‘Our focus is to provide power at affordable prices’

| Updated on: May 17, 2015
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This government is pragmatic enough to look at long-term solutions: Piyush Goyal

“I can almost say I am forgetting my chartered accountancy and becoming a technical person and deciphering what government and governance is all about,” is how Piyush Goyal, the man at the helm of three critical ministries Power, Coal and New & Renewable Energy, would like to term his experience so far.

But, numbers are what Goyal has dealt with so far by successfully navigating the e-auction of coal blocks, working out a bailout package for stranded gas-based power plants, and taking steps to correct the tariff issues for green energy.

Speaking to BusinessLine , Goyal shares his strategy, while acknowledging that there is always scope for improvement.

The process of importing gas for firing the stranded power plants has been initiated. Though this electricity is not cheap, you have put a cap on tariff. Is it workable?

We have 10 million standard cubic metres a day of imported gas available, which we can get for these power plants. Taking this as the base, through a reverse bidding process, we have been able to determine at what value and the highest plant load factor, the bidders (basically, the plants) can provide the cheapest power.

Our focus is to give power at affordable prices. Gas prices have shot up globally in the last few years, making such plants unviable. Through this process – shared effort of various stakeholders across the gas chain and the power plants – we have been able to reduce tariffs to as low as ₹4.7 a unit for stranded plants and for the partially stranded plants for less than ₹3.5 a unit.

How has the government arrived at 5.05 billion units generation capacity for June-September period alone from such gas-based plants?

We are not expecting the plants to work at 35 per cent capacity daily. Their annual capacity is 35 per cent. For example, during monsoon, we might not run these plants at all. It is only during the peak deficit that we will use it. So, they will run at 100 per cent may be for four months, which will be equivalent to 35 per cent over the year.

A concern among gas-based power producers is that the bailout package is for the short term – for two years. Any plans for long term?

We will obviously look at long-term solutions. This government is smart enough to look at the future. I am not being boastful, just pragmatic. But, the fact is we do not know what will happen in the long run in terms of the domestic gas output. We expect that by the third year, domestic gas output will increase. Therefore, the package is for the first two years. Also, we wanted to see how this works out – its success, response of the parties, and whether we are able to keep tariffs affordable. If this works, then, possibly we may not need to give any government support.

We are also working out on how crucial their role is in meeting the peak power deficit. We are also looking at how interest rates work, whether the cost of debt (for these plants) comes down and whether it brings down their operating costs.

When is the next round of coal auctions? Are there any corrective measures to be taken from the first round?

Our work is a continuous process. I am delighted at the enormous success of the recently concluded coal auction. There were no errors. The bids were competitive.

There were a couple of instances where the general sense was that if you map out a variety of bids of similar mines, there were some outliers. On these, we took corrective action. This was also to show to the world that this is a government that keeps a watchful eye…

But, there is always scope for improvement. We don’t believe in an ostrich-like approach.

What is the status of giving surplus land of coal mines back to the States and using them for renewable energy?

There is tremendous potential for this surplus land to be put for two uses. Recent reviews have revealed that there is great potential in these mines even after their production life. We can use them like water ponds or small water bodies to provide drinking water or through a certain amount of processing provide it for irrigation. Wherever that is not possible, we are exploring ways to generate electricity through renewable energy.

What about the Ultra Mega Power Projects?

Well, some of the UMPPs have been stuck over the years. We are working on a two-pronged approach.

We have the Pratyush Sinha committee to suggest improvements in our UMPP bidding mechanism. Simultaneously, we are also looking at bringing out five UMPP projects in the plug-and-play mode where we are trying to see if we can replace some of the old plants which run out of their useful life, but have land in abundance.

For example, an old 500-MW plant will have 2,000 acres which can sustain a 4,000 MW UMPP. In any case we had a policy to replace coal-based plants that are more than 25 years old. Now, we are adding a new dimension where we provide a coal block to such plants that already have land, water, environment clearances, and also bring the State government or the previous owner on board as an equity partner for the value of their land to bid in a plug-and-play mode.

Published on January 23, 2018

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