NTPC cost to shoot up 40%

The new coal pricing system to be adopted by Coal India Limited (CIL) will increase the power costs of NTPC by up to 40 per cent, the state-run power major said today.

It is the new pricing system that has led to the rise in power costs, said NTPC chairman and managing director Arup Roy Choudhury. Since the fuel cost is a pass-through, the impact will be directly on power prices.

From January 1, CIL implemented pricing structure based on the gross calorific value (GCV) of coal. Earlier, the government-controlled company followed a pricing mechanism based on the useful heat value (UHV) of coal, which deducted ash and moisture content from the standard formula. However, unlike the UHV pricing methodology, in which coal was categorised into seven grades, the GCV-based system has 17 grades — and the new prices have been fixed accordingly.

However, Kolkata-headquartered CIL’s board is likely to review the prices to rationalise them in the wake of the Coal Ministry’s decision last week to correct the prices. Delhi-based NTPC plans to sign a joint venture agreement for the 1,320-Mw Khulna power project in Bangladesh by this month-end.

 “The project would be a 50:50 JV between NTPC and the Bangladesh government. We expect to sign the agreement by January 29,” he said.

Adding capacity
Power minister Sushilkumar Shinde said the 11th Five Year Plan would achieve a capacity addition of 52,000 Mw. About 80,000 Mw is under construction; it will come in the 12th Plan (2012-17). There could be 10,000-Mw capacity in the current Plan, coming from captive power sources. Earlier, the capacity addition target was fixed at 78,000 Mw for the 11th Plan, but it was later cut to 62,000 Mw.

Issues such as coal shortage and environmental hurdles have impacted the country’s power capacity plans.

The 1975-founded NTPC and Bangladesh Power Development Board had signed a memorandum of understanding in August last year to establish two thermal power projects at Chittagong and Khulna for mitigating the power shortages in the neighbouring nation at an estimated investment of aroundRs 13,200 crore.

The company also plans to achieve financial closure by September for its 500-MW project in Sri Lanka, according to Choudhury. The construction of the project is likely to start by April next year. The project will be a 50:50 joint venture between NTPC and Ceylon Electricity Board for setting up of a 2x250-MW coal-based power project in Trincomalee region.