NTPC close to buying out UP government’s 50 per cent equity in Meja power project

By: | Published: December 11, 2018 4:08 AM

The Meja Urja Nigam (MUNPL) is a 50:50 joint venture between NTPC and Uttar Pradesh Rajya Vidyut Utpadan Nigam in Allahabad

NTPC has given its proposal to acquire the 50% stake of UP Rajya Vidyut Utpadan Nigam at the face value of shares.

Over a year after it had evinced interest in taking over the Uttar Pradesh government’s 50% equity in the 1,320 MW Meja thermal power project in order to lower the cost of electricity in the state and bring about greater efficiency, the country’s largest power producer NTPC seems to be close to sealing the deal.

The Meja Urja Nigam (MUNPL) is a 50:50 joint venture between NTPC and Uttar Pradesh Rajya Vidyut Utpadan Nigam in Allahabad, the MoU for which was signed in 2007 when Mayawati was the chief minister. The first unit of 660 MW has already been commissioned and the second unit is likely to be ready by March 2019.

In a communique to the UP government, NTPC has given its proposal to acquire the 50% stake of UP Rajya Vidyut Utpadan Nigam at the face value of shares. “In case the plant becomes part of NTPC’s portfolio, it leads to an interest cost reduction of around 7 paisa as well as flexibility in optimisation of coal sources through single ACQ or captive mines of NTPC. These accrued savings on actuals, indicated to be around 15 paisa, will be a pass through to the beneficiaries in terms of CERC regulations,” NTPC’s letter dated November 16 states.

Clarifying this, the letter further states that Meja TPS has a letter of assurance (LoA)/FSA for 5.49 MTPA coal against the requirement of 6.39 MTPA corresponding to 85% PLF. “Thus, the 14% shortfall in coal quantity essential for full AFC recovery will have to be met from alternate sources for which Meja TPS may have to go for costlier MOU/auctioned coal if it continues to operate in the JV mode. An option to using NTPC Pakri/Barwadih coal to the extent of shortfall was also considered during the discussions. It is clarified that as per the present pricing of coal from Pakri/Barwadih mine, a benefit of 8 paisa is likely to be available to the beneficiaries,” the letter says, requesting the UP government to consider NTPC’s proposal.

NTPC has been keen on acquiring UP’s stake in the project as it would bring the project entirely under its balance sheet and that would make it easier for it to raise cheaper loans. It had given a proposal to the UP government regarding the same more than a year ago, after which the state government appointed PFC Consultancy to prepare a report on the stake sale.

Talking to FE, a state power department official said the PFC’s report states that the UP government has invested approximately Rs 1,209 crore and thus NTPC must pay Rs 1,265 crore to the state government for the investment made by it or give a rebate of 17 paisa per unit of power.

The state government discussed the report with NTPC officials, after which NTPC wrote this letter offering a 15-paisa rebate to be passed on to the consumers.

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