CARE Revises Ratings On Sasan Power; Reliance Power Disagrees
Reliance Power Ltd. said rating agency CARE has revised the long-term and short-term ratings of its subsidiary Sasan Power on account of significant weakening in the financial risk profile of the parent firm.
The rating agency also cited continual uncertainty over compensatory tariff implementation towards change in law during construction and foreign exchange variations as reasons for the revision.
Reliance Power said it "strongly disagrees with the revised ratings assigned by CARE".
CARE revised the long-term and short term ratings of Reliance Power's subsidiary Sasan Power Ltd. to ‘CARE BB+’ (negative outlook) and ‘CARE 4’ respectively on account of significant weakening in financial risk profile of the parent company. It said that this was coupled with continual uncertainty over the compensatory tariff implementation towards change in law during construction and foreign exchange variations, the company said in a regulatory filing.
Reliance Power said the 3,960 MW Sasan ultra mega power project is operating at 97 percent plant load factor for year to date in financial year 2019-20 and continues to be the best performing power plant among such large sized power stations in the country.
"The power plant performance is strongly supported by optimal and efficient operating performance of its captive coal mines which deploy most modern and productive equipment and are the largest coal mines by volume handled in the country.
"With its competitive tariff Sasan is placed on the top of Merit Order Dispatch stack and has an excellent track record of collections from Procurers Sasan has hedged substantial portion of its foreign currency debt," it added.
Reliance Power said Sasan has always been regular on debt service without taking any support from its parent company since inception of the project.
"The company strongly disagrees with the revised ratings assigned by CARE...The company believes that CARE has not appropriately factored in the above rating strengths, while assigning the revised ratings," Reliance Power said.