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The central electricity regulator recently allowed Tata Power to increase the rate of power from its Mundra ultra mega power project (UMPP) in Gujarat. The increased tariff, at INR 2.87 a unit, is still competitive, according to ratings agency India Ratings.

The agency expects the tariffs of the Tamil Nadu and Odisha UMPPs, under bidding currently, to be substantially higher than the previous round. It believes an imported coal-based UMPP has to cover major risks with tariff in the range of INR 3.25-3.65 a unitThis would be between 13 per cent and 27 per cent higher than Mundra’s tariff.

The 4,000-MW Mundra plant provides power to Gujarat, Punjab, Haryana, Maharashtra and Rajasthan. It is known that any replacement power in lieu of Mundra would cost upwards of INR 4 a unit and such a large supply of 4,000 MW cannot be channelised at a short notice. Further, short-term power is more expensive.

Consequent to the regulator’s order, Tata Power said the losses incurred by the company would fall from INR 1,500 crore to about INR 400 crore. For the domestic coal-based UMPP in Odisha, the ratings agency expects bids to be in the range of INR 2 to INR 2.4 a unit, or 70-100 per cent higher than Reliance Power’s Sasan project tariff of INR 1.19 a unit. However, this may be up for review as the regulator has agreed to hear RPower’s plea that the steep depreciation of rupee against the dollar has hurt its project financials.

RPower submitted that the cost of the 4,000-MW Sasan project in Madhya Pradesh had risen from INR 19,600 crore to INR 22,400 crore and its debt servicing outflow from INR 12,227 crore to INR 16,098 crore, or an additional burden of INR 3,821 crore for repayments between 2013 and 2017. This is after taking into account the rupee depreciation index.

Source-On Request