Lockdown Delayed Execution of Under Construction Projects, Escalated Costs: Adani Transmission

Adani Transmission (ATL), an arm of the Adani Group, has said that the coronavirus-induced lockdown has delayed the execution of its under-construction projects due to non-availability of workforce and delay in getting multiple regulatory approvals led to cost escalation.

The government had imposed a 21-day nationwide lockdown on March 25, 2020, in order to fight coronavirus pandemic, and has been gradually relaxing the guidelines for restarting economic activities. However, this lockdown has impacted economic activity across the country.

The company said that “the continued lockdown has also resulted in the migration of resources affecting project execution work due to non-availability of workforce and disruption of allied services.”

“Delay in getting multiple regulatory approvals, i.e. ROW (right of way), forest approvals, wildlife, defense, civil aviation and power and transmission line crossing will delay the SCOD (scheduled commercial operation date), leading to cost escalation,” it added.

The Ahmedabad-headquartered company also worried about, owing to the uncertainty in the availability of the labor force and moderate delay in key materials, and moderate hurdles in the availability of technical specialists of vendors, it envisages that roughly 25 per cent of the planned Capex will be unutilized. This unutilized Capex will impact the targeted EBITDA and Regulated Asset Base for FY21, it further said.

On the commercial operation date (COD), the company said that “in view of lockdown disruption, our suppliers, contractors and resources down the line have not been able to perform their obligation and this may likely get further extended, for which extension of time has been provided to them. This will result in the delay of COD beyond our control.”

Adani Transmission also added that its cash flow is adversely impacted during pandemic times due to nonpayment by Discoms for Transmission assets and by billed consumers for the retail distribution business.

However, ATL has around Rs 2,296.84 crore of cash and liquid investments at the end of March 31, 2020, it added.

On the mitigation plan for the under-construction project, the company said that it is taking requisite steps to complete the projects on scheduled COD. However, to mitigate the loss due to time and cost overrun, it has already issued required Force Majeure and Change in Law notices under the provisions of Transmission Services agreement.

The transmission major also added that the management is confident of getting favourable consideration by long term transmission customers and appropriate regulatory commissions for determination of the impact of Force Majeure and Change in Law notices.

Reacting to the news, shares of the company were trading at Rs 188 apiece, up 4.21 per cent, from the previous close on the exchange at 11:27 a.m.

Earlier, the company had reported a jump of 32 per cent in its consolidated net profit after taxes (PAT) at Rs 204 crore for the third quarter ended December 31, 2019, strongly driven by superlative operational performance.