Adani Power has made it clear that Jharkhand would be supplied power from the company only at the rate fixed by the Jharkhand State Regularity Authority Commission (JSERC) and not at variable rate, which was the case with the MoUs signed in the pre-auction era of coal blocks.
The company has recently signed its stage-II MoU with the State Government based on that only and went on conducting public hearing at Godda where its 2X800 MW coal-fired power plant is proposed to be commissioned by 2020.
“The formula of 12 per cent and 13 per cent power to be given on variable and fixed rates is outdated. It was viable when companies were given coal blocks on the recommendations from the Government. Now we are on auction route and have to bid aggressively for getting coal blocks.
In this scenario, it is not feasible to provide power at the rate lower than the total cost coming up,” said a top official of the company requesting not to be quoted.
The power major as per the agreement inked with the State Government in February, 2016 is setting up 1600 MW power plant at Godda with the investment of Rs 15,000 crore. Though it has committed to provide 25 per cent of the installed capacity of the power plant to the State kitty on priority basis, the power purchase agreement (PPA) is to be mutually agreed and tariff for such power purchase will be solely determined by the JSERC; i.e. on fixed rate.
The JSERC fixes tariff based on cost coming on setting up power plant, other costs involved and generation cost coming on every single unit of electricity. “We could have agreed to this only since era of free power is over. Now companies have to make huge investments in buying coal as well as land plots at market rate. As no rebate is being given, the concept of cheaper or free power is outdated,” he added.
The company needs 1500 acre of at Godda out of that about 1300 acre is to be purchased from private parties. The land purchase process is expected to commence in March, 2017.
The State Government had entered into agreements for setting up independent power plants (IPPs) with companies like Essar, Aadhunik and several others way back with clause of fixed and variable rate components. Moreover the changed condition with Adani Power is likely to put other projects in the State in disadvantageous position.
“The change is discriminatory. It would push players like us out since we have done MoU with the Government committing to supply 12 per cent of the installed capacity at variable rate which is only cost of the fuel per unit.
It is very cheaper than the fixed rate coming on adding all the cost like land, manpower and other capital investments made,” said a senior official of Essar Power. Essar had singed PPA in 2012 based on the 2007 MoU’s condition only for its 2000 MW power plant located at Chandwa of latehar.
He added that once the PPA with Adani comes into fore, they may knock the court’s door citing not a level playing field else sought the Government to review the MoU done with it too in the light of the newer scenario.
“In the given circumstances, we also have to buy coal blocks through auction route and purchase land with raiyats,” argued the official.