The Punjab State Power Corporation Limited (PSPCL) has asked the state government to reject Tata Power’s proposal to revise the power purchase agreement (PPA) for its Mundra project.

Tata Power supplies 475 megawatt (MW) electricity to Punjab and 380MW to neighbouring Haryana daily from its Mundra Ultra Mega Power Plant in Gujarat.

Citing a recent Supreme Court order, Tata Power had sought an amendment in tariff by hiking per unit of electricity by approximately ?50 paisa, which could lead to an annual burden of ?300 crore on the state’s consumers.

Tata Power had asked the Punjab government to amend the PPA based on the recommendations of the Gujarat government’s high-power committee which was formed following the Supreme Court order.

After discussing the issue, the PSPCL chairman and directors sent a 15-page letter to the state government saying the proposal is patently wrong as no government cannot force any direction related to tariff rates, which is decided by the power regulator.

Any diversion from this practice will lead to litigation as other power companies will also try to redo the existing PPAs, the PSPCL legal team pointed out in the meeting.

The PSPCL also claimed that the Gujarat government’s highpowered committee is not a statutory authority and, therefore, they are not bound to accept its recommendations.

In a letter to principal secretary (power), Punjab, Tata Power had sought revision on basis of a Supreme Court order that had asked the three private power plants — 4,000MW Coastal Gujarat Power Limited of Tata Power; 4,620MW Adani Power Mundra Ltd and 1,200MW Essar Power Gujarat Power Ltd — to approach the respective state governments to revise the PPA.

These plants claim to have been incurring losses since the price hike of coal imported from Indonesia.

Tata Power’s individual losses had accumulated to ?8,000 crore till March 31 this year, the letter claimed.

PSPCL chairman-cum-managing director (CMD) Baldev Singh Sran said, “As per the existing guidelines and in the interest of power consumers, we have discussed the issue and forwarded our opinion saying it is not acceptable,” he said, refusing to share details.