Power companies lose Rs 550 crore in two days

The massive electricity grid failure earlier this week, that left a majority of India in darkness, has impacted the volumes of power generation companies. The worst power black-out in the world hit their revenues by an estimated Rs 550 crore (Rs 5.5 billion) in two days.

The companies affected by the grid collapse were state-owned power generator NTPC Ltd, Nuclear Power Corporation of India Ltd (NPCIL) and Neyveli Lignite Corporation (NLC) in the central sector. Among the states, power utilities of Rajasthan, Haryana and Uttar Pradesh had to shut capacity down.

About 35,000 Megawatt (Mw) of capacity had to be shut as the northern grid, that caters to nine states including the national capital, collapsed under the weight of excessive load on Monday.

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Even before the exact cause of the incident could be understood, two additional grids – eastern and north-eastern, tripped along with the northern grid on Tuesday. The generation loss on the second day was 55,000 Mw.

Taken together, the generation loss of 90,000 Mw on the two days was close half of India's installed power capacity of 200,000 Mw.

While some plants remained shut for a few hours or less than a day, others remained shut for more than a day before revival efforts kicked in.

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Power companies refused to divulge details of revenue loss from the incident but a back of the book calculation puts the figure at around Rs 550 crore, assuming an average Plant Load Factor (PLF) of 85 per cent, the total revenue loss to the companies is estimated to be Rs 550 crore. The calculation is based on a conservative estimate of sale price at Rs 3 per unit.

NTPC was among the worst-hit, with six of its main plants brought down by grid failure. While the company did not share revenue loss details, based on the assumptions stated above, the impact on profit is expected to be around Rs 42.6 crore (Rs 426 million).

"Around 7,000 Mw (a fifth of NTPC's capacity) went down for some hours. The capacity started coming in within hours of the grid rectification," a senior official from NTPC Ltd told Business Standard.

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Asked to comment on the loss figure, the official said, "Our profit and loss is based on fixed cost and not the entire Rs 3 per unit sale price, which has 70 per cent of fuel cost. Also, fixed cost is much less in most of our old stations. The average price of Rs 3 per unit includes new stations."

NTPC, which generates 220 billion units of electricity, recorded a marginal 1.3 per cent increase in net profit last financial year (2011-12), at the back of a 9.4 per cent rise in total income at Rs 64,832 crore (Rs 648.32 billion).

Among the NTPC-owned plants that became a victim of the grid collapse were the 2,500-Mw Rihand thermal power station, the 2,000-Mw Singrauli plant, the 1,800-Mw Dadri plant, the 1,050-Mw Unchahar power station and the 705-Mw Badarpur power plant. The Rajasthan Atomic Power Station of NPCIL was also among the affected plants.

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Among the states, Panipat thermal power station in Haryana, Anpara and Obra plants in UP and Giral, Rajwest and Surajgarh power stations in Rajasthan were the worst affected.

Experts said the financial impact of the grid collapse on generating companies may not be a major concern.

"An overall impact of Rs 550 crore for the companies is not huge, considering their huge turnover. But the impact on consumers, especially the small-scale industries, is more important in this case," said V Srinivasan, Research Analyst with Mumbai-based Angel Broking.