The Hindu Business Line : `For country's energy security, we are moving into gas, hydro and nuclear'

In the Eleventh Plan, we want to add at least 22,000 MW, including about 2,000 MW from hydro, which will be a thrust area. This calls for an investment of at least Rs 88,000 crore.

The power sector is a happening field. And rightly so, for if India has to sustain the high GDP growth, rapid expansion in capacity and mix in the power sector is a must. Realising the potential, several large corporates have planned new power projects across the country NTPC, which drives the power sector, is now up against competition and needs to fine-tune its strategies to the growing realities of the market. In the backdrop of the company's plans of growing into a 50,000 MW company by 2012 and 75,000 MW by 2017, from the current capacity of 26,404 MW, and with an eye on global markets, Business Line met up Mr T. Sankaralingam, Chairman and Managing Director, of the Rs 26,000-crore power giant, to get an insight into the directions in which the company is moving.

Excerpts from the interview:

What are the near-term goals that NTPC has set to ensure that the company has a major share in the domestic power sector?

At present 19.29 per cent of the country's total installed capacity is with NTPC. Our 13 coal-fired and seven gas-based stations generated 27.69 per cent of all the power produced in the country.

In the Eleventh Plan, we want to add at least 22,000 MW, including about 2,000 MW from hydro, which will be a thrust area. This calls for an investment of at least Rs 88,000 crore.

NTPC needs a capex of about Rs 1,60,000 crore in the next two years to firm up its long-term plans. Loans from the Asian Development Bank and Bank of America, a Medium Term Note (MTN) programme for $1 billion, and issue of bonds are to be some of the routes for raising funds.

Going by the recent bidding process for the Ultra Mega Power Projects, wherein the tariff quoted was quite low, will NTPC lose out on major projects? Is there a strategy to counter this?

Yes, somebody has quoted a tariff of Rs 1.19 per unit, I can only say good luck to them. Let them build and operate. In open competitive bids, we cannot avoid this trend. Long-term players like us have to evaluate the risks, while short-term players can perhaps take risks. We will not put the company in problem for the sake of short-term gains.

Is diversification into nuclear, hydro and oil/gas exploration going to be a major strategy in the long term?

To increase the fuel security of the country, which is the prime responsibility of NTPC, we are diversifying into gas exploration. In fact one oil/gas block in Arunachal Pradesh has been allotted to the NTPC-led consortium under NELP-V.

Hydro power is already a major thrust for the company. We have projects going in Himachal Pradesh, Uttaranchal and Arunachal Pradesh. A subsidiary, NTPC Hydro Ltd., has been formed to take up small projects. It is already putting up a 171 MW unit in Uttaranchal and another 120 MW unit in West Bengal.

In the case of nuclear power, the company's board has given the nod to enter the field this year. A consultant has given us a road map. We have approached the Department of Atomic Energy (DAE) for opportunities. Simultaneously, we have asked the Ministry of Power to amend the Memorandum of Association to facilitate our entry into this sector. We are awaiting permission.

NTPC has two distinct advantages over the private sector players in nuclear power. In the area of procuring fuel or taking up projects, we don't need to wait till the Atomic Energy Act of 1962 is amended.

We are working on a paper on the areas of processing fuel, spent fuel, nuclear wastes, etc., and would discuss it with the Centre. Most global energy companies with capabilities in nuclear sector are in touch with us.

What are your plans for power trading?

Our subsidiary, NTPC Vidyut Vyapar Nigam, has started merchant plants at Katra and Farakka, and for hydel power in Uttaranchal to develop the electricity market and not to create one, which results in jacking up rates. We would like reasonable returns from this venture; profit-making is not our intent. The electricity regulator has appreciated this approach. In 2005-06, NTPC traded 1643 million units and earned a profit of Rs 3.32 crore.

How much focus does the company place on Research and Development?

Our focus is to deliver products. The R&D budget is fixed at 0.5 per cent of the profits, which the board has cleared. We are working on the futuristic hydrogen fuel.

Similarly, our efforts in IGCC (Integrated Coal Gassification Combined Cycle) are moving forward. We are working with USAID to indigenise the technology. A 100 MW demonstration plant is planned at Dadri.

NTPC has signed up with the International Energy Agency (IEA) for an interesting project on carbon capture and sequestration, which will begin soon. In the FutureGen project of the US also we are keen to take part. Renewable energy is another area which the company is seriously exploring as a future option.

You have made some ambitious plans on flyash utilisation and trade. What is their status?

Lots of cement units are willing to take the flyash generated by our coal-based power plants. After meeting the demands of the small-scale units located close to our power units, NTPC is willing to supply to any interested sector. It will not mind exporting. A small consignment was sent to the Gulf recently. NTPC has formed a company exclusively to promote the use of flyash. We are also exploring the applications of this waste material in agriculture and use in infrastructure projects.

How are your global plans progressing?

We have a three-pronged strategy for our global business. First is to invest in the power business, especially to achieve fuel security for the country. Second is to acquire coal fields, rights of gas, invest in LNG terminals to bring gas to India and, finally, to acquire power plants or coal mining rights.

In Sri Lanka, a joint venture has been formed for setting up a 500 MW (2x250 MW) coal based-power plant at Trincomallee. The Power Purchase Agreement would be signed by end of March and by 2011 these plants should be commissioned. Options are open in Indonesia and Australia.

In Nigeria, a final agreement with the Government is expected shortly. It would involve refurbishing a shut down power plant (120 MW) and maintenance; maintenance of existing plants and training people in India and creating infrastructure for the African country. In exchange, India should be able to get LNG.

In the medium term, the setting up of a 700 MW unit and for the long term coal based, 500 MW plants are envisaged.