Adani Power (APL), which is seeking to increase tariffs at its flagship 4,620 MW power plant in Mundra, Gujarat, reported its fifth straight quarterly loss as it continued to grapple with rising fuel costs.
APL’s net loss on a standalone basis for the quarter ended December, widened to R507 crore from a loss of R358 crore in the same period last year. The company sold 5,957 million units of electricity during the quarter, versus 3,018 million units a year earlier.
Total income rose 59% to R1,688 crore but fuel costs doubled to R1,211 crore. Finance costs also increased 33% to R526 crore. Weak financial results sent the stock sliding 4% to R61.55 on the BSE.
India’s power producers, such as APL, Tata Power and Reliance Power, are facing higher costs of imported coal because of changes in laws and regulations in exporting countries such as Indonesia and South Africa. Australia also recently introduced a 30% carbon tax for coal, pushing up prices.
Shortages of coal and gas used in conventional thermal plants have hampered power producers, who have been forced to increase exports.
“Coal linkage and regular supply from the linkage of Coal India and its subsidiaries is a must to ensure smooth power generation at optimal cost at our near 10 GW capacity at three plants,” APL finance chief Prabal Banerji said.
Power producers are unable to pass on increased costs to customers because of difficulty in renegotiating tariffs or the price at which they sell electricity to distribution companies.
The group’s billionaire chairman Gautam Adani said he was optimistic about the prospects for the sector. “The domestic outlook for the power sector seems set to improve on the back of recent policy measures addressed by the government like PMO direction to sign FSA and to work on coal-pooling mechanism, SEB debt restructuring approval by cabinet, (and) rail links for coal evacuation,” he said in the statement.