GAIL India Worried Over Efforts To Renegotiate Power Purchase Pacts

Renegotiation of power purchase agreements by some states amid falling tariffs has India’s largest gas distributor GAIL India Ltd. worried.

Cancellation of agreements is bothering “not only us but is a real pain point for solar power plants too”, BC Tripathi, chairman and managing director of GAIL India, said at an event in Delhi on Wednesday. “We need rules to prevent power units from cancelling gas pacts,” he said.

GAIL supplies fuel to power plants. At 25,000 megawatts, gas-based units account for more than a tenth of India’s thermal power generation as of June, according to the Central Electricity Authority.

Uttar Pradesh cancelled pacts with seven power projects with a cumulative capacity of 7,040 megawatts, Bloomberg had reported. Andhra Pradesh and Karnataka are also trying to cancel agreements with power suppliers or revise rates downward. The efforts to rework pricing came after solar power tariffs fell to an all-time low earlier this year.

“Old power purchase agreements are not being honoured. We are facing a similar situation in gas, and that too not only in the private sector, but also in the government sector. We need to address these issues. Only then we can move towards the goal of achieving gas-based economy,” Tripathi said.

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