about his concerns on the proposed plants, at the sidelines of a media workshop in Hyderabad |
India is rolling out seven large mega power plants through private investment. Do you think the exercise will be successful? |
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In the early 1990s, the power utilities were losing Rs 5,000 crore a year. A lot more electricity has come down the wire since then, and the losses are Rs 23,000 crore per year. |
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If cracking a Rs 5,000-crore problem was hard, cracking a Rs 23,000-crore problem is doubly challenging. Now, I think mega power plants can work, though it requires focused attention to see that the first two cases come to closure. |
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So you are suggesting a proof-of-mega-power-concept to begin with? |
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The regulatory framework is still being tested. Our sense is that the most critical aspect is to showcase two projects that come to closure to establish credibly. |
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Equity is not the issue here. It is the debt part of the project. The lenders are the ones who are risk-averse and want guarantees. |
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But these projects are without guarantees... |
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Even though there are no guarantees today, there are genuine concerns that need to be addressed like barriers to open access. |
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If the positions (of not giving guarantees) are etched in stone, these projects will be much harder to close. There should be give and take. |
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Which of these projects have less risk? Pit-head-based power projects, perhaps? |
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There is less risk associated with pit-head-based coal projects rather than those relying on imported coal. |
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What are the most important steps that you feel need to be taken to recharge India's power sector, besides adding to power generation capacity? |
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Distribution is a critical aspect of this business. We need to ensure competency and autonomy of the management of distribution companies. We also need to make regulatory processes much more participatory. |
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And what about tariffs: isn't that an area of concern? |
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We feel that many urban households are able, ready and willing to pay higher tariffs provided service is efficient and demand-responsive. |
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There is thus a need to refine subsidy structures. The power sector is a conduit for about Rs 20,000 crore of poorly targeted subsidies. On the positive side, industrial tariffs (which cross-subsidise household and rural consumers) have started declining. |
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