India-based power utility OPG Ventures PLC (LON:OPG) has written off its Gujarat power station after a series of ongoing disputes.
Efforts in future will be directed toward the Chennai power plant and OPG’s growing solar capacity. Profits here for the year to March were £6.2mln while revenues rose by 3% to £140mln. The Gujarat write-down, however, meant a loss for the year of £100.9mln (£23.1mln profit).
A sharp rise in seaborne coal prices and escalating disputes with the Gujarat authorities and electricity distribution companies meant debt repayment deadlines had been missed. No more cash will be spent on the Gujarat operation, OPG added.
The news at Chennai is more encouraging as the price of seaborne coal has fallen back and the loan on the first generator built at Chennai is on schedule to be paid back fully in December.
Four solar projects at Karnataka, meanwhile, are ramping up to full capacity of 62Mw.
Borrowings at the end of the March were £93.5mln, down from £321mln which reflects the absence of the Gujarat loans.
To preserve cash, there is a scrip rather than cash dividend for the year.
Arvind Gupta, executive chairman: “We are already benefitting from reduced coal prices following the FY18 spike and expect to be able to demonstrate a clear path to profitability in FY19.
“Our focus will remain on repaying the long-term debt on the Chennai plants and look forward to Unit 1 being debt free later this year with the remaining units following within five years.”