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Mundra losses will fall 50% on tariff hike, says Praveer Sinha of Tata Power

Mundra losses will fall 50% on tariff hike, says Praveer Sinha of Tata Power


Praveer Sinha, chief executive officer & managing director, Tata Power, spoke about the current situation being faced by the power sector, his expectations from Gujarat government’s resolution to increase power tariff, disinvestment and capital expenditure during an interview with Swati Khandelwal of Zee Business.

There were talks that your losses from Mundra power plant will go down up to 50% after the Gujarat government’s decision to allow tariff hike. Is that the right number?

Yes. We were incurring losses of around Rs 1,500-1,600 crore in Mundra due to the increase in coal prices in the international market, but it is decreasing, now. In fact, it went up to $100 on the HBA index of Indonesia, but its prices are going down and have reached a mark of $90 at present. This decrease has taken down our losses from 90 paise/unit to 40-45 paise/unit. Besides, we are also taking steps to control it.

Gujarat government would be interested in the Mundra power plant. Talks were on for it in the recent past. What is the status? 

Yes, it has been almost one-and-a-half years when we had such a discussion on the issue. But the question is why will the Gujarat government opt for a loss-making company and take its liabilities on itself. In fact, no other government or the five beneficiaries of the project were interested in the taking the project. It is not more on the table and we are supposed to run it on our end and try to convert it into a profit-making company.

What kind of burden will be transferred to the consumers through the expected price hike?

Gujarat and Maharashtra are two states with maximum power consumption. During our calculations, we found that the tariff hikes will have an impact of just 1-1.5 paise in Gujarat. Besides, there is a certainty that these states will get an additional 10% electricity with this hike as we will take our production to 90% from existing 80%. Secondly, the power purchase agreement, that will remain active for 25 years, has completed five years. But they have opted to extend the remaining 20 years by 10 years, which will lead to a depreciation in the cost of the tariffs after it completes the remaining 20 years. This will lead to a reduction in the cost of power, which is beneficial for them.

What is the roadmap of Tata Power for the next five years?

Tata Power has a consumer-centric growth plan and our new businesses will include certain things like solar projects, charging infrastructure of utility-scale and rooftop solar projects but people are not aware of these things. We also have other consumer-related services like home automation solutions in which a consumer will be provided with an opportunity to decide the kind of power that he wants to consume at a time. Under the process, he will be enabled to remotely handle these things.

Source: dnaindia
Anand Gupta Editor - EQ Int'l Media Network


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