Faced with uncertain domestic supplies, NTPC Ltd, the country’s largest power generation firm is fast-tracking plans to acquire overseas coal blocks with a mining capacity of around 20 million tonnes per annum (mtpa).
“While, around 5mtpa is targeted for our existing power projects, the balance is for the imported coal based UMPPs (ultra mega power projects) that we plan to bid for,” said a company executive who did not wish to be identified.
Power push: Mined and refined coal from this mine owned by Singareni Collieries Co. Ltd in Andhra Pradesh is mostly consumed by the NTPC power plant in Ramagundam.
The company is trying to accelerate acquiring overseas coal blocks as procedural and infrastructure delays have upset its plans to achieve fuel security through its captive coal blocks and reduce dependence on Coal India Ltd (CIL), the primary coal supplier as reported by Mint on 11 October.
NTPC had plans to bid for the imported coal-based 4,000MW UMPPs at Krishnapattnam in Andhra Pradesh, but did not finally do so as it was unable to tie-up the imported coal supplies in time.
Larsen & Toubro Ltd, Reliance Power Ltd and Sterlite Industries Ltd were the three final bidders for the project to be awarded by 30 November.
NTPC is now considering bidding for the remaining imported coal-based projects proposed at Cheyyur and Marakkanam in Tamil Nadu. “We could not bid as imported coal prices are very volatile. Without having a price tie-up it would have been suicidal,” the executive added.
“NTPC with its financial strength and bargaining power as a large consumer may have competitive edge over other players seeking to acquire coal properties abroad. But, in light of large number of players, from India and China in particular, looking for such acquisitions, NTPC may have to act swiftly. However, coal mining costs are reasonably lower and it makes strategic sense to acquire coal mining properties abroad from both supply security and economic perspectives,” says Dipesh Dipu, a manager with accounting firm PricewaterhouseCoopers.
Prices of imported coal, including?freight,?average around $90 (Rs3,555) per tonne. Coal is critical for NTPC, as more than 80% of its installed capacity of 27,404MW is coal-based. With about 67% of the total power generation currently based on coal, the power sector is the largest consumer, absorbing nearly 78% of India’s total coal production.
NTPC has a total coal requirement of 100mtpa, out of which around 4mtpa is imported. The rest of the requirements are met through the coal supplies by CIL.
“We are exploring opportunities to acquire coal mines abroad and are looking for partners with proven expertise to acquire and develop coal mines,” NTPC chairman and managing director T. Sankaralingam had announced at the firm’s annual general meeting in September.
NTPC already has an memorandum of understanding with Steel Authority of India Ltd, CIL, Rashtriya Ispat Nigam Ltd and National Mineral Development Corp. Ltd for the formation of a special purpose vehicle for acquiring coal mines abroad.
Coal demand in India is expected to grow rapidly as the country seeks to add 78,000MW of generating capacity in the next five years. India currently has a generating capacity if 130,000MW, but needs more power to fuel an economy that grew by 9.4% last year and is expected to expand by more than 8% this year. NTPC expects to account for 22,596MW or a little under one-third of the incremental capacity.
Udit Misra contributed to this story.