NTPC is exploring the possibility of buying out big power projects in central and south India after being approached by banks that have lent heavily to these projects. "Banks have come to us with proposals to take over projects," NTPC chairman Arup Roy Choudhury said.
A number of private projects, which have become non-performing assets (NPAs) to lenders, have been offered to NTPC.
Promoters of many projects have been unable to pay their debts because of delays in starting production. Besides, loans taken in dollars have become costlier because of the rupee depreciation, making it tougher for the borrowers to pay back.
Sources said banks were looking for buyers for Lanco Infratech's 1200 megawatt (MW) Udupi project and the Amarkantak unit, among others.
NTPC plans to use part of its cash reserves of over Rs 18,000 crore for acquisitions and to buy coal mines.
The PSU has earmarked Rs 20,200 crore as capital expenditure this fiscal.
"We would look at super-critical power assets with capacity above 500MW. We are looking at assets, which have fuel linkages and all approvals in place," Choudhury said.
NTPC also wants equipment lasting for at least 40 years and compatible with the machinery it uses in its plants.
Analysts said such a strategy would help companies such as NTPC add capacity at a cost lower than setting up a project as developers might offer the projects at a discount.
According to estimates, loans amounting to Rs 50,000 crore to power projects totalling over 15,000MW of capacity could become NPAs.
Choudhury said, "We are open to acquiring a distressed project if the valuations look good and we are allowed to examine the equipment of the plant."
Sources said NTPC would be averse to buying out projects using Chinese equipment as it did not match with the PSU's standards and were of dubious quality.
"For Chinese equipment projects, we will be very cautious and we will examine it very closely," Choudhury said. He added that he "wanted NTPC to keep itself fluid and liquid" as it needed to quickly work out plans to buy domestic coal mines and strategic stakes in overseas mines besides tapping project opportunities.
Many private players are under financial pressure because of regulatory delays holding up their projects. The delay in payments by state electricity boards has added to the woes.
"Power is a long gestation business and one needs deep pockets to be in it. Many of those who entered the business in a hurry in the last decade do not understand the nature of this business nor are able to wait for 5-7 years before their assets start giving returns," said Sudipto Bose, an independent merchant banker.
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Source - Telegraph