The regulator’s move is aimed at ensuring that acquirer passes on the benefit of taking over the asset at a discount to the end consumers.
In an order that will have implications for the debt-ridden power sector in the country, the Uttar Pradesh energy regulator UPERC has asked Renascent Power Ventures, an arm of Tata Power-backed Resurgent Power Ventures, which had acquired 75% in the Prayagraj Power Generation Company (PPGCL), to offer a discount of 14 paise/unit on the fixed charges to the state power distribution entity (discom).
The regulator’s move is aimed at ensuring that acquirer passes on the benefit of taking over the asset at a discount to the end consumers. PPGCL is a unit of Jaiprakash Associates, which operated the stressed 1,980-megawatt (MW) power plant near Allahabad. The levelised tariff was Rs 3.02/unit earlier; after the Rs 0.14/unit cut, it will be Rs 2.88/unit.
Speaking to FE, an official of the UPERC said that the cut in fixed component of tariff will come with certain sweeteners: Renascent Power Ventures would be allowed to sell 10% of the power at market price and the station heat rate (SHR) would be more than normative.
Renascent Power, which is backed by Tata Power Co Ltd and ICICI Venture Funds Management Co had signed a share purchase agreement with SBI and the other 17 lenders. While the original project cost was Rs 10,780 crore, including a Rs 8,000-crore loan, the debt amount as admitted by Renascent Power is reduced to Rs 6,000 crore. This will result in savings of about Rs 200 crore per annum by way of interest.