NTPC’s Yemen plans stalled due to dispute over price issues

NTPC’s Yemen plans stalled due to dispute over price issues
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First Published: Sun, Apr 12 2009. 09 14 PM IST
Updated: Sun, Apr 12 2009. 09 14 PM IST
New Delhi: India’s largest power generation company, NTPC Ltd, says its plans to set up power projects and a training centre for local engineers in Yemen—from where it wants to source gas for its fuel-starved plants back home—have run into trouble following a dispute over the cost of maintaining existing facilities in that country.
“We wanted to make it a relationship-building exercise as they (Yemen) have gas. We have plans (to set up power facilities) there but they will have to bear the costs. They want us to pay below the cost (for maintaining and repairing power plants in Yemen) to which we are not ready. We are still in talks,” said R.S. Sharma, NTPC’s chairman and managing director. “The governments in these countries are very unpredictable. Though we have been pursuing our Yemen plans, there has been no response from there. What to do...it looks like, it may not work,” said a senior NTPC executive who didn’t want to be identified.
Similar NTPC plans in Nigeria—to secure 3 million tonnes of gas a year for its projects in India—had faltered because of delays in finalizing an alliance with a local partner, as reported by Mint on 28 October.
The state-owned company has a total gas requirement of 12 million standard cubic metres per day (mscmd), which is expected to go up to 17.35 mscmd by 2012. NTPC has seven power plants fuelled by gas or liquid fuel with a total capacity of 3,955MW; it also runs a 740MW gas-based plant under a joint venture.
The company had zeroed in on Yemen, located in south-west Asia, following a suggestion from the ministry of external affairs, to leverage India’s old relationship with that country to secure gas resources, estimated at around 4,000 million barrels of oil and gas.
The Yemen embassy in New Delhi couldn’t be contacted for comment.
Mint had reported on 3 November 2007 about the company’s plans to set up power projects and a training facility in Yemen to secure gas supplies for its plants.
Kuljit Singh, a partner at accounting and consulting firm Ernst and Young, said: “NTPC is one of the few such large global utilities that is not venturing out of the country. They should aggressively look at overseas projects—and not only at bilateral projects. They should actively look at bidding for setting up projects overseas in addition to depending on inter-governmental contacts.”
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-based power generation, 4,550MW through gas-based generation and the balance from hydro-power. The company registered a net profit of Rs7,827.4 crore last year (2008-09) on a turnover of Rs42,182.4 crore.
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First Published: Sun, Apr 12 2009. 09 14 PM IST