The Maharashtra cabinet on 04-12-2013 cleared a proposal to appoint a committee to decide on a tariff revision for Adani Power Ltd's 1,320 MW Tiroda power plant in Gondia district, as directed by the Maharashtra State Electricity Regulatory Commission (MERC). The state government-owned power distribution utility Mahavitaran Ltd had signed a power-purchase agreement (PPA) with Adani Power in 2008. However, in 2009, the environment ministry declined to grant clearance to a captive coal mine allotted to the company as the mine was in the middle of the buffer zone at Tadoba tiger reserve.
Subsequently, it tried to negotiate with Mahavitaran for a higher tariff as it had to purchase coal from other sources, but Mahavitaran declined to oblige.
Adani Power approached MERC seeking a tariff revision in 2011. In August, ruling in favour of Adani Power, MERC approved a temporary hike of 57 paisa per unit and asked the state government to appoint a committee to decide on the tariff hike.
"The committee will consist of secretary energy, managing director of Mahavitaran, independent financial analysts, bankers and independent experts from power sector," a press release issued by the chief minister's office said.
The government has already approved an increase in price of power purchased from Mundhra ultra mega power project (UMPP) by 59 paise per unit, which has taken the price to Rs2.85 per unit. In this case too coal price hike caused generation cost to move up. MSEDCL gets 800MW from this plant.
The increased cost of power purchase will be recovered from consumers through fuel surcharge that appears in your bill as 'Indhan Adhibhar'.
Adani Power had filed a petition in Maharashtra Electricity Regulatory Commission (MERC) demanding increase in power rates as the allocation of Lohara coal mine had been cancelled by ministry of environment and forests (MoEF) and it was forced to buy coal from elsewhere and price of this coal was far higher.
MERC agreed to Adani's contentions and asked the state government to set up a committee to revise the rates on lines of Tata Power's Mundhra UMPP. Other than ACS (planning) it will comprise principal secretary (energy), managing director of MSEDCL and experts in the sectors of finance and power.
While the price of Adani power is expected to cross Rs3 per unit, Mundhra's 800MW still remains one of the cheapest for MSEDCL. Other private companies are supplying it at over Rs3 per unit while its rate of the new units of its sister concern Mahagenco is over Rs4 per unit.
The decision to increase Mundhra's rates was taken on the recommendation of Central Electricity Regulatory Commission (CERC). The state government agreed to the hike with certain conditions. Tata would have to make advance payments to Indonesian coal suppliers with the profit earned. The financial institutions that have provided loan to the company should reduce their rates. Similarly, the power generated over and above 80% plant load factor (PLF) should be supplied to MSEDCL.
Meanwhile, the government has decided to provide grants to MSEDCL for providing electric connections to poor SC and ST consumers instead of loans. This will reduce financial burden on the company and consequently the tariff. The loans given since 2010-11 will be converted into grants. Money will be made available from district planning committee (DPC) funds as earlier.