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Event
Jaiprakash Power Ventures (JPVL) has commenced filling of water in the intake channel of the
1,000MW Karcham Wangtoo hydropower plant.
Details
In line with its indicated schedule, JPVL has commenced filling of water in the intake channel of the
1,000MW Karcham Wangtoo hydropower plant from 2 Jan 2011. This is a critical milestone in the
construction of the project and is a lead indicator of the commissioning of the first unit of the plant
over the next two months. The company has targeted 6 Mar 2011 as the commissioning date of the
first unit, and the timely commencement of water filling provides comfort that it will achieve the
target. When commissioned in March 2011, the Karcham Wangtoo project would be completed six
months ahead of schedule and about 2-3 months ahead of our assumptions.
While a dispute with PTC regarding the PPA for sale of power from the plant remains unresolved,
we expect a solution before the plant is commissioned. Till such time as the final outcome of the
dispute, we assume design energy of 5.36bn units and we expect JPVL to sell 80% of the same to PTC
on tariffs determined under CERC regulations and the balance 20% in the merchant market.
Our view
Karcham Wangtoo, once commissioned, would be India’s largest private hydropower project and
the second largest overall. The commissioning potentially ahead of schedule, we believe, re-affirms
Jaiprakash Group’s strength in project execution and its track record of managing large and complex
projects. Moreover, it reinforces our comfort on the smooth rollout of the planned 11,770MW of
additional hydro and thermal power projects over the next seven years. We see the commissioning
of Karcham Wangtoo as a key trigger for the stock and reiterate our Outperformer rating on JPVL
with a 12-month target price of Rs79/ share.
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