Dr. Prasanna Kumar Acharya Director (Finance), NLC India Ltd
Clear Focus On Green Energy Production
NLC India Limited (NLC) (formerly Neyveli Lignite Corporation India Limited) is a central public sector undertaking under the administrative control of the Ministry of Coal, Government of India. It annually produces about 30 million tonnes of lignite from opencast mines at Neyveli in the state of Tamil Nadu in South India and at Barsingsar in the Bikaner district of Rajasthan state. The lignite is used at pithead thermal power stations of 3,640 MW installed capacity to produce electricity. In this interview, Director (Finance) Dr. Prasanna Kumar Acharya outlines the company’s strategy of contributing clean power to the nation
What is the expected power generation capacity of the fully commissioned Ghatampur Thermal Power Station, and how does it align with the growing power demand in the region?
Neyveli Uttar Pradesh Power Ltd. (NUPPL) is a joint venture between NLC India Ltd. and UPRVUNL, which is a Government of Uttar Pradesh enterprise, in the ratio of 51:49. The company is currently setting up a coal-based supercritical thermal power plant with a capacity of 1,980 MW (3 x 660 MW) at Ghatampur in the Kanpur Nagar district of Uttar Pradesh. The power purchase agreement (PPA) for this project has been signed with 75 per cent for Uttar Pradesh and 25 per cent for Assam. The Pachwara South Coal Block (PSCB) in the state of Jharkhand is the linked coal block for NUPPL Ghatampur Thermal Power Station.
Coal requirement will be met through bridge linkage from Coal India till coal production commences from the linked mines. Uttar Pradesh, the third-largest economy in India, contributes more than 8 per cent to the national GDP and is growing at a CAGR of 7 per cent (FY16-20). The state clocked a peak electricity demand of 30 GW in June 2024 and recorded electrical energy consumption of 148.287 BU in FY 2023-24. As the fourth-largest state in the country boasting several industrial establishments and 22 per cent urbanisation, the state’s energy requirements are set to grow robustly in the coming years.
The 20th electric power survey of CEA, Ministry of Power, Government of India, projects the peak electricity demand of Uttar Pradesh to touch 44 GW (+47 per cent) in FY 2031-32 and the electricity demand to grow to about 254 BU (+71 per cent) in FY 2031-32. The numbers are reflective of strong economic growth envisioned for Uttar Pradesh. NUPPL upon successful commissioning of 1980 MW will have normative generation capacity of 14,743 million units per annum.
What were the key drivers of the capital expenditure exceeding the annual target? Could you provide a breakdown of the capital expenditure across different segments?
The capital expenditure across different segments is as follows:
The capital expenditure target for 2023-24 MoU was fixed before the previous year, ending March 2023. During the year 2023-24, based on the award of contracts for some of the new projects of NLCIL which led to additional capital expenditure, the actual expenditure was more than the target as mentioned above.
What is the detailed roadmap to achieve the 6 GW renewable energy capacity target by 2030? Which renewable energy segments are you prioritising?
The NLCIL corporate plan is to achieve more than 6 GW in renewable energy capacity by 2030, which includes the following capacity addition beyond the existing capacity of 1.45 GW:
- Gujarat: 600 MW
- Rajasthan: 810 MW
- CPSE Scheme: 510 MW
- SECI Hybrid Tender: 150 MW
- Rajasthan JV Mode: 1,000 MW
- Assam JV Mode: 1,000 MW
- Mined Out Land at Neyveli: 300 MW
- PSP: 100 MW
- Other Projects: 500 MW.
Given the growing interest in green hydrogen, does the company have any plans to explore opportunities in this space?
Yes, NLCIL is planning to explore opportunities in green hydrogen. The company has taken up initiatives and has a clear focus on green hydrogen projects for eco-friendly energy solutions. Production of green hydrgoen for DE carbonisation of lignite and coal power plants as well as diversification of markets and revenue streams is part of this project. NLCIL has already forayed into establishing the 4 MW proton exchange membrane (PEM) electrolyser-based green hydrogen pilot plant at Neyveli.
NLCIL has engaged Engineers India Limited (EIL) as the project management consultant to establish this pilot plant with a project timeline of eight months. Currently, NLCIL is coordinating with the PMC and technical and commercial preparations are underway. This project aims to pioneer green hydrogen production, contributing to India’s renewable energy and carbon neutrality goals. Going forward, NLCIL will develop its portfolio in the production of green hydrogen. Green hydrogen, produced through renewable energy-powered electrolysis without emissions, significantly aids in decarbonising various sectors.
There are some likely challenges though. Setting up green hydrogen production units using renewable energy sources is expensive and storing of green hydrogen is challenging. The high initial costs need to be addressed to make green hydrogen economically viable. Efficient energy storage solutions are crucial for managing intermittent renewable energy sources used in hydrogen production.
Could you elaborate on the key financial metrics that the company is focusing on to measure its performance, and what are the targets for these metrics in the coming year?
The key financial metrics NLCIL is focusing are earnings per share and the return on capital employed. The earnings per share of the company increased to Rs 13.32 per share from Rs 9 per share in FY 2023-24. The return on capital employed is also in an increasing trend and the effort is to improve both the ratios in the upcoming years.
Setting up green hydrogen production units using renewable energy sources is expensive and storing of green hydrogen is challenging. The high initial costs need to be addressed to make green hydrogen economically viable. Efficient energy storage solutions are crucial for managing intermittent renewable energy sources used in hydrogen production.