The Central Electricity Regulatory Commission (CERC) on Monday allowed Tata Power Co to raise electricity tariffs on a temporary basis at its Mundra power plant in western India.
The CERC allowed Coastal Gujarat Power Ltd, a wholly-owned unit of Tata Power, to charge "compensatory" tariffs on account of the rising cost of imported coal, the power utility said.
Tata Power shares this morning surged almost 6 per cent on both the Bombay Stock Exchange and the National Stock Exchange after the news.
Welcoming the CERC order, Tata Power said, "This decision of the CERC is an important step in resolving the major impasse affecting imported coal-based power projects in the country that got impacted due to extraneous factors well beyond the control of developers."
The central power regulator has asked states that buy electricity from Tata Power's 4,000 MW Mundra Plant in Gujarat to form an expert panel to decide on compensating the company for higher cost of coal imports from Indonesia.
With domestic coal production lagging far behind demand, utilities like Tata Power and Adani Power have little choice other than to go for costly imports, pushing up the cost of power production.
Coastal Gujarat Power had petitioned CERC seeking relief on account of adverse impact of the unforeseen, uncontrollable and unprecedented escalation in the imported coal price.