Relief for Adani, TATA & Essar as Gujarat Govt. approves power tariff hike

After a long-pending petition by Adani & Others over power tariff hike, the Gujarat government has given a decision. These power projects will be allowed the power tariff hike by amending their PPAs with Gujarat Urja Vikas Nigam Limited (GUVNL). The ordeal which was ongoing since 2010 has now come to a deciding point and the troubled power projects are given relief.

However, the increase in the tariff will be directly passed on to the consumers at an approximate rate of INR 40 paisa/unit.

TATA & Adani had earlier approached CERC seeking higher tariff on the grounds of their cost going up due to the “Change in Law” in Indonesia in 2010, following a regulation passed by South-East Asia Nation.

However, in 2013 CERC rejected their plea of force majeure and “change in law”, but constituted a committee to suggest payment of compensatory tariff to the power company.

The apex court’s directive was followed by recommendations of a committee constituted by the Gujarat government to look into the possibility of “contribution by each stakeholder, including banks, project developers and procurers, by way of concessions for mitigating hardship”.

Maharashtra cuts power tariff by 20 percent

Govt. of  Maharashtra, on Monday (20th Jan 2014) posted a perfect example of political interference in the functioning of an important sector. Following the footprints of the incumbent Govt. in Delhi, Maharashtra also has approved a 20 % cut in power tariffs for residential, commercial and industrial consumers covered by its state run distribution company (MahaVitran). Such a concession is although not extended to Mumbai consumers owing to power supply from private distribution companies – Reliance Infrastructure, Tata Power and BEST.

According to a senior minister, the recommendation for a power tariff cut comes in response to huge pressure from all sections. As per an article in Business Standard, MahaVitran has warned of incurring huge losses following such a decision. The state Govt. is expected to bear an extra burden of Rs. 706 crore a month.

The proposal will now be put across the state regulator –  MERC for final implementation.

For relevant media articles click on the following link –

Business Standard

The Hindu

The Hindu Business Line

For our previous blogpost on Maharashtra’s cross subsidy hike – click here

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