1 NOV, 2012, DEBJOY SENGUPTA, ET BUREAU
KOLKATA: Power companies have once again flagged concern over falling coal supplies, saying that low capacity utilisation because of raw material constraints was crimping return on investment for new thermal power plants.
According to a report of the Central Electricity Authority, the average plant load factor (PLF), or capacity utilisation, of new thermal power plants dipped to 68.5 per cent in the first half of the current fiscal from 73.32 per cent in the year-ago period.
The average PLF of thermal power units for 2011-12 fell to 73.32 per cent from 75.08 per cent in the previous year. The hit was bigger for independent power producers with average PLF falling from 80.97 per cent in 2010-11 to 67.27 per cent in 2011-12, the report said.
"If the plant load factor drops to 70 per cent, the rate of return on equity vanishes due to lower generation and resulting lower revenue flow," the chairman and managing director of a large public sector power company said.
"If the PLF falls below 60 per cent it will become difficult for the unit to service even interest costs."
New thermal power projects are generally planned on a PLF of 85 per cent and a rate of return on investment of 15.5 per cent, if the financing is done on a 70:30 debt equity ratio, said the power company chief, who did not wish to be named.
"At 68 per cent PLF, the return on equity vanishes and further decline starts, affecting the financial health of the companies," he added.
KOLKATA: Power companies have once again flagged concern over falling coal supplies, saying that low capacity utilisation because of raw material constraints was crimping return on investment for new thermal power plants.
According to a report of the Central Electricity Authority, the average plant load factor (PLF), or capacity utilisation, of new thermal power plants dipped to 68.5 per cent in the first half of the current fiscal from 73.32 per cent in the year-ago period.
The average PLF of thermal power units for 2011-12 fell to 73.32 per cent from 75.08 per cent in the previous year. The hit was bigger for independent power producers with average PLF falling from 80.97 per cent in 2010-11 to 67.27 per cent in 2011-12, the report said.
"If the plant load factor drops to 70 per cent, the rate of return on equity vanishes due to lower generation and resulting lower revenue flow," the chairman and managing director of a large public sector power company said.
"If the PLF falls below 60 per cent it will become difficult for the unit to service even interest costs."
New thermal power projects are generally planned on a PLF of 85 per cent and a rate of return on investment of 15.5 per cent, if the financing is done on a 70:30 debt equity ratio, said the power company chief, who did not wish to be named.
"At 68 per cent PLF, the return on equity vanishes and further decline starts, affecting the financial health of the companies," he added.
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