Setback for Tata, Adani, Essar: Gujarat scraps order to pay more for power

In a setback to Tata Power Mundra, Adani Power and Essar Power, the Gujarat government has gone back on its earlier decision to revise power purchase agreements (PPA), totalling 7,180 megawatt (Mw).

According to state government sources, the earlier resolution allowing these developers to charge higher tariffs, “now stands cancelled”. It will now sign supplemental PPAs with these units on a “case-by-case basis” over and above the existing PPAs.

The earlier resolution was issued in November 2018 after a high-powered committee (HPC) formed by the state government suggested new terms of PPA with cost escalation to be shared by consumers, lenders, and the project developer.

State government sources said with the situation changing in conventional power in terms of reduced coal prices and keeping supplementary PPAs in mind, the increased tariffs were becoming unviable for the government.

The notice by the state said it would sign a supplemental PPA with Essar Power. The one with Tata Power is awaiting nod from the state government. In the case of Adani Power, the matter of a supplemental PPA is pending with the Central Electricity Regulatory Commission (CERC).

The decision by the Gujarat government comes a week after the Maharashtra government agreed to allow revised tariffs for Coastal Gujarat Power.

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