The new coal pricing system to be adopted byCoal India Limited (CIL) will increase the power costs of NTPC by up to 40 percent. It is the new pricing system that has led to the rise in power costs. Sincethe fuel cost is a pass-through, the impact will be directly on power prices. From January 1, CIL implemented pricing structurebased on the gross calorific value (GCV) of coal. Earlier, thegovernment-controlled company followed a pricing mechanism based on the usefulheat value (UHV) of coal, which deducted ash and moisture content from thestandard formula. However, unlike the UHV pricing methodology, in which coalwas categorised into seven grades, the GCV-based system has 17 grades — and thenew prices have been fixed accordingly. CIL is likely to reviewthe prices to rationalise them in the wake of the Coal Ministry’s decision lastweek to correct the prices.
NTPC plans to sign a joint venture agreementfor the 1,320-Mw Khulna power project in Bangladesh by this month-end. Theproject would be a 50:50 JV between NTPC and the Bangladesh government. Weexpect to sign the agreement by January 29. NTPC and Bangladesh PowerDevelopment Board had signed a memorandum of understanding in August last yearto establish two thermal power projects at Chittagong and Khulna for mitigatingthe power shortages in the neighbouring nation at an estimated investment ofaroundRs 13,200 crore. The company also plans to achieve financial closure bySeptember for its 500-MW project in Sri Lanka. The construction of the projectis likely to start by April next year. The project will be a 50:50 jointventure between NTPC and Ceylon Electricity Board for setting up of a 2x250-MWcoal-based power project in Trincomalee region.
The 11th Five Year Plan would achieve acapacity addition of 52,000 Mw. About 80,000 Mw is under construction; it willcome in the 12th Plan (2012-17). There could be 10,000-Mw capacity in thecurrent Plan, coming from captive power sources. Earlier, the capacity additiontarget was fixed at 78,000 Mw for the 11th Plan, but it was later cut to 62,000Mw. Issues such as coal shortage and environmental hurdles have impacted thecountry’s power capacity plans.
| Company Name | CMP |
|---|---|
| NTPC | 333.65 |
| Tata Power | 399.85 |
| Power Grid Corp | 315.25 |
| Adani Power | 504.00 |
| Torrent Power | 1551.50 |
| View more.. | |
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The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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