Production cut as state electricity boards shun costlier power being generated due to use of expensive imported coal
Tue, Oct25, 2011
New Delhi: NTPC Ltd, India’s largest power generator, may fall around 18 billion units short of its potential production capacity in the current fiscal, as state electricity boards (SEBs) shun purchases of expensive electricity produced with imported coal.
The company is bracing for the production shortfall, equivalent to nearly half of Delhi’s annual power consumption, at a time when India is battling a power deficit.
The expected shortfall in power generation by the state-owned utility is a 38% rise over the last fiscal, when it fell short of its generating capacity by 13 billion units.
With the supply of domestic coal at a low, NTPC has to burn imported coal that is increasing the cost of power. SEBs’ aversion to buying expensive power has already resulted in NTPC reducing its power generation in the current fiscal to the tune of 7 billion units, which is now expected to more than double.
“Since we have adequate amount of imported coal, we are ready to supply power generated from that coal, but the SEBs are unwilling to buy expensive power, leading to our stations backing down,” said a senior NTPC executive on condition of anonymity.
India has an annual electricity requirement of 700 billion units, of which around 220 billion units is supplied by NTPC.
Cutting the power generation will dent revenue at NTPC but not its profit, because state utilities have to pay a fixed amount to the power producer even if they do not draw any electricity. The variable payment to NTPC includes the cost of fuel to generate the power. NTPC posted a net profit of Rs. 6,011 crore on revenue of Rs. 43,337 crore in the year ended 31 March.
A spokesperson for NTPC said it’s difficult at this stage for the utility to comment on production for the year.
“The increase in variable price is largely due to increase in imported coal use,” the NTPC spokesperson said.
NTPC needs 166 million tonnes (mt) of coal in the year to 31 March, of which around 16 mt has to be imported. The company has already placed orders for importing 12 mt.
While electricity tariffs at NTPC’s stations differ from project to project, the average tariff per unit of electricity charged by the utility is around Rs. 2.63. Of this, the fixed cost is Rs. 1 per unit, with the balance being the fuel cost.
“While imported coal is expensive, even the price of domestic coal has gone up and states don’t want to buy expensive power,” said a second NTPC executive, who too didn’t want to be named. “A 10% increase in blending imported coal leads to a tariff increase of 30-35 paise per unit.”
SEBs across India are saddled with losses because of power theft during transmission and distribution, billing inefficiencies and, more importantly, because they have to buy expensive power to tide over short-term deficits.
The “situation will only improve for utilities like NTPC once the SEB finances improve”, said a senior power ministry official, requesting anonymity.
India is battling a power deficit because of coal shortages on account of faltering local production.
In what could be the worst case of coal shortage faced by India’s power sector, 41 thermal projects have less than a week’s coal reserves to support power generation and 28 projects have less than four days’ stock.
Power projects situated near coal mines are supposed to have a reserve of two weeks while those located far from the mines should have at least a month’s supply in reserve. India has 75 thermal power projects that depend on Coal India Ltd for fuel supplies.
“At the end of the day, we are not getting the required amount of domestic coal,” said a third NTPC executive, also requesting anonymity. “That results in us having to forego revenue as we generate less than what we are capable of.”
NTPC, which generates 8 megawatts (MW) of every 10MW it produces by burning coal, is looking to increase installed capacity from 34,854MW now to 75,000MW by 2017 and 128,000MW by 2032.
Coal India has an 82% share of the country’s coal production, but has been unable to keep pace with rising demand. It is to supply NTPC 145 mt in the current fiscal year.
sourced livemint
Tue, Oct25, 2011
New Delhi: NTPC Ltd, India’s largest power generator, may fall around 18 billion units short of its potential production capacity in the current fiscal, as state electricity boards (SEBs) shun purchases of expensive electricity produced with imported coal.
The company is bracing for the production shortfall, equivalent to nearly half of Delhi’s annual power consumption, at a time when India is battling a power deficit.
The expected shortfall in power generation by the state-owned utility is a 38% rise over the last fiscal, when it fell short of its generating capacity by 13 billion units.
With the supply of domestic coal at a low, NTPC has to burn imported coal that is increasing the cost of power. SEBs’ aversion to buying expensive power has already resulted in NTPC reducing its power generation in the current fiscal to the tune of 7 billion units, which is now expected to more than double.
“Since we have adequate amount of imported coal, we are ready to supply power generated from that coal, but the SEBs are unwilling to buy expensive power, leading to our stations backing down,” said a senior NTPC executive on condition of anonymity.
India has an annual electricity requirement of 700 billion units, of which around 220 billion units is supplied by NTPC.
Cutting the power generation will dent revenue at NTPC but not its profit, because state utilities have to pay a fixed amount to the power producer even if they do not draw any electricity. The variable payment to NTPC includes the cost of fuel to generate the power. NTPC posted a net profit of Rs. 6,011 crore on revenue of Rs. 43,337 crore in the year ended 31 March.
A spokesperson for NTPC said it’s difficult at this stage for the utility to comment on production for the year.
“The increase in variable price is largely due to increase in imported coal use,” the NTPC spokesperson said.
NTPC needs 166 million tonnes (mt) of coal in the year to 31 March, of which around 16 mt has to be imported. The company has already placed orders for importing 12 mt.
While electricity tariffs at NTPC’s stations differ from project to project, the average tariff per unit of electricity charged by the utility is around Rs. 2.63. Of this, the fixed cost is Rs. 1 per unit, with the balance being the fuel cost.
“While imported coal is expensive, even the price of domestic coal has gone up and states don’t want to buy expensive power,” said a second NTPC executive, who too didn’t want to be named. “A 10% increase in blending imported coal leads to a tariff increase of 30-35 paise per unit.”
SEBs across India are saddled with losses because of power theft during transmission and distribution, billing inefficiencies and, more importantly, because they have to buy expensive power to tide over short-term deficits.
The “situation will only improve for utilities like NTPC once the SEB finances improve”, said a senior power ministry official, requesting anonymity.
India is battling a power deficit because of coal shortages on account of faltering local production.
In what could be the worst case of coal shortage faced by India’s power sector, 41 thermal projects have less than a week’s coal reserves to support power generation and 28 projects have less than four days’ stock.
Power projects situated near coal mines are supposed to have a reserve of two weeks while those located far from the mines should have at least a month’s supply in reserve. India has 75 thermal power projects that depend on Coal India Ltd for fuel supplies.
“At the end of the day, we are not getting the required amount of domestic coal,” said a third NTPC executive, also requesting anonymity. “That results in us having to forego revenue as we generate less than what we are capable of.”
NTPC, which generates 8 megawatts (MW) of every 10MW it produces by burning coal, is looking to increase installed capacity from 34,854MW now to 75,000MW by 2017 and 128,000MW by 2032.
Coal India has an 82% share of the country’s coal production, but has been unable to keep pace with rising demand. It is to supply NTPC 145 mt in the current fiscal year.
sourced livemint
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