Gujarat Allows Pass-Through Of Higher Coal Cost For Tata, Adani, Essar Power Plants

Bringing relief to thermal power plants owned by Tata, Adani and Essar groups, the Gujarat government on Saturday passed an order to allow pass-through of higher cost of coal to end consumers, a source said.

The Supreme Court had earlier ruled against any compensatory tariff for Tata Power Company Ltd., Adani Power Ltd. (4,600 MW Mundra) and Essar Power (1,320 MW Salaya) plants to allow pass-through of higher cost of imported coal.

Confirming the development, Tata Power in a BSE filing Monday said, "The company welcomes the resolution by the government of Gujarat to accept the recommendations of the high-power committee in giving some relief to Mundra ultra mega power project that meets nearly 15 percent of Gujarat's requirement of power at a very reasonable cost."

"This relief will help Coastal Gujarat Power to continue its operations to meet its obligations to all the five beneficiary states," it added.

It further said, "Though the coal cost is now a pass-through, the company would continue to make losses due to rebate on financing cost, and coal mines' profit is being passed on to beneficiaries states."

According to the statement, Tata Power expects to get the consent of other four procurer states and, thereafter, amendment to the power purchase agreement, based on the recommendations of the High Power Committee, so as to seek necessary approvals from power regulator Central Electricity Regulatory Commission as per the directions of the Supreme Court.