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

Government sanctions new posts to hire cyber security professionals

The government has sanctioned 111 posts of cyber security professionals for the Indian computer emergency response team (ICERT) under the ministry of electronics and information technology (MEITY), according to a ministry official, who added that the posts were sanctioned earlier this year. 

Bhutan’s pursuit of happiness, shortage of health sub-centres in UP, and role of digitisation in IGNOU

In many ways the story of Gross National Happiness in a country is the story of Bhutan and its modern history. There are two major transition points in Bhutan’s recent history, the beginning of the monarchy in 1907, and the transition to a Constitutional monarchy in 2008, and the pursuit of happine

Do you agree with the ban on the sale of cattle for slaughter through animal markets?

Do you agree with the ban on the sale of cattle for slaughter through animal markets?

Modi inaugurates India’s longest bridge in Assam

  Prime minister Narendra Modi celebrated three-year of his government on May 26 by inaugurating Dhola-Sadiya bridge over the Brahmaputra river in Assam’s Tinsukia district. It is the longest bridge in India, which runs 9.15 km from end to end and connects Assam with Arunachal Pradesh.

IndianOil registers highest ever profit of Rs 19,106 crore

 IndianOil posted a net profit of Rs 19,106 crore for 2016-17 fiscal as compared to a profit of Rs 11,242 crore in the last fiscal. The income from operations for the financial year 2016-17 was Rs 4,45,373 crore as compared to Rs 4,06,828 crore in the previous fiscal. IndianOil`s income from

Maiden flight of HAL’s light utility helicopter

 Hindustan Aeronautics Limited (HAL) carried out first flight of light utility helicopter (LUH)-PT-2 on May 22 at its Bengaluru-based facility. The flight duration was about 22 minutes and pilots reported nil snag, HAL said.   “These maiden flights of indig



Video

कालेधन पर किया हुआ अपना वादा पूरा करूंगा - मोदी

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter