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Reduced offtake by discoms a temporary phase: NTPC

10 Sep 2013

September 10: NTPC Ltd Chairman and Managing Director Arup Roy Choudhury feels reduced offtake of power by state distribution companies (discoms) due to their poor financial health is a temporary phase.

"I feel that it is only a temporary phase and all the state discoms are re-creating or re-organising their financial positions," he said.

"At present, on any day, we have 5,200 MW of capacity which is not requisitioned. The situation has worsened during the first five months of 2013-14 when a total of 16 billion units of electricity were lost due to lack of requisitioning against 3 billion units lost in the entire year of 2012-13," the CMD said.

He, however, exuded confidence that the demand for power should increase during the next two quarters of 2013-14 with an improvement in the economic situation and also because of the fact that states would requisition higher amounts of power in an election year.

The financial restructuring package circulated by the Central Government has already been adopted by seven states, in which the fuel cost adjustment has been allowed to offset any increase in power procurement cost in such a way that discoms will not lose money, Roy Choudhury added.

SERC will allow revised tariffs with effect from April 1 of each year so that their impact is fully realised during the financial year, he said.

However, so far as the past financial outstandings are concerned, these have to be sorted out based on the financial restructuring whereby 50% of the liabilities are to be taken over by the state governments and the balance will have to be reworked by the financial institutions, he added.

"Accordingly, it is a temporary lull because states are working on this prior to the general elections. Hence, I only see that demand will increase tremendously as all states would like to provide as much power to their consumers as possible," Roy Choudhury said.

Business model not affected

The CMD, however, said low demand by SEBs does not affect the business model of NTPC since its regulated returns on investments are based on the availability of machines at very high levels at all time.

"NTPC has always been outperforming on other parameters for returns on investments like savings in specific oil consumption, auxiliary power consumption, better heat rate etc over and above the normative parameters set by the regulator," Roy Choudhury said.