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Fall in coal prices: Govt revokes order allowing pvt power firms to charge high tariffs

“This has been done due to the fall in coal prices. It is in public interest,” Sunaina Tomar, Additional Chief Secretary, energy and petrochemicals department told The Indian Express. The decision was taken in a recent Cabinet meeting.

By: Express News Service | Ahmedabad | July 10, 2020 4:20:56 am
coal prices, coal prices fall, Power Purchase Agreement, Gujarat 2018 gr resolution, Gujarat 21018 gr resolution revoked, Adani Powe, tata power, indian express news The move comes has a setback for the three power producers who have been importing coal in the past to run their units in Gujarat. (Representational)

The Gujarat government has revoked a 2018 government resolution (GR) that permitted private power producers like Adani Power, Tata Power and Essar Power to impose higher tariffs by amending the Power Purchase Agreement (PPAs).

An official from the state’s energy and petrochemical department said that the 2018 GR, that provided “relief” to power companies affected by a change in law in Indonesia, has been cancelled. “This has been done due to the fall in coal prices. It is in public interest,” Sunaina Tomar, Additional Chief Secretary, energy and petrochemicals department told The Indian Express. The decision was taken in a recent Cabinet meeting.

The move comes has a setback for the three power producers who have been importing coal in the past to run their units in Gujarat. These three companies have PPAs for supply of 4,600 MW (Mega Watt) power to Gujarat for 25 years. This includes the two PPAs of Adani Power for 1000 MW each, one PPA of Tata Power for 1800 MW and similarly a PPA of 80O MW with Essar Power. While Tata Power and Adani Power operate 4000 MW and 4620 MW power plant at Mundra, Essar operates 1320 MW plant at Salaya near Jamnagar. States like Haryana, Rajasthan, Punjab and Maharashtra also procure power from these units.

The government issued a GR in December 2018, after it decided to accept the recommendations of a high-power committee that suggested “relief” to three imported coal-based power plants owned by Tata Power, Adani Power and Essar Power in the state. This three-member committee comprising former Supreme Court judge Justice R K Agrawal, former RBI Deputy Governor S S Mundra and former Central Electricity Regulatory Commission (CERC) chairperson Pramod Deo was set up by the Gujarat government on July 3, 2018 to find solutions for the financially distressed power plants.

The three power plants were in the bind after Supreme Court set aside the decision of an Appellate Tribunal for Electricity that allowed Adani Power and Tata Power to charge compensatory tariff against the increased cost of coal imported from Indonesia.

Tomar in a statement issued later on Thursday evening stated, “The main aim of the resolution dated December 1, 2018 was to provide 4805 MW of power at a reasonable cost to the people and protect their interest. Keeping the changing trend in Indonesian coal market and due to non-achievement of all the aims of the resolution, the government is revoking it.”

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