Aggressive bidding in auction to be credit -ve for power cos

Rating agency today said the aggressive bids by companies in the ongoing coal blocks auctions, especially by the power sector, will be credit negative for them.

“Participants at the ongoing e-auction of coal blocks for both regulated and unregulated sectors are facing difficult choices, as outcomes will redefine their cost structures and profitability in the short-term, even as they ensure fuel security and sourcing flexibility over the long term,” Crisil said in a note.

For the regulated power sector, allocation of blocks will lead to a four-fold increase in captive coal availability to around 100 million tonne over the medium-term. This will improve the plant load factors, but “aggressive bidding will be a credit negative”, it warned.

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