Both the Centre and the State seem to be passing the buck when dealing with the problems faced by imported coal-fired power plants in Gujarat, which could become stressed assets.

In what seems like an attempt to keep itself away from the political implications of any decision, the Ministry of Power has asked the Gujarat government and imported coal-based power producers to find a way for reviving stranded thermal power projects in the State.

The Minister of State (Independent Charge) for Power and Renewable Energy, R K Singh had called a meeting with the Gujarat government representatives and bankers that had lent to the thermal power projects to find a way for de-stressing these assets.

An official present at the meeting told BusinessLine that, “The Gujarat government, lenders and the companies have to find a way out for keeping these projects afloat. The Centre cannot play any role other than bringing everyone to the same table here. There is no option that has been finalised right now.”

The crux of the problem is the Supreme Court denying compensatory tariff to imported coal-based power projects of Tata Power and Adani Power.

The power companies alleged that a change in law by the Indonesian government had increased the price of imported coal and made it impossible to continue supplying power at the pre-committed rates.

An official at one of the affected power plants said, “The total cost of power, even after making the coal cost pass through will be substantially lower than the current rate at which the Gujarat Urja Vikas Nigam Ltd (GUVNL) is buying from the spot market.”

“GUVNL is buying power at ₹4 a unit from the market today. And even today, the power generated from imported coal is 60 paise cheaper,” he added.

Currently, these power plants can be run with 30 per cent of their coal requirement being met from domestic coal. The rest, however, has to be imported due to the constraints of machinery installed.

“We are not willing to make a heavy capital expenditure, change the nature of our power plants to run on domestic coal without the assurance of a cost pass through,” an official at another imported coal-based power producer said.

For now, the possibility of allowing a higher tariff to these ailing power plants seems out of question.

Another official present at the meeting that the Power Minister had called said, “There were various aspects to keep in mind. We are looking at the solutions and at the same time there are a good amount of power plants that are stranded. It is also true that the Gujarat government is buying power from other sources that are not that cheap. There is a Supreme Court judgment and a bank loan that needs to honoured.”

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