Stressed power projects: FM Arun Jaitley holds review meeting with lenders

Mundra project has accumulated losses of Rs 64.57 billion against a paid-up equity of Rs 60.83 billion

Finance Minister Arun Jaitley on Saturday held a review meeting with lenders and senior officials on the financial stress faced by some of the power projects, including that of Tata Power and Adani Group in Gujarat.

The high-level meeting was also attended by Principal Secretary to the Prime Minister Nripendra Misra, senior officials of power ministry, SBI chairman Rajnish Kumar, among others, sources said.

It is to be noted that Tata Power last year offered to sell 51 per cent stake in its 4,000 MW Mundra power project for Re 1 to states like Gujarat, which gets electricity from it, to tide over the financial crisis facing this business. Besides, there were allegations that Adani Group charging exorbitant electricity tariff in Gujarat.

However, the company refuted the charges saying it sold power to the state at a "very attractive" price of Rs 2.65 per unit over the last four years.

Coastal Gujarat Power Ltd (CGPL), the Tata Power unit which operates the Mundra project, wrote to Gujarat Urja Vikas Nigam Ltd offering to retain only 49 per cent stake and operate the project as a contractor provided the procurers buy all the power at higher tariffs.

In the letter, copies of which were marked to the principal secretary to the Prime Minister and Union power secretary, CGPL CEO Krishna Kumar Sharma said Mundra has accumulated losses of Rs 64.57 billion against a paid-up equity of Rs 60.83 billion.

It has an outstanding loan of Rs 101.59 billion and lenders have stopped further disbursal due to non-viability of the project, he wrote.

Tata had in February 2006 won a bid for the 4,000 MW Mundra project in Gujarat, quoting a price of Rs 2.26 for every unit of electricity generated. It had intended to fire the plan with coal imported from mines owned by the Tata Group in Indonesia.