NTPC to get back three cancelled coal blocks

The government plans to divest 9.5% stake in NTPC to raise up to Rs 12,000 cr

In a move that could boost the valuation of NTPC, the government will restore allocation of three cancelled coal blocks of the public sector company on Tuesday, a month before the power generator’s public issue hits the market. The Cabinet had recently given its go-ahead for restoration of the blocks.

“The three coal blocks (of NTPC) would be re-allocated tomorrow,” Power Minister Jyotiraditya Scindia told reporters after a ministerial panel’s meeting.

A coal ministry official confirmed the development. “We had sought law ministry’s final advice on the matter. That will come tomorrow. A notification for re-allocation will be issued subsequently,” the official added.

The government plans to divest 9.5 per cent stake in NTPC to raise up to Rs 12,000 crore. The finance ministry will bring the offer for sale in the first fortnight of February. The move is part of the plan to raise Rs 30,000 crore in the current financial year through public sector units’ disinvestment. The government has been able to raise only Rs 6,900 crore so far in FY13.

IN THE PINK

• NTPC posted a net profit of 2,597 crore during the third quarter
• Total income grew 1.7% to Rs 15,807 cr
• Good numbers attributed to improved capacity addition & dip in raw material cost

The three blocks have combined coal reserves of 830 million tonne and can produce up to 13 million tonne per annum (mtpa). Restoration of the blocks will boost NTPC’s plans to double generation capacity to 75,000 Mw by ramping up in-house coal production to 47 mtpa, around a fourth of its coal requirement over the next five years.

According to another coal ministry official, the work already done by the company in developing the blocks and the ongoing coal shortage led the government to reconsider its earlier decision to cancel the allotments.

“NTPC has already acquired land in two of the three blocks. Besides, it has appointed consultants and selected the mine development operators (MDOs),” he said.

The three blocks – Chatti Bariatu, Chatti Bariatu (South) and Kerandari - are meant to supply fuel to two power plants of 1,320 Mw capacity each -- Barh in Bihar and Tanda Stage-II in Uttar Pradesh. Both the projects, when commissioned, would require about 10 million tonne of coal a year.

NTPC consumes about 120 million tonne of coal annually to fire its 39,000-Mw power generation capacity. The company’s share price on the Bombay Stock Exchange (BSE) closed at Rs 161.7 on Monday, 1.4 per cent less than the previous day’s close.