Andhra Pradesh discovers there is no cheaper power

States that have rejected developers? proposals for hike in electricity tariff to reflect the actual increase in imported fuel cost for existing projects are unlikely to get cheaper power elsewhere. This is the inference one makes from the offers received by an Andhra Pradesh utility in response to its tender for 2,000 mw power supply.

Central Power Distribution Company of Andhra Pradesh and Andhra state utility, had recently floated tender for procurement of 2,000 mw power for three years. In response to the tender, bidders have quoted Rs.4.29-6.24 a unit price for supplying power.

While the weighted average tariff for power plants based on domestic coal linkage is R4.91 a unit, it is 5.42 a unit for those based on imported coal, sources said.

Significantly, Mundra and Krishnapatnam ultra mega power projects, which are based on Indonesian coal, have levelised tariff of R2.26 and R2.33 a unit. Similarly, tariff for Adani Power?s Mundra power plant is about R2.5 a unit.

Developers of these projects are seeking R0.80-0.85 a unit hike in tariff to accommodate the increase in Indonesian coal price following the recent change in that country?s coal mining law. They have argued that the change in Indonesian mining law should be taken as a Force Majeure event as it could not have been foreseen by them at the time of bidding. But power procurers including Andhra Pradesh have opposed developers? move.

Unable to persuade power buying states on pass-through of increase in fuel cost, Tata Power and Adani Power have moved the central electricity regulatory commission (CERC) for relief. They have sought regulator?s permission to hike tariff for their projects to reflect the increase in the Indonesian coal price.

Reliance Power has initiated arbitration proceedings against 11 power procurers of the Krishnapatnam UMPP.

As much as 15,000 mw capacity based on imported coal is facing the prospect of default on power purchase agreement, according to Ashok Khurana, director general, association of power producers, a body of private power producers.