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The country’s largest power producer NTPC Ltd will pay Rs700 crore to Rajasthan government for its stake in the 1,000 mega watt (MW) Chhabra power plant and assume close to Rs3,200 crore of debt as part of a deal reached with the state last Wednesday that will also bring down cost of power for a state power distribution firm and for consumers.

 

NTPC, which has announced phasing out of 11,000 MW of old and polluting power units, will explore similar acquisitions of other states’ loss-making power generation businesses to turn around, a central government official and a company executive said, both on the condition of anonymity.

 

The deal will lower Rajasthan Rajya Vidyut Utpadan Nigam Ltd’s (RVUN) power generation cost through financial restructuring and improvements in plant operations, which in turn, will lower the power purchase cost of state distribution firm Rajasthan Urja Vikas Nigam Ltd (RUVNL) by 33 paise and power tariff to consumers by five paise, according to details of a presentation made by NTPC on the deal and reviewed by Mint. Power tariff to the consumer is expected to be cut from Rs3.89 a unit now to Rs3.84 after the transaction is completed. Union power minister Piyush Goyal had said earlier the deal will help improve efficiency in power generation from the Chhabra power plants and result in lower tariff for consumers.

 

NTPC too benefits from the deal as setting up a greenfield thermal power plant of similar capacity will cost more, while the Rajasthan government benefits from exiting a project that has been making recurrent losses partly because of the comparatively high amount of heat required to produce every unit of electricity.

 

NTPC will take over the first phase of the Chhabra project (1000 MW) by March 2017 and subsequently, the second stage of 1,320 MW capacity on its completion. For quick completion of the second stage, which has a revised project cost of Rs9,750 crore, NTPC will render project management services to RVUN, which is funding the project with an equity contribution of about Rs1100 crore and the remaining with debt. The power supply deals that RVUN has with state distribution firms will be transferred to NTPC.

Source: Livemint