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NTPC to feed Delhi's power hunger; to add 1,000 mw

The PSU recently asked SBI Capital to undertake a financial feasibility study for Badarpur TPP stage III expansion project, reports M Rajendran.

india Updated: Jan 09, 2007 14:27 IST

Power generation major National Thermal Power Corporation Ltd (NTPC Ltd) anticipating an increased demand for power from Delhi and neighbouring states over the next few years, has decided to add another 1,000 megawatt through expansion of its Badarpur thermal power project (TPP) stage-III.

The public sector power company had recently asked SBI Capital to undertake a financial feasibility study for Badarpur TPP stage III expansion project. Based on the report, that had suggested NTPC should enter in long-term power purchase agreement with target states.

Senior executives in NTPC who did not wish to be identified said that the decision to expand the project has been taken following the favourable financial opinion made in the report.

"Since sale of power for entire capacity will be based on Central Electricity Regulatory Commission's (CERC) cost plus tariff setting principles, NTPC would be able to take the advantage of five year exemption or such other period determined by the regulator provided to state owned and controlled companies from sale of power based on competitively bid tariffs," says the SBI Cap report, a copy of which is with Hindustan Times.

It had also pointed that the cost plus regime would offer NTPC the advantage of a pass through foreign exchange rate variation (FERV), a guaranteed return on equity of 14 per cent and a relative insulation from the regulatory risk on account of a new competitive framework.

As per the demand-supply analysis made in the study, it is expected that the matching to the commissioning schedule of this project, there will be sufficient demand for power from the expansion of 1,000 MW project.

The SBI Cap report concludes, "Subject to the risk analysis and mitigation mechanism, the weakness and threats enumerated in the strength, weakness, opportunities and threats (SWOT) analysis, the impact of the various scenario envisaged under the sensitivity analysis and the additional support to be provided for debt servicing out of the company's internal accruals, the proposed project of NTPC is viewed as financially viable."

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First Published: Jan 09, 2007 14:27 IST