Shares in Adani Power gained as much as 15 per cent on Wednesday after regulators allowed the power utility to raise tariffs for electricity on a temporary basis, in a ruling that could boost other firms grappling with erratic fuel supplies.
The Central Electricity Regulatory Commission (CERC) has allowed Adani Power to charge "compensatory" tariffs for electricity from its Mundra plant in Gujarat, until supply conditions improve.
"We welcome the CERC order, which will pave the way forward to bring back investor confidence into the Power Sector," Gautam Adani, Chairman, Adani Group said in a press statement.
The regulator said Adani should be allowed such a tariff, citing the "unforeseen" events of the rising cost of imported coal from Indonesia, coupled with the shortages of domestic supplies from the state-run Coal India Ltd.
"As and when the hardship is removed or lessened, the compensatory tariff should be revised or withdrawn," the regulator said in an order, adding that a committee should be set up to establish the amount of the tariff.
It did not say how long the provision for higher tariffs would run, but added that the supply problem was a "temporary phenomenon and is likely to be stabilized after some time".
The order boosted shares of other power companies, raising hopes for a similar reprieve for them.
India's power sector has struggled with domestic coal shortages and has become increasingly reliant on costlier imports to meet the country's rapidly growing energy needs.
Adani Power shares were up 13 per cent at 12:17 pm. Shares in Tata Power Company and Jaiprakash Power Ventures were up more than 4 per cent each.
Copyright @ Thomson Reuters 2013
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