NTPC FY 20 Coal imports to double

As NTPC continues to add thermal generation capacities to its portfolio amid sustained under-recoveries due to coal shortage, it is also increasing the coal import target to meet the additional fuel demand. For its goal to add 4,880 MW thermal capacity by FY19-end, NTPC would have incremental coal requirement of 18-20 MT, the company management recently said in the Q3FY19 earning conference call. To meet this demand, it plans to import 11.9 MT in FY20, more than twice the 5 MT target set for FY19.

NTPC had awarded a 2.5 MT coal import contract in December. Out of which, 0.07 MT has already been delivered. Another tranche of 2.5 MT coal import tender is coming up soon. In nine months of FY19, 0.38 MT imported coal has been consumed, 73% more than what was used in the corresponding period last fiscal.

NTPC’s power plants received 45.4 MT of coal in the quarter, 13.4% more than what was supplied in the preceding quarter ended September 30, 2018. However, the company continues to face under recovery due to the coal shortage. Out of the total under-recovery of Rs 1,101.1 crore in nine months of FY19, Rs 284 crore has been attributed to coal shortage.

Power plants are contractually entitled to receive fixed costs for recovering capital expenses even though buyers do not procure electricity from the units. But the plants need to display a minimum plant availability factor (PAF) of 83% to claim the fixed costs, which becomes a challenge in the absence of adequate fuel supply. The generation loss due to fuel supply constraints was 4.17 billion units in Q3FY19.

NTPC had paid Rs 10,000 crore in advance to the railways to receive coal supply at unrevised rates until FY20, hedging itself against the 8.8% rise in railway freight charges. However, it cannot recover the Rs 364 crore (for nine months of FY19) working capital interest it has spent on this advance amount through tariff revisions.

The company also expects to reap the benefit from the Rs 5,648.8 crore capex it has incurred on its captive mines. Total output from NTPC’s Pakri Barwadih captive coal mine in the nine-month period of FY19 has been 4.9 MT. In FY20, NTPC expects to mine 8.5 MT from this coal block. In the three months ended December 2018, the mine produced 2.2 MT coal, 193% more than the output in the year-ago period. Another 0.12 MT coal has been excavated from Dulanga coal block.