Setting a trend: NTPC likely to take over seven coal-based private power projects

IN A new trend of public sector companies taking over private firms, government-owned power major NTPC is evaluating seven coal-based power projects, which have been put up for sale by private developers, for possible acquisition. These projects belong to...

“developers who no more want to continue with the project and those who are operating the project but don’t feel interested enough to run the project,” said Arup Roy Choudhury, chairman and managing director of NTPC, in Hyderabad. “Independent due diligence is on,” the CMD added.

Without naming the projects, Choudhury said they are as large as 2,000 megawatt (MW).

“I don’t think there is any problem for us in raising money, the project has to be right,” Choudhury said.

“We have a very good balance sheet and investors are willing to put money,” he added.

Due to economic slow down, high borrowing costs, lack of fuel supply, delay in environmental and forest clearances and poor financial health of state electricity boards private power players are finding it little tough to stay afloat. Economic growth slowed to five percent in the year ended 31 March and volatility in the Indian rupee also affected power developers who import power plant machinery.

NTPC aims to go on an expansion drive by buying out some stranded private generation plants for which it is in talks with the concerned companies. 

"We don't start a project unless we have the coal linkage, environmental clearance, land and water available and also have a PPA (power purchase agreement). When all this is tied-up we start the project," Choudhury said when asked about the criteria for taking over a stranded power project. 

The company is also hopeful of finalising these proposals by the end of the calender year. It is looking at the quality of equipment of these projects, the level of clearances they have achieved, coal availability and sourcing the fuel in case of non-availability before buying these thermal power stations.

NTPC is reportedly in talks with private power companies like L&T and Shapoorji Pallonji Group for taking over their stranded plants.

The Maharatna company with a handsome balance sheet aims to add 14,000 MW capacity by 2017.

"We don't have coal shortage for this 14,000 MW, there is 20,000 MW more under execution and we don't have any coal problem for that as well, no issue, we are going ahead full steam the way we planned," he said.