Lanco expects pending SEB payments in 6 mths

The increase in power rates in Tamil Nadu is a relief for Lanco Infratech, facing delayed payments from state electricity boards (SEBs).

The company is yet to receive payments from Tamil Nadu, Karnataka, Andhra Pradesh, Uttar Pradesh and Haryana. “In the last two months, many SEBs like Tamil Nadu have increased tariffs (rates). We have also been receiving payments. It might take another six months to receive all our payments,” said Phillip Chacko, investor relations head, without revealing the amount of net receivables for the company.

A report by CRISIL, released yesterday, pegged Lanco’s receivables from its Amarkantak power plant in Chhattisgarh at Rs 555 crore as on March 2012. The rating agency downgraded the power project’s rating to moderate risk from moderate safety. Lanco Amarkantak is near Pathadi village in Chhattisgarh and sources coal from South Eastern Coalfields. The power produced from both the 300 Mw units is bought by Power Trading Corporation of India (PTC).

The report said Lanco was also undertaking various measures to improve liquidity. “LPL has approached banks and other lenders to enhance its working capital facilities and provide short-term debt; it has commenced sale of electricity on the power exchange, wherein it gets paid for the sale of power on a daily basis; it is also aggressively following up with PTC for realisation of debtors,” CRISIL had said.

SEBs have been facing financial stress due to power procurement costs in the past and fewer rises in rates. This has meant mounting debt and increase in pending payments for power generators. Over recent months, however, many of them are taking remedial measures and some went into debt restructuring. Tamil Nadu’s SEB, for instance, raised money through a state government-guaranteed bond issue.

Chacko said they had two pending rate orders from electricity regulators for two of their projects, the Udupi power plant and a second unit in Amarkantak. The receivables of these projects would be cleared after the orders were. “Ideally, we should get interest along with the receivables,” he said.

The 1,200-Mw Udupi power plant is an imported coal-based power project, which has power purchase agreements to sell 90 per cent of its power to Karnataka and the rest to Punjab. The company had defaulted on loan repayments from this unit, over receivables which were stuck with the Karnataka government.