GMR up 11%, to get EBITDA boost post CERC's tariff order

GMR Group today announced revision of power tariff for GMR Kamalanga Energy following an order passed by CERC on November 16. GMR Kamalanga Energy is an SPV (special purpuse vehicle) of GMR Energy.

GMR Kamalanga had submitted an application to CERC for determination of tariff under PPA (power purchase agreement).

Prior to this order, GMR Kamalanga was being reimbursed at Rs 2.75 per unit of total tariff. Consequent to the CERC order GMR Kamlanga will be entitled for a price of FY14 which shall be approximately Rs 3.97 per unit and Rs 3.4 per unit thereafter.

Around 85 percent of plant’s power generation capacity is tied up through long term PPA which Includes PPA with GRDICO, Orissa for off taking 25 percent of the power generated from the power station.

GMR Kamalanga Energy owns and operates (three units of 350 MW each) coal based thermal power plant at Kamalanga village, Odisha. Its unit 1 was commissioned in April 2013, unit 2 in November 2013 and unit 3 in March 2014. The union power ministry granted it the mega power project status.

At 11:38 hours IST, the scrip of GMR Infrastructure was quoting at Rs 14.70, up Rs 1.39, or 10.44 percent amid high volumes on the BSE.Posted by Sunil Shankar Matkar_PAGEBREAK_In an interview to CNBC-TV18, Madhu Terdal, Group CFO of GMR Infrastructure spoke about the latest happenings in his company.Below is the verbatim transcript of Madhu Terdal’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Sonia: Can you just confirm this final tariff order for us and how much will it help your EBITDA in your Kamalanga power plant go up?A: I do confirm that Central Electricity Regulatory Commission (CERC) has passed the tariff order, in fact it must be available on the CERC website also. As you know this tariff petition was pending for a pretty long time and we were getting only Rs 2.75 till now. As a consequence of the resolution of the petition we will be entitled to get Rs 3.97 for the year 2014 and thereafter we will be entitled to get Rs 3.40.Latha: What does that mean in terms of amount of money, I mean arrears?A: In terms of amount of money I think it should have a positive EBITDA impact of the order of Rs 120-130 crore. The order has come recently, of course we are working out the whole calculations, but it will have every month about Rs 10-11 crore kind of positive impact and on an annual basis about Rs 120-130 crore. In addition to that, for the previous years, we will be entitled to receive some arrears as well.Latha: You haven’t calculated that, the arrears how much would it be because it is a one-time gain isn't it? A: We have to do that calculation. Latha: This money comes to you from Andhra Pradesh (AP) state board electricity (SEB) or Telangana SEB? A: No, this is Odisha Grid Corporation. Kamalanga has got power purchase agreement (PPA) with the Odisha Grid Corporation and it is on to the cost plus tariff model. Unfortunately though the Odisha government was paying us at the rate of ad hoc base of Rs 2.75, the resolution was pending for CERC. If you remember government regulators have been continuously working to resolve these issues and thanks to the push on the regulators as well as the government now the issues have started getting resolved. So, it is a very healthy sign to note that our liquidity and profitability will start moving up now. Sonia: Can you just tell us about the Kamalanga plant itself, how much have you sold in terms of total units in the year gone by and in FY16 how much do you plan to sell? A: I do not have the numbers readily available with me. However, it is a 1,050 megawatt plant. 25 percent it is being supplied to Odisha Grid Corporation and we have got other PPAs with Bihar and Haryana as well. Indeed even Bihar in a very forward state movement even though the CERC has not still given the orders out of our claim for about 24 paisa they have already permitted collection of additional 13.81 paisa and we have already started getting that money. So, that shows the governments and the state government’s proactive steps to improve the collection of the electricity as well as the payment of the dues.