Power projects hit as Indonesia alters coal export prices
Post Date: 29 Sep 2011 Viewed: 456
Ultra mega power projects (UMPPs) in India are expected to face expect tough times ahead after the Indonesian government decided to benchmark coal export prices to international levels affecting power purchase agreements (PPAs) signed by developers such as Tata Power and Reliance Power.
In response, the Centre refused to intervene and asked the companies to sort out the issue of tariff revision with their procurers but the developers are now objecting to this stance.
The power ministry had asked the UMPPs to resolve the issue directly with their procurers.
But sources say the developers are now putting the onus on the government saying the PPAs and procurers were decided by the government and not by them.
UMPPs also feel that amending PPAs will be a complicated affair, considering there are several procurers and not all of them may agree to the amendments.
Reliance Power's Krishnapatnam project has PPAs with 4 distributors while Tata Power's Mundra project has PPAs with 7 procurers.
The power ministry has refused to act even as it is working towards revising the standard bid documents for the next set of UMPPs.
The new guidelines are likely to revise the tenure of the PPAs and also look at provisions on unforseen fuel price increases, but with prospective effect.
G B Pradhan, additional secretary at the power ministry said, “The bid documents are expected to be out in next 2 - 3 weeks. The amendments will be with prospective effect.”
So while there is still no clarity on how the existing UMPP developers will deal with this crisis for the next lot - this policy change will bring in some much needed armour against fuel price shocks.