Tata Power Company Ltd’s subsidiary, Coastal Gujarat Power Limited (CGPL) today announced the discontinuance of its power supply to three Rajasthan state-owned distribution companies (discoms) from its 4,000 Mw-ultra-mega power project (UMPP) at Mundra in Kutch.
“The company has invoked its rights under the power purchase agreement (PPA) and has decided to discontinue the supply of power to the three Rajasthan state-owned distribution companies from its Mundra ultra mega power project,” CGPL said in a statement on Thursday.
CGPL said it was constrained to issue notice to the Rajasthan discoms due to consistent failure on their part as procurers to fulfill the obligations, including collateral arrangements in spite of repeated and regular reminders.
“The Rajasthan discoms have been defaulting on paying their dues in a timely manner, leading to large outstanding dues. Mundra’s balance of payments on account of fuel tariffs is already a challenge, as recovery through tariff is lower than spendings. With continued non-payment in a timely manner and non-availability of payment security, the company finds it difficult to manage payment for its obligations to buy fuel and discharge its various obligations,” the company stated.
The move follows CGPL’s several notices to the discoms required under the PPA, thus effectively terminating its contract. The three Rajasthan discoms account for 10 per cent of the total capacity from Mundra UMPP.
CGPL will make alternate arrangements for contracting and selling this power, the company further stated.