Tata Power seeks 'certain waivers' from Mundra UMPP lenders

Mundra project, fired by imported coal from Indonesia, is being run by Coastal Gujarat Power Ltd (CGPL), a wholly-owned subsidiary of Tata Power.

Last Updated: Jul 28, 2013, 13:00 PM IST

New Delhi: Tata Power has sought "certain waivers" from lenders to ensure further disbursements of loans to the 4,000 MW Mundra plant, the country's first operational ultra mega power project.

Hit by higher imported coal prices and lower tariff realisation, the Mundra project is grappling with significant financial burden including impairment provisioning against its assets.

Mundra project, fired by imported coal from Indonesia, is being run by Coastal Gujarat Power Ltd (CGPL), a wholly-owned subsidiary of Tata Power.

In response to a query on whether the company has sought restructuring of loans given to the Mundra UMPP, a Tata Power spokesperson replied in the negative.

"Not yet. As mentioned, the company has sought certain waivers from lenders to enable further disbursements of loans," the official said.

Without disclosing specific financial details, the spokesperson said the amounts for which the waivers have been sought are "related to certain terms in the loan agreement".

The original cost estimate for Mundra project was Rs 17,000 crore. It has funding from IFC, IIFCL, ADB, Korea Eximbank, BNP, SBI and nine other lenders. The debt to equity ratio for the plant's financing is 75:25.

According to Tata Power's annual report for the 2012-13 fiscal, consequent to the impairment loss with respect to Mundra UMPP, certain covenants governing the loans borrowed for construction of the project have not been met at the end of March 31, 2013.

Subsequently, CGPL received waiver from compliance of the covenance up to June 30, 2013.

"Further, CGPL has sought revision in certain terms of financing agreements and expect to execute such revision. Accordingly, loans aggregating to Rs 11,512.55 crore are considered to be long-term borrowings (including current maturities of long-term borrowings of Rs 686.32 crore)," the report said.

CGPL has accounted for an additional impairment of Rs 850 crore related to Mundra project for the year ended March 31, 2013. Besides this, the company had recorded an impairment of Rs 1,800 crore for the year ended March 31, 2012.

In April this year, Central Electricity Regulatory Commission (CERC) had asked entities procuring power from Mundra UMPP to form an expert panel to decide on compensating the company for higher cost of coal imports from Indonesia.

The directive came on a petition filed by Tata Power seeking relief. The panel is believed to be looking into the issue.

Currently, Mundra UMPP has five units of 800 MW each.

Electricity produced from the plant is being supplied to five states -- Gujarat, Rajasthan, Punjab, Haryana and Maharashtra.