Gujarat govt revokes order allowing higher power tariff to imported coal based power projects

Gandhinagar: Gujarat government today announced that it has revoked its December 2018 order allowing higher tariff to imported coal based power projects (by Tata Power, Adani Power and Essar).

A statement issued by Additional Chief Secretary (Energy & Petrochemicals), Sunayna Tomar reads:

Govt. of Gujarat had constituted a High Power Committee chaired by Shri. R.K. Agrawal (Retired Supreme Court Justice) to make recommendations for addressing the issue of imported coal based power projects located in the State. The recommendations of High Power Committee and decision thereof were placed before the State Cabinet and same was approved. Thereafter, State Govt. issued Policy Directive vide GR dated 1.12.2018 accepting the recommendations of High Power Committee.

The main objective of GR dated 1.12.2018 was to protect interest of consumers while ensuring supply of power from 4805 MW capacity at reasonable rates. Further, in view of market trend of Indonesian coal price, changed scenario and to safeguard the interest of the consumers, Govt. of Gujarat has revoked the GR dated 1.12.2018 as the same was not fulfilling its objective and purpose.

The suitable decision in the matter of Tariff for Imported Coal based Project would be taken in future by Govt. of Gujarat considering the consumers interest.

Tata Power Company Statement:

“With regards to the Gujarat Government revoking the earlier order dated 1st Dec. 2018 on signing of supplemental PPA for CGPL, Mundra, our understanding based on recent discussions with concerned authorities is that the Government Resolution dated 1.12.2018 based on the High Powered Committee recommendations has been revoked by the Government of Gujarat due to low prices of international coal.

However, the amendment to the PPA with Coastal Gujarat Power limited ( CGPL) will still be considered with HPC conditions although with few additional conditions in view of the recent order of GERC in the case of Essar Power. Hence in our view, the cancellation of GR will not impact the progress of the ongoing discussions with CGPL on the supplemental PPA.

The company is examining all the aspects of the HPC terms in view of the latest low Imported coal prices and its long term trends.

It may be noted that based on legal opinion Gujarat Government has also agreed that separate Supplemental PPA can be finalised with CGPL instead of the composite common PPA, which was envisaged earlier with all the five States.”