Economy

Adani becomes first generator to get PPA amended for imported coal-based plants

ksenia kondratieva Mumbai | Updated on December 12, 2018

An Adani Power plant   -  REUTERS

Contract will have to go through the CERC approval

Adani Power has emerged the first out of three power generators to finalise the amended power purchase agreement (PPA) for its imported coal-based 4,600 MW Adani Power Mundra Ltd (APML) in Gujarat with the state distribution company Gujarat Urja Vikas Nigam Ltd (GUVNL), three sources privy to the development told BusinessLine.

“The contract with Gujarat is signed and will have to go through the Central Electricity Regulatory Commission (CERC) approval,” one of the persons said.

He added that since AMPL also sells power to Haryana, it is waiting for the State government to go through a similar process that Gujarat government followed.

According to sources, Essar Power’s 1200 MW Salaya plant (EPGL) is also in the process of finalising the amended PPA with GUVNL and the document can be signed by end of this week. Post then, it will have to be approved by Gujarat Electricity Regulatory Commission (GERC). EPGL is the only project out of three selling power solely to Gujarat, which makes the PPA amendment process relatively easier for the company.

This leaves Tata Power’s 4,150 MW Coastal Gujarat Power Ltd (CGPL) last in the race to get long-awaited relief as it is selling power, besides Gujarat, to Haryana, Maharasthra, Punjab and Rajasthan.

All these States will now have to come out with their own policies and directions to their distribution companies to amend the PPAs, which then have to be approved by CERC. Adani Group’s spokesperson could not be reached for comments, Essar Group’s spokesperson refused to comment. Officials of CERC, GERC and GUVNL could not be reached for comments immediately.

Tata Power in a note to exchanges last week said the Gujarat government’s move to accept the recommendations of the High Power Committee (HPC), appointed by the State government earlier this year for amending PPAs with power generators, was a “positive step is in the interest of all stakeholders”. Tata Power MD Praveer Sinha then told a TV channel he expected the entire process of amending PPAs to get completed by this month-end.

Changes in PPA

Earlier this month, the Gujarat government has instructed GUVNL to amend PPAs with three power generators and approach the power regulators for approval.

The amendments in PPAs will follow the suggestions of the HPC which has recommended allowing pass through of coal price with a cap of $110 per tonne, increase in variable cost by around ₹0.60-0.70 per unit, reducing the fixed component in the tariff by ₹0.20 per unit which will lead to writing off a part of the loan to the projects by lenders.

HPC has also suggested extending the duration of the PPAs by another 10 years after the completion of existing term of 25 years.

The State government’s order came a month after the Supreme Court on October 29 allowed CERC to amend the PPAs of these three plants.

This is despite that last year, the Supreme Court disallowed any compensation to the three power generators that have been facing challenges since 2010 when the change in regulations in Indonesia have lead to increase in price making the projects unviable.

While the Supreme Court has stipulated a time period of eight weeks for CERC to amend the terms of the PPAs which would be over on December, 24, a source privy to the recent meeting at CERC with power generators said

CERC would take more time to come up with a mandate regarding pass through of coal and will come up with its order in next 3-4 weeks.

Published on December 12, 2018

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