Citing non-compliance on payment security related issues, CGPL said in a statement here: "The company has invoked its rights under the Power Purchase Agreement 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 step follows several CGPL notices to the discoms required under the purchase agreements, thereby effectively terminating its contract.
The three Rajasthan discoms account for 10 percent of the total capacity from Mundra UMPP. The company said it will make alternative arrangements for contracting and selling this power.
"Rajasthan discoms have been in default of paying 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 spending," CGPL said.
"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 statement added.
