Setting the path for similar relief in future for other power projects, the Central Electricity Regulatory Commission (CERC) on Monday ordered a compensatory tariff package for the Tata Power-owned 4000 MW Mundra ultra mega power project (UMPP) over and above the tariff agreed in the power purchase agreements (PPAs).

Releasing its order on a petition filed by Tata Power seeking compensation in shape of hike in tariff for the sudden hike in price of coal imported from Indonesia, the CERC said a committee should be constituted within one week comprising representatives of Principal Secretary (Power), Managing Directors of the distribution companies of the procurer States, chairman of Tata Power or his nominee, an independent analyst of repute and an eminent banker dealing and conversant with the infrastructure sector.

``The committee shall go into the impact of the price escalation of the Indonesia coal on the project viability and obtain all the actual data required with due authentication from independent auditors to ascertain the cost of import of coal from Indonesia and suggest a package for compensatory tariff which could be allowed to the petitioner over and above the tariff in the PPAs,’’ the order said. However, the CERC has said the order is subject to periodic review by the parties to the PPAs.

Today’s order is on similar lines of the April 2 order of the power regulator allowing Adani Power to charge more for electricity produced at its Mundra plant in Gujarat.

Further, the CERC said in the present case, the escalation in price of imported coal on account of Indonesian regulator is a temporary phenomenon and will be stabilised after some time. Therefore, the petitioner needs to be compensated for the intervening period with a compensation package over and above the tariff discovered through the competitive bidding. The compensation package could be variable in nature commensurate with the hardship that the petitioner is suffering on account of the unforeseen events leading to the increase in intentional coal price affecting the import of coal. ``As and when the hardship is removed or lessened, the compensatory tariff should be revised or withdrawn. In our view, this is the most pragmatic way to make the PPAs workable while ensuring supply of power to the consumer at competitive rates,’’ the order stated. While four members of the Commission voted in favour of the order, one member, S. Jayaraman, dissented.

In a statement issued here, Tata Power said the DERC order for compensatory package was a positive development. ``This decision of the CERC is an important step in resolving the major impasse affecting imported coal-based power projects in the country that got impacted due to extraneous factors well beyond the control of developers. CGPL has been delivering the full potential of Mundra across the five beneficiary States albeit with tremendous fiscal pain. We will continue to honour its commitment towards the nation’s energy security by providing reliable and competitive power supply through the project and hope for quicker resolution of the issues,’’ the statement added.