Tata Power merges Mundra plant into parent for capital support
Tata Power has decided to merge its wholly owned subsidiary Coastal Gujarat Power Ltd, which operates the ultra mega power plant at Mundra, into the parent company to provide financial relief as it continues to face losses.
Praveer Sinha, MD and CEO, Tata Power, said: “CGPL has already suffered large losses and is facing difficulty in financing its operations. Given the inordinate delay in resolution of the tariff matter, the merger will provide relief through direct support from the parent company. The company continues to be in discussion with various state governments and state discoms. We do hope that the state governments will take a practical view and resolve thePPA (power purchse agreement) amendment issue in the interest of all stakeholders.”
Operating revenue for the quarter fell 17% year-on-year, while costs fell proportionately by 10%, on lower fuel and financing costs.
In a major strategic change, Tata Power announced along with its quarterly results that its much-beleaguered Mundra ultra mega power plant in Gujarat, it solar cell manufacturing and construction arm Tata Power Solar Systems and its investment subsidiary Af-Taab Investment Company Ltd into the parent “for greater synergies in financing, compliance, and oversight.”
The quarter saw revenue fall across all the major business verticals: generation revenue, renewables, transmission and distribution.
About the proposed offloading of its renewables portfolio, Sinha, said, “The proposed renewable InvIT (infrastructure investment trust) will be the growth engine and we intend to grow this to be India’s largest renewable InvIT. At present, it has about 2.6 GW of operating plants and 1.5 GW of capacity in pipeline taking the total capacity to 4.1 GW. This InvIT provides the option to recycle capital once the assets are operational. Further, the InvIT strategy enables Tata Power to raise capital at lower cost post stabilization of assets and grow the portfolio whilst we deconsolidate our debt. Apart from adding capacity in the renewable generation in the next five years, we will also be scaling the solar cells and modules manufacturing business along with the solar EPC (engineering, procurement, construction) business.