Fuel troubles in the power sector have put a question mark on the viability of the country’s largest foreign direct investment in the sector. Hong Kong-based China Light & Power (CLP) has said it might have to “reconsider” its India investment if coal and natural gas supply to its two power plants was not streamlined.
In a letter to Prime Minister Manmohan Singh, its chief executive officer has cited shareholder concerns on the viability of the projects as the reason. CLP currently has investments of around Rs 12,000 crore across six states, with a power generation capacity of 2,700 Mw. “The pressure is mounting and the management needs to urgently find remedial solutions or reconsider present and future investments in the country,” CEO Andrew Brandler wrote to Singh.
The company’s main concern is the lack of coal supply for its 1,320-Mw plant in Haryana’s Jhajjar. The plant has been incurring losses, which will lead to inability to pay dues to banks and financial institutions, both local and foreign, the company says. “The Jhajjar project is losing large sums of money as contracts with various agencies of the government are not being honoured,” Brandler said. CLP had in July 2008 bagged the project, which became operational in January 2012. The company has to run the plant at 80 per cent availability to recover its capacity charges in full. However, with supply from Coal India dipping below 50 per cent of the requirement, the project has been facing huge underrecoveries.
| CLP FACT FILE A major power company in Asia-pacific |
|
Also, CLP’s 655-Mw gas-based power plant in Gujarat is facing loss of efficiency due to declining gas supply. “Under these circumstances, it is becoming increasingly difficult to sustain operations in India, as our profitability dips to alarming levels and we bleed financially on a daily basis,” the CEO said. The company saw huge opportunity in the country’s energy sector in 2002 but the reality was “grim and disappointing” now, he said.
CLP India Managing Director Rajiv Mishra confirmed Brandler had written to the PM and the power minister. In a detailed response to a Business Standard questionnaire, Mishra said CLP had not heard from the PM or his office yet but it was hopeful of establishing contact soon. A questionnaire to the PMO remained unanswered. A PMO official said the CLP letter had been received. “Brandler’s concerns have been addressed at the highest level. PMO had asked Coal India to meet supply commitments for 60,000 Mw of projects to be commissioned by 2015, including CLP’s plants. That exercise is on,” he said. Another email, sent to Power Secretary P Umashankar, did not elicit any response.