KOLKATA (miningweekly.com) - India’s NTPC Limited, the country’s largest power producer, would start scouting for equity in overseas coal assets to equip the utility company to compete in bidding for setting up ultra-mega power plants (UMPPs) across the country.

NTPC would be looking to set up UMPPs, for which the Indian government would invite competitive bids from private and public companies. To set up imported coal-based plants, it would be necessary to have investments in coal assets overseas, according to a company official.

NTPC’s free cash reserves on its balance sheet of around $2.75-billion would be leveraged to fund equity acquisition in coal assets overseas, for this purpose, the official added.

India's largest power producer, however, was not successful in bagging any UMPP projects in the first round of tariff-based competitive bidding.

The UMPP projects, based on super critical technology and awarded by the Indian government through bids based on tariffs, was first conceived in 2005. Each power plant had a minimum capacity of 4 000 MW.

Four projects had already been awarded and were at various stages of implementation, while bids for three more projects in the provinces of Chhattisgarh, Odisha and Tamil Nadu were expected to open before month-end.

The shortage to coal feedstock had been the country's biggest obstacle to the take-off of thermal power plants, including UMPPs. Coal-based power projects in the country imported about 30-million tonnes of the dry fuel in April to July of this fiscal year.

Around 27 projects, using predominantly domestically produced coal, purchased 14.6-million tonnes of the fuel from overseas until July 31, owing to a shortage of domestic supplies, according to Central Electricity Authority data. In the current fiscal year total imports were forecast at 50-million tonnes.

Power plants designed to use imported coal received about 15-million tonnes of imported coal during the period with 32-million tonnes forecast for the full fiscal.

Thus, about 82-million tonnes of coal imports are needed this fiscal year to meet the requirements of power plants using indigenous coal and projects relying on imported fuel.

NTPC officials said that equity in overseas coal assets was imperative to ensuring the viability of imported coal-based UMPPs, pointing out that with major supplier Indonesia benchmarking its coal exports against international prices, the project costs of UMPPs would be unviable at current coal prices.

Moreover, as success in bidding for UMPPs would depend on quoting competitive power tariffs, having a source of imported coal would be an important imperative, the official added.