Aptel notice to Gujarat solar developers on GUVNL’s plea

The Appellate Tribunal for Electricity (Aptel) has issued notices to 80 Gujarat-based solar project developers in an appeal filed by Gujarat Urja Vikas Nigam (GUVNL), the state government run utility. GUVNL is seeking a cut in tariff of power it will buy from the solar players on the grounds that actual cost incurred by developers of these projects was 40 percent less than initially assumed.

The utility is seeking a proportionate cut in the tariff to Rs 9 per unit from the Rs 12.54 per unit agreed under the power purchase agreements (PPA). GUVNL has signed PPAs with some eighty players including the solar arms of large corporate groups such as Tata, GMR Essar and Welspun.

The dispute has put Rs 14,000 crore worth solar projects in the state under a cloud.

The tribunal admitted the appeal with a rider on its maintainability. “Since the maintainability of the Appeal as well as the Petition filed before the State Commission is questioned, we deem it fit to admit this Appeal subject to the maintainability,” Aptel said in its order on Monday.

The hearing in the matter is scheduled on December 11.

In August, Gujarat Electricity Regulatory Commission (GERC), the state-level regulator had dismissed a review petition. One of the grounds was that the petition was made after three years, while the time allowed for such petitions was 60 days from the original order.

In 2009-10, GERC had determined the tariff through a consultative process. “The Commission decides to adopt Rs .16.50 crores per MW (Megawatt) as capital cost for Solar Photovoltaic (PV) Power Project and Rs .13 crores per MW for Solar Thermal Power Project,” it had said.

Based on these rates, GUVNL signed in aggregate 88 power purchase agreements for 971.5 MW aggregate capacity in two phases. Out of the above, 857 mw of solar PV capacity has been established so far, according to GUVNL.

At the originally agreed cost of Rs 16.5 crore per Mw, the cost of these projects work out to Rs 14,140 crore.

But, GUVNL argues that several developers it had checked had incurred between Rs 10 crore to 13 crore per mw. “The weighted average woks out to around Rs 12 Crore per MW.”

At this rate, the total project cost comes to Rs 10,284 crore or Rs 3,856 crore less.

This difference of Rs 3,856 crore Is a windfall for the developers and will result in additional burden for consumers, the utility argued.

“The increased tariff of Rs . 3.54 per unit is a direct burden on the consumers of the State and is an unwanted, unjustified and windfall gain to the project developers,” the petition said.

Besides challenging the petition on its maintainability and other technical grounds, developers say that a fall in cost of solar equipment and other costs was taken into account even at the time of fixing the tariff and it was one of the factors that had attracted investment in the renewable energy sector.

Changing terms of PPA long after it was finalised, will affect future investments in the sector they argue.

Source: Business Standard