Tuesday, July 16, 2013: The Narendra Modi government in Gujarat which was previously lauded for being business friendly by the India Inc has now stumped itself into a highly confusing situation. The state government is seeking for ways to back out from the high tariffs that it had contracted to nearly 1,000 MW solar plants including that of Tata, Adani Group, GMR, Lanco, one of Bollywood star Ajay Devagan and several others. According to the leaders in the industry, this was quite a shocking move and has now raised consistency issues. However, the Gujarat Government has its own version for the same.
According to it, this move is a response to the companies going to the regulators to increase plant tariffs. Using imported coal has raised the costs unexpectedly. As per the state government, it too is using its power to seek regulatory intervention and reduce tariff from Rs 12.54 per unit to Rs 9 on grounds that the building cost for the plants was low when the tariff was fixed.
The Vibrant Gujarat Summit had been a giant leap for the Modi government in the state four years ago. It had then signed 88 power agreements from 75 developers with tariffs as high as Rs 12.54 for every unit and for a period of 25 years.
This then brought in an investment flow amounting to Rs 150 billion from real estate businesses and even Bollywood stars. According to the Gujarat government, the state is paying high costs for being an early entrant into the solar business and if the investors want to prevent their plants from making losses, they are free to approach even the Prime Minister.
