NTPC has held its own with robust returns to shine amid gloomy power play

NTPC, with efficient operations and consistent performance, is BS Star PSU of the Year 2016

The power sector is undergoing major changes, with state-owned distribution companies undergoing restructuring, the demand for power falling to historic lows, fuel supply touching new highs and industrial growth at a standstill. Amidst this gloom, the public sector NTPC has held its own with robust returns and consistent performance.
 
NTPC’s operational performance has been better than its peers and the sector as a whole. During the first half of 2016-17, its plant load factor (PLF), or the operating ratio of its plants, was 77.98 per cent, against the national average of 59.04 per cent, which fell by four per cent over last year.

 
While the sector grapples with a lack of demand pushing down generation, NTPC has maintained a dominant position in the market through operational efficiency. The company was able to recover the fixed costs for each plant as it achieved the regulatory benchmark plant availability factor (PAF) of 83 per cent.
 

The latest tariff regime links the incentive income with a PLF of more than 85 per cent, instead of PAF as earlier. So, while NTPC missed earning incentives from demand-starved power discoms, it continued to earn the fixed cost owing to its robust PAF.
 
In 2015-16, NTPC reported a consolidated operating income of Rs 78,705.5 crore and net profit of Rs 10,183 crore, against an income of Rs 80,612 crore and net profit of Rs 9,986 crore in 2014-15.

 
NTPC has planned new power generation capacity of close to 24,000 Mw, and plans to build at least 2,000-2,500 Mw every year. This comes at a time when government estimates are hinting at a slowdown in coal generation capacity owing to the increasing share of renewable energy. The company has also committed 10,000 Mw of solar power capacity by 2022. As per market estimates, NTPC’s capital expenditure is likely to remain around Rs 30,000 crore a year for the next five years.
 
As part of its fund-raising activity, NTPC raised 500 million euros in January this year after a Rs 2,000-crore rupee-dominated masala bond issue in August.

 
NTPC also made its debut in captive coal production as it opened the contentious coal mine Pakri Barwadih in February 2017, seven years after allotment. The mine has estimated an annual capacity of 15 million tonnes and has been allotted by the Centre to NTPC as a basket mine to meet the fuel shortfall of its power stations. NTPC has a total of six coal blocks allotted to it.
 
Going strong with its inorganic expansion plans, NTPC also signed a non-binding Memorandum of Understanding (MoU) with Rajasthan Rajya Vidyut Utpadan Nigam to buy power generating assets of the Chhabra Power Plant. While the total cost of the plant is estimated at around Rs 15,000 crore, NTPC will currently pay about Rs 5,000 crore for the operational 1,000 Mw and the cost of the two 660 Mw units will be decided later.

 
NTPC has also embarked on its first restructuring, to improve efficiency. The company, which has several divisions sprawled across power generation from both conventional and non-conventional sources, power and fly ash trading, equipment sourcing and consultancy, decided to merge existing units and create new ones.
 
It has also retired several defunct MoUs that were signed with states to facilitate power development and purchase, which stand nullified. The MoUs signed for technological improvement are under review by an internal committee of the power ministry.