Transfer of power business valued at Rs 408 crore

Our Bureau

In a nutshell

NTPC given

100 days to pay Rs 274 crore from date of transfer.

Badarpur balance

sheet bifurcated into power producing business to be transferred to NTPC and asset holding unit to be retained by the Government.

New Delhi, May 3

The Government today approved the transfer of Badarpur Thermal Power Station (BTPS) to state-owned NTPC Ltd for Rs 408 crore.

The Cabinet, at its meeting, gave the nod for the transfer, an official spokesperson told reporters.

The 705-MW Badarpur station is owned by the Centre and operated by NTPC under an operations and maintenance (O&M) contract funded through the Budget.

NTPC has been operating the station since April 15, 1978 and an allocation of Rs 1,419 crore has been made in the Budget for Badarpur's O&M expenses for the current fiscal.

"With this decision, the Government will stop putting further money to run the BTPS," the Government spokesperson said.

The transfer of power business of BTPS to NTPC will be at the business value of Rs 408 crore.

NTPC will be given 100 days to pay the amount of Rs 274 crore (excluding the value liabilities of Rs 134 crore) from the date of transfer.

As part of the transfer, the Government has authorised lease of 517.08 hectares of land on which the plant is located for 50 years to NTPC, which will pay an annual rent of Rs 5.2 crore.

The balance sheet of BTPS has been bifurcated into one relating to power producing business, which will now be transferred to NTPC, and another as a residual asset holding unit, which will be retained by the Centre till the settlement of Delhi Electricity Supply Undertaking (DESU) period dues.

Valuation hurdles

According to Government officials, the Centre had offered the plant to NTPC a couple of times earlier in the past, but disagreements on the valuation kept the deal from going through.

While NTPC wanted the buy-out to be adjusted against the erstwhile DESU dues owed to it, the Centre wanted the transfer of Badarpur to be treated as a separate commercial deal.

The Ministry of Power had, subsequently, floated a proposal in March 2000 for selling the plant to private players, but the idea was later shelved.

The plant has been running efficiently since NTPC turned around the station after taking over operations 28 years ago. Prior to NTPC's takeover, the station was operating at very low plans load factor of 31.94 per cent (recorded in 1978). The station had recorded an average plant load factor of 88.45 per cent last fiscal.

(This article was published in the Business Line print edition dated May 4, 2006)
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