Do not have liberty to freely raise tariffs: NTPC

NTPC investors should not get disheartened about the CERC proposals because the company will be able to give them same service, says the company CMD.

January 17, 2014 / 11:43 IST

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The draft CERC guidelines aimed at fixing tariffs for the power sector for the next five years is likely to affect the country's largest power generator, NTPC. The stricter norms under CERC regulations have the potential of making power plants more efficient but in the interim, their profits may take a hit. Talking to CNBC-TV18, NTPC CMD Arup Roy Choudhury said the proposals, when effected, will not hit financial balance of the company.

Claiming that NTPC has a very good working model, Choudhury said it has the ability to raise money from its books. "We do not go back to the government for money." So if anything is looking detrimental to financial balance of NTPC, can be discussed with CERC to take it forward, he said. "And that is why we have concluded that investors should not get disheartened. We are quite confident that we will be able to give them same service."

He said the regulation will be effective April 1. At the moment CERC is looking at a presentation by all the stakeholders and NTPC is also making one, which will be followed by discussions, Roy Choudhury said. "I am expecting by February or end-March the finalization will take place and they will publish their regulation by April 1. That is what the timeline looks like."

He clarified that NTPC is a company under regulatory mode. Whatever money that is available in the balance sheet is going to be used for project expansions. Whatever money it raises from domestic and international projects will be solely based on balance sheet. "We raise money today at less than 8 percent which goes to show lenders' confidence on us." Roy Choudhury informed that company has to maintain debt equity of 30:70 which is necessary to achieve its target by the end of 12th Plan. "We do not have an ad-hoc situation of raising our tariff whenever we want. we are under regulatory regime."

Drawing a comparison with Coal India, Choudhury, he said CIL has the liberty to increase prices anytime and increase their cash balance on their books. "We do not have that liberty. We are working under regulator which strictly regulates all parameters of our business."