APTEL Cites Unlawful Process in UP To Restore Bid Prices For Adani Green Energy

In a judgement that is as much an indictment of almost all the bodies involved in the Uttar Pradesh power sector. the Appellate Tribunal For Electricity (APTEL) has come down heavily on UP New Energy Development Authority (UPNEDA), UP Power Corporation Limited (UPPCL), UP Transmission Company Limited (UPTCL) and the state regulator UPERC. In its order dated November 28, APTEL has found reason to term the actions of these state entities as “arbitrary, unjust and unlawful”. To know why, read on.

The case involves the call for bids by UPNEDA for RFP for supply of 215 MW solar power to the state by firms. Many firms made bids, and eventually, 15 were selected on the basis of their bids. The bids for various capacities offered, the tariff quoted varied, for a period of 12 years, having ranged from the lowest of Rs.7.02/kWh (of M/s Essel Infra Projects Ltd., Mumbai) to the highest of Rs.8.60/kWh (of M/s Sree Radhey-Radhey Ispal Pvt. Ltd., Kanpur). Adani Green Energy UP made its bid for 50 MW at Rs 8.44/kWh, while the other petitioner in this case, Chennai based Sahasradhara Energy, made its bid at Rs 8.37 for 5 MW capacity.

For Adani Green energy, after receiving the approval as a selected bidder, problems started when the state transmission utility took inordinately long to provide transmission infrastructure for its 50 MW plant. Despite the contract clearly specifying otherwise in case of such delays, the firm did not get a formal extension for its scheduled project commissioning date, and was slapped with a notice for termination post the original date.

In the meantime, in negotiations with all the bidders, a price of Rs 7.02/kWh was arrived at for supply, that was adopted on 21.11.2017.

But for Adani Green, the delay proved costly as even this price was sought to be renegotiated, after delays in project completion and ‘changed market conditions’ encouraged the state regulator to remove any ‘unreasonable’ advantage to the firm. To cut the story short, the state regulator virtually imposed a price of Rs 5.02/kWh (after reducing it first to Rs 5.07/kWh) for Adani Green Energy and Saharadhara. The bids were not cancelled outright for the ostensible reason that this would ‘vitiate’ the investment climate in the state.

The fact that the earlier tariff adoption petition (no.1110/2016) was filed by UPPCL and UPNEDA on 04.05.2016. It was finally decided twenty months thereafter on 12.02.2018 did not make any difference. Nor the fact that the state entities never gave a reason for the delays at their end.

The APTEL bench, found this whole sequence jarring, and hence the judgement that at the very least, Adani Green Energy UP needed to get tariff parity with the 9 bidders who have already been given contracts at Rs 7.02/kWh.

You can view the detailed judgement here.