KOCHI: CIAL Infrastructures Ltd (CIL) – CIAL Infra, a wholly-owned subsidiary of Cochin International Airport Limited (CIAL), has moved the Appellate Tribunal for Electricity, Delhi, challenging the tariff set for its 4.5-MW Arippara Small Hydro Electric Plant (SHEP).
The company is seeking a higher rate than the Rs4.30 per unit interim tariff set under its power purchase agreement (PPA) with Kerala State Electricity Board Limited (KSEBL) in May 2023.
This rate is lower than the Rs5.53 per unit prescribed in the Kerala State Electricity Regulatory Commission’s (KSERC) 2020 generic tariff regulations for small hydro projects under 5 MW capacity.
The matter is currently pending before the tribunal, and CIL is also preparing to submit a revised petition to KSERC, citing lower capacity utilisation factor (CUF) and higher power evacuation costs as justification for a higher tariff.
Strength of long-term PPAs
Despite the ongoing tariff dispute, CIL benefits from long-term PPAs that cover its debt tenure, mitigating revenue risks, according to ICRA, the leading rating agency. The company operates a 39-MW solar plant within Cochin International Airport premises, supplying power to CIAL at a healthy tariff of Rs 6.80 per unit.
More than 70 per cent of CIL’s operational capacity is tied up with CIAL, ensuring timely receipt of payments and stable cash flows.
CIL also operates an 11.6-MW solar power plant at Payyannur, Kerala, which currently lacks a long-term PPA. Instead, it has a short-term agreement with KSEBL at a tariff of Rs 2.37 per unit, valid until March 31, 2025.
The company has filed a petition to supply power from the Payyannur plant to CIAL, with an approval expected by March 2025. A long-term PPA with CIAL for the Payyannur plant, likely to be signed from FY2026 at a higher tariff, is expected to further improve CIL’s financial metrics. The signing of this agreement remains a key rating monitorable from a credit perspective.
Financial performance
As of now, CIL’s total loans stand at Rs190 crore. While its operating income for FY2023-24 remained flat at Rs 42.3 crore, net profit rose slightly from Rs10.3 crore in FY23 to Rs10.9 crore in FY24.
CIL was incorporated in 2012 as a subsidiary of CIAL to explore opportunities in power and infrastructure. The company has played a crucial role in CIAL’s diversification efforts, enabling the airport to become fully powered by solar energy.
In addition to its solar plant at the airport, CIL commissioned the Payyannur solar power plant and the Arippara SHEP, both of which have been operational since Q3 FY2022.
Although CIL benefits from stable revenue through long-term PPAs, the resolution of the Arippara SHEP tariff dispute and the finalisation of a long-term PPA for the Payyannur plant will be critical factors in strengthening its financial position. The company’s ability to secure higher tariffs will influence its future profitability and credit profile.
