NTPC undertaking first-of-its-kind restructuring

NTPC, India's largest state-owned power generator, is restructuring many of its divisions, the first such remodelling since its inception. The company, which has several divisions across power generation - conventional and non-conventional sources, power and fly ash trading, equipment sourcing and consultancy -, is merging existing units and creating new ones.

Sources in the know say pursuant to discussions with the power ministry, several defunct memoranda of understanding (MOUs) that the company has signed with states to facilitate power development and purchase will be nullified. MoUs signed for technological improvement are also likely to be reviewed by either an internal committee or the power ministry.

An email sent to the company on the issue did not elicit a response till the time of going to print.

To improve efficiency, most state divisions were being merged into a single organisation, said executives in the know. For instance, the corporate units for all thermal plants in Uttar Pradesh, one of the largest playfields for NTPC, will be represented by a single office, likely to be located at Dadri. Dadri houses a 1,820-Mw coal-based power plant of the company, which caters to the demand of the Delhi-National Capital Region.

NTPC's wholly-owned subsidiary, NTPC Vidyut Vyapar Nigam, which is involved in power trading, sale of fly ash and solar power generation, is being de-merged. Its fly ash sale division has been subsumed under the environment-management department. This entity will ensure the environmental safeguards of coal-based power plants are in place.

For its solar power segment, which NTPC plans to scale up to 25,000 Mw by 2022, it has created a separate entity, the NTPC renewable energy cell. This will identify project sites and scale, issue tenders, set up projects and bundle solar power with thermal power for sale. NTPC has already issued tenders for about 3,000 Mw of solar projects and appointed a dedicated team for this.

NTPC Electric Supply Company Ltd, which is engaged in equipment sourcing and power distribution in areas around power plants, will now largely look at rural electrification. In the past, the company's senior executives have been vocal about the need for the company to venture into power transmission and distribution.

In March, Business Standard had reported NTPC was planning to become an 'all-in-one' power utility, with interests across the supply chain. "We are in a strong position to enter related businesses. We are already venturing into coal mining. The next step is forward integration by starting our own T&D (transmission and distribution) business," a senior company official had said at that time.

NTPC plans to borrow Rs 15,000 crore this financial year, including the Rs 10,000 crore required for bonus debentures. For 2015-16, the company's capital expenditure is pegged at Rs 23,000 crore; it will rise to Rs 25,000 next year. NTPC will consider raising Rs 4,500 crore through external commercial borrowings. It is also considering raising funds through rupee-denominated bonds issued in capital markets abroad, though the amount is still under wraps.

Executives said with strong financials, the company is looking at venturing into allied businesses in the coming financial year. Solar and power transmission and distribution will be the major focus areas.

In an interview with Business Standard in May, minister of state for coal, power and renewable energy, Piyush Goyal, had said, "NTPC has very aggressive plans and I see it becoming one of the valuable companies of the world."

As of March this year, the company's overall installed capacity stood at 44,598 Mw, including coal, gas, hydro and renewable energy projects. The company commissioned its first hydro power project in Koldam this financial year.