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State discoms yet to file petition in CERC for amendments to PPAs with Tata Power

The Gujarat government had already given its approval to Gujarat Urja Vikas Nigam (GUVNL) to submit its revised PPA with Tata Power to CERC.

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The wait is getting longer for Tata Power to revise power purchase agreements (PPAs) for its imported coal-based 4,000 mw power project in Gujarat as none of the five distribution companies have so far filed their separate petitions in this regard in the Central Electricity Regulatory Commission (CERC) for its approval. The procuring states include Gujarat (1805 mw), Maharashtra (760 mw), Rajasthan (380 mw), Harayana (380 mw) and Punjab (475 mw).

The Gujarat government had already given its approval to Gujarat Urja Vikas Nigam (GUVNL) to submit its revised PPA with Tata Power to CERC. However, four other states have yet to take a decision in this regard. Power sector sources hinted that states may wait till the Lok Sabha elections are over and then submit their petitions to amend the PPA.

In case of Adani Power's Mundra power project, the GUVNL, which is the sole procurer of 2,000 mw, has filed petition for amendments to the existing PPA in the CERC, and is waiting for the ruling. Of the 4,620 mw capacity, Adani Power produces 2,000 mw on imported coal which is tied with GUVNL. The rest, 1,425 mw, is generated on domestic coal for which amendment is not needed as Adani Power has PPA with the Harayana state distribution company.

The Supreme Court in October had directed to amend the PPA based on the High Power Committee's report. The apex court also asked CERC to act expeditiously up to December 24 and approve the amendments to the existing PPAs based on the consent of power procurers and Tata Power.

Tata Power spokesperson preferred not to comment. However, the Tata Power CMD Praveer Singh in his communication sent in December to all five states had stated that the company was suffering from huge financial hardships on account of under-recovery of energy charge after the promulgation of the Indonesian Regulations 2010 and the subsequent increase in the price of Indonesian coal.

The company in the same missive informed that it has accumulated losses of nearly Rs 8,000 crore till March 31, 2018.

Singh had argued that the revised per unit will be in the range of Rs 3.10 from the current level of Rs 2.94 per unit following the amendment to the existing PPA. He had said that it will be quite less compared to procurement of power from new power plants.

Energy expert Ashok Pendse said that crux of the issue is the financial viability of the power projects run by Tata Power. ''In the light of that what stand states are going to take in CERC is very crucial. If this decision is delayed beyond the point and the subsequent CERC's ruling, the Tata Power's plant will continue to generate at loss,'' he noted.

Association of Power Producers director general Ashok Khurana observed that CERC's approval for amendments to PPAs will help both Tata Power and Adani Power to continue power generation at their respective plants. ''For the consumers the rise in tariff will be less than new power projects by which this power will be substituted,'' he noted.

SC Direction

The Supreme Court asked CERC to act expeditiously up to December 24 and approve amendments to existing PPAs based on the consent of power procurers and Tata Power

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