Power Sector Woes in India....

recently CERC in disposin petition filed by adani against guvnl / n other haryana state power entities, has in principle agreed to raise power prices

I too agree power at high prices is better than no power…let consumers decide if they want power at high prices or they are okie with no power

But let us also look at the precedents we are setting…

Govt invites cos to set up up UMPP giving them options 2 chose their sources of coal…at no point does govt say we want coal from this country  and we want power at this price…what govt simply says these are the facilities available in terms of land, clearances etc…u choose d technology, eqpt n also quote d price at which u wanna supply power for 25 yrs…fair enuf !!!

Govt invites cos to supply power for a particular period...it gives options to power cos to determine d price n also if the price will b fixed or variable...

Co takes some assumptions n ties up coal from some other country XYZ…n goes ahead n bids at fixed price n wins d contract....however there was some change in regulation in tht country XYZ resulting into increase in coal prices n hence d Co comes back to Govt citing force majeure, change in law etc n asking for revision in power tariff

Coal Mining

Another co borrows huge money from foreign entities at INR 40…with INR touching 60, it too comes back saying the interest costs / equipment costs have increased….pls help us by raising prices…but do we tell that there were sufficient financial products available in the market to hedge or for tht matter y u went to borrow outside when we have DFI ready to give INR loans….

In the interest of supplying power though at higher price, govt agrees to this price revision

From a consumer perspective, what their fault…they had agreed to buy power at the price initially quoted by the power co in first place…

why does the govt not penalize the power co…let them also take a hit in terms of lower profits from what was initially envisaged…if they had quoted prices with 10% IRR, let them now work at 5% IRR…

If such thing wud have happened in a pvt co, we wud talk abt exploring options to reduce expenses…let them rationalize manpower expenses, logistic expenses or for tht matter interest expenses…

We have seen in the past how CAG rapped a pvt co for inflating drilling expenses…how does govt ensure that there is no gold plating in coal expenses…Are the transactions truly at arm’s length between coal supplying co n power co ??

By agreeing to revise prices, what is the sanctity of market determined price and a legally binding contract between parties (in this case one being a govt entity). A co will aggressively bid for order, start work, halt it at later date, come back to govt for revision n happily go back with revised price…

Today it has happened in power..tomorrow it cud b ports, roads…

I m sure that this will b tested in the courts of India n we will hear more abt this soon