It was expected to be the jewel in Tata Power’s crown. But is instead proving to be a millstone around the company’s neck, one that it is reportedly trying to get off its back. In the third week of June 2017, the company sent a proposal to the Gujarat Urja Vikas Nigam to buy 51 per cent equity in the 4,000 MW Mundra Ultra Mega Power Project (UMPP) for Rs 1. The reason is huge losses on account of increase in prices of coal it imports for the plant from Indonesia.
It had won the contract to build and operate the project in December 2006 after an intense bidding war. It quoted Rs 2.26 per unit, based on the assumption that it would use Grade 4 coal from Indonesia (coal of gross calorific value 6,322) which then cost $49.79 per metric tonne (MT). Accordingly, the company acquired coal assets in Indonesia and floated a company to ship coal to India. The power ministry floated a special purpose vehicle for the project – Coastal Gujarat Power Ltd (CGPL) – for Mundra and transferred it to Tata Power. Now, CGPL is Tata Power’s 100 per cent subsidiary. Read More…
Credit By : Business Today
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