This year, Tamil Nadu has been getting pretty good winds and the wind power generation has gone up compared with last year. One company that is letting out a sigh of relief is Orient Green Power Ltd.

The wind power company, which reckons it lost about ₹250 crore because the state-owned utility in Tamil Nadu did not buy its electricity in the past years, ended 2018-19 with a loss of ₹33 crore.

Also, it did not help that public distribution companies were not paying wind energy companies their dues on time — OGPL has to get ₹30 crore from Andhra Pradesh alone. Timely receipt of dues would help companies such as OGPL manage their finance costs. OGPL had to contend with finance costs of ₹192 crore last year, upon a ₹1,200-crore bank debt burden.

Olympus Capital and Bessemer Ventures-backed OGPL’s Managing Director and CEO, Sesha Venkatachalam, says that 2018-19 was particularly bad because of poor winds in Tamil Nadu, where the company has 310 MW (of its 425 MW) wind power capacity.

However, 2019-20 wind season has begun on the front foot. In April-May period of this year, Tamil Nadu generated 1,585 million kWhr, compared with 859 million in the corresponding period of last year — a 45 per cent jump. There is no reason to believe that the rest of the wind season, which is yet to peak, will not be as good. This has prompted Venkatachalam to observe that the current wind year “looks bright”.

NSE listed OGPL’s is a sad story of renewable energy done in by the government-owned discoms, with first the “backdowns” (or not buying electricity) and then delayed payments. That the Tamil Nadu discom had a practical reason for the backdown – the inability of its grid to handle large parcels of intermittent wind power — is not helpful to a company that has to pay back its bank dues out of its electricity sales.

Thankfully, however, the phenomenon of backdown has gone and the state is buying most of the electricity that wind and solar companies are generating. The other problem, though, that of delayed payments, is a nation-wide phenomenon that is bludgeoning all renewable energy companies and holding back investments. Venkatachalam says that all States except Gujarat pay very late, and ironically, also extract discounts that are due for prompt payment. There have been reports that Telangana owes energy companies ₹2,400 crore.

OGPL, for instance, could get investors bring in cash to pay off bank debts, but which investor would bring in cash if he doesn’t trust the investee’s biggest customer? The parent, Shriram group, chipped in with ₹700 crore. It is today owed about ₹450 crore and analysts believe that the group has little option but to forget it.

The company, formed in 2006 as a joint venture between Shriram EPC, part of the Chennai-based Shriram group, and Bessemer Ventures, went public in 2010, for ₹47 a share, to raise ₹900 crore. It is yet to pay a dividend. Its shares closed today on the NSE at ₹4.05.

Related Topics
comment COMMENT NOW