There appears to be little respite for the beleaguered private power producers who had entered into 25-year supply contracts through tariff-based competitive bidding, without adequate control over coal prices. The expert panel set up by the Union Ministry of Power is believed to have found little possibility of inclusion of a fuel-surcharge to offset the rise in coal prices, especially of imported coal, in the existing contracts, according to sources.
The committee, set up under the under the chairmanship of Mr Gireesh Pradhan, however, reportedly felt that the future biddings should be linked with the coal price index so as to safeguard the suppliers from volatility in fuel costs.
A host of Indian power producers previously approached the government for inclusion of such clauses in the existing agreements following introduction of minimum benchmark export prices by Indonesia, the single largest source of imported coal in India.
A total of 44,821 MW of power was tied up through Case-1 (fuel, location technology independent) and Case 2 (location, technology, fuel-specific) competitive bidding route in India in the last decade. This includes 16,000 MW tied up for four ultra mega power projects (UMPPs).
While a part of the PPAs were struck against firm domestic captive coal resources or linkages, a bulk of the agreements including those by Adani Power (Mundra), Tata Power (Mundra UMPP), Reliance Power (Krishnapatnam UMPP), Essar (Salaya-II) and others were based on overseas coal sources.
Adani most affected
While most of such proposed projects have yet to go on stream, Adani Power has apparently paid the price of being a fast mover in the sector. The company has already implemented nearly 3,300 MW capacity out of the proposed 4,620 MW at Mundra and is now being asked by the Gujarat Urja Vikas Nigam Limited (GUVNL) to honour its commitment to supply 1,000 MW at Rs 2.35 a unit, which is reportedly below the cost price.
The company's plea to discontinue the agreement was turned down first by the state level regulator and then by the Appellate Tribunal for Electricity (APTEL) last month.