New Delhi: Hindustan Power Pvt. Ltd may go public in 2017 to raise a part of the capital required to set up a 1,320 MW thermal power plant in the next four years, said a top executive of the company, as it expects electricity demand to pick up due to a likely revival in the fortunes of state power distribution companies.
The company has 600 MW of solar capacity and on Thursday commissioned a 1,200 MW thermal power plant at Anuppur in Madhya Pradesh. The additional thermal capacity will be added at the same site in Madhya Pradesh.
“Depending on the incremental capital requirement, we may look at an initial public offer (IPO) some time in 2017,” company chairman Ratul Puri said, adding that the company has a low level of debt financing.
The company has a robust cash flow that can meet part of the Rs.9,000-crore investment required for expansion, Puri told reporters.
The existing 1,200 MW capacity was set up with an investment of Rs.8,000 crore. The facility is connected to the National Grid. The company is hoping that a normal monsoon, a pick-up in industrial activity and the turnaround of state power distribution companies will increase electricity demand and help generation companies.
Hindustan Power has signed deals with the Madhya Pradesh and Uttar Pradesh governments for supplying power.
Kalpana Jain, senior director, Deloitte in India, said the power sector’s problems include distressed financial health of state distribution companies, under-procurement of power by states, inconsistent fuel supply and operational inefficiencies.
“The revival of power distribution companies is key to the overall power sector’s growth. Once the financial position of the suppliers improves, higher offtake of power can be expected which will also address allied problems in the sector,” said Jain.
Under the central government’s Ujwal Discom Assurance Yojana (UDAY), a revival scheme for power distributors approved by the cabinet on 5 November, 2015, eight states have so far taken over Rs.1 trillion of distributors’ loan liabilities, bringing down the accumulated debt of power distribution companies to Rs.3.3 trillion.
“UDAY will certainly improve the health of state power distributors and is a better structured scheme than the previous ones in 2002 and 2012,” said Ashok Haldia, managing director and chief executive officer of PTC India Financial Services, an arm of Power Trading Corp. of India Ltd.
Puri of Hindustan Power said the company has no immediate plans for bidding for any new solar power capacity as the tariffs at which projects are being auctioned are not attractive. “We have actually stepped out of solar biddings. We think the tariff (quoted in recent biddings) is too aggressive. The rational rate of tariff for solar tariff is Rs.5-5.5 per unit,” said Puri.
On Wednesday, six companies won bids to set up solar power projects of 500 megawatts (MW) capacity at a solar park in Karnataka, quoting tariffs in the range of Rs.4.78-4.80 per unit.
