The Haryana Government is challenging in court a decision by the Central Electricity Regulatory Commission (CERC) to allow Adani Power to raise tariffs, dealing a potential blow to a key sector struggling with chronic losses and erratic fuel supplies.

The case filed by Haryana underscores the ability of local politics to derail a federal decision that was hailed by power companies as a step toward ending electricity shortages that sap the competitiveness of domestic businesses, hobbling economic growth.

Haryana is home to the business hub of Gurgaon, where companies rely on costly generators to avoid major and frequent blackouts. Microsoft Corp, Google Inc and agribusiness giant Cargill Inc are some of the multi-national firms based there.

State Power Minister Ajay Yadav told Reuters his government had filed a challenge against an April ruling by the CERC that paved the way for Adani Power to increase the price at which it sells electricity to State-subsidised power distribution companies.

The CERC had also issued a similar ruling favourable to Tata Power Co, which sells to Haryana, but it was not immediately clear if the State would challenge that ruling as well. “We decided to file an appeal,’’ Mr. Yadav said, referring to the Adani Power ruling which was specific to the company’s operations in Haryana and Gujarat.

The challenge was filed at the federal power tribunal, and there is no indication when it will be heard.

An Adani spokesperson did not respond to requests for comment.

More In: Industry | Business