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According to people familiar with the matter, Tata Steel has begun to cancel the power purchase agreement (PPA) between Pushau Steel and Pushau Energy to reduce costs
.
Prosor Steel is a business
acquired by Tata Steel through bankruptcy settlement proceedings.
The abolition of the agreement to purchase electricity from Pusau Energy would save Tata Steel, India's second-largest steel producer, Rs 3-400 crore per annum
, the person said.
Tata Group also earlier cancelled an office lease agreement
between Prosau Steel and its former promoter.
The cancellation of the PPA is part of
the Rs 35,000 crore resolution approved by the National Companies Tribunal on May 15, 2018.
Puseau Energy resolution professionals had opposed the cancellation of the agreement and sought to list the company as an operating creditor
of Puseo Steel.
"We sought reasons by sending a notice to Pushau Energy why the PPA agreement between Pushau Energy and Pushau Steel cannot be terminated," a person familiar with the matter said
.
Prosau Energy is a subsidiary of Prosau Steel and is in bankruptcy proceedings
.
Tata Steel's decision to cancel the PPA is because Pushau Steel can buy power from the grid at a lower cost because it must continue to pay a certain amount to the grid even if it buys electricity from Pushau Energy, and the move to cancel the PPA could bring current or future Pushao Energy management to the negotiating table to work out terms
that are more favorable to Pushau Steel.
According to people familiar with the matter, Tata Steel has begun to cancel the power purchase agreement (PPA) between Pushau Steel and Pushau Energy to reduce costs
.
Prosor Steel is a business
acquired by Tata Steel through bankruptcy settlement proceedings.
The abolition of the agreement to purchase electricity from Pusau Energy would save Tata Steel, India's second-largest steel producer, Rs 3-400 crore per annum
, the person said.
Tata Group also earlier cancelled an office lease agreement
between Prosau Steel and its former promoter.
The cancellation of the PPA is part of
the Rs 35,000 crore resolution approved by the National Companies Tribunal on May 15, 2018.
Puseau Energy resolution professionals had opposed the cancellation of the agreement and sought to list the company as an operating creditor
of Puseo Steel.
"We sought reasons by sending a notice to Pushau Energy why the PPA agreement between Pushau Energy and Pushau Steel cannot be terminated," a person familiar with the matter said
.
Prosau Energy is a subsidiary of Prosau Steel and is in bankruptcy proceedings
.
Tata Steel's decision to cancel the PPA is because Pushau Steel can buy power from the grid at a lower cost because it must continue to pay a certain amount to the grid even if it buys electricity from Pushau Energy, and the move to cancel the PPA could bring current or future Pushao Energy management to the negotiating table to work out terms
that are more favorable to Pushau Steel.
