Tata Power offers to sell 51% stake in Mundra power for ₹1

Tata Power

Tata Power has offered Gujarat state to purchase its 51 percent stake in 4,000 MW Mundra power project for ₹1 only. This offering was to tide over the financial crisis facing this business as Gujarat state takes electricity from it. Mundra has accumulated losses of ₹6,457 crores against a paid-up equity of ₹6,083 crores.

Coastal Gujarat Power who operates the Mundra project wrote a letter to Gujarat Urja Vikas Nigam Ltd to retain only 49% stake and operate the project as a contractor. He also wrote that it has an outstanding loan of ₹ 10,159 crore and lenders have stopped further disbursal due to non-viability of the project.

In 2006, Tata won a bid for the 4,000 MW Mundra project in Gujarat, quoting a price of ₹2.26 for every unit of electricity generated. The company intends to fire the plan with coal imported from mines which are owned by the Tata Group in Indonesia.

The company wanted tariffs to be negotiated or wants to sell 51% equity share for a nominal value of ₹ 1. Through the selling, it wants the relief for the project by purchasing power at a rate so that it can overcome the fuel costs.

According to the reports, CGPL in the letter stated that against the project outlay of ₹ 17,900 crore, the company has an outstanding term loan of ₹ 10,159 crore and an additional amount of ₹ 4,460 crore which is due to Tata Power.

Mundra project has signed a 25- year agreements to sell electricity to utilities in Gujarat, Rajasthan, Maharashtra, Haryana, and Punjab where Gujarat is the lead buyer.