Tata Power offers to sell 51% stake in loss-making Mundra mega project for just Re 1
It has outstanding loan of Rs 10,159 crore and lenders have stopped further disbursal due to non-viability of the project
New Delhi: Tata Power has offered to sell 51 percent stake in its 4,000 MW Mundra power project for Re 1 to states like Gujarat, which buy electricity from it, to tide over the financial crisis facing this business.
Coastal Gujarat Power Ltd (CGPL), the Tata Power unit which operates the Mundra project, wrote to Gujarat Urja Vikas Nigam Ltd earlier this month offering to retain only 49 percent stake and operate the project as a contractor provided the procurers buy all the power at higher tariffs.
In the letter, copies of which were marked to Nripendra Misra, Principal Secretary to Prime Minister, and Union Power Secretary, CGPL CEO Krishna Kumar Sharma said Mundra has accumulated losses of Rs 6,457 crore against a paid up equity of Rs 6,083 crore.
It has outstanding loan of Rs 10,159 crore and lenders have stopped further disbursal due to non-viability of the project, he wrote.
Tata had in February 2006 won a bid for the 4,000 MW Mundra project in Gujarat, quoting a price of Rs 2.26 for every unit of electricity generated. It had intended to fire the plan with coal imported from mines owned by the Tata Group in Indonesia.
In 2010, the Indonesian government said that any export of coal could be done only at prices linked to international rates.
Tata, in turn, sought higher tariffs for power, but the plea was rejected by the Supreme Court.
Sources said CGPL in the letter stated that financial position of the company continues to deteriorate and has reached a critical situation due to substantial loses incurred.
It wanted tariffs to be negotiated or power procurers take over 51 percent paid up equity shares of CGPL for a nominal value of Rs 1 and grant relief to the project by purchasing power at a rate to fully address the under-recovery of fuel costs.
When contacted, a Tata Power spokesperson said the company would comment issue shortly.
Mundra project, comprising of five units of 800 MW each, was commissioned between 2012 and 2013. It has signed a 25-year agreements to sell electricity to utilities in Gujarat, Rajasthan, Maharashtra, Haryana and Punjab. Gujarat is the lead buyer.
Sources said CGPL has stated in the letter that against the project outlay of Rs 17,900 crore, the company has an outstanding term loan of Rs 10,159 crore and an additional amount of Rs 4,460 crore which is due to Tata Power.
After the Supreme Court rejected compensatory tariff to it and similar power plant of Adani Group, CGPL made a plea with all procurers to consider afresh the issue of compensatory tariff but Gujarat Urja Vikas Nigam Ltd specifically denied the request.
CGPL has stated that it is making the offer to avoid the project being rendered unviable and eventually turning into a Non Performing Asset (NPA) or bad loan, thereby depriving the consumers of one of the lowest cost power.
India adds 67,208 fresh COVID-19 cases in last 24 hours; positivity rate falls but Kerala, Goa, Sikkim remain a concern
COVID-19 India cases: The test positivity rate has remained below 5 percent for the 10th day and below 4 percent for the third day
GSHSEB Class 12 Exams 2021: Gujarat board announces evaluation criteria; result by third week of July
The new GSHSEB evaluation critieria will take into account the marks scored in the Class 10 board exam and in the internal unit tests in Class 11 and Class 12 in the ratio of 50:25:25 respectively, the board said
Addressing a press conference ahead of the inauguration of an AAP office in Ahmedabad, Kejriwal said the AAP was a credible alternative to the BJP and Congress