NTPC gains from pre-poll thrust to coal supple

State-owned power generator NTPC gained from improved coal supply to its power plants in the pre-election season, as it was able to reduce its traditional under-recoveries stemming from fuel shortages. The company’s fixed cost under-recoveries, which increases with fuel-related uncertainties, were at Rs 800 crore in FY19, 43% lower than FY18, as it received more fuel from Coal India and increased production from its own captive mines.

Under-recoveries due to coal shortage itself in FY19 was Rs 250 crore, down 69%.

NTPC reported a net profit of `11,750 crore in FY19 on a standalone basis, registering a year-on-year (y-o-y) increase of 13.6% and its revenue grew 8.2% to Rs 92,179.6. The company’s Ebitda (earnings before interest, tax, depreciation and amortisation) increased 5.1% to Rs 22,771.5 crore, though its Ebitda margin went down 80 basis points y-o-y to 25.2% in the fiscal.

The power generation behemoth’s fixed cost under-recoveries came down as its average plant availability factor (PAF) improved 146 basis points y-o-y to 87.3% on higher coal receipt. Fixed cost represents pre-determined expenditure components, including debt service obligation and risk-free returns. However, in order to claim fixed costs, plants need to display a minimum annual plant availability factor (PAF) of 83%.

The coal situation improved with the power ministry asking the coal and railway ministries to prioritise supply pithead power plants, as FE reported in early February, irrespective of their contractually entitled quantities so that they can run at full capacity utilisation levels. More than 77% of such pithead power generation capacity in the country are owned by NTPC.

To ensure constant generation in the pre-election fiscal, NTPC consumed 176 MT coal in FY19, up 4.5% y-o-y. Its captive Pakhri Barwadi coal mine produced 6.8 MT coal in FY19, 150% higher than previous fiscal. However, the company also had to raise imports by 228% to 1.1 MT to ensure adequate coal supply. NTPC’s fuel costs increased 8.6% to `52,493.7 crore, while its generation output increased only 3.2%.

While the all-India average plant load factor (PLF) of thermal power plants stood at 61.1% in FY19, the same for NTPC’s power plants — which have assured buyers — was at 76.7%. The company earned Rs 352 crore as PLF-linked incentive, which is 7.7% higher than FY18. About 23% of the country’s electricity was generated by NTPC, which owns 16% of the total installed power production capacity.

Against the expectation of about 5,000 MW, NTPC could commercialise only about 1,700 MW of generation capacity in FY19. Its outstanding receivables from discoms was at around Rs 7,600 crore at the end of FY19, which analysts find to be a key negative for the company. The overdue is mainly on account of dues from Uttar Pradesh (`1,190 crore), Andhra Pradesh, Telangana and Karnataka.