0601 Generation Incentive

NTPC Limited
Corporate Human Resources Division

HR Policy Manual
Generation Incentive Scheme
Section:0601
Issue No: II Rev.No.:0
Issue Date: 26.09.2011
Updated as on: 31.01.2012
Page: 1 of 20

GENERATION INCENTIVE SCHEME

Preamble:

The followings are the essential features of the modified Power Generation
Incentive Scheme which is enclosed as Annexure:-

1. The provisions of the scheme are applicable w.e.f. 1.4.2005.

2. Basic pay for the purpose of payment of Inc entive will be actual basic
pay (w.r.t. 1997 pay structure) and special pay, if any. However, basic
pay will not include any Dearness pay, DA, Personal Pay, Personal
Adjustment.

3. The Incentive payment will continue to be linked with the
performance para meter, the Equivalent Availability Factor %.

4. The incentive will be paid in two components i.e. monthly and
quarterly.

5. The employees, for the purpose of Incentive payment, will be
categorized into Direct(Group-A) and Indirect (Group-B/C) and the
maximum quantum of Generation Incentive payable to each
category/group in different stages of project will be as under :-

During O&M phase During Expansion/
Concurrent phase
Group-A
(O&M employees)
Amount as
per
performance-
payment matrix as
Amount as per
performance-payment
matrix as given in
scheme (para 7.2)
Group-B
(Common service
employees)
85% of
amount
payable to
85% of amount payable
to employees in Group-
A
Group-C
( Project Const.
employees)
N.A. 30% of amount payable
to employees in Group-A

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Section:0601
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6. The oil linked incentive/disincentive as applicable to only for
Operation & Maintenance employees in group-A, will continue to be
paid as per existing scheme.

7. In respect of employees who have been transferred from one project
to another after 1.4.2005, payment for the period where the
employee had worked at the transferor project will be made by the
project where he is presently working. For this purpose , the
transferor project should send the amount payable in respect of
employee transferred to other projects/units within a period of one
month of issue of circular.

8. The Scheme shall not be applicable for Tanda TPS for which a
separate scheme is in operation.

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Section:0601
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Annexure

GENERATION INCENTIVE SCHEME

1.0 SHORT TITLE

The Scheme shall be called "NTPC Power Generation Incentive
Scheme".

2.0 BASIC CONSIDERATIONS

2.1 The purpose of any Incentive Scheme is to motivate the
employees to give their best. In the case of a power plant, the
incentive plan also takes into account the maintenance
aspect of the plant while motivating employees to maximize
generation. Any Scheme which encourages maximization of
Generation only in the short term may be self defeating as it
leads to irreparable damage to plants and machinery because
of insufficient motivation to employee for the proper upkeep
and regular maintenance of the Plant. A successful Incentive
Scheme, hence, should strike a balance between short range
and long range plant requirements and should achieve a good
blend of the two in such a way as to optimize generation on a
sustained long range basis. Further, increase in Generation
may not lead to desirable results if increased costs are
allowed to eat away the substantial surplus as a result of
higher generation. From this point of view, it is desirable to
build the fuel costs and their impact on the economics of
generation into the scheme itself so that reasonable norms of
fuel consumption are maintained.

2.2 The following objectives have been considered in designing the
incentive scheme.

2.2.1 To keep the Generating station in readiness to deliver e
x-bus output expressed as % of rated installed capacity so
that the available resources are optimized based on the
merit order operation thereby bringing about an
overall economy in generation.

2.2.2 To maximize generation of ele ctrical energy through

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Section:0601
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d
e
ve are
easily measurable and have a direct co-relation to the

2.2.3 the scheme by the
employees, smooth implementation and amenability to

2..2.4 rameters for payment have been determined to
encourage better maintenance for higher availability of

2.2.5 e
while at
same time, ensuring that payments are consistent
economic terms with the level of performance.
3.0

r
ion, morale and the team spirit among the
employees, the followings are the principal objectives of the

b) n of generation of Electrical energy through
d other allied
c) Reduction of cost per unit of energy generated. d)
in absenteeism.
4.0

loyees of NTPC other than Tanda
TPS, directly or indirectly engaged in Generation of Electricity. The
em

a) Apprentices under Apprentices Act and Trainees b)

optimum use of installed power plant capacity an
reduction of cost per unit of energy generated. Th
factors recommended for payment of incenti
extent of achievement of th e above objectives.
To ensure easy understanding of
simple unambiguous computations.
The pa
plant.
The quantum of incentive offered to employees has to b
enough to motivate them to put in extra effort
the
in

OBJECTIVES
With the above as background and apa t from the general purpose of
promoting motivat
Incentive Scheme:
a) To keep the Generating station in re adiness to deliver ex-bus
maximum output expressed as % of rated installed capacity.
Maximizatio
optimum utilization of installed plant capacity an
resources.
Reduction

APPLICABILITY
The Scheme covers all regular emp
Sch e will not be applicable to: -
Casual or daily rated employees

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5.0 RECOMMENDED FACTORS FOR INCENTIVE PAYMENTT
ac
of po and cost reduction, a multi-factor scheme has been
designed

i)
To hieve the twin objectives of availability of plant for generation
wer
incorpo rating the following factors:
Generation Incentive based on Equivalent Availability Factor
%:-

pa
EAF% orked out as per formula given
below

a) The station AF% shall

, as
certif

H of DC is issue
terms of MU

Payment linked with Equivalent Availability Factor (EAF%) will
be id monthly and quarterly to eligible employees. The
for a station shall be w
:
s where ABT is in operation, the E
be calculated as under:
EAF(%) = Declared Capacity(%) / Availability(%)
ied by concerned Authority.
owever, in case the certification d in
the EAF% will be calculated as under:

Declared Cap.(MU), as certified by the
concerned Authority
EAF(%)
=
Ex-bus Generation (MU) at installed

capacity
x 10

0

b) Stations where ABT is not in operation, EAF will include
shortfall in g o d on
t structions
RLDC/REB/C

Actual Gen.(MU)+Shortfall in Gen.
EAF(%) = due to backing down (MU)

eneration due to backing d wn (base
he certificate issued) on the in of
EA and will be calculated as under:
Generation (MU) at installed capacity
x 10

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The responsibility of obtaining the relevant certificate
from the above authorities will be of the
concerned Project/Station. If capacity declared is
found to be wrong and penalty imposed on NTPC on
account of the false declaration, the amount of
penalty sha ll be recovered from the
incentive payable to employee in proportion to their
basic pay. The maximum amount of recovery will
be restricted to the total amount of Generation
Incentive paid in that month.

d) Based on the EAF of the station, the incentive will be
payable as per performance-payment matrix in para 7.2
below .

(ii) Oil Consumption linked Incentive:- Payment will be made
monthly only to the employees directly and exclusively
engaged in operation and maintenance of the plant as per
para 8.0 below.

6.0 GENERATION LINKED INCENTIVE BASED ON EAF %
The Generation Incentive Scheme based on EAF% will have
monthly and quarterly components of payment linked with the
corresponding performance levels as detailed below . There will be
graded increase in rate of Incentive for increase in EAF% above
70% EAF. The maximum Incentive will be payable at EAF of 90%
and above. The Performance Payment matrix showing monthly and
quarterly payments is given in the Clause 7.2. The capacity for the
purpose of computing EAF% shall take in to the account deration of
newly commissioned units during the first year as given in clause
7.1. The total payment linked with EAF% will be as under: -
a) At 70% EAF - incentive payment will be 7.5% of basic pay.
70% there will
for every 1%
b) For EAF% above
incentive payment
be gra ded increase in
increase in EAF% with

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Section:0601
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maximum incentive equal to 30.0% of basic pay at 90% EAF.
The graded increase in rate of Incentive payment has been
made as per details given below:-

6.1 Monthly Incentive
6.1.1 The monthly incentive will be paid based on Equivalent
Availability Factor (EAF%) achieved during the month.
6.1.2 Performanc e -Payment Relationship
At 70% EAF, the incentive payable is 5.625% of basic
pay and there will be graded increase in Incentive rate
with maximum incentive equal to 22.50% of basic pay,
payable at 90% EAF.

6.2 Quarterly Incentive
6.2.1 The quarterly incentive will be paid once in three
months based on the average EAF% achieved during
corresponding period. The performance period for
payment of quarterly incentive will be as under:
1
st
quarter - April to June
2
nd
quarter - April to September
3
rd
quarter - April to December
4
th
quarter - April to March
6.2.2 Performance-Payment Relationship
At 70% EAF, the total incentive payable for the quarter,
including monthly component is 7.50% of basic pay and
there will be graded increase in Incentive rate with
maximum Incentive being 30.0% of basic pay payable at
90% EAF.

6.3 An illustration showing computation of monthly and quarterly
incentive ra tes are enclosed for reference.

7.0 CAPACITY AND PERFORMANCE -PAYMENT RELATIONSHIP

7.1 Capacity
Installed capacity will be taken as the basis for computation of
EAF%. When the capacity is de -rated/re -rated, the EAF will
be calculated on that basis. Review in capacity will be done
with the approval of Competent Authority . In case of newly
commissioned Unit, the capacity to be taken into account for
the computation of EAF % will be determined as follows:

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Section:0601
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a) Coal S

ii) In the subsequent four (04) months, it will be 70%
lled/Ex-bus capacity and thereafter, it will
be equal to 100% of installed/Ex-bus capacity.

b) Gas S
tations
i) In the first two (02) months from the date of
commercial operation, it will be 60% of
installed/Ex-bus capacity.
of insta
tations

i) In the first month from the date of commercial

ii) In the subsequent two (02) months, it will be 70%

c) EAF%
shall be rounded off to the nearest integer. Decimal of
0.5 and above will be rounded off to the next higher
integer while decimals below 0.5 will be ignored.

operation, it will be 60% of installed/Ex-bus
capacity.
of installed/Ex-bus capacity and thereafter, it will
be equal to 100% of installed/Ex-bus capacity.
For the purpose of calculating incentive rates, the

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7.2 Performance Payment Matrix:

Incentive payable (% of Basic pay) EAF(%)
Monthly Quarterly Total
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90 & above
05.625
06.075
06.525
06.975
07.425
07.875
08.625
09.375
10.125
10.875
12.150
13.050
13.950
14.850
15.750
16.650
17.550
18.450
19.800
21.150
22.500
1.875
2.025
2.175
2.325
2.475
2.625
2.875
3.125
3.375
3.625
4.050
4.350
4.650
4.950
5.250
5.550
5.850
6.150
6.600
7.050
7.500
07.50
08.10
08.70
09.30
09.90
10.50
11.50
12.50
13.50
14.50
16.20
17.40
18.60
19.80
21.00
22.20
23.40
24.60
26.40
28.20
30.00

8.0 INCENTIVE LINKED TO OIL CONSUMPTION FACTOR

The incentive will be payable monthly only if the Specific oil
consumption of the station is 2.00 ml/kwh or less in a particular
month. Similarly, there will be dis-incentive if the Specific oil
consumption of the station in any month is more than the 4.00
ml/kwh.
8.1 Performance Payment Table for Incentive- The
matrix of payments will be as under: -

Oil Consumption in
ml/kwh
Incentive as % of
monthly basic pay
Above 2.00 Nil
2.00 1.76 0.70
1.75 1.51 1.00

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Section:0601
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1.50 1.26 1.30
1.25 1.01 1.60
1.00 0.76 1.90
0.75 0.51 2.20

8.2 There will be no incentive for oil consumption between 2.00

8.3 e for excessive oil consumption - The matrix for
dis-incentive with respect to excessive oil consumption will be
as u :

Oil on
in m
0.50 & below 2.50

ml/kwh and 4.01 ml/kwh.
Dis -incentiv
nder -
Consumpti
l/kwh
Dis-ince as % ntive
of monthly basic pay
4.01 4.25
4.26 4.50
4.51 4.75
4.76 5.00
5.01 5.25
5.26 5.50 2.20
5.51 & Above 2.50
0.70
1.00
1.30
1.60
1.90

8.4 disincentive for excessive oil consumption for the
month will be subject to a maximum of 25% of total incentive

8.5
n
the EAF% in any month is less than 70%, there
will be no incentive/disincentive on account of oil

8.6
n will
be moderated in the similar manner during first six months.
s m t

a) During first 2 months after = 60% of oil consumption
The total
payable.
The above incentive on account of oil consumption will be
payable o ly when the base level of generation i.e. 70% EAF
is achieved. If
consumption.
For the purpose of generation linked incentive, the capacity
for computation of EAF% for a newly commissioned unit, is
derated to 60% in the first 2 months and to 70% in the
subsequent 4 months. The actual specific oil consumptio
Thi oderation will be carried ou in the following way:

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Section:0601
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0.6)
date of commercial operation (Moderating factor-

b) During subsequent = 70% of oil consumption
04 months (Moderating factor-0.7)
c) After 06 months of = 100% of oil consumption
commercial operation (Moderating factor-1.0)

8.7 The specific oil consumption (x) of the station for the purpose
of oil linked incentive will be computed as follows:-

Ci * Mf
x (ml/kwh) = ---------------------------------------
Total generation of station in MU

Ci = Oil consumption in K.Liter for Unit ì'
Mf = Moderating Factor for unit as given in
para 8.6 above.

8.8 There may be situation in a project when some of the units
may not have completed 06 months of commercial operation.
Under this situation, the calculation of station specific oil
consumption for the purpose of incentive shall be carried out
as per example given below:-

a) Total number of units - 5

b) No. of unit(s) months which have completed
06 of commercial operation
- 3 (Unit
I,II & III)

c) No. of unit(s ) which have completed 03-06
months of commercial operation
- 1 (Unit
IV)

d) No. of unit(s ) which have completed less
than 03 months of commercial operation
- 1 (Unit V)

e) Oil consumption of individual units :
Unit I C1 K.Liter
Unit II C2 K.Liter
Unit III C3 K.Liter
Unit IV C4 K.Liter
Unit V C5 K.Liter

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f) Station specific oil consumption (x) for oil linked
incentive purpose will be:
C1+ C2 + C3+ 0.7*C4 + 0.6*C5
x = ----------------------------------------
Total generation of station in MU

The above station specific oil consumption `x' will then
be compared with the incentive/disincentive matrix
given above and incentive/disincentive will apply, as the
case may be.

8.9 The oil incentive payment is payable only to the employees in
Group-À'. The disincentive due to excessive oil consumption
will also be applicable to the employees in Group-À' only.

9.0. CLASSIFICATION OF EMPLOYEES FO R THE INCENTIVE
SCHEMES

9.1 For the purpose of payment of incentives under this scheme
Group A'
: Eligible
engaged
commissi

Group B'

:
as specif
All other
the employees will be classified into the following groups:-
employees directly and exclusively
in Operation & Maintenance of the
oned unit or units including Auxiliaries
ied in Para 9.2
eligible employees not covered under
Group À' above in respect of a station where all
units are declared under commercial operation.
This group will include employees as specified in
Para 9.2(i).
Group C'
: The employees posted in Civil Construction &
Equipment Erection department during
expansion/concurrent phase. This group will
include employees as specified in Para 9.2(ii).

9.2 Deptt./areas und er each group will be as under:
Deptts/Areas under
Direct Category (Group-
A)
Deptts/Area under Indirect Category
(Group-B/C)

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, EEMG,
e
Plannin
Operations, Chemis
Fuel Handling
try,
Fuel Transportation/
MGR, Maintenanc
Group-B
Head of Project, Commercial,
Plant Civil Mntce, R&M, T/ship
Civil & Electrical
(i)
Mntce., HR,
Autobase, Const. Workshop, EM
g, Mechanical,
G,

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Section:0601
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Electrical and C&I
Maintenance
(excluding nisterial
and drivers)
mi
staff

Note:-
including those posted in O&M.
(ii)
F&A, C&M, ETP, TS(P&S,FQA,FE),
e, s .
All ministerial staff and drivers
R&R, IT/Commn Safety. Tel.
Exchang Medical, A h Utln ,
Vigilance , TQM
Group-C
Erection & Civil Construction
(i) The clarifications regarding any Department/Area not
cate entive
ill be obtained from Corporate HR Division.
h time, the r ed
employee will be paid incenti nd .
( artment/a s be the sis for
cate roup pur of incentive. The
al area/function assigned, if any, will not
e incentive category/group of an individual

10.0 QUANTU INCENTIVE
the Performance Payment
10.2 e oyees posted in
irect category (group-B) will be
un

Group A
Indirect
Category
covered above, its gory for the purpose of inc
payment w
Till suc matte is clarifi the concerned
ve of the i irect category
ii) The dep rea of po ting will ba
gory/g for the pose
addition
chang
employee.
M OF

10.1 The Incentive rates indicated in
relationship Matrix are to be applied on the Basic Pay for
corresponding period in respect of Equivalent Availability
Factor (%) both for Coal & Gas stations and in respect of Oil
Linked Incentive (para 8.0), for Coal stations only, on monthly
basic .

Th generation incentive payment to empl
common service group i.e. ind
as der:-
Direct Category
Group B
100% of Incentive payable on EAF% as
indicated in the Perf.Payment Matrix. In
addition employees under this category
would also be entitled for Incentive , as
per Para 8.0, for Sp.Oil Cons p.
r factor
o
85% of Group-'A'
rates indicated
in Perf. Payment
Matrix fo
f EAF(% )

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Section:0601
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10.3 Indirect Category Group-C during Expansion/Concurrent
phase:- The employees posted in Civil Construction &
Equipment Erection department will get 30% of
applicable rate of Generation Incentive of Group A.

10.4 The Generation Incentive payable during various stages of

project i.e. during O&M and concurrent phase/expansion
phase to all categories of empl oyees is given below as
illustration:
Stage/phase of the
Project/Station
Generation Incentive Rate
Deptt/Areas O&M Service Erection & Civil
Function

Construction
O&M Phase
(a Units in ll
Commercial
operation)
Group-A
( ) 5 100%
Group-B
(8 %)
-
Expansion/Concurren
t Phase
Group-A
(100%)
Group-B
(85%)
Group-C
(30%)

11.0

11.1
if the performance is below standard:

11.2

12.0 OTHER GENERAL CONDITIONS

REDUCTION IN INCENTIVE PAYMENTS
In order to control the cost of generation and improve working
and performance of the power station, management in its
absolute discretion may introduce, from time to time, one or
more of the following factors for which reductions in incentive
rates will be made

a) Control on auxiliary power consumption
b) Timely wagon unloading
c) Cleanliness
d) Excessive overtime payments
e) Any other relevant factor
The total deductions on account of all the above factors shall
not exceed 40% of the total incentive payable including
disincentive for oil consumption. Depending on the relevance
and requirements, the introduction/discontinuance and
extent of deduction may vary from station to station.

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12.1
rata
trainin
casua
purpo
12.2 e a
pay n
not c r
Rent
comp
Fund, .
12.3 Employees may be tra red from one department/division
to another. In such cases their entitlement for incentive will
be determined as per the entitlement of the
department/division in which they are actually posted.

12.4 Relevant particulars and data relating to generation, oil
consumption, attendance etc., will be finalized on the basis of
records and accounts maintained by the Company.

12.5 The management reserves the right to review/modify the
scheme at its own discretion from time to time keeping in
view efficiency of the plant being increased/ improved through
installation of more or better equipment or by improving the
mechanical / process / technology / methods / systems and
procedures.

12.6 Computation of EAF% and specific Oil consumption (ml/kwh)
for the purpose of this will be made by HR in consultation with
F&A on the basis of certified data from Head of O&M, with the
approval of Head of Station/Project. At Regional Headquarter
in respect of EAF% will be done by Regional HR in
consultation with Regional F&A on the basis of certified data
provided by Regional OS/Commercial, with the approval of
Regional ED. Similarly, at Corporate Centre processing w.r.t.
EAF% will be done by Corporate HR in consultation with
Corporate Finance on the basis of certified data provided by
Corporate OS/Commercial or Regional Commercial/OS, with
the approval of GM(HR).

12.7 Generation Incentive payment to CC & RHqs employees
The employees will be entitled to incentive payments on pro-
basis for actual period of attendance. The period of
g in India for a duration of not more than 15 days,
l leave and RH will be treated as attendance for the
se of incentive payment.

Th mount of Incentive earnings will neither be termed as
or allowance, nor wages. Accordingly, this amount would
ount fo any service benefits i.e. computation of House
Allowance, Compensatory Allowance, cash
ensation, encashment of leave, pay fixation, Provident
Pension or Gratuity etc

nsfer

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a) Generation Incentive rate in respect of Corporate
Centre employees will be worked out based on the
weighted av it ial
of licable incentive ra of the indirect category-
Gro B in each of the Stati Project of NT

the applicable Generation Incentive rates of
al Head rter employees will be worked out
ed on the apaci
commercial operatio plic n e rat
o - in each the jects
the respective regions.

-
The
erage on capac y in commerc operation
app
up-
te
on/

PC.
b) Similarly,
Region
bas
qua
w
r
eigh
n of
up
ted
ap
B
aver
abl
age
e in
of
on
ce
c
tiv
pro
ty
f t
ith
in
he
in
e o
w ry -G

--o

-
indirect catego

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Section:0601
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M+Q

Addl in Qtr.

M+Q

Addl in Qtr.

Monthly
EAF
Monthly

(a) (b) (c) d=(c)-(b) (a) (b) (c) d=(c)-(b)

Illustration for calculation of GI rates-Monthly and Quarterly components
tation -I tation-II
EAF

GI Rates GI Rates
1.1 April 86.00% 17.55% 74.00% 7.43%

Sl. S S

Month

1.2 May 86.00% 17.55% 73.00% 6.98%
1.3 June 84.00% 15.75% 71.00% 6.08%

1.4 Total GI paid (1.1-1.3) 50.85% 20.48%

1.5 1st Qtr(April-June)

86.00%

70.20%

19.35%

73.00%

27.90%

7.43
%
2.1 July

88.00%

19.80%

77.00%

9.38%

2.2 August 81.00% 13.05% 41.00% 0.00%
2.3 September 93.00% 22.50% 65.00% 0.00%

2.4 Total GI paid (1.1-2.3)

125.55%

37.28%

2.5 2nd Qtr (April-Sept) 86.00% 140.40% 14.85% 67.00% 0.00% 0.00
%

3.1 October

86.00% 17.55%

70.00% 5.63%

3.2 November 94.00% 22.50% 74.00% 7.43%
3.3 December 99.00% 22.50% 78.00% 10.13%

3.4 Total GI paid (1.1-3.3)

202.95%

60.45%

0 00% 0 00% 69 00% 50 85% 253 80% 89 00% Dec) - (April Qtr 3rd 3 5

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4.1 January 90.00% 22.50% 4.0 7.43%

4.2 February 100.00% 22.50% 0.00% 12.15%

4.3 March 95.00% 22.50% 81.00% 13.05%

4.4 Total GI paid (1.1-4.3) 321.30% 93.08%

5.0 4th Qtr (April -March) 90.00% 360.00% 38.70% 71.00% 97.20% 4.13%

6.0 Avg Inc in FY 30.00% 10%

N.B. Quarterly, Incentive will be payable only when total m y centive paid in the quarter n the
minimum based EAF% of the quarter. If it is less than it ll be treated as zero.
7
8
0%
8.
tha on
zer
thl
o,
in
wi
is less

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HR Policy Manual
Generation Incentive
Section:0601
Page: 20 of 20

RECORD OF REVISIONS

Section-Clause No. Revision
No.
Revision
Date
Amendment Details
0601-Record of
Revisions
0 13.02.2012 Provision Added

PREPARED BY REVIEWED BY APPROVED BY

D P Giri
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P K Senapati
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D S Rao
AGM(HR)

0601 Generation Incentive

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0601 Generation Incentive

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