Gridco's power trade earnings dwindle on drought

Acute drought in 27 of the 30 districts in Odisha triggered by deficient monsoons have tapered earnings of the state-owned power trading firm

Acute drought in 27 of the 30 districts in Odisha triggered by deficient monsoons have tapered earnings of state-owned power trading firm Gridco (formerly Grid Corporation of Odisha).

Gridco usually sells surplus hydro power to other states and also trades on power exchanges. But the lack of a normal monsoon in last fiscal pulled down hydro power generation, marring Grdico's prospects for higher earnings.

"Gridco managed to earn only Rs 350 crore in last fiscal through sale of surplus power, barely a third of what we earned in FY15. Below par monsoon and the tepid demand for electricity dampened our earnings. This year, we hope to compensate the losses by hoping to sell surplus hydro power from October onwards, banking on a good monsoon", a senior Gridco executive told Business Standard.

As of now, Odisha is encountering a peak power deficit of 300-350 MW. The state is plugging the deficit by procuring power from Punjab, Delhi and Arunachal Pradesh via the power banking mode.

In 2016-17, Gridco is projected to be in a position to trade 2673 million units (MU) of power enabling it with a surplus of Rs 134 crore, considering a profit margin of Re 0.50 per unit. The surplus power availability for 2017-18 and 2018-19 is pegged at 5188 MU and 20092 MU respectively that would help Gridco mop up surplus of Rs 260 crore and Rs 1005 crore.

According to provisional figures, Gridco ended 2014-15 with a loss of Rs 271 crore. The power trading firm's cumulative losses have mounted to Rs 3476 crore by the end of FY15.

By the end of 2014-15, Gridco had an outstanding loan of Rs 4843 crore. Reeling under financial stress, Gridco has also availed Rs 1000 crore as inter-corporate loan from state owned miner Odisha Mining Corporation (OMC). Gridco borrowed from OMC to clear its mounting dues and also to swap some high cost loans.

Non-payment of bulk supply power (BSP) dues and loan dues by electricity distribution companies (discoms) had added to Gridco's financial woes. Gridco was saddled with arrears from discoms to the tune of Rs 5094 crore by end of 2014-15.

Leading infrastructure consulting firm Feedback Ventures has submitted a report, outlining the roadmap for Gridco's financial recovery. The strategies for Gridco's turnaround include sale of long-term, medium term and short-term surplus power and surrender of allocation of costly power from NTPC stations outside the state.

Procurement of high cost power from NTPC stations located outside the state like Barh and Kahalgaon, both in Bihar has hurt Gridco's operations. The state government has decided in-principle not to go for procuring costlier power from such stations. Besides, congestion

in inter-state transmission and lower price realizations from energy exchanges also affected Gridco's earnings.