The Story of Power Plant, Coal, and a Promise That Changed

Hirdesh Goswami
Mar 23, 2025
2 min read

Once upon a time...

There was a company called KSK Mahanadi Power Company (let's call it KSK). They built a big power plant that can make a lot of electricity.

But just like a car needs fuel to run, this power plant needs coal to make electricity.

The Promise

A government company called TANGEDCO from Tamil Nadu wanted electricity. So, in 2013, KSK promised TANGEDCO:

“I will give you electricity, and I’ll use cheap coal that I get from some coal mines.”

TANGEDCO said:

“Great! Let's sign a deal!”So, they signed a big contract (called a PPA) to sell electricity for many years.

The Coal Plan

KSK didn’t own coal mines. But they made a plan:

Get coal from GMDC and GIDC, who had coal mines.
Use a backup system called “tapering linkage” (which means coal supply until the mines are ready).
Everything seemed perfect!

The Big Problem

Then something unexpected happened!

In 2014, the Supreme Court of India said:

“Hey! Many of these coal mine permissions were not given properly. Cancel them!”

That meant: the coal mines that were supposed to give coal to KSK were cancelled.

Also, in 2013, the Government changed its coal supply policy (NCDP 2013).Before, they promised to give 100% coal to power plants.Now, they said:

“Sorry! We can only give around 65% coal, and the rest you must buy from the market.”

So now, KSK couldn’t get all the coal it was expecting.It had to buy extra coal at higher prices to keep its promise to supply power to TANGEDCO.

KSK Asks for Help

In 2016, KSK wrote to TANGEDCO and said:

“Hey! The coal plan has changed! The mines were cancelled, and coal policy reduced supply. This is a ‘Change in Law’. Please pay me extra to cover the extra cost.”

But TANGEDCO replied:

“No way! You’re too late. And this doesn’t count as a 'Change in Law' for you.”

⚖️ The Court Journey

KSK went to the Electricity Commission (CERC) in 2016, asking for help.
In 2018, CERC said:
“No compensation. You didn't follow the rules properly, and that coal plan doesn't count.”
KSK said, “This is unfair!” and went to a higher court called APTEL.
In 2022, APTEL said:
“CERC, look again! You must check this case in light of recent court decisions. This could be a valid 'Change in Law'.”

The Final Decision – 22nd March 2025

CERC took another look and finally said:

Yes, KSK is right!

The cancellation of coal mines by the Supreme Court counts as a Change in Law.
The new coal policy (NCDP 2013) also counts as a Change in Law.
KSK had to spend more money to buy extra coal.
KSK should be paid extra by TANGEDCO to cover that cost.

They also said:

KSK sent the notice a bit late, but it’s still acceptable.
KSK and TANGEDCO must now work together to calculate the compensation, based on the difference in coal cost.