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Home News Power Sector News Tata Power looks for higher tariff from Mundra UMPP

Tata Power looks for higher tariff from Mundra UMPP

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Tata PowerEven though Tata power cannot legally get a higher tariff above the lowest tariff bid of Rs 2.26 a unit , they started campagning in the corridors of central Government for a higher tariff citing  price increase of  Indonesian coal. Tata Power has said the flagship 4,000-MW Mundra UMPP could become a "non-performing asset" if no decision is taken on increasing tariffs for electricity from the plant. 

Tata Power bagged the Mundra project in 2007 on the basis of the lowest tariff bid of Rs 2.26 a unit, but they argue that a change in the coal pricing policy in Indonesia has disturbed the cost structure of this project. Other private developers are also started asking for higher tariff on the lines of Tata. But, many critics in power sector feels that private companies like Tata and Reliance are undrequoting to get big power projects like UMPP, where the Governments will provide tax incentives. By under quoting they can outbid public sector companies. Later, they have the power to get higher tariff by some means. As per UMPP bid agreement fuel cost will not be reflected in power tariff. Now, when the project is nearing completion, these private companies are asking tariffs higher than those quoted by NTPC during the original bid process. Any increase in power tariff will burden the common man's money as it will be passed to them immediately.

"It (Mundra UMPP) is not a non-performing asset to the extent net worth is there. One day, it could become if no decision is taken (on tariffs)," Tata Power Managing Director Anil Sardana said in an interview. "We will keep on generating (power from Mundra UMPP) till the time we could. When we have no shareholder money left out in the balance sheet, nobody will give us coal," he noted. The electricity from the Mundra Ultra Mega Power Project, to be fired with Indonesian coal, would benefit five states, including Gujarat, Maharashtra, Punjab and Haryana.

The first unit of 800-MW has been synchronised. Tata Power, which bagged the project through competitive bidding in 2007, is in discussions with concerned states and the Centre over revising the tariff structure. "We are not asking for any change in the fixed cost -- which is the cost on account of plant," Sardana said.

"We are only saying that whatever I get as a fuel, I toll and convert it into power. I am not asking for any charges for tolling. Change the variable cost for today as well as future so that plus and minuses are all yours," he said.

Despite doing everything right, these problems have come up, he added. "If the country feels that they don't want to own the project, then perhaps it is a different feeling altogether. We have told the beneficiaries that if you can't pay this tariff, you say that you don't need this power. Then we will sell it to somebody else," Sardana said.

The Indonesian government's new law requires benchmarking of coal sales to an index-based price linked to global rates. This move has pushed prices of the dry fuel very high.

"90 paise of fixed cost for Mundra is the lowest for any project like this. In this amalgamated cost of Mundra, if the (offtakers) agree to differential price, the total difference in tariff is just 2 per cent. After revision, the power cost will be Rs 3.05 or Rs 3.10 (per unit)," Sardana pointed out.

Source- Times of India


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