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Gujarat Government to Increase Tariffs on Three Coal-Based Power Plants; Tata Power & Adani Groups Played Safe

Gujarat Government to Increase Tariffs on Three Coal-Based Power Plants; Tata Power & Adani Groups Played Safe

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In the wake of relief from Gujarat government which has resolved to water down the tight tariff regulations on coal-based power plants in line with the surge in tariffs the government has proposed. In the midst of this tariff revision, Tata Power and Adani Group have good news to relish. Both the power producers have gained 6.6 percent and 3.7 percent upsurge in the stock market.

Adani Power was quoting at Rs 57.05, up 2.98 percent after hitting a 52-week high of Rs 57.45 while Tata Power Company was up 5.84 percent at Rs 80.70, at 10:28 hours IST.

The Gujarat government has directed its power distribution company to raise tariffs of the three imported coal-based power plants owned by Tata Power, Adani Power and Essar Power by amending their power purchase agreements (PPAs) and approaching the power regulators for approval.

This comes as a big relief for the three plants which together can generate about 10,000 mw but have been making heavy losses after an abrupt jump in the price of Indonesian coal and the refusal of various states to pay higher tariffs as they said the power producers were bound by the PPAs, the report added. “The matter has lingered for years as it was put up to various regulators, courts, committees, appellate authorities and governments.”

Tata Power welcomed the resolution by the Government of Gujarat to accept the recommendations of the High Power Committee in giving some relief to Mundra Ultra Mega Power Project that meets nearly 23 percent of Gujarat’s requirement of power at a very reasonable cost.

“This relief will help Coastal Gujarat Power Limited to continue its operations to meet its obligations to all the five beneficiary States,” the company said.

It further said though the coal cost is now a pass through, it would continue to make losses due to rebate on financing cost and coal mines profit is being passed on to the beneficiary States.

Tata Power expects to get the consent of other four procurer States based on the to the recommendations of the High Power Committee’s and thereafter amendment to the power purchase agreements (PPAs) so as to seek necessary approvals from CERC as per the directions of the Supreme Court.

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