Adani Power 'well placed' to mitigate fuel risk: Report

NEW DELHI: Adani Power, which is aiming at 20,000 MW installed capacity by 2020, is "well placed" to mitigate fuel supply risk on account of the parent group's dominance in coal trading, says a report.

HSBC Global Research, a part of global banking major HSBC, said Adani Power also has a strong record of timely project completions.

"Adani is well placed to mitigate the fuel supply risk of its power projects," it said.

According to a research report, parent Adani Enterprises' coal mines and dominance of coal trading would help Adani Power to mitigate fuel risk.

Many power projects in the country are grappling with fuel scarcity, a scenario that could adversely impact the country's capacity addition plans.

"Adani Enterprises, the parent, dominates India's coal trading market and owns mines in Indonesia, assuring a minimum supply for Adani's power projects.

"The parent also owns both land and sea transportation fleets and infrastructure interests, minimising logistics risks," the report said.

Adani group owns coal mines in Indonesia and Australia and also has a 30-year, take-or-pay contract with PT Bukit Asam for mines in Sumatra.

"Parent group has a strong mines development and operations (MDO) business in India, currently partnering various state agencies to develop mines with a production capacity of 110 million TPA (Tonnes Per Annum)," the report noted.

Further, it pointed out that Adani Power has taken adequate measures to address technical and fuel-mix change risks by way of appropriate design of the boiler.

"Operations and engineering maintenance teams from equipment suppliers have been deployed at project sites. Furthermore, its boilers have been designed for fuel quality flexibility," HSBC Global Research said.

At present, Adani Power has an installed capacity of 2,640 MW and the same is expected to reach 20,000 MW by 2020.

"Adani has a strong record of timely project completions, boding well for its scheduled increase of capacity from 2.6 GW to 6.6 GW by March 2013," the report said.