Hope new capacities help revenues jump in FY14: NHPC

NHPC has recently undergone pressure due to slippage in their capacity addition plans. However, chairman and managing director ABL Srivastava hopes revenues will jump in FY14 once all the full impact of all the commissioned projects comes on stream.

For FY12, Srivastava told CNBC-TV18 that they are planning capacity expansion of 10%. “We generated energy of 18,600 million units roughly last year and the current year’s plan is 20,500 million units,” he said. For funding their projects, NHPC plans to raise Rs 2600 crore from the market and another Rs 3000 crore from various other sources. Below is an edited transcript of his interview with Latha Venkatesh and Reema Tendulkar. Also watch the accompanying video. Q: One of the constant worries of investors who own your stocks is that you are falling behind in terms of getting your target power capacities in, basically execution problem. Can you tell us what is leading to these delays? A: I agree that there have been slippages in the capacity addition plan which we had targeted for the last year and some of the projects have slipped for the current year. We will have to examine and tell project wise because for example Chutak is concerned we have made the two units ready out of the four unit. Out of the Chutak’s four units, two units are ready and  two are expected to be ready in the couple of months. Uri also was on the verge of the commissioning, but at the fag end agitations have started from locals due to which we were forced to close the activities. Even in Chamera there is some sort of delay. We have been able to spin those all the three units and we are hopeful that with the testing already on we should be able to commission this project very shortly. Q: That’s exactly what I was coming to. Can you give us an idea of what kind of capacity additions will happen or go on stream in FY13 and how in FY14? A: As far as current year is concerned, we are targeting to complete six projects fully and a unit from Chutak, which means seven projects to be commissioned in the current financial year. That is our target for a capacity of roughly 1,350 megawatts. The seven projects are Chutak, Uri, Chamera-III, TLDP-IV, Parbati-III, Nimoo and TLDP-III. These are the seven projects in which we are concentrating to commission in FY12-13 only. As far as FY13-14 is concerned, it is a blank as of now. If unfortunately any projects slip then that maybe going there. But our target is to complete these projects in the current financial year only. Q: Because of this time overrun which you are talking about, is there a possibility of a cost overrun in any of your projects and will the regulator allow any of these cost overruns? A: Definitely delay in project has a cost; any delay cannot be without cost. For example, there is increase in interest during construction period, there is increase in overhead expenses, there is increase in the price variation for the periods which are to be done. Definitely any delay has a cost. As of now we have been able to convince the regulators about the delays because they are not attributable to NHPC. For the future we have to be optimistic. Q: Since you have a stream of projects, you will have some visibility about the amount of capacity that will come on stream. Can you therefore give us an idea of how your revenues will grow in FY13, FY14 and FY15? A: As a listed company you will agree that we can’t give the projected figures of the financials. But as far as 2012-2013 is concerned, we can say that last year we generated energy of 18,600 million units roughly and the current year’s plan is 20,500 million units. So definitely roughly 10% generation is targeted for addition. Q: So you are saying that your big jump in earnings will come in FY14 because all plants will be on stream in FY13? A: We hope so. Once all these projects are commissioned full impact of these commissioned projects will be available in the next year only. Q: What about your fund raising plans? A: You know that Central Electricity Regulatory Commission (CERC) guidelines provide for 70-30 debt component. Based on that itself we are going for a fund raising. In 2011-2012, we raised roughly Rs 2,600 crore from the market and roughly Rs 400 crore from over a PFC. In the current year, we are targeting to have roughly Rs 3,000 crore borrowing from the different sources. Q: In your P&L there is a huge category called other expenditure category. What is in that other expenses? A: Last year, the other expenditures was the water cess which was imposed by the J&K Government. Substantial payment had to be made last year and for the first full year the water cess has been paid that is Rs 4,500 crore plus. Q: There is this repeated frequent buzz of you selling your Uri and Salal plant to the J&K government. Will this happen at all? A: The Government of India has made it very clear that the projects will remain with the NHPC.