NTPC agrees to 49% in Chhabra plant JV, but wants management control

Jaipur: NTPC signed a 50:50 joint venture agreement with Rajasthan Rajya Vidyut Utpadan Nigam (RVUNL) last November to take over operation and management of the Chhabra Thermal Power Plant. However, the coal ministry's refusal to continue the existing coal supply mechanism has put a spanner in the deal. The coal ministry stated that RVUNL could bring in a subsidiary to avail of the coal supply, but not an equal or larger shareholding partner. RVUNL owned the plant before entering into the partnership, which aims to improve efficiency.To remove the hurdle, both the state energy department and the CM recently wrote to NTPC, requesting a change in the shareholding pattern. They proposed reducing NTPC's stake from 50 per cent to 49 per cent, which would qualify it as a subsidiary of RVUNL and enable the coal supply to continue. However, NTPC, in a letter to the energy department, stated that despite being the junior partner, it should have the right to appoint the CEO, CFO, COO, and other key managerial personnel.Despite having a 49 per cent stake in the JV, against RVUNL's 51 per cent, NTPC has asked for the rights to take over the complete operation and management of the 2,320 MW thermal power plant.In addition to having key managerial personnel, NTPC stated that amendments to the old agreement should allow the board to have equal representation from both promoters, including the NTPC chairman with the casting vote.Similarly, NTPC suggested that tariff determination for the plant should be under the purview of the Central Electricity Regulatory Commission (CERC). Under the CERC, NTPC would be eligible for a return on equity (ROE) of 15.5 per cent (with GST over 18 per cent), which RVUNL does not charge. Sources indicated that the ROE would make power from the plant costlier, burdening the consumer.NTPC has also sought the power to release RVUNL's employees from the plant on the grounds of unsatisfactory performance. "Since the management and operation will be under NTPC, it will not be difficult for it to justify someone's performance as 'unsatisfactory,'" said the source.