From gas to tariff, Lanco’s litany of woes drags on

Lanco Infratech continues to be buffeted by lack of feedstock for its gas-based power plants and tariff issues at thermal assets.
Its Kondapalli power project in Andhra Pradesh has been
seeing low plant load factor (PLF). “The reduction in gas supplies has resulted in 69% PLF at Kondapalli. It was about 80%  at the beginning of the year and has gradually come down due to insufficient gas,” T Adi Babu, Lanco’s chief financial officer, said.

Of the 4,367 mw power capacity available with the company, about 1,334 mw is gas based, while it has 33 mw hydro and wind-based projects. The rest is thermal.

“But the sale price of power from Kondapalli is high and even at a PLF of 50%, we will be able to compensate for the losses. However, we are waiting for the gas issue to be resolved by the government at the earliest,” he said.

The company is also facing tariff issues at its unit in Amarkantak, where a 300 mw unit produces power to cater to the needs of Haryana and Chhattisgarh.

About 65% of generation is supplied to Haryana and the balance goes to Chhattisgarh. “We are awaiting the determination of tariff by the Haryana Electricity Regulatory Commission. It would take another three to four months for the process to be over. Currently, we are supplying power to Chhattisgarh at regulatory tariff,” he said.

The recently commissioned Anpara power plant is also yet to overcome teething problems and the PLF has remained at about 50%. “Even for the next quarter, PLF at Anpara will remain low. From April 2012 onwards, we hope to see some improvement,” Babu said.

At its 600 mw Udupi power plant, PLF is a low 47%. There is also a tariff issue and the company has filed a tariff petition with the Central Electricity Regulatory Commission. For the second unit of another 600 mw, the company is awaiting the completion of a transmission line to evacuate power.

“All the clearances for the transmission line are in place and we hope to see the line completed in the first quarter of next year,” he said.

For the third quarter ended December 2011, the company reported revenues of Rs3,053.7 crore and an adjusted profit of Rs279.8 crore. Lanco expects the margins to remain at about 14-15% for the current fiscal.

“From the first quarter of the next financial year, we are going to see significant growth in capacities and revenues primarily due to the availability of projects such as Udupi, Budhil (700 mw), Kondapalli III (732 mw, subject to availability of gas) and two road projects — Hoskote and Devihalli — with a length of about 163 kms,” he explained.