KSK Power Ventur PLC - April 2014 Trading Update
("KSKPV" or "the Company")
· Existing operating capacity of 891 MW generated 2,076 MWh. The first 600 MW of KSK Mahanadi is now up and running at 62% PLF, which should continue to improve, and generated 1,088 MWh taking aggregate generation in the period to 3,164 MWh. Although the overall generation across the portfolio is below earlier expectations, the same has been achieved despite the challenges currently facing all aspects of the energy sector in
· The second 600 MW unit at Mahanadi is scheduled to be commissioned during the next
three months, bringing the Company's total operating portfolio to 2,000 MW in Q1 FY
· Operating constraints at Wardha with respect to coal costs, open access and PPAs
continue. Efforts to address these issues are being pursued, with improvements
expected in the coming year. In the interim, reduced asset utilisation levels means
revenue and profitability will be lower than indicated earlier.
· Depreciation of the Indian Rupee is significantly increasing the capital costs for
constructing the Mahanadi project. Timelines are also being impacted by EPC contractor
concerns regarding the challenging Central Government policy environment and generally
very slow decision making process.
· Significant long term PPAs signed in recent months with state utilities for an aggregate
1,500 MW. 1,000 MW now signed with distribution companies in the State of Uttar
Pradesh with average tariff of
500 MW with a distribution utility in the
· Fuel Supply Agreement now signed with tapering linkage provides cover to Mahanadi for potential delays in production and supplies from the Morga-II Coal Block.
The 1,079 MWh of power generation with an average PLF of 46% reflects the challenging local operating environment, and the fuel and open access grid constraints currently experienced by
The Company continues to pursue compensation for the calorific value shortfall in the coal supplied during the year, and a prima facie opinion has been expressed by the
The Company's earlier PPA with R-Infra for 290 MW of supplies ended on
The Company is also pursuing with the local regulators renewal of open access for supplies to industrial customers and expects to achieve resolution shortly
The power generated in the plant was 397 MWh, with a PLF of 67%. Improvements to the plant's maintenance are being implemented to improve the plant's overall performance.
The power generation for the plant was 183 MWh, with a PLF of marginally below 50% due to local factors. With new PPA arrangements now in place, gross generation is expected to increase and reach a fully stabilised level by the end of Q1 2015.
The power generation for the 58 MW combined cycle gas based power plant was 231 MWh, with a PLF of 91%. Power continued to be supplied to captive consumers under the committed long term Power Delivery Agreements, as well as to utilities and third party consumers on a shorter term basis. Opportunities to refinance the project on more favourable terms are being sought.
The 18.9 MW of wind turbines generated 6 MWh with a PLF of 7%, essentially due to the post monsoon seasonality.
The power generation was 171 MWh, with a PLF of 91%. The Company is seeking to enhance the overall financial performance of the project through savings on fuel costs
The 10 MW PV solar power generation plant in the
The first 600 MW unit is now operational, with over 1,000 Mwh of generation and power being supplied under the PPA. Significant efforts are being made to commission the second 600 MW unit during the current quarter. Full output under the PPAs will rely on the expected additional transmission systems of the power grid being fully functional.
Construction activity for the remaining four units is being pursued, with much of the support infrastructure and balance of plant for all 3.6 GW having already been completed substantially. While continuing to be engaged, on ground challenges and concerns of the EPC contractor relating to the Indian policy environment are impacting project timelines. Commitments from project lenders remain firm and commissioning is expected to be achieved in line with the lenders supporting the necessary project payments and the planned fuel supplies being fulfilled by the respective agencies.
The currency impact due to the significant depreciation of the Indian Rupee against the US Dollar has resulted in considerably greater costs on imported capital goods. The Company is exploring ways to address this including efforts to firm additional debt required for the same. Additionally, a small US Dollar denominated Term Financing facility was obtained with considerably lower interest charges than higher cost Indian Rupee debt. Additional financing is being pursued on similar terms, where possible, to align these costs more with the underlying currency requirements.
The Company has secured debt financing within the Indian holding companies that have enabled the earlier tender offer as well as the buyout of the entire minority of the KSK Mahanadi project resulting in KSKPV owning a 74.94% interest in KSK Energy Ventures, the listed Indian subsidiary and a 100% interest in
Further, the Company has received a number of proposals, from various national and overseas utility businesses, for collaboration on the KSK Mahanadi project. These are currently under evaluation.
The recent execution of the PPA for 1000 MW with distribution companies in the
• KSK Mineral Resources:
Mine development support and associated works on behalf of
• KSK Water Infrastructure:
Infrastructure works, including the construction of the 60km pipelines and the pump stations for the supply of water for the 3.6 GW Mahanadi project, have been completed and are operational. Additional intermediate reservoir works sufficient to support the continuous operation of all six units are expected to be completed during the later part 2014 enabling full completion of this infrastructure.
• Raigarh Champa Rail Infrastructure:
The Company's 15.7 km inward railway line connecting the Mahanadi plant with the
Business Strategy and Outlook:
The high capital intensity and associated debt required in developing and growing the Company's power generation business, coupled with high currency volatility and the current difficult Indian policy environment, will impact the Company's overall funding requirements and financial performance in the near term. Work continues on a number of major initiatives in this regard.
The challenge continues within the Indian power sector as a whole to obtain fuel at the right price, and open access for the supply of power to customers at sensible PPAs. However, with tapering linkage of coal supplies now secured to cover any potential delays for the Mahanadi plant, and with significant long term PPAs signed at higher tariff rates, the Company's growing plant portfolio and operational experience enables it to be better placed to secure the necessary further funding for its major capital projects, resulting in an improved financial performance over time.
With the high quality of its asset base, a proven execution capability, an increasingly efficient business structure, and with secured fuel supplies to the power plants, the Company is well positioned to address the Indian power generation opportunities.
For further information, please contact:
Mr. S. Kishore, Executive Director
Mr. K. A. Sastry, Executive Director +91 40 2355 9922
Richard Day 44 (0)20 7614 5900
This information is provided by RNS
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