OPG faces hit from Indian power reforms

OPG Power, the developer and operator of power stations in India, was off after reporting that national economic reforms in the country could have an impact on it.

The government of India has announced debt restructuring assistance to State Electricity Boards (SEB), subject to them undertaking reforms on tariff and transmission losses.

OPG said that many SEBs, including Tamil Nadu, had accepted the government's plans, meaning a further rise in regulated tariffs in the Tamil Nadu region was possible sometime during the remainder of the current financial year and more likely in the following year.

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"However as the timing and quantum of such increases cannot be reliably determined at present, the company has not adopted any further potential increases in tariff in its own estimates," OPG said.

The firm also noted government reforms to improve domestic coal availability over a period of time.

"The company expects limited short term impact of this upon its operations due to its coastal locations and greater fuel flexibility," OPG said.

"However, the removal of 5% import and counter-veiling duties on coal has had a positive effect on landed coal cost."

Shares were down 1% by 09:00 on Tuesday.

MM