Tata Power to sell non-core assets, improve efficiencies to offset Mundra impact
Mumbai: Power producer Tata Power Co. Ltd plans to sell non-core investments and improve efficiencies to counter the impact of the Supreme Court ruling that disallowed it to charge higher tariff from its Mundra plant.
The company made this disclosure in an analysts call on Monday, days after the Supreme Court denied it compensatory tariff on account of expensive Indonesian coal.
Tata Power does not expect any impact on its credit rating from the court order and expects business to be as usual, said an analyst, asking not to be named as he is not authorised to speak to reporters.
In a major setback to Tata Power and Adani Power Ltd earlier this month, the Supreme Court denied award of compensation on account of expensive Indonesian coal, setting aside an earlier tribunal ruling that had allowed the power producers to charge higher tariff.
The judgment is credit-negative for Tata Power but does not impact its Ba3 rating, Moody’s Investors Service said earlier this month.
Tata Power, however, would need to look for cheaper fuel sources, maintain optimum generation, utilize the losses to set off against alternate income, and refinance debt, Mint reported on 13 April.
Tata Power’s Coastal Gujarat Power Ltd (CGPL) unit and Adani Power both operate over 4,000 megawatt (MW) coal-fired project in Mundra, Gujarat, and have power purchase agreements with state discoms in Rajasthan, Gujarat, Haryana and Punjab. The two power producers have long argued that a change in Indonesian regulations has pushed up their cost of coal imported from that country to fuel their electricity plants at Mundra.
Tata Power has said it would continue to work towards alternatives, including sourcing of competitive and alternative coals, “to best contain the onslaught of under-recovery”.