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Coming to the rescue of private power players, the Gujarat government announced the formation of a High Powered Committee (HPC) to look into the hardships faced by stressed power assets and find a sustainable solution in a time-bound manner.
The committee, formed by the Gujarat government through a Government Resolution (GR), comprises of three members — former Supreme Court Justice, R K Agrawal as its Chairman, former Deputy Governor of RBI, SS Mundra, and former Chairman of CERC, Pramod Deo. SBI Capital Markets, Mumbai, will provide secretarial support to the committee, which is asked to finalise recommendations within two months. Gujarat government’s nodal officer is appointed from Energy and Petrochemicals Department.
The committee is asked to examine and analyse the hardships faced by the developers of power projects, Coastal Gujarat Power Ltd (CGLP), Adani Power Ltd (APL) and Essar Power Gujarat Ltd (EPGL), on account of change in Indonesian regulations and subsequent orders in the matter. Also the committee is empowered to seek additional details, clarifications from the relevant parties as required.
The HPC is also asked to analyse contribution by each stakeholders such as banks, developers and procurers by way of concessions for mitigating hardships. The committee, in the interest of consumers, may also suggest measures for overall reduction in the cost of power generation , the GR states.
The formation of the HPC comes a year after a Working Group was formed under the guidance of Union Government in June 2017. During the discussions of the Working Group, it was decided that Gujarat being the lead procurer from the stressed power assets, should initiate the action to resolve the issue.
Indonesian regulations
The changes in the Indonesian regulations on coal pricing mechanism resulted into loss for power producers, who approached regulators for revision in tariff from those agreed under respective Power Purchase Agreements (PPAs). An expert committee was formed and based on its opinion, CERC gave its order in February 2014 supporting increase in tariff. But the litigation continued and finally in April 2017, the Supreme Court ruled against increase in tariff, putting developers in a tight spot.
The developers APL, CGPL and EPL had made repeated representations about their suffering and financial loss after the hike in cost of coal imports, hence expressed their inability to honour PPA obligation with full capacity.
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