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Home News Power Sector News CERC asks Tata Power to approach states on Mundra tariff hike

CERC asks Tata Power to approach states on Mundra tariff hike

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CERC chairmanIndia's power sector regulator on 19-07-2012 asked Tata Power Co. Ltd to approach states that buy electricity from its plant in Mundra, Gujarat, with its tariff hike proposal, saying the firm's agreements with the procurers allows for negotiations. As for Adani Power Ltd, the Central Electricity Regulatory Commission (CERC) said it will hear the counsels of Haryana and Gujarat on whether the company's petition to it to hike tariffs is maintainable as the firm has signed specific power purchase agreements (PPAs) with the two state governments.

Adani Power and Tata Power had approached CERC to consider increases in their power tariffs after customers declined to pay higher rates for the electricity generated from their imported coal-based power plants in Mundra.

"In the Tata Power issue, there is a clause for conciliation in the PPA. We have asked them to formulate a proposal and give it to the procurers, in this case the states. Then the states can respond to Tata Power," said Pramod Deo, chairman, CERC. "Their petition is pending and this was a premature move on their part."

As for Adani Power, Deo said according to the firm's lawyer, "the PPA have been signed with Haryana and Gujarat government discoms (distribution companies) and been approved by SERCs (state electricity regulatory commissions). Hence, as a generator supplying to more than one states, it should come to CERC. That's where the matter is. It is the issue of the maintainability of the petition. We will hear the comments of the states after one month."

Adani Power has entered into two power purchase agreements of 1,000 megawatts (MW) each with the Gujarat government at Rs. 2.35 per unit and Rs. 2.89 per unit for its 4,620MW plant in Mundra. It entered into a similar accord with the Haryana government at Rs. 2.94 per unit.

Tata Power's special purpose vehicle Coastal Gujarat Power Ltd (CGPL) has signed power purchase agreements to sell electricity generated from its Mundra plant to Gujarat, Maharashtra, Haryana, Punjab and Rajasthan at Rs. 2.26 per unit.

An Adani Group spokesperson declined comment. A Tata Power spokesperson, in an emailed response, said, "The commission has suggested that the concerned parties, that is, procurers and CGPL should meet immediately in order to explore a possibility of a specific solution. The commission has kept the petition pending and has asked the parties to report on the outcome for it to decide on further course of action. CGPL is committed and would pursue on this advise and hopes to find an early resolution."

Tata Power has been lobbying the power ministry for higher rates for the power generated from its Mundra plant, the country's first 4,000MW power project.

The company acquired a 30% stake in two coal mining units and a trading company from Indonesia's PT Bumi Resources Tbk for $1.1 billion in 2007 to source fuel for the plant.

According to Indonesian rules, prices of coal produced in the country have been pegged to the prevailing international prices of the commodity. Overall cost of the Mundra project is estimated at about Rs. 17,000 crore, with 75% funding through debt.

Source- Livemint


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