The Central Electricity Regulatory Commission (CERC), on Thursday, asked Tata Power subsidiary Coastal Gujarat Power Ltd. (CGPL) and States who have been listed as buyers of power from the 4,000 MW Mundra ultra mega power project (UMPP) in Gujarat, to submit their replies in a week's time on the tariff hike issue.

On the first day of the hearing, CGPL presented its case to CERC. Tata Power had approached CERC seeking higher tariff for power generated from the Mundra plant due to the hike in cost of imported coal. When Tata Power won the bid for the 4000 MW UMPP in 2007, it had quoted a price of Rs.2.26 paise a unit. However, now it had approached the CERC to hike the tariff to Rs.3 per unit. The CERC would fix the next date of hearing only after receiving the responses of the concerned parties.

He said stakeholders including CGPL and State distribution companies from Gujarat and Punjab argued their case before the Bench. The procurer States said that the power purchase agreement (PPA) between the company and the procurers was an exclusive document. So any change to be made should be done within the provisions of the PPA. The project was fired by imported coal from Indonesia. Changes in Indonesian fuel pricing regulations have made the UMPP unviable at existing tariffs. Electricity generated from Mundra UMPP was to be supplied to five States — Gujarat (1,805 MW), Maharashtra (760 MW), Punjab (475 MW), Haryana (380 MW) and Rajasthan (380 MW). The first 800 MW unit of the project became operational in March.

The buyer States had recently turned down the company’s proposal for a tariff revision. The buyers, led by Gujarat Urja Vikas Nigam Ltd., filed a petition with the CERC arguing that none of them had agreed to a tariff revision at this stage. Buyers from Mundra UMPP include Gujarat Urja, Haryana Power Generation Corporation Ltd., Jaipur Vidyut Vitran Nigam Ltd., Ajmer Vidyut Vitran Nigam Ltd., Jodhpur Vidyut Vitran Nigam Ltd., Punjab Electricity Board, and Maharashtra State Electricity Distribution Company Ltd.

The discoms have argued that the lowest bid rate was the result of keeping the variable element of fuel cost at a low value. It is not justified at this stage to claim an escalation due to an increase in the fuel price, as this was neither in the bid nor in the PPA. Such a claim is a post-tender development, changing the very basis of the bid to benefit the seller and, hence not acceptable, they told CERC.

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