Heavy Rains Hinder Hydropower Generation

Monsoon, a vital ingredient of economic growth, has created havoc in the country with its early arrival - especially in the northern India. It is believed that the rains have taken nearly 5000 lives along with being responsible for huge destruction in the Himalayan state of Uttarakhand. The rain which improves the business prospects of Hydropower companies has now made it difficult for carrying out normal business.

According to recent filings by the NHPC and JP Power Ventures, the hydropower plants of companies based in the northern India have been largely impacted by the rains.

Jaiprakash Power Ventures (JPVL) has informed that its Vishnuprayag Hydropower plant of 400 MW capacity has been affected due to the high intensity rains with the excessive silt brought by the floods of the Alakananda river. The company has also reported that it has stopped power generation from this plant from June 16, 2013. The event as described by the company is of Force Majeure and there would be a commercial impact on its revenues for the quarter.

NHPC has also reported that water has entered its Dhauliganga Power Station (280 MW) and that generation in the plant has been stopped. The water has damaged various ancillary structures of project like roads, residential and non-residential buildings, it further added.

Another state-owned SJVN also has a power station in Uttarakhand but the company has not yet reported any damage to its power station. Besides, there are a number of private as well state-owned power generating companies having power stations in the state which would also have hit by the floods. The impact remains unconfirmed.

Both the companies (NHPC and JPVL) have reported that their projects are covered under the Industrial All Risk Insurance Policy.

As far as an impact on the revenues is concerned, NHPC may not see a huge impact in revenues as the Dhauliganga unit represents only 5% of its total capacity. For JPVL, the impact may be significant as it represents quarter of its operating capacity. The fear, however, is the damage to the stations. If the high flow of water has damaged the key components of the plant, then the impact would be huge for FY14