Tata Power to sell non-core assets
To bring down its around ~49,000-crore gross debt, private utility Tata Power is planning to sell its non-core assets even as it continues to explore viable options to resolve issues pertaining to the financially crippled 4,000-megawatt (Mw) Coastal Gujarat Power Ltd (CGPL) at Mundra.
"Our gross debt is ~48,816 crore. We are examining various debt-reduction options, including sale of non-core assets," Tata Power chairman N Chandrasekaran told shareholders at the 98th annual general meeting in Mumbai.
The gross debt to equity ratio currently stands at 3.3, he added.
He said the steep rise in global coal prices impacted the Gujarat plant and Tata Power is working on some resolution.
It can be noted the company had made a proposal some time back to sell 51 per cent stake in the plant to Gujarat Urja Vikas Nigam for a notional ~1, to rescue itself from the debt-laden, loss-making business but the state government rejected the proposal.
The company also offered to operate the project, subject to grant of compensatory rate for the entire period of the power purchase agreement (PPA).
Though the company has PPA with the state electricity board, it is not drawing power from the plant citing higher cost. The plant is running at a capacity of 70 per cent now.
"On the issue of resolution of the compensatory rate for CGPL, we approached all courts of appeal and continue to explore viable options to address the issues by continuous engagement with the power procurers and lenders," Chandrasekaran said.
He said Tata Power has a natural hedge over the project because of the Indonesian coal mines. "Nevertheless, we have made significant investments of close to $1.2 billion in the company. So we would like to solve this issue. Currently, two kinds of resolutions are possible — one with the regulators and procurers and the other is we get cheaper coal, which doesn't seem to be so far working," he added.