So who really cares about the investor?

Eleven thousand crore rupees of losses, and almost a decade later, Tata Power suffered another hit when, last fortnight, the Gujarat government decided to cancel the tariff hikes given to its power plant; so did others like the Essar and Adani groups who got similar relief in 2018. At a time when a fourth of the prime minister’s Rs 100-lakh-crore infrastructure plan depends upon investments made in the power sector, it is amazing that such little effort has been made to sort out something so critical.

The story of these plants, with around 11,000 MW of installed capacity, started in the 2000s with a big policy goof up. Till then, India had a two-part tariff for electricity. Since an entrepreneur’s main job—and risk—was to complete a project while keeping costs down, a ‘capacity charge’ was paid for this. Since fuel costs were typically outside the control of the power producer, these were a ‘pass-through’—if prices of coal went up, the electricity tariff rose and vice-versa; this part of the tariff was just passed on to the fuel supplier.