End of privileges

In the current cost-plus regime,any escalation in cost from project delays gets capitalised. And electricity consumers bear the extra cost,since project delays and cost escalation are not the developers headache.

In contrast,in a mandatory tariff-based bidding regime,the success of a power generator would critically hinge on its ability to complete a project on time. Any escalation in the estimated capital cost would not be passed through. NTPC,however,feels that it would be better placed to face the competition because of its vast pool of experienced engineers.

We have the most experienced engineers in the power sector with us. That would help us meet the challenge of timely project execution, Choudhury pointed out. We are improving our project delivery everyday. The fact that we completed the Dadri-II project in a record time of 39 months goes to show that NTPC is well-equipped to deliver timely project execution, he said.

There are indeed delays in some of our projects. But these delays happened under circumstances that were beyond our control—-like the government’s decision to scrap projects such as the Loharinag Pala hydroelectric project in Uttarakhand and North Karnapura in Jharkhand, he added.

While the Uttarakhand project was revoked on environmental concerns,the site selected for the development of the North Karanpura project was declared a coal-bearing area. The delay in the Koldam hydroelectric project is because of certain geological surprises.

However,NTPC is apprehensive of pressure on its margins going ahead,and is looking at adopting a new matrix for operating in a competitive regime.

The Central Electricity Regulatory Commission (CERC) has recommended adhering to the January 2011 deadline for implementing the mandatory tariff-based bidding. The government has to take the final call on that.

As of now,NTPC doesn’t have to participate in tariff-based bidding for getting power projects. However,that would change if bidding becomes mandatory.

As the biggest player in the power generation industry,we have no choice but to participate in tariff-based bidding. However,we feel we will compete well, the chairman said.

As a PSU,we have certain national responsibilities. However,we make up for such competitive disadvantages with our 35 years of experience in power generation, he argued.

NTPC is looking at strategic opportunities to sharpen its competitive edge to bag power projects through tariff-based bidding.

We will soon come out with strategic decisions that would raise our profitability,Choudhury said.

NTPCs tendering for the bulk supply of 660 mw supercritical equipment is at an advanced stage. Despite the initial delay,in the aftermath of the disqualification of L&T Power’s bids,the company expects to award the contract soon.

Meanwhile,NTPC is also preparing to invite a tender for the bulk supply of 800 mw supercritical equipment,and is awaiting clearance from the power ministry.

This will be the first tender for the supply of 800 mw supercritical equipment. We have prepared tender norms in consultation with the Planning Commission and the power ministry. The idea is that anyone who comes out as a winner adds manufacturing capacity so that there is a continuity in equipment supply, Choudhury said. We are fully prepared for starting tendering for 800 mw units. Once we get approval from the ministry,we would be able to complete tendering in two-to-three months, he said.

Ensuring fuel security for its plants is another challenge facing the company. It is importing more coal to meet the domestic shortfall in fuel supply for its plants. We are importing 12 million tonnes coal every year through STC and MMTC. But we are also aware that we need to buy imported coal on our own. We are looking for people who have interest in mines abroad, he said.