The joint venture for power distribution in Odisha is likely to commence operations soon, Tata Power said in a statement while announcing the company’s financial performance for FY20.
It may be recalled that in late December 2019, Tata Power was awarded the Letter of Intent (LoI) by Odisha Electricity Regulatory Commission (OERC) for the distribution and supply of electricity in Odisha’s five circles that constitute the Central Electricity Supply of Odisha (CESU).
The five circles which constitute the CESU are the areas of Bhubaneswar (Electrical Circle I and II), Cuttack, Paradip, and Dhenkanal. Initially, the license for the supply of electricity is being offered for 25 years. Currently, CESU is spread over an area of 30,000 square km, covering a population of 14 million with a consumer base of 2.5 million, while the average power demand of CESU is approximately 1.3 GW.
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Renewable energy & capex: During FY20, the statement observed, Tata Power added 318 mw of renewable energy capacity, taking the total green capacity to 2,637 mw. Meanwhile, despite incurring capital expenditure of over Rs.2,226 crore in FY20, net debt reduced by Rs.1,300 crore with further improvement expected from sale of non-core assets and other initiatives. Debt Equity level is down to 2.0 and is expected to go down further.
Management View: Commenting on the company’s performance, Praveer Sinha, CEO & MD, Tata Power, said, “All our businesses and operations have performed exceptionally well. Our robust performance is supported by excellent performance of renewable business & capacity addition.
India is in a war-like situation in its fight against COVID-19. Taking stock of the situation, we mobilised our business continuity plan to provide uninterrupted power supply to ensure that citizens continue to comfortably work from home while medical staff, law enforcement agencies and other essential services continue to serve the nation.
Globally, India is following one of the most stringent lockdowns with all economic activities coming to a halt for nearly two months now. We are witnessing a drop in demand by almost 30% compared to 2019 in our distribution businesses. Though this impacts our topline, almost all Tata Power’s assets are under either regulated businesses or through fixed price long term contracts on take or pay basis. Thus in our business the return profile covers our fixed costs and provides us assured returns.”
The Government of India has already announced a liquidity package to Discoms through PFC and REC and the generating companies will be the biggest beneficiary of this liquidity package, as it is expected to clear the old overdues of GENCOs by DISCOMs This will improve the liquidity conditions for Gencos, which have been impacted by the huge receivables.
Another welcome move by the Government was to clarify the must-run status of renewable energy projects and payments to renewable energy generators to be made on regular basis by the discoms.”
