Fuel cost increase: Adani and Tatas’ Indonesia power projects wait for ‘compensatory tariff’

The Indonesian coal-based power projects of Tata Power and Adani Power, which were set up on the promise of cheap fuel coming to Gujarat by sea, continue to face uncertainty on whether they will be compensated for the rise in the fuel cost.

While Tata Power’s case is going on in the Appellate Tribunal for Electricity (APTEL), earlier this month, the Supreme Court left the decision on payment of a ‘compensatory tariff’ to Adani Power with the distribution utility.

The decision on payment of the ‘compensatory tariff’ to Adani Power will be subject to the final outcome of the case, which will be heard again in the Supreme Court on January 6.

However, none of the developments so far have indicated that the fortunes would turn in favour of the operators of the two plants and they would be compensated for the additional cost burden mounting since 2011. There is hope for the future.

The Supreme Court had also said that a change in the power purchase agreement can be modified if both parties — the generator and the purchaser — are agreeable to the changes.

At the time of signing the power purchase agreements, the two companies were confident that the cheap imports of coal from Indonesia would continue and quoted extremely low tariffs. Tata Power had also set up subsidiaries in Indonesia to mine coal and export it to India.

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