Coal ruling hits NTPC's mega acquisition plan

The Supreme Court order terming the ad hoc allocation of coal blocks as illegal may derail NTPC's move to acquire some of the troubled private sector power projects.

Country's largest power producer has zeroed in on about 8,000-9,000 megawatt (mw) of power capacity, out of about 55,000 mw of capacities being developed by private players who had responded to the NTPC's call to rescue troubled projects.

The plan would have helped the crisis ridden power sector to a large extent.

While this 9,000 mw plants are being developed by units which have every clearances in place, the Supreme Court ruling may jeopardise the whole process as coal block allocation to many of these units might get cancelled, NTPC chairman Arup Roy Choudhury said.

"With the coming of the Supreme Court order we have to again look at these shortlisted applications. It has to be seen if coal blocks allocated to these projects get affected because of the ruling, which will be known after September 1. In such a scenario our acquisition would be lower than 8,000-9,000 mw that we are expecting," Choudhury told reporters on the sidelines of a conference on energy by BCC&I.

"We decided to go for inorganic growth when we had put out an Expression of Interest, following which we received 34 applications aggregating about 55,000 mw. Due diligence is going on, the board has constituted a sub-committee which is looking at the applications and we are about to appoint a merger & acquisition consultant. We presume that by March we would be able to pick up some power plants which are already in operations or will be in operations soon. Realistically, we might acquire around 8,000-9,000 mw.

He said the company would pick up only those projects which had financial problems.

"Those being held up for basic issues like lack of land availability, water supplies or environmental clearances we won't pick. Ready plants having financial closure but having some minor funding issues would be preferred," he said.

NTPC has considered only the viable units as per its standards, plants where per generation costs matches favourably. That's a tough standard as NTPC's cost of production is lowest in the industry even lower than Rs 6 per watt.

NTPC's own coal mining plans wouldn't get impacted, though.

"We have gone through the order and we believe it wouldn't impact us adversely at all. With these, I like to put to rest concerns and assure that all of NTPC's coal mining activities would continue as it was before without hindrance, and our coal mining as well as capacity addition targets are on schedule.

NTPC so far as been allocated 10 coal blocks but all are under development and none is producing.

Of these, four have been allocated recently, while development of six captive coal blocks are on with a target production of 13 million tonne by fiscal 2017.

The thermal power producer is also getting into solar power generation, and production may touch 3,000 mw shortly.

"We had recently advertised for EoI from domestic solar power equipment makers to install 1,000 mw of solar power. We are progressing towards creating 3,000 mw within the next one-and-a-half years. States including Andhra Pradesh, Madhya Pradesh, Rajasthan are keen that we come and set up solar power parks there," he said.