Lenders haircut to help Tata Power revive generating firm Coastal Gujarat – Business Standard

Tata Power | electricity
Dev Chatterjee  |  Mumbai  Last Updated at May 9, 2022 21:53 IST

With lenders planning to take a haircut, Coastal Gujarat Power, a Tata Power-owned generation company, is expected to revive after making continuous losses since its commissioning.
The project, one of the first ultra mega power projects, is increasing its production after two state governments – Gujarat and Maharashtra decided to buy additional power from the project in Mundra, Gujarat.document.write(““);googletag.cmd.push(function(){googletag.defineOutOfPageSlot(‘/6516239/outofpage_1x1_desktop’,’div-gpt-ad-1490771277198-0′).addService(googletag.pubads());googletag.pubads().enableSyncRendering();googletag.enableServices();});


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"The 4,000 mw power plant is already operating four units and is supplying Gujarat with 1,805 megawatt and 760 mw to Maharashtra,” Tata Power’s CEO Praveer Sinha said after the annual results.
Coastal Gujarat Power, which is now merged with Tata Power, reported debt of Rs 7,936 crore as on September last year. The fuel cost under-recovery stood at Re 1 a unit in the fourth quarter of FY22 as compared to Rs 0.72 a unit in the same period of FY21, given under-recovery from mining profit sharing and lender's haircut, Elara Capital said in a note.
“Free on board (FOB) price of coal at $112.2 a tonne was up 103 per cent on a year on year basis. The reported net loss was Rs 480 crore in Q4FY22 as compared to a loss Rs 277 crore in Q4FY21, offset by higher coal prices,” the report said.
When contacted, a spokesperson said: "Presently the provisions for a long term resolution plan are still under discussion and not yet finalised and we cannot therefore comment regarding the same.”
In October 2018, a high power committee recommended sharing the losses incurred in Coastal Gujarat Power among consumers, its lenders, and developers. The HPC recommended a pass-through of fuel costs subject to a cap of $110 per tonne of coal and lenders taking a fixed deduction of 20 paisa/kilowatt hour (p/kWh). The committee also asked to share 1 profits from its Indonesian mines subject to a floor of 15p/kWh; and increased the normative plant availability factor to 90 per cent for the same capacity charges.
In January 2019, after the committee’s recommendations, the Supreme Court ruled that power purchase agreements (PPA’s) could be amended with distribution (discoms), subject to the regulator’s approval.
"At this stage, I don't have data but I can definitely say the EBITDA (earnings before interest, depreciation, and amortization) for the Mundra plant as also for all the other imported coal-based plants will be positive,” Sinha said.
In its analysts call, said its mining permit for its coal mine in Indonesia, PT Kaltim Prima Coal (KPC) was renewed for 10 years by Indonesia. The renewal of permit will help the company to secure and hedge coal for its thermal power plants in India. The company holds a 30 per cent stake in the mining company.
The company is not interested in reverting to coal after making investments in renewables as it believes renewable energy is the future of .
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