will government's massive surge in investment ... - Myiris.com

Apr-Jun 2013 Earnings Preview
Tariff hikes continue, TN gets bonds under FRP
A slew of states resorted to tariff hike partially to meet the working capital needs and as a
compulsion for availing restructuring of loans under FRP. Tariff hike came into effect in June
for UP, where the domestic users would now pay 35-45%. For AP too, tariff hike was to the
tune of 15%, Bihar-7%, MP-2%, Punjab-9%, Rajasthan-15%, Haryana-13% and HP-16%.
Meanwhile, restructuring of Discoms kick-started, with Tamil Nadu getting bonds of
Rs61bn.
Depreciating Rupee should hurt power players
With rupee depreciating almost 7% in the last month and nearly 15% in the last three months,
major power players who have taken USD-denominated loans, will take a hit on imported coal
prices and interest payments on loans. Reliance Power’s total debt is about US$2.8bn, Lanco is
about US$1.4bn, GMR is about US$0.2bn and Adani Power is about US$4bn.
Adani Power and Tata Power gets CERC nod for compensation tariff, still awaiting
final outcome
CERC acknowledged the fact that projects are suffering from losses arising out of
unforeseen events which will render it commercially unviable, if not given a suitable
hike in tariff. Thus, it has decided and directed the parties to the Power Purchase
Agreement (PPA) to work out an amicable solution to compensate for the losses
arising out of the difference between the prices before and after the Indonesian
Regulations were passed (which made erstwhile contracted lower coal prices to be
kept aligned to high spot prices).
Again, the tariff determination process will take into consideration points like profits
from overseas mines, sharing revenue due to sale of power beyond the target
availability etc.
However, two months have passed but the panel has not come up with a formula to
determine the returns.
McCloskey Coal price movement
(US$ / Tonne)
130
120
110
100
90
80
70
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Source: Bloomberg, PL Research
Indonesia Coal price movement
(US$ / Tonne)
125
120
115
110
105
100
95
90
85
80
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Source: Bloomberg, PL Research
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