While the company's proposal is in line with the National Electricity Policy, the Ministry of Power (MoP) is still to approve the merchant sale of the majority of the 1,000 MW power to be generated from NTPC's upcoming Korba-III and Farakka-III thermal power projects. - While short-term sale of power will no doubt substantially increase potential revenues for NTPC, this move is also driven by its desire to facilitate the provision of feedstock for these two plants, given the Centre's present favorable disposition towards merchant power projects (MPP), which are not backed by long-term power purchase agreements (PPA).
- According to a recent policy decision, the government will grant coal linkage to MPPs of 1,000 MW+ capacity, while those producing between 500 MW and 1,000 MW will be assigned captive coal blocks, in a bid to plug the enormous electricity supply gap that exists in the country.
- Accordingly, NTPC has proposed 65% of power generated by the Korba-III, along with 63% of Farakka-III's generation, be earmarked for the open market, direct sales to bulk customers and power exchanges.
- The balance will be sold to the respective home states via long-term PPAs. Accordingly, Chhattisgarh will be entitled to 175 MW of power at regulated tariffs from Korba-III, while West Bengal will obtain 185 MW from the Farakka-III plant.
- The Korba and Farakka plants are expected to go on steam in October 2010 and February 2011, respectively.
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