Tata Power does not expect Covid-19 to have too much of an impact on its business, except its coal mining companies, the firm said in its annual report, released on Tuesday. The company added recoverability for its Mundra cash generating unit (CGU) will remain unaffected.
In its annual report, the company also said it would not pursue any greenfield or brownfield expansion in thermal power and would explore options in the distribution business in Indian and international markets and acquire transmission assets.
“Considering power supply being an essential service, management believes that there is not much of an impact likely due to this pandemic on the business of the company and its subsidiaries, joint ventures and associates,” Tata Power said in the report. It added, “…. except that there exists some uncertainty over impact of Covid-19 on future business performance of its coal mining companies which form part of Mundra CGU (comprising investment in companies owning Mundra power plant, coal mine and related infrastructure).”
The company added based on its sensitivity analysis, it believesd the Covid-19 uncertainty is not likely to impact the recoverability of Mundra CGU.
For its overall thermal and hydro generation portfolio, Tata Power said it has no greenfield or brownfield expansion plans in the near term. Tata Power is also evaluating opportunities in services for thermal and hydro plants by leveraging its technical and operation expertise.
The company said it would focus to augment transmission infrastructure in Mumbai operations. It added it will also look for suitable opportunities for acquiring few transmission assets through mergers and acquisitions. In its distribution business, Tata Power will also explore services business opportunities in both, domestic and international markets.
Tata Power also plans to go-ahead with supplementary tariff orders with two of the five states that procure power from its Mundra power plant.
“As per the legal opinion received, even if ultra-mega power plant (UMPP) Mundra supplies power as per the tariff discovered through the competitive bidding process to five states under single power purchase agreement (PPA), in order to implement High Powered Committee (HPC) recommendations, Coastal Gujarat Power (CGPL) can enter into separate Supplemental PPAs with each procurer,” Tata Power said in its annual report.
The report added CGPL is pursuing with Gujarat and Maharashtra to sign separate supplemental PPAs. “Once HPC recommendation is implemented in these two states, the matter will be taken up with other procuring states,” it further said Rajasthan, Punjab and Haryana are the other three states procuring power from Mundra.