NEW DELHI • India’s top court yesterday directed the federal electricity regulator to decide within eight weeks on approving revised tariffs for three power producers in the western state of Gujarat due to increased cost of imported coal.
The Gujarat government sought the top court’s intervention to implement a state government panel’s report that recommended implementing a cost-reflective tariff which would mirror any increase or decrease in input costs. The plea also includes a provision to extend the contract period for the plants run by Tata Power Co Ltd, Adani Power Ltd and Essar Power Ltd.
The two judge bench led by Rohinton F Nariman said the decision for tariff should not be bound by an earlier single-judge order, which had rejected the power producers demand for higher tariff last year. Tata Power jumped as much as 25%, the biggest jump in intra-day trade in a decade, while Adani Power shot up as much as 21%, the highest since January.
Higher tariffs would allow these plants, with a combined capacity of nearly 10GW, to run at full capacity, after lying under-ut ilised since the Supreme Court last year denied an increase in tariffs.
Bringing these plants back into the grid could improve the reliability of supply, as well as ward off chances of these projects slipping into non-performing assets.
The plants had bid for a fixed tariff to win the projects, but those tariffs turned unviable after Indonesia changed its coal pricing regulations in 2010, linking prices of the fuel to an international standard.
The revival plan also includes lenders writing off a part of their loans and project developers absorbing accumulated losses. The court yesterday asked the Central Electricity Regulatory Commission to hear all consumer groups on the proposals.
Tata Power operates a 4,000MW plant in the coastal town of Mundra in Gujarat, while Adani Power runs a 4,620MW plant at the same location.
Both generating plants are fuelled by coal imported from Indonesia. Essar operates a 1,200MW plant at Salaya in the same state.
The plants haven’t been running at full capacity after the court ruled last year that a change in regulations overseas couldn’t be a ground for increasing power prices.