At a time when most power producers are facing fuel supply problems, the Anil Ambani-promoted Rs 18,948-crore Reliance Power claims it has insulated its projects from fuel constraints. The company expects to complete commissioning of five remaining units of the 3,960 MW Sasan Ultra Mega Power Project (UMPP) on schedule (by 2014). J.P Chalasani , CEO RPower, talks about the projects, challenges, and the way forward in an interaction with Business Line .

Excerpts from the interview:

By when will the remaining units of Sasan UMPP (Madhya Pradesh) take off? What is the status of your solar project in Rajasthan?

Construction work is in full swing for the remaining five units of the Sasan UMPP and it is expected to be commissioned as per schedule, if not ahead of schedule. As for the 100 MW Concentrated Solar Power (CSP) project in Dhursar, Rajasthan, (tipped to be India’s largest CSP plant to be commissioned under the Government’s National Solar Mission), it is expected to be commissioned by the next quarter of this fiscal.

RPower is today operating with a capacity of 2,500 MW, which includes the 1,200 MW Rosa project in Uttar Pradesh, 600 MW Butibori project in Nagpur, 40 MW solar project in Rajasthan and 660 MW of the Sasan UMPP and 45 MW of wind power in Maharashtra.

What is the progress on the Tilaiya UMPP?

The initial development work and various approvals and clearances are being obtained for the coal mine attached to the Tilaiya project and we are hopeful that these will be available soon.

Fuel supply constraints are affecting domestic power developers. What is the way forward?

I agree that fuel is one of the biggest concerns for the power sector. At RPower, I can certainly say that we have managed coal availability for the operating plant as well as upcoming projects. We have successfully operated 1,200 MW at Rosa using a blend of domestic and imported coal. We are also in the process of mitigating the fuel risks for our Butibori plant.

Availability of gas has also been a critical challenge. We are also impacted to the extent that we are awaiting gas allocation for our project expansion at Samalkot. However, the Government is aware of the criticality of the issue and a number of options are being evaluated. I am quite optimistic that some solution will emerge and these gas projects will be able to start operating.

When do you expect to start construction of the hydro project in Arunachal Pradesh?

We have a number of hydro power projects in our portfolio and one of them is the 700 MW Tato Hydro Power Project in Arunachal Pradesh. The project is moving toward commencement of construction.

What problems do these hydro projects face?

Hydro power projects, by their very nature, have very long gestation periods and also have to go through a number of regulatory approvals and clearances before they reach the stage when construction can begin.

These projects require certain policy measures and support from the Government to enable speedier development and also to make them more attractive. We have been sharing our views with the Government and I am hopeful that some of these measures will be implemented.

The Government has taken steps to support distribution utilities, mainly in the public sector. Do you think this is enough?

The financial restructuring plan (FRP) and State regulators approving tariff hikes are steps in the right direction. However, a lot still needs to be done and these steps need to be sustained and supplemented with efficiency improvement measures which, we believe, can be done through a process of privatisation, which is perhaps the best solution in the long run.

Private power firms want changes in bidding norms for UMPPs. Do you expect the new guidelines to be better?

One of the significant learnings from the existing norms has been that none of the bidders will be in a position to factor in unforeseen and unprecedented situations in their bids. If such issues are not addressed in the offtake agreements, there is likelihood of projects not coming up. We hope the new bidding guidelines will be such that they address these issues without taking away the benefits of the competitive bidding process.

RPower has funding from Chinese agencies. But, the Ministry of Heavy Industries wants External Commercial Borrowings (ECBs) denominated in Chinese currency for power plants to be withdrawn. Will you be impacted?

I don’t think this applies to us since we have never borrowed loans denominated in Chinese currency. Our ECBs are denominated in US dollar. We are very clear in our strategy that we will source equipment after assessing life-cycle-costs, which include equipment, operating and maintenance as well as financing costs.

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