Arup Roy Choudhury, chairman and managing director of state-run NTPC Ltd, India’s biggest power producer, speaks in an interview on capacity addition plans and the challenges ahead for the domestic power sector. Edited excerpts:
Last week the Supreme Court ruled in favour of NTPC and Ansaldo was disqualified from that huge Rs.16,000 crore tender. How soon are you going to call bids for it? Can you give us a sense of what’s happening? (The apex court set aside a Delhi high court order that allowed Ansaldo Caldaie Boilers India to bid for a tender for equipment supply to NTPC, which had rejected the company’s bid on grounds that it did not meet the minimum qualifying requirements.)
As you are aware, the dispute was for the SG (steam generator) package...It is unfortunate that we lost almost one year on this. We have now taken up steps to award this and we would like very much to do so by March, which means it will happen in this fiscal. The STG (steam turbine generator) package was always resolved, we were just waiting for the SG package to get sorted (out). We expect that package, too, should get awarded by March. So the entire Rs.16,000 crore that you mentioned should get awarded by March this year.
Are there other tenders in the pipeline right now that you will be looking at? Does this guarantee Bhel (Bharat Heavy Electricals Ltd) a piece of the pie as well?
As per the bulk tender process, Bhel will always get a part of this. The second lot of 800 megawatts (MW) bulk is also finalized and thankfully there is no litigation and therefore it has been finalized well in time and as per the guidance of the cabinet. Kudgi (in Karnataka) has already been awarded. The balance units are two in Darlipali and two in Gajmara, both in Orissa and two in Lara in Chhattisgarh. The Chhattisgarh land acquisition is in a very advanced stage. In Orissa we are a little slow because of the land issue. So, unless we get the land there, we will probably not be able to award the Orissa contracts. But I would like to reiterate that from our side all the tenders have been finalized well in time, they are ready to be awarded and we are waiting to award them.
There are reports that your initial plan was for 75,000MW to be added in the 12th Plan, but you might have cut it down to 65,000 or 66,000. Can you tell us what is your strategy and the rationale behind it?
Capacity addition is no more an issue with NTPC or in the country. We have already added 2,500MW last year. We said we would and we did it. This year we have said that we will add more than 4,000, we are almost at 2,000 and we expect to add another 2,000 by the end of March, so we will go beyond 4,000MW.
Looking at the capacity addition for the 12th Plan, the capex (capital expenditure) that we have thought for in the 12th Plan is Rs.215,000 crore. Now when we look at our capacity addition programme, we find that probably adding another 40,000 MW could be a little difficult at the moment because we don’t have a surety of gas. So we thought that in the coming five years if we take around 5,000 to 6,000MW capacity addition per year, it will be a fairly good target for us . If we get to about 65,000 as our total capacity, it will still mean that in the next 5–7 years we would have doubled what we have today...
As you mentioned there has always been a question mark on gas since the last two years at least. Now we have finally an empowered group of ministers meet on it. What sort of hope do you have in light of the KG-D6 output falling? Do you have any plan B?
As far as gas is concerned, the fall in production is what we read in newspapers. So we don’t want to comment on the falling or tapering production or about pricing. But I think we have to depend on our natural gas resources. Coal and whatever gas we have is our natural resources. These cannot be priced at international level prices. There can’t be a situation where we subsidise oil imports, or diesel and kerosene prices on one end and then allow our own resources at international prices.
So, I have very high hopes from the panel of ministers that they would be able to get the requisite amount of gas and I have very high hope that not only covers Gandhar (in Gujarat) but even Kayamkulam (in Kerala) will get some allocation of domestic gas. We have in fact requested for Badarpur (Delhi) also. But we really don’t know how that will stand. I think the gas will come through and I have no reason not to believe that it will not come through. I think the indications from the government are that the gas will be given to the power sector which they are treating as priority for the growth of the economy
Is there a plan B, if it is getting delayed. Would you be open to buying from the spot market considering you already have a plant ready?
Our plan B will depend on our buyer. If I generate from imported gas and nobody buys then what’s the point in having plan B? So, at the moment, I will not see any plan B. If there is a plan B, it depends on whether the consumer wants power from imported gas. I can start then and in fact I can start Kayamkulam straight away.
In fact, all my gas plants today are running at an average of about 70% PLF (plant load factor). I have another 20-25%, which I can run with imported gas. But I should have the demand for imported gas. So, why should I have a plan B for capacity addition on imported gas when my domestic capacity is under-utilized. And if they want it on imported gas I can run those on higher capacity.
Two issues weighing on the sector are land acquisition and acute coal shortage. From NTPC’s point of view how are you looking to meet this issue?
As far as coal is concerned we have enough mines to meet our requirement at least by 30%, if not more. What Coal India is giving us today and what the government has now ordered to commit FSA (fuel supply agreement), that with normal increase of 3% to 4% would suffice our requirement from Coal India.
Last week the Supreme Court ruled in favour of NTPC and Ansaldo was disqualified from that huge Rs.16,000 crore tender. How soon are you going to call bids for it? Can you give us a sense of what’s happening? (The apex court set aside a Delhi high court order that allowed Ansaldo Caldaie Boilers India to bid for a tender for equipment supply to NTPC, which had rejected the company’s bid on grounds that it did not meet the minimum qualifying requirements.)
As you are aware, the dispute was for the SG (steam generator) package...It is unfortunate that we lost almost one year on this. We have now taken up steps to award this and we would like very much to do so by March, which means it will happen in this fiscal. The STG (steam turbine generator) package was always resolved, we were just waiting for the SG package to get sorted (out). We expect that package, too, should get awarded by March. So the entire Rs.16,000 crore that you mentioned should get awarded by March this year.
Are there other tenders in the pipeline right now that you will be looking at? Does this guarantee Bhel (Bharat Heavy Electricals Ltd) a piece of the pie as well?
As per the bulk tender process, Bhel will always get a part of this. The second lot of 800 megawatts (MW) bulk is also finalized and thankfully there is no litigation and therefore it has been finalized well in time and as per the guidance of the cabinet. Kudgi (in Karnataka) has already been awarded. The balance units are two in Darlipali and two in Gajmara, both in Orissa and two in Lara in Chhattisgarh. The Chhattisgarh land acquisition is in a very advanced stage. In Orissa we are a little slow because of the land issue. So, unless we get the land there, we will probably not be able to award the Orissa contracts. But I would like to reiterate that from our side all the tenders have been finalized well in time, they are ready to be awarded and we are waiting to award them.
There are reports that your initial plan was for 75,000MW to be added in the 12th Plan, but you might have cut it down to 65,000 or 66,000. Can you tell us what is your strategy and the rationale behind it?
Capacity addition is no more an issue with NTPC or in the country. We have already added 2,500MW last year. We said we would and we did it. This year we have said that we will add more than 4,000, we are almost at 2,000 and we expect to add another 2,000 by the end of March, so we will go beyond 4,000MW.
Looking at the capacity addition for the 12th Plan, the capex (capital expenditure) that we have thought for in the 12th Plan is Rs.215,000 crore. Now when we look at our capacity addition programme, we find that probably adding another 40,000 MW could be a little difficult at the moment because we don’t have a surety of gas. So we thought that in the coming five years if we take around 5,000 to 6,000MW capacity addition per year, it will be a fairly good target for us . If we get to about 65,000 as our total capacity, it will still mean that in the next 5–7 years we would have doubled what we have today...
As you mentioned there has always been a question mark on gas since the last two years at least. Now we have finally an empowered group of ministers meet on it. What sort of hope do you have in light of the KG-D6 output falling? Do you have any plan B?
As far as gas is concerned, the fall in production is what we read in newspapers. So we don’t want to comment on the falling or tapering production or about pricing. But I think we have to depend on our natural gas resources. Coal and whatever gas we have is our natural resources. These cannot be priced at international level prices. There can’t be a situation where we subsidise oil imports, or diesel and kerosene prices on one end and then allow our own resources at international prices.
So, I have very high hopes from the panel of ministers that they would be able to get the requisite amount of gas and I have very high hope that not only covers Gandhar (in Gujarat) but even Kayamkulam (in Kerala) will get some allocation of domestic gas. We have in fact requested for Badarpur (Delhi) also. But we really don’t know how that will stand. I think the gas will come through and I have no reason not to believe that it will not come through. I think the indications from the government are that the gas will be given to the power sector which they are treating as priority for the growth of the economy
Is there a plan B, if it is getting delayed. Would you be open to buying from the spot market considering you already have a plant ready?
Our plan B will depend on our buyer. If I generate from imported gas and nobody buys then what’s the point in having plan B? So, at the moment, I will not see any plan B. If there is a plan B, it depends on whether the consumer wants power from imported gas. I can start then and in fact I can start Kayamkulam straight away.
In fact, all my gas plants today are running at an average of about 70% PLF (plant load factor). I have another 20-25%, which I can run with imported gas. But I should have the demand for imported gas. So, why should I have a plan B for capacity addition on imported gas when my domestic capacity is under-utilized. And if they want it on imported gas I can run those on higher capacity.
Two issues weighing on the sector are land acquisition and acute coal shortage. From NTPC’s point of view how are you looking to meet this issue?
As far as coal is concerned we have enough mines to meet our requirement at least by 30%, if not more. What Coal India is giving us today and what the government has now ordered to commit FSA (fuel supply agreement), that with normal increase of 3% to 4% would suffice our requirement from Coal India.
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