JSW Energy turned out to be a proverbial white knight for bankers trying to sell troubled power sector assets to recover their dues. In the last few months, the company has added 1,500 MW in deals worth ₹9,200 crore. While going on an acquisition spree, the company has always kept an eye on its debt. Sajjan Jindal, Chairman of Jindal Group, has not shied away from rejecting deals that do not fit his bill. Speaking to BusinessLine , Jindal discusses his strategy and views on the power sector. Excerpts:

By when do you feel reforms in the energy sector will start delivering results?

I think green shoots are visible. Measures that needed to be taken at the government-level have already been taken. Now it is only about the implementation of these policies.

This will rejuvenate the whole sector. The main problem was that discoms (distribution companies) were weak. Different political parties were promising free power, concessions on tariff et al. This was creating problems. I hope all policy-level changes made by the government as well as schemes, including UDAY (financing scheme for discoms), will bear fruit for the industry.

Are you considering more acquisitions?

The sector is pretty stressed at the moment. JSW Energy and few other power companies have got strong balance sheets to take advantage of the situation.

We are expecting consolidation in the sector.

It grew quite organically when everybody went into the power sector and got into difficulties. We are looking at 8-10 different power projects for acquisition across the country. Depending on the outcome, we will decide which one to invest in – depending on which one gives us best returns.

What is the size of the assets you are looking at?

Over the last two-three years, we have acquired assets worth about ₹12,000-13,000 crore. Going forward, we are planning to acquire assets of another ₹4,000-5,000 crore.

We have maintained the ratio of 60 per cent debt and 40 per cent equity in all our acquisitions. Every year, we are accruing profit and our debt levels are also decreasing.

What is the thought behind extending JSPL asset acquisition over two years?

Basically, they were not happy with the lower price that we were offering.

We told them that if they wanted a higher price, they would have to tie up the PPA (power purchase agreement) and FSA (fuel supply agreement).

If they were willing to give us 15 per cent return on equity, we were willing to pay a higher price.

What prompted you to shift your strategy from selling power in the spot market (merchant power) to signing a PPA?

(Almost 80-90 per cent of JSW Energy power capacity is under PPA now)

The sector has evolved over the last 20 years.

When we ventured into this sector, it made more sense to focus on merchant power, because the price of electricity was very high and merchant power made more sense. But with time, the power sector in India has matured like any other country in the world.

This is a utility business and we believe that utility businesses should be fully protected from both ends.

This is now a fixed-return type of business. So it has to be PPA-backed rather than being merchant-driven.

We are constantly working on signing up of the PPA. As you have seen, we are gradually becoming a 90 per cent PPA-driven power company.

Has the UDAY (Ujwal Discom Assurance Yojana) scheme started benefiting the industry?

I already see this benefit coming in, because electricity boards have become more disciplined and the situation across the country is improving.

Will you look at expanding your transmission business?

We are at present in the transmission business through couple of joint ventures. Yes, we are looking at few more.

That is one of the areas we would like to focus on more. We would also want to get into distribution as and when opportunities come.

Do you think providing subsidised power to villages will lead the power sector to trouble again?

It is very important that power reaches villages and rural areas, but if it is subsidised then it would be a big problem.

Anything driven by subsidy does not really work in the long term. It doesn’t even benefit the poor.

Nobody wants free power; they only want power. They are willing to pay the price. Our politicians should understand that nobody is looking for free power.

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