Pay compensatory dues to Adani Power in 4 weeks, Supreme Court tells Rajasthan discoms

Shares of Adani Power soured after the Supreme Court. in a ruling on February 25, had ordered three power trading companies owned by the Rajasthan government to pay remaining compensatory dues to the company.

The judgement from the top court comes in a contempt petition that was filed by Adani Power seeking payment of Rs 6,738 crore from three discoms towards compensatory tariff.

Today, the Supreme Court has granted a period of four weeks to the Rajasthan discoms to pay a sum of Rs 3,000 crore along with interest at the rate of 9 percent.

In September 2020, the apex court had passed an order directing the three distribution companies to pay compensatory dues since 2013 to Adani power towards recovery of the higher cost of imported coal. The top court had upheld the order passed by the appellate tribunal. In 2021, the top court rejected the review petition filed by the discoms and gave finality to its order on compensatory dues to be paid to Adani Power.

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The contempt petition was filed in January this year after the power trading companies failed to comply with the court’s order Adani Power had claimed to be facing operational trouble on account of piling up dues owed to it. The company also claimed that it was unable to meet its debt servicing obligations as well as requirement for advance payment to import coal.

The Rajasthan government and Adani Power had entered into a power purchase agreement in 2008 for supply of power from Kawai thermal power plant in Rajasthan.

While Adani Power claimed compensatory dues from discoms to recompense for the increased cost of coal used for power generation, the government dicoms claimed that the increased cost ought to be set off by an increase in tariff charged to the final consumers. This, the government companies had claimed, was a matter of public interest.

The two sides had been in a dispute over the terms in their PPA concerning the issue of compensatory dues for years with the matter ultimately culminating into the Supreme Court ruling in favour of Adani Power.

Share price of Adani Power surged over 14 percent intraday on February 25 after the company won payment of compensatory tariff.