Regional Coal: Indian power majors seek PPA changes

Jolted by a sudden change of rules in Indonesia, Indian electricity producers have demanded alterations to power purchase agreements (PPAs) signed with buyers so that they get the flexibility to increase tariff they signed up for, Indian media DNA reported.

Currently, most of the PPAs under competitive bidding are based on a fixed cost of production but this, say producers, has become unviable. They want the calculus to be based on ?heat rate? or plant efficiency.

The Association of Power Producers, which has sector biggies such as Tata Power, Reliance Power, Adani Power and Lanco Infratech among members, has written to the Union ministry of power saying it would be difficult for them to continue production from plants dependent on Indonesian coal without increasing tariffs.

?We suggest that a suitable tariff structure be worked out, which holds power companies responsible for plant efficiency (heat rate) and fuel availability, but allows pass-through of fuel prices to the purchaser,? the association letter said.

The letter said all existing contracts should be modified to the new tariff structure ... to ensure that power companies do not default and create bad loans for the banking sector.

Indonesia has decided to link the price of coal exported from that country with a benchmark based on international prices of coal with effect from September 23.

That has put currently operational plants of Tata Power (at Mundra in Gujarat), Adani Power, (also in Mundra), JSW (in Ratnagiri, Maharasthra) and Lanco Infratech (in Udupi, Karnataka) in deep trouble because they are based on Indonesian coal.(*)