Economy

Centre moves in to facilitate talks between Tata Power, Gujarat govt

Our Bureau New Delhi | Updated on January 12, 2018

File photo of Union Minister of State for Power, Piyush Goyal.   -  The Hindu

But solution has to be found between the buyer and seller, says Piyush Goyal

The Minister of State (Independent Charge) for Power, Coal, New and Renewable Energy, and Mines, Piyush Goyal, remained categoric in his stand on the ongoing conflict between Tata Power and the Gujarat government and said that the solution has to be found between the buyer and the seller.

Goyal was clear that the government can only play the role of a facilitator and bring the two stakeholders together for a dialogue, commercial issues have to be sought between the stakeholders.

When asked by reporters here he said: “The Centre has brought the stakeholders on the table to help them resolve the problems and find a solution that is in the best interest of the people of the State.”

Goyal was speaking after a meeting with industry players on the impact of GST.

In its representation to the government, Tata Power suggested that the Gujarat government should take over the imported coal based Mundra thermal power plant following the Supreme Court verdict on compensatory tariff.

When asked if the Centre has a view on this option, Goyal said, “This is a matter for the parties to resolve. The Centre does not have a view on this.”

In a letter to the Gujarat State Power Distribution company, Tata Power said that the accumulated losses to the Mundra Power plant is to the tune of ₹6,457 crore with a paid-up equity of ₹6,083 crore as of March 31, this year.

Sources told BusinessLine that power plants running on imported coal, namely those of Adani Power and Tata Power, have sought relief from the government after they were not allowed to hike power tariffs in line with the increased cost of coal. These companies had earlier proposed to scrap the existing PPAs.

While the private players suggested they were willing to forego the security deposits, Discoms should call fresh bids from power generators to match the existing tariffs.

Another option proposed by the private players to solve the growing NPA issue in the power sector was to allow the power procurers import coal and then alter the arrangement accordingly. In such a scenario, the power generating companies will only offer their power generation capacity, hence, their benefits would be the cost of power production minus the fuel cost.

The options before the State governments include taking over the asset, taking responsibility for assuring coal supply or waiving off penalty for not supplying power and shutting down the projects.

Published on June 22, 2017

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