CERC step will increase profits for new projects: Neyveli

The Central Electricity Regulatory Commission (CERC) has upped the Return on Equity (RoE) for power units to 15.5% versus 14%. CERC added that the new RoE would be applicable for the period 2009 to 2014. The power stocks, that saw in surge yesterday, remained quieter today but the news looks positive for the entire space. Prasanna Kumar, CMD & Director of Finance, Neyveli, believes that the RoE for new projects will be more provided they are completed on time. According to him, profits will increase and there will be incentive for generators to produce more power. He sees additional profit for future projects at Rs 32.5 crore and is of the view that additional depreciation will not impact bottomline. Sanjiv Goenka of CESC said that the CERC guideline holds for private companies and it is up to state regulators to implement them. He further added that the new CERC norms are applicable to all projects under state and central regulation.