State-run NTPC Ltd will spend 30,000 crore in 2016-17 to step up power generation capacity as electricity demand is picking up due to ongoing efforts to turn around distribution companies under the Ujwal Discom Assurance Yojana (UDAY), NTPC chairman and managing director Gurdeep Singh said.

The power utility, which accounts for about a sixth of the country’s 302 gigawatt (GW) of power capacity—mostly from coal-fired plants—is reviewing its long term corporate plan to branch out more into renewable sources of energy, in line with the government’s commitment to meet 40% of its electricity needs from non-fossil fuels by 2030.

NTPC is trying to produce 10GW of the proposed 100GW of solar power capacity that the government has planned to install by 2022.

The power generation company will diversify into fertilizer production, said Singh, entering a regulated industry where the government pays subsidy for selling plant nutrients at state-set prices.

The gap between the government fixed price and the cost of production plus a 12% return on investments is granted as subsidy based on the audited sales quantity figures.

The company’s idea is to get into businesses where returns are assured.

The diversification can be more rewarding as many chemicals which can also be produced from the fertilizer plant are not price regulated by the government and the margins could be up to 20%, Singh said at a briefing on the company’s plans for the current fiscal.

NTPC Ltd and Coal India Ltd will jointly revive Fertilizer Corp. of India’s plant at Sindri in Bihar and at Gorakhpur in Uttar Pradesh for a total investment of 12,000 crore, out of which 30% would be funded through equity contribution and the rest through debt, said Singh.

Talks are on to rope in a third partner in the fertilizer joint venture, he added.

NTPC is also exploring ways to increase its renewable energy presence. “We are reviewing our earlier long-term corporate plan of having 128GW of capacity by 2032, out of which 11% was to come from renewable energy (about 14GW). We are revisiting this plan to see how we can improve upon that. This year, we are planning to add 1,000MW of wind power," said NTPC director-technical A.K. Jha.

Industry observers said the increased focus on renewable energy has strategic significance. “The single-most important motivation to invest in solar power is energy security. India imports a large proportion of its energy sources, which burdens both household spending and government budgets," said Kameswara Rao, leader of the energy, utilities and mining practice at consultancy firm PricewaterhouseCoopers (PwC) India.

The increase in power demand is evident from the fact that in the last two months, the company’s plants have been utilising 82% of their capacity, said NTPC director-finance K. Biswal. It was 78.61% in 2015-16 against the national average of 62%.

Biswal said the company will raise 20,000 crore debt to meet the capital spending, of which about 7,000 crore will be raised from overseas lenders.

NTPC also has to revamp some of its older plants to meet new environment norms notified on 7 December 2015, which could lead to a tariff increase of 50 paise per unit to the consumer. The company is yet to decide which plants need revamp.

In view of the 24,000MW capacity under construction, NTPC does not have any plans for a share buy back, Gurdeep Singh said, in response to a question. The company expects to add 4,500MW in the current fiscal.

“Our cash position is not such that we should go for a share buyback. It is not prudent to borrow from the market for projects and buy back shares," said Biswal.

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