Indian state regulator delays power deal with Adani’s $2 billion project over cost issues
NEW DELHI: The power regulator for northern Indian state Uttar Pradesh has delayed approval of a power supply deal with Adani Group’s new $2 billion coal power project over lack of clarity around costs, a filing showed on Wednesday, six months after the announcement.
Adani Power in May won a contract to supply 1,500 megawatts of power from a coal plant in Uttar Pradesh at 5.38 rupees ($0.0638) per unit.
The lack of clarity over costs stems from a decision by the Indian government in July to ease rules for some coal plants from installing equipment that would remove sulfur dioxide from exhausts while burning coal.
The easing of rules is expected to bring in billions of rupees in savings for the coal plant operators.
The state power regulator noted in the order that the power utility, Uttar Pradesh Power Corporation, failed to provide its own analysis of savings or cost changes from not installing the equipment.
The commission directed the state power utility to make Adani Power a party to the case and submit detailed cost assessments within two weeks. The case is now listed for hearing on December 18.
The regulator noted in its previous hearing in September that once the equipment was confirmed as not required, the power utility should have approached the commission with revised fixed charges and operating expenses reflecting savings for the state.
It also said the utility should have assessed the impact of revised goods and services tax rates on coal under the power supply agreement.
Indian state electricity distributors are signing long-term contracts with coal-fired power generators to meet a projected surge in evening demand, despite the country’s efforts to expand clean energy capacity.
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