Mitsubishi Power India has reached a settlement to pay NTPC Rs 851 crore to exit the flue gas desulphurisation project at the Farakka Super Thermal Power Station. The decision follows a major July 2025 regulatory shift that exempted most coal-fired plants from mandatory emission control installations, significantly changing the project's viability.
Japanese industrial firm Mitsubishi has agreed to pay NTPC a settlement of Rs 851 crore to withdraw from the flue gas desulphurisation (FGD) installation project at the Farakka Super Thermal Power Station in West Bengal. This settlement marks the end of a long negotiation process between the two parties regarding the incomplete infrastructure project.
The project was originally commissioned about six years ago with an estimated cost of Rs 1,000 crore. While the installation of wet limestone FGD systems was intended to lower sulfur emissions, the project faced significant delays and remains unfinished, with only the first stage completed. The settlement comes after months of discussions where NTPC had reportedly sought over Rs 1,200 crore in compensation, while Mitsubishi had initially proposed a figure closer to Rs 720 crore.
The Impact of Regulatory Policy Changes
The core reason behind this exit is a major shift in Indian environmental policy. In July 2025, the government revised its emission control norms, exempting approximately 78% of coal-fired power plants in India from the mandatory installation of FGD units. These new studies on the sulfur emissions from Indian coal reduced the immediate necessity for such installations at many existing stations.
For companies like Mitsubishi, which were contracted to execute these installations, the policy shift changed the business case for the project. For NTPC, the situation creates a need to re-evaluate capital spending and the management of unfinished infrastructure projects across its power portfolio. The exit highlights the risks involved in long-term power infrastructure contracts when regulatory landscapes change.
What Investors Should Monitor
Investors tracking NTPC may look at how the company manages the remaining project works and the potential impact of these policy changes on future capital allocation. While the settlement brings a conclusion to this specific dispute, the broader sector remains sensitive to how power companies manage ongoing contracts in the face of evolving environmental regulations. The key monitorable will be any further updates regarding similar projects where contractors may seek to exit due to changes in site viability or regulatory requirements.