15 firms in fray to set up cement units near NTPC’s power plants
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State-run NTPC Ltd’s diversification drive is gaining traction with around 15 companies evincing interest in the cement manufacturing plan proposed by India’s largest power generation utility.
NTPC Ltd had invited expressions of interest (EoI) from manufacturers on 16 February for setting up cement units near its plants.
It is also open to cement joint ventures. Apart from helping utilize 52 million tonnes (mt) of fly ash generated by its projects, NTPC is also scouting for captive consumers to create the demand for electricity generated by its plants. These cement units will have to buy electricity from NTPC’s projects.
“Interested party shall sign a long-term agreement with NTPC for use of fly ash and electricity exclusively from the identified power station of NTPC from the date of commissioning of cement/allied product plant,” NTPC had said.
NTPC has been trying to keep pace with rapid changes in power sector by exploring new businesses such as setting up charging stations for electric vehicles.
India’s current installed capacity of 329,204.53 megawatts (MW) and projects under construction are expected to meet the country’s electricity demand till 2026.
This is the trigger for NTPC to scout for new growth areas. NTPC’s thermal stations are registering a low plant load factor (PLF)—a measure of average capacity utilization—due to muted demand.
“We had floated the EoI for which around 15 firms have shown interest. This includes almost everyone from the cement industry,” said a senior NTPC executive, requesting anonymity.
He declined to name the companies.
Mint couldn’t ascertain the names of these companies.
This comes at a time when the cement sector is seeing early signs of increase in demand after a short-lived decline, as Mint reported on 23 March.
India’s cement industry is estimated to have a capacity of about 420 mt.
“An internal committee will decide upon the firms,” added the NTPC executive quoted above.
Queries emailed to an NTPC spokesperson on Thursday remained unanswered.
Analysts remain buoyant on NTPC.
“With coal rationalization and import substitution, NTPC has been able to achieve savings of 32p/unit,” wrote JM Financial Institutional Securities Ltd in a 30 March report.
The plan will also help NTPC to better utilize the fly ash its coal-fired plants produce. Domestic coal contains high levels of ash that harms the environment.
“Presently, NTPC ash is being utilized in land development, ash dyke raising, road/rail embankments, brick/blocks/tile industries, cement industries, etc. NTPC intends to increase its ash utilization by inviting EoI from interested parties for establishing integrated cement plant/cement clinker grinding unit/cement blending unit/allied products manufacturing unit in/adjacent to NTPC power plant(s) on “built, own and operate (BOO)/JV mode,” NTPC had said.
The plants offered by NTPC to set up these cement units include Barh (1,320MW), Farakka (2,100MW), Bongaigaon (750MW), Dadri (1,820MW), Badarpur (705MW), Mouda (1,660MW) and Aravali Power Co. Pvt. Ltd (1,500MW).
“NTPC will have to reinvent itself, given the disruptions across the Indian energy sector,” said a person aware of NTPC’s diversification strategy, requesting anonymity.
India, the world’s third largest energy consumer after the US and China, plans to achieve 175 gigawatts (GW) of renewable energy capacity by 2022 as part of its commitments to the United Nations Framework Convention on Climate Change adopted by 195 countries in Paris in December 2015.
This has resulted in sub-Rs3 per unit solar power tariffs, which are lower than the average rate of power generated by NTPC’s coal-fuelled projects.