The Central Electricity Regulatory Commission (CERC) has allowed higher tariff as well as compensation of Rs. 329.45 crore for Tata Power's 4,000-MW Mundra project to compensate for increase in the price of imported coal.The electricity regulator has directed 5 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.
Besides, a compensatory tariff of Rs. 0.524 per kWh has been granted for the project from the period beyond April 1, 2013, CERC said in an order released on Saturday. This results in electricity tariffs increase by 52 paise per unit for the current fiscal across states such as Gujarat, Maharashtra, Haryana, Punjab and Rajasthan which are the procurers of electricity for this project.
Electricity from Mundra ultra-mega power project is supplied to Gujarat, Maharashtra, Rajasthan, Haryana and Punjab. It has been facing challenges following rise in the price of Indonesian coal, which is used to fire the plant.
The order is significant as it opens the door to compensation for other power projects that have run into similar problems due to a seemingly unexpected turn of circumstances, especially with respect to fuel costs.
However, state utilities may approach the Appellate Tribunal for Electricity against the order.
"The tariffs will go up. We had raised a lot of objections. Nothing stops us. We can very much go for an appeal," said a senior Maharashtra government official requesting anonymity.
While the lead procurer for the power from the project is Gujarat Urja Vikas Nigam Ltd, the other utilities that have signed PPA with CGPL are Maharashtra State Electricity Distribution Co. Ltd (MSEDCL), Ajmer Vidyut Vitran Nigam Ltd, Jaipur Vidyut Vitran Nigam Ltd, Jodhpur Vidyut Vitran Nigam Ltd, Punjab State Power Corp. Ltd and Haryana Power Generation Corp. Ltd.
"...the past losses of Rs. 329.45 crore shall be reimbursed by the procurers in proportion to their contracted capacity in 36 equal monthly instalments," said the 110-page order dated February 21.
Terming the order "balanced", Tata Power said in a statement that it provides partial relief to Mundra UMPP.
"The company finds the order balanced perhaps keeping in view the beneficiaries and consumer interests," the company said in a statement.
"The decision of CERC was awaited to make Mundra viable, which had got impacted due to no fault of itself, but due to change of law at Indonesia as also other coal exporting countries and an unprecedented rise which could not have been perceived," it said.
In April last year, CERC had allowed Tata Power and Adani Power to raise electricity tariffs for these projects as part of compensating the fallout from rise in coal costs.
Following that, a panel headed by eminent banker Deepak Parekh had made recommendations on the issue of compensatory tariffs for the project.
Tata Power also said the order would help resolve a major impasse affecting imported coal based power projects in the country that got impacted due to uncontrollable extraneous factors.
"Mundra UMPP has been since inception delivering to the full potential of Mundra across the five beneficiary states albeit with tremendous fiscal pain and this challenge of keeping Mundra UMPP viable had continued far too long," the statement noted.