“The project financing comprises equity of Rs 110 crore and rupee term loans of Rs 255 crore,” Tata Power said in a statement. The Mithapur project is being developed by Tata Power Renewable Energy Ltd, a subsidiary of Tata Power.

“Tata Power Renewable Energy Limited has successfully tied up the entire debt requirement through a consortium of domestic lenders, namely State Bank of India and Export Import Bank of India with SBI Capital Markets Ltd acting as the sole financial advisor and arranger,” the statement said.

According to the company, the first loan disbursement was received on December 8. “The signing of the financing agreements is a significant milestone for the project… We look forward to participating in many such initiatives in solar power,” Tata Power Managing Director Anil Sardana said.

Tata Power has inked a Power Purchase Agreement (PPA) for the project with Gujarat Urja Vikas Nigam Ltd
Agencies

The Tatas will be deprived of the cost advantage on coal imports from the South-East Asian country due to a new local law that requires benchmarking of coal sales to an index-based price linked to global rates. This will necessitate Tata revisiting its cost calculations on the Mundra UMPP.

UMPPs were seen as a means to achieve leapfrogging of investment and capacity addition in the power sector. Out of the four ongoing UMPPs projects in the country, the Mundra project was slated to be the first to come onstream.

“It (the impact) will depend upon what is the prevailing prices of coal. Suppose at current price of US $120 per tonne, we will have huge losses in the variable side and which could mean that we will have a first-year loss of Rs 500 crore,” Tata Power Managing Director Anil Sardana told in an interview.

At current prices, the Indonesian coal that will be used to run the Mumdra UMPP would increase power generation costs by 60 to 65 paise per unit, he said, adding that the company has sought a meeting with the buyer states at the end of this month to find a solution.

Today, the rate is Rs 2.26 per unit and if “you add that 60-65 paise, it becomes Rs 2.90 per unit”, Sardana said. It will still be the cheapest imported coal-based power unit ever, Sardana claimed, although he said it is up to the buyer states to find out the solution.

“We don’t know what answers will be palatable to the beneficiaries (the buyer states) side… They have to find out the answers they are willing to take, which can range from compensation to allocating a coal mine in India till the time we locate a new mine abroad and develop it,” he said.

“Or somebody can say that you convert this coal (from Indonesia to run Mundra UMPP),” the Tata Power MD said. Five states — Gujarat (1,805 Mw), Maharashtra (760 Mw), Punjab (475 Mw), Haryana (380 Mw) and Rajasthan (380 Mw) — have signed power purchase agreements to secure the 4,000 Mw of electricity generated by the Mundra UMPP.

Tata Power had won the bid for developing the Mundra UMPP in 2007 by quoting the lowest tariff of Rs 2.26 per unit and the Rs 16,000 crore project was to run on imported coal. It has a supply contract for 10.1 million tonnes per annum (MTPA) of coal with Indonesian coal companies KPC and Arutmin, in which it holds 30 per cent stake each. Part of this coal was to be used for the Mundra UMPP.

According to the original contract, in the first five years, Mundra was to get 75 per cent of the coal at  index- linked prices and the rest was to be supplied at a discounted rate of about US $40 per tonne. After that, the entire quantity was to be purchased at market prices.
Agencies

“The company is in the process of acquiring 20.95 Mw operating wind assets in Maharashtra from Niskalp Energy,” the firm said in a statement. Tata Power would also shortly place an order for 150 Mw wind capacity to be set up in Maharashtra and Rajasthan, and to be commissioned during the course of FY12 and FY13.

“Today, our wind portfolio has crossed 300 MW and the company is committed to adding a sizable capacity every year to maintain a significant wind portfolio,” Tata Power Managing Director Anil Sardana said. Wind power from its plants in Gujarat, Tamil Nadu and Karnataka are sold to respective state distribution companies.

The electricity generated from the company’s wind farm in Maharashtra is sold to Tata Power’s distribution business unit in Mumbai. Tata Power has an installed generation capacity of more than 3,120 Mw.
Agencies

 The Outlook revision reflects the deterioration in financial profiles of the off-takers (state power utilities (SPUs)) and TPTCL’s muted volume growth of 6.8 per cent YoY inFY11compared to the industry growth of 27.4 per cent (includes only electricity transacted through trading licenses and exchanges). The subdued growth was due to a regulatory order by MERC, which did not allow TPTCL to trade power freed from a Mumbai distribution licensee.
The affirmation reflects the reasonable business position enjoyed by the company in the power trading segment and the trading margin accretion witnessed in FY11. The ratings also factor in TPTCL’s strong operational and financial linkages with The Tata Power Company Limited (TPCL, a 100 per cent stake). Further, TPTCL has a strong portfolio of long-term tie-ups in excess of 5GW with power generators, which provide revenue visibility.

The company traded only 4,354 million units in FY11. However, its trading margins increased to 5.3 paisa/unit in FY11 from 4 paisa/ unit in FY10. The company also benefited from a 36 per cent increase in rebate income to INR60.7m in FY11 from INR44.7m in FY10. Its gross margin (trading margin and rebate income combined) came at 6.6 paisa/unit compared to 4.9 paisa/unit.

TPTCL’s ratings continue to be constrained by the credit risk of off-takers; however it is mitigated by the fact that nearly 34 per cent of its buyers are Tata Group companies. The ratings also take into account the company’s exposure to select “take-or-pay” power purchase agreements (PPAs), however risk mitigation clauses like low guaranteed base rate and compensation only if the off-take is below a certain quantity, embedded in the PPAs provide comfort against the risk. The ratings factor in the provision made by the company in FY11 of INR96.4m due to a reduced payment by a SPU which led to a decline in its EBITDA margins to 2.43 paisa/unit from 2.73 paisa/unit. The company is contesting the deduction.

Negative rating guidelines include an increase in its trade through take-or-pay PPAs that would enhance business risks, material delinquencies by power off-takers that could stress working capital requirements and/ or a reduction in support from TPCL. Positive rating guidelines include strong volume growth with margin accretion and improvement in the financial health of SPUs.

Incorporated in February 2004, TPTCL is a power trading company, set up by TPCL. The company has been issued a category “I” trading license from the central power regulator, Central Electricity Regulatory Commission.

“The line is ready to evacuate power from two units of Mundra UMPP (2X800 Mw) in normal condition and more than 1,200 Mw in the contingency from today onwards,” Power Grid said in a statement. The transmission system was commissioned on Thursday. According to the statement, the system commissioned consists of high capacity Mundra-Bachau-Ranchodpura 400 kV double circuit line along with 630 MVA Bachau 400/220 kV sub-station.

These are part of the transmission system associated with Mundra UMPP, being implemented by Power Grid at an estimated cost of about Rs 5,000 crore, it added. “About 770 circuit kilometer transmission line has been commissioned in challenging conditions like passing through tough terrains in creek area of Arabian Sea… Excessive water logging due to heavy rains, etc,” the statement said.

The first unit of Tata Power is expected to be commissioned by end of December this year.
Agencies

Shares of power generation firms fell, with Tata Power Company and NTPC hitting 52-week lows.  Tata Power Company fell 1.45 per cent to Rs. 985.95. The stock hit 52-week low of Rs. 982.20 today. NTPC fell 1.25 per cent to Rs. 161.35. The stock hit 52-week low of Rs. 161.15 today.

Among other power sector stocks, Reliance Infrastructure, Reliance Power, Power Grid Corporation of India and Torrent Power fell by between 1.54 per cent and 3.84 per cent.

Index heavyweight Reliance Industries (RIL) weakened in volatile trade.  RIL shed 2.16 per cent  to Rs. 807.30. The stock was volatile. The scrip hit high of Rs. 822.80 and low of Rs. 805 so far during the day. The company has denied inflating costs on its D6 gas field in the Krishna-Godavari (KG) basin. RIL clarified that audits by three independent experts had found that costs in the KG-D6 field were not inflated and the company had adhered to the PSC (Production Sharing Contract). With regard to Comptroller and Auditor General of India’s (CAG) observation that an operator has an incentive to keep costs high, independent auditor Ernst & Young (E&Y) said any increase in capital expenditure is rather detrimental to both the contractor and the government. Consultant Daniel Johnston commented that the appraisal activities which RIL has carried out in relation to the various discoveries in the KG-D6 block are consistent with good international petroleum industry practices (GIPIP).

RIL said that the independent reports by E&Y, IPA and Daniel Johnston & Co. Inc. entirely validate RIL’s stand in its responses to CAG. The independent nature of these studies conducted by globally reputed consultants has acknowledged RIL’s commendable efforts in bringing to stream India’s first deep water hydrocarbons production facility in record time, RIL said. The fact that energy major BP has entered into a strategic partnership with RIL in this block, further vindicates RIL’s position, RIL said. With its newly established partnership with BP, RIL is confident of unlocking the full potential of KG-D6 and other blocks, thus bringing greater benefit to the nation, RIL said.

RIL issued the statement after trading hours on Friday, 9 September 2011, after CAG said in its final report submitted to the parliament on Thursday, 8 September 2011, that RIL initially estimated capital expenditure of D-1 and D-3 gas discovery at US $2.4 billion, which it later revised to US $8.8 billion. The CAG report also said that RIL started implementing the revised capex plans even before they were approved by the government. The report also found that RIL didn’t relinquish some least-priority areas in the KG D6 block, which the government could have given to other companies for further exploration.

ONGC rose 0.21 per cent. The company, early this month, filed prospectus for about Rs. 11000-crore follow-on public offer with the Securities and Exchange Board of India.
India Infoline

“We will be investing around Rs 1,000 crore over the next three years to lay our own distribution network in Mumbai for supplying power to our customers,” TPC Executive Director Sankaranarayanan Padmanabhan told reporters after the company’s AGM.

At present, TPC serves 8 lakh customers using the wire networks of BEST and Reliance Infrastructure to distribute electricity in the city and the suburbs, respectively. TPC also has its own network in certain parts of the metropolis. TPC is charged a fee called wheeling charges for distributing power through the R-Infra and BEST networks, which the company then recovers from its consumers.

“Law allows wheeling and permits us to use the network of Reliance to distribute electricity in the suburbs. Before the Supreme Court order, we were not allowed to lay parallel network. But now we have rolled out a plan to lay our own network. We have put up a proposal to the MERC,” he said.
Agencies

“We are also tendering quite actively on power projects outside India, where there is great demand, for growth,” Tata told an annual meeting of shareholders. Tata did not elaborate on the firm’s overseas plans.

Tata Power is developing a 114 MW hydro power project in the Himalayan nation of Bhutan and has bought a 50 percent equity stake in a planned hydro power project in Nepal. In 2010, it had won a bid for a 240 MW geothermal project in Indonesia in consortium with Australia’s Origin Energy and Indonesia’s PT Supraco.

Indian power developers are grappling with several problems in setting up new projects, such as delays in securing environmental clearances, farmers’ opposition to land acquisitions and the soaring prices of imported coal. Tata said the government needed to give the utmost priority to looking into the problems of the power sector.

“The government wants the private sector to play a major role in the (power) sector. Unless land is made available, we will not be able to play our role.”  Tata said he expected the federal government to review the tariff structure for Ultra Mega Power Projects (UMPP) — those with capacity of about 4,000 MW — as coal prices have risen.

Australia’s thermal coal prices, a benchmark for Asia, were flat at just over $120 per tonne in the week ending Tuesday, as weak demand kept trading thin.

In the June quarter, the utility posted 35 percent higher net profit from the previous year, at 4.19 billion rupees. Also in June, it raised US $334 million from a perpetual bond issue besides having raised another US $450 million in April to fund its capex.

The company’s stock, which is valued by the market at US $5.7 billion, closed down 4.42 per cent at 1,038.30 rupees, underperforming the benchmark index , which ended down 1.29 per cent, taking its cue from Asian peers.
Agencies

Tata Power, which has coal assets in Indonesia, has told the government that the Southeast Asian nation’s plan to regulate exports of the fuel could double the cost of generating power at its 170 billion rupee (US $3.8 billion) plant at Mundra in the western state of Gujarat, the people said, asking not to be identified because the matter isn’t public.

India has awarded contracts to build four of 16 planned coal-fired plants, each with a capacity of 4,000 megawatts, to help reduce blackouts in the second-fastest major growing economy. The South Asian nation faces a peak power deficit of 13 percent in the current financial year. “Recently, Indonesia like other coal-exporting countries made amendments in conditions related to exports of coal from their shores,” Tata Power said yesterday in an e-mailed statement. “We look forward to a discussion on how the issue of change in law in Indonesia regarding imported coal could be dealt with.”

The utility won the Mundra project in December 2006 with a bid of 2.26 rupees a unit. Increases in the tariff are linked to the power regulator’s index. Even with tariff revisions, the price could make the Mundra project financially inviable during its first five years of generation, one of the people said.

“The power ministry has been consulted and they will probably have to increase the tariff,” said Rohit Singh, an analyst at IDBI Capital Market Services Ltd. in Mumbai. “Other developers who bid will certainly be disappointed, but there’s really no other viable option.”

Coal prices have surged on rising demand to feed power stations and steel mills in China, the world’s largest user of coal, and amid global production disruptions, including record flooding in Queensland. The average price of power-station coal at Australia’s Newcastle port, a benchmark for Asia, rose to US $124 a ton in the first half of 2011 from US $97 a year earlier, according to McCloskey Group.

The first unit of the Mundra plant is scheduled to start in September, Tata Power said during an earnings conference call on May 19. Reliance Power Ltd. (RPWR), which won contracts to build the other three 4,000-megawatt projects, is also seeking to resolve the problem caused by Indonesia’s fuel tariff, Power Secretary P. Uma Shankar said. The utility reached out to the ministry in July after halting work on its project at Krishnapatnam in the southern state of Andhra Pradesh, one of the people said.
Agencies

“This is a significant moment for us and is aligned to our strategy of being an integrated power player. With this objective in mind, Trust Energy was setup to securitize coal supply and shipping of coal for our thermal projects,” Tata Power Managing Director Anil Sardana said in a statement.

Trust Energy was set up in 2007 to help integrate coal supply chain to support growth plans of Tata Power. The entity has a portfolio of a fleet of five Cape vessels, in its first phase. The Mundra ultra mega power project is expected to come up later this year.”The arrival of Trust Integrity at Mundra reinforces the company’s fuel supply and logistics management integration, planned for the Mundra UMPP project,” the statement noted.
Agencies