CERC allows tariff hike at Tata Power plant

MUMBAI (Reuters) - The Central Electricity Regulatory Commission (CERC) has allowed Tata Power Co Ltd to raise electricity tariffs on a temporary basis at its Mundra power plant on account of rising cost of imported coal, the power utility said on Monday.

The electricity regulator has allowed Coastal Gujarat Power Ltd, a unit of Tata Power that operates the plant in Gujarat, to charge "compensatory" tariffs for electricity until the fuel supply situation improves.

The regulator will direct the setting up of a panel to finalise details of the compensatory tariff.

The order follows a similar ruling by the regulator earlier this month, which allowed Adani Power Ltd to raise tariffs for electricity from its power plant at Mundra, a ruling that consumer states have promised to challenge.

India's power sector has struggled with domestic coal shortages and has become increasingly reliant on costlier imports to meet the country's rapidly growing energy needs.

Tata Power's 4,000-megawatt plant at Mundra runs on imported coal from Indonesia, but it has been suffering from mounting losses after the South East Asian nation raised levies on coal exports, which Tata has not been able to pass on to its customers so far.

"This decision is an important step in resolving the major impasse affecting imported coal-based power projects that got impacted due to extraneous factors beyond the control of developers," Tata Power said in a statement.

Ahead of the ruling, shares in Tata Power closed down 1.5 percent in a firm Sensex.

(Reporting by Prashant Mehra; editing by James Jukwey)