CERC ruling is new lease of life for Adani Power: CLSA - Moneycontrol.com

Moneycontrol Bureau Calling the power regulator's landmark ruling a fresh lease of life for Adani Power, CLSA has in its latest report said it will wait and watch for the final outcome on tariff hike on April 30 for further analysis  In a landmark judgement, the Central Electricty Regulatory Commission (CERC) has permitted the company to charge compensatory tariff for electricity from its Mundra plant in Gujarat, until fuel supply improves. However, the quantum of tariff will be decided by a special committee set up by the CERC on April 30. Analysts have conceived this development as a big positive for the company which has got an interim relief till coal price stabilises globally. Here is why CLSA believes the CERC ruling to be a big relief for the company. * Adani has been struggling with losses quarter-on-quarter since Q4 of FY12 due to fuel cost being as high as Rs 2.5/unit on realization of 2.35-2.89/unit. Infact, its Rs 615 crore loss in Q3 can be attributed to Mundra plants poor performance, it said  * A weak rupee against the dollar has already escalated the project cost by 10-15 percent as it imports coal from Indonesia. * Earlier, Adani could not pass on additional cost to consumers as it had signed fixed power purchase agreements (PPAs) for 2.4 GW capacity which was unviable due to frequent hikes in fuel cost. However, CLSA further says more clarity is required on quantum of hike which will be decided by April 30 by a committee formed by the CERC. Assuming that even if there is 0.10/kWh (kilowatt-hour)hike in tariff it will lead to 14-28 percent increase in FY14 earnings. However, CLSA further says it will re-look at stock valuation post final quantum of hike is finalised. Meanwhile, Adani Power shares have fallen around 33 percent to Rs 70.40 in the past one year due to its inability to raise tariff despite high imports and insufficient fuel supply affected production. via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNH2J1UIuBZfvoC5hsRRb6peeYHKuw&url=http://www.moneycontrol.com/news/business/cerc-ruling-is-new-leaselife-for-adani-power-clsa_846760.html

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