A study of Project: Vindhyachal – Stage V by

NTPC

Submitted in partial fulfilment of the requirements of the course

Uncertainty, Complexity and Risks and Projects (UCR)

Instructor: Prof. Goutam Dutta

Academic Associate: Abhay Kumar

Submitted on June 20, 2019

By

Meghna Shanker (18349)

Rajkumar Singh (18053)
Shounak Chakraborty (18470)
Shreya Chandra (18471)
Tanmoy Bhunia (18076)
Vishwajit Sangle (18160)
Table of Contents
Introduction ..................................................................................................................................... 3

Five Forces Analysis ....................................................................................................................... 4

Threat of new entry ..................................................................................................................... 4

Threat of substitutes .................................................................................................................... 4

Bargaining power of buyers ........................................................................................................ 4

Bargaining power of suppliers .................................................................................................... 4

Intensity of competitive rivalry ................................................................................................... 5

Need for the project ........................................................................................................................ 5

Feasibility Studies ........................................................................................................................... 6

Financials .................................................................................................................................... 6

Financial Feasibility .................................................................................................................... 7

Technical Feasibility ................................................................................................................... 8

Chronology ................................................................................................................................... 10

References ..................................................................................................................................... 11
Introduction

India is one of the most rapidly growing economies of the world. One of the key factors that
determine how well this growth can be sustained, is the availability of energy to fuel this growth.
The importance of building capacity to generate power is emphasized in various forums of
infrastructural development. In the future, commercial and domestic demand is going to sky-
rocket. According to the IEA’s Global Energy & CO2 status report, the primary energy demand
for India has increased by 4 percent or over 35 million tonnes of oil equivalent[1]. This is equivalent
to 11 percent of global demand growth. Not only has the demand been increasing, for decades, but
the country has also suffered from power shortfalls. Since independence, the development of
power sector in the country has been predominantly the domain of state Electricity Boards formed
under the Central Electricity Authority (CEA). National Thermal Power Corporation Limited was
set up in November 1975 with the objective of planning, promoting and organizing integrated
development of thermal power in the country. Since then NTPC has been a key player in the power
sector of the country and by now has reached a total installed capacity of 27904 MW.
The power generation from NTPC plants stands to about one-fourth of the total power generation
of the country. Considering the track record, the Government of India has allowed NTPC to
venture into hydroelectric development and in other non-conventional energy sources. NTPC has
launched several backward and forward integrations, making it an integrated power major with
interests in hydropower, captive coal mining, power distribution, and power trading. To embody
its diverse operations, the company has been rechristened as NTPC Limited.
Vindhyachal STPP was conceived as a pit head coal-based super thermal power plant of 2260 MW
(6x210 MW + 2x500 MW) capacity for which land was acquired during stage-l of the project. The
capacity of the project was increased to 3260 MW by adding two units of 500 MW each under
Stage III of the project. Stage-l, I1& II of the project comprising of six units of 210
MW + two units of 500 MW + two units of 500 MW are under commercial operation. Two units
of 500 MW under stage IV of the project is currently being implemented the capacity after
implementation of Stage IV of the project shall be 4260 MW. This project report studies the fifth
stage of capacity expansion undertaken by NTPC as part of the scheme. It was titled Vindhyachal
Super Thermal Power Project-V and is a 500 MW coal-based power plant. It is a brownfield project
based in the Singrauli District of Madhya Pradesh.
Five Forces Analysis

Threat of new entry

NTPC falls into the power industry, characterized by the high entry barriers in terms of capital
with low/medium returns. Entry barriers in the form of capital investments, regulatory compliance,
setting up of fuel linkages, land acquisition, sourcing of human capital, etc., prove to be major
challenges. These decreases the overall attractiveness of the industry as only highly consolidated
organizations can compete effectively.

Threat of substitutes

Although there are no substitutes to electric power, generation of electricity has substitute methods
to the traditional one of thermal generation employed by NTPC. Competition in the form of
organizations operating in the domain of Solar power, Wind power, etc. has been on the rise in the
recent years as there is a drive to move towards cleaner form of energy. These new organizations,
like Mercom, CleanMax, Renew Power, ASEA Brown Boveri, operate on a small scale and
typically cater to small organizations, and household needs[2]. Although the growth rate of the solar
power industry is high, there is a huge gap between demand and supply of energy leading to
medium to low threat of substitutes.

Bargaining power of buyers

There is an ever increasing in demand from the industry, and not nearly enough suppliers, leading
negligible buyer power. Prices for the electricity and its supply are regulated by the Govt. of India.
Hence it is difficult to dictate the prices by the customers. Hence the bargaining power of the
buyers is low owing to the demand-supply gap.

Bargaining power of suppliers

The major raw material in the thermal power plant is coal and equipment. Supply of coal has been
diminishing owing to the scarcity and its huge demand in industrial as well as commercial
purposes. NTPC has tied up with multiple mining companies (majorly govt. owned) with the price
for coal being regulated by the government. For its equipment needs, it has entered into a joint
venture with BHEL, another govt. owned company. This ensures the steady supply of raw
materials. With private players buying coal mines in other countries, the market dominance of
Government companies like Coal India is likely to decrease. Hence the bargaining power of the
suppliers is medium.

Intensity of competitive rivalry

As demand greatly exceeds the supply, all the generated power is used, leading to lower
competition among the power companies. Although there has been a spike in private participation
in the industry which is expected to steadily grow because of encouragement from the government.
This may lead to competition for the plant location, contracts, etc. in the future, but the intensity
of competitive rivalry is low as of now.

Need for the project

The power demand, both domestic and industrial, has increased exponentially. In order to bridge
the gap between demand and supply, NTPC has targeted to have an installed power generating
capacity of 1,28,000 MW by the year 2032. As part of the rapid capacity addition strategy,
Vindhyachal Stage-V was conceived for implementation.
The CEA publishes electrical power survey highlighting the demand and supply scenario of the
country bifurcated into different zones. During the conception of this stage of the project the
relevant reports were the 11th five - year plan and the 17th Electrical Power Survey published by
the CEA.

The following is a summary at the end of 11th plan:

 Region Availability at the end of Demand as forecasted by the 17th EPS[4]
11th plan[3]
Energy Peak Energy (MU) Peak (MW) Deficit/Surplus
(MU) (MW) (%)
NR 282905 41103 294841 48137 -14.61
WR 281691 40926 294860 47108 -13.12
SR 250918 36456 253443 40367 -9.69
ER 167490 24334 111802 19088 27.49
NER 32754 4759 13329 2537 87.57
I’Lands 388 56 384 88 -35.95
Total 1016146 147634 968659 157325 -6.16

It clearly highlights an overall deficit of 6.16% all over India and a 13.12% deficit in the Western
Region where this project will cater to (Madhya Pradesh is classified as a Western region state as
per CEA).

Feasibility Studies

Financials

The overall Debt-Equity ratio proposed for the project was 70:30. Equity was planned to be
financed from the internal resources of NTPC whereas the debt portion was proposed to be
financed from External Commercial Borrowing (ECB) and domestic Borrowing/Bonds. The
proposed tentative plan was:

Foreign Component Domestic Component

Equity 30%
ECB Loan 30%
Domestic borrowings/Bonds 40%
Financial Feasibility

While performing the analysis of financial viability of the project certain assumptions were made.
The cost of production would vary over a certain range with initial costs being higher and after a
few years of operation, the plant would stabilize rendering production costs to be lower. An
average value of production cost was assumed over a period. The discount rate was assumed to be
10%. The plant is expected to run at full capacity for 340 days a year.

Total Project Cost

Project Cost excluding interest during construction 27.84 Billion
Interest During Construction (IDC) 4.3 Billion
Project cost including IDC 32.14 Billion
Working Capital Margin (WCM) 0.55 Billion
Project Cost inclusive of IDC and WCM 32.69 Billion

Cost of Energy
Average Cost of production 201 Paise/Unit
Fixed Charges 118 Paise/Unit
Variable Charges 83 Paise/Unit

Peak Load 500 MW

Days of operation (Annual) 350
Power Generation (Billion Units) 4.2 BU

Profit Margin
Selling price per unit (INR) 3.25
Profit Margin per unit (INR) 1.24
Annual profit generated (INR) 5.06 Billions

NPV for 12 years of operation = INR 1.62 Billion

This indicates that the project is financial viable with a payback close to 10 to 11 years.

Moreover, a sensitivity analysis of NPV with respect to profit margin in INR indicates that
achieving good operational efficiency would have a dramatic effect.

Profit Margin (INR) NPV (Billion INR)

1.24 1.62
1.2 0.61
1.3 3.13
1.4 5.66
1.5 8.19
1.6 10.71

Technical Feasibility

LOCATION

The plant is located in Singrauli district of Madhya Pradesh, having a latitude and longitude of 24°
6 N and 82°40 E respectively. Major rail and road distances from the project site are as under:
Between Stations By Road (kms) By Rail (kms )

Vindhyachal-Lucknow 435 475

Vindhyachal-New Delhi 850 925

Vindhyachal-Sidhi 095

Vindhyachal-Bhopal 610 590

Vindhyachal-Mirzapur 175 175

 Vindhyachal-Varanasi 220

LAND REQUIREMENT

A total area of 5378 acres of land was acquired for the project in Stage. The plant facilities and
township for this expansion stage would be accommodated within the land acquired during Stage-
l of the project. However, for ash disposal, approximately 260 acres of additional land is
proposed to be acquired.

COAL REQUIREMENT, AVAILABILITY, AND LINKAGE

Coal requirement for Vindhyachal STPP, Stage-I, II & II is presently being met from Northern
Coalfields Limited. (NCL). The daily coal requirement for one 500 MW Unit shall be about 2.7
MTPA at 90% PLF. For FR purposes, coal from NCL has been considered. Accord for Long-term
coal linkages was planned to be established with the Ministry of Coal.

COAL TRANSPORTATION

Coal requirement for Stage-V shall be met from Stage-IV itself. Accordingly, Stage IV CHP
capacity has been selected as 2000 MTPH.

COOLING WATER REQUIREMENT, SOURCE, COMMITMENT AND SYSTEM

Raw water is proposed to be used for meeting the complete water requirement of the project.
Normal Makeup water requirement for this project would be about 1800 m3/h with ash water re-
circulation system and 2800 m3/hr with once through the system.

The source of raw water for the project is hot water Discharge channel of CW System of Singrauli
STPP as that of an existing Stage-I, II, III & IV of Vindhyachal STPP.
The total committed water for the project is 180 Cusecs and the same has been duly concurred by
CWC. The make-up water requirement of Stage-V will be about 20 Cusecs which shall be met
from surplus water available within the existing commitment. A closed cycle cooling water system
using Induced Draft Cooling Towers is proposed.

STEAM GENERATOR TECHNOLOGY

The Steam Generators (SG) shall be direct pulverized coal-fired having subcritical steam
parameters with higher Reheat steam per 568 C. drum type (natural or assisted circulation) OF
subcritical once through, water tube, single/double pass (tower type/two pass type single reheat,
radiant furnace, dry bottom balanced draft outdoor type with all necessary auxiliaries.

POWER EVACUATION SYSTEM

The power generator is proposed to be stopped up to 400 kV by generator Transformer and will
be evacuated through the transmission system to be evolved and implemented by Power Grid
Corporation of India Ltd.

Chronology
Month Activity

Nov-09 Project Approval

Dec-11 Approval of investment proposal

May-12 MOEF Clearance, Project work started

Mar-15 Electrostatic precipitator, Fire detection, station piping, coal handling plant
erection and commissioning
Apr-15 Power and electrical safety system completed

Jun-15 Main Plant, CW System, Off Site Civil Works, Chimney /Chimney Elevator
completed
Aug-15 Electrical cabling, wiring complete

Sep-15 Ash Handling & AWRS System completed

Oct-15 Completion of project
References

1) https://www.thehindubusinessline.com/economy/india-outpace-global-energy-demand-
growth-in-2018-iea/article26643852.ece
2) https://www.electronicsb2b.com/industry-buzz/report-reveals-indias-top-market-leaders-
in-solar-power-industry/
3) www.cea.nic.in/reports/others/thermal/trm/th_randm_annex7.pdf
4) https://www.scribd.com/doc/57505120/17th-Electric-Power-Survey-Report