No bailout for Tata, Adani power projects in Gujarat

Centre distanced itself from controversy, claiming it is an issue for states, banks to handle

The Gujarat government is unlikely to buy equity in Tata and Adani power projects at Mundra that have been rendered unviable because of high prices of imported coal, which the Supreme Court has ruled cannot be passed on to state utilities.

The Centre has also distanced itself from the controversy, claiming it is an issue for states and banks to handle.

Tata Power had asked Gujarat Urja Vikas Nigam (GUVNL) to buy 51 per cent equity in its 4,000-Mw Mundra Ultra Mega Power Project (UMPP) for Rs 1. Adani Power and Essar Power, which have projects running on imported coal, have also submitted similar proposals to hive off equity.

GUVNL executives said there was no discussion over offers made by Tata and Adani. “We have not even analysed the subject nor have we any such indication from the government,” said a GUVNL executive.

“We have not conducted a due diligence nor are we working towards it,” another GUVNL executive stated.

GUVNL Managing Director Pankaj Joshi could not be reached. Gujarat Power Minister Chimanbhai Sapariya was also not available for comment.

Union power ministry officials said the Centre had no role in this issue. “The state and banks will have to resolve the matter. If any facilitation is needed, the Centre will assist,” an official said.

Another official ruled out a bailout for power projects based on imported coal. “The banks had lent to them and it was their job to conduct due diligence. The next course of action is in the hands of the banks,” he said.

Union Power Minister Piyush Goyal had last week met banks and state government representatives on the issue of power projects based on imported coal. A committee was set up to look into the matter but banks are yet to evaluate the assets of all such power plants.

Tata Power and Adani Power did not reply to emails seeking their comments for this news report.

The Supreme Court in April denied relief to Tata Power’s UMPP and Adani Power’s 1,980-Mw plant in Mundra, Gujarat, in a five-year-old case for compensation due to an unforeseen increase in prices of coal imported from Indonesia. The case was fought between the two companies on the one hand and the state utilities of Gujarat, Rajasthan, Maharashtra, Punjab and Haryana on the other.