India’s largest power generation company, NTPC Ltd, hopes to attract and retain hydroelectric power project and coal-mining engineers with additional allowances as much as 60% more than those its other employees currently get.
Taking this route will help avoid having to deal with the long and complicated process that a public sector undertaking (PSU) such as NTPC faces in increasing salaries per se of key employees.
“We are planning to give additional allowances to our personnel who are setting up hydroelectric projects. As these projects are in far-flung areas and at great heights, they need to be adequately compensated,” said NTPC human resources director R.C. Shrivastav. It is working out a similar arrangement for engineers to develop its captive coal blocks.
In order to increase salaries, government-owned units such as NTPC have to approach the department of public enterprises (DPE) that oversees public sector administration. In turn, DPE makes a representation on behalf of all its units to the Pay Commission. However, in the case of allowances, the company’s board has the power to approve it.
To fight growing staff attrition, PSUs are lobbying the government to ask the Sixth Pay Commission to incorporate a differential pay structure favouring employees with technical expertise, as reported by Mint on 16 July.
“Giving special allowances is a good practice for organizations to identify critical and ‘hot’ skills in line with the market for itself and pay special premiums for these positions,” says Hema Ravichandar, a Bangalore-based independent consultant. “It helps to pay this premium in form of an allowance than as a part of the salary to an employee as long as the person stays in that role.”
NTPC has a power generation capacity of 27,404MW and plans to become a 50,000MW firm by 2012. Of the 22,596MW it plans to add in the next five years, 15,180MW will be through coal-based generation and 4,550MW through gas-based generation, the balance being met with hydro-power.
It is betting big on hydro-power generation and plans to set up two such projects in Arunachal Pradesh. At present, it is constructing a hydel project at Koldam (800MW) in Himachal Pradesh, expected to be completed by 2008.
Coal mining is critical to NTPC as it has a total coal requirement of 100 million tonnes per annum (mtpa), of which around 4mtpa is imported. It plans to invest about Rs10,000 crore to produce 50mtpa of coal by 2013.
The government has allocated it eight captive coal blocks. Developing its own blocks will help it save 15-20% in costs.
NTPC says it has lost 100 engineers in the past year to firms such as Tata Power Ltd, Reliance Energy Ltd and Lanco Infratech Ltd. “Additional compensations will help in motivating people as their satisfaction level will go up. We will use such ways to compensate people differently based on location and type of work,” Shrivastav added.