Tata Power's subsidiary CGPL refinances part of Mundra UMPP loans
CGPL had a net loss of Rs 1,719 crore in the last financial year and an operating income of Rs 6,112 crore in FY17 and Rs 5,908 crore in FY16, but net losses were Rs.849 crore and Rs.999 crore respectively.
- Sep 28, 2018,
- Updated Sep 28, 2018 8:10 PM IST
The beleaguered Tata Power Company's (TPC) subsidiary Coastal Gujarat Power Ltd (CGPL), which runs the Mundra 4000 megawatt ultra mega power project (UMPP) in Gujarat, got a relief as the company has refinanced its outstanding loans worth Rs 5500 crore.
Tata Power on Friday said the company has completed refinancing of the outstanding ECB loans amounting to $770 million, through a mix of INR-denominated debt instruments and equity funding from the proceeds of divestment of non-core assets of the company. The refinancing of USD loans of CGPL will help in rescheduling the cash requirements, as well as reducing the effective interest cost apart from reducing foreign exchange related volatility for CGPL. Now, CGPL is facing a cash flow burden resulting from the continuing losses due to the under-recoveries in the Mundra Ultra Mega Power Project.
CGPL had a net loss of Rs 1,719 crore in the last financial year and an operating income of Rs 6,112 crore in FY17 and Rs 5,908 crore in FY16, but net losses were Rs.849 crore and Rs.999 crore respectively.
In 2006, Tata Power had won the bid for the UMPP quoting Rs 2.26 per unit of electricity, banking on low cost imported coal from Indonesia. In 2012, the Indonesian Government decided to benchmark export of coal from that country to international prevailing coal prices, making the Mundra project unviable. The decision also affected viability of a similar power plant of Adani at Mundra.
Tata Power spent nearly Rs 18,000 crore to construct the 4150 MW plant, including Rs 6,200 crore as equity and the rest as loans, mainly from Asian Development Bank (ADB) and IFC. The interest burden on Mundra started from 2013 onwards and annually, the company has to pay over Rs 1,000 crore as interest.
"We have been looking at various options to improve viability of Mundra UMPP as this is one more step in the same direction as it reduces interest cost burden and cash flow burden on CGPL," said Praveer Sinha, CEO & Managing Director, Tata Power.
In March, Tata Power had sold its shares in group companies Tata Communications and Panatone Finvest to Tata Sons and its affiliates for Rs 2150 crore as part of divesting non-core assets.
Adani, Tata Power and Essar had approached the authorities for a relief, but the Supreme Court had in April 2017 ruled out a tariff hike for such projects, won based on tariff war. Then the power developers offered the Gujarat government and the power purchasing discoms to sell a 51 per cent stake in the stressed projects for just one rupee. However, this has not worked out.
Sources say currently a high-powered committee (HPC) appointed by the State government has suggested a fuel pass-through with a cap which can be revised after five years based on coal price movement, thus revising the tariff structure of the power purchase agreements (PPAs). The State Government is yet to take a final decision.The beleaguered Tata Power Company's (TPC) subsidiary Coastal Gujarat Power Ltd (CGPL), which runs the Mundra 4000 megawatt ultra mega power project (UMPP) in Gujarat, got a relief as the company has refinanced its outstanding loans worth Rs 5500 crore.
Tata Power on Friday said the company has completed refinancing of the outstanding ECB loans amounting to $770 million, through a mix of INR-denominated debt instruments and equity funding from the proceeds of divestment of non-core assets of the company. The refinancing of USD loans of CGPL will help in rescheduling the cash requirements, as well as reducing the effective interest cost apart from reducing foreign exchange related volatility for CGPL. Now, CGPL is facing a cash flow burden resulting from the continuing losses due to the under-recoveries in the Mundra Ultra Mega Power Project.
CGPL had a net loss of Rs 1,719 crore in the last financial year and an operating income of Rs 6,112 crore in FY17 and Rs 5,908 crore in FY16, but net losses were Rs.849 crore and Rs.999 crore respectively.
In 2006, Tata Power had won the bid for the UMPP quoting Rs 2.26 per unit of electricity, banking on low cost imported coal from Indonesia. In 2012, the Indonesian Government decided to benchmark export of coal from that country to international prevailing coal prices, making the Mundra project unviable. The decision also affected viability of a similar power plant of Adani at Mundra.
Tata Power spent nearly Rs 18,000 crore to construct the 4150 MW plant, including Rs 6,200 crore as equity and the rest as loans, mainly from Asian Development Bank (ADB) and IFC. The interest burden on Mundra started from 2013 onwards and annually, the company has to pay over Rs 1,000 crore as interest.
"We have been looking at various options to improve viability of Mundra UMPP as this is one more step in the same direction as it reduces interest cost burden and cash flow burden on CGPL," said Praveer Sinha, CEO & Managing Director, Tata Power.
In March, Tata Power had sold its shares in group companies Tata Communications and Panatone Finvest to Tata Sons and its affiliates for Rs 2150 crore as part of divesting non-core assets.
Adani, Tata Power and Essar had approached the authorities for a relief, but the Supreme Court had in April 2017 ruled out a tariff hike for such projects, won based on tariff war. Then the power developers offered the Gujarat government and the power purchasing discoms to sell a 51 per cent stake in the stressed projects for just one rupee. However, this has not worked out.
Sources say currently a high-powered committee (HPC) appointed by the State government has suggested a fuel pass-through with a cap which can be revised after five years based on coal price movement, thus revising the tariff structure of the power purchase agreements (PPAs). The State Government is yet to take a final decision.