India’s NTPC to Reduce Dependence on Imported Coal

BRISBANE, Australia - Aug. 18, 2013 - PRLog -- A senior NTPC executive told IHS Coal’s Indian Coal Report that the power major has unravelled a strategy to reduce its dependence on international coal.

We are planning to reduce our imports. We will contain it to a maximum of 10% of our total requirement,” the company official said.

According to the official, NTPC will source out about 16-20% of its fuel requirements from the coal blocks allocated to the company. He believes that this will also bring down its dependence on Coal India Limited (CIL) for its fuel requirement from the current level of 82% to 70% by 2017, the terminal year of the current plan period.

NTPC is publicly listed on the Bombay Stock Exchange (BSE) and the Indian government currently holds just under 75% of the company.

The company has an installed capacity of 39,674MW, including some joint venture operations, made up of 16 coal-based and seven gas-based power stations. Of this, 35,719MW is coal-based. All of the coal capacity is designed for indigenous coal but the company supplements imported coal to make up for the shortfall in domestic supply.  By the end of 2017, the company is expected to have a total generation capacity of over 50,000MW.

The company had earlier projected that imported coal demand for its plants would increase to 22-23mt by 2017. This estimate would be higher if plans to produce 37mt of coal from its domestic coal blocks by 2016-2017 are not realized. Currently, NTPC has no production from captive coal blocks.

The company was earlier allocated six captive blocks. They were: Pakri-Barwadih, Chatti-Bariatu, Kerandari, Dulanga, Talaipalli and Chatti-Bariatu (South).

The biggest contract mine, NTPC’s Pakri Barwadih mine in Hazaribag in Jharkhand, is yet to come into operation despite several assurances that the company would start producing coal soon. In 2010 Thiess India secured a $5.5b, 27 year deal to produce 15mtpa. The mine was designed to replace material that is currently sourced from the import market.

The official believes that a reliance on international coal brings consistent inherent risks.

“You have already seen what happened to our import plans last fiscal year. There could be several unforeseen circumstances which could topple your plans. So it is time to focus more on our own resources and develop it as fast as possible,” the official said.

NTPC Chairman Arup Roy Choudhury told the media recently that the company has already spent about $233m for developing the coal blocks allocated to it and would spend about $1.25b to develop domestic coal blocks.

Even though the company had a target to import about 16mt in the previous financial year, the company could eventually import only 9mt.

Media reports speculated that charges of corruption levelled by some unknown persons against some of the NTPC traders and subsequent enquiries made by the power major resulted in the delay in the procurement process.

In addition, an assessment by the country’s independent auditor, the Comptroller and Auditor General (CAG), found the company may have lost approximately $130m by requiring 20mt to ship through ports that were not cost efficient.

The company has again set an import target of about 16.6mt for the current fiscal year, April 2013 – March 2014. However, a senior Central Electricity Authority (CEA) official said that the import plan of the power major for this financial year will likely meet the same fate.

Of the 14 coal blocks the government allocated to state-run power companies recently, NTPC has also bagged four blocks with an estimated reserve of 2bt. While blocks Bhalumunda and Banai with reserves of 550mt and 629mt respectively are located in Chattisgarh, the remaining blocks Chandrabila and Kudanali-Luburi with 550mt and 266mt each are in Orissa.

Separately, media reports suggest that CIL has assured the power major that it will help NTPC reduce its import by supplying more coal to it.

“Possibly, with the exception of the Simhadri unit, there is no NTPC plant which is receiving less than 80% of the annual contracted quantity. If we make a little more effort, we can even fulfil an 80% supply to that unit as well,” Chairman and Managing Director of CIL S Narsing Rao, told the media recently.  

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