Maha govt gives nod to Mundra UMPP rate revision with riders

Maharashtra government today approved an application from Tata Power's 4,000 MW ultra mega power project (UMPP) at Mundra seeking tariff revision, as recommended by the Deepak Parekh panel, but with some riders.
The decision was taken at a Cabinet meeting here, official sources said.
Maharashtra's power distribution arm MahaVitaran has tied up for getting 800 MW from the coal-fired UMPP in Gujarat. But the state is currently getting 80 per cent of this and wants the company to ensure it gets the entire quota.
One of the riders says once the price of imported coal (used in UMPP) falls, the tariff should be revised downwards accordingly. Another caveat calls for an undertaking from the private firm to reduce its return on equity or RoE (a measure of company profitability) as far as possible, they said.

If the revision materialises, the power tariff may increase by 59 paise per unit for MahaVitaran. But according to a state discom official, they expect the effective increase to be 35-45 paise a unit.
The state government has accepted recommendations of the panel, headed by HDFC Chairman Deepak Parekh, which had called for a hike in tariff for power supplied by Coastal Gujarat Power, an arm of Tata Power that runs Mundra UMPP.

Central Electricity Regulatory Commission (CERC), in April this year, had allowed Tata Power to pass on to consumers high cost of coal imported from Indonesia for the Mundra unit, which supplies power to five states.

The regulator had asked all states which receive power from the project to file an affidavit in this regard.
According to the MahaVitaran affidavit, Tata Power should pass on the benefit of any reduction in Indonesian coal prices and also reduce the RoE as far as possible. It called on financial institutions, which have funded the project, to reduce their interest rates.
It said even after the entire exercise, if the tariff is unviable, the state will have the option of cancelling the purchase pact without giving any compensation.
Punjab and Haryana, receiving power from Mundra UMPP, have opposed the CERC nod to hike in tariff and have moved the court against the decision.