Coal news and updates

This is with reference to inaccuracies in "Why CERC's compensation to Tata, Adani for high coal prices sets dangerous precedents and dents competition'" published in ET Magazine, dated March 2, 2014.

 

The Mundra UMPP was conceptualized by the government to be run on imported coal. While the CERC had prescribed the methodology for determining the rates of escalation, factored in a maximum hike of around 20% in coal prices, the actual hike stood at 153%. The PPAs do provide for a domestic 'change in law' scenario, but not outside India.

 

The Mundra UMPP did not approach the CERC asking for higher tariff from discoms but sought intervention to ensure the plant's viability through an appropriate mechanism for future fuel price pass through. The objective of both National Electricity Policy and Tariff Policy is to ensure financial viability of the sector. It is thus imperative that the CERC intervenes and passes appropriate orders to ensure the viability of the project.

 

Importantly, if Mundra was not to supply power any more, the replacement power would cost a minimum of Rs 4 per unit if contracted from any other plant at the present procurement rates. It could also go up to Rs 7 and up — if bought at spot rates.

 

Source: ET