Tata introduces successor Mistry to Modi

Group Wants To Renegotiate Power Purchase Agreement With Gujarat For Its Mundra UMPP

TIMES NEWS NETWORK

Gandhinagar: Tata Group’s outgoing chairman Ratan Tata introduced his successor Cyrus Mistry to Gujarat chief minister Narendra Modi in Gandhinagar on Thursday. It is also learnt that there was discussion on renegotiating the power purchase agreement (PPA) with the state government for its Mundra UMPP (Ultra Mega Power Project)
The first phase of UMPP, of 800 MW, is already complete. According to government sources, the Tatas want a higher price for the power, before going into production, than what they had agreed upon about five years ago. The reason being given, is that there is a rise in prices of coal they will import from Indonesia for producing power.
About 14,000 MW of capacity addition based on Indonesian coal, including Tata’s Mundra UMPP, has hit a roadblock after Indonesia made it mandatory for coal exports to be benchmarked to international prices from September 23.
The Mundra UMPP is expected to produce 4000 MW of power by 2012 end and Gujarat is likely to get 40% of the total power produced, while the rest of it will go to Rajasthan, Haryana and Punjab.
The official note issued by the Gujarat government said “energy sector” was discussed with Modi, but gave no further details. The first phase of the project was to be commissioned in October but this did not happen. The Tatas, meanwhile, represented to the Government of India for making changes in the PPAs they had signed up with states.
However, central government passed the buck to state governments to settle the issues arising out the power purchase agreements signed with the power producers.
“The centre wants us to renegotiate, but we have clarified that this cannot be done unilaterally. All four states must reach a consensus on the issue”, a senior bureaucrat in Gujarat government said. “We had agreed upon giving Rs 2.87 per unit of power, but they want at least 70 paise more.”
The government note quoted Ratan Tata saying that Gujarat is very special to his heart. “He praised Modi’s leadership for bringing industrial growth, good governance, transparent administration, qualitative change in socioeconomic scenario in Gujarat”, it added.
Tata Group over the years has made substantial investments in Gujarat in the projects of its various firms like Tata Chemicals, Tata Motors and Tata Power. It may be recalled in 2008, Modi had managed to get Ratan Tata to invest in Gujarat by just sending an SMS — ‘Welcome to Gujarat.’ This was after the company was forced to shut its Singur factory for production of Tata Nano. Interestingly, Mistrys’ firm, Shapoorji Pallonji, has also been a leading investor in the infrastructure projects of Gujarat.