Business Line reported that TATA Power Company Ltd’s wholly owned subsidiary Coastal Gujarat Power Ltd has discontinued supply to the distributing companies of Rajasthan from its 4,000 MW ultra mega power project at Mundra, Gujarat, due to non compliances as per PPA on payment security related issues.
CGPL has invoked its rights under the Power Purchase Agreement and has decided to discontinue the supply of power to the three Rajasthan state owned distribution companies.
According to a CGPL statement, this follows its several notices to the discoms required under the PPA, thus, effectively terminating its contract.
The three Rajasthan discoms account for 10% of the total capacity from Mundra UMPP. The company will make alternative arrangements for contracting and selling this power.
Due to consistent failure on the part of the Rajasthan discoms as procurers to fulfill the obligations including collateral arrangements, in spite of repeated and regular reminders, CGPL was constrained to issue notice to the Rajasthan discoms. These discoms have been in default of paying dues in a timely manner leading to large outstanding dues.
CGPL said that the balance of payments on account of fuel tariffs is already a challenge as recovery through tariff is lower than spending. With continued non-payment in a timely manner and non-availability of payment security, the company finds it difficult to manage payment for its obligations to buy fuel and discharge its various obligations.
