Central electricity regulator CERC’s panel report could mean a R1,500-crore relief for Tata Power’s struggling Mundra power plant, but a final verdict is still sometime away, managing director Anil Sardana told FE. Even as policy clarity is awaited, the company’s lenders have agreed to grant waivers on a breach of debt covenants including the debt to equity ratio at the company’s Coastal Gujarat Power (CGPL) unit that runs the 4,000 MW plant.
The CERC appointed panel, headed by Deepak Parekh, has recommended a 45-55 paisa per unit hike at Tata Power’s flagship plant, pegging coal prices at $79 per metric tonne and the Rupee at 55/$, but Anil Sardana said the final figure will be contingent on the currency and international cost of coal as fluctuations are built into the formula.
“The contours of the report are drawn on the recommendations of CERC in its orders, but the verdict is still sometime away,” Tata Power’s managing director Anil Sardana said. When will it be out? “No idea, it depends on the CERC,” replied the Tata Power head. “When we had submitted our petition, we had requested for a 57 paisa hike, coal price was at $84, and the rupee at 55 to a dollar.” International coal prices are currently close to $75/metric tonne while the rupee closed at 67.63 on Tuesday.
As the Mundra plant runs up annual losses of R2,000 crore, the company is currently facing a working capital crunch which has forced it to shelve plans to expand the Mundra plant.
The company had earlier outlined plans for an 1,800 MW expansion, two units of 900 MW in the plant, hoping that by selling power at higher prices from the increased capacity would help soak up losses on account of the current tariff. “This plan no longer makes sense,” Sardana conceded.
“When we originally came up with the plans, it made a lot of sense, and the maths showed that we could cover our losses, but now with the rupee sliding, this is no longer the case,” he said.
The company has, however, managed to get some relief from its lenders