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Home News Power Sector News NTPC lashes government over power crisis

NTPC lashes government over power crisis

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NTPCThe head of India's largest power producer blamed the government for chronic fuel shortages that have exacerbated the country's energy crisis and put off steps to increase power generation as he repeated a warning NTPC would fall far short of its own target to up capacity. Arup Roy Choudhury, chairman of state-run NTPC, said a climate of fear following a spate of corruption scandals had frozen officials into inaction on environmental clearances, land acquisition and allotment of coal mines.

"Public sector companies like me are under tremendous pressure because of the environment of suspicion and mistrust," Choudhury told Reuters in an interview at the company's headquarters in New Delhi.

"It becomes a game of snakes and ladders, where you overcome a few steps, (and then) suddenly you find yourself at the bottom of the heap, trying to work yourself through again."

Choudhury reiterated that NTPC, which owns about a fifth of India's generation capacity, would miss its target of adding 25,000 MW to capacity by 2017 and was now aiming for just 14,500 MW.

India relies on coal for two-thirds of its power generation, and will need even more for the additional capacity planned to tackle a power deficit that sometimes reaches as high as 13 per cent, hampering industry and plunging millions into darkness.

An estimated 85 per cent of the 76,000 MW of new capacity planned for installation over the next five years will be generated by coal.

Hand-to-mouth for fuel

India sits on the world's fifth-largest reserves of coal. However, output of the state's near-monopoly, Coal India, has stagnated and, combined with a slide in gas output, power producers have limited access to cheap local fuel supplies.

The alternative is to import coal at higher prices that raises costs for struggling distribution utilities.

Coal shortages knocked 7.8 billion KWh off NTPC's capacity utilisation in the past year, denting its profit.

"I'm the largest generator in the country, but still I'm hand-to-mouth in fuel," Roy Choudhury said, bemoaning the country's failure either to increase coal output or, like China, look abroad to purchase resources for industry at home.

Prime Minister Manmohan Singh's corruption-plagued government has faced heavy criticism for a policy paralysis that has contributed to a slowdown in economic growth, and the power sector is one of the most severely affected.

According to a draft report by state auditors that was recently leaked to media, the government had lost $211 billion in potential revenue by allocating coal mines at its discretion instead of auctioning them off, bringing a "windfall gain" to companies like NTPC.

After a furore over the report, the government quickened the pace of the auction process for captive mines and has delayed the handover of mines allocated earlier.

"Due to the environment of mistrust" allocation has stopped, Choudhury said, noting that formal approval for concessions approved in principle a year ago were frozen.

The fate of projects with capacity of about 8,000 MW depends on mines that received in-principle approval last September. Projects for a further 2,600 MW are linked to three mines that were seized from NTPC due to a lack of progress and then reallocated last year, but formal allotment has still not come.

While private players such as Tata Power, Reliance Power (RPOL.NS) and GVK Power (GVKP.NS) have secured coal mines overseas, NTPC - which is several times their size, with a market value of $23 billion - has not bought a single mine abroad, largely due to state control that slows decision-making.

"If I were to purchase mines abroad today and coal prices were to fall after a few years, I may be questioned for the deal," said Choudhury.

"If the government really wants the public sector to do business, it has to give it support," he said.

He said the government should establish ways to help state-run companies resolve issues quickly but instead there was a sense that "somebody is holding a Damocles sword over your head, waiting for you to make mistakes and catch you".

Source- IBN Live


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