NHPC circumvents its way into thermal power The country's largest hydel power company, nhpc Limited (formerly known as National Hydroelectric Power Corporation Ltd), was incorporated in 1976 with an objective to plan, promote and organise an integrated and efficient development of hydroelectric power in India. Under its articles of association, nhpc does not have the mandate to get into thermal power generation. Taking a cue from ntpc's diversification drive, it had approached the government some time ago to amend its articles of association, so that it could get into generation of power from coal, gas and other geothermal resources. But it was told to concentrate on hydel power alone. Yet, the psu is all set to diversify into thermal power generation. A 1,000 mega watt coal-based power plant is being set up by nhpc's subsidiary, Narmada Hydro-electric Development Corporation (nhdc), in Madhya Pradesh. nhpc holds 51 per cent equity in nhdc, while the MP government holds the rest. The psu's cmd, S.K. Garg, claims that this was not a direct diversification by nhpc. "The diversification into thermal power is through our subsidiary nhdc, which has been allotted a 1,000 mw power project by the government of MP," he says, nhdc has already implemented 1,520 mw of hydropower projects in the state. As there is not much scope for further hydel projects in MP, the state government decided to allot nhdc a coal-based power project in the state, nhpc grabbed the opportunity with both hands. Not just that, nhpc is planning to foray into wind power as well, through one of its subsidiaries. The psu is obviously buoyed by the fact that it reported a 4.6 per cent rise in its provisional net profit at Rsl,050 crore for the fiscal ended 31 March 2009. Following in ntpc's footsteps In getting into thermal power, nhpc is following a trajectory similar to that of ntpc, established a year earlier in 1975. Set up to generate power from coal, it later moved to gas. Today, the psu has diversified into hydropower, coal mining, power equipment manufacturing, exploration of gas, power trading, and of course, distribution. With an increasing presence in the power value chain, ntpc is now eyeing nuclear energy as well, and calls itself an integrated power major. When ntpc ventured into hydropower development in 2003-04, there were murmurs of protest from nhpc. The protest had something to do with the speculation swirling at that time that ntpc had moved a note to buy the government stake in nhpc. The speculation proved baseless, but ntpc managed to convince the power ministry mandarins that what it was doing was aimed at having a balanced portfolio for long-term sustainability. The first step in this direction was taken by investing in the Koldam Hydro Electric Power Project in the Satluj river of Himachal Pradesh. Two more projects were subsequently identified in Uttarakhand. Construction work is currently on in full swing in all these projects. Power ministry officials, however, say that the idea of power psus turning into integrated power majors is fine. But they fear that this trend may lead to a "whittling down of core competencies". "nhpc was formed specifically for tapping the enormous potential available in the country for hydroelectric-ity generation. We are of the view that the company should use all its resources for the purpose for which it was created, rather than losing focus," an official said. It is precisely for this reason that the power ministry has so far resisted the idea of giving an in-principle approval for the diversificaion that would allow nhpc to amend its article of association - regulations that govern the relationships within an organisation. The demand had surfaced last year, when the hydropower psu was planning an initial public offer (ipo). The broadening of its portfolio would have helped make the ipo more attractive. The company planned to double its capacity to 10,000 mw by the end of five years to 2012 with a capital expenditure of Rs28,000 crore in the 11th Plan. The listing plan has been deferred indefinitely due to the volatility in the markets. After much due diligence, the ministry felt that the company should stay focussed on hydroelectricity generation. Yet, the psu has now surreptiously got into thermal power generation, albeit through its subsidiary.