Tata Power has decided to exit from PT Arutmin Indonesia investment to get additional cash flow of $500 million to reduce its consolidated debt. The company said the move was prompted by under-recovery challenges faced at its Mundra ultra mega power project (UMPP) operations which has caused concern on cash flows. “Considering the present coal price scenario, Arutmin, which is a mine spread over a number of pits in South Kalimantan, Indonesia, had started posing production and cost viability challenges in its operations,” the company said.
Tata Power, however, continues to hold its equity stake in PT Kaltim Prima Coal (KPC). KPC will also continue to be a part of the supply chain for Tata Power Group’s coal offtake requirements.
Accordingly, Tata Power, through its wholly-owned subsidiaries, has signed an agreement to sell its 30 per cent stake in Arutmin and associated companies in coal trading and infrastructure, to a Bakrie Group entity.
The aggregate consideration for Tata Power’s 30 per cent stake is about $500 million.