NTPC plant load trips on shortage of gas

Reveals risks in Red Herring prospectus

The state-owned National Thermal Power Corporation (NTPC), the country's largest power generation company, is facing an acute fuel shortage at its gas-based power plants.

This has led to a lesser plant load factor (PLF), a performance and efficiency indicator, at all its gas-fired stations than at coal-fired plants.

The company, whose initial public offering is set to open on October 7, has also failed to achieve its own target of adding 5,300 mw during the Ninth Plan period. It could manage to add only 2,700 mw during the period.

Top comapny officials said NTPC would be signing a memorandum of understanding (MoU) with the ministry of power and a gas purchase agreement with Reliance Industries to get more supply.

A K Singhal, executive director (finance) of NTPC, said, "We are trying to come through the gas crisis. We are signing a memorandum of understanding (MoU) with the ministry of power, which has agreed to seek the ministry of petroleum and natural gas to raise gas supply to our gas-fired stations and meet the target availability norm of 80 per cent."

"Moreover, we are going to sign a gas purchase agreement, for which we have already issued a letter of intent, with Reliance, which will supply gas from its Krishna-Godavari block," Singhal added.

"By the end of the Tenth and Eleventh Plan periods, our gas-fired plants are expected to achieve higher PLF."

During the financial year to March 2004, PLF at coal-fired plants stood at 84.4 per cent, while that at gas-fired plants stood at 68.3 per cent.

Singhal said the lower power capacity addition during the Ninth Plan period was due to non-availability of gas and higher liquid-fuel prices.

In its draft Red Herring prospectus filed with the Securities and Exchange Board of India, the company noted, "We require 16 mmscmd of gas to run our gas-fired stations at a PLF of 80 per cent. But, in the last fiscal, we received only 10 mmscmd of gas, which represented 77 per cent of our allocation of 13 mmscmd. Though we tried to cover gas shortages by using alternative fuels, such as naptha and high-speed diesel, these are more expensive than gas and therefore their use increases our costs of supply and power generated by us."

Currently, NTPC has six gas-fired power plants. Of these, one plant, at Kayamkulam, which has a capacity of 350 mw, is using naptha. Its Auraiya plant, in Uttar Pradesh, has the highest capacity of 652 mw. Those at Kawas and Jhanor Gandhar, both in Gujarat, have capacities of 645 mw and 648 mw respectively.