‘Govt on track in solving power sector issues’

ksenia kondratieva Mumbai | Updated on June 24, 2018


Centre likely to shut down 250-odd plants that are over 25 years old, says Tata Power MD

While Tata Power is optimistic about growth opportunities in the renewable energy sector and several new business verticals, thermal generation remains its core business as coal-based capacity accounts for 70 per cent of its total 10,757-MW portfolio. Going forward, the company is not planning to add new thermal capacities, but may acquire stressed power assets through Resurgent Power Ventures (its JV platform with ICICI Venture Funds Management and other investors) as it believes the government is on the right track in solving issues in the power sector. Edited excerpts of an interview with Praveer Sinha, Tata Power CEO and MD:

The Mundra plant in Gujarat, which accounts for half of your thermal capacity, has been making losses for several years now. Do you see this issue being resolved anytime soon?

This is a challenge for us as international coal prices have been going up in the last few years, but we are taking a number of steps internally such as improving efficiency and increasing the blend of coal. We are also now trying to source different coal from different places, so that it gives us flexibility in terms of pricing. But the government on its own has been making a huge effort; they are in the process of forming another High Power Committee. They also want a solution because it is a pity that plants (producing electricity at) one of the lowest costs are not able to generate and schedule power. It is an asset of the country, and the State is buying power at 1.5 times the cost. So it is not in the interest of anyone that plants of such capacity are left out and you buy power at high cost from some inefficient ones. I am sure the government will sort this out because the stakes are high and the public interest is not being served by not running these plants.

A lot of stressed assets are likely to be up for sale. Will you be trying to acquire some?

We keep on looking at long-term opportunities through our joint platform with ICICI. What matters eventually is the cost of power. I should not get carried away by the fact the plant has Power Purchase Agreements (PPAs).

It is important that you should have proper cost of power, proper PPA and proper technology.

I will be hesitant to go for sub-critical equipment. We have a lot of filters and we would not like to take up a project where we cannot schedule the power supply. We are all committed to (fighting) climate change, so (we need to see) how do we contribute from our side so that we don’t add to the emissions but reduce them and still effectively run the plants.

Given the issues the sector is facing, from lack of long-term PPAs to coal supplies, is it possible to turn these stressed assets around?

These are transition times for India and I am sure we will find solutions that will ensure many of these plants are able to structure the PPAs and coal sourcing. In fact, the government is looking at some 250-odd power plants that are more than 25 years old — this is something like 34 GW of capacity and there is an opportunity to close some of them down, specially those having small equipment, highly inefficient and polluting also.

Once that space is created, new generation capacity will come and coal will get allocated. With the same amount of coal we can produce more power. I am sure this is on the top of the government’s mind.

Published on June 24, 2018

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