The Neyveli Lignite Corporation, a Navaratna company, plans to add power generation capacity of about 8,500 megawatts (MW), of which about 6,000 MW will be utilised for the power deficit states in the Southern region of the country. The company, which has core operations in mining, is looking at diversifying its operations, mainly into power generation both in conventional and non conventional segment. NLC will invest about Rs 27,000 crore in next five years for developing power generation projects in the country, says B Surender Mohan, chairman-cum-managing director of the NLC, in an email interview with Power Today.
NLC has chalked out a commendable plan for setting up power generation plants, what is the status as of now?
Yes, we have been diversifying our operations in power generation. As of now, we have already started implementation of thermal power projects aggregating up to 6,500 MW. This includes a 500 MW (2x250 MW) lignite based thermal power station-II expansion project at Neyveli, a capacity of 1,000 MW (2x500 MW) at Tuticorin through a JV with Tangedco, a lignite based thermal power station at Neyveli (2x500 MW) and Sirkazhi ultra mega power project of 4,000 MW. Apart from this, we are also developing a wind power plant with a capacity of 50 MW and a solar PV project of 10 MW at Neyveli.
Status of these projects are mentioned below:
TPS-II expansion: Declaration of commercial operation regarding the first unit is expected by June 2013. In the second unit, pre-commissioning activities have begun.
Tuticorin 1,000 MW coal fired plant: NLC is presently implementing a coal based thermal power project of 1,000 MW capacity at Tuticorin, through, NLC Tamilnadu Power Limited (NTPL), a joint venture with Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO). Unit I is expected to be commissioned in December 2013 and unit II by March 2014.
Neyveli new thermal power station 1,000 MW: Tendering activities for steam generator, turbo generator and balance pf plant are in progress.
Sirkazhi UMPP 4,000 MW: The company has already applied for allocation of coal blocks.
Wind power plant 50 MW: As an initiative towards generation of green power, NLC is setting up a wind power project of capacity 50 MW at an estimated cost of Rs 364.75 crore.
Solar PV project 10 MW: For the 10 MW solar photovoltaic project at Neyveli tendering activities are in progress.
Other upcoming projects: NLC and Uttar Pradesh Rajya Vidhyut Uthpadhan Nigam Limited (UPRVUNL) have formed a JV named NUPPL for putting up a 3 X660 MW coal-based power project at Ghatampur, in Uttar Pradesh. Proposal has been submitted to Government of India for sanction of the project.
The Feasibility Reports have been prepared for the 250 MW lignite based thermal power station at Bithnok with linked Mine (2.25 MTPA), and the 250 MW Barsingsar thermal power station extension with linked Hadla & Palana Lignite Mine (2.5MTPA), both in Rajasthan
How much is the expected investment for the power projects and how will the company manage it?
The planned investment in the power projects in the next five years is about Rs 26,799 crore. Funding pattern for NLC projects is in the debt equity ratio of 70:30 and the company does not avail any budgetary support from Government of India. The fund requirement will be met by internal resources and borrowings.
Which are the other sectors the company may see for diversification?
NLC will not be in a position to achieve the desired growth rate if it sticks to lignite centric growth. Therefore, there are compelling reasons for NLC to diversify into power generation based on coal further.
NLC is venturing into 'Green Energy' sector by setting up a wind based power project with an initial capacity of 50 MW, which will be expanded to 250 MW in a phased manner. Also it has proposed to setup a 10 MW solar power project which will be expanded to 200 MW. The company at present is concentrating on diversifications within the mining and power sectors in which the company has competence.
How will the disinvestment plan help the company?
In order to meet the requirements of the Securities Contracts Regulations Act 1956, GoI has plans to offload a small portion of the equity capital of the company. Such decisions are generally in a larger interest and not necessarily aimed at helping any particular company. NLC will go by the directives of the government in this regard.
How do you see the growth in mining sector in light of present global economic and geo-political scenario?
A GDP growth rate of 9 per cent per year has been envisaged over the Twelfth Plan period of 2012-17. This would necessitate a growth in the total energy supply by around 6.5 per cent per year. As of now, coal meets around 52 per cent of the total energy requirement in the country. Since more than 75 per cent of our demand of oil is met through imports, the country will have to rely more and more on coal in the years to come.
To meet the growing demand, now the mining sector is being encouraged to acquire coal assets abroad. Coal will continue to be the major source of energy and with upcoming clean coal technologies, it will further consolidate its position. Therefore, I do not see any reason for decline in the growth of coal industry.
If we talk about the financial performance of the company how to you assess your company and what is the growth target for the next fiscal?
NLC during the year 2011-12 has registered a total sale of Rs 4,867 crore as against Rs 4,296 crore in the year 2010-11, a growth of over 13 per cent.
The Profit After Tax (PAT) for the year 2011-12 was Rs 1,411 crore as against Rs 1,298 crore recorded during the year 2010-11, a growth of about 9 per cent. The PBT and PAT for the year 2011-12 were the highest for any year since inception. The company is performing very well and I expect similar performance in the current financial year also.
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