May receive Rs 300cr from Tamil Nadu SEB soon: GMR Infra

The Cabinet Committee on Economic Affairs (CCEA) on Monday cleared Rs 2 lakh core debt restructuring proposal for state electricity boards.

In an interview to CNBC-TV18, Raaj Kumar, chief executive officer, energy biz of GMR Infra says liquidity will improve in the states. "They will start doing their business, buying and selling of power, rather than load shedding. So, this will surely help us," he adds.

Tamil Nadu, he says, owes significant amount to the company, in the region of Rs 600-700 crore. "We expect to receive this money soon, as soon as next month. We have been told that by first week of October, first 10 days of October, they will clear 50 percent of the outstanding," he adds.

SEB bailout: Too soon to cheer as other issues remain

Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Gautam Broker.

Q: How do you see this advantage of solvent SEBs flowing to you? Will you be able to sell more power to them? Is that your big advantage?

A: Absolutely. Liquidity will improve in the states. Therefore, they will start doing their business, buying and selling of power, rather than load shedding. So, this will surely help us.

Q: Do you already have receivables from them? How much do they owe you? When do you expect that money to come?

A: Tamil Nadu owes significant amount in the region of Rs 600-700 crore. We expect to receive this money soon, as soon as next month only.

Q: Anything form Karnataka?

A: Karnataka, we have an outstanding of about Rs 100 crore. This will take some time

Q: And nothing from Andhra Pardesh itself?

A: No nothing much.

Q: By what time do you think the positives could start flowing? We have had a package. By when do you think it will actually result in higher off take and improving volumes for the sector?

A: It should happen immediately. I think the demand side is picking up quite aggressively because October to March is one of the peak power consumption time. So, the demand side will pick up. The effect should be seen immediately. I don’t see any reason for any further delay.

Q: It will take a while before the consortium of banks sign a tripartite agreement with the SEB and the state government. How many months do you think could elapse before that happens?

A: I would guess about two-three months. By December end, it should be in place.

Q: In your own specific case, Tamil Nadu SEB has already raised tariffs. The Tamil Nadu government has also proactively said that it will clear loans to some of the lenders. Have you got any indication from TNSEB for this Rs 600 crore being on the way or even a part of it?

A: Yes, we have been told. We met them a couple of days back. At that time, the discussions were going on. We have been told that by first week of October, first 10 days of October, they will clear 50 percent of the outstanding. So, it is a very strong indication. We are happy about it.

Q: By the end of the year, how much might your say interest cost go down, how much could your debtor days go down?

A: Our project capex is too high for any significant impact to be seen.

Q: When do your capex come, your next phase of expansions come on stream?

A: Our ongoing projects, two of them, nearly 2000 MW, will become operational in this financial year. One 800 MW gas based plant is waiting for gas allocation. It is ready for operation, but unfortunately it has to wait for gas.

Q: How much is operational and working?

A: Currently, operational capacity is just a shade below 1,000 MW.

Q: How much are you able to generate and sell?

A: Gas based plant load factors (PLFs) are sub 30 percent, so cumulative generation is less than 300 MW. It is a bad situation.

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Q: Do you think that will improve before FY13 is out?

A: The existing assets will not significantly improve because gas is not available. When the coal capacity comes, we will be commissioning two coal based projects this year then the overall generation from GMR Power business will increase. But I don’t see much happening on the gas side, unless the pooling mechanism comes.

Q: For this 2,000 MW you have an FSA agreement in place, so coal is an assured supply?

A: Yes.

Q: You have a power purchase agreement (PPA) as well?

A: Yes, we have,

Q: Therefore, how many units out of that 2,000 MW may you generate this year in FY13?

A: In FY13, nearly progressively commissioning, I think first unit of 300 MW should get commissioned in the next few days. So before this year end, I think progressively we will be commissioning all the five units of 350 MW each.

Q: Can you give us an idea how many megawatts will you actually sell in FY13? How many do you hope you will sell in FY14?

A: Significant capacity is remaining unutilised because of the non-availability of gas. So, large part of generation would depend upon how gas provisions improve, either through import of LNG and pooling of gas which government is not talking about and how much domestic coal is actually available.

But our capacity availability will be nearly 4,000 megawatts. We will have 4,000 megawatts to sell, how much we are able to generate for want of gas and fuel will have to be seen. It is difficult to hazard a number. But, yes, in terms of capacity availability, around 4,000 megawatts will be available.

Q: Are you aware the standard bidding document changes that have been contemplated by the Ministry of Power and is in discussions with CERC? Have you heard anything on that front?

A: Yes, we have been a part of the discussion. We have been participating in various discussions with the Association of Power Producers, FICCI. We have been also talking to the ministry.

Q: From what we learn linkage and captive coal producers will stand to lose out a bit on that. Are you putting up your case in front of the ministry to not go very strong on capping the captive charge or the energy charge?

A: Yes. We are discussing various aspects. These are not the only issues on the table.

Q: Do you believe the final changes could come by in the next two-three weeks, is it possible?

A: We believe so. They should come before the middle of October, latest October-end.

Q: You were saying you were negotiating for other changes as well. Besides changes in the standard bidding document, what are the other changes you are expecting?

A: I am talking about changes in the standard bidding document that we are discussing through Association of Power Producers (APP) indirectly also. Something positive should emerge from this discussion.

Q: What is the positive that you are expecting?

A: It will be difficult to comment at this point in time.

Q: What is the plea?

A: There is no single plea. There are multiple clauses in the standard bidding documents. Each one is being discussed and debated. So, there is nothing specific that I can pinpoint at this point in time. It is a broad level discussion happening on various aspects.