Cost-plus cover for NTPC stymies power sector revival
Even as a dearth of new power purchase agreements is stalling many under-construction and existing private power units, the virtually exclusive regime of cost-plus tariffs for the state-run NTPC is further undermining their ability to commence operations or operate at higher capacities.
In the latest instance, NTPC’s sourcing of coal from mines located 1,100 km away in Jharkhand for its 1,200 MW Khargone plant in Madhya Pradesh is seen to raise its fuel cost, resulting in many states, including MP, having to pay the state-run firm despite them not sourcing electricity from the unit.
According to a recent note by research firm Motilal Oswal, thanks to the `1,500 crore invested by NTPC to ensure smooth rail connectivity from its Pakri Barwadih mines, Khargone’s fuel costs would be around `3-3.3 per unit, resulting in final tariffs of more than `5 per unit. unit.
