Adani Power, Bangladesh sign 25 year pact

Adani Power (Jharkhand), the wholly owned subsidiary of Adani Power, has inked a Power Purchase Agreement (PPA) with Bangladesh Power Development Board for 25 years. Under the deal, the company will produce 1496 MW electricity at its new coal based power plant that will be set up at Godda in Jharkhand.

The new plant will be ‘ultra supercritical’, which means that the plant will require less coal per megawatt-hour, thus resulting in higher efficiency with lower emissions and lower fuel costs per unit.

Currently, Adani Power owns APML (Adani Power Maharashtra Limited) and APRL (Adani Power Rajasthan Limited) which opewrate coal based power plants with a capacity of 3300 MW and 1320 MW respectively under power purchase agreements (“PPAs”) for twenty five years with substantially fixed tariffs.

“The PPAs for these plants were made based on the commitments / understanding that domestic coal linkages would be available to meet the fuel requirements. However, adequate coal linkages were not made available due to various reasons not attributable to the respective subsidiary companies,” the company says in its annual report for FY17.

Under APML, the Tiroda Power plant contributed Rs6,494.77 crores towards the total consolidated revenue. However, the plant incurred Rs217.24 crores comprehensive loss during the year.

Similarly, APRL’s Kawai Power Plant contributed Rs4,012.65 crores towards the total consolidated revenue and earned Rs14.83 crores comprehensive profit during FY17.

“Despite the commendable growth in generation and transmission capacity, the growth in consumption of electricity has fallen short of projections. This has led to a situation nearing oversupply in the electricity market in the near term. Along with this, there have been persistent challenges in terms of fuel shortages, non-availability of long-term PPAs, and policy uncertainties that have impacted private sector investments, and created a stress on the banking system,” Gautam Adani chairman of Adani Group says in the report.

One must note that the company has clocked revenues of Rs 23,202 crores in the given year as against Rs25,733.75 crores in FY16, thus registering a 1% decrease in the revenues. The power giant attributed lower revenues to lower sale of electricity units in the past year.

“The revenue is lower in FY 2016–17 mainly due to non–recognition of Compensatory Tariff (CT) for Mundra plant, pursuant to the judgement by the Hon'ble Supreme Court in the matter and also due to reduction in quantum of power sold,” the report states. The company has sold 60.19 billion units of electricity in FY17 as against 64.62 billion units in FY16 from all the plants.

In terms of technological upgradations, the company is evaluating 800MW and 1,000 MW ultra-supercritical technology units for ‘future expansion plans’ that will help reduce emissions and yield higher efficiency.

Currently, the overall capacity of Adani Power is 10,480 MW and plans to increase its thermal power generation capacity to 20000 MW by 2020.