Nation's largest power producer NTPC today reported a 13 per cent drop in the first quarter net profit as retrospective tightening of technical norms by the regulator wiped off gains from a rise in electricity generation.
Net profit in April-June this year at Rs 2,201.2 crore was lower than Rs 2,527.02 crore in the same period of the last fiscal, the company said in a statement here.
Total income increased from Rs 16,391 crore to Rs 18,885 crore. The company reported EBITDA of Rs 3,268 crore, with margins at 18.1 per cent.
NTPC said gross power generation at 63.133 billion units was 10.75 per cent more than last year. Coal-based power plants of the company clocked a plant load factor of 84.29 per cent.
The firm had 43,128 MW of coal-based power generation capacity.
"In spite of posting outstanding generation growth, profitability has declined owing to the implementation of Tariff Regulations 2014 having provision of retrospective tightening of technical parameters post investment decision," the statement said.
The Central Electricity Regulatory Commission (CERC) has been tightening the operative norms for thermal power plants. The recent regulation has made the norms very stringent in the areas of Station Heat Rate, specific oil consumption and auxiliary power consumption which are adversely impacting operating profit of thermal stations.
Besides, regulations for 2014-19 have linked incentives to be based on the plant load factor (PLF) metric and not plant availability factor (PAF).
PAF measures the generation capacity that is available, whereas PLF is based on the actual power generated by a plan based on demand. Since distribution companies and state electricity boards are strapped for funds, PLF is often lower than PAF—implying that NTPC would be entitled to lesser financial incentives.
The Central Electricity Regulatory Commission (CERC) earlier linked the recovery of tax from the customers of power producers on the basis of actual payment of tax. In the earlier regime, if a company managed to save on tax because of tax planning, it was allowed to retain such gains.
NTPC shares closed at Rs 86.45, down 3.7 per cent on BSE.