States that procure power from Tata, Adani's Mundra miss SC tariff deadline

Relief for Adani Power and Tata Power may be delayed as some of the states that procure power from the firms’ Mundra units are yet to arrive at a decision on tariffs. This, even after the Supreme Court had set an eight-week deadline for doing so. 

“The recommendations of the high-powered committee (HPC) are being discussed with various stakeholders of the government and a final decision is yet to be taken. I am not aware if any of the other states (except Gujarat) have taken a decision,” said Arvind Singh, principal secretary, energy, government of Maharashtra. Singh did not give a timeline on by when a decision is likely to be taken.

Maharashtra is one of the five states that procures power from the Mundra units of the firms. Rajasthan, Gujarat, Haryana and Punjab are the other four. Some buy power from both.

A Tata Power spokesperson said in an email response that the proposal was “under discussion with various state governments who, in turn, are in touch with their state discoms and are expected to take it to their Cabinet for approval. The proposal will then be submitted to CERC. We believe appropriate time extension will be sought if required”.

On October 29, the Supreme Court had directed the Central Electricity Regulatory Commission (CERC) to decide within eight weeks on approving revised tariffs for Adani Power, Tata Power and Essar Power for their imported coal-based power units in Gujarat. These units have been struggling financially owing to an increase in coal prices higher than the tariffs fixed in the power-purchase agreements (PPA). Coal prices were higher than expected due to a change in Indonesia’s export policy for coal. 

In December, the Gujarat government resolved to accept the recommendations of the HPC in giving some relief to Mundra ultra-mega power project (UMPP).  A top official from Tata Power in November had said that within eight weeks, the states needed to get the necessary approvals from their respective cabinets, and approach the CERC and the regulator needs to clear it.

“Given the company’s PPA was only with Gujarat, we have started discussions for its revision after the Gujarat government’s resolution in December,” said an official from Essar Power. 

An email query sent to Adani Power remained unanswered.

Tata Power operates a 4,000 Mw UMPP at Mundra and Adani Power operates a 4,620 Mw power unit there.

The expected revision based on HPC’s recommendations, once implemented, is expected to cut down Tata Power’s Mundra losses by half, with a 40-45 paise per unit reduction in its under recoveries.  So far, company officials stated the overall accumulated losses for Mundra unit was Rs 9000 crore, for which the company has already provisioned.

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