All 5 units of Mundra plant to run at full capacity for next 6 months, says Tata Power#39;s Praveer Sinha

Dr. Praveer Sinha, Managing Director (MD) and CEO - Tata Power

Dr. Praveer Sinha, Managing Director (MD) and CEO – Tata Power

All the five units of Tata Power’s Mundra plant in Gujarat will run at full capacity for the next six months, MD & CEO Praveer Sinha has said.

The plant load factor (PLF) for Mundra would be more than 80-85 percent and EBITDA for the plant would be positive first quarter on, Sinha said in an interview to CNBC-TV18 on May 9.

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The company’s March quarter adjusted profit after tax (PAT) of Rs 653 crore (up 66.3 percent on year) came 4 percent above estimate of Rs 632 crore. Mundra, however, reported a net loss of Rs 484 crore due to high fuel under-recoveries at Rs 1 a unit and lower plant load factor.

Sinha said the government of India had given directions that all the five units were to operate and supply to all the five procured states.

“… a committee has been set by the Ministry of Power based on which we will get the full realisation and it will be cost reflective. So I think that’s a very good change of course is for the next six months,” Sinha said.

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“…for the next six months all the units hopefully be operating at full capacity. You would have seen that in the last quarter we were just operating one unit for Gujarat but going forward all five units will operate at full 100 percent availability and we should be able to recover full cost for Mundra.”

The company was already running four units and would soon start the fifth unit, “so we do expect at least for next two quarters up to October all five units to run at 100 percent availability”.

“The committee has given the option that the procured states can buy on the tariffs that will be determined by this committee, which will be a cost-reflective tariff and in case, any of the state is not keen to pursue that then they can relinquish that quantity,” he said.

The relinquished quantity can be taken by the other states and in absence of that, power can be sold in the exchange and the difference between the actual cost and the exchange can be shared 50-50.

“So I think it’s a very good development that has happened for all imported coal-based plants, including Mundra, and we do expect that this plant will become to that extent financially sustainable at least for next six months,” he said.

The procurer states would have to pay the tariffs on a weekly basis and the committee would keep revising prices every two weeks to ensure that it reflects the shipping and other costs.

“The revised arrangement would be made under Section 11 which empowers the government to ask units to operate and set cost-reflective tariff,” he said.

“At this stage don’t have data but can definitely tell you that the EBITDA for the Mundra plant as also for all the other imported coal-based plants will be positive.”

India is in the middle of a power crisis, with various parts of the country facing prolonged power cuts.

Moneycontrol has been writing extensively on what ails the power sector, how the crisis ties up with coal shortage and steps that can be taken to prevent a repeat under its Power Shock series.

Tata Power stock, which has taken a beating in the last few weeks, closed 6.22 percent lower at Rs 230 on May 9.


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