New Delhi: India’s largest power generation company, NTPC Ltd, is scouting for operations and maintenance (O&M) contracts in the US and Europe.
Low-risk: An NTPC plant in UP. The company’s consultancy division made a Rs41 crore net profit in FY09.
The state-owned utility will focus on old power plants in these regions, chairman and managing director R.S. Sharma said. “We are looking at this opportunity through our consultancy arm,” he said, without elaborating.
An O&M contract is easier to execute than building a power project and NTPC expects its presence in the US and Europe through such deals will help it to set up projects in these markets later.
“This comes from their strategic strength, which is power plant operations. It is a low-risk strategy than investing in setting up projects. NTPC has a cost advantage,” said Shubranshu Patnaik, executive director at consultancy firm PricewaterhouseCoopers.
“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,” Kuljit Singh, a partner at accounting and consulting firm Ernst and Young, had said earlier. “They should actively look at bidding for setting up projects overseas in addition to depending on inter-governmental contacts.”
NTPC’s consultancy services division registered a net profit of Rs41.2 crore in the year to 31 March on a revenue of Rs127.3 crore. It secured orders worth Rs188.8 crore during the last fiscal. In the same year, the company registered a net profit of Rs7,827.4 crore on revenue of Rs42,182.4 crore.
So far, NTPC’s global aspirations haven’t yielded results. The company had shown interest in acquiring overseas power generation assets such as Globeleq Generation Ltd’s 683MW gas-fired plant in Egypt and Temasek Holdings Pte Ltd’s Singapore power generation company, Tuas Power Ltd, that has installed capacity to produce 2,670MW of electricity.
Globeleq, which wanted the Indian firm to participate in the sale of its projects in Asia, Latin America and Africa, rejected its bid after NTPC said it was only interested in the Egyptian project. NTPC could not bid for Temasek’s assets because the Indian government was late in approving the requests, reported in Mint on 23 March 2007 and 20 December 2007. 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.
NTPC’s stock fell Rs1.70, or 0.86%, to Rs195.80 at close on the Bombay Stock Exchange on Thursday. The exchange’s benchmark index, Sensex, fell 3% to 10,947.40 points.