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NTPC slashes investment

Coal supply uncertainty prompts largest power producer to cut commitments by Rs 50,000 cr

Sudheer Pal Singh & Jyoti Mukul  |  New Delhi 

The uncertainty surrounding coal availability has forced the country’s largest power producer NTPC Ltd to cut down its investment size by a fourth or around Rs 50,000 crore. The company had planned to invest more than Rs 2 lakh crore during the five-year period ending 2017.

With a current power generating capacity of 36,000 Megawatt (Mw), NTPC alone accounts for 92 per cent of India’s coal-based capacity in the central sector. Though the company has fast-tracked capacity addition and added 6,980 Mw in the last 21 months, which is almost 20 per cent of the total capacity it has added in the last 35 years, coal supply constraints will push 11,000-Mw capacity addition to the 13th Plan period starting 2017-18. “We had to review our 12th Plan capital expenditure estimate mainly because coal is not available. Around 11,000 Mw of our planned capacity is stuck for want of coal,” a company executive told Business Standard. This capacity is now expected to come up only in the 13th Plan.

An analysis of data for the 11th Plan ended March 2012 showed the installed generation capacity had increased 40 per cent but the actual generation rose 29 per cent. The installed capacity at the end of March this year was 199,877 Mw from 143,061 Mw at the end of March 2008. The availability was 857,239 million units (Mu) at the end of March this year from 664,660 Mu at the end of March 2008.

Being a big player, NTPC has been able to absorb fuel problems to some extent but in the case of private coal supply constraints have already started showing on their balance sheets. For instance, lower asset utilisation forced by a lack of coal and gas supply brought down the average plant load factor for Lanco Infratech to less than 60 per cent at its eight units. That saw the contribution of the power business to the company’s profitability fall by almost half to Rs 173 crore in the first quarter.

Similar is the case of Adani Power, which expects domestic linkages from Coal India to meet coal requirements for most of its 9,240-Mw capacity. “Though linkages are in place for most of Adani Power’s capacity, we anticipate risk to domestic coal supply because of the likely production shortage from Coal India in the medium term,” says Edelweiss in its latest report on the company.

NTPC is planning to add 14,500 Mw by March 2017 even after scaling down its target by 11,000 Mw for coal-based capacity and around 4,000 Mw of gas-based capacity.

“Coal linkages for some of these plants have been given without identifying the mines. Also, some of the blocks allocated to us have been taken back and not re-allocated. We may have installed at least a part of this 11,000 Mw in the current Plan. But that will not be possible now,” the executive said. Still, NTPC is better placed than private players. Of its 160-mt coal requirement, NTPC buys 125 mt from the domestic market and imports the rest.

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First Published: Fri, August 31 2012. 00:00 IST