The Hindu Business Line : `4 NTPC units to be developed as merchant power plants'

Four of the upcoming projects of NTPC are to be developed as `merchant power plants'— electricity produced by these plants would be sold on auction to the highest bidder, as opposed to a particular buyer through a power purchase agreement (PPA).

Two of these — Korba (500 MW) and Farakka (500 MW) — are thermal units and the other two (the 600 MW Loharinag Pala and the 500 MW Tapovan Vishnugad) are hydel plants.

Typically merchant power plants do not tie-up their output for any particular buyer. However, part of the production of these plants would be dedicated to specific buyers and the rest would be sold on auction.

Demand & supply

Buyers of electricity (such as State electricity boards) could bid for the electricity from these plants for any period of time, such as for "next fifteen minutes or for next week". The tariff would be, therefore, based on demand and supply rather than a PPA.

Senior officials of NTPC told Business Line on Friday, on the sidelines of a press conference, that they found that at times electricity distributors bought power from NTPC at agreed rates and instead of supplying to customers in their region, sold off the power for a higher price to customers elsewhere.

"Why should we not get the higher price ourselves," posed a NTPC official, explaining the rationale behind merchant power projects. He hinted that hydel power projects of the future were likely to be merchant projects because the plants could be switched off and on, depending upon the demand for electricity.

The NTCP's Chairman and Managing Director, Mr T. Sankaralingam, said that the company's hydel portfolio would grow (it has 4,400 MW of projects at various stages), but ruled out any merger of the other public sector power company, National Hydro Power Corporation (NHPC) with NTPC.