Rs 5000cr in the bag, NTPC may announce buyouts this qtr

Below is the transcript of the interview on CNBC-TV18.

Latha: Let me start with an advertisement of yours a few months back offering to buy power plants from companies who want to sell their plants, what has been the response, have you shortlisted any purchases?

A: Absolutely, there is a lot of work is going on we have got a huge response, 54,000 megawatts (MW). We are progressing, we have a consultant, we have our expert visiting all the manufacturers who have supplied equipment to these people who have offered us plants.

It might look as if we are taking time, but one has to understand for a moment that we are now 40 years old and we are running power plants for 35 years. Some of the plants that we are running are more than 45 years old. So we would like to assess the plants on technicalities. Financially it is quite easy to assess, it is not a difficult thing, to see that we can run these also for the next 40 years.

If we can’t, there is no point in taking up because our reputation is at stake, and as you know that the manufacturers are from various countries, so people are going and having a look at them and once we are fully satisfied, on the technical angle, only then is the question of discussing the financials.

Latha: What is the amount of money that you have set aside for this?

A: I wish I could tell you that, but we had thought that we will acquire or invest about Rs 5,000 crore in the fiscal which is gone by, but we could not arrive at a total closure. However, I would say this much amount is very near. We want to do it extremely soon, it might happen any day.

Sonia: When will you know how much you are finalised in terms of purchase, will you know by June or even earlier?

A: I would say by June, we should be able to give you a very good picture and I would not be surprised if we have already acquired something in Q1 itself.

Sonia: Recently you have been allotted about 5 captive blocks, what is the timeline to get all the documents in place for example land acquisition etc? Have you given out any mining orders?

A: No, as far as we are concerned, all our mines where land had been acquired, rather the payments have been made to the state government, the forest clearance has been taken so it is only the mining contract which has to be given. We are not miners, so we will be appointing mine developers and operators (MDO), and that takes standard time it should happen in the next couple of months, I would say in terms of months only.

So there should not be any problem, so we want to see that the activities start and some mines like our Pakri Barwadih already is in a very advanced stage of coal can be produced. So I think, we are looking towards the production of coal, very soon, a little bit this year and going forward more next year.

But as you must have seen, there is a lot of extra coal production by Coal India and the beneficiary has been NTPC. So we are getting a lot of coal through the road transport, through other modes, so coal is coming and as on 30th March we had the largest stock of coal ever in our plants.

Latha: Coming back to your own mines, which mines will you commission by FY16 end, how much will you mine and likewise what is the mining timetable for FY17?

A: In FY16, only one mine will start producing, which is Pakri Barwadih and that should initially be only about 3 million tonnes. Our total capacity is about 100 million tonnes. We would like to get to about 70 million tonne by FY18-FY19.

Latha: Market is pretty unhappy that you haven’t added much power generation capacity in FY15. considering that you commissioned 6 gigawatts of capacity in FY14, what is going wrong?

A: This year what we had targeted, we almost achieved it. We could not do one project, in Bihar, Nabinagar, where we could only reach up to boiler light-up because there was severe land problems. This is one of the projects, which is under the PM’s review also and now Bihar government has given us some dates.

However, we met all our targets that were scheduled. In fact, yesterday we got our first hydro project, Koldam, commissioned yesterday. That was the first hydro of NTPC ever. So we did all that but if you look at the numbers, if you are comparing numbers to last year it is less because our acquisition process could not be completed.

Number two is: as I had explained earlier we had to give up the expansion in gas. So the gas ones which come in about two years time were to have been delivered last year and this year, but going forward we have 23,000 megawatts under construction.

Sonia: How much did you add last year i.e. in FY15?

A: This FY15 the number would be somewhere about 1,700-1,800 or between that.

Sonia: How much will you commission in FY16 and FY17?

A: I keep talking about this, that power plant commissioning is not exactly mathematical. I mean you cannot say that in January this will get commissioned or in February that will get commissioned, but we are targeting very aggressively and I think this year we will go between 3,000 and 4,000.

Latha: You have the distinction of completing 14 years as a CEO in public sector undertaking (PSU) companies, 9 years in National Buildings Construction Corporation Limited (NBCC) and five years now in NTPC and in NBCC you converted a loss-making company into a profit-making one, it is now a multibagger, can you make an NBCC out of NTPC as well?

A: The biggest challenge when I joined was that we were seen nowhere to achieve the 1,28,000 megawatt that we had promised up to 2032 in our corporate plan. There was this January 2011 deadline for all projects to be done with state governments on nomination basis. So we went around and signed power purchase agreements (PPAs) of 105 gigawatts. We have expansion capacity of about 25-30 in our own plant. So the fact the first thing was to see that the company has enough business.

The second part was the perception that company doesn’t deliver fast enough. In the last four and a half years, we have delivered more than 12,000 MW. We do need picking up year by year you were asking me earlier some question as to why we did less this year, but if you see on an average in the four and a half years -- more than 12,000 MW which is 27 percent of the capacity of NTPC that existed when I joined.

So that is a very important thing that we went about doing, then we went about looking at the redundancies, the reduction in land, reduction in how you save on design, so we looked at all these aspects, to see how you make your power cheap. As I told you that my average power is Rs 3.10, and it is only going to go down, it is not going to go up. So we started looking at all these as to how to make most efficient power.

I must tell you that even on the financial side, with little help from our ministers, the way we went about doing the bonus debentures, it improved our financial numbers tremendously, it gave us access to cheaper funds. Look at the investor confidence that we built. We went twice to raise money. We raised USD 2 billion from the market, previous year before last and 45 percent came from international investors.

So look at the kind of investor confidence that we build. So these are the things now our challenge is forward, you asked me the question on what we are doing with CERC tightening their parameters, I am sure with the dedicated team that we have in NTPC, those who have helped me in doing this, they are going to find a way to come out of the present challenge also.