Sources said NTPC had earlier sought mega power project status for the joint venture project at Nabinagar in Bihar’s Aurangabad district for which the ministry of power has to issue a certificate.
NEW DELHI: The approval of a mega power status by the Cabinet Committee on Economic Affairs (CCEA) to its joint venture with the Railways means NTPC will have to enter into a power purchase agreement with buyers other than the Railways.
Sources said NTPC had earlier sought mega power project status for the joint venture project at Nabinagar in Bihar’s Aurangabad district for which the ministry of power has to issue a certificate.
NTPC based its demand for a mega power status on the grounds that the project has a 1000 mw capacity and power from the project will also be supplied to users other than the Railways. These are the two key requirements for enjoying fiscal benefits under the mega power project policy.
Earlier objections were raised on the grant of the status highlighting the fact that electricity from the project would be going only to the Railways. Sources said the status was now being sought since as per the amended power sale plan 90% power would go the Railways and the remaining 10% to other users.
The CCEA approval for the mega status earlier this year was subject to the modification that 10% of the power generated is earmarked for users other than the Railways. Sources said customers for sale of 10% equity have yet not been selected.
The Railways are looking at the venture to cut power cost. Sources said the Railways require 2,200 MW for its entire network. It pays about Rs 4.22 per unit (average all-India) for its needs. However, the captive power plant would bring this down to Rs 2.51 a unit, which is 40% cheaper. The cost per unit may further go down to Rs 2.39 if the joint venture gets mega project status.
The Nabinagar Thermal Power Project is being set up by a joint venture called Bhartiya Rail Bijlee Company Ltd with 76% holding by NTPC and 24% by the Railways. The grant of mega status entitles the joint venture project to customs and excise duty concessions.
The project involves an investment of Rs 5,352.5 crore with a debt equity ratio of 3:1. On an authorised equity of Rs 1,605.75 crore, NTPC will put in Rs 1,188.26 crore in proportion to its equity participation. The Railways will invest another Rs 417.5 crore.
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