Mundra project: Final hearing on Tata Power’s tariff revision plea today

S. Shanker Updated - March 12, 2018 at 02:39 PM.

The power generated at Mundra is to be channelled to discoms in Gujarat, Haryana, Rajasthan, Punjab and Maharashtra.

All eyes will be on the Central Electricity Regulatory Commission, as it takes up the final hearing on the tariff revision plea of Tata Power for the 4,000 MW Mundra project on Thursday.

More than industry watchers, Reliance Power will be looking at the outcome, as it is also battling a case at the Delhi High Court on tariff revision against the procurers of its proposed 4,000 MW Krishnapatnam project in Andhra Pradesh .

R Power suspended work on the project last year following the refusal of procurers/State power utilities to consider a tariff hike.

The company managed to obtain a stay against the procurers’ from encashing its Rs 300-crore bank guarantee for lack of progress of the project.

Differences too diverse

Sources said the Delhi High court had asked the procurers and R Power to negotiate a settlement as provided for by the redressal mechanism, under the power purchase agreement. However, it appears obvious that the differences are too diverse for any off court settlement. R Power had inked power purchase agreements with the discoms of four States committing supply at Rs 2.33/ unit. It had sought a hike of about Rs 0.80/ unit consequent to Indonesia mandating that all coal exports from there should be benchmarked to international prices.

Both Tata Power and R Power had made arrangements in Indonesia to obtain coal at about $25-30 a tonne. The Jakarta ruling nullified their earlier contracts, resulting in coal cost spiralling to almost two-and-a-half times their earlier contracted price.

Interestingly, Tata Power, too, has sought a near-identical raise in tariff at about 80 paise/ unit with its procurers. Tata had committed to supply at Rs 2.26/ unit, which also includes an escalation component of about 45 per cent.

In effect, both companies have sought a revised tariff of Rs 3.05-3.15/ unit, which is far lower than the tariff quotes received by the Andhra Pradesh Central Power Distribution Company for the medium-term in July. The average price quoted was Rs 5/ unit.

The AP discom sought about 2,000 MW for a three-year period from June, 2013.

Under the PPAs inked, the power generated by the Krishanapatnam project was intended for Andhra Pradesh, Maharashtra, Tamil Nadu and Karnataka.

The power generated at Mundra is to be channelled to discoms in Gujarat, Haryana, Rajasthan, Punjab and Maharashtra.

>shanker.s@thehindu.co.in

Published on September 26, 2012 17:21