Gujarat-based Adani group has given a notice to the Gujarat government terminating a long-term power purchase agreement (PPA) inked in 2007 for supply of 1,000 Mw, officials of GUVNL said.
The PPA was signed following a competitive bidding and Adani group has committed to supply power at Rs 2.35 per unit for 25 years.
"Adani group has given us a notice terminating the PPA and now we have approached the regulatory commission Gujarat Electricity Regulatory Commission (GERC) with a petition," a top official from Gujarat Urja Vikas Nigam (GUVNL) said.
"Now the matter is pending before the regulatory commission, which will decide on it on merit," the official added, refusing to divulge details.
However, officials in the state energy department said that the reason for scrapping the PPA is related to fuel supply.
Adani spokesperson could not be contacted.
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"When the PPA was inked, Adani group was expecting to get coal from Gujarat Mineral Development Corporation's (GMDC) coal block in Chhatisgarh. However, the same could not be materialised, forcing the group to back out from the deal," an official said.
He added, "Apparently imported coal is not a viable option as it will lead to increase in the power generation cost."
The sources also added that fuel supply agreement (FSA) was not signed within a year after signing the PPA and therefore Adani group has now shown its inability to honour the agreement.
Meanwhile, Adani group, which had given Rs 100 crore as security deposit is ready to surrender the amount in order to back out from the agreement, sources in GUVNL said.
In 2007, GUNVL had inked four PPAs to procure 3,200 Mw of power from Adani Power (2,000 Mw), Essar Power (1,000 Mw for Rs 2.4006 per unit) and Aryan Coal (200 Mw for Rs 2.2498 per unit).
"We had inked two PPAs with Adani group for supply of 2,000 Mw for 25 years. Tariffs for one PPA was 2.35 per unit while another PPA's tariff was at Rs 2.89 per unit, which will be honoured," a GUVNL official added.
Meanwhile, Adani Power is at various stages of commissioning close to 15,000 Mw of generation capacity in four states while it has already inked PPAs for long-term supply of close to 7,000 Mw with governments of Maharashtra, Rajasthan and Haryana besides Gujarat.
Adani Power is aiming at commissioning 20,000 Mw of generation capacity within next five years.
It is in the process of setting up coal-based power plants in Gujarat, Maharashtra, Rajasthan and Madhya Pradesh.