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Loss of power supply from private companies won’t hit Gujarat, says state's power utility chief

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Source: The Economic Times
Wednesday, August 02, 2017

 NEW DELHI: Gujarat will be able to withstand any loss of generation from the three stressed electricity plants of Tata Power, Adani Power and Essar Power that run on imported coal, the managing director of the state's power utility said. 


The state has a diversified generation portfolio with a balanced fuel mix, Pankaj Joshi of Gujarat Urja Vikas Nigam Ltd (GUVNL) told ET in an interview. "Non- or less availability of generation from a particular fuel may have a marginal impact. However, there is no threat to the financial position of distribution utilities," he said. 

GUVNL, the umbrella company managing electricity supply in Gujarat, is exploring blending of domestically produced coal with that imported from cheaper sources and increased purchase of the fuel from the spot market to insulate consumers from fluctuations in international coal prices, he said. 

In June, Tata Power, Adani Power and Essar Power each offered a 51 per cent stake in their Gujarat plants that use imported coal for Rs 1. These plants are under financial stress as they are unable to increase electricity prices to offset higher cost on imported coal. 

The reason for the higher cost on the fuel is changes in laws in supplier countries. 

The Supreme Court in April ruled that increase in coal prices due to such a reason cannot be cited for changing the terms of power purchase agreements. While SBI is drawing up various options, GUVNL is in the process of completing its due diligence. 
"State has received the proposal from generators offering stakes. State has yet not done detailed technical, financial and legal due diligence. Further, other states are also involved in the matter and their view also needs to be taken into consideration," Joshi said. "Once it is done, it may enable the state government to take a suitable view in the matter." 

Tata Power operates the 4,000 mw Mundra ultra mega power project that has power supply pacts with five states. Adani Power's board has already approved hiving off its 4,620 mw Mundra plant and is exploring offering a majority stake in the resultant subsidiary to GUVNL that buys 2,000 mw from the project. Essar Power offered its 1,320 mw Salaya plant to Gujarat after the adverse ruling from the court. 

Tata Power has said lenders to Mundra project have suggested selling a stake to power procurers from the plant. He said Gujarat has adequate power capacity tie-ups on a long-term basis. 

"It is making constant efforts towards cost optimisation and may pursue purchase under long, medium and short term to optimise the cost," Joshi said. 


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