GN Bureau | October 19, 2015
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.
Most of us have paid at least one visit to a health facility. It is easy to identify quality care when we receive it – an attentive doctor, a responsive team of health workers, adherence to hygiene and safety protocols, and so on. Unfortunately, not everyone has access to high quality care, a situati
Published ahead of World TB Day (24 March 2019), The Lancet Commission on Tuberculosis estimates that there are significant financial benefits of reducing TB mortality. With the country shouldering one-fourth of the global burden and a predominant number of patients accessing care in the private sector, th
India is unhappier than ever before. The United Nation`s World Happiness report 2019 has ranked India at the 140th position from the previous 133 in 2018, dropping seven spots in just a year and 23 positions since 2015. Out of the total 156 countries that were covered, India`s
Releasing a booklet on the railways achievements in the last five years, railways minister Piyush Goyal may have painted a rosy picture, but that does not subtract from its many troubles, chief among which is its worsening operating ratio. The ratio is of working expenses to tr
SAIL has rolled out stainless steel smart garbage bins, which will display signals to the collection vehicle about the ‘fill-up’ position. A smart garbage station will be set up at Bhikaji Cama Place, which is being developed by SDMC (South Delhi Municipal Corporati
Prime minister Narendra Modi recently inaugurated a civil enclave at Hindon airport in Ghaziabad. The development of new civil enclave at Hindon airport is aimed at reducing the burden of Delhi’s IGI Airport and will also serve the passengers from Delhi NCR and Uttar Pradesh. Hindon