Gujarat Urja Vikas Nigam’s change of mind on feed-in tariff comes three years after signing agreement with project developers
The Appellate Tribunal for Electricity (Aptel) at the Centre has admitted an appeal of the Gujarat Urja Vikas Nigam Ltd (GUVNL), state power utility, seeking reduction in the tariff of already installed renewable energy projects in the state. The tribunal on November 12 sent out notices to around 80 companies that have installed the projects in the state.
Aptel has listed the matter for hearing on December 11.
In 2009-10, GUVNL signed at least 88 contracts for buying 970 MW of solar power. The project developers include Moser Baer India Ltd, Tata Power and Welspun Energy. As per the power purchase agreement, GUVNL awarded the developers a feed-in-tariff of Rs 15 per unit for the initial 12 years and Rs 5 per unit for the next 13 years. This averages out to Rs 12.54 per unit.
Justification for lowering tariff
But following installation of the projects, GUVNL now claims that the agreed tariff is unreasonable. In its petition, GUVNL claims that it considered a capital cost of Rs 16.5 crore per MW to arrive at that tariff figure. “But most developers have set up their projects for a capital cost between Rs 9 crore per MW and Rs 12 crore per MW,” it says. The utility is arguing that developers have made windfall gains and misled the government, and that the “reasonable and prudent tariff” would be around Rs 9 per unit.
By moving Aptel, GUVNL has challenged the order of Gujarat Electricity Regulatory Commission (GERC). In August, GERC had dismissed the same petition of GUVNL on the grounds that it was made after three years, while the time limitation on such petitions was 60 days from the original order in 2009-10.
Developers cry foul
Developers say this move of GUVNL has put an investment of Rs 8,000 crore in the state’s solar energy sector at stake. This may affect future investments in the state. Retrospective changes are not justified, says Bridge To India, a Delhi-based consultancy firm on solar energy, in a statement. Any revision of a closed contract will affect India’s solar story. GUVNL should not have signed power purchase agreements at the given tariff if it thought the assumed capital costs did not reflect the actual price point in the market, it says, adding that the recent move would be detrimental to investor confidence.
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