Coastal Gujarat Power Limited (CGPL), the wholly owned subsidiary of The Tata Power Company Limited has announced discontinuance of its power supply to three Rajasthan state-owned distribution companies (discoms) from its Mundra 4000 Mw Ultra Mega Power Project (UMPP).
Citing non-compliance on payment security related issues, CGPL said on Thursday in a statement, "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 (UMPP)."
The move follows its 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.
Due to consistent failure on the part of Rajasthan Discoms as procurers to fulfill the obligations including collateral arrangements in spite of repeated and regular reminders, CGPL was constrained to issue notice to the Rajasthan state discoms.
"Rajasthan Discoms have been in default of paying its dues in a timely manner leading to large outstanding dues. Mundra 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.
CGPL will make alternate arrangements for contracting and selling this power, the company further stated.
