Five states face power shutdown from Tata Power's Mundra plant in Gujarat if they fail to implement the proposed tariff hike from March. The power major has informed Gujarat, Haryana, Rajasthan, Punjab and Maharashtra that it's not in a position to run the plant as losses from the unit are mounting by the day.
The company has requested the states to pass the additional fuel cost to customers or face complete power shutdown. "Our attempt has been to arrive at a mutually acceptable arrangement. We have waited long for a resolution and losses are mounting. We do hope that states will take steps to finalise this quickly," The Economic Times quoted a company official as saying.
The current call for tariff hike comes on the back of the Supreme Court's order to the Central Electricity Regulatory Commission (CERC) to consider raising power tariffs in wake of power companies facing major losses every year. After dragging the matter for months, these states now don't have an option but to implement the hike for they will be forced to buy expensive power from other states if Tata Power stops supplying electricity.
Among these five states, only Gujarat has approved the power hike. Other states are either dragging the matter or have simply refused to approve the revised power purchase agreement. Notably, Tata Power has pegged loss worth Rs 1,000 crore for FY20 from the Mundra plant alone. Last year, it had incurred Rs 1,700 crore loss from the Gujarat plant.
The development comes due to a poor state of the stressed power sector in India. Power producers' total outstanding dues owed by distribution firms jumped nearly 50 per cent to Rs 88,177 crore in December 2019 over the same month previous year.
Discoms in Rajasthan, Uttar Pradesh, Jammu & Kashmir, Telangana, Andhra Pradesh, Karnataka and Tamil Nadu account for the major portion of dues to power gencos.
Lower fuel under-recovery from the Mundra ultra mega power project (UMPP) had also helped Tata Power post a consolidated profit after tax (PAT) of Rs 246 crore for the third quarter of financial year 2019-20.