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AUG 27 2012

‘NLC will have11500 MW capacity in ten years’

  • Economic Times, ET Bureau / Hyderabad
  • Created: Mon 27th AUG 2012

Navaratna PSU Neyveli Lignite Corporation (NLC) is on an ambitious expansion plan, with strategies in place for divesification. NLC is also exploring the possibility to acquire coal assets in India and abroad. B Surender Mohan, chairman-cum-managing director, NLC, in an interview wth FE’s Sajan C Kumar, speaks at length, about the plan and the prespective. Excerpts:

NLC has set a long-term target of adding 15000 MW power in next ten years. What are the strategies to achieve this target? What will be the size of investment needed, and what are the challenges before you?

At present, NLC has an installed generating capacity of 2740 MW. When TPS-II Expansion project of 500 MW is completed in March 2013, NLC will have a generating capacity of 3240 MW. As you are aware, NLC is setting up a 1000 MW power plant through joint venture with TANGEDCO at Tuticorin. This project is likely to be completed in 2014. Further, tenders have already been issued for steam generators, turbo generators and balance of plants (BoP) for a new Neyveli thermal power station of 1000 MW capacity which will replace the aging TPS-I of 600 MW capacity. With these two projects, NLC will have a generating capacity of more than 5000 MW by 2015-16.

Taking into account the power projects under formulation totalling to 6500 MW, after ten years NLC will have a total generating capacity of about 11500 MW. NLC would also consider participating in the new projects as may be notified by government under the tariff bidding route.

NLC has approached the Centre for exempting lignite-based power projects from tariff-based competitive bidding route. If such exemption is given, NLC may persue 8.0 mtpa capacity lignite mine (MINE-III) linked to 1000 MW power station at Neyveli besides the 8.0 mtpa lignite mine at Gujarat linked to 1000 MW Thermal Power Stations. To add these capacities, the first strategy that NLC has adopted is diversification.

Till recently NLC was pursuing a growth plan which was lignite-centric. Most of the lignite deposits in the country are available in the state of Tamil Nadu followed by Rajasthan and Gujarat. More than 85% of the total reserves are deep-seated and are not amenable to conventional mining. Technology to tap deep-seated reserves are at a nascent stage. Further, these adverse geological conditions increase the stripping ratio, resulting in escalation. Therefore, to sustain growth NLC is now looking for power generation using alternate fuels, mainly coal.

The next strategy NLC has taken is to forge JVs with companies for synergy. In this regard for the 2000 MW power station to be set up at Gatampur in UP, NLC has joined hands with UPRVUNL. Such a strategic partnership will make the project implementation easy.

NLC is in the process of initiating action for setting up a 4000 MW power station using the coal near Sirkali. The strategic location will enable NLC to use imported coal in an economical manner. Regarding investment, we may take an approximate estimate of R6 crore per MW.

NLC is said to be diversifying into renewable energy projects? Do you think such diversification would pay rich dividends?

As I have already explained, there are compelling reasons for NLC to diversify into power generation based on alternate fuels. NLC has also forayed into renewable energy. NLC is of the view that in future renewable energy would be more profitable as clean energy has caught the attention of the general public. NLC is processing the offers received for setting up a 10 MW solar power station at Neyveli. NLC has also floated tender for setting up 50 MW wind farm.

Tell us about the expansion plans? What are the new projects planned? What will be the focus area, going forward?

NLC is pursuing the projects for which Power Purchase Agreements have been entered into with the respective beneficiaries. NLC has proposed to set up a thermal power plant of 250 MW capacity with linked mine of 2.25 mtpa at Bithnok in Bikaner district, Rajasthan at an estimated cost of R2,298.83 crore. Land acquisition for this, through the Rajasthan government, is in the process.

NLC has entered into an MOU with Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited for forming a joint venture with equity participation in the ratio of 51:49 to set up a 1980 MW (3 x 660 MW) coal-based thermal power project in Ghatampur Tehsil, Kanpur Nagar district, at an estimated cost of R11,128 crore.

NLC proposes to develop the Devangudi lignite block, which has a mineable lignite reserve of 42.5 million tonnes, at an estimated cost of R358 crore.

NLC is a partner in the joint venture mining project along with Mahanadhi Coal Fields Limited and Jindal & Co for exploiting Talibira II & III coal blocks in Odisha.

Lignite mining capacity of NLC at the end of XII Plan period is expected to be 37.35 mtpa compared to the present capacity of 30.60 mtpa. Thus, NLC’s focus areas would continue to be mining and power generation.

NLC faces labour problem on and off. What would be your e ndeavour to see a peaceful work atmosphere?

There is absolutely no problem with the regular employees. The contract workmen who render support services go on agitation now and then.

In the early 1990s, the management created a society with 5,000 contract workmen as members. In due course about 4,200 of these members were absorbed into the company's regular category. Later, there was no enrolment of contract workmen as members by the society. The contract workmen demand that there should be enrolment of members into the society leading to regularisation. This is the issue on which the contract workmen go on agitation. This matter is under litigation in the Supreme Court.

Since the main stream operation is being carried out by the regular workmen, there is no significant impact of agitation on NLC's production.

What is the status of proposed stake sale of the company?

In order to essentially meet the provisions of the Securities Contracts Regulations Act 1956 and the Listing Agreement regarding a minimum of 10% paid-up equity capital to be held by the public, it may be required to offload a small portion of the equity capital of the company. NLC will go by the directives of the government in this regard.

Is the company looking at acquiring coal mines abroad?

It is estimated that in the year 2016-17,there would be a shortfall of 230 mt of coal, which has to be met through import. Considering this mismatch of demand and supply, Government of India has formulated a policy to facilitate acquisition of raw material assets abroad by Maharatna /Navratna CPSEs. Further the Central Electricity Authority has advised the thermal power generating companies/ thermal power project developers to design the power generating equipment to utilise blended coal consisting 30% imported and 70% domestic coal. Therefore, to meet its own requirement and the requirement of its subsidiary company, NLC is exploring the possibility of acquiring coal assets in India and abroad.


Rajasthan Uttar Pradesh Gujarat Odisha Tamil Nadu Tamil Nadu Generation and Distribution Corporation Ltd Balance of Plant Coal Power Purchase Agreement Coal Field Memorandum Of Understanding Central Electricity Authority Neyveli Lignite Corporation Power

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