 "Far from slowdown, massive spurt in power investments")
The private power industry seems to have played its cards well in securing assured coal supply citing investment drought in a meeting with Prime Minister Manmohan Singh last year. While 20-odd industry leaders complained of investment slowdown citing coal crunch then, data reveals that asset worth of power companies has been growing at over 20 per cent annually over the past three years.
Investment data of 27 listed power companies, sourced from Capitaline Database and compiled by Business Standard, shows that their combined worth of fixed assets (Gross Block & Work in Progress) increased from Rs 460,091 crore in 2010-11 to Rs 592,461 crore in 2011-12, a 29 per cent jump that hardly indicates a “slowdown”. Asset value had grown by 20 per cent in the previous year. Further, additional capital expenditure by these companies jumped 72 per cent to Rs 132,369 crore in 2011-12 as compared to 77,348 crore in 2010-11.
GMR, one of the biggest private sector power player, attributes this to the investment cycle. “Though we may see capacity additions during the initial years of 12th Plan owing to residual effect of huge investment cycle peak of 2008-09, this effect would subside and capacity additions would decline going forward as the fresh investment commitments have not kept pace,” a company spokesperson said.
Companies which registered maximum rise in asset worth in 2011-12 included Lanco Infratech (100 per cent jump to Rs 35,402 crore), Adani Power (48 per cent jump to Rs 43,423 crore), Tata Power (18 per cent jump to Rs 50,915 crore), Powergrid Corp (24 per cent to Rs 91,581 crore) and NTPC Ltd (16 per cent jump to Rs 139,280 crore) (see table). E-mail queries sent to NTPC Ltd, Reliance Power and GVK Power seeking comments remained unanswered.
The investment aggression of power companies continued this financial year too. A total of 195 power projects are currently under implementation in the central sector. Over Rs 624,383 crore are being invested in these projects. Power sector alone accounts for over 33 per cent – Rs 208,000 crore – of this ongoing capex, according to data sourced from Ministry of Statistics and Programme Implementation (MoSPI). Major projects commissioned during the current fiscal so far include the Rs 2,635 crore Koteshwar hydro project and Rs 1,842 crore Chamera project of NHPC Ltd, Rs 3,700 crore Barh transmission project of Powergrid and Rs 8,230 crore Sipat stage I project of NTPC Ltd.
Investment data of 27 listed power companies, sourced from Capitaline Database and compiled by Business Standard, shows that their combined worth of fixed assets (Gross Block & Work in Progress) increased from Rs 460,091 crore in 2010-11 to Rs 592,461 crore in 2011-12, a 29 per cent jump that hardly indicates a “slowdown”. Asset value had grown by 20 per cent in the previous year. Further, additional capital expenditure by these companies jumped 72 per cent to Rs 132,369 crore in 2011-12 as compared to 77,348 crore in 2010-11.
GMR, one of the biggest private sector power player, attributes this to the investment cycle. “Though we may see capacity additions during the initial years of 12th Plan owing to residual effect of huge investment cycle peak of 2008-09, this effect would subside and capacity additions would decline going forward as the fresh investment commitments have not kept pace,” a company spokesperson said.
Companies which registered maximum rise in asset worth in 2011-12 included Lanco Infratech (100 per cent jump to Rs 35,402 crore), Adani Power (48 per cent jump to Rs 43,423 crore), Tata Power (18 per cent jump to Rs 50,915 crore), Powergrid Corp (24 per cent to Rs 91,581 crore) and NTPC Ltd (16 per cent jump to Rs 139,280 crore) (see table). E-mail queries sent to NTPC Ltd, Reliance Power and GVK Power seeking comments remained unanswered.
The investment aggression of power companies continued this financial year too. A total of 195 power projects are currently under implementation in the central sector. Over Rs 624,383 crore are being invested in these projects. Power sector alone accounts for over 33 per cent – Rs 208,000 crore – of this ongoing capex, according to data sourced from Ministry of Statistics and Programme Implementation (MoSPI). Major projects commissioned during the current fiscal so far include the Rs 2,635 crore Koteshwar hydro project and Rs 1,842 crore Chamera project of NHPC Ltd, Rs 3,700 crore Barh transmission project of Powergrid and Rs 8,230 crore Sipat stage I project of NTPC Ltd.
Tata Power, the largest private power producer, invested Rs 1,800 crore in power projects in 2011-12 and Rs 570 crore during the first three quarters this year. The company has commissioned three units of 800 Mw each at its showcase Mundra UMPP beginning February 2012. Also, two units of 525 Mw each of the Maithon project were commissioned in September 2011 and July 2012. The fourth unit of Mundra UMPP is next to go on stream soon. “The government has taken action to address challenges in the sector. Still, there is an urgent need to address many issues including fuel shortage, faster reforms of the distribution sector and rationalization of electricity tariff,” Anil Sardana, Managing Director, Tata Power, told Business Standard.
Another private power major Lanco has invested over Rs 3,000 crore in setting up three projects totalling 4,000 Mw over the past three years. It plans to inject another Rs 1,900 crore to commission this capacity. However, this capex growth is currently facing short-term disruptions. "We have taken a strategic decision to slow down execution of this capacity for some time. There is no assured fuel supply from Coal India. CIL's assured supply will allow running the plant only at 68 per cent PLF while recovery of fixed charges requires 85 per cent PLF," Dheeraj Sood, Head, Investor Relations at Lanco told Business Standard.
The Hyderabad-based GMR Energy, has invested Rs 5,400 crore in ongoing projects between April and December this fiscal, about 10 per cent lower than the previous year but 18 per cent of the company’s total investment of Rs 30,000 crore in India so far. “Over the next couple of fiscal years, the cumulative capex commitment would be in the range of Rs 3,500 crore towards the completion of on-going projects and new hydro project which is likely to get into construction next year,” a GMR spokesperson told Business Standard.
While companies claim coal issues have worsened, addition of generation capacity grew from 9,585 Mw in 2009-10 to 12,160 Mw in 2010-11 and further 20,501 Mw in 2011-12. In fact, last fiscal’s capacity addition was highest in any single year. Private industry’s capacity addition too grew from 4,200 Mw in 2009-10 to 5,121 mw in 2010-11 and a mammoth 11,970 Mw in 2011-12.
The fact that Plant Load Factor (PLF) of power stations, particularly private sector-owned plants, exceeded the target during 2011-12 further undermines the extent of coal crisis. Private sector plants achieved a PLF of 76.1 against 75.6 targeted last fiscal.
Experts expressed surprise at the investment frenzy shown in the data but attributed it to the ever-rising demand for power in the country. “The issues raised over coal supply may be, to an extent, hyped. The recent increase in investment in the sector has occurred because companies have invested taking a long-term view of the gap in demand and supply of power,” Amir Pandurangi, Senior Director, Deloitte Touche Tohmatsu told Business Standard. He, however, added that the sector may be heading for an investment drought over the next 1-2 years if fuel issues are not sorted out soon.