Govt asks NTPC, NHPC to focus only on core areas of operation

Written by Subhash Narayan | New Delhi | Updated: Aug 20 2014, 09:22am hrs
NTPCThe government has asked NTPC, NHPC, SJVNL and THDC to focus only on core areas of operation and transfer their non-core assets among themselves.
In what may push state-owned power companies to alter their business strategies, the government has asked NTPC, NHPC, SJVNL and THDC to focus only on core areas of operation and transfer their non-core assets among themselves. Once this is implemented, the country's largest power producer NTPC, which started operations as a pure thermal power player, will have to transfer its proposed hydro power projects to the other three PSUs NHPC, SJVNL and THDC which are primarily hydro power firms.

Sources said the power ministry has already asked the PSUs under its administrative control not to look at broad diversifications (thermal players entering large hydro projects and vice versa) and explore opportunities for transfer of each others non-core assets between themselves. A formal strategy would be finalised later to determine the pricing for such transfers, they added.

NTPC is constructing four hydro projects with combined capacity of 1,600 MW. These include the 800 MW Koldam hydro project, 520 MW Tapovan Vishnugad hydro project, 171 MW Lata Tapovan project and 120 MW Rammam-III hydel project. Besides, the company's 600 MW Loharinag Pala project in Uttarakhand was scrapped by by a Group of Ministers in August 2010 citing religious and environmental concerns even after the company had invested close to R800 crore inthe project.

On its part, NHPC is implementing 1980 MW Salka thermal power project in Chhattisgarh and 1,320 MW Pirpanti TPP in Bihar. Additionally, SJVN has signed an MoU for a 1,320 MW thermal plant at Buxar in Bihar while THDC has signed an MoU with the UP government for a 1,320 MW thermal station at Khurja.

An NTPC official said: There have been discussions between the company and the government on exiting areas (like hydro power) that are not our core competency. But a formal structure for such transfer would be worked out only after consultants are appointed to value each projects and put a price tag for each projects.

Faced with delays in several of its hydro projects and problems with Loharinag Pala project, NTPC chairman and managing director Arup Roy Choudhury had earlier indicated that the company may not be interested in putting up any hydro projects in future.

Sources said power minister Piyush Goyal is also keen to implement the new strategy as there is a feeling that hydro and thermal projects require specific domain experience that is exclusive to companies operating the area for considerable number of years.

A power sector expert with a leading consultancy firm, however, said: The government's thinking is welcome but it should be left to the companies to decide which projects are good for them and will yield returns. If companies are following good governance norms, its board should be competent to decide the cou-rse of action for investments.