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Power Play: NTPC Told To Quickly Buy Distressed Assets

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At a time when the private sector power players are aggressively acquiring distressed power plants, a government panel has asked NTPC to act fast to acquire the right assets available in the market. The panel has also asked the company to increase its renewable energy portfolio to 10 per cent of the total capacity in the next five years.

As much as 50,000 MW of distressed generation capacity is on the block, ready to be acquired due to bad financial position of the owners of those plants. NTPC currently has an installed capacity of 43,000 MW.

“NTPC’s recent initiative to acquire stranded power projects under construction is indeed laudable. However, NTPC needs to complete this exercise at the earliest, say in six months or so, to get over the uncertainty on other new projects which the company should be implementing. It should not happen that the company slows down other new projects and also does not decide on taking over stranded projects due to one reason or the other,” read the minutes of the meeting of the advisory group for integrated development of power coal and renewable energy.
 
Read Also: Adani Buys Lanco Asset In Rs 6000-cr Deal

Read Also: How R-Power Outbid Adani For Jaypee Projects

NTPC was the first company that received expression of interest from over 30 companies wanting to sell their distressed assets to the largest power generator of the country. However, NTPC, like many other Public Sector Undertakings (PSUs) in the past, has been accused of going slow in decision making leading to missing out on opportunities.

In the past few weeks, private sector players, Reliance Power and Adani Power have acted aggressively in acquiring distressed assets in the market. While R-Power entered an exclusive memorandum of Understanding to acquire Jaypee Infratech’s three operational hydro power plants having 1,791 MW generation capacity at a valuation of Rs 12,000 crore, Gujarat-based Adani Power, which is also India’s largest private sector power generator, bought 1200 MW Udupi power plant by shelling out Rs 6,000 crore from Lanco Infratech.

Interestingly, both these companies have acquired assets despite having highly leveraged balance sheets. While Adani Power has a debt of Rs 22,317.20 crore and a cash surplus of only Rs 412 crore as reported on March 2012, Anil Ambani owned R-power has a debt of Rs 27,715 crore and cash of Rs 3,000 crore on its books. On the other hand, NTPC had Rs 15,311.37 as cash and bank balance on its balance sheet as on March 2014, whereas the company reported a debt of Rs 62,405.75 crore on March 2014.

The panel headed by former power minister Suresh Prabhu has a mandate to ensure 24x7 electricity to consumers in the country.