Power tariffs may go up by 30-40% warns NTPC

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Power tariffs may go up by 30-40% warns NTPC

Get ready to shell out more on your electricity bill. With the new pricing norm set by Coal India for pricing of coal, India's largest power producer NTPC has signaled a hike in tariff rates by as steep as 30-40%.

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Get ready to shell out more on your electricity bill. With the new pricing norm set by Coal India for pricing of coal, India's largest power producer NTPC has signaled a hike in tariff rates by as steep as 30-40%. Coal India has unveiled a new pricing system by reclassifying different grades of coal and raising their number from 7 to 17.

Arup Roy Choudhury, chairman and managing director at NTPC opposes this move by Coal India and appeals to Power Minister and Coal Minister to look into it. Commenting on financial health of State Electricity Boards and payment cycle, he clarified SEBs are paying regularly to NTPC and there are no defaults.

NTPC currently has 36000 MW capacity under operation.

Below is the edited transcript of Arup Roy Choudhury's interview with CNBC-TV18. Also watch the accompanying video.

Q: There has been some discrepancy apparently in the extent of the coal price hike, the communication from Coal India, NTPC seems to be at a bit of variants. Can you clarify what kind of price hikes are we talking about?

A: Coal India has recently expressed their intent to go in for Gross Calorific Value based pricing. We have given our feedback to them even though Coal major feels it is going to be cost neutral. But it is not exactly going to be cost neutral, as there will be substantial increases in tariff and therefore we have not accepted their proposition. We have taken it up with Power Ministry and Coal Ministry.

NTPC don't agree to this new method and we feel Coal India is not ready to implement this new method as well. It requires certain technical requirements at their pit heads, at their mining stations. It will be a little premature for me to comment but on an average we feel NTPC power might go up by 30-40%.

2Q: Is it up to any resolution though because our last communication with Coal India seems to suggest that they had already initiated those price changes from January?

A: I don't think they can do it unilaterally. Some state governments have already taken a stay from their respective High Courts, so Coal India cannot put it unilaterally. Although it makes no difference to NTPC as such but I cannot be immune to my stake holders who consumes our power. We are concerned about the way Coal India has gone for new pricing mechanism.

Q: There was an important meting with the Prime Minister with regards to power issues and one of the prickliest issues is with State Electricity Boards (SEBs), have you seen any improvement in the situation with regards to the payment cycle on SEB, are you hopeful of any resolutions this year?

A: I was not a part of the meeting so I won't comment on that. But the power sector in the country requires some kind of infusion from top most level of the country. I was glad to read that the Principal Secretary to the Prime Minister will now be looking into the problems.

If I am asked to express our problems, I will definitely go and tell him. But this is a multi-state, multi-ministry problem; it cannot be sorted out just like that. SEB is one end of the spectrum; there are huge problems with coal, ash and transportation. Definitely SEBs financial health by and large is their 'own doings' because they have not been revising their tariff.

Some of them have already taken the initiative. The Appellate Tribunal did give them a good order based on which they should have started taking initiatives. Some states are in election mode, so they are not able to take it at the moment. But, as far as we are concerned we have no defaults, we are getting payments from all the states. There is no area of concern as far as NTPC is concerned, but on the total power sector it is a huge concern.

Q: There also seem to be indications that come the budget there maybe some decisions or action taken with regards to power equipment. Would you expect to see the government slap the import duties that have been talked about or it has now become a neutral sort of ratio because of the way the currency has been moving?

A: When I was asked to come into the meeting and I had expressed that we had are all looking at the possibility of getting the cheapest equipment in the country with very high quality. So, that should be our lookout and taxation should be designed to that affect. I already give incentive to domestic producers - there is price preference given to them.

As far as my purchases are concerned, if there is taxation imposed by the government, they will loose the price preference. So essentially for NTPC orders there won't be much affect, it will remain what it is. But as a nation we should proceed towards getting cheapest possible equipment because we are looking at cheapest power generation cost.