Companies & Sectors
Tariff revisions for PPA projects possible, finds Nomura

CERC has the jurisdiction to regulate/revise or consider the appeal for tariff revision in case the power generating company sells power to more than one state and has signed legally binding PPAs, said the Attorney General of India. This may benefit Adani Power and Reliance Power, finds Nomura

Power generating companies have a glimmer of hope now in increasing power tariffs, says Nomura given that the Attorney General of India (AG), G Vahanvati, has told the Forum of Regulators (FoR), that the Central Electricity Regulatory Commission (CERC) has the jurisdiction and can regulate/revise electricity tariffs if legally binding contracts (PPAs—Power Purchase Agreements) have been signed by the generating company (IPP) with discoms across multiple states. The AG opined:


(a) CERC is the appropriate commission which has the ‘jurisdiction’ in cases where the generating company is supplying to more than one state. Whether the generating company originally had just one state as a buyer and thereafter added more units/capacity and started supplies to buyers/beneficiaries in other states, is immaterial.


(b) CERC has the jurisdiction to and can regulate/revise signed PPA tariffs (between the generating company and state discoms). Whether the relief is to be granted or not, is ultimately for the appropriate commission (CERC) to consider.


(c ) In case of the anomalous situation where an SERC has already passed a tariff order while the other state refuses to acknowledge the same, CERC is the appropriate commission and it is immaterial whether an SERC has passed a tariff order or not (relating to the power plant/generating company in subject).


In essence, CERC has the jurisdiction to regulate/revise or consider the appeal for tariff revision in case the generating company sells power to more than one state and/or have signed legally binding PPAs, says Nomura.


The implications for IPPs (independent power producers) are as follows, according to Nomura:


(a) Adani Power and Reliance Power are the most likely beneficiaries given their fixed tariff PPAs in Mundra and Krishnapatnam UMPP. Adani’s appeal, seeking revision in tariff related to PPA with GUVNL (Mundra II, 1000MW at Rs2.35/kWh) has been admitted in the Supreme Court while it has also filed petitions with the CERC for PPAs with GUVNL and Haryana SEBs (1424MW with UHBVNL & DHBVNL). Adani’s Tiroda-I PPA with MSEDCL is also under negotiation and a positive outcome may impact the results positively.


(b) Reliance Power’s Krishnapatnam UMPP case is also sub judice (as Reliance seeks stay on encashment of bank guarantee by the procurers) subsequent to which a tariff revision petition would be filed.


(c) JSW Energy and Lanco Infratech can also benefit in respect of their PPAs with MSEDCL (300MW from its Ratnagiri facility) and HSEB (165MW from its Amarkantak facility) plants respectively.


(d) Tata Power could potentially benefit from this development.


Consumer demand continues to be strong says Nomura

Consumer stocks like Hindustan Lever, Godrej Consumer, Nestle and others are trading at expensive valuations. The reason: It will be another quarter of robust earnings growth for consumer product companies

Nomura’s (Nomura Equity Research) meeting with Godrej Consumer Products indicated that despite concerns on slowing GDP (gross domestic product) growth and poor monsoons, there has been limited to negligible impact on underlying demand. This was already borne out in the Q1FY13 numbers across the sector. The demand has continued to remain robust into Q2 as well. Nomura predicts that this augurs well for companies across the sector and it is believed this will be another quarter of robust earnings growth.
Consumer stocks are trading at higher than long-term averages. This is a result of consistent delivery on a quarterly basis, with most companies reporting double-digit volume growth and some price/mix led gains, says Nomura.
In an environment where investors are averse to increasing the risk in the portfolio, consumer companies offer a safe haven, opines Nomura, and they have been rewarded with higher multiples. Nomura does not expect this to reverse in the short-term and valuations look likely to remain at the higher end of the long-term average.
Nomura analysts met Godrej Consumer Products to get an update on the outlook for FY13F, and performance of various business units. Q1FY13 results were solid, with most businesses showing robust performance. The company has not seen any demand slackening in Q2 and remains confident of delivering another solid year in FY13. Key takeaways from the meeting included soaps business continuing to perform, household insecticide business continuing to drive growth, and international business being on track to deliver. 


Naroda riots: Ex-minister Maya Kodnani among 32 convicted

The Special Court, which heard arguments on the quantum of sentence, will decide on the punishment on 31st August. The massacre had taken place a day after the Godhra train burning incident of 27 February 2002

Ahmedabad: Ten years after over 90 people from the minority community were killed in Naroda Patiya riots, a special court on Wednesday convicted 32 people, including BJP MLA and former minister Maya Kodnani and Bajrang Dal leader Babu Bajrangi, on charges of murder and conspiracy, reports PTI.
Additional principal judge Jyotsna Yagnik in her verdict acquitted 29 other accused.
The court held Kodnani and Babu Bajrangi guilty under sections 120 (B) (criminal conspiracy) and 302 (murder) of IPC in the post-Godhra riots case.
"The maximum punishment for criminal conspiracy and murder can be death sentence," advocate Shamshad Pathan, representing the victims, said.
The court, which heard arguments on the quantum of sentence, will decide on the punishment on 31st August. The massacre had taken place a day after the Godhra train burning incident of 27 February 2002.
On 28 February 2002 when a bandh call was given by the Vishwa Hindu Parishad (VHP), a large crowd gathered in the Naroda Patiya area and attacked people belonging to minority community that resulted in the death of 97 people while 33 others were injured in the violence.
Kodnani, a three-time MLA from Naroda area, who was considered to be close to Chief Minister Narendra Modi, was arrested in March 2009 when she was the minister and had to resign from the post.
She became the MLA for the first time in 1998 and won elections twice from that constituency. She was made Minister of State for Women and Child Development in the Modi government in 2007.
BJP state leadership wasted no time taking her into the Cabinet, widely believed to be at the behest of LK Advani. She was the first Sindhi leader to become a Gujarat minister, since the state was founded in 1960.
Welcoming the verdict, Law Minister Salman Khurshid said in Delhi tht the judgement enhances faith of the people in the legal system.
Playing down the court's order, BJP spokesperson Tarun Vijay said, "We have full trust in the judicial system of the country".
The trial began in August 2009 and charges were framed against 62 accused, one of the accused, Vijay Shetty, died during the course of trial.
As many as 327 witnesses, comprising eye witnesses, victims, doctors, police personnel, government officials, forensic experts and journalists including Ashish Khetan, who conducted a TV sting operation on the accused, have been examined by the court.
Initially, 46 people were arrested by the Gujarat Police, whereas 24 more people were apprehended after the probe was handed over to the Supreme Court-appointed Special Investigation Team (SIT) in 2008. In all, 70 people were arrested in the case.
Six persons died before the charges could be framed and trial started, while two others identified as Mohan Nepali and Tejas Pathak jumped bail and are still absconding.
Kodnani was arrested by the SIT when she was a minister of state for women and child development in Modi government in March 2009. She was an MLA at the time of the incident.
The Naroda Patiya case was probed by eight investigating officers over the last decade with the latest being Himanshu Shukla on behalf of the Special Investigation Team (SIT).
The Naroda Patiya case was one of the nine cases of Gujarat riots being probed by the SIT, including the Godhra train burning case.


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