With an operating capacity of 40GWs and plagued by a relatively slower pace of
capacity addition and cost/time overruns therein, the hydro power (HEP) scenario
in India has not altered much since the first 5‐year plan. Below are the brief
highlights ofthe currentscenario in terms of capacity addition in the sector:
Only 7.3% capacity addition has been achieved in the first 18 months of the
12th Plan: The 12th Plan had envisaged 10.8GWs capacity addition, of which, only
798MWs has come on stream to which the Central sector contributed 66%,
Private sector 21% and State sector contributed 13%. The total capacity under
construction (CWIP) stands at 10GWs under the 12th plan, of which, 54%
pertains to the Central sector, 31% to Private and balance to the State. Within
the CWIP, in PSUs, NHPC’s share - 3GWs, NTPC - 1GW and NEEPCO - 0.8GWs;
State-wise, HP and AP each have a share of close to 500MWs of CWIP, while in
the private sector, it is scattered amongst players like NCC, NSL, GVK, L&T and
others.
Cost/time overrun substantial: A total of 10GWs of projects have been
currently delayed, thus, leading to time and cost overruns. A total of 6.9GWs
pertain to Central, 1.5GWs to State Sector and 3GWs to Private which are
reeling under both, time and cost over runs. In terms of time, the projects
currently under CWIP are delayed by over 30-40 months and in some cases,
beyond six years. Poor geology, delays from contractors, local resistance (Land
acquisition/forest clearance) and adverse weather conditions affecting logistics
and operations were the main reasons for the delays. In terms of cost, the
projects currently under CWIP have crossed over 30% on an average of their
original cost (average PC being Rs8-10bn) approved in the DPR. Out of the total
projects in CWIP, 5247MWs has been awarded to BHEL, 100MWs to Chinese
players and balance 4752MWs to Indian (VA Tech), French (Alstom), European
(Litostroj Slovenia) and Chinese (Dongfang) TG suppliers. Major EPC contractors
for these projects are SNC, Patel Engineering, Jaiprakash, HCC, DSC Engineering,
Om Metals, Gammon India etc.
Overall progress to remain slow, target may be missed by 30%: With geopolitical hindrances within India and outside likely to remain the same, the
progress of HEPs continue to remain dismal. Around 265MWs is expected to
come up in H2FY14 and another 2500-3000MWs in FY15-16. Looking at the
progress of CWIP, we expect the capacity addition target to be missed by 30% in
the 12th Plan. In the listed space, while SJVN has the least risk of capacity
addition as Rampur 412MWs is expected to come on stream by FY14, NHPC’s
Kishanganga, Parbati St. II and Subansiri Lower may slip into the 13th Plan.
However, on account of a regulated model of earnings and healthy dividend
yields within the power sector, NHPC and SJVN are relatively safer bets and
hence, we maintain ‘Accumulate’ on both.
��
capacity addition and cost/time overruns therein, the hydro power (HEP) scenario
in India has not altered much since the first 5‐year plan. Below are the brief
highlights ofthe currentscenario in terms of capacity addition in the sector:
Only 7.3% capacity addition has been achieved in the first 18 months of the
12th Plan: The 12th Plan had envisaged 10.8GWs capacity addition, of which, only
798MWs has come on stream to which the Central sector contributed 66%,
Private sector 21% and State sector contributed 13%. The total capacity under
construction (CWIP) stands at 10GWs under the 12th plan, of which, 54%
pertains to the Central sector, 31% to Private and balance to the State. Within
the CWIP, in PSUs, NHPC’s share - 3GWs, NTPC - 1GW and NEEPCO - 0.8GWs;
State-wise, HP and AP each have a share of close to 500MWs of CWIP, while in
the private sector, it is scattered amongst players like NCC, NSL, GVK, L&T and
others.
Cost/time overrun substantial: A total of 10GWs of projects have been
currently delayed, thus, leading to time and cost overruns. A total of 6.9GWs
pertain to Central, 1.5GWs to State Sector and 3GWs to Private which are
reeling under both, time and cost over runs. In terms of time, the projects
currently under CWIP are delayed by over 30-40 months and in some cases,
beyond six years. Poor geology, delays from contractors, local resistance (Land
acquisition/forest clearance) and adverse weather conditions affecting logistics
and operations were the main reasons for the delays. In terms of cost, the
projects currently under CWIP have crossed over 30% on an average of their
original cost (average PC being Rs8-10bn) approved in the DPR. Out of the total
projects in CWIP, 5247MWs has been awarded to BHEL, 100MWs to Chinese
players and balance 4752MWs to Indian (VA Tech), French (Alstom), European
(Litostroj Slovenia) and Chinese (Dongfang) TG suppliers. Major EPC contractors
for these projects are SNC, Patel Engineering, Jaiprakash, HCC, DSC Engineering,
Om Metals, Gammon India etc.
Overall progress to remain slow, target may be missed by 30%: With geopolitical hindrances within India and outside likely to remain the same, the
progress of HEPs continue to remain dismal. Around 265MWs is expected to
come up in H2FY14 and another 2500-3000MWs in FY15-16. Looking at the
progress of CWIP, we expect the capacity addition target to be missed by 30% in
the 12th Plan. In the listed space, while SJVN has the least risk of capacity
addition as Rampur 412MWs is expected to come on stream by FY14, NHPC’s
Kishanganga, Parbati St. II and Subansiri Lower may slip into the 13th Plan.
However, on account of a regulated model of earnings and healthy dividend
yields within the power sector, NHPC and SJVN are relatively safer bets and
hence, we maintain ‘Accumulate’ on both.
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