Gujarat Withdraws Tariff Government Resolution For Imported Coal-Run Power Units
Smoke rises from a chimney as electricity pylons stand at the Tata Power Co. Trombay Thermal Power Station in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Gujarat Withdraws Tariff Government Resolution For Imported Coal-Run Power Units

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The Gujarat government has withdrawn a resolution allowing private power companies to charge higher tariffs for their imported coal-based projects, saying the 2018 order was not fulfilling its objective.

The move has come as a blow to energy companies like Tata Power Ltd., Adani Power Ltd. and Essar Power who have such coal- based projects in Gujarat.

The Government Resolution in this regard was issued in December 2018.

The Gujarat government said a suitable decision in the matter of tariffs for imported coal-based projects would be taken in the future considering the consumer interest.

“In view of market trend of Indonesian coal price, changed scenario and to safeguard the interest of the consumers, Government of Gujarat has revoked the GR dated 1. 12.2018 as the same was not fulfilling its objective and purpose,” Additional Chief Secretary Sunayana Tomar said in a statement on Thursday.

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Tomar looks after the energy and petrochemical department of the state government.

Tata Power, Adani Power and Essar Power have PPAs (power purchase agreements) to supply 4,800 MW to state-run utility Gujarat Urja Vikas Nigam Ltd for 25 years.

The government had constituted a high-power committee chaired by Justice R K Agrawal, a retired Supreme Court judge, to make recommendations for addressing the issue of imported coal-based power projects located in the state.

The committee was formed at a time when imports of coal had become costly for power producing companies and they were facing difficulties in continuing operations.

"The recommendations of the committee and decision thereof were placed before the state Cabinet and same was approved.

"Thereafter, the state government issued policy directive vide GR dated 1.12. 2018 accepting the recommendations of the committee," said the statement.

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The GR allowed companies to raise tariffs after amending PPAs and informing the authorities concerned.

The main objective of GR was to protect interest of consumers while ensuring supply of power from 4805 MW capacity at reasonable rates, the government said.

However, due to the change in situation of supply of coal and in interest of consumers, the state government has withdrawn the order, the statement said.

The government said "suitable decision in the matter of tariff for imported coal-based projects would be taken in the future."

Adani Power has a 4,620 MW plant in Mundra, while Tata Power has a 4,000 MW plant in Kutch district. Essar Power has a 1,320 MW plant at Salaya in Jamanagar district.

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