Tata Power Company is confident of getting regulatory approvals for higher tariff for its loss-making Mundra ultra mega power project after the Central Electricity Regulatory Commission (CERC) has set a precedent by allowing Adani Power’s power plant in Mundra to pass through imported coal cost to power consumers, a top executive of Tata Power told ET.
While Tata Power can expect a favourable outcome since its plea for higher tariff in also based on the same issue of escalation in coal prices, the company still has to get on board all the five state power distribution companies (discoms) it sells power to. Only once it has a consensus with the customers, can it file a petition with the regulator.
“Once the tariff has been approved for one company, the regulator will approve it for others on the same principle. There’s no difference between their case and ours, only that we have five customers who need to agree and they had one,” said Praveer Sinha, managing director and chief executive officer, commenting on the recent CERC order.
On Friday, CERC approved higher tariff for 2,000 mw of power that Adani Power’s Mundra power unit sells to Gujarat Urja Vikas Nigam, to allow the pass through of higher cost of imported coal to run this plant. Adani Power’s Mundra plant, just like Tata Power’s Coastal Gujarat Power plant, in Gujarat, runs on imported coal.
Both units were hit after Indonesia came out with a presidential decree that coal prices would be declared by them on a month-onmonth basis, linked to market factors and no licensee will be able to sell coal at lower than that licensed price, resulting in losses in the Mundra power units as they could not pass on the cost to the customers.
Tata Power is currently incurring a loss of Rs 1,500 crore on its Mundra power plant, which it hopes to reduce by half upon tariff revision by increasing the tariff to Rs 3.10 a unit from the contractual tariff of Rs 2.80. The Gujarat discom has approved the proposal, and the company now needs approvals from other four discoms in Maharashtra, Haryana, Rajasthan and Punjab. The CERC order highlighted the need to look at contribution by each stakeholder for mitigating hardships faced by these projects.
“All these states know that Mundra would offer lower cost power, in spite of the increase in tariff, than any alternate source of power. We are in talks with the states but due to elections, chief ministers and ministers are campaigning. Hopefully, it would be done after the elections,” Sinha said.
Tata Power’s 4,150 mw-ultra mega power plant in Mundra can cater to 2% of India’s total power needs. Since the change in policy in Indonesia in 2011, the companies impacted by it have been struggling to ease their burden by increasing tariff, but the process has been long due to regulatory issues and involvement of different stakeholders.