Tata Power approaches CERC for higher tariff

Mundra project has five units.
Punjab and Haryana to get 475 MW and 380 MW respectively from Mundra
New Delhi: Faced with losses at the 4,000 mega watt (MW) Mundra project due to expensive imported coal, Tata Power has moved the central electricity regulator, Central Electricity Regulatory Commission (CERC) seeking higher tariff for power generated from the plant. Mundra, the country’s first ultra mega power project (UMPP), which is located in Gujarat, is fired by coal imported from Indonesia. However, changes in Indonesian fuel pricing regulations have made the UMPP unviable at existing tariffs.

Tata Power has petitioned the CERC, seeking higher tariff for the project. The first hearing of the petition is scheduled for Thursday, a source close to the development said. When contacted, Tata Power said: “The company will not comment as the matter is subjudice.” The company won the UMPP, Mundra, through competitive bidding by quoting a price of Rs 2.26 per unit, a tariff which has now become unviable. Now, the company has sought higher tariff of about Rs 3 per unit. This is the first time Tata Power has moved the CERC, the source said adding earlier it had raised the concerns with the Power Ministry and the concerned state governments.

Electricity generated from Mundra UMPP is to be supplied to five states--Gujarat (1,805 MW), Maharashtra (760 MW), Punjab (475 MW), Haryana (380 MW) and Rajasthan (380 MW). According to the source, the company is incurring a loss of about 0.75 paise for every unit of power generated from the plant. If the current tariff continues, Mundra UMPP could see an annual loss of around Rs 1,800 crore, the source said. Overall cost of the Mundra project is estimated at about Rs 17,000 crore, with 75 per cent funding through debt. As on fourth quarter of 2012, debt drawn stood at Rs 11,648 crore while equity investment was at Rs 3,972 crore.

Mundra project has five units, each having 800 MW capacity. The first unit became operational in March. A Spanish brokerage firm Espirito Santo Securities has revealed that the loss making power distribution companies would have to keep hiking rates by 5-10 per cent for the next five years to break-even. Faced with strained finances, more than 20 State Electricity Boards (SEBs) have proposed to increase tariffs in the past 18 months. The firm said despite tariff increases, SEBs would still continue to make losses though with substantially reduced numbers.PTI