Private players hoping to get the better of NTPC in a tariff bidding regime are likely to feel disappointed by the central utility?s swift moves to get its act together. The company has already secured new power supply contracts that would allow it to increase its installed capacity from 33 giga watt to over 100 gw without having to go through the new dispensation. Meanwhile, it is taking a fresh look at its traditional approach to project execution. The company is mulling new initiatives like taking up some projects under the EPC mode to expedite its capacity addition pace.
NTPC?s new moves assume significance in the context that doubts were cast by various analysts on NTPC?s capability to survive a tariff bidding regime where project executions skills hold the key to success. The central utility can turn the tables against private players if it can get back its bearings.
The company came out with a long-term corporate plan last year to have 132 gw capacity by 2032. But this looked like an unrealistic target at that time given that the government had planned to implement the tariff bidding regime from January 6, 2011, of which NTPC had little experience. That gave rise to an apprehension that the company simply might not get enough projects to achieve capacity addition target. However, NTPC has proved the skeptics wrong by signing power purchase agreements for over 100 gw before the introduction of new regime.
With PPAs for over 100 gw in place, NTPC has enough time to get its project execution right. However, the company is not complacent. It has already taken initiatives in this direction. For example, in a shift from its traditional policy, the central utility has put in place a mechanism under which it would have a list of pre-qualified vendors for civil construction work. That would help the company cut the normal time for conducting bidding for such projects. Meanwhile, the company is also planning to adopt a similar mechanism for the supply and installation of auxiliary equipment.
NTPC is also planning to award EPC contracts for some projects rather than invite separate bids for various components of their plant package. The company?s move seems to be prompted by its bad experience from having separate contractors for different work and supplies.
The government has introduced the bidding regime but, at the same time, it has also allowed NTPC some concessions to help it better navigate the initial transition. For example, NTPC has bagged approval to sell up to 50% power from its 14 future projects to home states. The government has allowed the company to sell 15% power from its new units at Korba and Farakka in the free market. That would help expand the business of its subsidiary NTPC Vidyut Vyapar Nigam which is engaged in power trading.
The company has payment guarantee on electricity supplied to state utilities because of a tripartite agreement involving NTPC, the Union finance ministry and states taking power from it. However, it is facing problems in running its power plants to their optimum plant load factor level because of the erratic electricity requisition pattern of its customers. NTPC does not have any option but to back down its plants when states buying power from it suddenly lower their requisitions. The company loses revenue which in turn impacts NTPC?s overall performance. To deal with such contingencies, NTPC is planning to have alternate customers to sell excess power rather than lower its generation.