The Tata Power arm Coastal Gujarat Power (CGPL), which runs Mundra Ultra Mega Power Project in Gujarat, is in advance stage of discussion with Gujarat Urja Vikas Nigam (GUVNL) to ink a supplemental power purchase agreement (PPA) to facilitate suitable increase in power tariff.
The Gujarat government had decided to reverse its 2018 decision to amend the PPAs it signed with three producers, Tata Power, Adani Power and Essar Power, to raise the power tariffs in order to offset the rising cost of imported coal.
The state government revoked its Government Resolution (GR) in this regard in view of easing coal prices in international market. It has decided not to amend the main PPA and the state is negotiating with the Coastal Gujarat Power (CGPL) on a supplemental PPA.
Even though there has been a drop in coal prices, there is still room for a hike in power tariff in line with the prevailing prices and the supplemental PPA will take that into consideration.
In its order dated 12 June 2020, the Energy and Petrochemicals Department of Gujarat government had noted that the matter of signing supplemental PPAs with EPGL and CGPL will be decided on case-to-case basis by the government.
The order also noted that GUVNL will submit the draft supplemental PPA with CGPL separately for approval of the state government.
Further, all modifications made in supplemental PPA with Essar Power Gujarat (EPGL) will be appropriately incorporated in the supplemental PPA with CGPL.
The supplemental PPA will come into effect from the date of order of CERC approving supplemental PPA.
The Additional Solicitor General (ASG) of India had informed the Central Power Ministry in April 2020 that the CGPL may supply power to Gujarat and Maharashtra at higher revised tariff and continue to supply power as per tariff determined through competitive bidding process to Punjab, Rajasthan and Haryana.
The three power producers have PPAs for supply of 4,600 MW power to the state utility Gujarat Urja Vikas Nigam (GUVNL) for 25 years. The Adani Power has two PPAs for 1,000 MW each, Tata Power has 1,800 MW and Essar Power has 800 MW.
