APGenco has taken the 100 per cent debt route to fund its new projects. The state power utility is unable to raise the required equity even though Power Finance Corporation and other financial institutions have pledged full support owing to its default-free track record.
The genco has achieved financial closure for its proposed 3,250 Megawatt projects, to come up over the next three years, at an investment of Rs 17,856 crore. The third largest power producer in the country after NTPC and MahaGenco, APGenco accounts for 56 per cent of the total installed capacity and 46 per cent of the total power supplied in the state.
Despite funding the projects through the 100 per cent debt route, APGenco enjoys entitlement of 20 per cent ‘notional equity’ with a 15.9 per cent rate of return on the same while the interest on borrowings is at 11 per cent, according to D Prabhakar Rao, joint managing director, APGenco.
The genco management has requested the state government to provide Rs 750 crore equity support to fund some of the projects, but is yet to receive a reply. It has cash reserves of Rs 1,050 crore to partly meet the equity requirement of the projects, which according to Rao, would require a capital expenditure of Rs 2,600 crore for the year 2011-12. It spent Rs 2,200 crore on new projects last year, discharging power bonds worth Rs 528 crore, issued 6-7 years ago, in the same period.
Net profit up 7.6%
Disclosing the financial results for the year 2010-11, APGenco managing director K Vijayanand said the company recorded a net profit of Rs 310 crore, an increase of 7.61 per cent over Rs 289 crore in the previous financial year. It achieved 17 per cent increase in energy sales at 34,597 million units (mu) as compared with 29,583 mu in the previous year. Turnover was up 29.42 per cent to Rs 8,526 crore in FY11 from Rs 6,588 crore. Increased costs of generation was one of the reasons for the growth in volumes, which did not fully reflecting on its bottomline.
Among the new projects, APGenco is developing a 2x800-Mw super critical thermal power project at Nellore besides a gas power station with 700 Mw in Stage 1 and a 2x700 Mw in Stage 2 in joint venture with discoms by forming a special purpose vehicle, Vijayanand said.
In talks with NPCIL
It is also in talks with the Nuclear Power Corporation (NPCIL) to develop a joint venture nuclear power project in the state. “So far, the issue is only at the discussion stage,” he told the media. It is also proposing to develop a solar power plant on a pilot basis at the premises of one of its existing power plants to expand the same to other locations. This is aimed at increasing the green footprint alongside coal-fired projects.
APGenco currently has projects with a total installed capacity of 8,385 Mw of which, close to 5,000 Mw is under coal-fired power stations while the remaining is hydel. It expects to cross the 10,000 Mw capacity mark in the next two-three years.
The company envisages to develop projects worth 17,292 Mw at an investment of Rs 98,000 crore in the next 15 -20 years. Of these, 8 projects with 3,250 Mw are under execution while six with a capacity of 7,242 Mw with an investment Rs 36,012 crore are under development. Another five, projects of 6,800 Mw with an estimated investment of Rs 44,538 crore are under investigation, according to the company.
