitable amendment in the price arrangement was required. In view of the promulgation of the Indonesian Regulations having an impact on the export price of coal from Indonesia, the petitioner has submitted that the cost of production of electricity from the Mundra Power Plant has increased tremendously which has rendered it commercially unviable to supply power to the respondents at the PPA price. The petitioner informed GUVNL vide its letter dated 25.7.2011 about the existence of "force majeure" events and sought urgent adjustment of tariff to get supply under the PPA dated 2.2.2007. On achievement of the SCODs of Units I and II of the generating station on 2.2.2012, the petitioner informed GUVNL vide its letter dated 6.2.2012 that it was in the process of approaching the appropriate authority for seeking relief under "force majeure" clause and supply of power from the project is subject to the decision of the appropriate authority with retrospective effect i.e. from SCOD. GUVNL in its letter dated 13.2.2012 has replied that it would take suitable view upon final decision of the appropriate authority or Court. The petitioner also took up the matter with Haryana Power Purchase Centre by its letter dated 25.5.2012, notifying the occurrence of "change in law" and 'force majeure' and seeking relief under Article 12.7(b) of the PPA for mitigation of the effect of force majeure/change in law, resulting in change of generation cost by adjusting the tariff to cover the revised coal prices. The Haryana Utilities are stated to have not responded to the request of the petitioner. Thereafter, the petitioner filed the instant petition on 5.7.2012 before this Commission seeking the following reliefs: a) 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; b) 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; c) 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; d) 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; e) pass such further or other orders as the Hon'ble Central Commission may deem just and proper in the circumstances of the case.

(3.) THE Commission after hearing the parties came to the conclusion that the petitioner had entered into a composite scheme for generation and sale of electricity to more than one State and upheld its jurisdiction to adjudicate the dispute between the petitioner and the respondents by order dated 16.10.2012. Haryana utilities sought review of the said order dated 16.10.2012 in Review Petition No. 26/2012 which was dismissed vide order dated 16.1.2013. Thereafter, the petition was taken up for hearing on merits.