Adani, Tata Power Tumble as India Court Blocks Higher Prices

Updated on
  • Court says higher tariffs possible only if Indian laws change
  • Shares plunge; Adani Power posts biggest ever decline

India’s top court said Tata Power Co. Ltd. and Adani Power Ltd. can’t charge higher tariffs to make up for losses on an increase in imported coal prices caused by a change in regulations in Indonesia. Shares plunged.

Adani Power shares slumped as much as 20 percent, their biggest decline since listing in August 2009, to 35.40 rupees in Mumbai and traded at 37.60 rupees as of 11:52 a.m. in Mumbai. Tata Power dropped as much as 6.8 percent to 81.15 rupees, the most in almost 19 months. The court said higher tariffs could be allowed only if there was a change in Indian laws.

The order puts to rest a more than four-year long legal battle by the two generators. The court overruled a final recommendation in December by the federal electricity regulator, which had said the companies could charge higher tariffs as Indonesia’s decision in 2010 to link coal prices to an international benchmark was a force majeure event. That “completely wiped out the premise” on which the two generators had quoted tariffs for these plants, it said.

Tata Power operates a 4,000 megawatt plant in the coastal town of Mundra, while Adani Power runs a 4,620 megawatt plant at the same place. Both generating plants are fueled by coal imported from Indonesia.

(Updates with court’s reasoning in second paragraph.)
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