Tata Power: Agrees not to shut down Mundra UMPP

New Delhi: Rajasthan and Haryana are examining the issue, an official in one of the state governments, said. However, Friday’s agreement clears way for the Mundra project to operate and sell its produce outside the PPA, helping the plant meet its debt obligations. Gujarat was the first state to amend the PPA based on recommendations from a three member high powered committee.

The meeting was held after Tata Power told the five states buying electricity from Mundra UMPP that it will not be able to operate the plant after March 20.

The 4,000-mw Mundra plant — one of the first four ambitious UMPPs in the country — has not been able to generate working capital for operations, and made cumulative losses of about Rs 11,000 crore, which has been funded by Tata Power and equity financing of Rs 5,000 crore.

Tata Power had won the bid for the UMPP at a price of Rs 2.26 per unit. The project ran into trouble in 2010 after Indonesia benchmarked coal export prices and the government decreed that coal exports could be done only at prices linked to international rates. After a series of legal battles in in Central Electricity Regulatory Commission, Appellate Tribunal for Electricity, the panel formed by the Gujarat government recommended passing the burden of high coal price to discoms.