CERC for compensating Tata Power for higher imported fuel cost

Power sector regulator CERC today said Tata Power should be compensated for the increase in imported fuel cost for 4,000 MW Mundra ultra mega power project in Gujarat.

Coastal Gujarat Power Ltd, a wholly-owned subsidiary of Tata Power, had petitioned CERC seeking relief on account of adverse impact of the unforeseen, uncontrollable and unprecedented escalation in the imported coal price.

"In the present case, the escalation in price of imported coal on account of Indonesian Regulation is a temporary phenomenon and will be stabilised after some time...

...Therefore, the petitioner needs to be compensated for the intervening period with a compensation package over and above the tariff discovered through the competitive bidding," CERC said in its order.

The compensation package could be variable in nature and commensurate with the hardship that the petitioner is suffering on account of the unforeseen events leading to increase in international coal price affecting the import of coal, the order said.

However, in a dissent order S Jayaraman, Member, said that the there is no scope either under the PPA (Power Purchase Agreement) or under the Act to establish a mechanism to grant relief to the petitioner as prayed for.

He added that the petition lacks merit and is liable to be dismissed.

Mundra UMPP is based on imported coal and has an estimated coal requirement of approximately 12 MMTPA (million tonnes per annum).