Electricity produced from expensive fuel is finding few takers, which could end in NTPC incurring higher generation loss this fiscal compared with last year.
Mr Arup Roy Choudhury, Chairman and Managing Director, NTPC, told Business Line that the surplus would be higher than 13 billion units in the last fiscal due to low demand.
Currently, around 90 per cent of the company's fuel requirement is met domestically via its long-term contract with Coal India.
The remaining 10-15 per cent is met through imported coal, which is expensive.
Mr Choudhury said it is always more viable to source fuel from the domestic market, as imported fuel means input costs going up, which leads to higher electricity tariff.
Whether it is gas or coal, if sourced from overseas, it becomes expensive.
Natural gas
While industrial customers dependent on gas would be willing to buy expensive imported natural gas, electricity generated from expensive imported fuel has few takers. “Even the electricity generated at Rs 4 a unit does not get immediate buyers,” he said.
NTPC is looking for long-term contracts for sourcing coal to ensure that the company has secure fuel supplies for its projects as well as it protects itself for volatility in fuel pricing.
The company has massive capacity addition plans and will add 4,320 MW of capacity this financial year. In 2010-11, it had added 2,490 MW.
Recently, NTPC contracted an Adani Group company to import 4 million tonnes of coal for it.
For the current fiscal, NTPC's coal requirement is about 164 million tonnes. Of this, about 119 million tonnes is estimated to come from Coal India.
Coal continues to remain the main fuel for electricity generation in the country. During 2010-11, NTPC generated 220.54 billion units, which was 27.19 per cent of the total power generated in the country. The total generation from coal stations was close to 195.28 billion units.