Gujarat government, lauded by India Inc for being business friendly, has stumped industry as it seeks to back out of the high tariffs contracted for nearly 1,000 mw of solar plants of the Tatas, GMR, Adani, Bollywood star Ajay Devgn, Lanco and others. Gujarat Urja Vikas Nigam (GUVNL) has approached the regulator with a plea to reduce tariff from Rs 12.54 per unit to Rs 9 to cut its payment liabilities. It is arguing that the state agreed to pay tariff of 12.54 per unit based on the then available perception that the project cost would be about 16.50 crore per mw.
Industry leaders said the move was shocking as it raised issues about the consistency of the state’s policy, but the business-savvy Gujarat government is tossing back to corporate bigwigs a dose of their own logic:
If companies can go to the regulator to raise tariffs for plants using imported coal on the ground that input costs rose unexpectedly, the State’s utility companies can also seek regulatory intervention to reduce tariffs from 12.54 per unit to 9 on the ground that the cost of building these plants was unexpectedly lower than what was envisaged when the tariff was fixed.
The Narendra Modi headed government took a giant leap in solar power after rolling out the red carpet for entrepreneurs at the Vibrant Gujarat Summit four years ago, and signed 88 solar power purchase agreements with 75 developers for 25 years with tariff as high as 12.54 per unit without any competitive bidding. This brought in investment of nearly 15,000 crore from a spectrum of investors ranging from real estate developers to a bollywood star.
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