Tata Power, India’s largest private-sector power producer, has sought the government’s permission to sell the excess capacity above 80% of the plant load factor (PLF) from its Mundra unit as spot power. The facility is expected to help the firm reduce its over `1,400-crore losses in FY18 due to lower cost of power purchase agreement (PPA) with the five procurers. The company expects to get the permission in a few months.
Praveer Sinha, MD and CEO of Tata Power, told a TV channel: “We have made a submission to the government regarding the sale of balance power in the spot market and expect a resolution in one-to-two months that will address the lower costs we are getting from the PPAs we have signed with procurers, besides addressing the issue of high cost of imported coal. However, this will come as a composite solution that the government is working on to resolve the issue at Mundra for the benefit of all stakeholders.”
The government is also in the process of forming a high-powered committee that will look into the Mundra issue and is expected to come out with a win-win solution for all, Sinha said. He further said the Mundra plant has been affected by rising cost of coal which last week touched a record high of $114 per tonne. To overcome the issue, the company is looking at increasing the blending of high gross calorific value coal (GCV) with low calorific value domestic coal. “We expect to take this ratio to 50:50 level by the end of the year,” Sinha added.
In an analyst call after the Q4FY18 earnings, Sinha said: “In a high coal price scenario, lower GCV coal price does not increase proportionately to high GCV coal price, and 2-3 MT of coal could be procured at a discount of 7%.” The current mix of medium calorfic coal (MCV) is 77%, low calorific value (LCV) is 13%, and the high calorific value (HCV) is 10%. The firm said it proposes to increase this ratio to MCV at 43%, LCV at 37%, HCV at 20%.