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NTPC to focus on buyouts of other state-owned thermal power plants

National Thermal Power Corporation Ltd (NTPC ), the country’s biggest power generator, has dropped its plans to take over stranded private power stations and will instead focus solely on state-owned thermal plants. “We are doing due diligence for a few projects like Damodar Valley Corporation’s (DVC) Raghunathpur project. We have already signed an agreement with the government of Jharkhand, where a joint-venture project will commence operation. There are many projects which are on the table…we are going through the due diligence process,” said AK Jha, chairman and managing director, NTPC.

The company is learnt to have evinced interest for a plant in Madhya Pradesh as well, apart from the ongoing talks for DVC’s Raghunathpur plant, while Rajasthan has indicated its interest in offering some of their thermal power plants to NTPC.

From NTPC’s point of view, the model to be followed involves a take-over of the plant — either directly or through a JV — with the tariff to be determined by Central Electricity Regulatory Commission (CERC) regulations.

The Rs 75,300 crore power generation major has already formed a joint venture company with the Jharkhand Bijli Vitran Nigam Ltd under a 74:26 equity pattern to take over the Patratu Thermal Power Station for performance improvement of existing capacity of the 840 MW plant that has been de-rated to 770 MW. Expansion of the station’s capacity in two phases — 2,400 MW in the first phase followed by 1,600 MW is on the anvil.

It has also signed an agreement with the Jammu and Kashmir State Power Development Corp Ltd for promoting a joint venture company with 67:33 equity participation for undertaking exploration, development and operation of jointly allocated Kudanali-Luburi coal block in Odisha.

NTPC had earlier indicated that it planned to deploy about Rs 5,000 crore for its inorganic growth plans, having issued an advertisement early last year offering to buy power plants from companies wanting to to sell their plants. The utility had received 34 proposals for a total of 55,000 MW in response to the expression of interest (EoI) it floated for acquiring generation capacity from other power producers. In addition, it also received around 12 proposals in response to a second EoI floated in December last year. It was reported to be planning to acquire 8,000-9,000 MW of capacity and had created a committee under the board’s supervision to evaluate potential opportunities. The company, which has cash reserves of over Rs16,000 crore, had mandated consulting firm KPMG to narrow down the list of potential acquisition targets.

A slowdown in growth and the resultant negative impact of electricity demand, alongside high borrowing costs and delays in securing clearance, has affected a number of infrastructure projects —including power plants — denting the ability of their promoters to repay creditors and vendors. Of India’s current installed generation capacity, NTPC has a 17 per cent share, with an installed power generation capacity of 43,128MW. The utility plans to add 14,038 MW in 2012-17 period and has a capital expenditure target of Rs1.5 trillion. It plans to have an installed capacity of 128,000 MW by 2032.

source: http://indianexpress.com