NTPC Capacity Expansion Financing Facility (India)
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Extended Annual Review Report Project Number: 39916 Loan Number: 7242-LN2249 October 2013 Loan NTPC Limited NTPC Capacity Expansion Financing Facility (India) In accordance with ADB’s public communication policy (PCP, 2011), this extended annual review report excludes information referred to in paragraph 67 of the PCP. CURRENCY EQUIVALENTS Currency unit – Indian rupee/s (Re/Rs) At Appraisal At Project Completion 24 January 2006 1 April 2013 Re1.00 – $0.023 Re1.00 – $0.018 $1.00 – Rs44.18 $1.00 – Rs54.49 ABBREVIATIONS ADB – Asian Development Bank CFS – complementary financing scheme CIL – Coal India Limited COD – commercial operations date CSR – corporate social responsibility MGR – merry-go-round NTPC – NTPC Limited (formerly National Thermal Power Corporation Limited) PAP – project affected person PLF – plant load factor R&R – resettlement and rehabilitation SOE – state-owned enterprise STPP – super thermal power plant TPP – thermal power plant XARR – extended annual review report WEIGHTS AND MEASURES GWh – gigawatt-hour ha – hectare km – kilometer MW – megawatt NOTES (i) The fiscal year of the Government of India ends on 31 March. The fiscal year of NTPC Limited ends on 31 March. (ii) In this report, “$” refers to US dollars. Vice-President L. Venkatachalam, Private Sector and Cofinancing Operations Director General T. Freeland, Private Sector Operations Department (PSOD) Director M. Barrow, Infrastructure Finance Division 1, PSOD Team leader S. Kondo, Investment Specialist, PSOD Team member s B. Q. Cafirma, Senior Operations Assistant, PSOD J. Gomez, Safeguards Officer (Environment), PSOD M. Manabat, Senior Investment Officer, PSOD J. Munsayac, Safeguards Specialist, PSOD M. Principe, Senior Social Development Officer (Safeguards), PSOD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. CONTENTS Page BASIC DATA MAPS EXECUTIVE SUMMARY i I. THE PROJECT 1 A. Project Background 1 B. Key Project Features 1 C. Progress Highlights 3 II. EVALUATION 4 A. Project Rationale and Objectives 4 B. Development Impact 4 C. ADB Investment Profitability 7 D. ADB Work Quality 7 E. ADB's Additionality 7 F. Overall Evaluation 7 III. LESSONS 8 APPENDIXES 1. Basic Data: Investment Summary 10 2. Private Sector Development Indicators and Ratings: Infrastructure 11 3. Social Impact 14 4. Environmental Impact 18 BASIC DATA NTPC Capacity Expansion Financing Facility (Loan No. 2249 – India) Key Dates Expected Actual Concept clearance approval July 2005 7 July 2005 Board approval January 2006 27 July 2006 Loan agreement September 2006 21 September 2006 Loan effectiveness September 2006 21 September 2006 First disbursement October 2006 25 October 2006 Final Disbursement March 2008 28 March 2008 Commercial operations date: Sipat STPP stage I (3 x 660 MW): Unit 1 April 2008 1 October 2011 Unit 2 February 2009 25 May 2012 Unit 3 December 2009 1 August 2012 Sipat STPP stage II (2 x 500 MW): Unit 4 June 2007 30 June 2008 Unit 5 December 2007 1 January 2009 Kahalgaon TPP stage II (phase 1: 2 x 500 MW and phase 2: 1 x 500 MW) Unit 5 November 2006 1 August 2008 Unit 6 May 2007 30 December 2008 Unit 7 March 2007 20 March 2010 MW = megawatt, STPP = super thermal power plant, TPP = thermal power plant. Project Administration and Monitoring No. of Missions No. of Person -Days Due diligence 2 6 Project administration 3 10 Extended annual review mission ) 1 30 INDIA Project Area NTPC CAPACITY EXPANSION FINANCING FACILITY Reserve Forest Area SIPAT SUPER THERMAL POWER PLANT - VICINITY MAP State Capital (as completed) City/Town Other Town/Village Katchora National Road Provincial Road Road Railway Canal River Pali Darri Hasdeo Dam MGR = merry-go-round Dipika Area Coal Mines Silli Korba Khurang Reservoir Coal Loading Point Ramang to Katni Beltara BITKULI RESERVE FOREST Khurang River BURKHAN Hasdeo Right Bank Canal Right Bank Canal RESERVE Arpa River FOREST rang r Track Khu ive Sipat MGR Water Intake Pipe Reservoir Water Pump Station eo R Canal Hasd to Mungels Balauda SIPAT PROJECT N Left Bank rang Ash Dyke Khu to Howrah Gataura Source: NTPC Ltd. (A Government of India Enterprise) to Janjgir This map was produced by the cartography unit of the Asian Development Bank. 13-0396a HR The boundaries, colors, denominations, and any other information shown on this map do not imply, on the part of the Asian Development Bank, any judgment on the Map 1 legal status of any territory, or any endorsement or acceptance of such boundaries, colors, denominations, or information. to Raipur Map 2 to Sahibganj r Salendara e v i Rampur ga R n Ga Salempur KAHALGAON Lalapur Sadanandpurbalsa Water Pumping Water Intake Pipe Banaspati Station Narayanpur THERMAL Akbarpur POWER Bhagalpur PLANT Kushapur Banshipur to Bhagalpur Bholsar ASH DYKE Lagma Gerua R. Gerua Rasulpur Rampur Bikampur Dhanora Merry-Go-Round Railway Ratanpur Madarganj Amarpur Telaundha Belbadda N Arar INDIA NTPC Silhan Khajuria This map was produced by the cartography unit of the CAPACITY EXPANSION Asian Development Bank. The boundaries, colors, denominations, and any other information shown on this FINANCING FACILITY map do not imply, on the part of the Asian Development Bank, any judgment on the legal status of any territory, KAHALGAON THERMAL or any endorsement or acceptance of such boundaries, POWER PLANT - VICINITY MAP colors, denominations, or information. (as completed) Nayanagar Project Area Road Ash Dyke Railway State Capital River Loading Point City'Town State Boundary Village Boundaries are not necessarily authoritative. National Road Source: NTPC Ltd. (A Government of India Enterprise) RAJMAHAL COALFIELD Matia 13-0396b HR EXECUTIVE SUMMARY In July 2006, the Board of Directors of the Asian Development Bank (ADB) approved a corporate loan of $300 million to NTPC Limited (NTPC), comprising a $75 million facility A from ADB’s ordinary capital resources and a $225 million facility B—through the complementary financing scheme (CFS)—from 32 international commercial banks, to partially finance the construction of two coal-fired power plants: (i) Sipat super thermal power plant (Sipat STPP), stages I and II, in the state of Chhattisgarh with a total installed capacity of 2,980 megawatts (MW), and (ii) Kahalgaon thermal power plant (Kahalgaon TPP), stage II, in the state of Bihar with a total installed capacity of 1,500 MW. This was ADB’s first loan to a state-owned enterprise without sovereign guarantee under ADB’s Innovation and Efficiency Initiative. As the largest power generator in India, NTPC’s operations and expansion plans are critical to reducing power deficits in India. NTPC is a financially sound entity with a strong balance sheet, an effective governance structure, and experienced management, and operated on an independent commercial basis. Evaluation of the project is based on four main criteria: (i) development impact, (ii) profitability of ADB’s investment, (iii) quality of ADB’s work, and (iv) ADB’s additionality. The results of this analysis were aggregated to derive an overall rating for the project. The development impact of the project is rated satisfactory . It was evaluated in four categories: (i) private sector development; (ii) business success; (iii) contribution to economic development (economic sustainability); and (iv) environmental, social, health, and safety performance. The contribution to private sector development is rated satisfactory. The business success of the project is rated satisfactory. NTPC is the largest power generator in India with 41,184 MW of installed capacity (18.44% of total installed capacity in the country) and, through this corporate financing, was the first utility in India to introduce supercritical boiler technology, which utilizes higher temperatures to convert fuel resources to steam and therefore is a more efficient thermal technology. NTPC is the leader in India’s power sector development in terms of power plant operational performance and, as such, is the benchmark against which private sector power producers are compared. NTPC’s wide range of social undertakings has had a high developmental impact in the many states where NTPC has built its generation assets. NTPC’s environmental, social, health, and safety performance is rated satisfactory . The subprojects have satisfactorily met national and ADB requirements on environmental safeguards and sufficiently implemented health and safety programs. NTPC has adequately mitigated the potential environmental impacts in accordance with its corporate environmental and social management system. There were no direct and negative social impacts, as none of the subproject facilities was established on tribal lands and land acquisition for both sites was completed before ADB’s involvement. NTPC has continued resettlement and rehabilitation assistance to the project-affected persons, and it undertook extensive corporate social responsibility activities, including provision of medical services, education, and installation or rehabilitation of rural electricity distribution systems. The investment outcome of NTPC is rated satisfactory with timely principal and interest payments. ADB’s work quality and additionality are both rated satisfactory . NTPC was the first utility to introduce supercritical boiler technology for power generation in India. Furthermore, ADB’s participation catalyzed