Drop in KG-D6 output a concern, says NTPC

In an interview with CNBC-TV18's Mehak Kasbekar, Arup Roy Choudhury, chairman and managing director of NTPC, spoke about the results and the road ahead for the company. 

Below is verbatim transcript of the interview. Also watch the accompanying video.

Q: Your fourth quarter numbers have been up but your annual results, your PAT, has been flat. It is just up about 1.12%. Can you tell us any specific reason for this?

A: We were a little scared that the amount of backing down that we had to 13.8 billion units, whether we will even be able to maintain the PAT that we did last. But I must tell you that the Q4 results have been good and we are about 1.12% more in PAT than last year.

This is an unaudited figure. I am sure that my financer has prepared a very conservative numbers today. When we get the audit done probably these numbers will improve further. Next year there are lots of projects, which are in the pipeline for commission.

They are going to become commercial. So our earnings will increase and I do not see any reason why our profits may not keep on growing.

Q: About 80% of your top-line expense has been coal and increasing prices of that. Can you tell us what your plans are as far as coal is concerned?

A: It is always is good that we have as much coal as possible from Coal India because that is the cheapest coal. That is domestic coal. You will be glad to know that we have tied up with Coal India and we have tied up with the Railways. Therefore, you saw that Farakka has come in incentives zone which was on a disincentive zone.

In Kahalgaon, the disincentive has reduced substantially. We are trying very hard with Coal India. We are also trying to stock coal in our projects as much as possible and then blend imported coal to the minimum possible. We are doing about 10% today but if we do not need to do even that we are trying for that.

I am very optimistic because for Coal India, it is a comfort level for them to give us coal. We also give them incentive if they give us more than what they commit. I do not think any major reason at the moment.

Q: We have to ask you about gas. We are looking for that EGoM to happen and as you have been assured you will be getting that but we are looking at KG D6 gas output becoming low. Are you concerned at all that the other plant, other than Kawas and Gandhar expansion, may not be able to maintain the plant load factor (PLF) that they have been maintaining?

A: It is an area of concern because if there is a shortage of gas in our existing projects, we have to resort to the spot market where the cost of gas is very high. Therefore, the generation cost of power is high. Although the gas is in the domain of the private sector, we have approached our ministry and the petroleum ministry to help us out so that at least we get whatever gas was committed to us. Of course related to that our 12th Plan projects, which are planned with gas, we need EGoM to allocate some gas to us even for us to start those projects.

Q: Speaking of the 12th Plan projects about 15-20 Greenfield projects is what you have announced this time. Are these all going to come up in the nest five years in the 12th Plan? Also if you can tell us how much capacity and investment are you looking at in these projects?

A: We have about today 45,000 MW on our plate, of which we think to bring about 25-30 in the 12th Plan, balance will naturally go to beyond and about 140,000-150,000 crore would be our requirement for funding these projects and we do funding through 70:30 and our balance sheets supports equity very well. We have already tied up for 20,000 crore from domestic banks, we have also tied up for USD 500 million bonds which we want to do in the next two-three months. So I don