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| EXCLUSIVE | |||||||||||||||||||||||||||||||||||||||
| NTPC has Always Converted Challenges into Opportunities | Interview with T. Sankaralingam, CMD, NTPC Limited | ||||||||||||||||||||||||||||||||||||||
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What is the overall scenario of power sector in India? The country has 135,006 MW of installed
capacity today. However, there is energy shortage of 7.9% amounting to
about 19 billion units and peaking shortage of 13.4% amounting to
13,686 MW.
In order to meet the growth requirement and to ensure that power development rapidly reaches every sector of the economy and every segment of the society, including the under privileged, the Government has set the objective of reaching power to all by 2012. Accordingly, the Government has set a capacity addition target of 78,577 MW during 11th Plan period (2002-2007). How does Indian power scenario compare with the rest of the world? With installed capacity of over 135,000
MW, India has the world’s 5th largest generation capacity. India’s
T&D network of close to 6 million ckt km is the 3rd largest in the
world.
However, per capita consumption of electricity in India is among the lowest in the world. It is about 600 kWh which is rather low compared to even developing countries like Malaysia (3196 kWh), Brazil (2246 kWh), China (1440 kWh). The global average per capita consumption is about 2490 kWh. Comparison of India’s per capita consumption with the consumption levels in the developed countries reveals a huge gap. Canada (about 18000 kWh), USA (about 14057 kWh), Australia (about 11446 kWh) and Singapore (about 8000 kWh) are consuming electricity at an entirely different level, nearly 15 times and even more than that of India. However, Indian power sector is projected to grow at 9% per annum. Along with China, India is likely to develop power capacity at a fast pace and in large volumes. What are the key issues facing Indian power sector today? Performance of the distribution segment;
rural electrification; capability building; availability and
affordability of fuel and availability of equipment are among the key
issues facing the power sector today. The positive, though slow,
improvement in the distribution sector and the consequent state of
financial health of most of the distribution utilities inhibits the
satisfactory completion of the electricity value chain.
Investors feel concerned about the payment security issues in the power
sector. Although things are improving, there is need to
accelerate the reform in the sector and reduce AT&C losses.
With the aim of improving the
distribution infrastructure and aiding the reform efforts of the
States, Government of India had launched the Accelerated Power
Development and Reforms Programme (APDRP). NTPC is also closely
involved with the implementation of this scheme and we have been able
to help the utilities in bringing down the distribution losses in more
than 150 towns covered under APDRP to below 15%.
About 56% of rural households have not
been electrified even though many of these households are willing to
pay for electricity. As many as 20% of villages are still
un-electrified. National Electricity Policy calls for determined
efforts to ensure rural electrification for securing electricity access
to all households and also to ensure that electricity reaches poor and
marginal sections of the society at reasonable rates within next five
years. Accordingly, creation of reliable rural electrification
system has been taken up under the Rajiv Gandhi Gramin Vidyutikaran
Yojana (RGGVY). NTPC is associated in electrification of about 40,000
villages in 6 States under the Rajiv Gandhi Gramin Vidyutikaran Yojana.
Nearly 3,000 villages and 60,000 below power line households are
targeted in 2007-08. The Yojana targets to electrify villages within a
period of five years.
Another major issue which has already
started impacting the power sector is the human resource crunch. This
is very critical, and more so in view of the large capacity addition
plans. Today most of the sectors, including the power sector have to
handle the issue of talent migration, especially at the entry level of
executives, because of the attractiveness of other industries like IT,
Telecom, etc. The power sector would need a large number of people both
at managerial level as well as those in the skilled technician grade.
This is an area which would need large scale capability building,
because we need people to build the power plants, operate and maintain
these at very high efficiency levels.
Availability of fuel in adequate
quantities and at affordable prices remains the key to having adequate
power supply by the year 2012. Today, the fuel component in cost of
power generated from thermal power plants is more than 70%. Over the
last few years it has continuously moved higher and higher. Since 2000,
the fuel cost component in NTPC’s average cost of supply alone has
increased by more than 50%.
Around 10% of the national installed
capacity is gas based, which faces major constraints in producing and
dispatching power on account of high fuel costs. Historically, the gas
power plants were supplied gas by State owned companies under the
Administered Price Mechanism (APM). Over the last few years, the
supplies under APM have reduced considerably, forcing the generators to
purchase gas from other sources. Even the domestic producers/ suppliers
of gas now wish to link the gas price to international crude price,
even though natural gas is a wholly indigenously produced
commodity. Natural gas resource of the country should be
treated as valuable national asset which should be allocated and
utilized in line with the larger economic objectives of the country
including effective power sector development.
Apart from gas, adequate quantity of
coal (which would remain the prime source of power generation in our
country) is essential so that the power plants are utilized to their
maximum potential. Over the last two years, the Government has started
allocating coal blocks to power utilities, which is a very positive
development. At NTPC, we have a target of having a coal production
capacity of around 50 MTPA by the year 2017, which would account for
20-25% of our total coal requirement.
Adequate and timely availability of main
plant equipment i.e. Boiler-Turbine-Generator (BTG) as well as Balance
of Plant (BoP) will be very critical for the accelerated growth of the
sector envisaged for the future.
What are the threats and challenges ahead for NTPC? How well is NTPC geared up to face future challenges? NTPC has always converted challenges
into opportunities. This is a proven strength of NTPC. There are no
threats to the Company. The Company is operating in a sector which is
poised for major growth.
However, the Company is geared up to
secure its market leadership and to further strengthen its position as
a premier power utility in the country with strategies and execution
plans in line with the emerging power market dynamics.
NTPC has made strategic entry into coal
mining with a view to ensuring fuel security and deriving economy and
stability of pricing. And its coal mining activities are going ahead
full throttle. NTPC is also exploring opportunities to acquire
coal mines abroad and is looking for partners with proven expertise to
acquire and develop coal mines.
Similarly, for meeting long term
requirement of gas supply for its gas based power stations, NTPC is
exploring options for participation in the gas value chain, including
opportunities abroad.
Besides diversifying into backward
integration areas of coal and gas, NTPC is developing substantial hydro
power by way of lateral diversification. We also plan to develop at
least 1,000 MW of capacity based on new renewables by 2017.
By way of forward integration, NTPC has
formed a trading subsidiary ‘NTPC Vidyut Vyapar Nigam Limited’ (NVVN)
and NVVN has made substantial progress in the business. NTPC is also
setting up Merchant Power Plants to sell power in the de-regulated
segment of the power market.
NTPC places strong emphasis on its human
resources, its key competitive strength. In order to attract and retain
talent, NTPC realigns its package of benefits and developmental
initiatives. It is taking steps to manage the aspirations of its
employees through innovative HR practices.
Do you suggest any measures to improve the status of the power sector in India? There is a broad consensus on the
measures to improve the sector. Bringing AT&C losses to a level of
at lease 15% is a very important task to be done. For this, there is a
need to effectively implement the modified Accelerated Power
Development and Reform Programme (APDRP).
Improvement in the plant utilization by
the State utilities will also help augment supply with less cost
compared to setting up new power plants. Measures like Partnership in
Excellence (PIE) initiated by the Ministry of Power are a good example
of the effectiveness of this approach. PIE was launched to improve the
performance of under performing stations of State utilities through
peer interaction. 22 Units operating at less than 60% PLF have been
identified. NTPC has been partnering 13 power stations (42 units) for
improving the aggregated present generation capacity of over 4700 MW.
Power plants entrusted to NTPC recorded net increase of approximately
2833 million units during 2006-07, equivalent to 430 MW capacity
addition at 75% PLF.
Effective rural electrification is also
an important measure to improve the quality of life of the rural
people, especially those in remote areas and those who are
underprivileged. In this context, Rajiv Gandhi Grameen Vidyutikaran
Yojana is a welcome initiative.
A number of other specific measures can
go a long way in improving the effectiveness of the sector and thereby
enhancing its contribution. These include:
How do you look at the potential for the growth of the Indian power sector in the changing economic environment? The booming Indian economy and the
encouraging investment climate are conducive to growth of the sector.
During the 10th Plan period (2002-07),
the country achieved its highest ever GDP growth rate of 7.6%. GDP
growth for the year 2006-07 was 9.4%. During the 11th Plan (2007-12),
the country aims to achieve faster and more inclusive growth. GDP
growth target for the 11th Plan is 9% and the growth is expected to
reach double digit by the end of the Plan. The economic boom will fuel
power demand at a fast pace. The power sector has to cope with the
demand and facilitate the unprecedented economic growth.
In order to meet the growth requirement
and to ensure that power development rapidly reaches every sector of
the economy and every segment of the society, including the under
privileged, the Government has set the objective of reaching power to
all by 2012. Accordingly, the Government has set a capacity addition
target of 78,577 MW during the 11th Plan period (2002-2007).
Probability of achieving the target for the 11th Plan is high because
learnings from the previous Plans have been utilized while fixing
targets and concrete advance actions have been taken for placing orders
for the power projects to be implemented during the Plan.
During the 12th Plan, the capacity
addition target is expected to be about 82,200 MW. According to the
projections for electricity requirements as per the ‘Integrated Energy
Policy’ of the Planning Commission, the total required installed
capacity by the year 2031-32 will be 778 GW at 8% GDP growth rate and
960 GW at 9% GDP growth rate.
What are NTPC’s future plans? The Vision of NTPC is to be “A world
class integrated power major, powering India’s growth, with increasing
global presence”.
NTPC has at present an installed
capacity of 27,904 MW, including 1054 MW from JVs. We plan to be
a 50,000 MW Company by 2012 and 75,000 MW Company by 2017. The company
has an ambitious capacity addition programme of over 22,000 MW during
11th Plan. Currently 13,360 MW is under construction and for the
remaining 9,000 MW; orders are going to be placed by the end of the
year.
NTPC has a well conceived Corporate Plan
covering the period 2002-2017. The Plan lays down the broad contours
for the Company’s future growth and diversification. By the year 2017,
the profile of NTPC will include the following features:
What is the NTPC’s growth rate since its inception? In terms of capacity addition, NTPC’s
CAGR has been about 20% since inception, and in terms of electricity
generation, the CAGR has been about 24%.
What is your opinion on the developments concerning policy and regulation in the power sector? We feel that the enabling legislation,
policies and regulatory interventions are all in place. The Electricity
Act 2003 (EA2003), the National Electricity Policy, the National Tariff
policy, Rural Electrification policy, guidelines for competitive
bidding, grid code, multi year tariff regulations, integrated energy
policy, etc are now all in place. Consequent to the enactment of
EA2003, the Government has framed various rules and guidelines for
removal of difficulties, State regulators have started issuing open
access regulations and Appellate Tribunal for Electricity is fully
functional.
The National Electricity Policy, which
outlines the broad aims and objectives of the sector, amongst other
things, sets the following major targets:
The Government has itself taken the lead
in attracting new investment through UMPP. The Regulator has taken a
proactive approach towards trading and is also considering proposal(s)
for setting up power exchange, which would enable real time trading of
power. The development of the transmission system along with a much
higher level of inter-regional transmission capability and the
availability of open access is to improve the utilization of the
generation assets.
To sum up I would say, that on the
policy and regulatory front there has been significant progress, the
private sector participation is looking up. But there is scope for
substantial progress further.
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| RNI No.
WBENG/2008/27737 |
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