The Gujarat Government will hold a meeting with lenders this week to discuss the future of imported coal-based thermal power projects of Tata Power and Adani Power located in Mundra.

The meeting is expected to be attended by top officials from the Gujarat Government, including the Energy Minister and Chief Secretary of the State. Representatives from Gujarat Urja Vikas Nigam Ltd (GUVNL), top executives from SBI as well as the management of the companies are also likely to be present at the meeting, according to sources close to the development. According to one source, the meeting could be as early as Monday.

Last month, both the private players had requested GUVNL, the parent body of State discoms, to consider various options that could help solve issues of non-viability of their thermal power projects.

Essar Power, another private player facing similar issues at its Salaya plant in Gujarat, too, has requested GUVNL to consider similar options. BusinessLine could not verify if Essar Power will participate in the said meeting.

Operations of imported coal-based power plants in Gujarat became unviable after the prices of the fuel imported from Indonesia increased due to changes in regulation in that country.

In their communication, sent to GUVNL and government officials last month, the power producers suggested that the tariff and terms of PPA signed in 2007 be re-negotiated, or GUVNL take over 51 per cent equity of the ailing projects and purchase power from private players while they continue operating and maintaining the plants. There were reports, too, of GUVNL wanting to take 100 per cent stake for ₹1.

On June, 5, the board of Adani Power approved slump sale of Mundra Plant to Adani Power’s own subsidiary, Adani Power (Mundra) Ltd.

The Supreme Court in April denied compensatory tariff to Tata Power and Adani Power (Essar Power filed the same petition before Gujarat Electricity Regulatory Commission seeking similar reliefs under change in law /force majeure), thereby denying earlier reliefs granted by the Appellate Tribunal for Electricity (APTEL).

Since then, the private players have been seeking ways to deal with these assets so that they do not turn non-performing.

According to market analysts, the options proposed by the private players may be difficult to be realised. While renegotiating of PPAs is unlikely, the scenario where GUVNL buys out controlling stake in the projects, may be challenged both for legal and political reasons.

More Like This

Published on July 9, 2017