Tata Power says electricity tariff will remain competitive

Written by PTI | New Delhi | Updated: Feb 26 2014, 19:34pm hrs
Describing the CERC ruling on Mundra project as partial relief, Tata Power today said tariff of electricity generated from the plant would go up to Rs 2.90 per unit which still remains very competitive.

Tata Power Managing Director Anil Sardana said that hike in electricity tariff would be in the range of 45-47 paise per unit. The final tariff would be around Rs 2.90.

Even after the tariff hike, the cost of power sourced from Mundra plant would be "very very competitive" compared to electricity sourced by beneficiaries from other sources, Sardana said.

According to him, at present, the cost of electricity decided through competitive bidding in long-term power purchase agreements is above Rs 4 per unit.

"It (CERC ruling) is actually a great win for customers...an asset has been salvaged," he added.

He also noted that losses incurred by the 4,000 MW Mundra plant would come down.

Electricity from Mundra project is supplied to Gujarat, Maharashtra, Rajasthan, Haryana and Punjab. The power purchase agreement with distribution companies (discoms) from these states is for selling electricity at a price of Rs 2.26 per unit.

Taking into consideration the fluctuations in exchange rate, the tariff of electricity from the plant is now around Rs 2.45 per unit.

CERC has allowed a compensatory tariff of Rs 0.524 per kWh for the project from the period beyond April 1, 2013.

The estimate of "45-47" paise hike in tariff is after taking into account various other factors including those related to Return on Equity (RoE), according to the company.

It has directed the states that procure electricity from the Mundra plant to pay a compensation of Rs 329.45 crore for the period from April 1, 2012, to March 31, 2013.

The regulator's move is aimed at compensating the losses suffered by the Mundra plant, located in Gujarat, due to rise in the price of Indonesian coal that is used to fire it.

CERC order, released last Saturday, came on Tata Power plea seeking relief due to rise in price of Indonesian coal, which is used to fire the plant.