The Gujarat state electricity board has approached the Central Electricity Regulatory Commission, seeking its approval to amend the terms of the power purchase agreement (PPA) for 2,000 MW signed with Adani Power for procuring electricity from the company’s imported coal-based plant in Mundra.
The development comes after the Supreme Court extended a lifeline to the three troubled imported coal-based power plants of Tata, Adani and Essar in Gujarat by allowing the CERC to facilitate pass-through of future fuel price escalation, as per the recommendations of a high-level committee.
The Gujarat government had constituted the committee in July this year to assess if the power plants could be revived through appropriate financial and contractual restructuring.
The regulator has been approached by Gujarat after the deadline set by the apex court. The Supreme Court had said: “We are of the view that the CERC should decide this matter as expeditiously as possible, and definitely within a period of eight weeks from today (October 29).” Consumer protection groups Prayas and Energy Watchdog have sought clarity on certain areas of the petition. The power regulator has asked Adani Power and Gujarat Urja Vikas Nigam to address them by January 14, 2019.
The high-level committee had recommended reduction in fixed charge by Rs 0.20/unit, which would necessitate banks to reduce debts by over Rs 10,000 crore for the three plants. Additionally, it also recommended to extend the existing PPAs by another 10 years after the completion of the 25-year tenure and allowing pass-through of coal costs, capped at $120/tonne. Adani Power had signed two PPAs with Gujarat (1,000 MW each) in 2007 at Rs 2.89/unit and Rs 2.35/unit. Gujarat’s average power purchase price is Rs 3.49/unit. Analysts have noted that if the CERC approves the high-level committee recommendations, Adani Power’s tariff would rise by Rs 0.80/unit.
Tata Power, Adani Power and Essar Power had set up 4,150 MW, 4,620 MW and 1,200 MW imported-coal based power plants, respectively, in Gujarat. These projects constitute about 45% of the overall power requirement of Gujarat and 22% of demand from Haryana. While the Adani plant sells power to Gujarat and Haryana, Essar’s Salaya plant has a PPA only with Gujarat. The Tata plant has PPAs with Gujarat, Maharashtra, Haryana, Rajasthan and Punjab under the ultra mega power policy (UMPP).
It could not be immediately clarified if the regulator has also been approached to raise tariffs for the Tata and Essar power units. Experts said on conditions of anonymity that since Tata supplies to multiple states under a central government policy (UMPP), tariff revision petitions for Tata might only be accepted after all states ask for it.
