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Pune-based non-governmental organisation Prayas (Energy Group) and Delhi-based consumer group Energy Watchdog have raised objection to the proposal submitted by the Gujarat government to bail out the loss-making power plants of Adani, Tata and Essar in Mundra.
The Gujarat government had filed its proposal with the Supreme Court seeking permission to execute its plan to pass on increased fuel costs to power distribution companies. This was based on the recommendations of a high-level committee that was set up to suggest ways to revive the ailing power projects.
Energy Watchdog, which had earlier challenged the Central Electricity Regulatory Commission (CERC)’s compensatory tariff award to these plants in the Supreme Court, has urged the apex court to dismiss the Gujarat government’s proposal as it violated the court’s ruling in the case.
It said allowing higher tariffs would set a wrong precedent for all power purchase agreements (PPAs) signed so far. Prayas said the proposal should be looked at from all angles before making a decision.
The high-powered committee (HPC) appointed by the State government in July has suggested that the tariff structure of the power purchase agreements (PPAs) be revised. The companies had sought a revision since the projects depend on coal imported from Indonesia. Recent changes in the Indonesian regulation have rendered coal imports costlier.
The Supreme Court had in April 2017 ruled out a tariff hike for the three projects, which had fallen on hard times. Tata Power and Adani Power’s plants in Mundra became unviable. Essar Power’s Salaya plant, too, suffered losses.
Last year, the three power developers separately approached the Gujarat government and the discoms, offering to sell a 51 per cent stake in the stressed projects for a nominal sum of ₹1. With lenders panicking, state-owned NTPC conducted a due diligence of the projects, assessing the possibility of feeding them with domestic coal. But this would require a large amount of fresh capital since the plants are not designed to run on domestic coal, according to experts. The stake sale talks have since been suspended.
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