Were Looking At Strategic Global Alliances

Updated: Nov 17 2003, 05:30am hrs
On a turnover of Rs 19,984 crore and profits of over Rs 3600 crore, National Thermal Power Corporation has drawn up plans of adding huge generation capacities by 2012. NTPC has also recently forged new alliances with various leading companies in the field of generation, distribution and trading, and is aggressively promoting its business overseas as an engineering service provider. Chairman and managing director, C P Jain, spoke to Anupama Airy of FE on the companys future plans. Excerpts.

What are your new capacity addition plans vis-a-vis existing and ongoing projects
We have formulated an ambitious capacity addition programme for becoming a 40,000 MW company by 2012. Our current installed capacity, as on October 31, 2003, is 21,749 MW. We will add another 20,490 MW by 2012 (this includes 314 MW of joint capacity with SAIL). In 2002-03, NTPC commissioned 1,000 MW ahead of schedule against a target of 500 MW and in 2002-03, till October 2003, we commissioned 500 MW. Another 5,300 MW is under construction at Talcher-II, Rihand-II, Ramagundam-III, Vindhyachal-III, Kahalgaon-II and Koldam hydroelectric project. This is the highest ever to be taken up by NTPC for simultaneous construction. We have opened bids for the countrys first super critical power plant of 1,980 MW at Sipat (Stage-I) and also invited bids for a second 1,980 MW super critical plant at Barh.

Efforts to import LNG for expansion of gas stations by 4,550 MW are also on and we are implementing around 2,500 MW through joint ventures with the Railways, Tamil Nadu Electricity Board (TNEB) and SAIL. During the Tenth Plan, we are putting up a 1,000 MW coal-based plant at Nabinagar in Bihar and 500 MW in Bhilai as JVs with the Railways and SAIL, respectively. In addition, feasibility reports are being prepared for another 3,930 MW. This is the largest capacity addition endeavour for the company and also for any organisation in the sector.

How will you finance these new capacities
The envisaged addition of 20,000 MW of new capacity upto 2012 requires a capital investment of 1,04,000 crore ($22 billion). On a debt-equity ratio of 70:30, internal resources of Rs 30,000 crore are required as equity. Now as 70% will be raised from debt market, we have tied up for loans of Rs 10,300 crore and another Rs 7,000 crore are under finalisation. In addition, NTPC is planning to raise funds through an IPO of about Rs 400 crore equity offer. We are planning to undertake an IPO of the size of 4-5% of its existing capital base (subscribed equity) for which approval from the power ministry is being sought. In order to obtain relaxation to reduce the IPO size from the stipulated 10% of the existing capital base, NTPC has approached SEBI. We are also contemplating following this up with an ADR issue in the near future to mop up more resources. Multilateral funding agencies are also being approached for funding suitable projects.

NTPCs fund realisations from the electricity boards have touched over 100% for the first time. Will you give some details of the realisations of bills from the SEBs
As you know, we have reached a one-time settlement with states to securitise old outstandings. Out of Rs 19,687 crore to be securitised, 8.5% tax-free bonds worth Rs 15,788 crore have been received. For the first time, outstandings have reduced from Rs 25,223 crore in March 2003 to Rs 8,643 crore in September 2003.

What hydel projects will you be executing in the next few years
We will be implementing 4,000 MW of hydro projects by 2012 and another 4,000 MW during the Tenth Plan. As for our existing projects, infrastructure development is at full swing at the 800 MW Koldam hydro-electric project. Last December, we signed an MoU with the Uttaranchal government for implementation of hydro-electric projects at Tapoban Vishnugad (360 MW) and Loharinag Pala (520 MW) on BOO basis, and recently the Uttaranchal government has allocated 108 MW Lata-Tapovan for implementation for which an MoU was signed in August.

Has NTPC redrafted its corporate plan of 1997-2012
Yes, we have reworked our corporate plan for 2002-2012. This is both a mid-course review of the earlier plan as well as a new roadmap that has been chalked out in view of emerging changes, issues and opportunities. It contains new directions and underlines certain initiatives already taken by the company. Under the plan, we have adopted a broad-based capacity portfolio, including hydropower, LNG, nuclear power and non-conventional and eco-friendly fuels.

The plan also envisages NTPC to be an integrated utility by implementing strategic diversifications in power trading, distribution, transmission, coal mining, coal beneficiation, etc. Developing a strong portfolio of profitable businesses in overseas markets, including technical services, and generation assets is also part of our corporate plan as well as leading developmental efforts in the countrys power sector, including assisting state utility reform, policy advocacy, etc.

How far have you progressed in power distribution and trading
To enhance payment security and seek advantage of the proposed changes in the new Electricity Bill and to leverage the experience gained in the process of working in distribution circles under the APDRP scheme, NTPC had planned to get into distribution. For this, we have formed a subsidiary company NTPC Electric Supply Company Ltd in August 2002. Discussions are on with the respective states to acquire distribution circles at Kanpur, Gwalior, Mohali and Pondicherry.

We have also decided to undertake power trading through a subsidiary company NTPC Vidyut Vyapar Nigam Ltd. The cost of power being traded could be made affordable by pooling the tariff of power from various stations. Apart from matching demand and supply, this will result in the emergence of free trading. It commenced business with a supply of 40 MW to Meghalaya and 50 MW to Assam in March 2003.

NTPC has recently announced plans to venture the global markets as an engineer- ing service provider. What are your plans in this regard
In view of significant demand for EPC (engineering procurement and construction), operation and maintenance and renovation and modernisation related services in domestic and international markets, the company is looking at strategic alliances with reputed global players. It has also joined hands with BHEL for executing contracts abroad. We have experience in system design, project planning and execution and O&M of thermal power stations and BHEL has developed expertise in product design and manufacture of various components required for power projects. To synergise the expertise of both organisations and to participate in the growing South Asian power market (including the domestic market), TPC and BHEL have decided to create this JV for undertaking EPC of infrastructure projects and maintenance of power stations in the region.

NTPC has entered into an MoU with Black and Veatch International, USA, for jointly offering the services relating to EPC and site supervision, O&M services for the power projects in third countries. We have also joined in expression of interest (EOI) as power plant service provider in Algeria, Oman, Saudi Arabia and Iran in an effort to expand its business globally and to meet its goal of becoming an Indian MNC.