Adani Power posts Rs 2,228 crore profit in Q2FY21 on compensatory tariff

Adani Power on Thursday reported a net profit rise of Rs 2,228.1 crore on a consolidated basis in the quarter ended September 30, from the profit of just Rs 3.9 crore posted in the corresponding period a year ago, on the back of one-time revenue recognition of Rs 3,624 crore as compensatory tariff as fuel expenses went down amid lower power demand.

The earnings before interest, tax, depreciation and amortisation (Ebitda) for Q2FY21 rose 126% year-on-year (y-o-y) to Rs 5,086 crore on compensatory tariffs and improved fuel cost recovery during the quarter. The fuel cost for Q2FY21 fell to Rs 3,161.8 crore from Rs 3,926.4 crore a year ago as electricity sales volume fell 13% annually to 12.6 billion units (BU).

Owing to lower sales, utilisation levels of Adani power plants fell, with plant load factor (PLF) dropping by more than 10 percentage points to 49.9% in the quarter due to reduced demand in Maharashtra as well as power exchanges. “India’s power demand has started to show strong improvement with the revival of its economic growth engine, after the slump brought by the pandemic,” Anil Sardana, managing director of Adani Power said.

The compensatory tariff accrued in the quarter’s revenue is from Maharashtra’s state-owned discom for additional costs incurred by Adani Power for supplying power from its 3,300 MW Tiroda plant, after the allocation of the Lohara coal block withdrawn due to environmental reasons. Holding that the cancellation of the coal block qualifies as a ‘Change in Law’, power regulators had asked the discom to reimburse the company for the expenses it had to bear to make fuel arrangements to compensate for the shortfall arising from the coal block de-allocation.

Recently, the Supreme Court also upheld the rulings of the Rajasthan Electricity Regulatory Commission and the Appellate Tribunal for Electricity that had allowed Adani Power’s 1,320-MW Kawai power plant to recover the additional cost incurred by it on importing coal — Rs 5,000 crore estimated by the company — as the Rajasthan government could not keep its promise of making arrangements for domestic fuel supplies for the plant.