Punjab to lose 375 MW cheap power as Tata Power shuts 3 units in Gujarat

POWER GENERATOR HAD ASKED FOR 50 PAISE HIKE IN RATE, SOMETHING THE PSPCL DID NOT AGREE TO

PATIALA : Punjab is set to lose 375MW of cheap power it buys at Rs 2.91 a unit, with the Coastal Gujarat Power Limited (CGPL), a project of Tata Power at Mundra in Gujarat, announcing the shutdown of three of its five units. Tata Power had asked for a 50 paise hike per unit in the rate that would have cost the state an additional Rs 200 crore. In total, Punjab drew 475MW from the plant, but now will only be able to buy 100MW.

Officials at the Punjab State Power Corporation Limited (PSPCL), which was informed of the shutting down of plants on Friday, said, they would meet the shortfall from other sources, also claiming that it was not a huge shortfall. It has also responded to the CGPL in a letter.

“Any attempt by CGPL to cease operation of power generation and supply of power from the Mundra Power Project would be a breach of its Power Purchase Agreement (PPA) and is illegal. Any such action shall be entirely at the cost and risk of the CGPL and its promoter, Tata Power Limited, and any adverse financial consequences to Punjab on account of the above shall be entirely at the cost and risk of CGPL/TATA Power,” the letter says. It goes on to add, “The claim of losses being incurred by CGPL is not a reason to not comply with the obligations under the PPA. CGPL is required to duly perform its obligation under the PPA on the terms and conditions contained in the PPA irrespective of any issue of losses or the performance being burdensome to CGPL.

FIRM HAD ASKED FOR CHANGES TO PPA IN DECEMBER 2018

On February 22, Gujarat-based Mundra Ultra Mega Power Plant that Tata Power owns had sent a notice to the Punjab government, saying that it would stop the supply of power from

February 29, if the rate at which the state bought electricity is not hiked.

This deadline was later extended to the mid of March, as the company expected a positive response. Tata Power had said that it was running into losses due to due to the high cost of imported coal and would be left with no option, but to shed operations. Gujarat, Maharashtra, Rajasthan and Haryana also buy power from the same plant.

Even earlier, in December 2018, Tata Power had written to the Punjab power secretary, asking for amendments to the PPA based on the recommendations of the high-powered committee that the Gujarat government had formed, based on a Supreme Court judgment.