BackTata Power to sell 30% stake in Indonesian subsidiary for $120 million
Tata Power expects to complete the sale in Mitratama Perkasa in two months, subject to getting requisite approvals
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Mumbai:Tata Power Co. Ltd has agreed to sell a 30% stake in its Indonesian subsidiary, PT Mitratama Perkasa, to Indonesian conglomerate Bakrie Group for $120 million.
The stake in Mitratama Perkasa is held by another Tata Power subsidiary in Indonesia, PT Sumber Energi Andalan Tbk, which signed the deal with Bakrie Group, the company said in a filing to BSE on Thursday.
“Prior to the sale, PT Mitratama Perkasa would be restructured to hold infrastructure assets in relation to PT Arutmin Indonesia and Tata Power, through its subsidiaries, would continue to hold 30% stake in PT Kaltim Prima Coal related infrastructure assets," Tata Power said in the filing.
This is a part of the $500 million agreement Tata Power announced on 31 January regarding the sale of 30% stake it held in mining company PT Arutmin Indonesia, and its associated infrastructure assets, to the Bakrie Group.
PT Kaltim Prima Coal, a subsidiary of Tata Power, owns one of the largest thermal coal-producing mines in the world.
Tata Power expects to complete the stake sale in Mitratama Perkasa in two months, subject to approvals.
The continuing losses at Mundra Ultra Mega Power Project (UMPP) have created stress on Tata Power’s balance sheet. The waiver on financial covenants relating to this project had expired on 30 June 2013 and the management was negotiating with lenders, according to the notes to accounts of September quarter earnings.
“Keeping the under-recovery challenges in Mundra UMPP operations and cash flow concerns in mind, we have also signed an agreement to exit from PT Arutmin Indonesia to get additional cash flow and to reduce our consolidated debt," Anil Sardana, managing director, at Tata Power had said early this month while announcing December quarter financial results.
Last week, the Central Electricity Regulatory Commission (CERC) allowed a compensatory tariff of ₹ 0.524 for every unit of electricity generated from Mundra plant. This tariff is for the period beyond 1 April 2013.
On Thursday, Press Trust of India reported that the CERC ruling will help in reducing Mundra project’s annual losses by ₹ 1,100 crore, citing Tata Power’s Sardana.
The 4,000 megawatt Mundra UMPP, located in Gujarat, is estimated to be incurring a loss of ₹ 1,500 crore annually mainly due to rise in price of Indonesian coal that is used to fire the plant, the news agency reported.
On Wednesday, the shares of Tata Power fell 1.85% to ₹ 79.45 on BSE, while the exchange’s benchmark Sensex rose 0.65% to 20,986.99 points. The S&P BSE Power index gained 0.57% to 1,527.62 points.
Markets were closed on Thursday for a local holiday.
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