NTPC halts FGD installations at five power plants

NTPC Limited has suspended the installation of flue-gas desulphurisation (FGD) systems at five of its under-construction thermal power plants, following a new notification from the Ministry of Environment, Forest and Climate Change (MoEFCC) issued on July 11, 2025. The affected projects, Lara-II, Singrauli-III, Sipat-III, Darlipalli-II, and Telangana-II, have a combined capacity of over 7 GW.

As reported by The Economic Times, the revised emission norms now exempt many coal- and lignite-based thermal power plants from mandatory flue gas desulphurisation (FGD) if they are located more than 10 kilometres from populated or polluted areas. The new guidelines divide plants into three categories. Category A includes those within 10 kilometres of critically polluted areas or non-attainment cities, where FGD remains mandatory. Category B covers plants within 10 kilometres of populated areas, where FGD installation will be decided by the Expert Appraisal Committee. Category C includes plants located beyond 10 kilometres from any such areas and are exempt from the FGD mandate.

The exemption has been positioned as a cost-saving measure for the thermal power sector. According to CareEdge Ratings (reported by The Tribune), the relaxed norms could reduce capital expenditure by Rs 87,000 to Rs 1,16,000 crore and lower annual tariffs by Rs 19,000 to Rs 24,000 crore, translating to a saving of Rs 0.17 to Rs 0.22 per unit.

However, environmental experts have criticised the move. A Wire article called the rationale “absurd,” warning that it undermines a decade of progress in pollution control. As of December 2024, only 44 of 537 identified thermal units had commissioned FGD systems, while hundreds remained under implementation or tendering.

The policy change also has operational and financial implications:

• NTPC, which had been leading FGD compliance efforts since the 2015 emission mandate, had awarded contracts for nearly 50 GW and issued tenders for an additional 17 GW.
  
  
• BHEL, the main contractor for NTPC’s FGD installations, may seek compensation for work halted midway, introducing the risk of legal and financial disputes.

The MoEFCC’s decision marks a shift in India’s approach to emission compliance in the thermal power sector. While it reduces immediate costs, it raises long-term concerns over SO₂ emissions, air quality, and public health, particularly in regions bordering Category C projects.