Business Daily from THE HINDU group of publications
Monday, Jul 31, 2006
Business Daily from THE HINDU group of publications Monday, Jul 31, 2006 |
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Corporate
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Outlook Industry & Economy - Power NTPC may get waiver on joint venture financial cap Anil Sasi
The financial limit could emerge as a stumbling block in light of the massive fund requirement envisaged for each of the proposed ultra mega projects.
New Delhi , July 30 NTPC is likely to get special exemption from the financial limit of Rs 1,000 crore applicable on `navratna' companies for establishment of joint venture companies. The exemption is specifically aimed at the joint ventures that NTPC is planning for the proposed 4,000 MW ultra mega projects, each of which could entail investments of over Rs 16,000 crore. The Power Ministry is in the process of moving a proposal on the issue for Cabinet approval, Government officials involved in the exercise said. The Rs 26,000-crore NTPC, which is participating in the bidding process for the proposed ultra mega projects, is actively exploring the option of bidding through the consortium route and is in the process of firming up coal mining and equipment supply partners. According to sources, the company is actively looking at a number of options, with BHEL being the most likely equipment supplier partner. The Cabinet had, in August last year, pegged the ceiling on investments by `navratna' companies for establishing joint ventures or subsidiaries for a particular project at 15 per cent of the enterprise's net worth, limited by a financial cap of Rs 1,000 crore. This financial limit could emerge as a stumbling block in light of the massive fund requirement envisaged for each of the proposed ultra mega projects, a Government official said.
Consortium route
On the rationale behind taking the consortium route, an NTPC executive said: "The developers for the ultra mega projects are to be selected based on a process of tariff-based competitive biding. It makes sense to form mining and equipment supply joint ventures so that costing and ultimately the tariffs can be worked out on a firm basis." According to plans firmed up by the Government, the proposed ultra mega power projects are to be set up at five sites in Madhya Pradesh, Gujarat, Maharashtra, Karnataka and Chhattisgarh. Two more sites have also been identified in Orissa and Andhra Pradesh. Commissioning of these projects is slated for the 11th Plan period. NTPC has already submitted EoIs for the four projects where Power Finance Corporation (PFC) has initiated pre-bid activity and the company is likely to bid for a majority of the projects on offer, officials said. The projects, each with an initial capacity of at least 4,000 MW, would have scope for expansion in future as well. The Centre would provide the site, fuel linkage in captive mining blocks and water, and obtain environment and forests clearance for each of the project through special purpose vehicles (SPVs) formed by PFC. The SPVs would also be responsible for tying up necessary inputs from the likely buyers of power and to facilitate tying up of power offtake from these projects and the necessary payment security mechanism. These SPVs will ultimately be taken over by the companies that win the bid to construct and operate the projects through the tariff-based competitive bidding route.
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