(MENAFN- KNN India) New Delhi, Nov 20 (KNN) The Uttar Pradesh electricity regulator has deferred approval of a power supply agreement between the state utility and Adani Group's upcoming USD 2-billion coal power project, citing insufficient clarity on cost calculations, according to an order issued on Wednesday.

The delay comes six months after Adani Power secured a contract to supply 1,500 MW from its new plant in the state at a tariff of Rs 5.38 per unit.

The uncertainty over costs stems from the central government's July decision to relax requirements for certain coal-based plants to install flue gas desulphurisation (FGD) systems, which reduce sulphur dioxide emissions, reported Reuters.

The exemption is expected to generate significant savings for operators, prompting the regulator to question why these revised cost implications were not presented.

The Uttar Pradesh Power Corporation Ltd (UPPCL), the state's distribution utility, did not submit its assessment of the cost changes arising from the exemption, the commission noted.

It has now directed UPPCL to include Adani Power as a party to the proceedings and file a detailed cost analysis within two weeks. The matter will next be heard on December 18.

In an earlier hearing in September, the commission observed that once it became clear the emission-control equipment would not be required, UPPCL should have approached the regulator with updated fixed charges and operating expenses reflecting the savings.

The commission also said the utility should have evaluated the impact of revised goods and services tax rates on coal under the proposed power supply agreement.

The scrutiny comes at a time when state distribution companies across India are entering long-term contracts with coal-based generators to meet rising evening power demand, even as the country continues to expand its renewable energy capacity.

(KNN Bureau)

MENAFN20112025000155011030ID1110375206