India compensates Tata, Adani for higher cost of Indonesian coal

India?s Central Electricity and Regulatory Commission (CERC) has issued a landmark order allowing Tata Power and Adani Power to raise the tariff of electricity produced at their respective Mundra power project as part of a compensation for higher cost of coal import from Indonesia.

The regulator also ruled four states in India, which receive the electricity, to compensate Tata and Adani for the higher cost of Indonesian coal. India imports coal mainly from Indonesia amid supply shortage at home.

Adani Power welcomes the new ruling, which granted it with nearly Rs 830 crore (about US$133.4 million) in compensation, saying the move by the sector regulator will help sustain operations at Mundra project in Gujarat and revive investor confidence.

"Despite facing huge financial losses, Mundra power plant has been supplying power to the states of Gujarat and Haryana. This order will facilitate in sustaining operations at Mundra and enable us to continue honoring PPA commitments," Adani Power said in a statement as quoted by the www.economictimes.com.

Tata Power is running the 4,000 MW Mundra Ultra Mega Power Project (UMPP), while Adani Power is implementing the 4,620 MW Mundra plant.

Local reports, however, said that the states are considering to challenge the controversial CERC ruling. (*)