NLC India CMD says no plans for divestment as of now; focus on asset monetization

Currently, NLCIL has a RE capacity of 1,421 MW comprising solar and wind and by 2030, it aims to become a 6,000+ MW renewable power company.

NLC India Ltd (NLCIL), a Navratna central public sector company, plans to monetize at least Rs 8,000 crore worth of its renewable energy assets in the next financial year (2025). The Government of India, which has a 79.2 percent stake in NLCIL, has no plan for its divestment as of now, Prasanna Kumar Motupalli, chairman and managing director of the company, said in an interview with Moneycontrol. He said the company is going to start a pumped hydro storage project on pilot basis at one of its mines and a green hydrogen project in Neyveli, Tamil Nadu. He further said work will be awarded for the country’s first lignite-to-methanol project worth Rs 4,400 crore by October-end. Edited excerpts.

How has NLC India’s performance been in the first quarter of this financial year?

We performed exceedingly well in FY23 and the same performance continued in Q1 of FY24 as well. We achieved around 81 percent of coal and 83 percent of lignite production and generated around 92 percent electricity against the targets in Q1 of the current financial year.

In Q1, we also won 300 megawatt (MW) solar capacity of Gujarat Urja Vikas Nigam Ltd through auction and we are going to get another 300 MW under the greenshoe option. So, we won a total of 600 MW in Gujarat in Q1. We also participated in Rajasthan’s solar tender for 810 MW, the reverse auction for which would happen soon. Besides, land acquisition activities for building thermal power plants at Talabira, Odisha, and Neyveli (1,320 MW), Tamil Nadu, are also going on in full swing. We are hopeful that we will be able to take a substantial part of land at Talabira and award the contract for a planned thermal power station of 2,400 MW there. Also, our under-construction 1,980 MW supercritical thermal power plant in Ghatampur, Uttar Pradesh will be fully commissioned by March, 2024.

What was the targeted capex in FY23 and how much was achieved? What is the capex target for FY24?

In FY23 our capex target was Rs 2,920 crore, against that we achieved Rs 3,300 crore. It is at least 13 percent more than the target. In the current financial year, the target is Rs 2,880 crore and we are optimistic that we will surpass this too.

We are going to spend this amount on our lignite-to-methanol project, which is the first of its kind in India, for which we expect to award work by the end of October.

Of the three major CPSUs under the Ministry of Coal, Coal India Ltd and Singareni Collieries Company Ltd are mostly restricted to mining activities. But NLC India is the only one with such a diversified portfolio. So is NLCIL planning to pivot to electricity generation, including renewable energy?

NLC is almost a 66-year-old company. I think it is one of the first complete energy companies in the country. You rightly said, out of all the coal companies under the Ministry of Coal, it is the most diversified company. We are into coal power generation, lignite power generation, coal mining, lignite mining, solar, wind, battery storage, floating solar, lignite to methanol, and overburden to sand. So we are diversifying into almost all the areas of the future. We're also diversifying into green hydrogen, and around 25 percent of our capacity is renewable capacity.

Although importance is being given to renewable capacity addition as per India’s commitment of having 500 gigawatt (GW) of RE capacity by 2030, at the same time, we have to give equal attention to coal and lignite mining as well as thermal power generation. Earlier, people were thinking once renewable capacities are set up they will replace the entire power generation portfolio. But the last two energy crises prove that for energy requirement, coal and lignite will continue to play a predominant role in the years to come.

In addition to that, of the 500 GW, about 292 GW will have to come from solar power, which is time-dependent. Now imagine a situation when 290-300 GW solar capacity suddenly becomes zero in the evening. That is why for proper integration of renewables we should be having sufficient storage capacity, which is very expensive as of now. So thermal power plants are rather going to help in the smooth energy transition in India.

NLC India has not yet started asset monetization. Is there any plan for it?

Yes, we have plans for asset monetization and that is the reason why we formed a subsidiary - NLC India Renewables Ltd. We will transfer our RE assets to the subsidiary and then monetize the assets in that subsidiary. Our existing RE assets are worth Rs 8,000-9,000 crore and we plan to monetize all of it. We are aiming to start asset monetization in FY25.

The government had plans for divestment of NLC. The Disinvestment Commission had recommended a 51 percent equity sale of NLC. What’s happening on that front?

As on date, the Government of India has a 79.2 percent stake in NLC, which in all likelihood is highest in the public sector. The government now is focusing more on asset monetization instead of divestment. So as on date, there is no plan for divesting the government stake in NLC India.

In May this year, power generation by NLC in Tamil Nadu was down by 1,000 MW as the company had to shut five units of its thermal power plants due to lignite shortage. There have been protests in the area for the company's lignite mine expansion. Has the issue been resolved?

Yes, lignite shortage was there due to land acquisition issues, particularly in the Neyveli area. Now, most of the issues have been sorted out and in a month or two we will take full possession of the land parcels. I am confident that in the current financial year itself we will restore production of lignite to the optimum level required for power generation.

NLC India was the first CPSU to cross the 1 GW mark in renewable energy (RE) capacity. But the company’s progress in RE capacity addition since then has been sluggish while other CPSUs now have much higher installed RE capacity. What are the reasons for the slow progress?

Yes, you have rightly pointed out. Our last solar project awarded was around 3.5 to 5 years back. And after that, the focus mainly shifted to capacity addition in thermal power at Ghatampur, Uttar Pradesh, and the Talabira mine operationalisation. Next, we also have to pay attention to the installation of the Talabira supercritical thermal power project. So there was some sluggishness in the focus on renewable power generation.

But now we aggressively want to add RE capacity. We recently formed a 100 percent owned subsidiary, NLC India Renewables Ltd, and with that also we will get some tax advantages in competitive bidding. After such a long gap we were awarded a 300 MW solar project in Rajasthan, and now we won around 600 MW Gujarat.

Going forward, we want to participate in almost all the bidding and install as much capacity as possible to make up for whatever we lost in the past 3-4 years.

As on date, our current total RE capacity, comprising solar and wind, is 1,421 MW. By 2030 we are targeting to become a 6,000+ MW renewable power company. Overall, by 2030 NLC India is aiming to become a 17,000 MW company, of which 6,000 MW will be from RE. We will be investing at least Rs 25,000 crore in renewables.

Does NLC have any plan to get into green hydrogen and pumped hydro storage projects?

Yes. We have kept 4 MW out of our soon-to-be-commissioned 10 MW solar power project in Neyveli for the green hydrogen pilot project. We are currently finalising the tender for electrolyser, which will be floated soon.

As for pumped storage, we have signed a MoU with WAPCOS, a Government of India organisation, for taking forward pumped storage activities. We will install a pumped storage project in one of our mines on pilot basis and subsequently increase the scale, and add more projects and capacity.

The Union Cabinet has approved amendments to the Mines and Minerals (Development and Regulation) Act to allow commercial mining of lithium and five more minerals. Your comment?

Permitting commercial mining of lithium and other critical minerals will help India meet its net-zero targets quicker. It will help decarbonize the mobility sector and will also pave the way for cheaper energy storage systems.