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Home News Power Sector News Mundra compensatory tariff : MahaViraran bats for RoE cut

Mundra compensatory tariff : MahaViraran bats for RoE cut

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MSEDCLMaharashtra's power distribution arm MahaVitaran has indicated that it would have too bear an additional burden of Rs 300 crore annually if the compensatory tariff of 56 paise suggested by the Deepak Parekh Committee for the Mundra UMPP is accepted. MahaVitaran is drawing 800 MW from the Mundra UMPP.

MahaVitaran in its recent representation to the Central Electricity Regulatory Commission (CERC) has argued that Coastal Gujarat Power Ltd (CGPL), an arm of Tata Power is earning an return on equity (ROE) of around 35 paise per unit. The under recovery of the fixed charges with ROE is around 48 paise per unit and around 13 paise per unit without ROE. MahaVitaran called for cut in the ROE by CGPL .

"There is a need to conduct a rigorous analysis to confirm that today's loss is not going to be made up by profits in future.'' MahaVitaran said.

Further, MahaVitaran official told Business Standard "As a procurer it was of the view that every party in the deal must come forward to make sacrifices to reduce the impact of the compensatory tariff. To this end, the bankers must step forward to cut interest rates that should be passed on to the procurers,'' MahaVitaran added.

According to MahaVitaran, CERC needs to determine the additional compensatory charge every year which will be passed on to the procurers. Further, the respective state electricity regulatory commissions need to approve such expenditure on account of the additional compensatory charge in the annual revenue requirement of procurers. MahaVitaran also emphasized the need to suitably incorporate a clause to enable procurers to call for renegotiations in case the project becomes unviable to the procurer.

Moreover, MahaVitaran has sought clarity from CERC on the recovery period of the compensatory tariff along with the billing mechanism.

MahaVitaran official said that it may explore an option of approaching the Appellate Tribunal for Electricity against the compensatory tariff. It would seek necessary approval for the same from the Maharashtra cabinet.

Source - Business standard


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