July 2, 2012 / 9:16 AM / 5 years ago

UPDATE 1-India's Reliance Power takes tariff fight to arbitration

* Indonesian export changes raise price of coal

* Indian distribution companies threatened penalties

* Indian projects totaling 9,000MW at risk due to costs (Adds background)

NEW DELHI, July 2 (Reuters) - India's Reliance Power ltd said it has filed for arbitration against 11 state distribution companies to resolve a tariff dispute that is threatening a $3.14 billion (175-billion rupee) power project in the southern state of Andhra Pradesh.

Changes in export rules by Indonesia, the main source of coal for the proposed 4,000 megawatt (MW) plant, raised prices and were beyond the company's control, Reliance said. The company has already stopped construction on the plant.

Indonesia's changes have made about 9,000MW of power projects in India nonviable, including a 4,000MW plant being developed by Tata Power, because the projects cannot raise tariffs to reflect higher fuel costs.

Controlled by billionaire Anil Ambani, Reliance originally bid to supply power at a fixed rate, but is now insisting on a tariff hike to meet the higher fuel costs.

Reliance in March served notice on the distribution companies that it was seeking an "amicable solution," but the state-run utilities did not respond, Reliance said, prompting the company to file for arbitration.

Reliance Power previously obtained a court order in March prohibiting any "coercive steps" against its proposed plant after the state distribution companies threatened to impose penalties for delaying the project.

Reliance has already spent an undisclosed amount of cash, mainly in acquiring land for the project, and wants a quick resolution to the dispute, said a company executive, who did not want to be named.

1$=55.7 rupees Reporting by Sanjeev Choudhary; Editing by Matt Driskill

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