The proposal by an expert panel has been resisted as “illegal” by consumer groups, the Gujarat government and its power utility said in their petition to the Supreme Court. The court has admitted the matter and will hear it on October 29, sources said. 

The expert committee, led by retired Supreme Court judge RK Agarwal, has recommended opening up the power purchase agreements (PPAs) to allow fuel cost pass through and an option to the companies to extend the power purchase contracts by 10 years. 

The Gujarat government, in its petition, has said continuation of the plants’ present PPAs will push the projects into liquidation, which is against consumer interest. The state and Gujarat Urja Vikas Nigam have advocated altering the PPAs, arguing that electricity from these projects was cheaper — even with revised tariff — than purchasing power from other sources. 

“However, in course of meetings held by the high-powered committee, consumer groups (Energy Watchdog, Prayas Energy etc) who attended, had raised objections on ground that in the face of the judgement of this court, any amendment would be illegal. One of them went to the extent of suggesting it (would) even be contrary to the judgement of this court and would constitute a violation of it,” the state said. 

“In view of objections raised by consumer groups, which would also influence a decision by the regulatory commission while approving amendment to the PPA, applicants are approaching this court for a clarification that (your) judgement does not, in any manner, prohibit or prevent operation of Clause 18.1 of the PPA, which provides for amendment subject to regulatory approval.” 

The state said it will face shortage of 4,805 MW in case supply from the three plants is discontinued. 

“To meet the shortage, Gujarat state utilities have purchased power under short term at rates of .`4.25-4.50 per unit. The applicants submit that average cost of power purchased from alternate sources is higher than purchasing from these three imported coal-based power plants — even at the revised cost suggested in the report of the high-powered committee,” the petition said. 

Fresh long-term power procurement may take four to five years, besides being costlier, as seen in bidding by other states. The state said PPAs for all three projects have the amendment provision, which has not been prohibited by the Supreme Court in its previous verdict. Modifications suggested by the committee would require approval of the parties and the Central Electricity Regulatory Commission (CERC). 

The Supreme Court had last year ruled that increase in coal prices due to change in overseas laws cannot be considered as change in law under PPA.