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Web Exclusive | October 2012

Costly coal wipes out Rs 30 bn from Mundra UMPP

Owing to expensive imported coal, the 4,000-mw Mundra ultra mega power project (UMPP) of Tata Power has witnessed around Rs 3,000 crore of equity erosion so far.

It is learnt that this is over 60 percent of the Rs 4,500-crore equity investment in the project. Unless the tariff is hiked, the overall equity could get eroded in less than three years from now,reports suggest.

Tata Power has already approached Central Electricity Regulatory Commission (CERC) seeking higher rate, which would help to mitigate losses arising out of pricier imported coal.

It is learnt that the annual loss from the Mundra UMPP is estimated to be about Rs 1,800 crore unless the rate is increased. Even though, the international coal prices has fallen on account of sluggish demand globally, the company continues to incur losses on the Mundra project.

Coastal Gujarat Power (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.

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.

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