NTPC to double capex in FY12, eyes coal buys

NTPC to double capex in FY12, eyes coal buys

New Delhi: India’s top power utility NTPC Ltd plans to more than double capital expenditure in the current fiscal year as it speeds up work on projects to boost generation capacity, and is reviewing several proposals to buy coal mines overseas.

The state-run firm plans to spend 26,400 crore ($6 billion) on capital expenditure in the fiscal 2011/12 that started in April. It currently has 15 power projects under construction, with total capacity of 14,748 megawatts(MW).

“Our capacity addition target is almost doubling. Naturally the capex plan would also double," Chairman Arup Roy Choudhury told reporters.

India faces a peak-hour power shortage of nearly 14% and utility companies are expanding capacity to satisfy a rapidly urbanising population and rising industrialisation.

The country aims to halve its peak-hour power deficit within two years and add generation capacity of 100,000 MW during 2012-17, but delays relating to land acquisition, environmental issues and coal sourcing have hampered growth in recent months.

NTPC, which generates about 30% of India’s power, plans to add 4,320 MW capacity on its own and through joint-venture projects this fiscal year, and 25,000 MWs by 2017.

It has already tied up about 20,000 crore in debt from local banks to fund its capex and plans to raise $500 million through an issue of euro bonds, likely in May or June. It is also looking to raise funds from local institutions through bonds.

NTPC had cash reserves of 1,6000 crore director finance A.K Singhal said.

Eyes overseas coal assets

NTPC, which generates 85 percent of its 33.2 gigawatts capacity from coal-fired power plants, is reviewing several proposals to buy coal mines in Australia, Indonesia, South Africa and Mozambique.

“We are doing due diligence on four proposals for mines in Indonesia and Australia," Roy Choudhury said. NTPC has tied up its current coal requirements for the next two years.

India holds 10% of the world’s coal reserves, but shortfall from local supplies have grown rapidly with the increase in coal-fired power plants and the country is estimated to have imported 137 million tonnes in 2011 fiscal year.

On Wednesday, NTPC reported March quarter net profit provisionally rose 24% to 2,505 crore. Provisional sales for the quarter stood at 14,490 crore, up 17.8% from a year earlier.

However, for the full year, provisional net profit rose just 1.1% to 8,826 crore.

“The abnormal rise in profit in Q4 is mainly due to the change in accounting procedure," Roy Choudhury said.

Shares in NTPC, valued by the market at $35.2 billion, rose as much as 2.5% after the results announcement. At 2.23pm, the stock was trading at 190.50, up 1.4% in a weak Mumbai market

The stock has lost nearly 7% of its value so far in 2011, compared with a 4.6% decline in the main stock index during the same period.