The company has also allowed discoms to defer the payment of fixed charges of Rs 2,064 crore after the end of the lockdown period in three equal monthly instalments, without interest.
State-run power generation behemoth NTPC’s decision to offer a rebate of Rs 1,363 crore to power distribution companies (discoms) is seen to reduce its FY21 profit by Rs 920 crore. The company has also allowed discoms to defer the payment of fixed charges of Rs 2,064 crore after the end of the lockdown period in three equal monthly instalments, without interest.
After NTPC’s announcement of the discount to discoms, analysts at IDFC Securities said the stock’s earning per share would be impacted by Rs 0.92/share in FY21. The deferment of capacity charges is expected to increase NTPC’s FY21 interest cost by Rs 25 crore, as per ICICI Securities. Power plants are contractually entitled to receive fixed costs for recovering capital expenses, even when buyers do not procure electricity from the units.
In the wake of the coronavirus outbreak, the Union power ministry has advised CPSU utilities, including NTPC and Power Grid Corporation of India Ltd (PGCIL), to consider offering a one-time rebate of 20-25% on fixed charges to the state-owned discoms.
PGCIL has offered a one-time consolidated rebate of Rs 1,075 crore to discoms, which is seen to reduce its FY21 profit by Rs 730 crore. NTPC’s consolidated net profit stood at Rs 12,634 crore at FY19-end, recording an annual rise of 20.3%. PGCIL’s consolidated net profit in the same fiscal was Rs 10,034 crore, up 22.3% annually.
NTPC’s annual fixed charges are in the tune of `37,000 crore, which comprises interests on long-term and working capital loans, depreciation, operations and maintenance charges and return on equity (RoE).
PGCIL, the central transmission utility of the country, also earns a 15.5% regulated RoE on making its transmission infrastructure available for power. It also has a strong pipeline of commissioning and commercialisation of projects, decent track record of execution and regulated returns.