NEW DELHI: The Gujaratgovernment has set up a panel to suggest within two months a rescue plan for three large generation projects belonging to the Tata, Adani and Essargroups in the state, with combined PPA (powerpurchase agreements) for over 8,000 MW and outstanding debts in excess of Rs 22,000 crore.

The panel will be headed by former Supreme Court judge, Justice R K Agrawal. Former RBI deputy governor S S Mundra and retired Central Electricity Regulatory Commission chairman Pramod Kumar Deo will be members.

As the Central regulator, Deo had granted tariff hike sought by these imported coal-based projects after fuel costs rose due to changes in Indonesian law. The relief was granted under PPA provisions of ‘force majeure’ and ‘change in law’. But the consumer states refused and the matter landed in the Supreme Court, which last year struck down the relief.

Unable to sustain operations at full capacity due to ballooning debt, the promoters reduced supplies and last year offered to sell 51% stake in the projects for Re 1 to the Gujarat government. The state has PPAs for 4,800 MW from these projects. The remaining PPAs are spread among Maharashtra, Punjab, Rajasthan and Haryana. All of them are buying expensive power to bridge the shortfall, resulting in a higher tariff.

After lenders sounded alarm bells, the Centre stepped in as facilitator. State-run NTPC conducted a technical study. But nothing came of this exercise. Officials feel after the SC verdict any rescue package could develop into a political hot potato in an election year.