Reliance Power has called procurers for reconciliatory talks to seek higher tariff for its 4,000 MW Krishnapatnam project.

The company had signed a 25-year power purchase agreement (PPA) with 11 procurers in four States for the entire power generated by the plant.

The tariff agreed upon was Rs 2.33 per kWh (kilo Watt hour).

The procurers, comprising State electricity boards and electricity distribution companies, are from Andhra Pradesh, Karnataka, Tamil Nadu and Maharashtra.

Mining law

RPower has suspended work on the Rs 17,400-crore project following the change in Indonesian mining law which made it mandatory for coal to be exported at benchmark prices.

In December, the lead procurer, Andhra Pradesh Southern Power Distribution Co, wrote to RPower advising it to take up construction work or face legal consequences under the PPA.

RPower was awarded the project, based on imported coal, under the competitive bidding process. The Krishnapatnam project is to come up in Nellore district of Andhra Pradesh.

The project is being implemented by Coastal Andhra Power Ltd (CAPL), a subsidiary of RPower.

Citing the change in Indonesian law, RPower told procurers that this was not envisaged during bidding and was completely out of its control. Further, it prevented it from fulfilling its obligations under the PPA.

It is learnt that RPower had contracted 25-year coal supply at $25-30 a tonne prior to the Indonesian law coming in force in September last year.

The new law calls for benchmark pricing which is upwards of $60 a tonne.

DEBT DENIED

RPower said this will increase fuel cost, as the existing fuel supply deal for the entire PPA tenure stood nullified.

Further, lenders to the project were now unconvinced about its viability. Hence, RPower was deprived of debt drawdown.

RPower said it had been in constant touch with the procurers to find an amicable solution to the issue. It said the current tariff of Rs 2.33 per KWh was not viable.

Force majeure events provided for relief, such as restoration of the economic value to the extent the coal not being available at the contracted price, it said.

Besides RPower, Adani and Tata Power too are impacted by the Indonesian mining law.

13,000 MW HIT

About 13,000 MW of the upcoming capacity addition of 45,000 MW is based on imported coal.

Recently, Tata Power commissioned the first of its five units of 830 MW each at Mundra this month.

> murug@thehindu.co.in