TIDMOPG
RNS Number : 6151G
OPG Power Ventures plc
31 May 2017
31 May 2017
OPG Power Ventures plc
("OPG", the "Group" or the "Company")
Trading update
OPG (AIM: OPG), the developer and operator of power generation
plants in India, announces its trading update in respect of the
full year ended 31 March 2017 ("FY17").
Highlights
-- Total generation c4.4 billion units up 30% from 3.3 billion units in FY16;
-- Chennai plant load factor ("PLF") of 76% and 63% for Gujarat;
-- Gujarat PLF up from 52% in FY16 and consistent with long term target of 75%;
-- Management expect FY17 results to be in line with consensus expectations;
-- Group debt repayment profile significantly improved;
-- 62 MW Karnataka solar project - construction set to begin next quarter.
Arvind Gupta, Chairman, commented:
"During the year we stuck to our strategic priority of
maximising the cash contribution of our existing assets and thereby
making our business stronger for the long term. We have delivered
on our commitment to start paying dividends following a continued
strong performance by our flagship plant at Chennai. At the younger
asset in our portfolio, Gujarat, our attention has been devoted to
increasing the mix of higher value sales, accelerating slow
receivables and establishing a significantly better debt repayment
profile. We thus maintain our commitment to strong cash generation
from our asset portfolio to fuel dividends and growth."
For further information, please visit www.opgpower.com or
contact:
OPG Power Ventures PLC +91 (0) 44 429
Arvind Gupta / V Narayan 11211
Swami +44 (0) 207
Ajay Paliwal / Pooja Maru 850 7070
Cenkos Securities (Nominated
Adviser & Broker) +44 (0) 20 7397
Stephen Keys / Camilla Hume 8900
Macquarie Capital (Europe)
Limited (Joint Broker) +44 (0) 20 3037
Raj Khatri / Nick Stamp 2000
Tavistock (Financial PR)
Simon Hudson / Barney Hayward +44 (0) 20 7920
/ James Collins 3150
About OPG
OPG operates and develops power generation related assets in
India and at 30 September 2016 had 750 MW of assets with a further
186 MW under development or in the pipeline. In the six months
ended 30 September 2016, according to its unaudited results for the
period, the Company generated revenues of GBP118 million, EBITDA of
GBP42 million and profit before tax of GBP18 million.
Operations Summary
FY17 FY16
------------------------------ ------ ----------
Generation (million kWh)
------------------------------ ------ ----------
414 MW Chennai 2,346 2,236(4)
------------------------------ ------ ----------
300 MW Gujarat 1,657 927(1)
------------------------------ ------ ----------
Generation (MU) excluding
auxiliary 4,003 3,163
------------------------------ ------ ----------
Additional "deemed" offtake
at Chennai 364 184
------------------------------ ------ ----------
Total Generation (Mue)(2) 4,367 3,347
------------------------------ ------ ----------
Reported Average PLF (%)(3)
------------------------------ ------ ----------
414 MW Chennai 76% 78%
------------------------------ ------ ----------
300 MW Gujarat 63% 52%
------------------------------ ------ ----------
Note:
1. Includes 704 million units generated until January 2016 from
Gujarat for which results were capitalised
2. MU - millions units or kWh; Mue - millions units or kWH of
equivalent power
3. Reported Average PLF based on Mue
4. Unit 4 operated for 9 Months in FY16
Chennai FY17 PLF of 76%
Total generation for the year was 12% higher than last year
despite the seasonal and regional events previously reported.
The plant realised an average tariff of Rs5.18 in FY17 and a
"deemed" offtake charge of Rs1.50 per unit for deemed generation.
The difference between tariff and cost of coal on a per unit basis
("the Clean Dark Spread"), was Rs2.63 at Chennai for FY17, which we
believe continues to be amongst the best in the sector,
notwithstanding the sharp spike in coal prices we reported earlier
during the year as well as measures taken by management to mitigate
high coal price volatility. Once again, the plant maintained full
availability, a strong and diverse customer base and did not
experience any coal shortages.
For FY18, the Chennai plant expects to continue with its
diversified sales mix, contracting the majority of its generation
from 414 MW to Group Captive customers and the balance of 74 MW
(net) to TANGEDCO under the 15 year Power Purchase Agreement
("PPA"). The Reported Average PLF achieved during April 2017 was
79%.
Cash collection from customers at Chennai improved significantly
in FY17 following our earlier shift of sales to Group captive
industrial customers with whom we have an average collection period
of approximately 40 days. During the year, the Company also
collected GBP24m of the GBP35m outstanding from TANGEDCO as at 31
March 2016. The Company expects to receive the balance of this
amount during FY18.
Gujarat generation up 79%
The Gujarat plant's generation was up 79% from FY16 to 1.7
billion units following the commissioning of both units. The plant
continued to ramp up achieving a PLF of 63% in FY17, up from 52% in
FY16 and on track to rise to 75% during FY18. The PLF in April 17
was 66%.
The plant realised an average tariff of Rs 4.03 per unit for
FY17 and the Clean Dark Spread was Rs 1.37 per unit.
For FY18 the Company continues to focus on maximising
profitability through diversifying sales to industrial customers
outside the state.
Update on OPG Gujarat payment delays by state electricity
companies
Following the year end, the Company announced an amendment of
the share capital rights in the Gujarat subsidiary to address
payment delays by the state electricity companies ("DISCOMS"). As
the Company's Gujarat subsidiary continues to be in compliance with
the Captive Power Regulations, and having made the aforesaid
amendments following discussions with Gujarat DISCOMS, the Company
anticipates that the amounts delayed will be recovered principally
in FY18.
Coal
The average landed coal price was Rs 3,526 per tonne in FY17
(FY16: Rs. 3,171 per tonne). Following the coal price spike in 2016
which we reported on as part of our interim results, and some
volatility at the beginning of 2017, coal prices have been
declining. Independent expectations are for international coal
prices to recede further throughout the rest of 2017 and 2018.
The Company has purchased coal on short term contracts recently
and continually reviews its longer term arrangements. We believe
our track record shows this approach serves us well given the term
for which we commit our prices to our customers.
Strong credit rating
The India credit rating of OPG Gujarat has been raised to A- and
for OPG Power Generation Limited has been reaffirmed to A+.
Solar projects
62 MW Karnataka
The Company has already secured debt financing for 40 MW of its
62 MW solar project development in Karnataka and sanction for the
debt financing for the remaining 22 MW is expected to be received
in the next few weeks on similar terms. The sanctioned debt is to
be repaid over 17 years and carries a variable rate of interest. As
previously reported the projects have a 25 year PPA with Karnataka
DISCOMS at an average tariff of Rs.5.00 across the 4 sites. With
the EPC awarded, construction is expected to commence in the next
quarter and is on track for commissioning in the current financial
year.
124 MW Jharkhand
The Company has secured a Letter of Intent for the award of a 25
year PPA for 124 MW at an average tariff of Rs5.36. The necessary
security deposits and guarantees have been lodged with the
Jharkhand authorities.
The land has been identified and potential debt providers are
ready to fund the project. The process of financial closure and
land acquisition is expected to start post signing of the PPA, with
a progressive commissioning timeframe over 18 months.
Macro trends
With India dedicated to reducing its carbon intensity, the
initiation of new greenfield coal fired projects is widely expected
to slow for the next couple of years. Correspondingly, load factors
at existing coal fired power plants, which will continue to provide
base load, are expected to rise in parallel with the growth in
renewables. A similar focus on carbon intensity worldwide, China's
policy in seeking coal prices within a narrow range and the
importance of coal mining in India are generally expected to mean
coal prices will continue their downward trend and resume a period
of stability similar in trend to that witnessed prior to last
year's spike.
India continues to improve as an investment destination and the
prospects for the power sector continued to improve during the
year. Notable features of the year include:
(a) A 7% GDP growth in FY17 recovering faster than expected from
the short-term effect of demonetisation. Independent forecasts are
for similar growth rates to persist to FY20 and demand for
electricity is typically correlated to GDP growth;
(b) a Goods and Services Tax bill was introduced to provide a
uniform indirect tax system and bring transparency in doing
business;
(c) UDAY, the financial restructuring scheme for DISCOMS, has
now been adopted by 27 States in India and approximately 80% of the
industry's debt has been restructured into bonds with 15 States
already filing applications for tariff increases.
Outlook
Operations at the beginning of FY18 have continued to perform
well. The extended debt schedule at Gujarat, which reduces our
principal payments by GBP67m over the next five years, and the
expected commissioning of our first solar projects are expected to
provide further strength, stability and diversification in our cash
flows and we look forward to reporting further progress in FY18.
The Company remains committed to a path of strong cash generation
to fuel dividends and growth.
Final results
The Company expects to issue its results and annual report for
the year ended 31 March 2017 in the week commencing 28 August
2017.
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
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