Tata Power expects Gujarat government to decide on buying power from Mundra in few weeks

Tata Power expects the Gujarat government to take a call on buying power from Mundra in a few weeks. Earlier in May, the government of India gave directions to the Mundra plant to run all its units at full capacity for the next months as there was an energy crisis looming.

Praveer Sinha, MD and CEO of Tata Power said in an interview with CNBC-TV18, that the arrangement is valid till October 31 and he expects to see an extension.

“We are in discussion with Gujarat to see how on a long-term basis, we can come to an amicable settlement. And we do hope that somewhere near what section 11 has given and what is being proposed by the government of Gujarat that we will be able to settle very soon,” he said.

Prime Minister Narendra Modi has launched the revamped distribution sector scheme (RDSS) last week. Power stocks are on an upward trajectory as this scheme offers to improve operational efficiencies, ensure financial sustainability of discoms and power departments, provide financial assistance, modernise and strengthen distribution infrastructure and improve reliability and quality of supply to the end consumers.

“It's a very welcome step considering that discoms have been the weakest link in the chain of the power sector,” he said.

With these reforms in the distribution sector and the changes that are envisaged, the whole power sector will improve drastically, he added.

Tata Power reported a 48 percent year on year (YoY) jump in revenues at Rs 14,775 crore for the first quarter ended June 30, 2022. In the corresponding quarter last year, the company posted a net profit of Rs 3,145.6 crore on the back of higher plant availability in Mundra and higher sales across distribution companies.

The company sees the next spurt of growth coming from renewable energy in the last few years. “We have crossed 1,000 mw in rooftop that we have installed in last few years. In last three years, our growth has been nearly 10X from what we were doing in 2018-2019. This is one of the focused areas, we will make this $1 billion business in next three-four years,” said Sinha.

The stock is up 4.23 percent in the last five days and 8.25 percent in the past month.

The revamped distribution sector scheme, which has an outlay of more than Rs 3 lakh crore for a period of five years till the 2025-26 fiscal year,

While discussing how serious is the debt issue of discoms, Rahul Prithiani, Senior Director- Energy, Sustainability and Commodities at CRISIL said, “It is very difficult to define a crisis. You could say it has been a perpetual crisis, actually. On an ongoing basis, we frequently keep having the same set of issues.”

 

According to Sabyasachi Majumdar, Senior Vice President and Group Head at ICRA Ratings, the RDSS scheme has just got approval. It will be some time before the actual implementation will take place and then people will see the results in terms of reduced AT&C losses.