NTPC may abandon two units if states renege on PPAs

NTPC may not go ahead with the construction of the upcoming 1,980-MW Nabinagar-2 and 1,600-MW Katwa thermal power generating units in Bihar and West Bengal, respectively, until it receives “re-confirmation” from the beneficiary states if they still require power from these projects.

Power purchase agreements (PPAs) for these projects were signed with West Bengal, Bihar, Odisha, Sikkim and Jharkhand in 2010.

The development comes after Odisha’s energy minister Susanta Singh recently requested Union power minister RK Singh to cancel PPAs between the state and NTPC for the aforementioned power plants, along with the 1,320-MW Pirpainti project, on the back of surplus generation capacity in the state. “NTPC is presently not pursuing the Pirpanti project,” a company spokesperson told FE.

Power tariff for these projects will be decided by the Central Electricity Regulatory Commission when they start to supply electricity after their completion. Sources said that Odisha has to pay around `1,000 crore every year to NTPC as ‘fixed cost’ even if they do not evacuate electricity from the Farakka, Kahalgaon and Barh units, based outside the state.

Along with the Nabinagar-2, Katwa and Pirpanti power plants, the state-owned power generation behemoth had also signed PPAs with Gridco, Odisha’s state-owned power transmission company, in 2010, for procuring power from NTPC’s 1,600-MW Darlipali and 3,000-MW Talcher plants in Odisha. The Darlipali plant is under construction and the Talcher unit is supplying power at competitive rates ranging between Rs 2.42/unit and Rs 2.66/unit.

Rampant generation capacity addition in the wake of less-than-expected demand has been cited as a major reason behind the current stress in the power sector, with assets worth `2.5 lakh crore at risk of getting converted into NPAs.

NTPC Limited