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Tata Power and Adaro International in arbitration over coal supply dispute

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Tata Power Company Ltd (TPCL) and Singapore-based Indonesian mining company Adaro International are engaged in a legal dispute over a coal supply agreement signed in August 2020 for the Trombay power plant, TPCL said in a regulatory filing on Thursday.

Both companies have sought compensation from each other with the dispute having escalated to the International Court of Arbitration under the International Chambers of Commerce (ICC ICA).

Adaro's notice alleged a breach of contract by TPCL and initiated arbitration with a claim of $106 million. In response, Tata Power has raised counterclaims of $229.947 million for Adaro’s failure to fulfill its obligations under the coal supply agreement.

"During the performance of the agreement, differences arose between both the parties. Adaro issued a notice alleging a breach by TPCL, which was followed by the request for arbitration with an alleged claim of $106 million. To this, TPCL responded and raised counter-claims of $229.947 million for non-supply under the agreement," according to a regulatory filing.

Tata Power said both parties are in 'serious discussions to amicably resolve the dispute', however, they have also agreed to proceed with the arbitration at the International Chambers of Commerce International Court of Arbitration (ICC ICA).

"The Arbitration is currently in nascent stages and the constitution of the arbitral tribunal is yet to take place i.e. party nominated arbitrators are yet to be confirmed by ICC ICA and only after such confirmation, the process for appointment of presiding arbitrator will be initiated," Tata Power Company said.

The appointment of party-nominated arbitrators is pending confirmation by the ICC ICA. Once confirmed, the process to appoint the presiding arbitrator will commence.

As the arbitration is in its initial phase, the financial implications of the dispute remain uncertain. Both claims will be assessed as the case progresses, but a resolution is not expected in the immediate future.

TPCL's scrip ended at Rs 439.30, down 0.31% on the BSE on Thursday
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