Power projects with a combined generating capacity of over 59,000 MW facing the prospect of default on supply contracts due to the developers? inability to pass on increase in fuel cost to distribution companies might get some relief soon.
The Union power ministry is planning to ask the Central Electricity Regulatory Commission (CERC) to suggest ways to bail out these beleaguered projects, sources said. Tata Power?s Mundra and Reliance Power?s Krishnapatnam ultra mega power projects (UMPPs) and Adani Power?s Mundra plant are among projects likely to benefit from the ministry?s move.
CERC chairman Pramod Deo declined to comment on the issue. ?We have not yet received any such letter from the ministry. We will comment only when we receive the letter,? Deo told FE.
Sources in the ministry, however, said the regulator might be asked to see if developers? pleas for being allowed to pass on the increase in fuel costs are admissible. And if they are finally permitted to do so, what be the likely impact on electricity tariff would be.
Specifically, the regulator may be asked to examine the impact on electricity tariff in India arising from unforeseen developments like the change in the Indonesian coal pricing law and reduced coal supply from Coal India against linkages and delay in production from allocated captive mines owing to environmental hurdles, which would necessitate the use of alternative coal supplies to run the plants.
Sources said that the CERC might also be asked to examine if the issue can be resolved amicably under the existing contractual framework and, if this is not possible, suggest a way out.
The regulator is also likely to be mandated by the ministry to implement its suggestions in cases where it subsequently adopted tariff discovered through the bidding route. Tata Power?s Mundra and Reliance Power?s Krishnapatnam UMPPs are the only projects where the regulator has adopted tariff.
The CERC can also be mandated to advise state electricity regulators over how to resolve such disputes relating to state-level power projects, including. Adani Power?s Mundra.
The ministry?s intervention comes after months of lobbying by the Association of Power Producers (APP) over the issue with the ministry, which has formulated bidding guidelines for allocation of power projects. Power-buying states like Gujarat and Andhra Pradesh have turned down the developers? appeal for an amicable resolution to the issue, fearing a political backlash.
?In view of changed dynamics of fuel, projects of 59,000 MW capacity are likely to become non-performing assets. We have requested the power ministry to refer the matter to the CERC,? Ashok Khurana, director general, APP, told FE. APP is a body of private power companies like Tata Power, Reliance Power, Lanco and Adani Power.
