Power Grid Corporation of India - Consistency in capitalization remains the key…

 

Power Grid Corporation of India is the country's central transmission utility and carries ~50% of the nation's generated electricity. The company has embarked upon an aggressive expansion plan over the 12th Five Year Plan (FY13-17) to augment India's power transmission and distribution infrastructure.

Power Grid over the last five years has managed to beat its guidance and is geared up to achieve its target set for 12th Plan. It recently increased its capex plans during the 12th Plan to ~INR1,100bn, higher than its earlier guidance of INR 1,000bn. The company has identified 27 transmission projects worth INR 483bn to be implemented in the near-term. With a secured business model earning 15.5% post tax return, we expect earnings to grow at CAGR of 17% over FY12-17e.

Capex and capitalisation for the 12th Plan

The company has revised its 12th Plan capex target to INR1,100bn from INR 1,000 bn earlier, of which INR 200 bn has been spent in FY13. This is due to an additional INR 100 bn on account of an increase in bidding-based projects, GoI contracts, green energy corridors, intra-state projects, and transnational interconnections. Yearly capex has been revised to INR221.5bn/224.5bn/225bn/225.5bn in FY14e/15e/16e/17e, respectively, as against an earlier INR200bn each year. To fund the increased capex, the company has successfully raised INR54bn, which will be deployed over the next two years.

Regulated business model with assured returns

Power Grid continues to earn a regulated RoE of 15.5% and incentives of 1.5% due to higher availability and income from consultancy and other segments. A regulatory order by the Central Energy Regulatory Commission in Nov-13 disallowed income from short-term open access, which lowered regulated RoE to 17.5% from 19%, impacting profitability by INR2bn. Book RoE for the company will increase to 14% in FY16 from 13% in FY14 due to a flat yearly capex of INR200bn and higher capitalisation in the years to come.

No further dilution required to fund capex for next five years

Power Grid has successfully concluded the follow-on public offer of 787m equity shares of INR10 each, comprising 17% of the existing paid-up capital, which comprises of: (a) Fresh issue of 601.8m shares (13% of existing paid-up capital); (b) Disinvestment of 185.2m equity shares (4% of existing paid-up capital). Post issue, the company is well capitalised to fund its capex requirements over the next five years and will not require to raise further equity.

Grid strengthening to help improve power sector volumes

Due to the grid collapse in Jul-12, thrust on grid security and strengthening schemes have taken precedence. Of the capex planned, INR180bn is for grid strengthening and INR90bn for ultra mega power projects. This will help in providing long- and medium-term open access to the consumers.

Valuations

At the current market price of INR99 per share, the stock trades at a FY15e P/E of 9.6x and P/B of 1.3x. We reiterate our Buy recommendation with a target price of NR124/share, (target P/BV multiple of 1.7x FY15e).

Source

Read More...

To fulfil its promise, Rajasthan government to buy electricity from private companies...

 

To fulfil its poll promise of continuous electricity supply to the domestic consumers and over six hours supply to agricultural sector across the state, the Vasundhara Raje government has decided to purchase electricity from private companies for the first three months to provide uninterrupted power supply to people.

Sources inform that the ruling party doesn’t want to take chances in the upcoming general elections and hence, has decided to ensure proper supply of electricity to farmers during the Rabi season. It has therefore ordered all three discoms - Ajmer, Jaipur and Jodhpur to purchase electricity from private companies.  A total of 1,050 MW of power will be purchased in total in first three months.

The purchase is only for a short term, as another unit of Chhabbra Power Plant is expected to start generating power by April. Also, the government is expecting power supply from Kawai Power Station in the coming months.

On various occasions, energy minister of Rajasthan, Gajendra Singh Khinwsar has stressed on continuous electricity supply in rural areas and ordered officials to ensure the same.

However, as ironic as this may sound, but the ‘necessary’ supply will affect the cash-strained discoms.

“I can’t tell you about the availability and the quantum of the electricity purchased right now. I will be able to tell about it on Monday when I resume my office. And, all the information will be known to all soon,” said Arjun Singh, director of power trading cell of Jaipur Discom.

To manage the daily balance between demand and supply of electricity across the state, power trading cell usually adopts the bidding route and purchases electricity from power exchange depending on the anticipated electricity demand.

Since the day it took charge, the BJP has been focusing on the availability of electricity in the state especially to the farmers which may prove to be politically sensitive. Notably, other parties, especially AAP had come to power in Delhi on the basic issue of electricity only.

Source

Read More...

Parali thermal plant of Mahagenco closes down one unit due to coal shortage...

 

Maharashtra State Power Generation Company Ltd (Mahagenco) has closed down the unit No 5 of the 1330 mega watt Parali thermal power station (TPS) due to shortage of coal. The other units of the thermal plant based in Beed district of Maharashtra, are not able to run with full capacity due to non-availability of coal.

Mahagenco has stated in a release today that the Parali TPS has coal availability enough for only one day.

"We are following up with the coal suppliers MEL, MECL and WCL about increasing the coal supply. Last year, the thermal plant had to be kept shut for six months due to shortage of water," stated the release.

Source

Read More...

Japanese firms interested in partnering Indian companies to develop technology solutions for Renewable Energy Sector...

 

A renewable energy delegation from Japan is now visiting India to explore opportunities for partnership with Indian companies in the renewable energy sector.

Smart grids, waste to energy and storage solutions clearly emerged as areas where both Japan and India could explore partnerships at the ‘Japan India Public Private Round Table on Renewable Energy’ organized by the Confederation of Indian Industry (CII) in partnership with the Ministry of New and Renewable Energy (MNRE) under the aegis of Japan-India Energy Dialogue in New Delhi.

Delivering the inaugural address at the roundtable, Dr Satish B Agnihotri, Secretary, Ministry of New and Renewable Energy, said, “Storage solutions is amongst the key renewable energy technologies that need to be evaluated. Within storage solutions, it is important to look at hybridization, given the intermittent nature of solar and wind power. Hybridization increases the combined capacity utilization factor thereby improving the financial viability. India also needs to leverage the Japanese experience in smart grid deployment and efficient appliances.”

Stressing on the importance of technology, H. E. Mr Takeshi Yagi, Ambassador of Japan, said, “Expansion of technology innovation is extremely important in the renewable energy field. With both Japan and India witnessing a sharp increase in energy imports, renewable energy is a key component of the energy mix. There is a need to harness the huge potential of renewable energy through the development of new technologies and their application to society. It is also important to utilize the private sector’s know how in the areas of waste to energy, storage batteries and smart grids.”

Highlighting some key areas that could be of interest for Indo-Japanese collaboration, Alok Srivastava, Joint Secretary, Ministry of New and Renewable Energy, said, “New areas of co-operation between India and Japan could be in developing cutting edge technologies. Another opportunity is in the area of financing at an affordable cost.”

Key Japanese companies accompanying the Ministry of Economy Trade and Industry (METI, Japan) include, Mitsui Engineering and Ship Building (Solar Power), NGK Insulators (storage solutions), Mitsubishi Heavy Industries (smart Grids), Hitachi Zosen Corporation (waste to energy).

Source

Read More...

Report on Coal Imports by India in 2013...

 

Based on preliminary data from major ports, imports of various types of coal and coke into India during 2013 have totalled 141.509 million tonnes.

While thermal coal import, estimated at 107.8 million tonnes, accounted for about 76%, coking coal import is estimated at about 30.7 million tonnes. The other products like met coke, pet coke and coke nut accounted for about 2%

Australia remained the top supplier of coking coal with about 84% share. For thermal coal Indonesia was the major supplier with about 75% share. For met coke, Chinese dominance at about 56% was somewhat diluted with supplies coming from 9 other nations.

The highest monthly imports took place in July 2013 at about 13.4 million tonnes with monthly average for 2013 at 11.79 million tonnes per month

Ports on Western Coast received about 69 million tonnes, followed by Eastern Coast at about 50 million tonnes and Southern Coast at 21 million tonnes. The highest imports occurred at Mundra 33.1 million tonnes, followed by Krishnapatnam at about 18.6 million tonnes, Ennore at 10.4 million tonnes, Paradip at 9.3 million tonnes, Haldia at 7.7 million tonnes, New Mangalore at 7.3 million tonnes, Mormugao at 7.3 million tonnes, Dahej at 6.9 million tonnes, Vizag at 6.4 million tonnes and Kandla at 5.2 million tonnes. The balance 14 ports accounted for 29.2 million tonnes

A total of about 2300 number of vessels were unloaded ie about 50 per week at various ports with an average cargo size of 60,000 tonnes per vessel

Source

Read More...

Power generation grows, but is it enough? Analysis

 

Electricity production in December grew 6.7% from a year ago, data from the Central Electricity Authority shows. Coming on the back of a 6.3% growth in November, it does look like the power supply has improved. For sure, the coal supply situation has improved and good rains, which have boosted hydel power production, have also helped.

However, that has to be weighed against anecdotal evidence of power shortages in the country. In HSBC’s latest Purchasing Managers’ Index survey, participants complained about “raw material shortages and power cuts.”

That’s because power demand in the country seems to be artificially suppressed. The “reported figures on power supply situation reflect distribution companies’ inability/unwillingness to buy enough power to meet the real demand and not ‘on the ground’ improvement in power availability for end users,” says a note from UBS Securities India Ltd.

Unless state electricity boards’s (SEB) financials improve, this situation is likely to persist. In the near term, the elections may provide some succour though as SEBs buy more due to political pressure.

Source

Read More...

Kerala, Tamil Nadu unable to buy power from National Grid...

 

India's southern states are unable to buy power from the rest of the country although a new grid has been put in place since January 1.

Kerala and Tamil Nadu have not been able to buy power from the exchanges over the past one month, a senior official of Indian Exchange said, adding that prices have risen substantially in Andhra Pradesh and Karnataka due to inadequate supply from the local plants.

"Although the national grid now connects the entire country, Kerala and Tamil Nadu have not been able to source any power because this new grid is wheeling only about 300-400 mw a day and power trading has not been allowed on the grid yet," the official said, requesting anonymity.

Kerala, Tamil Nadu unable to buy power from National Grid

While there is no generating station with excess power in these two states, Andhra Pradesh and Karnataka have been receiving some supply from the local plants, he said. However, this supply is not adequate.

As a result, power prices in these two states have risen sharply to 5 per unit from 3 per unit over the past one month, he added. At the same time, there are a number of thermal power stations with idle capacity in north and east India.These plants cannot be fired up as the new grid is not stable enough to supply excess power to the southern states from the rest of the country, officials said.

Until last month, the southern grid was a standalone power distribution system which could not draw adequate power from the rest of the country. Producers such as NTPC, on the other hand, were saddled with idle capacity because they could not route power from their plants due to lack of a transmission system linking southern India. Power prices have, therefore, remained high in the southern states, officials said, adding that the new grid is yet to change the scenario.

Source

Read More...

Manali Hydel project wall collapses during trial run...

 

The reservoir of a hydel project near here burst on Sunday morning during a trial run of filling it with water, causing panic in settlements downstream. The exercise was undertaken just a few days before the commissioning of the project at Aleo village.

A 4.8MW hydropower project, Aleo Manali Hydropower Pvt Ltd stage-II, being set up on Allain Nullah, is scheduled to start power generation by the end of this month. Sources said the project management had opened the inlet gates of the reservoir, which has capacity to store 12,000 cubic meter of water, on Saturday. A day later, around 10am, a huge chunk of the reservoir wall collapsed when it was filled to only 75% of its capacity. As the water breached embankment, levels in Allain stream and the Beas rose suddenly, causing panic among residents in Kullu and Bhuntar towns, some 50 kms from here.

An official of the project management said the reservoir was being filled on a trial basis, but a wall collapsed before it was filled to capacity. "We have suffered huge losses. The reasons for the incident are still unknown. About 95% work of the project has already been completed," he said.

According to Manali sub-divisional magistrate Vinay Dhiman, the project management had not informed them about filling up the reservoir on trial basis. "It could have proved fatal for many. We are looking into the matter and those found guilty will be liable for legal action," he said.

Vashisht panchayat pradhan Govardhan Thakur alleged that the project management had neither informed them of the filling of reservoir nor warned the public. Thakur Dass, pradhan of Prini village, located next to the project site, said the management should take extra care of the people and property in nearby villages.

Source

Read More...

Haryana nuclear project to be on stream in 5 years...

 

Prime Minister Manmohan Singh will lay the foundation stone on Monday for a nuclear power project near Gorakhpur village in Fatehbad district of Haryana.

The project will comprise two reactors of 700 MWe each. They are Pressurised Heavy Water Reactors (PHWRs) that will use natural uranium as fuel and heavy water as both coolant and moderator.

The Nuclear Power Corporation of India Limited (NPCIL) will build these reactors. This is the first time Haryana will have a nuclear project.

In the second stage, the NPCIL will build two more PHWRS of 700 MWe each at the Gorakhpur site.

The first pour of the concrete for the first two reactors will take place in June 2015 . As per present plans, the first unit will be commissioned 63 months from now and the second unit six months later. About 534 hectares for the entire project and 75 hectares for residential quarters for the NPCIL employees have been acquired around Gorakhpur.

Informed sources said the Cabinet has given “in-principle” approval for building the third and fourth PHWRS of 700 MWe each at the site.

The NPCIL is already building four PHWRS of 700 MWe each, two units each at Kakrapara in Gujarat and Rawatbhatta in Rajasthan. The units at Kakrapara are under advanced stage of construction and they will reach criticality in 2016.

The NPCIL will also build 700 MWe reactors that will use natural uranium as fuel at Chutka and Bhimpur in Madhya Pradesh, Mahi Banswara in Rajasthan and Kaiga in Karnataka.

The NPCIL had notched up a capacity factor of more than 80 per cent in its operating units across the country in both the financial years 2012-13 and 2013-2014, the sources said.

Source

Read More...

Bikram Coal Block allocated to Birla Corporation Ltd has been de-allocated...

 

The Ministry of Coal (MOC) has de-allocated Bikram Coal Block allocated to Birla Corporation Ltd vide its letter dated January 07, 2014 on the grounds that the coal block has not been developed as per the milestones prescribed in the allocation letter.

Though significant progress has been made in the development of the coal block the delays have been entirely due to delays/lapses in receipt of various clearances and approvals from the government authorities, which were beyond the control of the Company. Such facts have not been recognised by Inter Ministerial Group (IMG) constituted by the government to review the progress of development of allocated Coal Blocks in arriving at the decision to de-allocate the coal block.

Order regarding deduction of 50% of Bank Guarantee, which is linked to the milestones set for the development of the block, would be issued separately after receipt of calculation of amount from the office of Coal Controller.

The Company is in the process of taking appropriate legal recourse against the de-allocation of coal block and deduction of Bank Guarantee.

Shares of Birla Corporation Ltd was last trading in BSE at Rs.252.90, down by Rs.9.05 or 3.45%. The stock hit an intraday high of Rs.263.70 and intraday low of Rs.252.

The total traded quantity was 2695 shares as compared to 2 week average of 1798 shares.

Source

Read More...