Pramod Deo, chairperson, CERC, says that the orders on petitions moved by Tatas and Adanis seeking higher tariff for electricity generated from their imported coal-fired projects in Gujarat will be announced soon.
He also pointed out that, currently all State Electricity Board (SEBs) are not in bad shape, only 4-5 of them need to be re-looked at.
Below is the edited transcript of his interview to CNBC-TV18.
Q: Central Electricity Regulatory Commission (CERC) hearings on both Tata Power and Adani Power pleas have gone on for over three months and there are some unconfirmed media reports which indicate that a final verdict is likely by the end of this month. What is your view by when there could be final judgment on these cases?
A: We have completed the hearing and in last hearing both the lawyers of Adani and buyers Gujarat and Haryana were directed to file their written arguments in a week's time and now the commission will deliberate. I definite timeframe cannot be given as there are certain issue involved. Very soon we will come out with the order on both Tata Mundra and Adani cases.
Q: Will this be the final judgment or do both the parties have the option of further litigation in higher courts?
A: I do not think one can be categorical that it will be binary and it cannot be appealed. The order can be appealed. We have to see the gamut of arguments which have been given in this case, why it should be re-looked.
First, change in law, change because of fuel cost it is a forced measure and the impossibility of executing this contract due to rising prices and they are demanding that financial equilibrium should be restored, because in both the cases the sister concerns own mines in Indonesia, so when the Indonesian government has decreed that the coal should be sold at a rate which they will notify every month than what the sister concern gave.
When we talk about financial equilibrium how that benefit will be passed on that is what they are referring to. These things have to be considered and based on it we can see if we can intervene.
Q: While all states have responded encouragingly to the State Electricity Board (SEB) restructuring package, nothing much has happened by way of actual groundwork either by additional states signing on for restructuring or by way of increasing tariffs. By when do you think we could see a material turnaround in the financial health of discoms?
A: Fortunately, not all states are in similar position. We are referring to only five-six states where the situation is alarming. Interestingly, as a forum of regulator we are directed to frame a Financial Responsibility Act and come out with a draft distribution sector responsibility so that the states can be bound by a statute to follow certain practices. We are working on that but it should be enacted by different states. So, the issue is limited to few states. Things are moving at its own pace as it is a process between the Center and the state.
Q: Both coal price pooling as well as finalization of case-II bidding norms are imperative steps for the revival of power sector and yet again there have been some amount of direction to another advisory committee for finalization of modalities, etc. By when can we hear final announcements on these two very important reform measures which are imperative to the power sector?
A: We are not directly involved in that as a regulator. The first issue will have to go through full cabinet, so always there would be argument for and against it. We have to see what will be the time frame for the second issue. The minister has conducted a meeting of advisory committee for standard bidding documents (SBD) which he has set up.
This issue was raised in the meeting and the minister said that more consultation will be conducted before going to group of ministers. So, based on this consultation, group of minister will decide on final documents for case-II bidding.