NTPC to float separate arms for hydel power, power trading

Mumbai: National Thermal Power Corporation (NTPC) is exploring possibilities to float separate arms for its hydel power and power-trading businesses into which the corporation entered recently.

Both these new divisions will be incorporated as subsidiaries of NTPC. At present, the company is negotiating its first power-trading deal for its 350mw Kayamkulam plant with Tamil Nadu and Karnataka.

The idea is to average out the cost of power to the two states as power from the Kayamkulam plant would cost around Rs 4 per unit, while the power supplied from the eastern grid would cost just about Rs 1.70 per unit. “The final cost for the two states would be in the region of Rs 2.50 per unit,“ say merchant banking sources advising NTPC on these new ventures.

“NPTC's focus is mainly in the power-generation segment. Floating new subsidiaries for diversified businesses makes sense for the corporation as it would not affect the company's balance sheet directly,“ the sources say.

They add that NPTC's move will not create any policy-related issues because Power Trading Corporation and National Hydroelectric Power Corporation (NHPC), two independent companies in power-trading and hydel power businesses, are not given any monopoly status over their receptive segments.

NTPC already has initiated steps to pursue small hydroelectric projects. The corporation is currently implementing the 800mw Kol Dam Hydro project in Himachal Pradesh and the company was also vigorously pursuing various hydel schemes in Uttaranchal, Karnataka, Madhya Pradesh and Himachal Pradesh. The sources say there is scope for five or six more entities to enter the hydel business along with NHPC and NTPC.

NTPC is expected to go in for an international equity float early next year. The corporation plans to raise close to Rs 13,000 crore through equity issues in the international and domestic markets. Currently, the company is in talks with various merchant bankers to mange the issue.

The corporation, which has so far raised money through fixed deposits, will have to raise equities to meet its capacity addition targets for the Tenth Plan and other diversified activities. NTPC plans to add more than 10,000mw to its existing capacity of 20,092mw in the coming five years.