Powering growth

R.S. Sharma: NTPC is on track to meet its capacity addition target for the Eleventh Plan. -

Interview with R.S. Sharma, Chairman and Managing Director, NTPC.

R.S. Sharma assumed the captaincy of the NTPC team recently. Appointed Chairman and Managing Director on May 1, he has, however, been with the company since 1980 and has been a witness to its growth from just a power-generating company to an integrated power major with multifarious activities.

Immediately preceding his elevation to the top, he was Director (Commercial) and was also guiding the activities of the Business Development Group. He has been instrumental in the preparations of guidelines for setting up a power exchange in the country. He was earlier Executive Director (Commercial) and also looked after corporate planning. Sharma brings with him multi-functional experience in the areas of operation, project implementation, planning, and commercial and regulatory affairs in the power sector. A firm believer in the philosophy of Can Do and Customer Focus, he has authored a number of technical papers on various segments of the power sector.

Sharma completed his degree in mechanical engineering from Government Engineering College, Rewa, in Madhya Pradesh in 1971 and joined the M.P. State Electricity Board. He joined NTPC in February 1980 at the Korba Super Thermal Power Station of 2,100 MW capacity. Excerpts from an interview:

What is NTPCs vision for the future?

NTPCs vision of a world class integrated power major powering Indias growth, with increasing global presence is aligned to the needs of the economic development of the country. The vision articulates NTPCs ambitious and accelerated growth in the entire value chain of energy. NTPC, a professional and dedicated organisation with sound business concept and a strong management team, sees itself as a large entity significantly contributing towards the economic development of the country. We have a target of taking our generating capacity from the present 29,394 MW to 50,000 MW by 2012 and 75,000 MW plus by 2017.

We intend to have a multi-fuel diverse portfolio of generating capacity, which includes hydro, nuclear and renewable energy sources, apart from coal and gas. Underpinning the fuel security of our power plants, we will have a presence in coal mining, natural gas and liquefied natural gas value chain too. With the opportunities thrown on its way by the Electricity Act, 2003, NTPC plans an increasing presence in the power trading and distribution segment also.

Recognising that technology is going to be one of the key drives of competitiveness, NTPC is engaged in futuristic technology development. Coal-based power generation being the dominant segment of NTPCs portfolio, it is aware of its responsibilities and has taken several technological initiatives to take care of the requirements of economic efficiency and the environment.

How is the capacity addition target of 22,000 MW for the current Plan period progressing?

NTPC is on track to meet its capacity addition target for the Eleventh Plan. A capacity of 1,990 MW has already been commissioned in the current Plan and a capacity of 16,680 MW is under construction. The remaining capacity is also in advanced stages of bidding or ordering. The work on this portion is likely to commence soon.

In the multi-project implementation scenario, NTPC follows an Integrated Project Management and Control System from concept to commissioning, which has been the key to our success. NTPC has evolved as an organisation that has developed and implemented the projects with exacting schedules. The project implementation skills of NTPC have been globally recognised.

In the light of fuel shortages envisaged across the hydrocarbon value chain, how is NTPC planning to cope with future demands?

While focussing on rapid capacity growth plans, NTPC is also aware of the issues and challenges of making available the fuel for its power plants to retain its cost and performance leadership. We have conceived and initiated an array of strategic fuel security measures. We have initialled a model long-term coal supply agreement for a period of 20 years with Coal India Limited to ensure adequacy, reliability, quality and appropriate pricing of coal supplies to our power plants.

NTPC has ventured into coal mining and has got coal blocks from the Government of India, including two blocks to be developed in a joint venture with Coal India Limited. By 2017, NTPC targets to have a coal production of 47 million tonnes per annum, which shall make it the second largest coal producer in the country after Coal India. We plan to commence production from our coal mines early next year. Our target is to meet 20 to 25 per cent of our coal requirement through our own production by 2017.

NTPC has established a joint venture company, NTPC SCCL Global Ventures Private Limited, with Singareni Collieries Company Limited (SCCL) to undertake coal mining in India and abroad. It has also signed a memorandum of understanding (MoU) with Rashtriya Ispat Nigam Limited (RINL), Steel Authority of India Limited (SAIL), the National Mineral Development Corporation (NMDC) and Coal India Limited (CIL) as a consortium partner for sourcing coking coal and thermal coal from abroad. Further, NTPC on its own is also scouting for coal mines in countries such as Indonesia and Mozambique.

The strategy is basically to have better control in terms of fuel pricing, quality and availability. Also, imported coal shall provide NTPC the option of setting up coastal plants and meet the loads around these areas.

To meet the shortfall in domestic gas supplies, NTPC has been sourcing gas and LNG from market and alternative sources. In order to ensure gas availability for its gas-based existing and expansion projects, NTPC is open to equity participation in the natural gas and LNG value chain. NTPC, as part of a consortium, has also ventured into exploration and production (E & P) activities in National Exploration Licensing Policy-V. The exploration activities in the petroleum block in Arunachal Pradesh are going on. Drilling of exploratory wells is planned during 2008-09 at identified prospective locations.

NTPC is also exploring the possibilities of mutual cooperation with the Federal Government of Nigeria for the setting up of coal- and gas-based power projects in Nigeria by NTPC and the supply of gas by Nigeria to NTPC.

With our strategic initiatives for fuel security, we are getting ready to cope with the increase in fuel demand matching with the capacity addition and to mitigate fuel shortages, if any.

How are NTPCs diversification initiatives progressing?

NTPC has embarked upon diversification initiatives to capitalise new growth opportunities in the sector and to leverage its strength for consolidating its position as the lead player in the Indian power sector.

In terms of backward integration, as stated earlier, NTPC has entered into coal mining and E & P activities and is putting in efforts to get a hold in the natural gas and LNG value chain.

Hydropower is a renewable and environmentally benign source of energy and is unaffected by volatility in fuel prices. Hydel plants also provide better load management options. Accordingly, NTPC forayed into hydropower development, and construction activities are in full swing at the Koldam (800 MW), Loharinag-Pala (600 MW) and Tapovan Vishnugad (520 MW) projects. NTPC plans to have projects of 9,000 MW of hydropower in its portfolio by 2017.

By 2017, the company plans to have 1,000 MW through renewable sources of energy such as wind, biofuel, solar and geothermal sources. NTPC has signed an MoU with the Asian Development Bank (ADB) for the establishment of a power generation capacity of about 500 MW through renewable energy sources. Another MoU has been signed between NTPC and National Geographical Research Institute for cooperating and sharing their knowledge in identifying potential sites for setting up geothermal-based power projects.

NTPC has set up a wholly owned subsidiary, NTPC Vidyut Vyapar Nigam Limited (NVVN), to pursue trading business. It is the second largest power trading company in terms of trading volume in India. Going forward, NTPC plans to establish a national power exchange using state-of-the-art information and communication technology for real time power trading transaction. It would target achieving 25 billion units in traded power by 2017.

Power distribution provides an opportunity for NTPC in terms of synergy with the power generation business. NTPC Electric Supply Company Limited (NESCL) is its wholly owned subsidiary for the purpose of establishing its presence in distribution and rural electrification. NESCL is pursuing the takeover of some of the existing distribution circles, apart from considering setting up greenfield distribution circles in new industrial areas and special economic zones. It is also carrying out rural electrification under the Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) of the Ministry of Power. It has been entrusted work under the RGGVY in six States and a Union Territory, covering approximately 40,000 villages.

Looking at the huge capacity addition planned in the country and the past slippages in capacity addition due to shortages of supplies, there is an urgent need to enhance the manufacturing capacity. NTPCs diversification into manufacturing is a strategic move to leverage its strengths in planning, engineering, power management and power plant operations, and to create a synergy with a strategic partner. It has decided to take 44.6 per cent of the Government of Kerala stake in Transformers and Electricals Kerala Limited (TELK).

A joint venture company, NTPC BHEL Power Projects Private Limited has been formed with equal equity participation by both NTPC and BHEL to take up work related to engineering, procurement and construction (EPC), and manufacturing and supply of equipment for power plants and other infrastructure projects in India and abroad.

NTPC has signed an MoU with Bharat Forge Limited to promote a joint venture company initially to take up manufacture of castings, forgings, fittings and high-pressure piping required for power and other industries, balance of plant (BOP) equipment for the power sector, and so on. It may eventually also explore opportunities related to the manufacture of power equipment.

How about NTPCs plans to look beyond Indian shores for business? Are there plans beyond Sri Lanka and Nigeria?

NTPC proposes to set up a coal-based plant in the Trincomalee area in Sri Lanka and has signed an MOU with the Sri Lankan government and the Ceylon Electricity Board (CEB) to set up a 2x250 MW plant through a joint venture company with the CEB with 50:50 equity participation. The site has been identified and discussions are under way with the CEB regarding power purchase agreement.

Establishing a successful services brand would be a precursor to taking investment decisions in different markets. Going forward, NTPC could evaluate various options for strengthening its presence in global markets. The company is at present providing consultancy services to clients in West Asia.

What is the outlook on the recent NTPC-BHEL joint venture?

To start with, NTPC-BHEL Power Projects Private Limited has already identified two projects, the 750 MW gas-based Bamnoli project of the Government of National Capital Territory of Delhi and the 500 MW Vaishali thermal power project in Bihar for EPC work. Apart from these projects, it is scouting for orders.

On the manufacturing side, the company is looking at various options, and tentatively plans to have manufacturing facility operations before the end of the Eleventh Plan. The company is developing its business plan.

How about NTPCs plans to venture into the nuclear power sector?

Considering the benefits of nuclear power generation and the strong project management capability of NTPC, we envisage setting up 2,000 MW of nuclear power capacity by 2017.

NTPCs nuclear programme would be guided by the overall national policy.