NTPC unable to fund capacity addition under ABT tariff ordered by CERC

Sanjay Jog

Mumbai, Aug 28: STATE-RUN National Thermal Power Corporation (NTPC) would not be in a position to finance the capacity addition of 21,180-MW from the existing 19,935-MW till 2011-12, under the availability based tariff (ABT) ordered by the Central Electricity Regulatory Commission (CERC).

The company had projected the fund requirement of Rs 1,06,352 crore, comprising Rs 31,733 crore internal debt, Rs 42,311 crore foreign currency debt and internal resources of Rs 32,308 crore.

According to AF Ferguson & Co, which reviewed NTPC’s financial projections in the wake of implementation of ABT, internal resources available were estimated to be Rs 14,209 crore, as against the requirement of Rs 32,308 crore. However, there would be a shortfall of Rs 18,000 crore in the internal resources (IR) vis-a-vis the IR required. “Under the ABT regime, the IR available cannot support the capacity addition of 21,180-MW by the year 2012,” the AF Ferguson & Co report said.

Under the ABT regime, NTPC would be in a position to undertake capacity addition of new projects in the range of only 6,250-MW as against 15,980-MW as planned earlier under the two-part tariff structure. The list of the projects worked out for the new capacity addition of 6,250-MW included Rihand II -1,000-MW, Ramagundam III -500-MW, Kodam 800-MW, Sipat-I -1980-MW, Kawas-II -650-MW, Kahalgaon II -1,320-MW. In addition to this, considering the internal resource availability, North Karanpura (1,980-MW) can be commenced in 2009-10, but completion would be in XII plan. The total funds required for the capacity addition of 6,250-MW would be Rs 58,085 crore, comprising local borrowings of Rs 17,253 crore, foreign currency debt of Rs 23,004 crore and internal resources worth Rs 17,828 crore. The IR available would be adequate to meet the IR requirement to fund the capacity addition of 6,250-MW.

According to AF Ferguson & Co, the IR available would not be adequate if the generation level falls by even 1 per cent against the base assumption. NTPC had assumed plant availability factor and plant load factor at the threshold level (80 per cent and 77 per cent respectively) to recover 100 per cent of the annual fixed charges.

The report said that a major concern of NTPC was the level of sales collection which would have a major impact on the IR available to finance the expansion plan. One of the key assumptions for sales collection related to the extent of realisation of current billing in the same year and the balance in the subsequent years, subject to a debtors level of 5.5 months or more. Based on this assumption, the debtors outstanding as on March 31, 2012 worked out to 5.5 months of sales.