In a major blow to the power companies such as Tata Power, Adani Power and Essar Power, the Gujarat government has cancelled its earlier GR (government resolution) which was issued in November 2018 that allowed higher tariffs to the power companies by amending the Power Purchase Agreements (PPAs).
Top sources in the government told The Hindu that in a recent cabinet meeting, the State government has cancelled the earlier GR which paved the way for higher tariffs to the three power companies that have PPAs with the State government for long term power supply.
These three companies have PPAs for supply of 4600 MW power to the state utility for 25 years. The Adani Power has two PPAs for 1000 MW each, Tata Power has 1800 MW and Essar has 800 MW.
In November 2018, the Gujarat government decided to accept the recommendations of a high-power committee that proposed to provide “relief” to three imported coal-based power plants — owned by Tata Power, Adani Power and Essar Power — in the State by allowing them to increase tariffs after the power producers cited change of law in Indonesia, from where they are sourcing fuel (coal), which raised the cost of importing coal from there.
“We have cancelled the GR in the cabinet meeting. Since coal prices have plummeted, we moved a note in the cabinet to cancel the earlier order on public interest,” a top bureaucrat said while fusing to divulge more details since the matter is “very sensitive in nature with massive financial implications.”
The GUVNL and state energy department has also informed the power regulators like GERC and CERC regarding its latest move to cancel the earlier order providing higher tariffs. Moreover, the GUVNL has also filed an affidavit stating its latest decision before the Appellate Tribunal for Electricity.
The earlier decision from the Gujarat government had come as a badly needed relief for the three private power producers in the state which had been in protracted legal battle with Gujarat and other states which are procuring powers from them.
In July 2018, the Gujarat government had formed a three-member committee “to suggest an early resolution” to the issues faced by the three private power producers and subsequently recommendations of the committee were accepted allowing hikes in tariffs by amending the PPAs and getting approval from the respective regulators like the Gujarat Electricity Regulatory Commission (GERC).
While Tata Power operates a 4,000-MW power plant at Mundra, Adani has a 4,620-MW plant at the same location in Kutch district. Essar Power has a 1,320-MW plant at Salaya near Jamnagar and Gujarat Urja Vikas Nigam Ltd (GUVNL) is the main power procurer from the three plants while other procurer states include Haryana, Rajasthan, Maharashtra and Punjab.
