An advisory group on power and coal has suggested several measures for state-run behemoth NTPC to improve its flagging performance over the recent years. The recommendations range from NTPC foraying into distribution business to salvage the sector, diversifying its portfolio and investing in cutting-edge research and development, to bolster its resources.
The report by the Suresh Prabhu-led group noted that NTPC’s performance in the last few years has taken a beating, partly due to certain gaps in its own decision-making.
“NTPC should consider getting into distribution in a big way, maybe, in JV with state discoms, deploy its management and technical capability for turnaround of distribution,” the group said and added that continued failure of the distribution sector will jeopardise all other segments, including power generation, and, thus, NTPC as well.
The recommendations of the group have focused on the company’s need to diversify its portfolio and enter into new businesses to hedge risk. The report lays emphasis on the thermal power generator’s need to not only enter the renewable power generation segment aggressively but also wants it to expand its hydro power portfolio as well.
“In the long run, hydro projects in NTPC’s portfolio will prove extremely useful in the context of emerging market structure in which cost plus generation tariff will get replaced by competitive pricing, and peak and off-peak load may be managed through the concept of higher peak hour pricing,” the report said.
The government could already be heeding the recommendation as is borne out by FE’s earlier report that the renewable energy ministry is waiting for the cabinet approval to a proposal to roll out installation of 15,000 MW of solar energy where NTPC’s power trading arm, NVVN, will play the role of purchaser and buyer of solar power.
“The target of achieving 10% of total capacity as solar power in next five years is not only achievable but for a coal-based power generation company it is a great opportunity to balance its project profit and to address climate change concerns,” the report added.
Lauding NTPC’s plans to acquire stranded projects, the report, however, cautioned that NTPC needed to complete this exercise within six months to get over the uncertainty on other new projects that the company should be implementing. It should not happen that the company slows down other new projects and also does not decide on stranded projects, the report warned. NTPC had announced plans to acquire stressed assets last year but it is yet to make any headway.
The report has also exhorted the company to phase out old, inefficient thermal power plants that consume excessive fuels and auxiliary power. Moreover, the report, while acknowledging NTPC as the leader in thermal power generation, has recommended its leadership should be matched by contribution toward technology development through research and development.
“NTPC, may integrate and network with BHEL, CIL and other organisations. A 10-year programme, aimed at breakthroughs in ultra-critical technology, carbon emission reduction, inexpensive solar power systems, etc, should determine the agenda on this front,” the report said.