Adani Power, GUVNL settle dispute over power purchase agreement

In a major relief to Gujarat’s power utility, Gujarat Urja Vikas Nigam Ltd (GUVNL) and Adani Group’s power company have decided to amicably resolve their decade-old dispute over a 1,000 MW power purchase agreement (PPA) in an out-of-court settlement.

As part of the settlement, the Adani group has decided to waive ₹12,000 crore compensation that was allowed by an order of the Supreme Court in 2019. The compensation was payable by GUVNL as per the verdict.

Now, both parties have approached the Supreme Court, which is seized of the Gujarat government’s curative petition, informing that the two sides agreed to move ahead with the out-of-court settlement to bring financial relief to the power consumers in Gujarat.

Moreover, both parties have also agreed on the withdrawal of the proceedings pending before the Central Electricity Regulatory Commission. On its part, GUVNL has agreed on the methodology reworked for the payment of energy charges to Adani Power for generation and supply of electricity under the PPAs.

As per the sources, in October 2021, when the country faced unprecedented coal shortage that almost crippled the power sector nationally, the Adani group, at the instance of the Central and State governments, offered to restart its Mundra plant operations keeping in mind the interests of consumers in Gujarat.

At the behest of both governments, Adani Power Ltd had arranged to provide 1,200 MW of power to the State on a short-term basis.

“In the interests of the power consumers of the State, we have decided to end the protracted legal battle and settle the dispute out of court,” a senior official in the government said.

According to the details, the GUVNL in 2007 had, after competitive bidding, signed two PPAs with Adani Power’s imported coal-fired power stations at Mundra.

Subsequently, international coal prices shot up, prompting Adani Power to seek fair equivalence through alternative coal supplies from the Gujarat Mineral Development Corporation (GMDC) from its coal block or compensatory tariffs from the GUVNL.

However, when the compensatory tariffs or alternative fuel supply were not provided, the power supplier decided to terminate the PPA, which subsequently became a legal matter in various forums from the State Electricity Regulatory Commission to the Supreme Court.

Eventually in 2019, the Supreme Court ruled in favour of the Adani Group. But the judgement was not enforced as the State filed a review petition and then a curative petition.