Nomura’s first cut calculations suggest that CERC’s final tariff regulations entail a potential 11%-13% dent to its earnings forecast for NTPC post FY14
For NTPC, the Central Electricity Regulatory Commission (CERC) issued the final tariff regulations for the period FY15-19 – these regulations form the basis of NTPC’s earnings (regulated returns) from its core business over the next five years. CERC had issued the FY15-19 draft tariff regulations in December 2013; subsequently, representations from various stakeholders were invited and a public hearing on the draft norms was held in January 2014.
Contrary to expectations, relative to CERC’s draft tariff regulations for FY15-19, the final tariff regulations overall offer meagre relief to NTPC’s earnings outlook, points out Nomura in a research note.
According to Nomura, “Purely on benchmark operating norms, our first cut calculations suggest that CERC’s final tariff regulations entail a potential 11%-13% dent to our earnings forecast for NTPC post FY14.” Nomura’s calculations assume zero utilisation-linked incentive for NTPC’s projects post FY14.
The research note makes it clear that relative to the tariff norms proposed in the draft regulations, the absence of material relief in CERC’s final tariff regulations for NTPC’s post-FY14 effective RoE (return on equity) prospects is a significant negative surprise. In this context, Nomura expects near-term stock price performance to be weak. Nomura however, maintains its ‘Buy’ rating on the Nomura share in the stock market.
In a positive for Gujarat State Petronet (GSPL), PNGRB has re-computed the transmission tariff for GSPL’s High Pressure network by 11% to Rs26.6/mmbtu, says Nomura in a research note
The regulator Petroleum & Natural Gas Regulatory Board (PNGRB) has re-computed the transmission tariff for High Pressure network Gujarat State Petronet (GSPL) by 11% to Rs26.6/mmbtu.
According to Nomura, while exact impact of revised tariff order will be clear once zonal apportionment of tariff is finalised, the research note estimates, the impact is as follows:
(a) Annual transmission revenue increase of Rs820 million (post-tax impact of
Rs0.95/share – 12% of Nomura’s FY15F EPS of Rs8.0/share); and
(b) Retrospective gains of Rs1.4 billion for the period July12 to Mar14 (post tax impact of Rs1.6/share or 20% of Nomura’s FY15F EPS).
The tariff increase is a further positive for GSPL, points out Nomura. The research note says, “We highlight that GSPL was already a net gainer of the tariff-setting exercise. The average tariff for GSPL had increased by 11%-12%, and it had booked a gain of Rs1 billion for the nine-month period from July-12 to Mar-2013.”
However, PNGRB has said that it will file an appeal in the Supreme Court against the Appellate Tribunal’s order. Nomura has had a view, that there was not much case for retroactive tariff fixation, even for the period prior to network authorisation.
Jail authorities from Goa seized nine mobile phones, including one from the cell Tarun Tejpal, during an inspection at the Sada sub-jail
Jail authorities from Goa seized nine mobile phones, including one from the cell of Tehelka founder and former editor Tarun Tejpal, during an inspection at the Sada sub-jail near Vasco town on Sunday.
Deputy Collector Gaurish Shankhwalkar told reporters that a surprise check was conducted in the Sada sub-jail. “We found nine mobile phones, including one in Tejpal’s custody,” he said.
However, jail authorities refused to state whether the mobile phone was carried by Tejpal. They also refused to disclose anything about whom Tejpal shares his judicial lock-up cell.
Shankhwalkar said that a detailed probe into the incident which has been initiated, would reveal the truth.
Tejpal who is accused of raping his junior colleague has been lodged in the Sada sub-jail. His bail petition is scheduled to be heard by the Goa bench of the Bombay High Court on 4th March.