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Home News Power Sector News Tata Power and state utilities differ over PPA clauses

Tata Power and state utilities differ over PPA clauses

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Tata PowerTata Power and its five customer states for country's first ultra mega power project (UMPP) differ over the provisions of power purchase agreement (PPA). Tata Power is arguing that article related pertaining to 'change in law' includes not only Indian laws but foreign laws too. However, five state utilities are not convinced. They also differ over the article related to 'force majeure'.

 Last month, the Central Electricity Regulatory Commission (CERC) heard Tata Power and its customer state utilities of Maharashtra, Rajasthan, Gujarat, Haryana and Punjab to admit the petition of the UMPP developer. Tata Power submitted that it had to pay exorbitantly high cost for import of coal from Indonesia on account of which the company will lose 67 paisa per unit, which is annual loss of Rs 1,800 crore.

Tata Power has commissioned three imported coal fired 800 mw generation units of country's first 4,000 mw UMPP at Mundra in Gujarat. It is investing Rs 17,000 crore for the project. Tata Power is importing coal from Indonesian mine where it enjoys 30% stake in thermal coal producers PT Kaltim Prima Coal and PT Arutmin Indonesia. Tata Power has filed petition before CERC to seek tariff revision following change in Indonesian laws pertaining to coal price.

However, Punjab State Power Corporation Limited believe that CERC does not have power to tinker with tariff arrived in the competitive bidding process. It submitted that the commission under the Electricity Act is restricted to adoption of tariff arrived at through transparent process of competitive bidding. Another state utility Gujarat Urja Vikas Nigam Limited also submitted that there Tata Power's interpretation of force majeure event and consequences of change in law is not correct and is not in tune with the interpretation of the power procurers of UMPP.

Pune based consumer representative organisation Prayas is also against the tariff revision for Tata Power. It argued that the Tata Power's claim for tariff revision by 67 paisa per unit should not be allowed since it would cause injustice to second lowest bidder whose bid was higher by 40 paisa per unit than Tata Power's final bid. Prayas also submitted that PPA does not provide for revision in tariff on account of increase in fuel cost as Tata Power was free to choose the source of fuel and therefore change in price of fuel was to the petitioner's risk.

Earlier, state utilities asked Tata Power to legally contest the Indonesian government's diktat that has raised the cost of coal. The company submitted before the apexelectricity regulator that Indonesian regulation envisaged punitive consequences and sanctions including suspension and revocation of mining permit for violation thereof. The utilities buying Mundra's power are from Gujarat, which will purchase 1,900 mw; Maharashtra 800 mw; Punjab 500 mw; Haryana 400 mw; and Rajasthan 400 mw. Soon, they will make detailed submissions before CERC in their reply to Tata Power's petition.

Source- ET


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