NHPC generation to be lower in Q2; no decision on buyback

Despite the good monsoon, power generation in the second quarter will be slightly lower than the previous year, says ABL Srivastava, Director – Finance at National Hydroelectric Power Corporation, or NHPC. This is due to the Dhauliganga plant not being operational because of the recent floods in Uttarakhand and secondly, some power stations will generate less in Q2 since they witnessed better power generation in the second half of 2012, he says.

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On NHPC buyback issue, which has garnered so much interest, Srivastava told CNBC-TV18 the ministry of disinvestment and ministry of power have been working on offer-for-sale (OFS) and that also has not been finalised yet. As far as buyback goes, there is no decision in the company to go for it, he adds.
He says except in case of one state electricity boards (SEB), there is no concern as far as receivables are concerned and the position is better than the previous quarter and the last six months. Below is the verbatim transcript of ABL Srivastava's interview on CNBC-TV18 Q: Monsoons have been very strong this year and we have seen signs of it play in your Q1 results, how will generation of electricity pan out going forward for the rest of the year and for Q2 in particular?
A: As far as Q2 is concerned, unfortunately our generation is slightly lower than the previous year. There are two reasons. One is our Dhauliganga plant is not operational because of the recent floods in Uttarakhand. That has affected.
Secondly in some of our power stations, the generation was much better in the second half of the previous year and in Q2 it is lower than that.
So from the generation side, our Q2 is likely to be less than the last year. Q: There is so much interest on the NHPC buyback. Can you give us any update on the timeline of the buyback because there has been a lot of flip-flop between ministries on this?
A: As told earlier also, Department of the Public Enterprises has issued a circular last year asking all public sectors to amend their articles to enable buyback. Many companies did it along with AGM of the last year and we have done in the current year. That is the only activity that has happened as far as the buyback is concerned. We have not taken any decision about the buyback on the issue. The ministry of disinvestment and the ministry of power have been working on offer-for-sale (OFS) and that also has not been finalised as of now. So on buyback I can only say that as of now there is no decision in the company. Q: If I have this right, the OFS option has not been dropped completely as yet, it is still an option which the government can explore and if you could tell us a little bit about maybe the timeline then can we expect the buyback maybe by the end of 2013 or can this even extend into 2014 as well?
A: The point is once we decide on the buyback, we will inform the stock exchange as per regulations. So any decision on the buyback - before being placed before the board will first be placed or informed to the stock exchanges as per the guidelines. Q: The other point that I wanted to touch upon is receivables, because your receivables position has been under a lot of stress, almost 70 percent of your company’s sales come from distribution companies (DISCOMs), which are financially stressed such as J&K, Haryana, Uttar Pradesh (UP) etc. with the mild effects of maybe even financial restructuring programme or the FRP already showing, has there been any improvement in your receivable situation at all?
A: Our receivable position has improved. It is much better than the previous six months. As of now, the defaulting state electricity boards (SEBs) are less except in case of one SEB, where there are major defaults and we are in discussion, in most of the beneficiaries and SEBs, our dues are as per line and agreements which we have entered. It is true that irrespective of some of the SEBs like UP and Delhi, we had entered into an arrangement for making the installments but those installments as of now are coming in time. Therefore, except in case of one SEB, there is no concern as far as the receivables are concerned and the position is better than the previous quarter and the last six months.