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Power, coal and renewable energy minister Piyush Goyal on Friday announced a host of innovative measures to address the slump in investment in power projects, following an hour-long meeting with the heads of major power companies. Reliance Group Chairman Anil Ambani, Adani Enterprises Chairman Gautam Adani and Jindal Steel and Power (JSPL) Chairman Naveen Jindal were present at the meeting.
“We want to focus on providing fuel to all operational projects. The view taken by everyone present today was a national asset that has already been created has to be protected. We will look at all investments in the power sector as national assets,” Goyal said, addressing the media after the meeting.
The industry leaders told Goyal there were viability concerns about projects with a capacity of about 39,000 Mw, already commissioned or to be commissioned soon, with an overall investment of Rs 1.57 lakh crore and debt of Rs 1.1 lakh crore, owing to factors beyond developers’ control. This, they added, led to risks for the banking sector. In the gas-based generation sector, debt of Rs 85,000 crore, for 24,000-Mw projects involving an investment of about Rs 1.2 lakh crore, stared at the prospect of turning non-performing.
| MEASURES & IMPACT |
Cutting e-auction sales by CIL
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Major decisions announced on Friday included reducing the quantity of e-auction sales by Coal India Ltd (CIL), rationalising existing coal linkages to save rail freight costs and free rail capacity, asking CIL to provide fuel linkages for commissioned plants, allowing surplus coal with companies to be transferred to CIL, requesting the environment ministry to allow additional production from operational mines, third-party inspection of coal despatches at the loading (mine) end, and setting up an inter-ministerial panel to discuss issues in this segment.
Goyal said the proposal to cut CIL’s e-auction sales without impacting the company’s profitability would be placed before the company board soon, along with a proposal to re-distributing linkages and implement third-party inspection. He also hinted at a proposal to ask the environment ministry to raise the environment clearance limits for existing mines and announced he would meet officials of the major lenders to power projects on Monday to resolve financing issues faced by the sector.
Asked about the latest controversy over objections raised by companies such as Tata Power, Reliance Power, Adani Power and GMR over “unfavourable” provisions in the bidding documents for ultra-mega power projects (UMPPs) in Odisha and Tamil Nadu, Goyal said: “If anybody chooses to cartelise and not bid for UMPPs, so be it. The government does not form a policy or decide on bidding documents based on the ability of a set of bidders to bid or not.” He added the government shouldn’t refuse to accept suggestions, should any issue be flagged.
On the issue of stranded gas-based power capacity, Goyal said gas power producers had chosen to invest “based on certain explicit or implicit assurances of gas availability, but there was never a commitment in terms of pricing. They have all invested with their eyes open, in terms of gas pricing being a function of the market and a revision every five years”. He, however, said this didn’t mean the government should shirk its responsibility to protect national assets, adding the matter of gas pricing was with courts.
Asked whether his ministry was keen to restructure or privatise CIL, the minister said there were benefits of a holding company structure of ownership and management. “Improving coal availability or its quality is not a function of any cosmetic restructuring. There are certain advantages of a holding company. For example, rationalising is possible only when all the seven subsidiaries work in a cooperative way,” he said. Other industry leaders who attended Friday’s meeting included Essar Group chief executive Prashant Ruia, Welspun Energy Managing Director Vineet Mittal and Hindustan Power Projects Chairman Ratul Puri. NTPC Chairman Arup Roy Choudhury, along with key officials from several central and state power departments, was also present.
