Tata Power completes $770 million ECB refinancing for Mundra UMPP

Private power producer Tata Power said on Friday that its Mundra ultra mega power project (UMPP) has completed the refinancing of its outstanding external commercial borrowings (ECB) loans worth $770 million. 

"Coastal Gujarat Power Limited, a wholly-owned subsidiary of Tata Power, which implemented the 4,000 Mw Mundra UMPP, has completed refinancing of the outstanding ECB loans amounting to $770 million through a mix of rupee-denominated debt instruments and equity funding from the proceeds of divestment of non-core assets of the company," Tata Power said in its media statement on Friday.

The company expects the refinancing will help reschedule the cash requirements, pare the effective interest cost and reduce foreign exchange related volatility for the Mundra subsidiary. "It is also expected to ease cash flow burden resulting from the continuing losses due to the continuing under-recoveries in the Mundra Ultra Mega Power Project," Tata Power said in its statement. 

Tata Power's Mundra unit has been loss-making due to a mismatch in the tariff offered through the power purchase agreement and the cost of production. The cost of operating the Mundra unit escalated following an unexpected change in Indonesia's coal export policy. The Mundra unit was to be fueled using coal imported from Indonesia. 
 

"We have been looking at various options to improve the viability of Mundra UMPP. This is one more step in the same direction as it reduces interest cost burden and cash flow burden on CGPL," said Praveer Sinha, chief executive officer and managing director for Tata Power.

Earlier in August, the Mundra subsidiary raised Rs 27 billion through an issue of non-convertible debentures.