Adani Power aims to generate 13200MW by Mar 14
Adani Power , Part of Adani Group is pursuing a power generation capacity of 13,200 megawatts (MW) and hopes about 6,600 MW of power would be operational by March 2012 and the balance 6,600 MW by March 2014, Director Ameet Desai told CNBC-TV18 in an interview.
Desai said weighted power realisation for the last quarter stood at Rs 3.86 per unit. “The merchant power tariffs stand above Rs 5 per unit while most of our power purchase agreements (PPAs) are in the range of Rs 3 per unit,” Desai said.
Adani Power is in the process of cancelling a 1,000 MW PPA with the Gujarat government, Desai said. “The case is sub-judice and we hope it will be resolved in the next few weeks.”
Here is a verbatim transcript of the exclusive interview with Director, Adani Power on CNBC-TV18. Also watch the accompanying video.
Q: There has been some talk that you have cancelled your 1000 MW power purchase agreement (PPA) with the Gujarat government. Is that true and why would that have happened?
A: That matter is before the regulator. The matter is in a way sub-judice and therefore I don’t think I will be able to offer much comment on that at this stage. But on the whole we are currently pursuing about 13,200 MW of generation capacity. The latest project to get added to our kitty is Madhya Pradesh project at Chhindwara. Compared to what we said when we were on the road for IPO that we are doing 6,600 MW and another 3,000 is on the drawing board, the current situation is that we are implementing projects of 13,200 MW.
Q: But the fact that there is arbitration involved out there seems to indicate that there is some kind of strife between the two parties on the Gujarat project?
A: The matter needs certain items to be resolved. When two parties need to resolve the best way as per the agreement is to go to the regulator and seek the counsel from the regulator, which is what both sides have chosen to do. You would appreciate that when the matter is before the regulator, it would best for us not really comment upon it in the public domain.
Q: We understand that but since it has been reported, I am sure your investors are concerned; it’s a very large size deal for you. Against the details of this deal did you agree to pay any termination cost in case this deal had to fall apart for any reason?
A: I will answer this in two parts; one is we have been obviously communicating with investors regularly and as of now if we leave even this particular PPA aside, we have PPAs including letter of intent (LoI) in Maharashtra with which is about 6,100 MW. So out of 13,000 MW that we are putting in this is nearly 50%.
To answer the part 2 of your question, any termination of contract leads to a certain payment towards the obligation and that also would get decided once the arbitrator or regulators gives the final verdict which we hope should get resolved in matter of some weeks from now.
Q: Do you have any more PPA agreements though with the Gujarat Government and does this impact those in any way?
A: No, each contract stands on its own legs and we do have another 1000 MW PPA with Gujarat Urja Vikas Nigam Ltd (GUVNL) which is the Gujarat State Utility and we do have reasons to believe that there is no impact on the other PPA either with Gujarat Utility or any other utility for that matter.
Q; What average price are you selling power at now because your last quarters results seem to indicate that realizations are closer to Rs 3.5 per unit compared to Rs 5 per unit plus, which we thought was generally the merchant tariff?
A: We have been supplying combination under long-term and medium-term power. Our last quarter’s weighted average realization was Rs 3.86 per unit and we continue to do a combination of long-term and short-term and medium-term as of now. Merchant power tariff certainly remains upwards of Rs 5 per unit as you said.
Q: But the implication seems to be that the long-term PPA did not kick in – you had to sell most of it at short-term, which is why its as low as Rs 3.5 per unit while ruling rates are higher between Rs 5.5-6 per unit?
A: We are able to sell a good quantum of our generation, about 35-40% on medium-term and merchant-term rates and therefore we realized this Rs 3.86 per unit it in last quarter. Should that not be the case, most PPAs that we have are in the range of Rs 3 per unit. So the fact that our average realization is at Rs 3.86 per unit clearly confirms there is combination of both merchant power and the long-term supply.
Q: Could you give us calendar of execution for this 13,200 MW that you spoke to us about because earlier you had spoken about 6,600 plus 3,300 MW around the time of IPO, for this additional capacity that you are talking about what is the roadmap?
A: The 6,600 MW which we had committed at the time of the IPO will be fully up and running by March 12. We are now seeing each of the turbines, which will get into operation s as per the schedule. The balance 6,600 MW, which we have not added that should get done between March 13 and March 14 because in all these projects– if we were at Tiroda at 1980 MW when we were for IPO, we have added there 1320 MW and so the added 1320 MW is no longer a Greenfield expansion– it’s a Brownfield expansion.
Similarly we have got moving with the Kawai project in Rajasthan which is 1320 MW where land, water, in terms of reference clearances is already there and the project will get executed in 42 months time. Similarly in Chinndwara as per the LoI we would put up the first turbine up and running in 42 months.
So all in all, the entire 13,200 MW is scheduled to be up and running by March 14.
Q: We understand you have been conducting road shows regarding your QIP- how soon will you look to tap the market to raise that money and will it be the Rs 1,500 crore as a sum you will raise in one go?
A: We have not been conducting road shows but we have very intense communication programmes with investors which we keep doing all across in India and aboard. We have been meeting investors to explain to them our business model of Adani Enterprises, the parent company of Adani Power and there the rights issue application has already been filed with regulator.
And once that is clear we expect to announce the Rights issue for Rs 1,500 crore. Once that is over there is an enabling resolution with Adani Enterprises to do a QIP up to Rs, 4000 crore. The timing and final decisions with that regard will only be taken after the Rights issue.
Q: Do you think both of them will be concluded during this calendar year 2010?
A: Certainly, that is the target and that is what we look forward to.
Source : Money Control
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