NTPC: Well-placed to expand

NTPC may be in a far better position to meet its capacity addition targets in this Five-Year Plan than in the last one.

The company’s annual report states that all the clearances and approvals for the projects have been obtained. Plus, the company has already commissioned power projects with capacity of 2,160 MW during the first quarter.

Projects with capacity of 16,638 MW are under various stages of construction. According to the company’s presentation in June 2012, the value of capital work-in-progress was Rs 40,118 crore. At Rs 6 crore a MW, that works out to 6,600 MW that is under construction.

Funds availability isn’t an issue for NPTC, unlike private power producers. The company’s cash flow from operations topped Rs 13,000 crore for the year ended March 2012. The cash balances continue to be robust at Rs 16,146 crore in spite of high capex during the last couple of years. The company has also been raising debt at very competitive rates. The weighted average cost of borrowing was 7.76 per cent as of March 2012, lower than weighted average cost of market borrowings for Government of India.

NTPC plans to add 14,038 MW of power capacity in the next five years to take its capacity to 51,000 MW by 2017. The long-term plan is to have 1,28,000 MW capacity by 2032. At the beginning of the last Five-Year Plan (March 2007), the company planned to add 22,000 MW.

But by mid-term appraisal it was quite clear that the projections were steep. The capacity to be added by NTPC was pared to 9,200 MW. In the 11th Five-Year Plan (2007-12), the company added 9,610 MW.

Fuel prices contributed to a 28 paise rise in cost per unit during 2011-12 which was the primary reason for the tariffs rising to Rs 2.94 a unit, up from Rs 2.59 a unit in 2010-11.

Addressing fuel issues

NTPC’s coal imports had risen 13 per cent to 12 million tonnes but the sharp rise in global coal prices and rupee depreciation led to escalation in costs. During the current year, the company plans to import 16 million tonnes. With coal prices cooling off and rupee appreciating, the costs may be lower this year. The company has also resorted to direct procurement of coal (4 million tonnes in 2011-12). It expects to save 15-23 per cent on costs by direct award of import contracts.

By 2017, NTPC plans to bring down import dependence to 13 million tonnes. It plans to raise productivity in captive mines to 37 million tonnes per annum by 2017. The production from captive blocks is expected to begin from next fiscal. For development of coal blocks, cumulative expenditure of Rs 879.81 crore has been incurred till June.

According to the annual report, the captive coal blocks have production potential of around 73 million tonnes an annum. The Ministry has already given in-principle nod to re-allocate captive blocks.

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