Tata Power, which is seeking higher rate for electricity generated from its 4,000-Mw Mundra ultra mega power project (UMPP), has so far seen erosion of more than 60 per cent of the Rs 4,500-crore equity investment in the project, according to sources.
“The company has already lost around Rs 3,000 crore of equity investment in the Mundra project since it started power generation in March this year, due to expensive imported coal,” a source in the know said.
Coastal Gujarat Power Limited (CGPL), a wholly owned subsidiary of Tata Power, is implementing the Mundra project in Gujarat. The first 800-Mw unit started generation in March.
The flagship UMPP, estimated to cost about Rs 17,000 crore, is being funded in the debt-equity ratio of 75:25.
The country’s largest private power producer has already approached the Central Electricity Regulatory Commission (CERC) seeking higher rate, which would help to mitigate losses arising out of pricier imported coal.
According to sources, the annual loss from the Mundra UMPP is estimated to be about Rs 1,800 crore unless the rate is increased.
“Unless the tariff is hiked, the overall equity could get eroded in less than three years from now,” the source said.
Even though, the international coal prices has fallen on account of sluggish demand globally, the company continues to incur losses on the Mundra project.
Sources noted that in the wake of fall in imported coal prices, the loss per unit of electricity generated has slightly come down to around 67 paise, while earlier, the same was around 70 paise per unit.
In recent times, the price of international coal has dropped to about $100 per tonne from $120 per tonne.
Tata Power bagged the Mundra project through competitive bidding by quoting an electricity tariff of Rs 2.26 per unit. But higher imported coal prices have made the UMPP unviable at this rate.
The company is seeking an increase in rate of about 0.70 paise per unit.
Mundra project has five units, each having 800-Mw capacity and two of them are already operational.
