Mitsubishi agrees to pay NTPC Rs 851 crore to exit Farakka project

Synopsis

Mitsubishi is nearing an exit from NTPC's Farakka power project. The Japanese firm will compensate NTPC with ₹851 crore for the project. This agreement follows earlier compensation demands and offers between the two companies. Significant work remains incomplete on the flue gas desulphurisation equipment installation. The project was initially estimated at ₹1,000 crore when awarded six years ago.

New Delhi: Japanese conglomerate Mitsubishi is close to exiting a flue gas desulphurisation project at NTPC's Farakka Super Thermal Power Station in West Bengal. The two parties have reached an agreement for Mitsubishi to compensate NTPC with ₹851 crore, pending final approvals from the company boards, according to people familiar with the development.

The project, when awarded six years ago, was estimated at ₹1,000 crore, of which around 20% was paid upfront by NTPC. The target completion date was set for 2025, but there is still significant work to be done.

ET had reported on April 30 this year that public sector undertaking NTPC has sought more than ₹1,200 crore from Mitsubishi Power India Private Limited (MPI) as compensation, while the Japanese firm had initially offered around ₹720 crore for exiting the project, located in Murshidabad district. "There has been a breakthrough... negotiations have found common ground," an executive told ET, requesting not to be named.

An email query sent to NTPC remained unanswered as of press time.

Mitsubishi responded to ET's query saying, "We are carrying out the installation work of flue gas desulfurisation (FGD) equipment for the Farakka Power Station in India. We will continue to execute the work in accordance with its contract with NTPC...We will refrain from commenting due to confidentiality obligations with the client for project status," the company told ET.

In June last year, the government exempted most coal-fired power plants from installing FGD units, which are designed to curb emissions, reversing its decade-old stance. To support its decision, it cited fresh studies that found that Indian coal did not emit enough sulphur when burnt for power generation. The Japanese company was mandated to install wet limestone FGD systems at Farakka Super Thermal Power Station in three stages (3x200MW, 2x500MW and 1x500MW) for NTPC, but it has completed only the first stage. The project was to be completed last year, but "significant" work is still left to be done, according to the executive.