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India’s NTPC scouts for overseas coal equity

India’s NTPC Limited, the country’s largest power producer, would start scouting for equity in overseas coal assets to equip the utility company to compete in bidding for setting up ultra-mega power plants (UMPP) across the country.
 
NTPC would be looking to set up UMPPs, competitive bids for which would be invited by the Indian government from private and public companies. But for setting-up imported coal based plants, it would be necessary to have investments in coal assets overseas, according to a company official.
 
NTPC’s free cash reserves on balance sheet of around $2.75-billion would be leveraged to fund equity acquisition in coal assets overseas linked to the company’s UMPP plans, the official added.
 
The largest power producer, however, was not successful in bagging any UMPP projects in the first round of tariff-based competitive bidding.
 
The UMPP projects based on super critical technology, awarded by the Indian government through bids based on tariffs was first conceived in 2005 for each power plant of minimum capacity of 4 000 MW each. Four projects had already been awarded and under various stages of implementation while bids for three more projects in the provinces of Chattisgarh, Orissa and Tamil Nadu were expected to open before month-end.
 
The shortage to coal feedstock has been the biggest roadblocks to thermal power plants in the country, including UMPPs. Coal-based power projects in the country imported about 30-million tonnes of the dry fuel in April-July this fiscal.
 
Around 27 projects using domestically produced coal purchased 14.6-million tonnes of the fuel from overseas until July 31, due to a shortage of supplies at home, according to data of regulator Central Electricity Authority data.  In current fiscal total imports was forecast at 50-million tonnes.
 
Power plants designed to use imported coal received about 15- million tonnes of imported coal during the period with 32-million tonnes forecast for the full fiscal.
 
About 82-million tonnes of coal imports are needed this fiscal to meet the requirements of power plants using indigenous coal and projects relying on imported fuel.
 
Officials in NTPC said that equity in overseas coal assets was an imperative in ensuring viability of imported coal-based UMPPs pointing out that with Indonesia benchmarking its coal export to international prices, project costs of UMPPs would be unviable at current coal prices.
 
Moreover, since success in bidding for UMPPs would depend on quoting competitive power tariffs, having own source of imported coal would be an important imperative to being competitive, the official added.


Source: Mining Weekly