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NTPC may set up subsidiary to tap global opportunities

NTPC may set up subsidiary to tap global opportunities
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First Published: Tue, May 19 2009. 09 24 PM IST
Updated: Tue, May 19 2009. 09 24 PM IST
New Delhi: State-owned NTPC Ltd may set up a subsidiary similar to ONGC Videsh Ltd, the overseas unit of Oil and Natural Gas Corp. Ltd (ONGC), to look for opportunities abroad.
“Though nothing is finalized, we are considering this option,” said an NTPC executive, who didn’t want to be identified.
Another NTPC executive, who also declined to be named, said: “As of today, we are moving ahead for our overseas proposals on our own. Going forward, the formation of an overseas subsidiary cannot be negated. If there are more properties in the offing, and the present company board can’t give more time and provide strategic inputs, we will consider this option.”
NTPC has not been able to make much headway on its global aspirations. Its plans to source gas from Nigeria for its projects in India have faltered.
Some of the power utility’s plans include setting up power projects in Kazakhstan, and securing operations and maintenance (O&M) contracts in the US, Europe and Bangladesh. It also plans to acquire coal mines in Mozambique and Indonesia.
“NTPC is looking for new prospects in coal overseas. This (proposed overseas) subsidiary will primarily take care of such opportunities,” a power ministry official said on condition of anonymity.
To start with, NTPC is looking to acquire a coal block in Mozambique that will require an investment of around Rs5,000 crore. The coal property will have an initial capacity of around 5 million tonnes per annum, or mtpa, that can be increased to 25mtpa. As part of the proposal, NTPC plans to build power projects in that country and also train its engineers.
“The OVL experience has been successful for ONGC... This subsidiary route for NTPC has been considered for some time now. The challenge for them is that though they have made a clear strategic intent for undertaking projects overseas, nothing has culminated so far,” said a New Delhi-based power sector analyst, who declined to be identified due to commercial considerations.
NTPC is the second state-owned firm in the power sector—after Power Grid Corp. of India Ltd—to consider establishing an overseas subsidiary.
The firm posted a net profit of Rs7,827.4 crore on revenues of Rs42,182.4 crore in the fiscal year to 31 March. NTPC currently has a power generation capacity of 30,144MW, which it plans to increase to 50,000MW by 2012. Of the 22,596MW it plans to add, 15,180MW will be through coal-fired power generation, 4,550MW through gas-based generation and the balance from hydropower.
Shares of NTPC fell 2.81%, to Rs205.75 at close on the Bombay Stock Exchange on Tuesday. The exchange’s benchmark index, the Sensex, at 14302.03 points, up 0.12%.
utpal.b@livemint.com
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First Published: Tue, May 19 2009. 09 24 PM IST
More Topics: NTPC | ONGC | US | OVL | Coal mines |