Tata Power’s wholly-owned subsidiary, Coastal Gujarat Power Limited (CGPL), which operates the 4,000-MW imported coal-based Mundra Ultra Mega Power Project in Gujarat, has completed refinancing of the outstanding ECB loans amounting to around $770 million (around ₹5,500 crore), a company statement said.

The refinancing was done through a mix of rupee-denominated debt instruments and equity funding from the proceeds earned through the divestment of non-core assets of the company, Tata Power said.

The company said refinancing would help reschedule CGPL’s cash requirements, reduce the effective interest cost and the foreign-exchange related volatility as the plant is firing coal imported from Indonesia. The exercise is expected to ease cash-flow burden resulting from continuing losses due to the persistent under-recoveries at Mundra UMPP.

“This reduces interest cost burden and cash flow burden on CGPL,” said Praveer Sinha, CEO & Managing Director, Tata Power.

In August, CGPL has raised ₹2,700 crore via non-convertible debentures (NCDs), to refinance foreign currency debt, and funding of hedge unwinding costs related to such refinancing as well as capital expenditure, the company had said in a regulatory filing.

CGPL’s losses have been weighing on the parent company’s profitability, analysts note. Tata Power has made multiple attempts to rescue the project after the Supreme Court ruling prevented it from charging higher tariff on the basis of an increase in the price of Indonesian coal, making operations at Mundra unviable.

In June 2017, Tata Power, Adani Power, and later Essar Power, wrote to the Centre proposing to sell 51 per cent equity of their ailing thermal power plants for a token amount of ₹1. The proposal was later shelved, industry sources said.

As BusinessLine reported earlier this month, a high-powered committee (HPC) appointed by the Gujarat government in July to resolve the issues of three coastal power projects, had submitted its recommendations to GUVNL (Gujarat Urja Vikas Nigam Ltd) and SBI Capital.

The HPC suggested revising the tariff structure of the power purchase agreements and allowing fuel pass-through with a cap that could be revised after five years based on coal prices. However, neither the State government, GUVNL, nor private power producers made any formal announcements on this development.