National Thermal Power Corporation (NTPC), the largest domestic power generator, seems to be planning to buy distressed power projects in its quest of capacity growth.
According to the company, it is interested in acquiring distressed power assets provided the valuations are attractive and examination of the equipment used in power plant is allowed. Company will go ahead with acquisition of the projects if components of Bharat Heavy Electricals Limited (BHEL) are used however if the equipment for China are used then the company will be very precautious.
According to the officials of the company, it will use the surplus cash of Rs 18,738 Crores available with it shall be used for funding acquisitions.
Company has further planned capital expenditure of Rs 20,200 crore for the financial year 2013-14 and is confident of executing it despite challenges related to land acquisition and environment clearances. The power utility added 4,170 mw in 2012-13, its highest ever capacity addition. As of July 31, total installed power generation capacity was 41,184 mw, while 20,064 mw of capacity was under construction, the company said.
According to the company, highly leveraged infrastructure developers are finding it increasingly difficult to finance the equity required for the projects and raise debt from banks. Power projects in particular are also suffering due to unavailability of fuel and the poor financial health of the key client-the state power distribution companies. Several power projects, owned by independent power producers as well as diversified infrastructure companies, are on the block as developers want to free their equity investment but concerns over the sector and mismatch in valuation expectation.
Many large power developers such as JSW Energy and Reliance Power Ltd have recently indicated their desires to acquired distressed assets as such strategy would help companies to add capacity at a lower cost then the new projects.
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