Tata Power Company Ltd.

Rajasthan State Electricity Board (SEB) has made an immediate payment of Rs 90 crore to the troubled Tata Power Company’s Mundra Ultra mega power plant (UMPP). This development comes right after private utility, Tata Power’s wholly owned subsidiary Coastal Gujarat Power (CGPL) stopped power supply to the distributing companies of Rajasthan from its 4,000 MW ultra-mega power project (UMPP) at Mundra, Gujarat, because of payment default issues. Rajasthan is to be supplied around 10% of the power to be generated by India’s first UMPP.

However, now since the default has been cleared, Tata Power is demanding that the state utility to provide the former with proper collaterals and securitization, as per the power purchase agreement that can protect it from any future defaults of similar nature. Further, the company also maintains the reason for termination of contract being the failure of payment security documentation and not just payment default issues.

Tata Power’s Mundra Power plant is incurring a loss of around Rs 400 crore on account of costly imported coal while the non-payment creates need for borrowings and associated interest costs.