Tata Power too expresses interest in acquiring stressed assets

Plans to tie up with states and union territories in distribution sector ; JSW Energy and NTPC have already shown similar interest

Tata Power is evaluating whether to acquire stressed power projects of other companies, an exercise also begun by JSW Energy and central government-owned NTPC.

Its annual report for 2014-15 said: "Due to the current financial stress in the sector, there are assets which may be available for acquisition. The company is evaluating opportunities to acquire projects in various stages of development."

A recent report of CRISIL Ratings says there are 46,000 Mw worth of power projects facing viability issues from lack of long-term buyers for electricity and/or inadequate fuel supply. It expects mergers and acquisitions of such assets.

Tata Power has proposed to increase its generation capacity from the present 8,750 Mw to 18,000 Mw by 2022, with 20-25 per cent from 'clean and green' sources (both 25 tonnes per annum of coal and coal equivalent), 4,000 Mw of distribution and decentralised distributed generation and a 10-time growth in value-added businesses.

It says acquiring land for future capacity addition is getting increasingly difficult but that it is actively evaluating opportunities in this regard.

On power distribution, it intends to try and partner states or Union Territories with the institutional will and conviction to reform and drive operational improvement. The company is tracking developments on the proposed changes to the Electricity Act of 2003.

It is also keeping an eye on opportunities in the transmission sector, beside pursuing the expansion of its network in the Mumbai and Delhi license areas.

The report says Coastal Gujarat Power Ltd (CGPL), its subsidiary which operates the ultra mega power project at Mundra in Gujarat's Kutch district, had reduced its loss to Rs 898 crore in 2014-15 from Rs 1,492 crore a year before, with better performance, lower coal prices and less of depreciation charges. The compensatory rate order of the Central Electricity Regulatory Commission on CGPL's power purchase agreement with buyers was not taken into account in reporting the financial performance.

Other concerns include risks in the Mumbai business due to pressure on supply rates, volatility in exchange rates and coal prices. It has assured shareholders that adequate assessment of the risks and returns on each investment has been done, with mitigation measures in place.