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Raghuvir Srinivasan

CHENNAI, Sept. 3

THE Rs 20,000-crore National Thermal Power Corporation Ltd (NTPC) plans to enter power trading. It is in the process of incorporating a subsidiary company for this purpose.

NTPC's Chairman and Managing Director, Mr C. P. Jain, told Business Line recently in an interview that the company was discussing the first power trading deal for its 350-MW Kayamkulam plant with Tamil Nadu and Karnataka.

"We are talking to Tamil Nadu and Karnataka to supply 90 MW each from Kayamkulam along with an equivalent quantum from the eastern grid, where we have a small surplus now," he said.

The idea is to average out the cost of power to the two States as Kayamkulam power would cost around Rs 4 per unit while the power supplied from the eastern grid would cost just about Rs 1.70 per unit. "The final cost for the two States would be in the region of Rs 2.50 per unit," Mr Jain said.

Asked why NTPC was floating a subsidiary for power trading when there was an independent company, Power Trading Corporation of India Ltd, already in this business, Mr Jain said that the latter was not given monopoly status over trading power.

A subsidiary company was floated so that the risks of power trading would be segregated from the main business from the company, according to Mr P. Narasimharamulu, Director (Finance).

"Payment security is the biggest risk in power trading and we had to take adequate steps to mitigate this risk," he said. The Kayamkulam deal, if it goes through successfully, could be the first such for NTPC.

Meanwhile, the company is also floating another subsidiary to pursue small hydroelectric projects. NTPC is currently implementing the 800 MW Kol Dam Hydro project in Himachal Pradesh. Mr Jain said that the company was also vigorously pursuing various hydel schemes in Uttaranchal, Karnataka, Madhya Pradesh and Himachal Pradesh.

According to him, there is scope for five or six more entities to enter the hydel business along with National Hydroelectric Power Corporation and NTPC.

Impact of CERC orders

The orders on tariff norms and availability based tariff (ABT) of the Central Electricity Regulatory Commission (CERC) are expected to substantially shave off NTPC's cash flows.

"We had projected a total cash flow of Rs 35,000 crore in the next 10 years which will now be whittled down to just Rs 9,500 crore following the impact of the CERC orders," Mr Jain says.

Consequently, the company's capex programme will suffer and Mr Jain says that it cannot consider any more new projects till the ongoing ones are completed.

"We cannot add any more fresh capacity unless the tariff policy is changed or the Government comes up with additional funding," he says.

On the outstanding dues from State electricity boards to NTPC, which was Rs 22,000 crore at last count, Mr Jain said that NTPC was pushing for the implementation of the scheme for one time settlement framed by the Ahluwalia Committee.

Already 14 States have signed the scheme while six more have indicated their in-principle acceptance. "Once the scheme is effectively implemented, our dues position will improve substantially. In the month of July itself, our realisations amounted to 90 per cent of current billing," Mr Jain said.

NTPC is planning to add a further 1,950 MW of capacity at Kayamkulam by 2009 to be run on LNG. It also has expansion plans totalling 2,600 MW at Anta, Auraiya, Kawas and Gandhar where it runs gas-based stations. The company has received expressions of interest from 12 different LNG suppliers to supply gas for these additional capacities.

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