Tata Power has offered to sell 51% stake in its 4,000 MW Mundra Ultra Mega Power Project to Gujarat for Re 1, reported Hindustan Times on Thursday. Similar moves are being contemplated by Adani Power and Essar Power, which also have power projects based on imported coal, reported Business Standard.

Coastal Gujarat Power Ltd is the Tata Power unit operating the Mundra project. Earlier this month, CGPL wrote to Gujarat Urja Vikas Nigam Ltd offering to retain only 49% stake.

In the letter to GUVNL, also marked to the Union power secretary, the chief secretary to the Gujarat government and the principal secretary to Prime Minister Narendra Modi, CGPL suggested two options: Renegotiating the power purchase agreement and selling equity. CGPL CEO Krishna Kumar Sharma said Mundra has accumulated losses of Rs 6,457 crore against a paid up equity of Rs 6,083 crore.

“The procurers take over 51% paid-up equity shares of CGPL for a nominal value of Rs 1 and grant relief to the project by purchasing power at a rate to fully address the under-recovery of fuel costs at CGPL,” said the letter, according to Business Standard.

CGPL has an outstanding loan of Rs 10,159 crore and lenders have stopped further disbursal due to non-viability of the project, he wrote. CGPL said it would like to operate the project as a contractor, provided the procurers buy all the power at higher tariffs.

“Tata Power shall continue to operate the plant under an O&M contract and provide all required support the project as a 49% stakeholder,” the letter added.

Earlier this week, Union Power Minister Piyush Goyal met banks and state government representatives this week to discuss power projects using imported coal, reported Business Standard. The meeting was attended by banks, the Power Finance Corporation, REC, the chief secretaries of Gujarat, Punjab, Haryana, and Rajasthan, and representatives of Tata Power, Adani Power, and Essar Power.

In February 2006, Tatas had won the bid for 4,000 MW Mundra project in Gujarat after quoting a price of Rs 2.26 for every unit of electricity generated.