National
Thermal Power Corporation (NTPC) Company SWOT Analysis Report
Strengths
- Dominant thermal generating portfolio.
- Major market presence.
- State backing.
- Stock exchange listings.
Weaknesses
- State control reduces flexibility.
- Thermal power costs on the rise.
- Lack of geographical diversification.
Opportunities
- Plant upgrading/expansion at home.
- Diversification into hydro-power.
- Plans for international portfolio.
Threats
- Strong competition in domestic power market.
- Changes in national energy policy.
Company Analysis
NTPC is in a strong position to remain the dominant force
in Indian power generation, while aspiring to build an international portfolio
of generating assets -- and to achieve a wholly integrated power business that
could include mines, trading and transmission lines. It is already building
some 11GW of new generating capacity in India, which will take it to at least
38GW and enlarge its market share to more than 25%, with new hydro-power
facilities the key thrust of near-term diversification. Further privatisation
can be expected.
Market Position
NTPC was established in 1975. It has grown into the largest
power utility in India and is the sixth biggest thermal power generator in the
world. The government holds 89.5% of the total equity in the company, with the
rest held by financial institutions and other domestic investors.
The total installed capacity of the company is 30.64GW
(including JVs), with 15 coal-based and seven gas-fired power stations. By
2017, the power generation portfolio is expected to have a diversified fuel
mix, with 53GW of coal based capacity, 10GW of gas, 9GW of hydropower, 2GW of
nuclear and around 1GW of renewable energy.
Strategy
The initial and overriding aim of the company is to
consolidate its position as India's leading thermal power generator, while
establishing a growing presence in the hydropower segment. The group also
wishes to develop a network of international power generation assets and
businesses. It wishes to diversify across the Indian power chain, including trading
and transmission/distribution, as well as coal mining.
By 2017, the power generation portfolio is expected to have
a diversified fuel mix with coal based capacity of around 53GW, 10GW through
gas, 9GW through hydro generation, about 2GW from nuclear sources and around
1GW from Renewable Energy Sources (RES). NTPC has adopted a multi-pronged
growth strategy which includes capacity addition through green field projects,
expansion of existing stations, JVs, subsidiaries and takeover of stations.
Latest Developments
NTPC has added a 500MW coal-fired unit at Korba in
Chhattisgarh, a company statement said in November 2010. The Korba project of
NTPC, based some 240km north of capital Raipur, already has three units of
200MW each in Stage-I and three units of 500MW each in Stage-II. NTPC is also
setting up a 4GW plant in Chhattisgarh's Lara village in the coal-rich Raigarh
district. The project will have five 800MW units to be built with ultra super
critical technology.
In August 2010, NTPC signed a memorandum of understanding
with the Bangladesh Power Development Board (BPDB) to set up two thermal power
projects with a total capacity of 1.32GW each in the neighbouring country. The
plants are likely to be installed on a 50:50 equity basis. The plants will use
imported coal as fuel. NTPC will also train BPDB engineers and help improve
efficiency of existing power stations.
In May 2010, NTPC announced results for the financial year
2009-2010. The company declared audited net sales of INR46,323 crore in
2009-2010 compared with INR41,924 crore, registering an increase of 10.49%.
Total Income for the year increased by 8.84 % to INR49,247 crore from INR45,246
crore.
Recent price hikes for coal and natural gas have put
pressure on generators to raise power tariffs. In November 2009, the ministry
of petroleum and natural gas proposed an increase of 33% for gas being sold
under administered price mechanism. R. S. Sharma, chairman and managing
director of NTPC, which accounts for 24% of gas-based power generation, indicated
that the rise in the fuel price will force the company to boost power charges.
NTPC's average realisation in the 2008/09 fiscal year was INR2.12 per unit. An
increase of around 5% in power tariff would probably follow if NTPC's cost of
fuel went up by 33% for gas-based power plants. Higher coal prices (+11% in
October 2009) are also likely to push power tariffs higher.
A 5% stake sale in NTPC could fetch the government
INR1.8bn, Indian Disinvestment Secretary Sunil Mitra said in November 2009. The
government has mandated more sales of shares by state firms and changed the
rules on how it can use the proceeds, as it seeks to boost revenues and rein in
a widening budget deficit.
In August 2009, NTPC signed a Power Purchase Agreement
(PPA) with Chhattisgarh State Power Distribution Company Limited (CSPDCL) for
supply of power from its Korba Super Thermal Power Station stage III (500MW).
In July 2009, NTPC announced results for the first quarter
ended June. The profit after tax for the quarter was INR219.3bn compared with
INR172.6bn in the corresponding quarter in the previous year, registering a
growth of 27.05%.
In May 2009, NTPC signed a long-term Fuel Supply Agreement
(FSA) with Coal India Limited (CIL) for supply of coal to NTPC power stations
for a period of 20 years.
According to March 2009 press reports, NTPC's Rihand
project is set for expansion in the next financial year, under which two units
of 500MW each are likely to be installed. NTPC Rihand's project general
manager, Manas Sarkar, said that two biomass units will be installed in the
Piparhar and Biar localities, and a solar power unit will be installed at Jarha
Chetwa village.
NTPC plans to borrow 70% of the total INR177bn (US$3.4bn)
it needs for expansion in FY2009/10, a senior official said in March. Some
18.2GW of capacity is under construction, the director of finance at NTPC, A.K.
Singhal, announced.
At its meeting held on January 30 2008, the company's board
of directors agreed to grant investment approval for the Bongaigaon thermal
power project (3 x 250MW stations) in the state of Assam. The current estimated
cost of the investment is INR43,753mn.
Pursuant to the signing of a MoU with Bharat Heavy
Electricals Ltd (BHEL) in September 2007, and the signing of a JV agreement in
December 2007, NTPC signed a supplementary agreement with BHEL on November 1
2008 to engage in manufacturing and supplying equipment for power plants and
other infrastructure projects in India and abroad. NTPC and BHEL are to have an
equal equity in the venture.
NTPC aims to raise its generation capacity by 22.43GW
during the 11th five-year plan (2007-2012). This capacity addition
will be 60.83% of the central sector contribution during the period. According
to a company spokesperson: 'out of the 11th plan target, 2.49GW has
already been added and 16.18GW is under construction, including 3.75GW in JV
companies.' The company planned to add 2.82GW during 2008-2009.
In December 2008, NTPC offered to reduce power tariffs by
around 50 paise for all its naphtha-based power projects, reports quoting
officials of the power utility said. The move follows the abolition of the 10%
import duty on naphtha under the government's stimulus package, which has come
as a big relief to power projects running on dual fuel.
NTPC, which has an installed capacity of around 25GW of
power, expects the cut in naphtha import duty to bring down the per unit tariff
to 55 paise (50 less than it is currently) for naphtha-based power projects.
Meanwhile, GMR, which runs the 220MW Mangalore power project, hopes the power
tariff to fall by at least 75 paise. The unit cost of power from naphtha-based
power plants is currently at the level of INR7.
According to end-2008 press reports, NTPC plans to get into
the nuclear generation business through a JV with NPCIL. The venture is set to
take up a cumulative capacity of 2GW, following which NTPC could go in
independently with its nuclear power plans on a commercial basis. The proposed
venture, where NPCIL would have a 51% stake and NTPC 49%, was likely to be ready
by early 2009 (the Minister of State for Power and Commerce Jairam Ramesh told
Business Line). NTPC would be the first firm after NPCIL to enter the nuclear
power generation business.
