Saturday, 18 September 2021

Adani Power @ Inflection Point!

Dear All,

Legal battle in Adani Mundra Power is getting very interesting.

The Supreme Court has agreed to reconsider its 2019 judgment, which had upheld a decision
of Adani Power (Mundra) to terminate the power purchase agreement (PPA) it had signed with
Gujarat Urja Vikas Nigam (GUVNL).

First, Modi govt mandated both Tata and Adani Power to start their stranded Super Critical
assets at Mundra. Adani Power had terminated PPA (both) with Gujarat as the state govt failed
to bring coal from GMDC mines as agreed. Imported coal did not fit into tariff equation agreed
upon in PPA which was, 2.35/kWh. So, Adani Power sought the contract termination, paid
obligation and moved out. The counter crashed below 20 then. The State of Gujarat (GUVNL)
knocked doors of the Apex Court in 2019 and the Court sustained the termination decision.

Fast forward today, post Covid resurrection of power demand, which has risen almost 15% to
595 BU, we are running into Peak Power deficit. The Union Govt is racing against time. After
favourable judgement, plants need to place order for coal. Takes 60-90 days from order date
to shore from Indonesia or Australia or even USA. We are maxing out domestic coal mining
capacity, thanks to decades of the State Monopoly/mismanagement of the national resource.
By March, power demand surges. But thermal power plants take time to restart the furnaces!
So, Apex Court must deliver judgement in 2-3 weeks. Or else we stare at summer blackout!
Already we have peak power deficit of 1% in monsoon months which is otherwise a slack season
for power demand.

In this background, now the State of Gujarat approaching again to the Apex Court after Modi
govt mandating both Mundra plants to resume operations on imported coal. The Supreme Court
accepted the Curative Petition which is rare. “We have gone through the curative petition
and the relevant documents. In our prima facie opinion, there are substantial
questions of law raised in this curative petition, which require consideration," the
court said on 16 September.

So, now what to expect? The Court may mandate, ADANI POWER & Tata POWER Mundra
to reinstate PPA and tariff may remain the same/or revised with change in environment/cost
structure but imported fuel cost would be a pass thru. That will secure/revive a massive super
critical capacity sitting idle, ease corporate stress in a nation, facing power shortage despite
boasting Coal India as #1 Coal miner in the world. After the Court order, which is an open
secret, is it logical to expect breakout in Adani and Tata Power share price???
Wishing all, a Power Packed Ride Ahead,

Conservative Indian

https://t.me/conservativeindian

https://t.me/conservativeindiangroup

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