Gujarat on Tuesday indicated it is open to Tata Power Co. Ltd increasing tariff on electricity generated from its plant at Mundra, but other states are yet to confirm their willingness to pay more.
This comes in the backdrop of a panel headed by Deepak Parekh recommending an increase in tariff.
“We will try to accommodate (Tata Power’s request to increase the tariff). There is large capital at stake,” Gujarat’s energy minister Saurabh Patel said in New Delhi on a visit to attend the seventh conference of state power ministers. “This may involve everyone including banks and states taking a haircut.”
Tata Power had approached the Central Electricity Regulatory Commission (CERC) to consider allowing an increase in tariff for electricity generated from its 4,000 megawatt (MW) ultra mega power project (UMPP) at Mundra in Gujarat after customers refused to pay higher charges. It sought the increase to compensate for the rising price of the imported coal it depends on to fuel the plant.
The power sector regulator in April offered to allow Tata Power a variable compensatory tariff till the fuel situation stabilized, as well as a bailout package in a repeat of its earlier judgement on a similar petition by Adani Power Ltd for a tariff hike. It appointed the Deepak Parekh committee to suggest revised tariff for both the companies. “Our interaction with stakeholders suggest that the Committee formed to suggest a ‘compensatory tariff’ for Mundra UMPP project, based on the CERC’s judgment in April, has effectively suggested the pass-through of entire fuel cost (Rs.0.59/kwh for FY14),” Credit Suisse India Research said in a 10 September report on Tata Power. Tata Power’s special purpose vehicle, Coastal Gujarat Power Ltd (CGPL), had signed agreements to sell electricity generated from the Mundra plant to Gujarat, Maharashtra, Haryana, Punjab and Rajasthan at Rs.2.26 per unit.