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Rs 1.9 lakh crore benefit to power companies post Gujarat bailout

New Delhi: Two consumer-interest NGOs, the original applicants in the 2017 Supreme Court case challenging tariff hike allowed to Tata, Adani and Essar group power plants in Gujarat, have told the apex court that the bailout package recommended by a state government panel would extend Rs 1.9 lakh crore benefit to the power producers at the cost of consumers. 

In separate affidavits to the apex court, Energy Watchdog — which was the original applicant in the 2017 case — and Prayas said even a hike of a few paise will make a huge amount since the projects have a combined capacity equivalent to generating 6,328 crore units of power in a year. Energy Watchdog said a Re 1 per unit hike will result in Rs. 1.9 lakh crore extra payment to these power projects over a period of 30 years. 

They said the financial distress of power plants can be resolved through the Insolvency and Bankruptcy Code mechanism in the best interest of all stakeholders.

The issue of allowing higher tariff to the power plants located at Gujarat’s Mundra has once again come up in the SC after the state government earlier this month sought the court’s consent to implement the recommendations of the panel headed by former SC judge Justice R K Agrawal. The issue is scheduled to come up in the SC on Monday. 

After the SC had struck down higher tariff in April last year, the state government set up the panel for suggesting a bailout package for the three imported coal-based power plants with combined outstanding debts of Rs 22,000 crore. The panel had also called the NGOs for their views. 

Among other measures, the panel recommended allowing the promoters to fully pass on the increased fuel costs, extending the PPA and lenders taking haircuts. The recommendations are akin to relief in the regulatory rulings that the SC had struck down.

The NGOs have said opening a special window for the three projects established in a particular state will send a wrong signal and have a cascading impact on all PPAs signed across the country based on tariff-based bidding.