The plans of NTPC Ltd, India’s largest power generation company, to manufacture power generation equipment may have just got a boost with the government deciding to use its bargaining power to get the company the required technology from foreign firms. The move could also help India address the issue of limited manufacturing capacity of such equipment coming in the way of its power generation plans.
Several power projects of the government will have to order equipment worth Rs10,000 crore. The government believes it can use this number as a negotiating and bargaining tool in discussions with companies that have the technology to make turbines and boilers with a capacity of 660MW and 800MW, according to a government official aware of the thinking who did not wish to be identified. “Whoever supplies this equipment (boilers and turbines) will transfer the technology to NTPC to help it start manufacturing (in India),” he added.
At present, NTPC does not have the capacity to manufacture equipment of this capacity and relies on domestic and overseas manufacturers. In India, Bharat Heavy Electricals Ltd is the sole manufacturer of power generation equipment of this capacity. The ability to make its own equipment will help NTPC meet its internal demand; the company plans to set up an additional capacity of 47,596MW by 2017, over its current capacity of 27,404MW.
Mitsubishi Heavy Industries (MHI), Toshiba Corp., Hitachi, Dosan, Siemens, Alstom, LMZ (Russia), Technoprom(Russia) and Dongfang are some of the companies that have the capability to manufacture power generation equipment of this capacity.
NTPC may set up a subsidiary to enter the power equipment manufacturing business. Shubhranshu Patnaik, associate director at accounting firm PricewaterhouseCoopers, said the move could help India meet “the demands of domestic power projects.”
India has a power generation capacity of 1.28 lakh MW. In the 10th Plan period (2002-07), only 20,950MW of generating capacity has been added as against a target of 41,110MW.
One reason for that, according to experts, is the limited power generation equipment manufacturing capacity that exists in the country.
Net profit up 15.57%
The net profit of NTPC Ltd, rose by 15.57% in 2006-07 against a year-ago period, on back of substantial capacity addition and higher efficiency levels. “We have adopted a multi-pronged growth strategy to achieve 75,000MW plus installed capacity by 2017. The strategy includes capacity addition through greenfield projects, expansion of existing stations, joint ventures and takeover of state electricity boards (SEBs),” T. Sankaralingam, chairman and MD, NTPC Ltd, said.
The company plans to set up two nuclear power projects of 2000 MW each that entail a total investment of Rs 28,000 crore.
NTPC’s net profit for 2006-07 was Rs6,726.40 crore against Rs5,820.20 crore in 2005-06. The company’s net sales grew by 17.20% to Rs 30,638.70 crore compared with Rs 26,142.90 crore in 2005-06. NTPC paid the highest interim dividend , 24% or Rs1,978.9 crore to the government during the year. “The company has been showing consistent growth performance year on year,” said Shubhranshu Patnaik, an executive at accounting firm PricewaterhouseCoopers .
The company’s power stations generated 188.67 billion units (bu), an increase of 10.41% over the same period in the previous year. “Our coal based stations performed at the highest ever plant load factor (PLF) of 89.43% compared to 87.54% last year,” added Sankaralingam.
NTPC has planned a capital expenditure of Rs11,325 crore for 2007-08, a 45% jump over the Rs7,820.6 crore that it spent in 2006-07. NTPC has also planned a capital expenditure of Rs1.60 lakh crore for the next plan period (2007-12) and is in the process of raising $1.5 billion from international banks and multilateral institutions.