Maharashtra, Punjab Cabinets to soon decide on tariff revision for Tata Power’s Mundra unit.

The Maharashtra and Punjab governments are understood to be taking up a proposal with their respective Cabinets to provide relief to Tata Power’s troubled Mundra generation plant. The proposal is related to revision in tariffs for the 4,150 MW unit.

Gujarat had approved tariff hikes for electricity procured from the plant to compensate for abnormal rise in coal prices in Indonesia from where the company sources the fuel

According to sources, Rajasthan and Haryana — the two other states having power supply contacts with the plant — are still deliberating on raising tariffs.

The estimated revised rate – seen to be around Rs. 3/unit, up from Rs. 2.7/unit – is significantly lower than the average tariff range of Rs. 3.5-4/unit at which these states buy thermal power. The Mundra unit had been losing Rs. 0.32 for every unit of electricity produced during Q3FY20, and reported a loss of Rs. 160 crore for the quarter.

The power purchase agreements (PPAs) with Coastal Gujarat Power — the Tata Power arm that runs the Mundra ultra-mega power plant — were signed under the composite ultra-mega power projects which warrant the consent of all beneficiaries to go ahead with tariff revision.

In a recent meeting with the buying states and Tata Power, the additional solicitor general is said to have suggested that the PPAs could be modified with each state separately. Rajasthan and Haryana will have the option of either buying power at the revised rates, or allow the plant to sell their share of electricity to Gujarat and Maharashtra. If the latter happens, Rajasthan and Haryana will receive 20% of fixed charges as penalty.

While Gujarat has tied up 1,805 MW capacity with the plant, Maharashtra and Punjab gets 760 MW and 475 MW, respectively. Rajasthan and Haryana each has contract for 380 MW. The fixed charge comes to around Rs. 0.90/unit.