Moody's gives 'credit negative' rating for Tata Power's Mundra UMPP
14 January 2013
The ambitious ultra mega power plant (UMPP) of Tata Power at Mundra in Gujarat will result in increasing losses for the company international rating agency Moody's said on Monday, while giving the firm a ''credit negative'' rating.
Last week, Tata Power, India's largest integrated power utility, announced synchronisation of the 800 MW unit four of the country's first UMPP in Mundra. The company, through its wholly-owned subsidiary Coastal Gujarat Power Limited (CGPL), had commissioned the first unit of Mundra UMPP last March, unit two in July and unit three in October.
''CGPL's losses will mount as additional units at the UMPP are commissioned because the company can only partially pass through this coal-fired plant's fuel costs to customers, given the terms of the purchase power agreements (PPAs),'' said the rating agency.
Earlier this month, CGPL had to terminate its PPAs with three distribution companies in Rajasthan following failure on their part to provide the required payment security under the agreements. While the distributors settled their outstanding payments, CGPL will be able to sell 10 per cent of its capacity at higher prices.
According to Anil Sardana, managing director, Tata Power, the synchronisation of unit four of Mundra UMPP is a significant milestone given the critical power shortage situation in the country. ''The Mundra power plant is one of the most efficient and environment-friendly plant based on super critical technology,'' he said.
With this development, Tata Power's gross generation has touched 7,700 MW, reinforcing its position as the largest integrated power company in India.