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Front Page Certificate Acknowledgement Index- Page Numbering is essential Objectives of the study Introduction to the company/ topic Hypothesis, if any Literature Review Research Methodology Data Analysis Findings & Conclusion Recommendations References/ Bibliography Annexure- to include questionnaire if any
Summer Training Project Report ON
NTPC LTD. 1
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NTPC LTD. 2
TABLE OF CONTENTS
1.1 EXECUTIVE SUMMARY 1.2 GENERAL INTRODUCTION 1.3 INDUSTRY PROFILE 1.4 GENESIS CHAPTER 2:RESEARCH METHODOLOGY 2.1 OBJECTIVES 2.2 RESEARCH DESIGN 2.3 SOURCES OF DATA COLLECTION 2.4 PRIMARY & SECONDARY SOURCE 2.5 LIMITATIONS CHAPTER 3: BUINESS PORTFOLIO CHAPTER 4:DATA ANALYSIS AND INTERPRETATION CHAPTER 5: FINDINGS & RECOMMENDATIONS 4.1MAJOR FINDINGS 4.2RECOMMENDATIONS 4.3CONCLUSION BIBLIOGRAPHY
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NTPC LTD. a policy to encourage private sector participation was initiated in 1991.EXECUTIVE SUMMARY Power is a concurrent subject under the Constitution. A special focus has been given to the Availability Based Tariff regime and its impact on NTPC. 4 . The study was to make for the trends in tariff structure in power sector and to have a detailed look on the reforms in and restructuring of the power sector in last decade. Due to paucity of resources with the Central/State PSUs and SEBs and in order to bridge the gap between demand and availability of power. A comparative analysis between the previous tariff structure and the existing tariff structure is attempted in this study.
It also explains the need for establishing a comprehensive tariff policy in power sector. the history of development Indian power sector has been discussed. This is the electricity tariff based on the plant availability and frequency. Trends In Tariff Structure Refers to the historical methods of tariff structure. Availability Based Tariff Structure Deals with the current tariff structure. which is based on CERC notification. Need of Tariff policies initialed by the government and the impact on the development of power sector has been discussed. key players and growth of them in the vicinity of different policies adopted. This chapter explains that initially tariffs were structured on single part. and then a committee was constituted to make the tariff in Two-parts. Therefore it is called Availability Based Tariff. At the end of the chapter the features of a good tariff are explained. It was evolved to formulate principles for generation tariff. are discussed under this part. The components of Availability Based Tariff are explained in NTPC LTD.INTRODUCTION In this chapter the purpose of the study has been elaborated in the background demand factor of electricity with special focuses on recent power sector reforms. After going through the historical methods of tariff structure we discuss the current tariff structure. Tariff Structure Policy And Norms Deals with the evolution of tariff policy and discusses the basic concepts of tariff. Tariff structure is based on the cost plus method of pricing. K. which govern the tariff determination. Various important provisions. P. Rao committee constituted the Two-part tariff. The methodology of tariff structure is explained in detail. 5 . This chapter has given focus on the structure. Overview of Indian Power Sector In general. which consists of fixed charges And Variable charges.
the generating company gets a higher payment. In case the average availability achieved is lower payment is also lower.Single-part-tariff.detail. After that various reforms occurred in power sector are discussed and certain recommendations for improvement of Tariff structure are suggested. which consists of capacity charges. In India Electricity sector is operating in Cost Plus Regulated Tariff regime. it is three-part tariffs. energy charges and unscheduled interchange charges. Than this report covers definition of tariff.Than its various components are discussed in detail.Two-part-tariff and Availability Based Tariff(ABT).Than three kinds of tariff structure are covered which are. After discussing the current tariff structure comparative analysis of different methods of tariff structure has been attempted in the next chapter. NTPC LTD.In ABT system if the average availability actually achieved over the year is higher than the specified norm for plant availability.Tariff is the price charged for the sale of electricity from the state electricity boards by Central public centre units engaged in power generation.There are two types of tariffs cost plus and market determined. Hence it is called availability-based tariff. ABT is currently used by NTPC for tariff Determination. 6 .
powering India’s growth. 7 .National Thermal Power Corporation COMPANY PROFILE Our Vision "A world class integrated power major. integrating multiple energy sources with innovative and eco – friendly technologies and contribute to society" Our Core Values (BCOMIT) • • • • • • Business Ethics Customer Focus Organizational & professional Pride Mutual Respect and Trust Innovation and Speed Total Quality for Excellence OBJECTIVE NTPC LTD. with increasing global presence Our Mission "Develop and provide reliable power. related products and services at competitive prices.
Business portfolio growth o To further consolidate NTPC’s position as the leading thermal power generation company in India and establish a presence in hydro power segment o To broad base the generation mix by evaluating conventional and nonconventional sources of energy to ensure long run competitiveness and mitigate fuel risks o To diversify across the power value chain in India by considering backward and forward integration into areas such as power trading. eight key corporate objectives have been identified.g. coal beneficiation. 8 . management practices NTPC LTD. To realise the vision and mission.. trading. growing to be a preferred brand for supply of quality power o To expand the relationship with existing customers by offering a bouquet of services in addition to supply of power – e. coal mining. These objectives would provide the link between the defined mission and the functional strategies. energy consulting. transmission. etc o To develop a portfolio of generation assets in international markets o To establish a strong services brand in the domestic and international markets Customer Focus o To foster a collaborative style of working with customers. distribution. distribution consulting.
with adequate concern for the interests of the customer Agile corporation o To ensure effectiveness in business decisions and responsiveness to changes in the business environment by Adopting a portfolio approach to new business development Continuous and co-coordinated assessment of the business environment to identify and respond to opportunities and threats o To develop a learning organization having knowledge-based competitive edge in current and future businesses o To effectively leverage Information Technology to ensure speedy decision making across the organization Performance Leadership o To continuously improve on project execution time and cost in order to sustain long run competitiveness in generation o To operate & maintain NTPC stations at par with the best-run utilities in the world with respect to availability. 9 .o To expand the future customer portfolio through profitable diversification into downstream businesses. efficiency. using customer specific information. NTPC LTD. inter alia retail distribution and direct supply o To ensure rapid commercial decision making. productivity and costs o To effectively leverage Information Technology to drive process efficiencies o To aim for performance excellence in the diversification businesses o To embed quality in all systems and processes. reliability.
Financial Soundness o To maintain and improve the financial soundness of NTPC by prudent management of the financial resources o To continuously strive to reduce the cost of capital through prudent management of deployed funds. Human Resource Development o To enhance organizational performance by institutionalising an objective and open performance management system o To align individual and organizational needs and develop business leaders by implementing a career development system o To enhance commitment of employees by recognizing and rewarding high performance o To build and sustain a learning organization of competent world-class professionals o To institutionalize core values and create a culture of team-building. empowerment. innovation and openness which would motivate employees and enable achievement of strategic objectives. 10 . leveraging opportunities in domestic and international financial markets o To develop appropriate commercial policies and processes which would ensure remunerative tariffs and minimize receivables o To continuously strive for reduction in cost of power generation by improving operating practices NTPC LTD. equity.
disseminating best practices in the operations and management of power plants etc Research and Development o To pioneer the adoption of reliable. 11 . reliable and environment friendly operation of power plants in the country NTPC LTD. assisting customers in reform. Sustainable Power Development o To contribute to sustainable power development by discharging corporate social responsibilities o To lead the sector in the areas of resettlement and rehabilitation and environment protection including effective ash-utilization. efficient and cost-effective technologies by carrying out fundamental and applied research in alternate fuels and technologies o To carry out research and development of breakthrough techniques in power plant construction and operation that can lead to more efficient. peripheral development and energy conservation practices o To lead developmental efforts in the Indian power sector through efforts at policy advocacy.
National Thermal Power Corporation is the largest power generation company in India.68% of the total power generation of the country during 2005-06. GENESIS Till early Seventies.395 MW). A total of 170. with majority shares owned by the Government of India. in India.955 MW) and 4 Joint Venture Projects (1. 7 gas based (3. Thus.51% and it contributed 27. NTPC’s share on 31 Mar 2006 in the total installed capacity of the country was 19. NTPC ranks amongst the top five companies. After incorporation in November 1975. Net Profit NTPC LTD.1.88 Bus of electricity was produced across all the stations of the company in the financial year 20052006.5% is held by FIIs. every fourth home in India is enlightened by NTPC. 202 million. 404 MW through its 14 coal based (21. NTPC’s core business is engineering. With a view to supplement the efforts of SEBs in the matter of integrated development of power. Government of India holds 89. Domestic Banks. the power generation capacity addition. The Forbes Global 2000 ranking for 2005 ranks it as the 5th leading company in India and the 486th leading company in the world. 12 . To pursue this objective. The gap between the demand and supply of power had been on increase and the same was affecting the economic growth of the country.054 MW). it was decided to set-up generating companies in Central Sector also. in terms of market capitalisation. It is a public listed (Bombay Stock Exchange) Indian public sector company. NTPC has grown to become not only the largest utility National Thermal Power Corporation Limited was formed in November 1975 as a generating company in the Central Sector. was mainly done by State Electricity Boards. As on date the installed capacity of NTPC is 26. construction and operation of power generating plants and also providing consultancy to power utilities in India and abroad. The Net Profit after Tax on March 31. Public and others. 2006 was INR 58.5% of the total equity shares of the company and the balance 10. At present.
the name of the Company “National Thermal Power Corporation Limited” has been changed to “NTPC Limited” with effect from October 28. 2005 and the approval of the Central Government under section 21 of the Companies Act.after Tax for the quarter ended June 30. Pursuant to special resolution passed by the Shareholders at the Company’s Annual General Meeting held on September 23. 1956. The company. 2004 is 21749 MW through its 13 coal based (17480 MW). 13 . which has completed its thirty years of existence on November 7. NTPC has generated 151357 million units (MUs) of electricity in 2003-04 including 2187 million units generated by JV Companies. 2006 was INR 2004-2005) where the profit was INR 13087 million. The installed capacity of NTPC as on March 31. 7 gas/liquid fuel based (3955 MW) and 3 Joint Venture (coal based) Projects (314 MW). 2. From the above graph it’s been clear that NTPC is creating that leading benchmark in all over the country. like above graph is dictating that the intensive and remarkable growth covered by NTPC was started in year 1986-87 from 3000MW with 20000BU and goes to NTPC LTD. 2005. GROWTH of the country but also a leading power utility of international acclaim. 2005. has made its foray into hydro-power and is planning to go into nuclear too).
Rourkela (120 MW) and Bhilai (74 MW). construction and operation of power generating plants. Ltd. NTPC has set new benchmarks for the power industry both in the area of power plant construction and operations. The present capacity of RGPPL is 740 MW.33% stake in Ratnagiri Gas & Power Private Limited (RGPPL) a joint venture company between NTPC. It is providing power at the cheapest average tariff in the country. NTPC also has 28. 7 gas based (3. With its experience and expertise in the power sector. This shows the effective installed capacity is leading a terrific generation of power.18% and it contributed 28. NTPC acquired 50% equity of the SAIL Power Supply Corporation Ltd.50% of the total power generation of the country during 2006-07.955 MW) and 4 Joint Venture Projects (1. This JV company operates the captive power plants of Durgapur (120 MW). NTPC has undertaken massive a NTPC LTD.895 MW). NTPC’s share on 31 Mar 2007 in the total installed capacity of the country was 20. As on date the installed capacity of NTPC is 27. NTPC is extending consultancy services to various organizations in the power business. Indian Financial Institutions and Maharashtra SEB Holding Co. It also provides consultancy in the area of power plant constructions and power generation to companies in India and abroad.inconsistent growth in year 2006-07 by 30000MW with 200000BU. 14 .904 MW through its 15 coal based (22. generating power at minimal environmental cost and preserving the ecology in the vicinity of the plants.054 MW). (SPSCL). NTPC is committed to the environment.NTPC’s core business is engineering. GAIL.
the company endeavors to improve the overall socioeconomic status of Project Affected Persons. As a responsible corporate citizen.forestation in the vicinity of its plants. NTPC was among the first Public Sector Enterprises to enter into a Memorandum of Understanding (MOU) with the Government in 1987-88. Inspired by its glorious past and vibrant present. Cenpeep is efficiency oriented. This quality of ash produced is ideal for use in cement. A "Center for Power Efficiency and Environment Protection (CENPEEP)" has been established in NTPC with the assistance of United States Agency for International Development. cellular concrete. concrete. building material. powering India’s growth. Plantations have increased forest area and reduced barren land. eco-friendly and eco-nurturing initiative . Recognising its excellent performance and vast potential.a symbol of NTPC's concern towards environmental protection and continued commitment to sustainable power development in India. NTPC is well on its way to realise its vision of being “A world class integrated power major. 15 . with increasing global presence”. Government of the India has identified NTPC as one of the jewels of Public Sector ‘Navratnas’. NTPC has also taken proactive steps for ash utilizations. In 1991. Through its Rehabilitation and Resettlement programmes. NTPC is making constant efforts to improve the socioeconomic status of the people affected by the projects. (USAID). it set up Ash Utilisation Division to manage efficient use of the ash produced at its coal stations.a potential global giant. The massive a forestation by NTPC in and around its Ramagundam Power station (2600 MW) have contributed reducing the temperature in the areas by about 3°c. SPREAD ACROSS THE COUNTRY NTPC LTD. NTPC has been Placed under the 'Excellent category' (the best category) every year since the MOU system became operative.
KOLDAM (800 MW) LOHARINAG-PALA (600 MW) DADRI (817 MW) NCPP (840 MW) FARIDABAD (430 MW) TAPOVAN VISHNUGADH (520 MW) LATA-TAPOVAN (108 MW) ANTA (413 MW) KAWAS (645 MW) TANDA (440 MW) BADARPUR (705 MW) (705 MW) ** UNCHAHAR AURAIYA (840 MW + 210 MW) (652 MW) KAHALGAON (840 MW+ 1500 MW)) FARAKKA (1600 MW) VINDHYACHAL (2260 MW + 1000 MW) RIHAND (1000 MW + 1000 MW) KORBA (2100 MW) TALCHER (2500 MW + 500MW) TALCHER TPS (460 MW)) SINGRAULI (2000 MW) SIPAT (2980 MW) JHANOR-GANDHAR (648 MW) RAMAGUNDAM (2100 MW + 500 MW) SIMHADRI (1000 MW) COAL POWER STATION GAS POWER STATIONS HYDRO PROJECT (in italics) : Projects in progress KAYAMKULAM (350 MW) ** : Plants managed and operated by NTPC NTPC has mostly built Regional power stations supplying power to the various states in the Region as per power allocation formula approved by Govt. NTPC LTD. as well as those currently under construction. 16 . together with their respective capacities. The location map of NTPC approved projects as shown below exhibits the wide presence of NTPC throughout the length and breadth of the country.NTPC projects/power stations are spread all over the country. of India. The map below shows the locations of our existing power stations.
16.90 31842.The list of completed projects.00 15995.P. Orissa U. 17.70 13105.50 66488. 14.00 27533. 6.2005 4 NTPC’S SHARE IN INDIAN POWER SECTOR NTPC LTD. 2.50 6787.20 11906. Million) 1.P 1000 Uttar Pradesh 1000 Orissa 840 Bihar 840 Uttar Pradesh 460 Orissa 420 Uttar Pradesh 817 Uttar Pradesh 652 Uttar Pradesh 648 Gujarat 645 Gujarat 413 Rajasthan 350 Kerala 440 1000 420 430 19435 Uttar Pradesh Madhya Pradesh Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Gas Gas Gas Gas Gas Naphth a Coal Coal Coal Gas 16252.00 9250. 12. 17 . 11.80 10000.70 4189. 7. 8. Capacity (MW) Project Simhadri 1000 Talcher –II 2000 Rihand-II 1000 Ramagundam-III 500 TOTAL 4500 Location (State) Primary Estimated Cost Fuel (Rs. 4. No.70 25000.90 11636.10 3560. 18.50 Dec 2002 Feb. 21.II Unchahar – II Faridabad TOTAL 2100 Chhattisgarh 2100 Andhra Pradesh 2000 Uttar Pradesh 1600 West Bengal 1260 M.P. 9.30 169615.40 Uttar Pradesh Haryana APPROVED / ON-GOING PROJECTS S.90 16692. 5. Dadri Talcher (taken Over) Unchahar–I (Taken Over Dadri Gas Auraiya Jhanor-Gandhar Kawas Anta Kayamkulam Tanda (taken over) Vindhyachal.00 9603. Korba Ramagundam Singrauli Farakka Vindhyachal Rihand Talcher -I Kahalgaon NCTPP.No COMPLETED PROJECTS Location Name of the Project Capacity (MW) (State) Primary Fuel Cost (Rs. A. 24. 15.50 20592. A.00 25921. 3. 13.80 14120.80 17158.20 14603. Million) Completion Schedule 22.00 329627. 20.2006 May 2006 Aug. 10. 25.30 42162. Coal Coal Coal Coal 38834.40 22130. 23. 19.P. projects under construction and projects managed by NTPC is given below: S.70 23874.
1% of the total installed capacity of the country and it has contributed about 26. 18 . The paid equity capital as on 31. employees and Qualified Institutional Buyers (QIB).7% 5. 2005 stands at Rs. Domestic Banks.50% of its equity is held by the Government of India and the balance 10. 89.5% is held by FIIs.2005 was Rs 82455 million which includes 73796.3 million contributed by Government of India and Rs 8658. The growth of share capital. The company was formed with an authorized capital of Rs. 1250 million which as on 31st March.4 million held by public.03.2 BUs 26.FUNDING PATTERN OF NTPC:NTPC is a Government of India Company. reserve and surplus is given below: NTPC LTD.As at the end of March 2006 NTPC’s installed capacity is about 19. Public and others.7% of the total power generation of the country during 2003-07 NTPC IN INDIAN POWER SECTOR AS ON 31-03-2011 ALL INDIA: 112058 MW ALL INDIA: 558 BUs NTPC 21438 MW 19.1% NTPC 149. 100000 million.
in Million) NTPC LTD.00 million during the previous year.“India’s growth.FINANCIALS:- TURNOVER AND PROFIT NTPC recorded a turnover of Rs.000 million and the paid up share capital Rs.00 million during 2003-04. 82. with increasing global presence”.070.100.642. Net profit after tax is Rs.460. 05 the authorized share capital of NTPC is Rs. 6. SELECTED FINANCIAL INFORMATION(Rs.608. 19 . 259.58. CAPITAL STRUCTURE As on 31st March.00 million as compared to Rs. 52.455 million.00 million during 2004-05 as against Rs.255.
Construction Stores & Advances Investments Current Assets.Advance against deprectiaion Development surcharge fund Total E) Net Worth Share Capital Reserves & Surplus Miscellaneous Expenditure (To the extent not written off or adjusd) Net Worth F) Capital Employed 260701 26806 287507 163947 9684 12721 334 2488 98333 20477 77856 17632 60224 2022 58202 23087 3238 31877 460396 229501 230895 136340 192891 157245 717371 201195 778 61402 263375 4408 4408 82455 367132 449587 523572 2004-05 225069 24110 249179 137235 8823 12062 (6160) (102) 97321 19584 77737 16955 60782 2712 58070 19790 2680 35600 431062 207914 223148 99285 207977 129073 659483 166719 4159 67467 238345 3374 3374 82455 335308 417763 500540 2003-04 188178 61816 249994 122150 8835 9813 (3813) 183 112826 20232 92594 33697 58897 6289 52608 10823 1387 40398 400281 187736 212545 74953 173380 135468 596346 149415 5113 80941 235469 1591 3784 5375 78125 277376 355501 458267 2002-03 190019 4492 194511 110312 8268 10814 1567 803 62747 15291 47456 9916 37540 1465 36075 7080 395 28600 366106 167456 198650 63863 36674 194132 493319 127090 5067 45850 178007 271 271 78125 237002 (87) 315040 386343 2001-02 177697 7076 184773 103991 8036 11531 1730 (500) 59985 13784 46201 8680 37521 2125 35396 7079 28317 328912 152131 176781 65550 40281 167799 450411 113161 2651 48146 163958 78125 208400 (72) 286453 356526 NTPC LTD.2005-06 A) Operating Income Earned from Sale of Energy Consultancy & Other Income Total Paid & Provided for Fuel Employees Remuneration & Benefits Generation. Loans & Advances Total Net Assets C) What is Owed Long Term Loans Working Capital Loans Current Liabilities & Provisions Total Liabilities D) Others Deferred Revenue . 20 . Administration & other expenses Provision (Net) Prior Period/Extra Ordinary Items Profit before depreciation. Interest & Finance Charges and Tax Depreciation Profit before Interest & Finance Charges and Tax Interest & Finance Co Profit before tax Tax (Net) Profit after tax Dividend Dividend tax Retained Profit B) What is Owned Gross Fixed Assets Less : Depreciation Net block Capital Work-in-progress.
16 14. (MU)Gross 36465 15503 10591 7041 3330 22206 6768 2809 4282 5394 2953 41668 16001 18305 2884 4478 42751 11464 6572 21185 3530 27791 NTPC LTD. 21 .23 3.56 1.46 12.11 3.46 4.53 50.93 Return on Net Worth (%) 14. of Shares 8245464400 8245464400 7812549400 7812549400 78125494 I) No.49 Debt to Equity 0.) 54.98 Book Value per Share (Rs.67 4.58 Current Ratio 2.13 12.33 14.42 0.94 12.41 0.e.32 3666.13 3.40 Value Added/Employee (Rs.91 1.Kaniha Talcher -Thermal Southern Region Capacity(MW) 5280 2000 2000 840 440 3152 840 413 652 817 430 5653 2100 2260 645 648 5900 1600 840 3000 460 3950 Gen.18 4.43 0.93 10. of Employees* 21870 21420 20971 21408 21383 J) Ratios Return on Capital Employed (%) 12. 1st June. BTPS (owned by NTPC w.50 40.88 11.78 * Excluding JVs.77 12. Subsidiaries.45 0. Million) 4.f.67 45. 2006) & BALCO STATION-WISE GENERATION 2005-06 STATIONS Northern Region Singrauli Rihand Unchahar Tanda National Capital Region Dadri ( Coal ) Anta ( Gas ) Auraiya ( Gas ) Dadri ( Gas ) Faridabad ( Gas ) Western Region Korba Vindhyachal Kawas ( Gas ) Jhanor Gandhar ( Gas ) Eastern Region Farakka Kahalgaon Talcher .G) Value Added 97482 88415 66749 88084 80889 H) No.
Ramagundam Simhadri Rajiv Gandhi CCP ( Liquid Fuel ) Total Badarpur
(Owned by NTPC w.e.f. 1st June, 2006)
2600 1000 350 23935 705
19691 7742 358 170880 5380
2006 Commercial Generation Million Units Sale of Energy Rs Million Profit before tax “ Profit after tax “ Dividend “ Dividend tax “ Retained Earnings “ Net Fixed Assets “ Net Worth “ Loan Funds “ Capital Employed “ 500540 Net Cash From Operations “ Value Added “ No. of Employees # “ Value added per employee Rs Million Debt to Equity Ratio Return on Capital Employed % Face Value per share Rs. Dividend Per share “ Book Value per Share “ 169789 260701 60224 58202 23087* 3238 31877 230895 449587 201973 523572 62064 97482 21870 4.46 0.45 12.46 10.00 2.80* 54.53 2005 158271 225069 60782 58070 19790 2680 35600 223148 417763 170878 50998 88415 21420 4.13 0.41 12.77 10.00 2.40 50.67
# excluding JVs, Subsidiaries and BTPS (owned by NTPC w.e.f. 1st June, 2006) * including final dividend recommended by the Board
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7. TURNAROUND CAPABILITY
NTPC has also demonstrated its ability in turning around sub-optimally performing stations. The phenomenal improvement in the performance of Badarpur, Unchahar and Talcher by NTPC stand testimony to this.
Badarpur (705 MW)
The expertise in R&M and performance turnaround was developed and built up by NTPC with the operational turnaround of Badarpur TPS through scientifically engineered R&M initiatives. .
Unchahar (420 MW)
The Feroze Gandhi Unchahar Power Station was taken over by NTPC as part of a win-win deal with the Uttar Pradesh Government whereby the dues of UPSEB were adjusted was used to and expertise of NTPC turnaround the languishing station. The remarkable speed and the extent of the turnaround achieved can be seen in the Table. the
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Talcher (460 MW)
An even more challenging turnaround story was being scripted at the OSEB's old power plant at Talcher, taken over in June 1995. The table indicates the dramatic gains in the performance of the power plant after take over. While NTPC bettered the PPA commitments, from the viewpoint of capital requirements, turning around such old units is a low cost, high and quick return option. These successes helped NTPC, the concerned SEBs and the entire nation in terms of economy and power availability.
Tanda Thermal Power station was taken over by NTPC on the 15 Jan 2000.The PLF of the power station improved from 14.9% at the time of the takeover to 91.14% for the year 2006-07 8. OPERATIONAL PERFORMANCE Since its inception NTPC has a record of sustained high level of performance of all its plants, which have facilitated All India PLF (Thermal) to rise from 55.3% in 1991-92 to 84.4% in 2003-04. NTPC plants achieved a PLF of 70.59% in 1991-92, which has increased to 84.4% in 2003-04.
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4% during the year 2006-07 which is the highest since the inception of NTPC. It may be seen from the table below that while the installed capacity has increased by 56. 25 .09 % in 2006-07.34% Description Unit 1997-98 2006-07 % of increase NTPC LTD.The following table presents the average PLF of our coal-fired plants compared to the average PLF for all coal-fired plants in India (including our plants) for the periods indicated: The operating performance of NTPC has been considerably above the national average. the employee strength went up by only 3.40% in the last nine years. which compares favourably with international standards. The PLF has increased from 75. The availability factor for coal stations has increased from 85.2% in 1997-98 to 89.03 % in 1997-98 to 90.
91 The energy conservation parameters like specific oil consumption and auxiliary power consumption have also shown considerable improvement over the years.847 97. OPERATIONAL PERFORMANCE OF COAL BASED NTPC STATIONS Unit Generation PLF Availability Factor BU % % 97-98 106.03 98-99 109.74 The table below shows the detailed operational performance of coal based stations over the years.06 00-01 130.54 89. 26 .54 01-02 133.8 88.Installed Capacity Generation No.51 91.39 90.8 02-03 140. MUs 16.585 4.60 89.86 83.2 75.609 23.88.5 76.350 1.88 87. of employees Generation/employee MW MUs No.16 84. NTPC LTD.7 80.1 81.20 05-06 170.11 87.4 88.8 04-05 159.6 88.2 81.7 03-04 149.14 26.20 85.375 7.36 99-00 118.1 81.674 24.
Players such as NTPC face significant uncertainties in the availability and economic viability of thermal fuels. A central regulator has been constituted that governs the pricing of bulk power sold by central generators to state utilities. NTPC would need to track these changes and also proactively assist the regulators in framing policies that enable development of the sector BUSINESS PORTFOLIO Introduction Over the last two decades. direct supply to HT customers. it has built a strong portfolio of coal and gas/liquid fuel based generation capacities. Central power utilities need to adapt to the twin challenge of working with multiple regulatory agencies and a tariff regime with downward pressure on bulk supply tariffs. 27 . the company has also made initial forays in the area of hydropower. regulatory reforms might pave the way for significant changes in the Indian Power sector. NTPC has spearheaded the development of thermal generation capacity in the Indian power sector. till date thermal generation has been the single largest revenue generator for NTPC. creation of power exchanges and “open access” to transmission infrastructure. The challenged health of state utilities presents a threat to the cash flow of NTPC LTD. As a leading player in the power sector. state regulatory agencies have also been formed/notified that are responsible for regulating operations of state utilities including rationalization in tariffs for different categories of consumers. The Indian power sector has witnessed and can anticipate several changes in the business and regulatory environment as outlined in the previous chapter of this plan. including trading of electricity. In this process. However. NTPC is also offering technical services through its Consultancy Wing and has entered into joint ventures for offering some of the services. In addition. Recently.Regulatory and Policy Environment One key element of the regulatory reforms in the power sector is the establishment of a transparent and fair pricing mechanism for power with a thrust on efficiency in operations. Further.
Hence sustaining leadership in generation is critical to the target of being the largest integrated power utility. Therefore. NTPC needs to target being the brand ambassador for the Indian power sector in overseas markets. NTPC would continue to speedily implement projects and introduce state-of-art technologies.generators. The policy framework has changed substantially with the recent clearance of the Electricity Bill by both houses of parliament. financial strength and significant learning curve benefits would also serve to provide an advantage over competitors. This has also increased the threat of competition. However to capitalise on the changing face of the power sector NTPC needs to consider a bolder target of becoming India’s leading integrated power utility. However. 28 . urgent and successful entry into other businesses in the power value chain and targeting markets outside India. NTPC with its history of excellence in all aspects of its business is uniquely positioned for growth. To meet this objective. etc) o Diversification along the power value chain o Dominance in the services business in the domestic and international markets Growth of the Generation Business Developing and operating world-class power stations is NTPC’s distinctive competence. Thus NTPC would continue to focus on making available reliable and quality power at competitive prices. NTPC’s business portfolio strategy would target three key dimensions: o Capacity addition program (including changes in fuel mix. NTPC LTD. Continued growth in generation is relatively easy on account of NTPC’s significant learning curve benefits. Thus the power sector offers a mixed bag of opportunities and threats to players and NTPC needs to review its business strategy and portfolio in light of these changes. ongoing changes in the customer environment also provide opportunities for improving the customer mix. The Indian power sector is on the road to becoming a viable investment destination with the recent thrust of the participants on speedy reform. technology. In addition. Its scale. This would call for controlled.
Efforts to reduce the variable cost of power would be critical to ensure dispatch of power plants under a merit order system. NTPC would have to review the share of coal-based projects on account of potential demand supply gap for domestic coal and the likely availability and competitiveness of alternate fuels such as gas. NTPC currently accounts for about 19% of the current installed capacity. NTPC LTD. Towards this end. NTPC would target to build an overall capacity portfolio of over 56. NTPC can also avail of opportunities to add hydropower to its portfolio subject to competitive tariffs and minimal R&R issues. fuel cells. ability to manage multiple projects. NTPC could also consider other energy sources such as biomass. A first step in this direction has already been taken with the investment in Koldam. Energy mix for capacity addition Currently.370 MW in the 10th plan. coal has a dominant share in the generation capacities in India and this is also reflected in the high share of coal-based capacities in NTPC’s current portfolio.Projected portfolio in 2017 Total capacity portfolio India’s generation capacity can be expected to grow from the current levels of about 104 GW to about 225-250 GW by 2017. 11. cogeneration. etc for future development thereby reducing the dependence on thermal fuels. Of this. While NTPC is fully equipped to provide the requisite managerial resources such as engineering capability. nuclear power. in its target to remain the largest generating utility of India. NTPC would endeavour to maintain or improve its share of India’s generating capacity. However. going forward.210 MW in the 11th plan period and 15.540 MW in the 12th plan period. As a leader in power generation. NTPC would target commissioning 9. etc the ability to arrange sufficient and timely funds would govern success in achieving the targets. Going forward.000 MW by the end of the 12th plan period. 29 .
retaining its position as India’s largest thermal power utility To minimise the landed cost of power from new plants by selecting appropriate fuels to retain its long-run competitiveness in power generation. This has helped in developing the long-term strategy for thermal fuels as detailed in this section. NTPC is already exploring various sources NTPC LTD. load balancing and other system constraints • Strategies Domestic coal based projects: NTPC would continue its strategy of major portion of capacity addition through pithead based coal plants during the 10th and 11th plan periods. imported coal and natural gas was carried out. while keeping in mind technical constraints such as evacuation of power. The study also compared the long run competitiveness of landed power using these alternatives in each of the three plan periods. Goal • To own/manage/control a portfolio of about 42. by 2017 the mix would be significantly different from the existing portfolio. 30 . However.000 MW of thermal power by 2017. Analysis indicates that gas could potentially be competitive to domestic coal in some parts of the country especially in states near to the coast. Gas based projects: NTPC would seek to develop gas-based combined cycle power projects subject to the assured availability of gas at a competitive price.While a decision on the fuel/energy mix for NTPC in the future would be largely governed by their relative tariff-competitiveness. going forward. NTPC would consider alternate fuel options to domestic coal (including regassified LNG and imported coal) with a view to broadbase its fuel portfolio and minimise its cost of power generation. Thermal Power To revise NTPC’s thermal fuel strategy a study of the expected trends in availability and prices of domestic coal.
Di-Methyl Ether (DME). domestic coal based capacities are more suitable for NTPC. In addition. Maintaining a comprehensive database for review of mix: The thermal fuel options detailed above would need to be constantly evaluated and further fine-tuned in line with the emergent fuel prices and availabilities and other system constraints. NTPC would continue to evaluate lignite as a fuel and would consider setting up lignite based capacities. NTPC would evaluate imported coal based projects (at the port) in the Southern/Western Region for the 11th and 12th plan periods. Capacities based on these fuels would be developed in the event they are competitive with other fuel options. decisions on plant and fuel selection would need to be considered on a case-tocase basis. The responsibility for designing and maintaining the database and deriving implications for NTPC. In view of this. NTPC LTD. would reside with the Fuel Management Group.including regassified liquefied natural gas and is evaluating their competitiveness prior to making a decision in this regard. NTPC would track developments in alternate fuel options such as Orimulsion. most of NTPC’s proposed plants are expected to be more competitive than projects based on imported coal. Coal Bed Methane (CBM) and heavy refinery residues. To facilitate this. Going forward. considering the potential for development of cogeneration plants in India. their availabilities. a comprehensive database of fuels. pricing trends and impacting forces would need to be maintained. imported coal based projects might be a more competitive option to domestic coal based projects at some coastal locations. In addition. Imported coal based projects: During the 10th plan period. if found competitive. In addition. 31 . Other fuel options: The option of developing lignite-based capacities was also evaluated and compared with domestic coal based plants. NTPC would explore opportunities for the same. The analysis revealed that in the present scenario. However. going forward.
NTPC LTD. the Fuel Management Group would work closely with the Corporate Planning group in the business plan revision exercise. as well as attract large private investments in the sector. through its Consultancy Wing. To facilitate review and fine-tuning of the capacity addition program based on fuel scenarios. pricing.Co-ordination with NTPC’s overall business plan: The information from the database on fuel availability and price forecasts would also be a critical input in developing the overall business plans for NTPC. affordability. a new Tariff policy has also been issued. The power sector thus offers a mixed bag of challenges and opportunities to players and NTPC would continue to review its business strategy and portfolio in light of these changes. efficiency and environment. Recently. In the foreseeable future. To meet the twin objectives of ensuring availability of electricity to consumers at competitive rates. NTPC has spearheaded development of thermal power generation in the Indian power sector. availability. it has built a strong portfolio of coal and gas/liquid fuel based generation capacities. the generation business would continue to be the single largest revenue generator for NTPC. The legal and policy framework has changed substantially with the enactment of the Electricity Act 2003. India faces formidable challenges in meeting its energy needs. In this process. which addresses all aspects including energy security. The company has made initial forays in the area of hydropower development and plans to have a significant share of hydropower in its future generation portfolio. both in domestic and international markets. MULTI-PRONGED GROWTH APPROACH: Over the last three decades. The Indian power sector is witnessing several changes in the business and regulatory environment. Although NTPC is also offering technical services. access. 32 . a draft integrated energy policy has been issued.
33 . (NASL) (Incorporated in 1999 and formerly known as NTPC-ABB ALSTOM POWER SERVICES PVT. to accomplish its growth plans. Acquisitio ns and takeovers and joint ventures / subsidiaries. JOINT VENTURE PARTNERS The following joint venture companies have been formed so far: NTPC -ALSTOM POWER SERVICES PVT. LTD. Expansion of existing stations. LTD) NTPC LTD.NTPC is adopting a Multi-pronged growth strategy for capacity addition through Greenfield Projects.
a Government owned hydro power utility. OBJECTIVE: To trade. debt.e. a power sector finance company owned by the Government of India and National Hydro Electric Power Corporation Ltd. As a result of aforesaid merger of BESCL in NSPCL. OBJECTIVE: To supply power to the Bhilai. another JV Co. erection and supervision in power sector and other sectors in India and abroad 50% PROMOTERS' NTPC: EQUITY: REL: 50% PTC(India) Ltd (Incorporated in 1998) This JV has been promoted with Power Grid Corporation of India Ltd (PGCIL).) w. licenses. Durgapur and Rourkela Steel Plant of Steel Authority of India Limited (SAIL) from its Coal based power stations at Bhilai (Chhattisgarh). with respect to BESCL now stand vested in NSPCL. (NHPC). liabilities etc. export and purchase power from identified power projects and sell it to identified SEBs/others 8% 8% 8% Tata Power: DV: FII: 10% 10% 18. permissions. Pvt Ltd. a Government owned transmission major in India. all properties. OBJECTIVE: To undertake project construction. Power Finance Corporation (PFC).OBJECTIVE: Undrtake Renovation & Modernisation of power stations in India and other SAARC countries PROMOTERS' NTPC: 50% EQUITY: ALSTOM Power Generation AG : 50% UTILITY POWER TECH LTD (Incorporated in 1996) This JV has been promoted with Reliance Energy Limited (formerly BSES Limited) a private sector Indian power company. of NTPC and SAIL with 50:50 equity participation.stood merged with BESCL(Bhilai Electric Supply Co. Durgapur (West Bengal) 2x60MW and Rourkela (Orissa) 2x60 NTPC LTD.5% PROMOTERS' NTPC: EQUITY: PGCIL: PFC: NHPC: 8% NTPC-SAIL POWER COMPANY (PVT) LTD (NSPCL) NSPCL.f 2nd August 2006. 2x30MW+1X14MW. import. the Joint Venture Company of NTPC and SAILwith 50:50 equity participation. 34 .as per the scheme of Amalgamation approved by High Court of Delhi.
NSPCL is carrying out the expansion of its installed capacity at Bhilai. OBJECTIVE: To take over Muzaffarpur Thermal Power Station (2x110MW).2006 among NTPC Ltd. IPGCL-25%.2006. in joint venture with IPGCL and HPGCL.12. HPGCL-25% EQUITY: PROPOSED JOINT VENTURES NTPC LTD. OBJECTIVE: To set up a 1000 MW coal based power station at Ennore in Tamil Nadu utilising the existing infrastructure facility at Ennore and supply power mainly to Tamil Nadu and the states of Kerala. a State run Electricity Board in the State of Bihar.(IPGCL) and Haryana Power Generation Company Ltd. PROMOTERS' NTPC: EQUITY: SAIL : 50% 50% NTPC TAMIL NADU ENERGY COMPANY LIMITED This JV was incorporated on 23rd May. a coal based power station at Kanti. OBJECTIVE: To set up a coal-based power station of 1500MW capacity in Distt.MW. PROMOTERS' NTPC-50%. Karnataka and Pondicherry. 51-74% PROMOTERS' NTPC: EQUITY: BSEB : 26-49% ARAVALI POWER COMPANY PRIVATE LTD (Joint Venture Agreement was signed on 14. Jhajjar. by implementation of 500MW (2x250MW) power plant.The Company was Incorporated on 21.12. 35 . for carrying out restoration. engaged in generation. Haryana.Indrapastha Power Generatuion Company Ltd. transmission and distribution of electricity. R&M and supplying power mainly to the state of Bihar. 2003 with Tamil Nadu Electricity Board.(HPGCL). transmission and distribution of electricity. a State run Electricity Board in the State of Tamil Nadu engaged in generation. 50% PROMOTERS' NTPC: EQUITY: TNEB : 50% Vaishali Power Generating Company Limited This JV was incorporated on with Bihar State Electricity Board. For the purpose of its business development.
2006 OBJECTIVE: LTD(SCCL) To promote one or more Joint Venture Companies for undertaking acquisition of coal/lignite mine blocks including exploration. mining. processing. operation & maintenance. operation & maintenance and selling electricity generation thereof.1. LIKELY EQUITY Yet to be finalised CONTRIBUTION FROM PROMOTERS 2. Indian Railways are the largest rail network in Asia and the world's second largest under one management. beneficiation. development. OBJECTIVE: To set up power stations to meet traction and non-traction power requirement of Indian Railways.0 INDIAN RAILWAYS MOU signed on 18th February 2002. 36 . besides providing consultancy services.0 SINGARENI COLLIERIES COMPANY MOU was signed between NTPC and SCCL on 23. development. LIKELY EQUITY 50% by each Company in the individual Joint Venture CONTRIBUTION Company FROM PROMOTERS NTPC LTD.08.
While interacting the following questions were posed to the interviewees either implicitly or explicitely. • • • • • What is the significance of Power sector in any Economy? How is the Power Sector been evolving for the last few years? What has been the role of NTPC in Power Sector? What have been the most important changes in the Power Sector in recent years? What are the features of new Tariff Structure & how are these different from the existing Tariff Structure? What are its advantages NTPC LTD. The report also includes numerical. statiscal data and it is qualitative and quantitative in nature. DATA COLLECTION TECHNIQUES Information for the study has been collected from different Primary & Secondary sources. PRIMARY DATA Primary Data is collected from the survey & for this survey Direct Personal Interviews were organized with the Senior Executives of NTPC. RESEACH DESIGN The study undertaken is exploratory. 37 .RESEARCH METHODOLOGY RESEARCH OBJECTIVE To study the reforms that are brought in by CERC with special reference to the comparison of traditional and modern tariff policies. descriptive and analytical. Noida. Information has been collected from various sources that have been detailed in the bibliography. personal interviews were held with the Senior Executives & an extensive research study was carried out in NCR (HQ). RESEARCH METHODOLOGY To meet the above-mentioned objective..
Journals. 38 . newspaper. leaflets Sources of data are given in the bibliography and the end of the project report LIMITATIONS NTPC LTD.Ahluwalia Committee Annual Accounts NTPC magazines like Damini & Horizons Misc.S.• • What are the most significant impacts of the power sector reforms on the industry as a whole Are reforms giving the right impact as they are indented to give? • • • • Which level of the power industry do you think needs more reform initiative? How the New Tariff Structure would affect the Power Sector of your company? Have any action plans been made to recover the old dues from SEBs? Any comments & suggestions? SECONDARY DATA Secondary Data has been collected from the following sources: CERC Notifications Expert’s Reports Report of M.
projects. money. thus the study has been confined to National Capital Region. NTPC LTD. It was practically impossible to cover all the regions. Knowledge gained pertains to NTPC. was not possible as it would involve huge expenditure. knowledge base and similar factors. Due to cost constraint visiting other regions. however it is but naturals that this study also suffers from some limitations which are broadly mentioned below: The regions are far away. projects. The conservative attitude of some of the employees was a limiting factor in gaining information. The availability of data was limited to National Capital Region. other regions also acted as a constraint. SEBs in a short span of two months. Hence time constraint was one of the limitations. SEBs etc. Non availability of knowledge of working of SEBs. An attempt was made to broad base the study as far as possible. which are caused by constraints of time.No study is free from limitations. 39 . Moreover we had no access to confidential files etc.
The policy framework has changed substantially with the recent clearance of the Electricity Bill by both houses of parliament. In addition. till date thermal generation has been thesingle largest revenue generator for NTPC. However to capitalise on the changing face of the power sector NTPC needs to consider a bolder target of becoming India’s leading integrated power utility. The Indian power sector has witnessed and can anticipate several changes in the business and regulatory environment as outlined in the previous chapter of this plan. This has also increased the threat of competition. ongoing changes in the customer environment also provide opportunities for improving the customer mix. NTPC is also offering technical services through its Consultancy Wing and has entered into joint ventures for offering some of the services. the company has also made initial forays in the area of hydropower. Continued growth in generation is relatively easy on account of NTPC’s significant learning curve benefits. Players such as NTPC face significant uncertainties in the availability and economic viability of thermal fuels. NTPC with its history of excellence in all aspects of its business is uniquely positioned for growth. Thus the power sector offers a mixed bag of opportunities and threats to players and NTPC needs to review its business strategy and portfolio in light of these changes. This would call for controlled. Recently. The challenged health of state utilities presents a threat to the cash flow of generators. urgent and successful entry into other businesses in the power value chain and targeting markets NTPC LTD. The Indian power sector is on the road to becoming a viable investment destination with the recent thrust of the participants on speedy reform.BUSINESS PORTFOLIO Introduction Over the last two decades. NTPC needs to target being the brand ambassador for the Indian power sector in overseas markets. However. it has built a strong portfolio of coal and gas/liquid fuel based generation capacities. 40 . However. NTPC has spearheaded the development of thermal generation capacity in the Indian power sector. In this process.
370 MW in the 10th plan. NTPC would target commissioning 9. While NTPC is fully equipped to provide the requisite managerial resources such as engineering capability. Hence sustaining leadership in generation is critical to the target of being the largest integrated power utility. NTPC would endeavour to maintain or improve its share of India’s generating capacity. NTPC’s business portfolio strategy would target three key dimensions: o Capacity addition program (including changes in fuel mix. Therefore.210 MW in the 11th plan period and 15. NTPC currently accounts for about 19% of the current installed capacity.540 MW in the 12th plan period. NTPC would continue to speedily implement projects and introduce state-of-art technologies. NTPC would target to build an overall capacity portfolio of over 56. Going forward.outside India. Its scale. financial strength and significant learning curve benefits would also serve to provide an advantage over competitors. technology. Thus NTPC would continue to focus on making available reliable and quality power at competitive prices. Projected portfolio in 2017 Total capacity portfolio India’s generation capacity can be expected to grow from the current levels of about 104 GW to about 225-250 GW by 2017. NTPC LTD. Towards this end. etc the ability to arrange sufficient and timely funds would govern success in achieving the targets.000 MW by the end of the 12th plan period. etc) o Diversification along the power value chain o Dominance in the services business in the domestic and international markets Growth of the Generation Business Developing and operating world-class power stations is NTPC’s distinctive competence. ability to manage multiple projects. 41 . Of this. in its target to remain the largest generating utility of India. To meet this objective. 11.
NTPC can also avail of opportunities to add hydropower to its portfolio subject to competitive tariffs and minimal R&R issues. Efforts to reduce the variable cost of power would be critical to ensure dispatch of power plants under a merit order system. cogeneration. retaining its position as India’s largest thermal power utility • To minimise the landed cost of power from new plants by selecting appropriate fuels to retain its long-run competitiveness in power generation. This has helped in developing the long-term strategy for thermal fuels as detailed in this section. A first step in this direction has already been taken with the investment in Koldam. NTPC could also consider other energy sources such as biomass. coal has a dominant share in the generation capacities in India and this is also reflected in the high share of coal-based capacities in NTPC’s current portfolio.000 MW of thermal power by 2017. However. NTPC would have to review the share of coal-based projects on account of potential demand supply gap for domestic coal and the likely availability and competitiveness of alternate fuels such as gas. While a decision on the fuel/energy mix for NTPC in the future would be largely governed by their relative tariff-competitiveness. The study also compared the long run competitiveness of landed power using these alternatives in each of the three plan periods. going forward. 42 . nuclear power. by 2017 the mix would be significantly different from the existing portfolio. etc for future development thereby reducing the dependence on thermal fuels. fuel cells. Goal • To own/manage/control a portfolio of about 42. imported coal and natural gas was carried out.Energy mix for capacity addition Currently. load balancing and other system constraints NTPC LTD. while keeping in mind technical constraints such as evacuation of power. Thermal Power To revise NTPC’s thermal fuel strategy a study of the expected trends in availability and prices of domestic coal. As a leader in power generation.
Imported coal based projects: During the 10th plan period. Gas based projects: NTPC would seek to develop gas-based combined cycle power projects subject to the assured availability of gas at a competitive price. NTPC is already exploring various sources including regassified liquefied natural gas and is evaluating their competitiveness prior to making a decision in this regard. NTPC would continue to evaluate lignite as a fuel and would consider setting up lignite based capacities. Analysis indicates that gas could potentially be competitive to domestic coal in some parts of the country especially in states near to the coast. Capacities based on these fuels would be developed in the event they are competitive with other fuel options. Di-Methyl Ether (DME). In addition. going forward. Going forward. NTPC would track developments in alternate fuel options such as Orimulsion. Coal Bed Methane (CBM) and heavy refinery residues. domestic coal based capacities are more suitable for NTPC. In addition. NTPC would evaluate imported coal based projects (at the port) in the Southern/Western Region for the 11th and 12th plan periods. NTPC would consider alternate fuel options to domestic coal (including regassified LNG and imported coal) with a view to broadbase its fuel portfolio and minimise its cost of power generation. if found competitive.Strategies Domestic coal based projects: NTPC would continue its strategy of major portion of capacity addition through pithead based coal plants during the 10th and 11th plan periods. Other fuel options: The option of developing lignite-based capacities was also evaluated and compared with domestic coal based plants. most of NTPC’s proposed plants are expected to be more competitive than projects based on imported coal. going forward. NTPC LTD. imported coal based projects might be a more competitive option to domestic coal based projects at some coastal locations. 43 . However. In view of this. However. The analysis revealed that in the present scenario.
considering the potential for development of cogeneration plants in India. in the future. NTPC would explore opportunities for the same. To facilitate this. Co-ordination with NTPC’s overall business plan: The information from the database on fuel availability and price forecasts would also be a critical input in developing the overall business plans for NTPC. While in the current scenario NTPC has plant specific pricing and power purchase agreements. Maintaining a comprehensive database for review of mix: The thermal fuel options detailed above would need to be constantly evaluated and further fine-tuned in line with the emergent fuel prices and availabilities and other system constraints. Hydel Power India has a vast. In addition. portfolio presence of hydropower could help NTPC in bundled pricing and peak demand management. would reside with the Fuel Management Group. Executing hydro projects would have the added benefit of price stability in the long term on account of the low share of variable costs in the tariff. pricing trends and impacting forces would need to be maintained. 44 . decisions on plant and fuel selection would need to be considered on a case-tocase basis. hydropower would also provide a peaking power option for the country. their availabilities. Global utilities have recognised the advantages of hydropower in the generating portfolio and many of the top utilities own and operate significant hydropower capacities. Amongst the top ten global thermal generating NTPC LTD. To facilitate review and fine-tuning of the capacity addition program based on fuel scenarios. the Fuel Management Group would work closely with the Corporate Planning group in the business plan revision exercise. Apart from being an environmentally clean source of power. untapped potential for hydropower development. The responsibility for designing and maintaining the database and deriving implications for NTPC. a comprehensive database of fuels.
companies. During the 12th plan period. It has already commenced work on the Koldam project. Towards this end NTPC may also consider replacing any proposed coal based capacity addition with hydropower capacity subject to tariff-competitiveness and minimal Resettlement and Rehabilitation issues. Goals • To build a hydropower portfolio comprising 20% of the overall generation portfolio by 2017.000 MW during the 10th. In all. adding about 11. and build peaking power capacities. 45 .500 MW of hydropower by the end of the 11th plan. the pace of hydropower addition would be ramped up. Going forward. NTPC would target building a portfolio of 4. NTPC has already initiated action and is already building capabilities in hydropower by executing an 800 MW hydroelectric station at Koldam. NTPC would seek to expand the share of hydropower in its generating portfolio. However.500 MW by the end of the 11th plan period • To reduce the dependence on thermal fuels. if necessary replacing proposed thermal capacity additions (subject to being competitive). NTPC is the only one without any hydro capacities in its portfolio. Out of this. projects would be added gradually in order to leverage experience gained and to mitigate risks in hydropower development. NTPC would target adding about 4. commissioning and operating hydropower plants • Strategies Gradual build-up of a large hydro portfolio: NTPC would seek to gradually increase its hydro capacity portfolio. After developing required skills in the initial years. hydropower additions would comprise close to NTPC LTD. In the immediate term. 11th and 12th plan periods. thereby generating competitive advantage for the future To develop and leverage organizational capabilities in the area of erecting.
000 MW of hydropower. This group would function similar to the regional set-up and would have the responsibility for development. NTPC would target adding about 1. Policy measures such as differential pricing for peaking power would be critical pre-requisites for NTPC to undertake PSPs. Small hydropower plants would also be considered and a wholly owned subsidiary named “NTPC Hydro Limited” has already been formed to facilitate focus. 46 . comprising close to 20% of the projected generation portfolio.40% of the planned capacity addition. As such. As part of the 11. Thus by 2017 NTPC would target about 11. encompassing issues such as differential tariff for peaking power.000 MW through the small hydro subsidiary by the end of the 12th plan period. Thus. Type of plants: To begin with. NTPC LTD. NTPC would focus on ‘run of the river’ hydel projects. NTPC would work closely with the regulator(s)/Ministry of Power to ensure an appropriate and remunerative tariff regime for hydropower. Pumped storage plants have been evaluated and have not been found to be commercially viable in the current scenario. In order to provide internal focus on hydro capacity development a separate hydropower group headed by an Executive Director has already been formed. NTPC would consider pumped storage plants during the 11th and 12th plan periods and pursue them only subject to commercial and technical viability. the initial focus would exclude reservoir projects till such time NTPC has sufficient experience in hydropower development and operation. Large reservoir-type hydropower plants typically face issues related to impact on irrigation.000 MW goal for hydropower development. Organisational preparedness: NTPC would take various initiatives to prepare itself for the increased thrust on hydropower. environmental damage and resettlement and rehabilitation. A separate group in the Engineering Division has been formed that would concentrate on developing skills in engineering of hydropower plants. execution and operation of hydropower projects.
hydro and nuclear power. India is also endowed with sufficient reserves of thorium.720 MW. The overall cost of nuclear power is seen to be favourable as compared to thermal fuels in countries that do not have access to cheap sources of coal or gas. However. lower exposure to fuel price risk and longer plant life. Towards this end NTPC would target NTPC LTD. Especially with the advent of distributed generation. as on March 31.000 MW of nuclear capacities in joint venture with Nuclear Power Corporation of India. 47 . nuclear power has the potential to contribute meaningfully to the future base load capacity in India. However. nuclear power offers other advantages including higher environmental cleanliness. On account of these advantages. etc. These include high gestation periods for project execution and difficulty in obtaining adequate funds. Towards this end. the development of nuclear projects in India has been constrained by several factors. Nuclear Power Corporation of India (NPCIL) had fourteen reactors in operation with a combined capacity of 2. In India. NTPC would consider the option of adding about 2. these technologies that offer smaller capacity installations could become lucrative. Fuel Cells. cogeneration. NTPC would also continuously evaluate the policy environment covering the nuclear capacity addition programme and the relative competitiveness of nuclear power.Nuclear Power Nuclear power is expected to enjoy a growing share of the developing world’s electricity generation during the next two decades. Future Generating Options Apart from thermal. During the 12th plan period. NTPC’s strong project management skills and balance sheet strength could help in offsetting these roadblocks and thereby prove to be a source of competitive advantage in establishing nuclear power generation capacities. 2002. Developmental efforts of NPCIL have led to substantial indigenisation and presence of competent domestic vendors of nuclear plant equipment. NTPC would also keep track of developments in alternate energy sources such as Wind.
CERC ORDER (CENTRAL ELECTRICITY REGULATORY COUNCIL) OPEN ACCESS REGULATIONS REVISED NTPC LTD. There are several types of fuel cells under development currently. The NTPC R&D division would also be responsible for both fundamental and applied research in these areas. NTPC would continuously track developments in distributed generation and fuel cell technology for adoption at a later date. Phosphoric Acid Fuel Cells (PAFC) that are commercially available and can be used to power small buildings such as office buildings. USA. conduct fundamental and applied research and evaluate viability of fuel cells and distributed generation for the future.g. However. Wind Energy: India is the fifth largest wind power-producing nation in the world (after Germany. make it an attractive proposition for consideration by NTPC.adding about 1000 MW by 2017 through a mix of these energy sources based on their commercial viability. 100% accelerated depreciation. hospitals etc and Direct Methanol Fuel Cells (DMCF) that are still in the preprototype stage. when viable. especially if the business environment renders distributed generation as a viable business model. NTPC’s R&D division would track technological developments. technology availability. Spain and Denmark) with an aggregate commercial capacity of 1444 MW. The presence of significant incentives for setting up wind power projects like the central incentives of tax holiday. the entry into wind power would be contingent on addressing some critical issues such as the need for significant investments and the need for cost effective ways to tackle variable and unpredictable nature of wind power in order to make the venture commercially viable Fuel Cells: Fuel cells could provide an attractive option for NTPC to consider in the future. in different stages of commercial availability for e. etc. competitiveness. concessional custom duty. 48 .
CERC has introduced a monthly timetable for advance reservation of transmission capacity. 2004. whichever is shorter. To avoid pan caking.In February. Applications must be submitted by the 19th day of the month. if they use the transmission lines for six hours or less in a day. 49 . Under the monthly timetable that has been introduced for the grant of transmission access to short-term customers. Short-term customers will be the first ones to be curtailed in the event of transmission constraint. This is based on the operational feedback received from stakeholders. A longterm customer will be allowed access based on the transmission planning criteria stipulated in the Indian Electricity Grid Code. transmission customers have been divided into two categories — long-term and short-term. which is applicable from April 1 2005. there will be a provision for advance reservation of lines for three months. In its amendments to the open access regime. In line with the original open access norms applicable from February 2004. for usage of up to 12 hours a day. The existing regulations were introduced in February 1. Allotment priority of long-term customers will be higher than that of short-term customers. the regulator has also proposed part-day transmission charges to reduce the cost of wheeling peaking power. 2003. The CERC has also announced an exit option to short-term customers. the Central Electricity Regulatory Commission (CERC) has announced streamlining of the norms for seeking open access in inter-State transmission. CERC has not changed the pricing scheme for intra-regional transmission access. whereby a customer can surrender the reserved transmission capacity by paying a minimum of seven-day charge or the charge for the balance period of reservation. the short-term customer shall be charged at the rate of 25 per cent of the last NTPC LTD. the transmission cost for short-terms customers is only a fourth of the daily charges. They will be processed together and access shall be granted by the 26th. congestion management will be done through electronic bidding. Under the part-day charges introduced by CERC. only half of the per-day charges shall be applied. in pursuance of the Electricity Act. the Commission has decided that for short-term intra-regional transactions. Similarly. For advance reservations for short-term customers. according to the norms.
year's effective rate for long-term customers. for procurement of power by distribution licensees. CERC has said that it would consult all the parties. Reliance Energy Ltd (REL) has applied to the CERC seeking license for transmission of power in western India for 20 lines and 13 sub-stations in western India. the state owned transmission utility has approached the MoP seeking authority to decide entry of private players into transmission. which will depend on the price of fuel and scheduled generation. the government notified guidelines for tariff determination via competitive bidding. FIXING OF TRADING MARGINS The CERC has taken steps to regulate trading margins The trading margins has been fixed at Re 0. and average transmission losses shall be applied. unscheduled charges. including Power Grid Corporation Ltd and consumers (in this case State Governments) and after that an advertisement would be made in newspapers. The regulator will not scrutinize tariff determined via this process. a distribution company can call for bids for supply of power through a competitive process and identify a supplier. It has been reported earlier that POWERGRID. among other things as well as capacity charges. It is also reported that a Malaysian company in joint venture with an Ahmedabad-based company has also approached the CERC seeking a similar license in Bina-Nagda sector. APPLICATIONS FOR TRANSMISSION LICENSE In December. NTPC LTD. 50 . COMPETITIVE BIDDING FOR POWER PURCHASE BY DISCOMS In January.04 per unit for electricity traders exclusive of transmission charges. The tariff structure in the notification mentions a formula for energy charges. application fees and transmission losses. As per the guidelines.
NTPC LTD. It is ironical at a time when the power ministry has strongly recommended 100 percent FDI in trading of electricity through the automatic approval rate. 12 million.05 per unit or less. particularly when a trader buys power for resale.it increased to a weighted average of Re. Significantly. About 68 per cent of the volume traded during the period carried a margin of Re 0. This will hinder investments as well as stifle competition in the sector. trading margins have been capped. been keeping close tabs on the trading business. Therefore fixing the trading margin is necessary to avoid arbitrary fixing of profit margins and thus leaving consumers to their whims and vagaries. As expected. The high amount of trading margins that some companies had been making necessitated greater scrutiny. As of now power trading amounts to just 2. but in the first half of 2005-06.The commission had. he earns revenue of Rs. without making any value addition. electricity traders are not pleased with the regulation.06 per unit.04 per unit. the highest trading margin in a single transaction in 2004-05 was Re 0. The commission states that the trading margin should not be fixed keeping in mind the requirement of traders alone. It has to be fair to consumers as well.5% of country’s existing power consumption. It would also prove detrimental to the electricity sector as a whole. 51 . for the past few months. 0. Their view was that fixing margins would stifle trading activity and push them out of the business. Power trading is still at a nascent stage and there is a long way to go.10 per unit. The regulator feels that traders have taken advantage of deficit situation prevailing in most parts of country. The CERC noted that nearly 90% of trading during 2004-05 was done at a margin of Re 0.
5 Hz and 49.02 Hz Between 50.0 --------561.04 Hz and up to 49.04 49.50 50.82 49.0 592.48 50.78 49. 0 paise /kWh within the above range) The following rates shall apply with effect from 1.0 12.02 Hz UI Rate (Paise per kWh) 0.84 49.76 ----------49.02 -----(Paise per kWh) 0.02 Hz Below 49.0 6. 52 UI Rate . 5 Hz and above Below 50.2004 : Average frequency of the time block(Hz) Below -----50.02 Not Below 50.Average Frequency of time block 50.78 ----------49.80 49.0 570.10.0 219.50 50.48 ----------49.0 linear in 0. 02 Hz step is equivalent to 8.02 Hz step (Each 0.0 210. 0 8.0 --------204.0 228.46 ----------49.0 600.80 49.5 Hz and up to 50.48 Hz Below 49.82 49.0 NTPC LTD.
) Note :The above average frequency range and UI rates are subject to change through a separate notification by the Commission. the Regional Load Despatch Centre shall investigate so as to ensure that there is no gaming. (i) Any generation up to 105% of the declared capacity in any time block of 15 minutes and averaging up to 101% of the average declared capacity over a day shall not be construed as gaming. 53 .and to 9.8 Hz frequency range.(Each 0.5-49. and if gaming is found by the Regional NTPC LTD.0 paise /kWh in the 50. and the generator shall be entitled to UI charges for such excess generation above the scheduled generation (SG).8-49. (ii) For any generation beyond the prescribed limits.0paise/kwh in the 49. 02 Hz step is equivalent to 6.0 Hz frequency range.
54 .2 49.2 50.I.9 49.4 50.4 50.1 49 49 48.RATES (OLD Vs. 50.8 49.2 50.3 49.7 49.8 49. NEW) U.RATE(N) 600 500 400 Load Despatch Centre. the corresponding UI charges due to the generating station on 300 account of such extra generation shall be reduced to zero and the amount shall be adjusted in UI account of beneficiaries in the ratio of their capacity share in the generating station.I.1 50.4 49.6 50.5 50.3 49.0 49.I.U.6 49.6 50.5 49.9 200 100 0 NTPC LTD.RATE U.
At 0 % PLF.Incentives 8. In proportion to the capacity allocations. kwh) is applied to incremental units generated over 77 % PLF.Recovery of Fixed 62. 5. 78 % PLF (including 80 % Availability. Depreciation. 7.Variable recovery charges Based on normative operation Based on same normative norms and applicable to operation norms and applicable NTPC LTD. 2000) Two parts – namely Fixed Three parts – namely Fixed Charges and Variable charges. charges deemed generation). For PLF beyond 90 %. 49 % PLF.Buffer (dead – 62. 78 % to 68. 78 % in a For availability below 80%. 50 % of charges are payable. 55 .Disincentives No buffer. O&M exp. Interest Same as in the case of two-part on loans. For PLF above 77 % (calculated from schedule) incentive @ 50 % fixed charges / kwh (subject to maximum of 21. variable charges and UI charges. allocation to SEBS 4. charges. 5 Ps. For PLF below 62. 3. on working capital. 1ps for every 1 % increase in PLF and applied on incremental units over 68.Components tariff 2.Fixed charges In proportion to the drawls.DATA ANALYSIS AND INTERPRETRATION COMPARATIVE ANALYSIS OF TARIFF A comparative chart of availability based tariff used in NCR since 1-12-2002 and twopart tariff has been presented as below: Description 1. rata reduction in fixed charges. of ROE. Interest tariff. 49 % PLF.Components fixed charges of Two-part tariff (GOI notified tariff) AvailabilityBased Tariff (CERC orders of Dec. band) zone between incentive and disincentive 6. incentive is reduced by 50 % of above. prograded manner.
Not applicable for single-state stations and shall be used to the extent of 1/3 rd of equity requirement of new stations. 00 % for Gas Depreciation is linked to useful life of the assets Provided to bridge the gap between depreciation and loan repayments in a year. To be utilized on regional basis only and no ROE on surcharge NTPC LTD. Advance Not provided Against Depreciation 14. 24 % for Gas. UI charges are inversely related to frequency. Not provided AvailabilityBased Tariff (CERC orders of Dec. escalation O&M 10 % per annum 7. 2000) to Scheduled Energy only. 60 % for thermal 6. Variations in actual ESO and scheduled ESO are to be accounted at Frequency linked UI rates. Depreciation was not linked to useful life of the assets 6 % per annum 3. Once loans are repaid.FPA formula to Provided neutralize fuel price fluctuations 11.UI charges 10. Amount of depreciation plus advance against depreciation shall not exceed 1/12 of the loan amount. Income –tax Based on operating capacity Based on the estimated pre-tax allocation to the at the beginning of the year profit of the stations stations 16. Development Not provided surcharge 5 % of fixed charges for NTPC. 84 % for thermal 8. Provided as in two – part tariff 9. balance depreciation is to be spread on the balance life of the assets Pass through at actual 12. Income Tax Pass through at actual 15.Description Two-part tariff (GOI notified tariff) Energy Sent Out.Depreciation 13. 56 .
Description Two-part tariff (GOI notified tariff) AvailabilityBased Tariff (CERC orders of Dec. Rs 35170 Cr Internal resource generation from 2001 – 2012 Rs 12507 Cr. NTPC LTD. 2000) funds utilized additions for capacity 17. 57 .
The inability to find a solution to the problem of subsidized supply of power to agriculturists. 4. NTPC LTD. The failure of efforts to induct the private sector into distribution. The slow rate of addition to power generating capacity.FINDINGS Indian power sector reforms have reached a stage from where further progress appears bleak due to the following major problems: 1. 5. 3. 6. The deficits accumulated over the years imposing an unbearable interest burden limiting the capacity to raise funds in the commercial market. 2. 7. the level of T&D losses remaining undetermined and the annual loss reduction in the system being very slow. The rationalization or rebalancing of tariffs becoming a losing game because the average cost of supply increases faster than the possible rates of increase of tariffs. 58 . inter alia. The chaotic condition of governance of LT distribution with. The large size of DISCOMS.
The inability to find the solution to the problem of subsidized supply of power to agriculturists should be checked. 59 . 3. 2.RECOMMENDATIONS 1. The low rate of power generation should be checked to meet the ever rising demands. NTPC LTD. Transparencies reduced at many level so this again needs to be checked.
The previous comparison between the two tariff structure shows that ABT is much advanced and efficient approach towards collection of revenue. the return on per unit power sold is increased.CONCLUSION 1. 60 . Although there remain some drawbacks in the modern approach too. wastage of power is reduced at the same time.254. 3. 2.171/intranet/hr/policy_manual/Corporate-statement/pdf/OUR %20MISSION.191. In ABT approach.pdf NTPC LTD. BIBLIOGRAPHY Tariff Notifications issued by government of India Orders issued by Central Electricity Regulatory Commission (CERC) ABT Invoice Annual Reports of NTPC http://191.
co. www.in 4.google.nic. 61 . www.indiainfo. www.co.in 2. ntpc.in 3.powermin. In house Magazines of NTPC WEBSITE: 1. www.com APPENDIX ABBREVATIONS USED IN THE REPORT CAGR CEA CERC ED Genco GOI IPPs JV MOU NTPC O&M PLF SEBs SERC LC FDI Compound Annual Growth Rate Central Electricity Authority Central Electricity Regulatory Commission Executive Director Generating Company Government of India Independent Power Producers (In Power Sector) Joint Venture Memorandum of Understanding National Thermal Power Station Operation and Maintenance Plant Load Factor State Electricity Boards State Electricity Regulatory Commission Letter Of Credit Foreign Direct Investment NTPC LTD.
MW MVA: MU: Mega Watt Mega Volt Ampere Million Unit NTPC LTD. 62 .