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Q: W hat will be the major growth drivers for the power sector in coming years?

A: Indian Power Sector has potential for explosive growth. Rising living standards of sizeable segments of our population, growth in the manufacturing sector and emergence of India as a manufacturing destination in the world, increasing urbanisation, thrust on rural electrification, our huge population and the national program of providing ‘power for all’ by 2012 are among the factors driving unprecedented power development in the country.

The Eleventh Plan (2007-2012) capacity addition target has been fixed at 78,700 MW. This is nearly four times the capacity added during the Tenth Plan (around 21,000 MW) and nearly twice the Tenth Plan target of about 41,000 MW.

Q: What are challenges that you foresee? How much growth you expect in the next five years?

A: The major challenges pertain to supply of main plant and ‘balance-of-plant’ equipments, delays and cost of land acquisition, linkages for water and coal, and availability of skilled manpower in large numbers.

Out of the target of about 78,000 MW in the 11th Plan, nearly 12,000 MW has already been commissioned and work is in progress for nearly 60,000 MW capacities. Therefore, the actual achievement is likely to be quite high during this plan period. While the CAGR for capacity addition during the 10th plan was 4.73%, the year on year growth during the first year of the 11th plan was 8.11%.

Q: What will be the impact of Nuclear Deal with NSG on the industry? What is likely to be the future scenario in terms of contribution to overall power generation etc?

A: Nuclear deal with US, France and Russia and other members of NSG will end India’s nuclear isolation of nearly 34 years. It will help India increase its nuclear power capacity rapidly from around 4 GW at present to about 40 GW by 2020 and 60 GW by 2030.

The country’s nuclear landscape will be rapidly transformed. A large number of reactors, fuel management including re-processing plants, fuel fabrication facilities and waste immobilization plants will have to be built almost simultaneously. Import of reactors too will require active participation from indigenous industries viz. civil works, forgings, electrical and electronic equipments, ancillary and other engineering equipments etc. A huge market estimated at $ 100 million will grow as a consequence of this development.

Q: The current model of power exchange is suitable for Indian market? What is the global experience in this regard?

A: In the context of global markets, Indian power market structure is built around ‘de-centralised dispatch’ more or less similar to European Markets. Even though the size of the electricity trading market is small, the necessary framework is in place at inter-state level for introduction of Power Exchange.

The model found suitable for Indian market employs a two sided auction i.e. confidential bids both from buyers and sellers for hourly contracts on day-ahead basis. The exchange discovers the market price at which demand and supply match. It will bring together multiple buyers and sellers on a common platform and provide them the opportunity to exercise their choices. The price discovery based on demand & supply will also provide a price signal for investments.

Q: What strategies your company has adopted to tackle rise in cost of raw material cost and shortage of fuel?

A: NTPC has been able to post impressive operational performance. However, it has been made possible amid tight coal supply situation. We are continuously in touch with Coal India Ltd (CIL) and also with the Ministries of Coal and Power to evolve long-term as well as short-term measures for effective augmentation of coal supply.

The gas supply to our gas based stations has not been as per the requirement. To meet the shortfall in domestic gas supplies NTPC has been sourcing gas/LNG from market and alternative sources. We are also open to equity participation in the natural gas / LNG value chain.

As a measure of ensuring fuel supply for its stations, NTPC has ventured in to coal mining and has got eight coal blocks from the Government of India including two blocks to be developed in joint venture with CIL. By 2017, NTPC targets to have a coal production of 47 Million Tonnes / Annum (MTPA). Our target is to meet around 20% of our coal requirement through our own production by 2017. The production from our first coal block at Pakri Barwadih is expected to commence in 2009-10.

We have also signed an MoU with RINL, SAIL, NMDC & CIL as a consortium partner for sourcing coking coal and thermal coal from abroad. Further, NTPC on its own is also scouting for coal mines abroad in countries like Indonesia. Mozambique etc.

Q: In India, the huge amount of investment in power sector evaporates in the T&D Losses. What are your views to overcome these losses?

A: India is one of the few countries with T&D losses as high as 30-35%. The sector continues to be saddled with very high Aggregate Technical and Commercial (AT&C) losses. The Government of India has undertaken initiatives like the APDRP program to provide incentives for reduction of losses by the state distribution utilities. These programs have started showing results and many states have significantly reduced the AT&C losses. Recently, GoI has come out with a Restructured- APDRP program.

Concerted efforts and actions are required for reducing the distribution losses to achieve turnaround of distribution sector. Some of the measures which will lead to reduction in AT&C losses are:

Reduction in AT&C losses and consequently improved health of the distribution companies shall also contribute to reduced realization risk for generators.

Q: What are the top five priorities for your company? What are the measures taken by the company to explore opportunities?

A: NTPC has a vision to become – “A world class integrated power major powering India’s growth, with increasing global presence”. The vision guides NTPC’s ambitious and accelerated growth plans in the entire power value chain. We have set a target of becoming 75,000 MW company by 2017, with a diversified fuel-mix for power generation including hydro, nuclear, and renewable energy in addition to coal. We also plan to make global footprints through power projects, coal mining and presence in natural gas / LNG value chain.

Our top priority is to achieve rapid capacity addition and sustain our performance-excellence.

Priority number two would be to build on the talent and knowledge base of NTPC. Our people have been our biggest resource and we would like to maintain that situation. Therefore we give high priority to enhancing the skill levels of our people as well as maintaining the talent pipeline to meet our ambitious goals.

Thirdly, we would like to ensure that our initiatives related to diversification like coal mining, globalisation, equipment manufacturing get into top gear and create a niche for themselves within say 3-4 years. We would like to ensure better control over the availability of fuel through domestic as well as possible foreign sources. By 2017, we target to use nearly 20% coal from our own mines.

Priority number four would be to maintain NTPC’s eminent position in the power sector not only through our size and performance but also our leadership role in the development of the sector, building on our customer relationships and contributing to the society in a responsible and sustainable manner.

All of the above mentioned priorities would contribute towards creation of value for our stakeholders, since we are today also a listed company. I do not construe “Enhancing Shareholder Value” as priority number one or five, but as an overall priority for an organisation of our size and our stature.

Q: In India, most of the power generation companies use thermal fuels and only few are using renewables. According to you, how feasible it is to use the renewable energy sources for power generation in India?

A: By 2031-32, as per the Integrated Energy Policy, the total contribution from renewable sources including all hydro shall be around 25% of our total installed capacity.

In the renewable energy segment, wind energy is a significant contributor to the power generation in the country. India has the fourth largest wind power installed capacity in the world. Solar insolation in the country is one of highest in the world. Major technology breakthrough in solar could be the catalyst for development of large solar farms and the National Action Plan for Climate Change released in June, 2008 holds out great hopes from solar.

By 2017, NTPC plans to have at least 1,000 MW through renewable sources of energy such as wind, bio-fuel, solar, geo-thermal etc. NTPC has signed MoU with ADB, GE Energy Financial Services, Kyushu Electric Power Company and Brookfield Renewable Power to undertake renewable power generation projects. NTPC has already issued NIT for setting up a 100 MW wind farm.

NTPC has taken an initiative for fast-tracking its solar power development programme – we shall be setting up 15 MW solar capacity by 2012 and 50 MW capacity by 2014. Considering the existing configuration of solar plants, these are sizeable targets.