NTPC Uses $3.1 Billion War Chest to Acquire 'Distressed' Indian Power Projects

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--India's largest power utility, state-owned National Thermal Power Corporation (BSE:532555) (NTPC) (New Delhi), has a war chest of about $3.1 billion that can be used for acquiring "distressed" projects.

The company says it will proceed on a project that will use equipment from Bharat Heavy Electricals (BSE:500103) (BHEL) (New Delhi), but that it would require close examination on projects that use Chinese equipment. NTPC says it has stringent standards for deciding on such projects.

In India, highly leveraged infrastructure developers are finding it increasingly difficult to finance the equity required for projects and to raise debt funding from banks. Power projects also are under severe pressure due to the unavailability of fuel and the poor financial condition of key players, such as the state-owned power distribution companies.

NTPC has a long-term view of expansion and generation capacity addition, targeting 128,000 megawatts (MW) by 2032. For the financial year 2013-14, NTPC has planned capital expenditures of about $3.4 billion. In 2012-13, the utility added 4,170 MW of capacity, its record annual addition. At the end of last month, company generation capacity stood at 41,184 MW, with a further 20,064 MW under construction.

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