MOSL: UTILITIES-CESC wins 100MW in BEST’s PPA, Tata Power at loss-CESC’s generation portfolio fully secured with PPAs
​UTILITIES: CESC wins 100MW in BEST’s PPA, Tata Power at loss; CESC’s generation portfolio fully secured with PPAs
According to media reports (Mumbai Mirror, dated 1st December 2017), the L1 bidders in the 750MW five-year PPA bid by BEST DISCOM (Mumbai) were (a) CESC’s Dhariwal and Adani Power for the base-load PPA of 300MW, (b) Maharashtra DISCOM for the peak-load PPA of 250MW and (c) Tata Power (TPWR) Trombay for the peak-load PPA of another 200MW. BEST had called the bids in place of its existing PPA with TPWR’s Mumbai generating assets that are expiring in March 2018. Mumbai has transmission capacity to import only 300-500MW. The outcome of the bids is likely to be decided by the regulator and the transmission capacity study, but the base load PPA should get preference. MAH DISCOM and TPWR have filed for a review of the PPA’s bidding conditions. The case will be heard on 6th December 2017.
CESC: Generation portfolio fully secured with PPAs
- CESC’s Dhariwal is L1 for 100MW at a price of ~INR3.5/kWh. Being a medium-term PPA, it will be eligible for coal linkage under the SHAKTI policy. We estimate additional EBITDA contribution of INR0.9-1.1b.
- Dhariwal was recently L1 for another 185MW short-term PPA under the flexible coal policy by Maharashtra (report link).
- Together, the Dhariwal plant will now be fully secured with PPAs (existing - 100MW TN, 187MW Noida, and new – 100MW BEST and 185MW MAH).
- We estimate Dhariwal’s EBITDA will increase from INR0.1b in FY17 to INR4.6b in FY19 with the full benefit of all the PPAs. It will turn PAT positive, and FCF generation will improve. This should also drive savings in interest cost (it was 12.9% in FY17). CESC’s consol. PAT will get upgraded by ~13% for FY19/20E.
- Post demerger, CESC’s generation entity will have one of the best mix of capacities among the listed private sector power companies – 2.5GW of capacity under PPAs, with a predictable cash flow stream.
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