Power companies lose Rs 550 cr in 2 days

The massive electricity grid failure earlier this week, that left a majority of India in darkness, has impacted the volumes of power generation companies. The worst power black-out in the world hit their revenues by an estimated Rs 550 crore in two days. The companies affected by the grid collapse were state-owned power generator NTPC Ltd, Nuclear Power Corporation of India Ltd (NPCIL) and Neyveli Lignite Corporation (NLC) in the central sector. Among the states, power utilities of Rajasthan, Haryana and Uttar Pradesh had to shut capacity down.

About 35,000 Megawatt (Mw) of capacity had to be shut as the northern grid, that caters to nine states including the national capital, collapsed under the weight of excessive load on Monday. Even before the exact cause of the incident could be understood, two additional grids – eastern and north-eastern, tripped along with the northern grid on Tuesday. The generation loss on the second day was 55,000 Mw. Taken together, the generation loss of 90,000 Mw on the two days was close half of India’s installed power capacity of 200,000 Mw.

While some plants remained shut for a few hours or less than a day, others remained shut for more than a day before revival efforts kicked in. Power companies refused to divulge details of revenue loss from the incident but a back of the book calculation puts the figure at around Rs 550 crore, assuming an average Plant Load Factor (PLF) of 85 per cent, the total revenue loss to the companies is estimated to be Rs 550 crore. The calculation is based on a conservative estimate of sale price at Rs 3 per unit.

NTPC was among the worst-hit, with six of its main plants brought down by grid failure. While the company did not share revenue loss details, based on the assumptions stated above, the impact on profit is expected to be around Rs 42.6 crore. “Around 7,000 Mw (a fifth of NTPC’s capacity) went down for some hours. The capacity started coming in within hours of the grid rectification,” a senior official from NTPC Ltd told Business Standard.

Asked to comment on the loss figure, the official said, “Our profit and loss is based on fixed cost and not the entire Rs 3 per unit sale price, which has 70 per cent of fuel cost. Also, fixed cost is much less in most of our old stations. The average price of Rs 3 per unit includes new stations.” NTPC, which generates 220 billion units of electricity, recorded a marginal 1.3 per cent increase in net profit last financial year (2011-12), at the back of a 9.4 per cent rise in total income at Rs 64,832 crore.

Among the NTPC-owned plants that became a victim of the grid collapse were the 2,500-Mw Rihand thermal power station, the 2,000-Mw Singrauli plant, the 1,800-Mw Dadri plant, the 1,050-Mw Unchahar power station and the 705-Mw Badarpur power plant. The Rajasthan Atomic Power Station of NPCIL was also among the affected plants.

Among the states, Panipat thermal power station in Haryana, Anpara and Obra plants in UP and Giral, Rajwest and Surajgarh power stations in Rajasthan were the worst affected.

WHAT AILS INDIA'S POWER SECTOR
Facts about generation, transmission and distribution of power

GENERATION

• India had 2,05,340 Mw of installed power capacity at the end of June 2012. Electricity generation for finanacial year 2011-12 rose 8.1%, but the peak hour shortfall was 10.6%
   
• Thermal power — coal, natural gas and diesel — accounts for 80% of the generation. Coal use accounts for two-thirds.
   
• There’s a shortage of domestic coal, as output at state-run Coal India has stagnated due to delayed environmental clearances, land acquisition troubles and little investment in advanced technologies
   
• Many power companies are forced to source more expensive coal imports
   
• In June, coal-based plants ran at 72% capacity, due to fuel shortages and transmission constraints
   
• Shortage of domestic natural gas supplies and a weak appetite for costly imports has meant most of the natural gas-fired power plants run at half the capacity
   
• Government data shows there is an average delay of 15 months in construction of new power plants
   
• India plans to add 88,000 Mw of generation capacity in the five years from 2012-2017. The country added about 55,000 Mw in the previous five-year period to March 2012

TRANSMISSION AND DISTRIBUTION

• Bulk power is transferred at a high voltage of 132KV and above through five regional transmission grids
   
• Power Grid Corporation of India, which oversees the transmission of electricity between states, plans to invest $3.6 billion in 2012-13, about 11%more than a year ago, to expand capacity.
   
• Average electricity demand has risen to 75-80 terawatt hours (TWh) per year from 50 TWh per year five years ago, according to PwC India. Rising industrial consumption and higher use of electric consumer goods has put pressure on the grid
   
• Distribution companies, mostly state-owned, are saddled with about $35 billion in debt
   
• Rates haven't risen enough for years to cover costs for subsidies, nor has electricity theft been checked, forcing electricity distributors to face losses as high as 40% in some states, while the national average is 27%
   
• The five states posting the greatest cash losses are Rajasthan, Tamil Nadu, Uttar Pradesh, Madhya Pradesh, and Andhra Pradesh

Source: Reuters

Experts said the financial impact of the grid collapse on generating companies may not be a major concern. “An overall impact of Rs 550 crore for the companies is not huge, considering their huge turnover. But the impact on consumers, especially the small-scale industries, is more important in this case,” said V Srinivasan, Research Analyst with Mumbai-based Angel Broking.