Last checked at 
By Matthias Williams
NEW DELHI, May 28 (Reuters) - Indian utility Tata Power CoLtd will hold off on major investments until itclarifies the fate of a regulatory decision to raise tariffs, acompany executive said on Tuesday.
India's federal electricity regulator allowed Tata Power, aunit of the Tata conglomerate, to raise tariffs for powergenerated at its Mundra plant in the state of Gujarat.
The company, however, must first agree on the increase withofficials from the states it supplies electricity to. A similardecision that allowed rival utility Adani Power Ltd toraise tariffs is also being challenged in court by localofficials keen to avoid a public backlash in an election year.
"Let me put it this way: the financial pressure on usarising out of the Mundra situation is enormous at this point intime," S. Ramakrishnan, executive director for finance, toldReuters in an interview.
"We will be very, very cautious and selective in our growthoptions," he said. "If one is talking of any large acquisitionwhich demands an immediate outlay of large funds we'lldefinitely not look at it."
Regulatory uncertainty, ranging from a tax dispute betweenthe government and Vodafone Group Plc to a lack ofclarity on rules allowing foreign supermarkets to set up inIndia, has stifled investment in Asia's third-largest economy.
India has the world's fifth-largest coal reserves butdomestic supplies are patchy as mining projects are mired in redtape and corruption, increasing the reliance on imports.
Tata Power imports coal from Indonesia and has also beenscouting for opportunities to buy coal assets overseas,including in the United States and Africa, Ramakrishnan said.
"While we are looking at them, I wouldn't say we areanywhere close, because there are challenges in terms of longterm competitiveness and availability of infrastructure tofacilitate the export of coal," he said.
Tata Power, which has an installed capacity of 8521 MW, aimsto generate 26,000 MW by 2020. With fuel supply constraints andland acquisition stalling new projects at home, the company haslooked abroad for new opportunities.
It recently signed an agreement to develop two hydroprojects in Georgia and has a joint venture in South Africa. Thecompany is also looking at developing projects in Myanmar,Vietnam, the United Arab Emirates and Saudi Arabia.
"Very often there is more clarity in some of thejurisdictions on policy matters pertaining to the sector,"Ramakrishnan added.
Tata Power's shares are valued at $3.9 billion. The companyposted a surprise consolidated net loss in its October-Decemberquarter, hurt by higher finance and depreciation costs. Itsfourth quarter results are due on Thursday.
