NTPC objects to power norms

Faced with the prospect of an annual loss of around Rs 1,200 crore due to the Central Electricity Regulatory Commission's new tariff order, the National Thermal Power Corporation (NTPC) is planning to file a review petition against some clauses of the norms announced yesterday.

NTPC executives said the company would lose around Rs 475 crore on account of depreciation rates being prescribed at 3.6 per cent instead of 5.2 per cent in the Companies Act.

The central power utility is expected to lose another Rs 250 crore annually due to the reduction in return on equity to 14 per cent.

On various plants operationalised before 1992, where NTPC has a debt-equity ratio of 50:50, the corporation would stand to lose about Rs 500 crore, company executives said.

The new norms prescribe a debt-equity ratio of 70:30, and any further equity infusion will get lower returns available to the debt component.

However, officials have cited the raising of the incentive rate to 25 paise per unit from the existing 21.5 paise per unit as a positive move.

An executive with a private power utility said the higher returns prescribed in CERC's draft order were necessary for private projects since they did not have access to payment security mechanisms like the securitisation process of state dues to CPSUs.