KPMG to chart out NTPC’s future

GN Bureau | October 19, 2015


#NTPC Ltd   #KPMG   #NTPC Corporate   #Central Electricity Regulatory Commission   #CERC  

State-owned NTPC Ltd, India’s largest power producer, has appointed consultancy firm KPMG to work out a new strategy to face the challenges of an evolving energy landscape.

 As part of the exercise, KPMG will revise the NTPC Corporate Plan 2032, which lays down a roadmap for the state-owned power producer. This plan had been drawn up by Bain and Co. India Pvt. Ltd.

“The corporate plan is reviewed every five years. India’s energy landscape has changed. With no immediate positives on the nuclear power front, gas being a scarce fuel and a thrust on renewables, a new strategy has to be evolved. Also, we have been impacted on the regulatory front,” an NTPC executive said, requesting anonymity.

NTPC’s worries stem from concerns over revised electricity tariff norms. The apex power sector regulator Central Electricity Regulatory Commission (CERC) had rejected NTPC’s plea to revisit electricity tariff norms applicable between fiscal years 2014-15 and 2018-19.

An earlier CERC order had said incentives would be based on the plant load factor (PLF) metric and not plant availability factor (PAF), as before. PLF is based on the actual power that is generated by a plant, whereas PAF measures the generation capacity that is available.

NTPC’s core business is generation and sale of power to state electricity boards (SEBs). Weak financials of the state government-owned distribution companies because of low tariff increases, slow progress in reducing losses, higher power purchase costs and crippling debt have assumed alarming proportions. SEBs with debt of Rs.3.04 trillion and losses of Rs.2.52 trillion are on the brink of financial collapse. Lower demand for power translates to a lower PLF.

NTPC’s PLF, which is a measure of average capacity utilization, was 81.5% in 2013-14 against 83.08% in 2012-13 for coal-fuelled projects. Also, there are no takers for around 5,000 megawatts (MW) of electricity offered by the utility.

While queries emailed to an NTPC spokesperson remained unanswered till press time, a KPMG spokesperson, in an emailed response, said, “As per our policy we do not comment on client engagements.”

NTPC has been trying to keep the tariff of power generated by its various projects to an average level of under Rs.3 a unit and to supply power at a uniform rate across the country. In the last fiscal year, the average rate of electricity sold by NTPC’s coal-fuelled projects was Rs.3.25 per unit, while the tariff of power from its other projects ranged between Rs.2 and Rs.4.50 a unit.

Experts believe these are challenging times for Indian utilities.

This also comes at a time when NTPC has voiced its apprehensions about the lapsing of a tripartite agreement—between the Reserve Bank of India, the Union government and the state governments—which provided comfort to power producers against payment defaults by SEBs.

The agreement lapses in October 2016, with no certainty that a replacement will be ready in time. Under the existing agreement, any state defaulting on dues owed to power companies risks a deduction from its annual transfers. So far, this clause has not been invoked as the threat of a deduction has ensured timely payment by SEBs, who are weighed down by Rs.3 trillion in accumulated losses.

Also, as part of the National Democratic Alliance government’s green energy push, NTPC plans to supply electricity from 10,000MW of solar power capacity that it is setting up on its own at Rs.3.20 per unit by bundling it with unallocated power to bring tariffs down. In addition, it plans to sell electricity at around Rs.5 per unit for 15,000MW that it is buying on behalf of the ministry of new and renewable energy and earn 7 paise per unit in return.

NTPC has an installed capacity of 45,548MW and a 16.5% share in India’s power generation capacity of 275,912MW. It plans to set up 10,000MW of solar power projects on its own. It is also procuring 15,000MW on behalf of the government. The utility’s green power plans involve renewable energy contributing 28% of its planned capacity of 128,000MW by 2032.

Comments

 

Other News

An eye on AI

Google Assistant, Rekognition and Tay. All these, often seen in news, have a common thread – they are powered by Artificial Intelligence (AI). Only difference is that while some have been in news for right reasons, some others have made it to the headlines for all the wrong reasons. For instance, Goo

Data-powered economy

1.33 billion. Let that large number sink in. That number is nearly 18 percent of the total global population, and almost the number of people estimated to currently reside in the republic of India, one of the world’s largest and fastest growing economies. These 1.33 billion people are spread across a

Dams or time bombs?

Kerala is limping back to normal after the devastating floods that wreaked havoc in the state prompting red alert in all 14 of its districts. While the rescue activities and immediate relief are now a thing of the past, the state is struggling to turn a new page and the focus is on reconstruction an

The imprint of the Gurjara Pratiharas

On August 16, when the country lost its beloved former prime minister Atal Bihari Vajpayee, a nondescript village, 70 km from Agra, came into the limelight. Bateshwar, the ancestral village of Vajpayee, is situated along the notorious Chambal ravines on the banks of the Yamuna. Vajpayee&rsq

Imagining the worst

Love Sonia is not a film you would want to watch if you knew its subject: sex trafficking. Without even a scene experienced, the subject induces visceral revulsion. However optimistic the screenplay, it can only deal in ugly dregs and bring up retching bile. Even so, Love Sonia, gritty an

India’s balancing act with China

On the first day of his August 19-20 visit to India, when Japanese defence minister Itsunori Onodera held talks with his Indian counterpart Nirmala Sitharaman, several defence and strategic-related issues had cropped up in their annual talks. But a big smile flashed on Sithraman’s face when Onodera,

Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter