1. NTPC cuts power cost by nearly 14%

NTPC cuts power cost by nearly 14%

State-run thermal power producer NTPC on Friday said that coal rationalisation at some of its plants along with reduction in coal imports has brought down the average variable cost for power by nearly 14% between September-December period translating into savings of Rs 300 crore for consumers by the end of last year.

By: | New Delhi | Published: January 16, 2016 12:22 AM

State-run thermal power producer NTPC on Friday said that coal rationalisation at some of its plants along with reduction in coal imports has brought down the average variable cost for power by nearly 14% between September-December period translating into savings of R300 crore for consumers by the end of last year.

However, the largest thermal power producer of the country said that the adherence to recently announced emission norms for coal-based power plants would heavily burden the consumers but refused to quantify it.“We are still in the process of assessing cost impact of the new emission norms. We would present our finding to the ministry by the month-end and apprise the government of the potential burden on consumers,” AK Jha, chairman and managing director, NTPC said.

As FE had reported earlier, the cost of compliance for coal-based power producers with strict norms for sulphur dioxide and nitrogen oxide was likely to be nearly R2.4 lakh crore for the total installed capacity in the country.

Meanwhile, the average variable cost for NTPC fell by 28 paise per unit to R1.78 per unit by the end of December compared to September. The variable cost for power primarily accounts for fuel cost which is passed through to the consumers. Power cost also includes ‘fixed’ cost which corresponds to return on investment for the operator and remains unchanged through a project’s life. At the end of September, 2015, NTPC’s average total cost was R3.20 per unit.

“The company has switched to procuring coal from sources closer to plants in Mouda and Ramagundam thus cutting down on freight charge. We have also switched to buying cheaper coal under fuel supply agreement (FSA) for Barh project as opposed to MoU route earlier,” Jha said explaining the reasons for reduction in power cost.

Jha said the company cut coal imports by 30% to 8.6 million tonnes (MT) for April-December, 2015 period from 12.3 MT for the corresponding period a year ago. The company also cut down on coal procurement through more expensive e-auction by 64% to 0.312 MT in the first 9 months of the current fiscal. “About 47% of NTPC’s coal-based plants, having an installed capacity of 14,780 MW, have energy charge of less than R1.50 per unit.

45% plants totalling 14,190 Mw capacity have energy charges ranging between R1.50 to R3 per unit. The rest 8% plants (2,525 MW) have energy charge of R3 to 4 per unit,” Jha said. The company, however, said that lower cost of imported regassified liquified natural gas (RLNG) from Qatar was unlikely to boost production from its gas-based power plants as the cost of power was likely to be above R5 per unit, making it difficult to be sold.

“Currently, we only have Badarpur and Dadri plants that produce power at over Rs4 per unit. We are finding it difficult to schedule the supply of power produced from these plants due to relatively higher cost,” Jha said.

He added that this was an indication that despite lower RLNG prices gas-based power would be even more difficult to sell. NTPC has a total installed capacity of 45,548 MW Including over 5,000 MW of gas-based capacity. The latter is currently running at just over 27% utilisation.

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