Reliance Power Eyes Progress on Gas Shortages
Reliance Power said it saw progress within 1-2 months on government efforts to tackle gas shortages that have hobbled generation, after quarterly profit beat forecasts on a sales jump.
Indian power companies are running below capacity, hit by domestic coal and gas supply shortages, the rising cost of imported coal and loss-making state distribution utilities buying less power.
The utility, controlled by billionaire Anil Ambani, posted a bigger-than-expected 15% rise in quarterly net profit to 2.66 billion rupees however, as net sales more than doubled. That beat three analysts’ average forecast of 2.35 billion rupees, according to Thomson Reuters I/B/E/S.
Reliance’s profits have risen over consecutive quarters on the back of new capacity addition and generation, which the company says is now at a record level. But like other companies such as Adani Power and Tata Power, it has struggled with fuel scarcity.
The first 660 MW unit of its flagship Sasan power plant began operations at the start of April in Madhya Pradesh. A further 2640 MW is expected to come onstream this fiscal year, as well as a 100 MW solar plant in Rajasthan, Chief Executive J.P. Chalasani told reporters.
Its 2400 MW Samalkot plant in Andhra Pradesh is ready but cannot operate because of a local gas shortage. Chalasani said the government was trying to tackle gas shortages and he expected “clarity” within 1-2 months.
“Today the issue is not just Samalkot. Even old plants are operating at very low PLFs because of unavailability of gas,” he said, referring to plant load factors, which measure how much capacity a plant uses. “So it’s becoming an issue for the entire power sector.”
The government is in discussions on price pooling – whereby it meets the shortfall in local gas supply through imports, charging all buyers an average price. Another Reliance plant in Andhra Pradesh has been bogged down in legal disputes after the company moved to raise electricity tariffs to offset the rising cost of imported coal.
The Central Electricity Regulatory Commission has allowed both Adani and Tata to raise tariffs on electricity sold to existing clients to compensate for the country’s fuel supply problems, but Reliance has yet to be granted approval to do so. The company’s shares closed 3.1 percent lower at 77.55 rupees in a Mumbai market that fell 2.1 percent.