National Thermal Power Corporation (NTPC) and Asea Brown Boveri (ABB) have decided to form a joint venture to modernise power stations in India and abroad.
The decision was taken at a NTPC board meeting yesterday
The corporation selected ABB from six companies shortlisted after global tenders were floated for a joint venture partner in February. The new company will undertake renovation of power stations but will not build or operate them. The corporation will bid for modernisation contracts through the joint venture.
More From This Section
Officials indicated that the company would initially be a 50:50 joint venture between NTPC and ABB. Equity would later be divested in favour of financial institutions, they added. However, NTPC has not fixed any time-frame for the subsequent divestment.
The joint venture company will initially have an authorised share capital of Rs 50 crore.
Offers for renovation have been made to all power utilities and equipment suppliers that have previously undertaken such programmes. UK-based PowerGen and National Power are also in talks with independent power producers for renovation contracts.
NTPC, in its selection, gave additional weight to companies with more experience in renovating hydel projects. NTPC, chiefly a thermal power generating company, wants to diversify into constructing and renovating hydel projects.
Power units have to modernise regularly, failing which the life of the plant declines rapidly. Independent power producers have provisions in their tariffs to undertake renovation every three to five years.
This apart, the Union power ministry has indicated it will give preference to companies that want to enter this area because raising capacity through renovation is far cheaper than setting up fresh capacity.
The ministry has cut the interest rates of the Power Finance Corporation to subsidise renovation by state electricity boards.
The government figures around 8,000-13,000 mw of capacity needs modernising work over the next five years, failing which it will be lost.