Gujarat government mulls over rescuing cash-strapped 9.8GW coal plants

The plants have suffered US$6.6 accumulated loss.

The State of Gujarat (India) may prepare a rescue plan for three Adani Power and Tata Power coal-fired plants at Mundra (Gujarat, India), which are in a difficult financial situation at the moment and no longer economically viable, said Enerdata.

The three coal-fired plants have a combined capacity of 9,820 MW. They began to be in trouble after the Indonesian government decided to link coal export prices to international rates.

The firms, in turn, sought to pass the cost increase on to end customers to compensate the loss, but the Indian Supreme Court rejected any tariff hike, making the plants economically unviable.

Here's more from Enerdata:

The largest power facility, Tata Power’s 4 GW Mundra power station, has accumulated losses of Rs 6,457 crore (US$998m). The other facility, Adani’s 4,6 GW Mundra plant’s total debt now stands at Rs 28,753 crore (US$4.4bn) and its accumulated losses are Rs 7,744 crore (US$1.2bn). Both signed a 25-year PPA with the Gujarat utility GUVNL in 2007.

The government, through Gujarat’s state-run power utility GUVNL, may spend up to RS 40,000 crore (US$6.2bn) to take over the plants, which may then become 100% public. However, nothing concrete came out and it is not clear yet whether Gujarat alone would take the entire ownership of the plants (100%) or if it would take ownership in proportion to the quantity of capacity it has tied up under the power purchase agreements. Adani Power and Tata Power proposed instead a 51% stake.

This story was originally published by Enerdata.