NTPC Approves New Investment Proposals

The Board of state-owned power major NTPC has approved projects worth Rs 12,953 crore as per its recent filing. The proposals include the first phase of Gadarwara Super Thermal Power Project of 1600 MW and a Chatti-Bariatu coal mine development proposal of 7 MTPA.

The coal ministry had de-allocated three coal blocks of NTPC (Chatti-Bariatu, Kerendari and ChattiBariatu -South) back in 2011. NTPC later made a presentation to the coal ministry in 2012 after which the ministry gave an in-principle approval for withdrawal of the de-allocation of the coal blocks. Recently, a few days before its OFS, NTPC finally got back three coal blocks which have an estimated coal reserve of 826 million tonnes. These coal blocks would be important to fuel the upcoming capacity of NTPC. Together these mines can fuel up to 1600 MW of capacity.

The company with the investment proposal has made sure that it keeps the coal mines with itself. The coal ministry earlier had de-allocated coal blocks of many companies as they failed to start the coal mining from the blocks.

NTPC currently has an installed capacity of 39,174 MW, which is the largest by any company in the country. The approval for the Gadarwara project would further be positive as it will add to its current operating capacity. The first phase of 2x800 Gadarwara Super Thermal Power Project is expected to benefit another state-owned company Bharat Heavy Electricals (BHEL) as NTPC will issue the equipment orders with it.

NTPC, in the third quarter, reported a good set of numbers but the stock has remained nearly flat this calendar year. There are quite a lot of policy initiatives taken by the government recently which may prove to be better for the power sector such as coal price pooling and SEB debt restructuring among others. We expect that about 10% of returns can be garnered from the scrip in the next one year. Those who are comfortable with this may buy the stock.