Issues and Challenges before

NTPC

Rakesh Jain
Addl. Dy CAG

1
 Presentation Outline
• Indian Power Scenario and GOI Initiatives
• XII Plan – Projection
• Areas of Concern- Power Sector
• About NTPC
• SWOT Analysis – NTPC
– Strength
– Week Ness
– Opportunities
– Threats
• Way Forward
2
 Indian Power Scenario
Type Installed Capacity
(MW) Capacity Break up
Thermal 151530

Hydro 39491
Thermal
Hydro
Nuclear 4780 Nuclear
Renewable
Renewable 27542

Total 223344

As on Source: CEA

31.03.2013 3
Per Capita Consumption Notwithstanding sustained
demand, India continues
(kWh/Year) to be among the lowest
per capita consumers
of electricity globally,
lagging Brazil and China by
~3:1
Per capita consumption
29% of the world average

4
 Strengths
• Huge Demand for Power
• Hydro Potential
• Educated Manpower
• Coal Reserves
• Huge Renewable Energy Potential
Weakness
• Limited Coal availability
• Poor Financial Health of
Discoms
• Environmental Issues

Indian
Power
Scenario
Opportunity Threats
• Increase in Power Equipment Mfg • Competition for energy Assets
Base in the International Market
• Development of Coal Mines • Cheap Imports from China
• Power Trading • Wide Fluctuation in imported
• Regulatory Setup fuel price
• Development of Green Energy • Change in International Laws
• Energy Efficiency and
Conservation
 POLICY & REFORM INITIATIVES

• Enactment of Electricity Act, 2003.

• National Electricity Policy, 2005.
• Tariff Policy, 2006 and subsequent modifications.
• Ultra Mega Power Project initiative.
• Mega Power Policy.
• New Hydro Policy, 2008.
• Operationalization of Open Access in Power Sector
• Case I & Case II Bidding Documents
• Automatic approval of 100% FDI in generation, transmission
and distribution.
• Scheme for Financial Restructuring of State Owned Distribution
Companies (DISCOMS)
6
 Targets/Achievements for Capacity
Addition in Various Five Year Plans (in MW)

For Private circulation only 7

Transition in Strategy for Development of Power Sector

Strategy for XII Plan

Strategy for XI Plan Sustained Development of
Capacity Addition Power Sector through
through Promotion of Green
UMPP Energy
Energy Conservation
Case I and Case II Financial Restructuring
Bidding of Discoms
Competitive Coal Linkages and
Bidding in place of Focus on procurement
Cost Plus Tariff of Coal Assets abroad
Rural Electrification
 12 Plan Capacity Addition
Th

Source: Draft 12th Plan: Planning Commission

9
 12th Plan: Requirements of Funds

Source: Draft 12th Plan: Planning Commission

10
 Areas of Concern- Power Sector
• Fuel Security
• Financial Health of DISCOMS
• Advance Planning for XIII Plan
• Environmental and ROW issues
• Land Acquisition
• Availability of Water
• Ash Disposal

11
 NTPC Ltd
(A Maharatna Company)

12
 India’s Largest Power Generator

As of March 31, 2013 total installed power generation

capacity of 41,184MW (including 5,364MW through other
group companies)
20,564 MW of capacity under construction, Bids invited
from Vendors for 3055 MW and FR approved for 20700
MW
Also developing other renewable energy projects, such
as wind and solar, as well as nuclear power projects
Global footprint in Sri Lanka and Bangladesh through JVs

13
 NTPC Ltd

• Granted Navratna Status by GOI in 1997

• Granted Maharatna Status by GOI in 2010
IPO FPO OFS

Year Oct 2004 Feb 2010 Feb 2013

GOI Disinvestment 5.25% 5% 9.5%
NTPC Share 5.25% Nil Nil
Price Band 52-62 Floor Price 201 Floor Price 145
Issue Price 62 Retail 191 Avg Allotment
Others Avg Price 203 Price 145.55
No of Times Issue 12.44 Times 1.2 Times 1.7 Times
Oversubscribe

14
 Market Price of NTPC Share

262

212

162

112

62
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2 1 1 2 1 3 1 2 1 3 1 2 1 2 2 1 2 2 3 1 2 3 1 1 3 1 2 3 1

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 No. of Plants Capacity (MW)1 % Share
NTPC Owned
Coal 16 31,855 77.36%
Gas/Liquid Fuel 7 3,955 9.60%
Solar * 10 0.02%
Sub-total 23 35,820 86.98%
Owned by JVs and Subs
Coal 6 3,424 8.31%
Gas 1 1,940 4.71%
Sub-total 7 5,364 13.02%
Total 30 41,184 100.00%

Player 41184
o wer
t P
epe n d en 35000+
g I n d
e a din R : 1 9% 30000+
sa L CA G
e d a 0 1 3
s Evolv 9 8 2–2 25000+
ha MW 1
NTPllCed Capacity
in
20000+
Insta
15000+
10000+
5000+
200+
1981-82 1987-88 1990-91 1994-95 2002-03 2006-07 2008-09 2011-12 2012-13

16
Capacity Expansion Plans (MW)

Capacity Addition (GW) (Excl RES) NTPC 88536

55535 54964

16071 14068
9641

8th+9th+10th Plan 11th Plan 12th Plan

17
NTPC Ltd

18
FINANCIAL PERFORMANCE

19
NTPC Ltd

20
NTPC Ltd

21
NTPC Ltd- Cost Structure

22
 NTPC Ltd

SWOT Analysis

23
 NTPC Ltd

STRENGTHS
• Leadership Position in Indian Power
Sector
• Experience of more than 30 years in
operation of Power plant
• Healthy Balance Sheet
• Ability of Turnaround Underperforming
Power Stations
• Prudent Off Take Policy
• High Operational Efficiency
• Strong Credit Ratings by Credit
Agencies
• Pan India Presence
• Competent and Dedicated Work Force 24
NTPC Ltd

WEAKNESSES

• Project Execution Delays

• Delay in Contracting ( NIT to
Award Process is long and
cumbersome)
• Low return from the Subsidiaries
and JV Companies
• High Iteration rate
• Fuel Security
• Cost Competitiveness

25
NTPC Ltd

MAJOR AREAS OF CONCERN

• High Balance of Plant Cost as

compared to IPPs
• Non scheduling of Power due to high
cost
• Falling Operational Performance,
like Increasing Heat Rate, Aux
Power Cons, Sp Oil Consumption
• Low rate of Incentive ,
• Non Focus on Cost Competitiveness

26
 Comparison with IPPs on “Hard Cost” basis
(Rs. crore per
MW)
Project hard
Configuratio
Project Type Year of Year of BTG BoP cost Total (As
Descriptio Location
n and G/B) cost COD BTG + Others
Capacity (in Cos
n BoP (C)
MW) (A) t (B) (A+B+C)
(A+B)
Jharkhand 2x500 G 2007 2012 N.A. N.A. N.A. N.A. 3.69
Maharashtra 3x660 G 2007 2013 2.34 1.63 3.97 0.03 4.00
Uttar Pradesh 2x600 G 2007 2012 2.69 2.69 0.23 2.92
Odisha 4x600 G 2007 N.A. 3.10 3.10 0.02 3.12
Gujarat 5x800 G 2008 2013 N.A. N.A. N.A. 3.53
IPPs
Odisha 2x600 G 2008 N.A. 2.31 1.61 3.92 0.08 4.00
Madhya Pradesh 2x660 G 2009 N.A. 4.87 4.87 0.12 4.99
Madhya 6x660 G 2009 N.A. 3.33 3.33 0.16 3.49
Pradesh
Karnataka 2x600 G 2009 2012 3.64 3.64 0.26 3.90
Chhattisgarh 2x600 G 2009 N.A. 2.26 1.56 3.82 0.73 4.55
Andhra Pradesh 2x500 B 2007 N.A. 2.20 1.72 3.92 0.88 4.80
Maharashtra 2x500 G 2007 N.A. 2.25 2.08 4.33 0.56 4.89
Haryana 3x500 G 2007 N.A. 2.30 1.82 4.12 0.61 4.73
NTPC
Tamil Nadu G N. . 2. 2. 1 4. 0. 0 5.
Uttar Pradesh 2x500 B 2008 N.A. 2.50 2.14 4.64 0.71 5.35
Madhya 2x500 B 2008 N.A. 2.50 1.98 4.48 0.56 5.04
Pradesh
z Data Set I: 2007 to 2009
 Comparison with IPPs on “Hard Cost” basis…2
(Rs. crore per
MW)
Project hard
Configuratio
Project Type Year of Year of BTG BoP cost Total (As
Descriptio n and BTG + Others
Location (G/B)cost COD Cos Cos Financed)
n Capacity
(in MW) (A+B)
BoP (C)
estimatio t(A) t(B) (A+B+C)
Uttar Pradesh 3x660 G n 2010 N.A. 2.76 1.46 4.22 0.10 4.31
Maharashtra 2x660 G 2010 N.A. 2.97 1.20 4.17 0.02 4.19
IPPs Punjab 3x660 G 2010 N.A. 3.52 3.52 0.37 3.89

Gujarat 3x660 B 2010 N.A. 3.47 3.47 0.01 3.48

Uttar Pradesh 3x660 G 2011 N.A. 2.90 1.66 4.56 0.24 4.80
Uttar Pradesh 2x660 G 2011 N.A. 3.09 2.20 5.29 1.16 6.45
Madhya
MadhyaPradesh
Pradesh 1x500 B B 2011 N A N.A. 2.94
2 30 2.30 5.24
0 28 0.28 5.52
Madhya 2x660 G 2011 N.A. 2.95 1.99 4.94 1.16 6.10
Pradesh
Karnataka 3x800 G 2011 N.A. 2.70 1.99 4.69 0.54 5.23
Maharashtra 2x660 G 2012 N.A. 3.10 1.80 4.90 0.94 5.84
NTPC Bihar 3x660 G 2012 N.A. 3.13 1.79 4.92 0.88 5.80
Uttar Pradesh 2x660 G 2012 N.A. 2.80 2.09 4.89 0.99 5.88
Maharashtra 2x660 G 2012 N.A. 3.10 1.53 4.63 0.31 4.94
Chhattisgarh 2x800 G 2012 N.A. 2.80 1.94 4.74 1.36 6.10

Madhya 2x800 G 2012 N.A. 2.95 2.06 5.01 1.12 6.13

Pradesh
Madhya 4x660 G 2012 N.A. 2.95 1.81 4.76 0.79 5.55
Pradesh
z Data Set II: 2010 to 2012
NTPC Ltd

OPPORTUNITIES
• Huge Power Deficit in the
country

• Consultancy assignments in
India and Abroad

• Diversification in other fields of

Energy efficiency , Power
trading , Fuel Security etc

• To play a Pivotal role in

development of Power Sector in
India

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 NTPC
SWOT Ltd - THREAT
ANALYSIS

THREATS

• Entry of Foreign/Private
Players in the Power Sector !
• Flow of human capital from
the company to other power
sector companies
• Pressure on Fuel resources
• Scarcity of vendors for

•
Power Equipment
Competitive Bidding Route
!
• Power Off Take risk
• Poor Financial Health of
Discoms
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 Focus on Strengths
Through Organic and Inorganic Growth,
Maintain Market Leadership

Overcome
Weakness
Identifying Strengths Through,
Opportunities
Brain
External Storming,
Environment
Monitoring, SWOT Strategic Think
Tank, Cost
Strong Oppurtunity Weakness
Management Analysis Control ,R&D,
Adoption of
Information Advanced
System, Technologies,
Opportunities Training of
Abroad Development
Threats
of Employees,

Addressing Threats through Risk Management

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 Principles of Growth
• Drive fewer, bigger, better innovation, Focus
on R&D
• Drive the basics in execution, Cost
Competitiveness
• Make the structure and organisation work
• Drive performance culture

• Drive people agenda to competitive levels 32

 Way Forward
• Project Execution within the time frame
• Target Scheduling at least 90% of Installed Capacity
• Fuel Security (Domestic & Imported)
• Ash Utilization
• Cost reduction (Fixed and Variable)
• Benchmarking
• Robust Internal Control Framework
• Strategic Planning
• Focus on R&D
• Diversification in other areas of Power Generation
33
Thank You

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