Arvind singh mahor -summer project report

1

Project Report

On

Faculty Guide:

Prof. Prabina Rajib

Industry Guide:

Prof. A P Dash

Senior Faculty, PMI NTPC

Submitted by –

Arvind Singh Mahor

Roll No. - 10BM60017, MBA (2010-12)

Vinod Gupta School of Management

IIT-Kharagpur

A Project Report Submitted in partial fulfilment for the award of

Master of Business Administration

2

ACKOWLEDGEMENT

It is with a sense of gratitude, I acknowledge the efforts of entire hosts of well-wishers who

have in some way or other contributed in their own special ways to the success and

completion of this summer internship project.

First of all, I express my sage sense of gratitude and indebtedness to our Dean,

Prof. A. Tripathy and Placement In charge, Prof. Prithwis Mukherjee at

―Vinod Gupta School of Management, IIT-Kharagpur‖, from the bottom of my heart, for

their immense actions, support, and faith.

I would also like to thank my project guide at VGSOM IIT Kharagpur, Prof. Prabina Rajib

who had sent me many papers related to my project and been very helpful in the completion

of this project

I sincerely express my thanks to all our lecturers for their valuable guidance and intellectual

suggestions.

Also, I also express my sincere thankfulness to my project guide and mentor,

Prof. A. P. Dash at PMI NTPC Noida for his kind advice, suggestions and constant help in a

lot of various ways during project course. Also thank Prof. Behra of PMI NTPC who

suggestion many points to be considered in project like Five Year Plans and Clean Energy.

Further I express my gratitude to all my MBA friends and NTPC Library People who were

kind enough to help.

I sincerely thank to all of them for their valuable suggestions, motivation and

encouragement. I express my thanks to the entire NTPC for giving me an opportunity to work

there.

Arvind Singh Mahor

MBA, 2010-12 Class

VGSoM,

IIT Kharagpur

3

CERTIFICATE FROM COMPANY

4

Table of Contents ACKOWLEDGEMENT ................................................................................................................................ 2

CERTIFICATE FROM COMPANY ................................................................................................................ 3

EXECUTIVE SUMMARY............................................................................................................................. 5

OBJECTIVES .......................................................................................................................................... 5

METHODOLOGY ................................................................................................................................... 5

RESULTS ............................................................................................................................................... 5

COMPANY BACKGROUND ....................................................................................................................... 6

POWER INFRASTRUCTURE IN INDIA .................................................................................................... 6

NTPC PROFILE ...................................................................................................................................... 6

PROJECT OBJECTIVE ................................................................................................................................ 9

MAIN DELIVERABLES ......................................................................................................................... 10

MAIN GOALS ...................................................................................................................................... 10

SURVEY OF LITERATURE ........................................................................................................................ 10

POWER PROJECT FINANCING TRENDS .............................................................................................. 10

PRIVATE POWER FINANCING: PROJECT FINANCE TO CORPORATE FINANCE ................................... 13

POWER REFORMS – TECHNOLOGICAL AND FINANCIAL PERSPECTIVE ............................................. 14

METHODOLOGY ..................................................................................................................................... 15

STATUS OF THE INDIAN POWER SECTOR .......................................................................................... 16

GLOBAL POWER SECTOR ANALYSIS ................................................................................................... 17

COMPARISON OF THE CHINESE AND INDIAN POWER SECTOR ........................................ 19

CAPITAL BUDGETING FOR A DUMMY POWER PROJECT ................................................................... 22

POWER CAPACITY ADDITION AND CAPITAL REQUIREMENT ............................................................. 31

FINANCIAL STRATEGIES AND FUND RAISING BY NTPC ...................................................................... 32

CALCULATION OF COST OF CAPITAL ................................................................................................. 33

CAPITAL BUDGETING MODEL USING THE EXCEL .............................................................................. 38

CHALLENGES AND OPPORTUNITIES FOR NTPC ................................................................................. 43

RESULTS ................................................................................................................................................. 43

CONCLUSION AND SUGGESTIONS ..................................................................................................... 44

Appendix A ............................................................................................................................................ 45

Appendix B ............................................................................................................................................ 55

CASE LET - NTPC: CURRENT STATUS, FUTURE DEMANDS AND INVESTMENT NEEDED .................... 55

References: ............................................................................................................................................ 60

5

EXECUTIVE SUMMARY

OBJECTIVES

To provide the optimum integrated financial model of Capital Budget & Capital

Structure for the additional power capacity required as per the 12th

Five Year Plan and

Other Studies for the NTPC considering the public undertaking nature and various

regulatory provisions related to pricing, contracting of raw material, operations,

administration etc. by various regulatory authorities like CERC, Power Ministry and

Environment Ministry

To analyse the Power generation policies of developing and the developed countries,

particularly focusing on the India and China and recommending the changes for

Indian Power Sector to enhance the Capacity in most efficient manner.

METHODOLOGY Methodology will include the intensive and extensive research, study and analysis to come to

the required solutions and suggestions incorporating the Power Industry norms. It will have

two sections: [see Exhibit 1]

DATA COLLECTION

Primary data

Data gathered from the NTPC staff, discussion and internal survey.

Secondary data

Data gathered using the external sources like study reports by various agencies like Asian

Development Bank, World Bank, UNO and other consultancy organisations who worked in

the same area like KPMG etc.

EXPLORATORY AND MATHEMATICAL STUDY

In Exploratory and Mathematical study various financial tools were used giving the inputs

from values available in primary data & secondary data section. Using these exploratory

results, future policies for Power Capacity addition and Operational, Fund Raising &

Technical Efficiencies will be recommended.

IT APPLICATION

Finally, using available software tools like MS Excel various charts and table drawn for the

visual representation of the study and analysis.

RESULTS Indian Power sector greatly need to improve on various fronts to meet the 12

th Five Year

target of the power capacity addition in terms of Operational, Functional, Funding, Cost

Reduction, Environment Challenges, Human Resource, Administration, Regulations, Tariffs,

and Distribution. Along it, India need to look for the alternative energy and sources also

considering the cost involving in Oil and Coal import and their limited availability with

focusing on the environmental effects and the large power requirement for sustaining the

economic and social growth.

6

COMPANY BACKGROUND

POWER INFRASTRUCTURE IN INDIA India is the fifth largest producer of electricity in the world and according to the Planning

Commission, while the State Governments account for 51.5% of the total generation capacity,

the central sector and the private sector account for 33.1% and 15.4% of the generation

capacity respectively. The Power industry in India derives its funds and financing from the

government, some private players that have entered the market recently, World Bank, public

issues and other global funds. India‘s total installed capacity of 173,626.40 MW as on March

31, 2011, the installed capacity of central power sector utilities, state sector entities and

private sector companies accounted for approximately 31.3%, 47.5% and 21.2%,

respectively. The following table sets forth a summary of India's energy generation capacity

as of March 31, 2011 in terms of fuel source and ownership:

See the organisation of Indian Power Sector Organisation [see Exhibit 2]

Sector Thermal Nuclear Hydro Renewable energy sources

Total

Central 40,747.23 4,780.00 8,885.40 - 54,412.63 State 52186.73 - 27,257.00 3,008.85 82,452.58 Private 19890.52 - 1,425.00 15,445.67 36,761.19 Total 1,12,824.48 4,780.00 37,567.40 18,454.52 1,73,626.40

NTPC PROFILE NTPC Limited (formerly known as National Thermal Power Generation Limited), India's

largest power company, was set up in 1975 with a vision “A world class integrated power

major, powering India‟s growth, with increasing global presence" to accelerate power

development in India. It has emerged as an „Integrated Power Major‟, with a significant

presence in the entire value chain of power generation business. NTPC is a Government-

owned entity with 89.5% of its paid-up capital contributed by the Government and the

balance of 10.5% being held with foreign institutional investors, financial institutions, banks,

and the general public. NTPC is primarily involved in constructing and operating power

stations. It is among the world‘s largest and most efficient power generation companies.

NTPC has installed capacity of 29,394 MW. It has

15 coal based power stations (23,395 MW),

7 gas based power stations (3,955 MW) and

4 power stations in Joint Ventures (1,794 MW).

The company has power generating facilities in all major regions of the country. It

plans to be a 75,000 MW company by 2017. NTPC is pursuing expansion of its business

activities into hydroelectric generation, coal mining, gas exploration, and participation in the

liquefied natural gas value chain, which supplements and supports its core power generation

activities.

NTPC Organisational Structure [see Exhibit 3]

Vision- A world class integrated power major, powering India's growth with increasing

global presence.

Mission- Develop and provide reliable power related products and services at competitive

prices, integrating multiple energy resources with innovative & Eco-friendly technologies and

contribution to the society

7

Core Values - BCOMIT

Business ethics

Customer Focus

Organizational & Professional Pride

Mutual Respect & Trust

Innovation & Speed

Total Quality for Excellence

Corporate Mission

―Develop and provide reliable power, related products and services at competitive prices,

integrating multiple energy sources with innovative and eco-friendly technologies and

contribute to society‖.

For the growth so far [see Exhibit: 4].

PRODUCTS AND SERVICES

Power generation- The Company has formulated a long term Corporate Plan for 15 years up

to 2017. The Corporate Plan seeks to integrate the Company's vision, mission and strategies

for growth with the national plans and to provide the company the cutting edge in the

emerging competitive environment. NTPC is targeting to become a 75,000 MW plus

Company by 2017.

Consultancy-The Consultancy Wing of NTPC, with an ISO 9001:2000 accreditation,

undertakes all the Consultancy and turnkey project contracts for Domestic and International

clients in the different phases of Power plants. NTPC is registered as a consultant with several

leading international development and financial institutions such as The World Bank, The

Asian Development Bank, The African Development Bank and UNDP.

Power Management Institute- NTPC has full-fledged facilities at the Power Management

Institute, NOIDA for providing training in all aspects of power Plant Management and

Systems. It also has Full Scope Replica Training Simulators both for Coal as well as Gas

based Stations for training personnel in Operation and Maintenance of power plants.

SUBSIDIARIES AND JOINT VENTURES

Business development through Acquisition and Joint Ventures serves both NTPC's own

commercial interest as well as the interest of the Indian economy taking over being a part of

the acquisition process, is also an opportunity for NTPC to add to its power generation

capacity through minimal investment and very low gestation period. Group NTPC has 5

Subsidiaries and 17 Joint Ventures [see Exhibit: 5] in the following area:

Power Generation

Services

Equipment Manufacturing

Coal Acquisition

Power Trading

8

PERFORMANCE HIGHLIGHTS

Coal based Stations performed at the highest ever Plan Load Factor (PLF) of 89.43 per cent

compared to 87.67 per cent last year. [see exhibit 6]. Seven coal based stations (Dadri,

Unchahar, Vindhyachal, Simhadri, Rihand, Tanda and Talcher-Kaniha) have achieved more

than 90 per cent PLF. Generated 188.74 Billion Units (BU) - an increase of 10.41 per cent

over the previous year. Contributed 28.50 per cent of the total electricity generated in the

country during 2006-07 with 20.18 per cent share of the total installed capacity of the nation.

PAF of both the coal and gas-based stations remained at healthy levels, which enabled the

company to earn efficiency incentives. The company‘s Plant Availability Factor (PAF) for

FY2011 as a whole stood at 91.67%, up 46bp Y-O-Y. During 4QFY2011, PAF of coal-based

plants stood at 96.4%, while PAF of gas-based plants stood at 96.87%. [Exhibit: 6]

FINANCIAL RESULTS

NTPC Ltd has declared its provisional unaudited revenues and profit for quarter and year-

ended March 31, 2011. The audited results are expected by May 20, 2011 post which we will

release a detailed results analysis. The provisional numbers indicate that the performance is

likely to be in line with CRISIL Equities‘ estimates. CRISIL continue to believe that NTPC is

better placed due to strong growth prospects, higher fuel security and a stable return model.

NTPC maintains fundamental grade of 5/5, indicating that the fundamentals of the company

are excellent relative to other listed securities in India. [Exhibit: 7] & [Exhibit: 8]

100% realization of the billing for the eighth consecutive year.

Provisional and un-audited Net Sales of Rs. 53,721 crore during 2010-11 as against

Rs. 46,169 crore (audited) during 2009-10, registering an increase of 16.36%. The

provisional and un-audited Gross Revenue is Rs.56,331 crore during 2010-11 as

against Rs.49,247 crore (audited) for the year 2009-10, an increase of 14.38%.

Provisional and un-audited Profit after tax for the year 2010-11 is Rs.8,826.16 crore s

compared to Rs.8,728.2 crore (audited) during the year 2009-10, an increase of

1.12%.

Capital Expenditure of Rs.12,817.61 crore during 2010-11, an increase of 22.46%

over the last year‘s figure of Rs.10,467.13 crore. NTPC Group‘s capital expenditure

was Rs. 16,326.58 crore as against Rs.14,334.54 crore over the last year, an increase

of 14%

Contributed Rs.6,243.99 crore to exchequer on account of Corporate tax, Dividend

and tax thereon and wealth tax, an increase of 92% over the previous year.

Approved outlay for 2011-12 for NTPC‘s capital schemes is Rs.26,400 crore; for

NTPC Group, the outlay is Rs.30,843.72 crore.

For Financial Results [Exhibit: 11]

9

PROJECT OBJECTIVE The Indian power sector has historically been beset by energy shortages which have been

rising over the years. In fiscal 2010, peak energy deficit was 12.7% and total energy deficit

was 10.1%. The demand for electricity has consistently exceeded the supply, and the demand-

supply gap has been widening. Rapid growth of the economy places a heavy demand on

electric power. Although generation capacity has increased substantially in recent years, it has

not kept pace with the continued growth of the Indian economy, despite low per capita

electricity consumption. Hence, India needs to think in long term manner to chalk out the

energy plan for sustaining the growth rate at same or more rates. We have to think for the

various alternative sources of energy also considering the environmental effects of global

warming. So, there is an utmost need of look for the non-conventional energy sources like

solar/bio/waste based plants.

Along it, the Indian Power sector is among the least efficient in the world in terms

of output units of electricity per unit of fuel (coal/gas/oil). Even if we compare India with

other developing nations like China and Korea, India is far behind in terms of generation

efficiency. Therefore, there are following goals of this project:

I. Future Power Capacity Additions

12th Five Year Plan (2012-2017) (the "12th Plan")

Power sector in the country is poised for record capacity addition of 15000MW during this

financial year said Shri Sushilkumar Shinde, Union Minister of Power inaugurating

International O&M Event ―Indian Power Stations - 2011‖ . It needs to plan to be a 75000MW

company by 2017. This is very important to sustain the growth rate of 9% yearly.

II. Power requirement Projection as per the Five Year Plans.

The analysis of power requirement considering the population and the economic growth upto

the 15th

Five Year Plan i.e. 2031-32. Hence, incorporating the past trend and other major

factors, draw the projected power plan using the Excel showing the each Five Year Plan‘s

Power target, yearly power target, cumulative growth pattern and Growth rate of power

requirement.

III. Calculation of various Parameters related to power generation

Calculation of cost of power generation per unit of primary and secondary fuel considering

their calorific value. Calculation of the fuel requirement to generate the power i.e. how much

to be imported and how much can be used from the domestically available coal store. Also,

calculating the tariff values to project the revenue from sales of electricity to various State

Electricity Boards (SEBs).

IV. Study of Long term Capital Requirement for the Power Generation

The analysis of debt, equity, earnings and other financial values for the projected future

power capacity considering the effects of Inflation, taxes, cost structure, tariffs and other

regulations. Hence, prepare a capital planning model using Excel showing the year wise

power generation, capital requirement, sales of power, profit, debt and equity. It will show the

need of future investment in the power sector.

V. Study of Power Sector in developed and Developing countries

Study and analysis of the differences between them in terms of functional, funding, technical

and regulatory methods, Particularly focusing on China and India and identifying the cause of

differences. Also, to recommend the various ways for the Indian Power Sector to Improve on

various fronts to achieve same level of efficiency.

10

MAIN DELIVERABLES

Identification of causes of weak efficiency of Indian Power Sector compared to China

and other developed countries.

Study of funding the power projects and Borrowing from various financial agencies

like Asian Development Bank, World Bank, Bank Loa n etc.

Analysis of future power capacity addition by NTPC as per the Five year Plans.

Tariff calculation, cost calculation considering the fuel quality and other technical

parameters like calorific value, fuel consumption, auxiliary consumption etc.

Capital calculation to meet the future power capacity addition considering the

inflation, tax and borrowing issues.

Developing a financial model using Excel showing growth trend, capital requirement,

revenue, debt, earnings, equity and profit for each year.

MAIN GOALS

Proposals for the improvement of the Indian Power Sector.

Projection for the Power Capacity addition and the Investment needed for that in

future.

Financial Model using Excel and drawing the pictorial representation of the results.

SURVEY OF LITERATURE For the survey of the literature to know what had been done to meet similar targets satisfying

the various criteria, I studied various cases, articles, reports and research papers from

Academic Institutes and Industries related to the same situation.

POWER PROJECT FINANCING TRENDS Despite the fact that coal-fired power projects are being cancelled at a quickening pace, coal-

fi red power is not going away any time soon. The recent global recession has severely

disrupted the growth momentum achieved by many developing countries. Although the

current economic recovery has bestowed considerable benefits on many industrial nations, it

has only reached a few developing countries. In this context, as would be expected, the

financial environment for power utilities around the world continues to be difficult.

Reflecting both capital shortages and a slowing of demand growth, there have been major

reductions in investment programmes in the power sector.

As an important instrument for changing the mix of a country's energy

consumption; the critical need to improve efficiency and resource utilization; and, perhaps

most important, the availability of capital. Over the past few years, the slowing down of

economic activity has reduced the growth of electricity demand in most developing countries.

However, in some countries — such as China (10.9%), India (6.6%), Indonesia (19%),

Pakistan (9%), and Turkey (8%) - the growth of electricity consumption has been constrained

by supply and there is a large unsatisfied demand, which has a high economic cost for those

countries.

Investment patterns and the energy mix

Power systems offer efficient means of using coal, lignite, and gas to distribute energy

to a wide range of users. Hydropower, nuclear, and, to some extent, geothermal

energy can only be harnessed effectively in the generation of electrical power.

The large scope for this is evidenced by electricity's major share in the energy sector.

For many countries, changing the energy sources from which electricity is generated

is an essential part of adjusting to the higher price of oil.

11

World Bank projections have indicated that

the cost of imported oil for electric power

generation will account for about one third

of developing countries' oil imports.

The economics for substitution are

particularly attractive in countries that have

an abundant supply of indigenous gas. The

scope for changing the generation mix

depends on the size of the system and the

country's specific conditions.

Several countries will continue to rely

heavily on oil or expensive hydropower

and will be unable to avoid costs of 12 to

24 cents per additional kilowatt-hour, but

the use of imported coal is not economical

because either power systems are modest

in size or the countries are landlocked,

raising transportation costs.

Two important considerations are the

significant economies of scale in their

construction and the fact that for technical

and economic reasons they must operate

close to their full available capacity.

Co-financing arrangements

For those World Bank borrowers that can borrow on commercial terms, export credits and

commercial banks constitute the most important source of external financing. Under the

traditional arrangement for co-financing with commercial banks, the World Bank and a

commercial bank enter into separate loan agreements with the borrowing country. Loans from

the commercial banks are on market terms and negotiated directly by the banks with the

borrower. In an endeavour to strengthen its role as a catalyst for more commercial

investment, the World Bank introduced innovative new co-financing instruments. The so-

called "B" loan programme was designed to increase the participation of commercial banks

in projects assisted by the World Bank. It was intended to supplement the Bank's traditional

methods of co-financing with the private sector and, to provide a wider ran.ge of options for

structuring-financed operations. Under the "B" loan scheme, three additional options become

available that permits the Bank to participate in financing from commercial sources, in

addition to making a direct loan, the new options are:

Direct financial participation in the later maturities of a "commercial loan‖

Guarantees of the later maturities of a private loan instead of direct funding

Contingent participation in the later maturities of a commercial loan that, initially,

would be financed entirely by commercial lenders.

Looking at new possibilities

In-the context of its overall energy lending operations, the Bank is actively looking at

the possibilities for nonrecourse or limited recourse financing techniques as a means

of mobilizing additional resources for power development.

These techniques allow commercial firms and lenders to finance attractive projects on

the basis of the projects' own cash flow, rather than on the basis of an overall

guarantee offered by the host government or the project owner.

12

The required conditions for successful project financing of this nature include a

reasonable perception of country and project risks; a strong and internationally

recognized project sponsor; preferably an export orientation of the project; and

generally a long-term purchase contract.

The World Bank's electric power lending

The World Bank has been the largest single international financier of electric power in

developing countries. In countries where the power sector is well developed and well

managed, a sector loan may be made. An analysis of the projects financed shows that

over the past six years there have been a distinct movement away from oil-fired

thermal generation towards hydro-generation, with significant activities in

transmission, distribution, and rural electrification.

On average. Bank finance covers about 30% of the total project costs. It also helps in

strengthening institutions in the power sector — by advising on priorities for system

development, management structure, electricity tariffs, financial and technical

operating practices, and by enhancing their ability to raise funds for expansion from

domestic as well as public or private external sources- other than the Bank.

Local currency requirements

The availability of domestic resources also will be a decisive factor in the success or

failure of power investment programmes. Many developing countries have difficulty

in mobilizing domestic resources for power investment partly for reasons specific to

the sector, partly because political pressure keeps rates below appropriate levels, and

partly because domestic savings in general are low and financial markets are almost

non-existent.

Revenues from power tariffs often covered local investment costs and external

borrowings were used to finance foreign exchange requirements.

Investments now being contemplated have longer gestation periods and much higher

costs requiring loans with longer maturities than are generally available. Reliance on

budget support for financing power investment means that investment often has to be

restrained when macroeconomic pressures on the budget become severe.

Inability to raise domestic financial resources has delayed the implementation of

power investments in many countries, leading to shortages of power and heavy

economic losses due to the disruption of production. Shortage of local currency also

hampers maintenance programmes that reduce the output of existing generating plant.

Power Projects Finance (PPF)

The Power Project Finance (PPF) market, defined as the largest markets, represents an

important segment of the total power market in developing countries. Examination of the PPF

market shows the following regulatory and financial trends:

A strong commitment by the host government to private power is a key determinant of

activity in a country. Most projects have BOO structures and long-term contracts.

Other structures and merchant pricing are rare.

There is relatively little private risk debt capital.

Countries with strong domestic capital markets provide a large portion of their own

debt requirements

Projects development time is considerably shorter in the countries with private power

experience than in countries without it.

13

PRIVATE POWER FINANCING: PROJECT FINANCE TO CORPORATE FINANCE Limited recourse project financing of power generation projects has been widely promoted as

a solution to the intractable problem of getting private credit to a sector dominated by no

creditworthy borrowers and public agencies— from the point of view of both those supplying

capital and those needing it. In such a scenario project financing of independent power

producers (IPPs) may seem the only way to get new capacity fast. In the developing world,

however, the public-private partnership in project-financed IPP ventures has been

disappointingly slow to produce results. The need for corporate balance sheet support for

private power sector investments is gradually being recognized, and the benefits of this shift

in financing structure are worth reflecting on because:

(I) Balance sheet support by the main partners in an IPP financing offers greater security to

lenders and provides easier (and perhaps cheaper) access to long-term debt—critical to

sustainable power sector financing given that IPPs typically depend on debt for 60 to 75 per

cent of their financing requirements.

(II) While equity in limited recourse project finance is almost exclusively private, balance

sheet support by IPP sponsors can open access to public equity markets, which are deeper and

generally cheaper.

(III) Increased corporate balance sheet support is a corollary to the restructuring in the

world‘s power sectors.

Project Finance is more expensive for an IPP

Project finance implies that the lenders to a project have recourse (or claim) only to

the project‘s cash flows and assets. In effect, then, the project is financed ―off the

balance sheet‖ of the project sponsors. Such project finance is termed nonrecourse

and is at one extreme of the project finance–corporate finance continuum of financing

possibilities.

In practice, project finance in developing countries is backed by sponsor or

government guarantees provided to give lenders extra comfort. In traditional corporate

financing, at the other extreme of the financing continuum, lenders rely on the overall

creditworthiness of the enterprise financing a new project to provide them security.

This combination of security, liquidity, and information availability allows debt to be

issued at a lower cost than through project finance. Further, because the enterprise‘s

overall risk is diversified over all the activities that it is engaged in, the cost of equity

is also usually lower.

The financing advantage for both debt and equity makes the overall cost of capital

lower for corporate finance. It also has low transaction cost because it avoids the high

cost of negotiating the web of carefully structured legal contracts with purchasers and

commercial lenders necessary under project financing.

Purchasing utilities weigh the risk that state regulators will disallow investment costs

against the perceived lower risk (and lower profits) of purchasing electricity from an

IPP, an arrangement in which all costs can be passed through or expensed.

Increasing balance sheet support for IPPs

As sector unbundling and self-generation expand choice for wholesale and (potentially) retail

consumers, and thus increase demand uncertainty, balance sheet support by IPPs will play an

important role in sharing demand risk among key participants.

Project developers operate in a fiercely competitive market for international projects.

Assuming competitive bidding, the primary source of competitive advantage lies in

the ability to find financing at the lowest cost, as differences in technical and

operating abilities become virtually indistinguishable among the frontrunners. (Other

attributes may, however, predominate in negotiated, non-competitive IPP deals.)

14

In the competitive international IPP market, several trends indicate that balance sheet

support is the preferred means for achieving this cost-of-capital advantage. Project

developers are putting their own balance sheets at risk—or those of their parent

companies—to raise cheaper debt for projects and to finance their equity contribution.

Creating consolidated balance sheets

Developers are pooling projects into entities that are then able to raise capital on the strength

of a combined balance sheet comprising the ―pooled‖ assets of the different projects.

Providers of equity and debt then finance the business of building and operating private

generation facilities rather than an individual power plant. Pooling spreads project risk.

For a multinational developer, it also reduces country-specific risk. And for a

developer with a few projects already under commercial operation, pooling offers the

advantage of an immediate revenue stream for repaying debt and paying dividends.

Pooling has two other benefits.

- First, it enables project developers to tap public equity markets—most private

project developers finance the equity component of a project privately.

- Second, it enables developers to raise cheaper debt on a corporate finance

basis.

IPP sponsors that have used this approach include Consolidated Electric Power Asia

(CEPA), raised debt and equity in the capital markets on the basis of its corporate

strategy of building multiple power plants in Asia.

POWER REFORMS – TECHNOLOGICAL AND FINANCIAL PERSPECTIVE The Government is convinced that rapid and self-sustaining growth of power sector and its

financial viability is essential for a speedier and sustained socio economic development.

Recognizing the need for reforms in the power sector, the Government of India has

endeavoured to evolve a national consensus for reforms hence the Electricity Regulatory

Commission Act was enacted. The power sector reforms programme endeavours:

To supply electricity to the consumers under the most efficient conditions in terms of

quality and cost in order to support the economic development of the State;

To take effective steps to enable the power sector to mobilize, from within the sector,

adequate financial resources for financing grid expansion requirements;

To create an operating and regulatory environment conducive to investment and

competition so as to foster entry of private participants into power generation,

transmission and distribution and to attract the capital and expertise required to

support power system up gradation, expansion and service quality improvement.

The Electricity Act 2003 is an attempt to introduce competition into the power sector. The Bill

envisages transforming the sector from a system of monopoly providers at regulated rates to a

system in which different companies compete to provide electricity. Key features are:

1. To disaggregate the functions of generation, transmission and distribution with a view to

creating independent profit centres and accountability;

2. Reorganization and restructuring of the State Electricity Boards in accordance with the

model, phasing and sequencing to be determined by the respective State Governments (States

would have the freedom to retain their Boards until they decide to restructure their industry);

3. States to determine the extent, nature and pace of privatization. (public sector entities may

continue if the States find them sustainable);

4. Competition, economy and efficiency to be promoted in the best interests of the consumers

and the national economy;

5. Transmission to be separated as an independent function for creation of transmission

highways that would enable viable public and private investments in the electricity industry;

15

6. Facilitation of private investment in transmission to be broadly retained;

7. Present entitlements of States to cheaper power from existing generating stations to remain

undisturbed; and Compulsory metering for enhancing accountability and viability;

8. Central and State Electricity Regulatory Commissions to continue broadly on the lines of

the Electricity Regulatory Commissions Act, 1998;

9. Special provisions for promoting access to electricity in rural areas and for the

economically weaker persons and Stringent provisions to minimize theft and misuse; and

10. Provisions for transition from a State-owned monopoly to a liberalized and competitive

industry.

Other recent changes include:

Electricity Regulatory Commission

Private Sector Investment in Power Transmission

Limit for Central Electricity Authority (CEA) approval raised

Liberalized Hydro Policy

Mega Power Policy:-

The Cabinet approved a new policy for mega-power projects defined as a plant of

more than 1000MW). This envisaged the establishment of a Power Trading

Corporation; exemption of customs duty on equipment imports and easing

administrative controls such as those relating to environmental clearances.

Second Generation Reforms:-

Power as a subject falls under the concurrent list and hence is under the jurisdiction of

the State Governments. With the Central Government putting in place a series of

legislations to usher in reforms in the Power Sector, the onus now lies with the State

Governments in the country to initiate and implement reforms in this sector.

Effective Market Monitoring Function for deregulated electricity

METHODOLOGY Since, this project is Analysis cum Financial model for the Power sector i.e. NTPC and

particular focus is on the analysing the Power Sector issues in developing world particularly

focusing on India and China. Along it, to develop a Financial Model for the Capital Planning

for the NTPC to meet the Power Generation targets as per the Five Year Plans and propose

the ways for the improvement of Indian Power Sector. Therefore, methodology for this

project included the following activities:

Activity Description

Activity – I Study of the status of Indian Power Sector Infrastructure

Activity – II Study of the Global Power Sector and Funding pattern of the Power

Projects.

Activity– III Comparing the Indian and Chinese Power Sector and pointed the learnings

for Indian power sector from the China to enhance the efficiency.

Activity – IV Capital Budgeting for a Dummy Project using assumptions

Activity – V Power Generation target for the India as per the Five Year Plans and the

World Bank Report. And Projection of the Capital requirement.

Activity – VI Financial Strategies & Fund Raising by NTPC.

Activity – VII Calculating the Cost of the Capital i.e. Cost of Debt and Equity funding.

Activity – VIII Developing the Capital Budgeting Model Using the Excel.

Activity – IX Opportunities and Challenges.

Activity – X Conclusion and Suggestions.

16

STATUS OF THE INDIAN POWER SECTOR

Demand and Supply Analysis

India ranks 5th in the world in terms of total installed capacity; it is one of the lowest in terms

of per capita consumption of power. The Government adopts a system of successive Five

Year Plans that set out targets for economic development in various sectors, including the

power sector. Still, India has continuously experienced shortages in energy and peak power

requirements. According to the Central Electricity Authority's ("CEA") monthly review of the

power sector ("CEA Monthly Review") published in March 2011, the total energy deficit and

peak power deficit for March 2011 was approximately 7.5% and10.3%, respectively.

Power Generation Efficiency

Indian power generation are among the least efficient in the world. After comparing these

statistics to International Energy Agency (IEA) statistics it is noticed that thermal power

generation in both sources is the same. The oil input in thermal power plants was also found

to be the same. For coal input a difference was found of 10–12% higher. The reason for this

could be different conversion factors to convert from tonne coal to energy. IEA uses e.g. a

conversion factor of 18 GJ/tonne coal for India for 2003, while Ministry of Statistics and

Programme Implementation(MOSPI) uses a conversion factor of 16.6 GJ/tonne coal based

on GCV for 2003 (16.1 GJ/tonne based on NCV, with 0.97 conversion from Gross calorific

value (GCV) to Net calorific value (NCV)). This explains the difference in higher coal input

in IEA statistics. The Energy and Resource Institute (TERI) gives even lower values for coal

input for power generation than; 4.3 vs. 4.5 PJ in 2001. IEA gives 5.0 PJ for 2001. In this

analysis we will use the fuel input data for coal (corrected to NCV) from to calculate the

energy efficiency for coal-fired power generation.

17

Weighted average efficiency of fossil-fired power production

GLOBAL POWER SECTOR ANALYSIS 80% of global population lives in developing areas. Of the 6.0 billion populations, in the

Organisation for Economic Co-operation and Development (OECD) countries the total

number is approximately 1.2 billion. As regards energy consumption, 16% of the global

population in the OECD countries would consume, by the year 2030, more than 40% of

energy and the balance about 84% of the global population in the non-OECD areas would

consume a little less than 60% of the total energy consumed in the world. World electricity

generation rose at an average annual rate of 3.7%, greater than the 2.1% growth in total

primary energy supply. De-regulation in areas of the global energy markets has led to fierce competition.

Now more than ever electricity has to be produced at a lower cost with many countries

imposing ever tightening environmental legislation to reduce the impact power generation has

on the environment. The enormous challenges are recognised in providing electricity as

efficiently as possible and strive to develop technology to meet your needs. Collectively,

developing countries use 30% of the world's energy, but with projected population and

economic growth in those markets, energy demands are expected to rise 95 %. Overall global

consumption is expected to rise 50 % from 2005 to 2030. As mentioned earlier, coal

constitutes the most dominant constituent of the energy sector. Different types of coal power

plants contribute by 50% to the total global power generation at the end of the time horizon

Power Sector Reforms worldwide

Many countries are currently working to create more competitive environments for electricity

markets in order to promote greater efficiency. These efforts affect

Regulation,

Funding and capital raising,

Industrial structure, and

Ownership.

18

Regulatory and Structural Changes

Regulatory changes can lead to the elimination of monopolies and reduction of

governmental intervention in the electric power industry.

Reforms include the reduction of price controls and tariff restrictions and the

elimination of subsidies. Structural changes are characterized by the division of the

industry into its three major functions

- generation,

- transmission and

- distribution

and a commitment from governments to ensure that independent producer and other

power-related enterprises will have full and fair participation in each of these

functions.

Ownership trends include an emphasis on privatization and commercialization to

attract private capital from foreign and domestic sources.

Privatization and Funding pattern of the Power Projects

Many non-OECD countries facing high electricity demand growth favour privatizing their

electric power sectors and opening their markets to foreign firms. This approach can free up

large amounts of public capital, which can be used instead for social programs. In addition,

private ownership allows managerial accountability, market efficiency, and better customer

service while reducing government deficits and international debt. The reasons for electric

utility privatization are numerous and vary from country to country. Some of the more

evident reasons include the following:

Raising revenues for the state through asset sales

Acquiring investment capital

Improving managerial performance

Moving toward market-determined prices

Technology transfer

Reducing the frequency of power shortages

Reducing the cost of electricity to consumers through efficiency gain

Taking advantage of creating national and regional power grids, and

Privatization of formerly state-owned electric power assets in developing countries has

opened up enormous investment opportunities. For foreign investors, investment in overseas

electricity assets offers opportunities to achieve potentially higher returns and, in many cases,

to realize greater growth opportunities than are available at home.

In many parts of the world, financial capital may be a greater resource constraint

than primary energy supplies. It has been estimated that over the period 1993 to 2010

investment to sustain the power generation infrastructure will require from 0.1 to 0.2 per cent

of gross domestic product (GDP) in the industrialized countries, 0.6 to 1.1 per cent of GDP

in China, and as much as 1.0 to 1.6 per cent of GDP in India.

In the industrialized world, restructuring of electricity markets is seen as a way to

enhance competition, bringing market forces to bear for the benefit of consumers. In the

developing world, privatization is seen as a way to attract foreign capital for investment in the

energy infrastructure while preserving public capital for other important projects.

Private power is beginning to make large contributions to power sectors in developing

countries. Private power is introducing new sources of financing to developing country power

sectors, providing new services, and creating competitive power markets.

19

Nearly two-thirds of all the capital raised for new private power projects was

provided under Project finance structures, in which project cash flows and assets, rather than

sponsors balance sheets, provide security to lenders. From a regulatory perspective, a strong

commitment to private power is a key determinant of PPF activity i n a country. Structurally

power project finance has involved largely build-own-operate (BOO) project structures and

long-term contract. Merchant power plants are rare. The vast majority of debt has involved

direct finance or credit enhancement from export credit agencies and multilateral

development banks. Development times average two to three years, and is less in countries

with PPF experience. The private sector uses a variety of mechanisms for managing risks. In

half of the projects examined it relied on central government guarantees. In the rest, it relied

on alternative mechanisms such as government loans, public insurance, local government

support, and strong commitments by utility off-takers. Private power continues to face many

challenges in developing countries. Protracted contract renegotiations and a lack of adequate

government risk assumption may erode investor confidence and restrain private investments.

Continued growth may require greater private debt capital risk taking. The primary drivers for

these FDIs have been:

Competition and anti-trust regulations, preventing major acquisitions in the domestic

markets.

The opening up of the domestic markets to international players, as a result of the

restructuring in a number of countries.

The stagnation of electricity demand in most developed markets, due to improved

energy efficiency.

The poor financial health of the power industry in many countries, which has resulted

in the opening up of many domestic markets to foreign private investments.

A pressure on profit margins, as a result of increased competition.

COMPARISON OF THE CHINESE AND INDIAN POWER SECTOR

The comparison of India was made with China because, India, when just independent, was

much similar to China in terms of demographics and infrastructure availability. China has

surged far ahead of India in its quest to satisfy the demand for power. China and India have

similar socioeconomic characteristics but distinct political setups. Unlike other emerging

economies, these countries also constitute two huge, unexplored markets for consumer

products. Both China and India are more heavily dependent on coal for electricity generation

than are the other developing Asian nations. China has been a role model, among the

developing countries, in carrying out reforms in various sectors in infrastructure.

The Demand – Supply Situation

Growth in electricity generation averaged 8% per annum during the last 15 years.

Nonetheless, electricity supply did not keep pace with growth in demand.

Strong projected growth in electricity demand in China results from two factors.

Increased need for rural electrification. The Chinese government is working to keep electric power growth in line with

economic growth.

Energy Consumption Projections for China

If electricity demand grows, as expected, at 8 to 9% per annum, China would need to

add about 18-20 GW of capacity per year10.

Even with a growth rate of 7% (low-case scenario), the growth in China‘s power

generating capacity will be about 16 GW per year. This still accounts for more than

20% of the world‘s new capacity.

20

Under the base-case scenario, the projected mix of generating capacity indicates that

the share of thermal power will remain stable at about 75-78%. This translates into an

addition of about 15,000 MW/year to thermal capacity or an investment of

approximately $15 billion/year in thermal power.

More than 90% of this investment will be directed to coal-based power generation.

Given the projected huge increase in overall energy usage by 2020 (162 per cent), a

massive investment in other energy infrastructure.

By 2020 China will be consuming as much electricity as the U.S., although the latter will

achieve that level through a modest 33 per cent increase over the 23-year time frame.

POWER SECTOR REFORMS IN CHINA

The Chinese Ministry of Electric Power (MoEP) began reorganization and it had been

completely dismantled now. Along with many other ministries, its commercial and regulatory

functions have been divided and now rest in the hands of several different Chinese

organizations. State Power Corporation of China (SPCC): As part of the Chinese

Government's efforts to "separate government functions from enterprises" the SPCC

represents a wholly state-owned investment that controls approximately 80 per-cents of all

power assets in China. Encouraging the localization of production is this market has been a

key objective of the Chinese Government. SPCC's Main Duties in this Respect are:

Formulating China's electric power development strategies, legislation and policies,

including investment policy, technical policy and major energy production and

consumption policies.

Formulating unified energy industry planning in collaboration with the State

Development Planning Commission and other governmental agencies like CEC.

Supervising the implementation of related national policies, decrees and plans.

Providing services to regional and provincial electric power enterprises.

Reform policies adopted by the Chinese Government

China has a sound energy / electricity conservation record among developing countries.

Various measures to improve the efficiency of electricity use have been introduced in

attempts to reduce the need for new generating capacity, and these measures have been

successful, as is indicated by the low ratio of 0.86 for the elasticity of growth in electricity

demand to GDP growth achieved during the last decade.

Faced with fiscal revenue constraints, the government is now promoting a shift in the

energy conservation programs to rely more on market-based incentives and introduce

innovative and commercially based contractual and financing mechanisms.

The Government is also encouraging efficient energy use through reliance upon

energy price increases.

Significant progress has been made in many ways to simplify the tariff, improve its

structure and bring it into line with costs.

Consumer prices for electricity now reasonably reflect economic costs in many

provinces as time of use pricing is being done.

Tariffs in China's power sector

Both Provincial and Central authorities have purview over the formulation and approval of

electric power tariff rates. Tariff rate formula and application with regard to the grid system,

is an area expected to change with the issuance of new regulations introducing competition

into the grid. There are four kinds of tariffs.

State Base Tariff: It is also known as the catalogue price and generally only pertains to

older, state-financed plants.

21

New Plan Tariff: It has a very complex formula and it applies to post-1985-built

plants).

Additional Quota Tariff: It varies from province to province and is based on the state

government‘s decision.

Financing in Chinese Power Sector

The International Energy Agency (IEA) estimates China will need to invest 2.765 billion into

the industry by 2030 to cope with demand – an estimated one quarter of the total global

energy sector investment within that period.

China has its own special set of barriers: investment controls incorporation rules,

usury laws, and lending rules, as well as unclear and changing CDM regulations.

All profits from future generation were remitted back to the government. Chinese

banks began to provide long term loan.

Foreign direct investment has played a critical role in financing the expansion of

China‘s electric power infrastructure and is expected to play an even more important

role in the future despite being restricted—for now—to strictly joint ventures

involving less than 50 per cent ownership.

Private investors have been involved in developing power projects through three main

methods:

- Joint ventures (JVs),

- Initial public offerings (IPOs) on stock exchanges, and

- BOT agreements.

Criteria for approval of foreign capital

The current power demand in the proposed region

The financing costs with regards to the international markets

Capability of the project to bear the tariff rate

Projects financial structure

Foreign exchange balancing plan

Scope of Chinese power plants to utilise foreign capital

Construction of new thermal (including co-generation) power plants.

Construction of new hydroelectric plants (including pumped storage units).

Construction of new nuclear power stations.

Power generation projects involving renewable energy or new technology.

Expansion of or the technological renovation of an existing power plant.

Rolling exploitation mechanism

A "rolling exploitation mechanism" means that the income from the first plant does not need

to be used for repayment of loans, but can be used for continued development of other power

projects. It is being employed for both hydropower and nuclear power to provide financing

for new projects.

FDI IN CHINA'S POWER SECTOR

To reduce chronic electricity shortages and enhance the efficiency of Chinese power plants,

China opened its doors to foreign direct investment (FDI). The volume and characteristics of

FDI in China's power sector, its impact on energy efficiency, and the factors that limit this

impact have the following characteristics:

The volume FDI in China's power sector fell below target during 1995 - 2000 by a

substantial margin, most likely because of persistent institutional barriers to FDI.

22

To avoid the lengthy central government approval process for large plants and to

minimize risk, early FDI tended to be in small-scale, gas- and oil-fired plants using

imported equipment and located in coastal provinces. However, more recent FDI tends to

be in larger coal-fired plants that use more Chinese equipment and tends to be located in

the north as well as the east.

FDI in china is likely having a significant positive impact on energy efficiency. Almost a

third of the 20 FDI plants in our survey sample use advanced efficiency enhancing

generating technologies, and a fifth are cogeneration plants.

Institutional bias in favour of small-scale plants has hampered the contribution of FDI to

energy efficiency and Uncertainty associated with the approval process of FDI projects,

electricity sector regulation, and the risk of default on power purchase contracts.

The institutional arrangements available for FDI in the Chinese power sector are:

Cooperative joint ventures, wholly-owned foreign ventures,

equity joint ventures,

build operate- transfer (BOT) projects,

build-operate-own (BOO) projects,

commercial loans, and

Stock and bond investments in existing Chinese power enterprises

LEARNING FOR INDIA Financing of power projects

Rolling Exploitation Mechanism and BOT (Build Operate Transfer)

Prices for the generation from all new plants are now set by contract to cover financing

and operating costs, on a plant-by-plant basis, and rolled into the average power tariff.

Restructuring of Power Sector Decision and Policy makers

Divesting the amount of decision making closer to the state or province level.

The commercial and regulatory frameworks have been divided amongst various

entities capable of doing certain things best.

Structured power monolith, Reforms in the state enterprise and Creation of electricity

markets. Directing investments to the adoption of more energy-efficient measures

instead of merely increasing the total energy supply will be crucial to meet this

challenge.

Energy conservation for both economic and environmental terms by transmitting to

the users more realistic and effective price signals. Physical quota systems, financial

support, R&D, information dissemination

Setting up large scale plants and discouraging the setting up of small scale plants

which won‘t be efficient generators as well as won‘t have adequate capital investment

to take pollution control measures. Environmental considerations should be taken into account

Stressing upon using clean coal technologies.

R and D efforts in the development of clean coal technologies.

CAPITAL BUDGETING FOR A DUMMY POWER PROJECT A dummy power project was given with the life of 25 years starting from April-2011. Some

assumptions for the input values were given by NTPC (shown in the table below). Using

these assumptions following parameters were calculated: A. Primary and Secondary Fuel Cost

B. Depreciation, return on equity and Operations & Management (O&M) Cost

C. Working Capital and Interest on working Capital

23

D. Term Loan and Interest

E. Average fixed cost

F. Tariff

G. Profit and Loss statement

H. Cash Flow statement and NPV, IRR

A. Cost of Primary and Secondary Fuel

24

B. Depreciation, return on equity and Operations & Management (O&M) Cost

25

C. Working Capital and Interest on working Capital

26

D. Term Loan and Interest

27

E. Average fixed cost

28

F. Tariff

29

G. Profit and Loss statement

30

H. Cash Flow statement and NPV, IRR

31

-1500.00

-1000.00

-500.00

0.00

500.00

1000.00

1500.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29Rs.

Cro

res

Time Period

Cash Flow

Net Cash Flow captial expenditure Gross Cash Accruals

Cash from operations cash from invseting cash from financing

From the Table- H, I got the values for capital budgeting as follows: IRR 11.40%

WACC 10.41%

NPV 160.44

Since, the value of NPV is positive also the value of IRR is more than WACC, so NTPC

should accept this project.

POWER CAPACITY ADDITION AND CAPITAL REQUIREMENT The low per capita consumption of electricity in India presents significant potential for

sustainable growth in the demand for electric power in India. The total energy consumption in

India is estimated to grow to approximately 1,280 million tonnes of oil equivalent ("Mtoe")

by Fiscal 2030. This implies growth of 3.5% CAGR in India's energy requirement over the

next 25-30 years, reflecting the huge potential for investments in the energy sector in India.

Projecting the Investment needed to meet the target.

Installed generation capacity to increase by about 60,000 MW (from 125,000 MW to

185,000 MW)

Investment program estimated to cost US$100 billion

- Generation – US$60 billion (Rs. 2,70,000 crores)

- Transmission & Distribution – US$40 billion (Rs. 1,80,000 crores)

In addition:

- About 20,000 MW of existing thermal capacity to be rehabilitated and

modernized

- Distribution networks to be upgraded and MIS strengthened

Power target and capital requirement

32

FINANCIAL STRATEGIES AND FUND RAISING BY NTPC

Fund Mobilisation

Leveraging strong ratios to raise debt at optimal rates:

A. Capital Structure

New projects to be financed with Debt equity ratio of 70:30.

Internal accruals sufficient to finance equity portion of the scheduled investment in

NTPC

Deployment of equity in Subsidiaries/JVs selectively – preferably with control

retention.

B. Debt Funding

NTPC has the ―Most Favoured Borrower‖ status due to:

- Low gearing and healthy coverage ratios

- Debt servicing ability to remain strong due to certainty of revenue based on the

cost plus regime.

Long term debt (term loans/bonds) preferred to match project cash flows-to be

realised from domestic/international markets.

Projects executed by subsidiaries and JVs to be financed under projects finance route.

C. 2010-2011

Total outlay Rs. 22350 crore, Rs. 12818 crore required as debt.

For Sources of fund [Exhibit: 9] and Application of fund [Exhibit: 10]

33

CALCULATION OF COST OF CAPITAL The Weighted average cost of capital has been calculated as on 31st march 2009. We have

taken the current annual report for the calculation i.e. for the financial year ended Mar 2009.

The calculation of cost of capital requires the following steps

1) Calculation of Cost of equity

2) Calculation of cost of debt

3) Calculation of cost of retained earnings

CALCULATION OF COST OF EQUITY

The cost of equity capital for a particular company is the rate of return, both dividend and

capital gains, on investment that is required by the company's ordinary shareholders. The

returns are expected future returns, not historical returns, and so the returns on equity can be

expressed as the anticipated dividends on the shares every year in perpetuity.

The cost of equity reflects the opportunity cost of investment for individual

shareholders. It will vary from company to company because of the differences in the

business risk and financial or gearing risk of different companies.

Cost of equity is calculated by using CAPM approach in which:

re = rf + (rm ± rf)*β

Where,

rf = Risk free return (Obtained from 364 days Treasury bill of Government)

rm = Average return of market

β = Systematic Risk Factor

34

35

Market risk premium

It is the excess of market return over the risk free return. We have calculated the Market

return Using SENSEX values for the last 5 yrs. The market return is approximately 26.19%

CAPM Model

Rf = 4.45%

Rm = 26.19%

Beta (NTPC) =0.76

Cost of equity = Ke

Ke = Rf + β (Rm-rf)

Ke = 4.45+0.76(26.19-4.45)

Ke = 20.97%

Hence the cost of equity is calculated as 20.97%

CALCULATION OF COST OF THE DEBT

The cost of Debt has been calculated as follows:

DEBT COMPONENT WEIGHTS COST WEIGTH X

COST

10.00% Secured Non-Convertible

Taxable Bonds of Rs. 10,00,000/-

each with five equal Separately

Transferable Redeemable Principal Parts (STRPP)

redeemable at par at the end of the 6th year and in

annual instalments thereafter up to the end of 10th year

respectively from 5th September 2001

3000 3000/89696

=0.033

10.00% 0.0033

9.55% Secured Non-Cumulative Non-Convertible

Taxable Redeemable Bonds of Rs. 10,00,000/- each

redeemable at par in ten equal annual instalments

commencing from the end of 6th year and up to the end

of 15th year respectively from 18th April 2002

6750 6750/89696

=0.075

9.55% 0.0072


Taxable Redeemable Bonds of Rs. 10,00,000/- each

with ten equal Separately Transferable Redeemable

Principal Parts (STRPP) redeemable at par at the end of

the 6th year and in annual instalments thereafter up to

the end of 15th year respectively from 30th April 2002

6750 6750/89696

=0.075

9.55% 0.0072


Redeemable Taxable Bonds of Rs. 10,00,000/- each

redeemable at par on 10th April 2018

1000 1000/89696

=0.011

8.00% 0.0009



redeemable at par on 1st May 2023

500 500/89696

=0.006

8.48% 0.0005



5000 5000/89696

=0.056

5.95% 0.0033

36

with five equal Separately Transferable Redeemable

Principal Parts (STRPP) redeemable at par at the end of

6th year and in annual instalments up to the end of 10th

year respectively from 15th September 2003



redeemable at par on 12th January 2019

500 500/89696

=0.006

7.50% 0.0004



with twenty equal Separately Transferable Redeemable

Principal Parts (STRPP) redeemable at par semi-

annually commencing from 23rd September 2009 and

ending on 23rd March 2019

5000 5000/89696

=0.056

7.552% 0.0042





annually commencing from 2nd August 2010 and

ending on 2nd February 2020

10000 10000/89696

=0.111

7.7125% 0.0086





annually commencing from 2nd July 2011 and ending

on 2nd January 2021

5000 5000/89696

=0.056

8.1771% 0.0046





annually commencing from 5th August 2011 and ending

on 5th February 2021

5000 5000/89696

=0.056

8.3796% 0.0047





annually commencing from 9th September 2011 and

ending on 9th March 2021

5000 5000/89696

=0.056

8.6077% 0.0048


Redeemable Taxable Bonds of Rs.70,00,000/- each with

fourteen Separately Transferable Redeemable Principal

Parts (STRPP) redeemable at par semi-annually

commencing from 4th June 2012 and ending on 4th

December 2018

5000 5000/89696

=0.056

9.37% 0.0052

37


Redeemable Taxable Bonds of Rs.70,00,000/- each with

fourteen Separately Transferable Redeemable Principal

Parts (STRPP) redeemable at par semi-annually

commencing from 4th June 2012 and ending on 4th

December 2018

5000 5000/89696

=0.056

9.06% 0.0051


Redeemable Taxable Bonds of Rs.10,00,000/- each

redeemable at par in five equal annual instalments

commencing from Nov 2019 and ending on Nov 2023

3500 3500/89696

=0.039

11.25% 0.0044

11% Secured Non-Cumulative Non-

Convertible Redeemable Taxable Bonds of

Rs.10,00,000/- each redeemable at par on 21st

November 2018

10000 10000/89696

=0.111

11% 0.0122


Redeemable Taxable Bonds of Rs.10,00,000/- each

redeemable at par on 4th February 2019

5500 5500/89696

=0.061

8.65% 0.0053

Foreign currency term loans

7180 7180/89696

=0.080

0.080

others 16 16/89696

=0.0002

0.0002

COST OF DEBT= 0.1621= 16.21%

Therefore, the cost of debt has come out to be 16.21%

CALCULATION OF COST OF RETAINED EARNINGS

Cost of retained earnings is the residual of an entity's earnings over expenditures, including

taxes and dividends that are reinvested in its business. The cost of these funds is always lower

than the cost of new equity capital, due to taxes and transactions costs. Therefore, the cost of

retained earnings is the yield that retained earnings accrue upon reinvestment. There are

basically three approaches to calculate the cost of retained earnings. One way is CAPM

(Capital Asset Pricing Model). Another way is the bond yield plus risk premium approach, in

which we take the interest rate on the company's own long term debt and then add between

5% and 7% which is more of a kind of guessing and thus is not very accurate. A third way is

the discounted cash flow method, in which we divide the dividend by the price of stock and

add the growth rate. It again involves a lot of approximation. Thus in order to get the most

accurate fit we have utilized the CAPM approach for calculating the cost of retained earnings.

This entails calculating the cost of capital using the CAPM approach. We first estimate the

risk-free rate (Rf) as well as the market rate of return (Rm). The next step is to estimate the

company‘s beta (β), which is an estimate of the stock‘s risk. Inputting these assumptions into

the CAPM equation, we can then calculate the cost of retained earnings which is listed as

follows-

38

Cost of retained earnings = Rf + β*(Rm - Rf)

The main difference between the cost of equity and cost of retained earnings is the floatation

costs. Since, flotation cost is not available for this calculation; we will take cost of retained

earnings as equal to cost of equity. Cost of equity we have already calculated above using the

CAPM, which is given by the following equation:

Cost of Retained Earnings = 4.45+0.76(26.19-4.45)

Cost of retained earnings = 20.97%

CALCULATION OF WEIGHTED AVERAGE COST OF CAPITAL

After obtaining the costs of various sources, the total cost of capital to the company would be

the weighted average cost of capital. In the weighted average cost method, weights are

assigned to each source, depending on the proportion they contribute in the overall capital

structure. Depending on that, the cost is multiplied by that weight, to arrive at weighted cost.

Then all these weighted costs are added together to achieve at the weighted average cost of

capital, which is the actual cost of capital to the company. Also to take the part of capital

assigned by each source, market value is taken rather than the book value. This is to consider

the market risks associated with various types of costs, like shares etc. The following table

shows the proportion of each source to the capital structure, its cost and weights.

Weighted Average Cost of Capital = ∑ W i*Cost i

Where, Wi is weight assigned to ith

Cost, where costs are of debt, equity, preference shares

and retained earnings. Substituting the values in the above formula, from the table we get.

Weighted Average Cost of Capital = (0.124*20.97) + (0.135*16.21) + (0.741*20.97)

Weighted Average Cost of Capital = 0.026 + 0.022 + 0.155 = 0.203 or 20.3%

From the above calculations we can see that the cost of capital of NTPC LTD. comes out to

be 20.3%.

CAPITAL BUDGETING MODEL USING THE EXCEL As per the additional Power capacity requirement and the investment needed to meet the

target. First, I had to consider some of the assumptions for the input parameters as per the

industry standard and the regulations in force. On the basis of these assumptions as input

parameters, First, I calculated various costs related to: Fuel efficiency, Operational efficiency

and Functional efficiency.

Finally for Capital Budgeting analysis, I have considered two cases considered-

A. GDP growth rate is 8%

B. GDP growth rate is 9%

39

40

0

200000

400000

600000

800000

1000000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Po

we

r in

MW

Time Period

Power Requirement

Addional power requirement(per year) cummulative power requirement

0.00

0.50

1.00

1.50

2.00

2.50

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Rat

ios

Time Period

Financial Ratios

Debt to Assets ratio Equity to asset ratio Debt to Equity ratio

41

42

0

500000

1000000

1500000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Po

we

r in

MW

Time Period

Power Requirement

Additional Power Per year Cummulative Power amount

0.00

0.50

1.00

1.50

2.00

2.50

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Rat

ios

Time Period

Financial Ratios

Debt to Asset ratio Equity to asset ratio Debt to Equity Ratio

43

CHALLENGES AND OPPORTUNITIES FOR NTPC

Considering the existing supply-demand gap and the expected increase in per capita

consumption (in view of the overall GDP growth targets for the economy), the 16th

Electricity Power Survey has projected a peak load demand of 157,107 MW and

energy demand of 975 billion kilowatt-hours by the end of March 2012 (i.e., end of

the 11th Plan).

To meet this projected growth in peak demand and account for transmission and

distribution system losses, India will require 212,000 MW of generating capacity by

2012.

To accomplish this ambitious goal, both the public and private sector will be needed

to substantially contribute to generation and high-voltage transmission capacity.

Given the limited SEB resources and limited success of independent power producers

in achieving financial closure of projects, the onus of adding to the country‘s

generation capacity rests largely with NTPC.

NTPC‘s ability to develop and construct large projects reasonably within budget and

on time is fundamental to India‘s economic growth targets.

The focus of power sector reforms in the past decade has been on reforming the state

regulatory framework and improving the state transmission and distribution networks.

On these accounts, moderate progress has been made.

However, in the process, power generation capacity and interstate transmission

investment programs have continued to suffer from relatively inadequate attention.

Capacity additions have been made, but not enough to meet demand.

Private sector investment in generation to complement public expenditures has been

very limited. Recent announcements by the Government to promote the ultra-mega

power projects (a series of 4,000 MW power generation complexes to be awarded

through competitive bidding by the end of 2006) recognize this on-going challenge.

The Government is also undertaking plans through Powergrid to develop a national

grid by 2012, which will involve construction of 60,000 kilometres of high voltage

lines to evacuate 100,000 MW of power from new generating stations.

Implementation of the 2003 Electricity Act could result in the development of a more

competitive market for power in India, but the challenge will be to sustain the pace of

national and state reform and the relative financial recovery of the sector.

The Electricity Act has opened up several opportunities for existing power sector

players such as NTPC, including direct supply to large customers, retail supply,

distribution, power trading, etc.

In such a competitive environment, NTPC will continue to benefit from its extremely

competitive tariffs, multi-location facilities (and diverse customer base, reducing the

credit risk of any one particular off taker), and the ability to sell directly to

creditworthy bulk consumers who are allowed open access.

RESULTS As per the objectives and goals mentioned earlier, I got the following results:

Indian power sectors needs to bring several reforms from Operational, Functional and

Human resource to Financing of the Power Projects.

The given dummy project for capital budgeting gives the positive NPV as well as IRR

is more than the WACC, hence that project should be accepted, and still there are

some risks that have to be incorporated in analysis like Political, Environmental and

Social before actually deciding to implement the project.

Weighted average cost comes around 20.30% for financing the power project.

44

As per demand of power and needed investment projection (Section: POWER

CAPACITY ADDITION AND CAPITAL REQUIREMENT), India need to

encourage FDI and private participation to meet the huge fund requirement. And

should take it as the opportunity due to certainty of returns.

Further, due to limited availability of fossil fuels like Oil and Coal, Indian Power

Sector also need to look for alternate and viable options considering the

environmental consequences as the long term measures towards the all-around

development

CONCLUSION AND SUGGESTIONS India targets 9 – 10% economic growth rate in a sustainable manner over next 10-15 years.

Adequate availability of energy would be sine–qua–non for this objective to materialize.

Substantial expansion of capacities in coal, petroleum, gas and electricity is, therefore, the

thrust of the Government policies and programmes. Ultimate goal is to develop these markets

and facilitate, through various policy initiatives, their matured functioning in a competitive

manner. Skilful development of road maps to reach the goal is a challenge. During the period

of transition, therefore, regulatory interventions to harmonize the interests of investors,

developers and consumers, is an approach, which is being pursued by various energy groups.

In most cases, development of energy sector, in various segments, has happened under

government-controlled organizations. Over last 10-15 years, private investments are being

encouraged, particularly in petroleum, natural gas and power. While India is fully committed

to develop and expand its energy markets, it is equally committed to ensure environmental

safeguards. Using latest cost effective technologies in all the energy segments forms an

important part of policy and strategy.

Greater corporate finance support will make it possible to raise private capital for independent

power financing from wider, deeper, and cheaper sources. But innovative strategies will be

required from governments, lenders, investors, and power sector enterprises alike. The

following strategies are worth considering:

Encourage the formation of large, well-capitalized independent generation companies.

Purely private and quasi-private variants of the Huaneng merchant generation model

in China might be workable in large power systems. Healthy competition should be

engendered through prudent regulatory reviews of the market power of the IPP in a

particular system.

Encourage divestiture of commercially operating (and perhaps underperforming)

generation plants by incumbent utilities to IPP developers. These sales should be

conditional on the purchaser‘s commitment to making specified investments. By

making positive revenue streams available to IPP developers immediately, such

transactions would give them the financial base to invest in multiple plants.

In IPP prequalification under competitive bidding, give greater weighting to IPP

developers with businesses listed on a stock exchange and to those with well-

capitalized balance sheets. The strategic goals of publicly held entities are likely to be

more transparent and longer term because of these entities‘ obligations to public

shareholders.

Encourage project sponsors to use balance sheet support for subordinated debt and

quasiequity portions of the project financing plan in order to increase corporate

financing. This strategy would ease the overall financing costs of projects and could

be a transitional strategy for meeting the huge financing needs for IPPs in developing

countries.

45

Appendix A Exhibit: 1

46

Exhibit: 2

Exhibit: 3

47

Exhibit: 4

Maharatna Status- More power to empower

48

Exhibit: 5

Exhibit: 6

Operational performance

49

Exhibit: 7

50

Exhibit: 8

51

Exhibit: 9

Exhibit: 10

52

Exhibit: 11

53

54

55

Appendix B

CASE LET - NTPC: CURRENT STATUS, FUTURE DEMANDS AND INVESTMENT NEEDED

On May 5th

, 2011, a hot day, as it usually it happens in Delhi or other North Indian

Places during summer season, Power Management Institute (PMI), management training

wing of National Thermal Power Corporation (NTPC) at Noida (Uttar Pradesh, India) had

got new interns for their MBA training at NPTC from IIT Kharagpur were coming to have

their first glimpse of NTPC and future corporate life. All people were informed to report to

Prof. Dash, a senior and very renowned faculty at PMI Noida.

After sometime, Prof. Dash called everybody and gave short introduction of self,

the PMI (NPTC) and the various projects in Indian Power Sector being carried out. Later, he

asked everybody to give their details about profile and background knowledge before asking

about the choice of projects. Arvind Mahor, an intern among them, told of his profile as

finance and expressed his desire to work in Capital Budgeting and Capital Structuring at

Power Projects. Prof. Dash asked him some questions in the area of Corporate Finance and

discussed with him about the demand and supply of power scenario in India and focused on

the 12th

Five Year Plan and its target by 2017 in energy sector. He told him to carry out with

the project in “Capital Budgeting, Capital Planning and Comparative study of Power Sector

focusing on China and India and proposing the ways for the improvements”.

INDIAN POWER SECTOR STATUS

The power sector in India is mainly governed by the Ministry of Power. As far as generation

is concerned it is mainly divided into three sectors these are Central Sector, State Sector, and

Private Sector. Due to India‘s economic rise, the demand for energy has grown at an average

of 3.6% per annum over the past 30 years. At the end of April 2011, the installed power

generation capacity of India stood at 174361.40MW. The total thermal capacity, including

gas stations and diesel generation accounts for about 64.27% of installed capacity of the

country followed by hydro capacity at 23.13%. Nuclear stations account for 2.86% and the

balance 9.74% is contributed by Renewable Energy Sources [Exhibit: 1]. Still, Power Sector

Units (PSUs) are the measure players, NTPC is one of them.

PROFILE OF NTPC

NTPC Limited (formerly known as National Thermal Power Generation Limited), India's

largest power company, was set up in 1975. It has emerged as an „Integrated Power Major‟,

with a significant presence in the entire value chain of power generation business. NTPC is a

Government-owned entity with 89.5% of its paid-up capital contributed by the Government

and the balance of 10.5% being held with foreign institutional investors, financial institutions,

banks, and the general public. It plans to be a 75,000 MW company by 2017. NTPC is

primarily involved in constructing and operating power stations. It is among the world‘s

largest and most efficient power generation companies. NTPC has installed capacity of

29,394 MW. It has

15 coal based power stations (23,395 MW),

7 gas based power stations (3,955 MW) and

4 power stations in Joint Ventures (1,794 MW).

56

NTPC is pursuing expansion of its business activities into hydroelectric generation, coal

mining, gas exploration, and participation in the liquefied natural gas value chain, which

supplements and supports its core power generation activities.

PROJECT DETAILS

This project had three parts. In first part, some assumptions were given for the input values

like project life, fuel cost, land cost, financial parameters, efficiency etc. for a dummy project

that NTPC is planning to implement. In this part he was to calculating Capital Budgeting

parameters like NPV and IRR considering the risk factors to determine the financial

implications of the project.

Second part was about to analyse the global Power sector Practices both in

developed and developing countries particularly focusing on China‘s Power Sector growth

trend, in hence proposing the various ways for operational and functional efficiency

improvement, financing pattern like FDI, Private participation etc. and other reforms

considering the regulatory norms, environmental effects etc. for the Indian Power Sector.

Finally, to project the Power demand and capital requirement year-on-year basis as

per the Five Year Plans, past track record and study reports from the various organisations

like World Bank, private consulting firms, planning commission etc. and prepare the financial

model using Excel tool depicting the visual representation in the forms of graphs and tables.

GLOBAL POWER SECTOR TRENDS

World electricity generation rose at an average annual rate of 3.7%, greater than the 2.1%

growth in total primary energy supply. The share of fossil fuels in the overall fuel mix for

electricity generation is in general more than 50–60%. From the fossil fuels, coal is most

frequently used [Exhibit: 5]. De-regulation in areas of the global energy markets has led to

fierce competition. The enormous challenges are recognised in providing electricity as

efficiently as possible and strive to develop technology to meet your needs. Collectively,

developing countries use 30% of the world's energy, but with projected population and

economic growth in those markets, energy demands are expected to rise 95 %. Overall global

consumption is expected to rise 50 % from 2005 to 2030. Many non-OECD countries facing

high electricity demand growth favour privatizing their electric power sectors and opening

their markets to foreign firms.

FUNDING PATTERN OF THE POWER PROJECTS

In many parts of the world, financial capital may be a greater resource constraint than primary

energy supplies. It has been estimated that over the period 1993 to 2010 investment to sustain

the power generation infrastructure will require from 0.1 to 0.2 per cent of GDP in the

industrialized countries, 0.6 to 1.1 per cent in China, and as much as 1.0 to 1.6 per cent in

India [Exhibit: 4]. Nearly two-thirds of all the capital raised for new private power projects

was provided under Project finance structures, in which project cash flows and assets, rather

than sponsors balance sheets, provide security to lenders. Structurally power project finance

has involved largely build-own-operate (BOO) project structures and long-term contract.

Merchant power plants are rare. The vast majority of debt has involved direct finance or

credit enhancement from export credit agencies and multilateral development banks. The

private sector uses a variety of mechanisms for managing risks but main is relying on central

government.

57

LESSON FOR INDIA

Financing of power projects: Prices for the electricity produced from all new power plants

are now set by contract to cover financing and operating costs, on a plant-by-plant basis, and

rolled into the average power tariff. Encourage the FDI like China by Joint ventures (JVs),

Initial public offerings (IPOs) on stock exchanges, Build-Operate-Transfer (BOT)

agreements, simultaneously, implement "rolling exploitation mechanism".

Restructuring of Power Sector Decision: India should divest the amount of decision

making closer to the state or province level, structure the power monolith and create the

power markets. Along it, should investment in energy-efficient measures, energy

conservation for both economic and environmental terms, R&D and clean energy.

DEMAND AND SUPPLY STATUS

Rapid growth of the economy places a heavy demand on electric power. The demand for

electricity has consistently exceeded the supply, and the demand-supply gap has been

widening. The per capita power consumption in India is 733.54KWh/yr, which is very

minimal as compared to global average of 2340KWh/yr. In fiscal 2010, peak energy deficit

was 12.7% and total energy deficit was 10.1%. The total demand for electricity in India is

expected to cross 950,000 MW by 2030. Peak load demand, however, increased by 8.52%

whereas peak supply grew by 7.6 % resulting in raising peak load deficit to 12.7% in 2009-10

from 11.9 % in the previous year [Exhibit: 2]. Central Electricity Authority in its 17th

Electric

Power Survey (EPS) has projected that in order to completely wipe off the energy deficit, the

energy requirement at the power station bus bar would be of the order of 968.659 Billion

Units in 2011-12 The Indian government has set an ambitious target to add approximately

78,000 MW of installed generation capacity by 2012.

POWER GENERATION EFFICIENCY

After comparing these statistics to International Energy Agency (IEA) statistics it is noticed

that Indian Power generation among the lease efficient. The biggest indicator of a poor track

record is the inability to meet targets on the power generation capacity additions [Exhibit: 3].

PROJECTION OF THE DEMAND AND INVESTMENT

[Exhibit: 6]

FINANCIAL STRATEGIES AND FUND RAISING BY NTPC

NTPC is leveraging strong ratios to raise debt at optimal rates. New projects to be financed

with Debt equity ratio of 70:30. NTPC is maintaining sufficient internal accruals to finance

equity portion of the scheduled investment and deploying equity in Subsidiaries/JVs

selectively – preferably with control retention. Long term debt (term loans/bonds) is preferred

to match project cash flows-to be realised from domestic/international markets. Projects

executed by subsidiaries and JVs to be financed under projects finance route.

RESULTS

The results for the capital budgeting of dummy project came out as:

WACC = 10.41% IRR = 11.40% NPV = 160.44 Rs.

And capital investment in term of equity and debt was calculated at GDP rate of 8% and 9%.

58

Exhibit: 1

Exhibit: 2

Exhibit: 3

59

Exhibit: 4 Exhibit: 5

Exhibit: 6

Exhibit: 7

60

REFERENCES:

Books & Papers:

1. A Comparative study of Infrastructure in India and China With focus on the Power Sector- Indian Institute Of

Management Ahmedabad

2. NTPC 6th

investors meet Mumbai document.

3. POSITION PAPER ON THE POWER SECTOR IN INDIA: Department of Economic Affairs Ministry of

Finance Government of India

4. INDIA POWER SECTOR: CHALLENGES & INVESTMENT OPPORTUNITIES, by: Salman Zaheer

Lead Energy Specialist, The World Bank

5. National Thermal Power Corporation Motilal Equity Research paper issue 13 May, 2005

6. NTPC Annual Reports

7. NTPC Balance Sheet

8. NTPC Income statement

9. Innovation in China‘s Energy Sector, By: Valerie J. Karplus

10. Foreign Direct Investment in China's Power Sector: Trends, Benefits and Barriers,

By: Allen Blackman Xun Wu

11. Power Finance, By: Peter Bosshard, Published by: South Asia Network of Dams, Rivers and People

12. Enhancing Global Competitiveness by Reforming Power Sector - A Case Study of India,

By: Rajesh Gangakhedkar

13. The Private Sector and Power Generation in China, By: World Bank

14. ‗Think Bric‘ China By: KPMG

15. Foreign Direct Investment in China's Power Sector: Trends, Benefits and Barriers

By: Allen Blackman and Xun Wu

16. Financing Energy Efficiency in China, By: William Chandler and Holly Gwin

17. India Energy Handbook By: PSI Media Inc, Las Vegas, Nev (USA)

18. Renovation of coal-fired power plants in China By: JCOAL

19. Independent Equity Research NTPC Ltd. By: CRISL

20. Economics of power generation with UCG By: NTPC

21. ELECTRICITY PRICES IN INDIA By: Pierre Audinet, Desk Officer for South Asia and Korea, Office of

Non-Member Countries

22. Energy and resources in India: Post Budget Analysis By: Srinivas Gadkari, leading Finance and Energy

professional from Mumbai

23. Hydro Power Vs Thermal Power: A Comparative Cost-Benefit Analysis

By: Adesh Sharma, AIPL (Power Sector), India

24. INDIA – Power Sector: Emerging Developments & Critical issues

25. India Power Sector Reforms Update Issue III _ May 2002

26. INDIA POWER SECTOR: CHALLENGES & INVESTMENT OPPORTUNITIES

27. Indian Power Sector By: Infrastructure Leasing & Financial Services

28. Ministry of Power- Executive summary

Web:

http://indianpowersector.com/ http://www.ntpc.co.in

http://www.sciencedirect.com/science/article/pii/S0301421507000213#secx20

www.powerprojectfinancing.com

www.frost.com/prod/servlet/cpo/33668790

www.cercind.gov.in

www.powermin.nic.in

http://indianpowersector.com/

http://www.ntpc.co.in/

http://www.sciencedirect.com/science/article/pii/S0301421507000213#secx20

http://www.powerprojectfinancing.com/

http://www.frost.com/prod/servlet/cpo/33668790

http://www.cercind.gov.in/

http://www.powermin.nic.in/