Finally government acknowledges efficiency is the solution and not price hikes for the power sector

Click here for my article that details the losses of Rs. 75,000 Crores but inept Discoms.  This does not even include the power plant efficiencies.

Next Steps for the Indian power industry

Minister for power, coal and renewable energy Piyush Goyal says for him the customer is the king.

The responsibility of lighting up the country today rests on Piyush Goyal’s shoulders. Just a month into his new job, the minister for power, coal and renewable energy has set an electric pace to energize the sector. He shares his vision with TOI in a freewheeling interview with Sanjay Dutta. 

When can we expect 24X7 power supply or blackouts in hinterland to get shorter?

Clearly, customer is the king. And that has been my first message to the departments under me. My effort is that we become a far more responsive government both to the needs and problems of the customer. When I say customer, the last man on the street is the final customer. But then within the system the power generator is the customer of the coal ministry or the coal supplier. The distributor is the customer of the power producer and then likewise in the entire chain.

I am trying to get that responsiveness into the system that the coal people give the best service which means quality price, timely delivery to the generator. Generator ensures timely supplies which will also include transmission and distribution, being adequately provided so the generator can satisfy his customer which is the distribution company.

The distribution company focuses to reduce power theft, to make sure 100% metering is done, he gets conscious of the fact that he has to ensure 24X7 power to each consumer and ultimately the consumer has to be educated that he has to pay for that power. He has to pay for that uninterrupted power for making it uninterrupted there will be certain redundancies built into the system. Also he will have to ensure that the theft that happens in the neighbourhood is stopped by a joint effort. After all, policing alone cannot stop every problem. It’s the people’s movement that resolves more problems than policing.

And finally, we will all in this value have to be conscious that the things are done transparently so that corruption costs are not loaded on to the final consumer and the final consumer gets quality at the right price. We cannot have a system that everything can be passed on to the final consumer in the garb of cost being recovered without being sensitive to their own problems and affordability.

The PM has spoken about the need for hard decisions, given the tight economic situation. As the doctor in charge of power, coal and renewable energy ministries, what are the bitter pills you will administer?

I think one of the urgent issues to address is increasing the domestic coal production so that the capacity that is available in India is put to full use. One way to recover the cost can be that you pass it on to the consumer. But I would rather focus my energies to reduce the cost by improving efficiency, improving productivity, by ensuring that every plant runs to full capacity, by ensuring that adequate coal is mined in the country so that we don’t pay for expensive imported coal. I have to bring in efficiencies in terms of linkages.

You will be amazed that the country has a situation where departments work in silos, so we have coal which is imported into Gujarat for a power plant in Korba, run by NTPC. And Coal India has given linkage to a power plant of the Gujarat government from Korba. The train may be crossing the line at the same time, going up and down. Rejigging this could save Rs 400-500 crore and the benefit will pass on to the consumer. It will also unclog the over burdened railway network. Help me push out more coal from the mines to its final destination. I have initiated a study at the pan-India level, my gut feeling says that thousands of crore can be saved, millions of tonnes can be additionally transported through the system, and pollution can come down.

Ramifications of small decisions can be pretty large. There have been complaints that you get a lot of boulders in coal. I am trying to see what I can do; planning to get crushers (it’s not an expensive proposition). I have given a timeline that by December 31, 2014 I am hoping that the Coal India board takes quick decisions and action so that every piece of coal that goes out of the Coal India mine will be to international standards.

Similarly, coal washing is an environmental friendly step, which for years has been quite neglected. I have passed orders that by June 2015- June 2016, which are the deadlines set by the environment ministry for a certain level of washing to be done, it will be strictly implemented and won’t seek any further extension to that. It will entail some investment and washeries, but I think there can be no better service to the nation than ensuring that we are not transporting ash over long distances.

Coal India has no dearth of money … Its sitting on a pile of Rs 60,000 crore?

It’s not only about having cash in the books, it’s also about improving our own efficiency. I would rather put that cash to good use to open new mines, expand the mining capacity. Again, something that needs people’s participation. I, on my side, can assure that whoever may get displaced whenever a new mine is opened, or a forest might have some mining activity, since mining activities are in forests, I can give categorical assurance that they will be well looked after, the R&R (relief and rehabilitation) will be better than the law provides. I can assure that I will use every effort to recreate afforestation to expand the forest cover.

But we will need people’s support to open new mines, to mine larger quantities. Today, we have certain decisions in certain states which are holding back mining production. A particular state says that you cannot move trucks from one time to the other. And if I cannot move trucks for 14 hours in a day then the mine’s production is down to 40%. So, it ultimately affects power generation and then the consumer. I will need a lot of support from all the stakeholders the states, consumers, environmentalists, everybody. I want to reach out to everyone for support.

What happens to tariffs? Utilities are doddering in the absence of timely tariff revision.

There are two things in this. One is what I found in a state like Rajasthan when I visited it, I suspect that the enthusiasm I see from Rajasthan, Andhra Pradesh, I am hopeful that these states really move fast and have come into the 24X7 category. But what I did see in Rajasthan, the state utilities increased the loss by over Rs 50,000 crore in last five years. So, it’s a government which is completely agnostic to running projects efficiently and allows indiscriminate power thefts, don’t bother about proper distribution network, meters are getting spoilt and are never replaced.

Their revenue was only Rs 10,000 crore against an expenditure of Rs 23,000 crore last year. There’s no concern for what amount is generated, or purchased, what is built, what is collected. We will have to set these things right only after consultation with the states.

Centrally, I cannot interfere in states, it’s a concurrent subject and in the federal polity, states are very sensitive to any ‘diktats’. I will be using a lot of persuasion to reach out to different states. For me it’s not about politics, I want to reach out to all states uniformly. We want 24X7 power for every citizen of India as Modi says elections are over and electioneering is over. Now it’s time to perform for 125 crore citizens.

We are going to reach out to the states and help them tide over these problems and incentivise good performance by states. I must tell you Gujarat, which has turned from a Rs 2,500 crore loss-making utility into a Rs 500 crore profit making utility under Modi over the last 10-12 years and giving 24X7 power to everybody, has had the lowest increase in tariffs compared to any other state in the country.

I don’t think it’s only about tariff. They have separated their agricultural feeder, they have metered every home, and they have filed FIR’s and prosecuted (people) power thefts, their collection efficiencies are among the finest. They are able to ensure that people get the power when they want at their homes, industries, commercial gets 24X7 power; agriculture gets adequate power as per their needs. It’s a case study worth doing.

That’s what when I first visited Gujarat, I said let me learn what needs to be learnt so set other things right. It was a very educative experience. I felt very good being at Sabarmati ashram , I saw the river front and what work the govt has done there and it inspired me both , to look at it as an opportunity to give back to the society, to give back to the nation and also to see how things can be done. I mean if Mahatama Gandhi can get his freedom by spinning a charkha or Modi could clean up the water front which otherwise could have been such a sensitive subject in a communally-charged city like Ahmedabad, in a densely populated area, I think lot of things can be done, it needs little bit of leadership, sincerity of purpose and transparency and honesty. If I tell you transparently what my issues are like when the Delhi crisis came , I shared with the people what exactly my situation is and after that I found everybody cooperating very well.

Are the stranded generation capacity the proverbial monkey for the government? There won’t be blackouts if this capacity is brought on stream.

These are actually an opportunity for the government because come to think of it, I know I have the ability to produce. I need to sort out a) its fuel supply b) transmission and finally c) distribution.

Now I am very clear where exactly are the issues lying. A lot of public sector and private sector project have either come up or are on the verge of getting commissioned. They need some last-mile funding for which we’ve already had a meeting with the bankers and we have a small group of people , bankers and experts, who are working to see what will be the best way to provide that last mile funding but more critical issue is how to expand the output from the coal mines, how to ensure more coal goes to the power producers.

The previous government had all sorts of permutations and combinations that these people will get so much coal, those will get so much; these will not be eligible, these will have to import. It’s quite a complicated web we’ve created. My logic is simple, If a plant has come up, it is now a national asset, to waste that, keep it idle, is a national liability, national cost. Whether the banks have funded it or whosoever and if you see what all perspective, someday that cost for being stranded will be burdened on the consumers after all we are in an ecosystem wherein interest is loaded into the cost of project as interest during construction and someday it goes in the tariff calculation directly or indirectly.

So my approach is that my job is to quickly get all of them operational. Get coal production to ramp up and start supplying to every operational asset and get them into production. May be, I will not be able to do 90% as I want to do right away but I will start and keep ramping it up as my production increases. So I don’t think that the stranded projects are impossible to retrieve, I think I only have to increase their fuel supply on one hand and on the other I am already in dialogue with states to quickly expand the transmission so I can evacuate power all over the country and of course the last mile distribution.

What about the gas-based projects?

It’s a much smaller dimension than the coal-based projects or thermal opportunity but in gas based also, it’s a matter of approach everyone is crying about it and I am looking at it as an opportunity in the gas plants. May be, in the very long run there is a problem because gas is keeping on getting expensive and this will become pretty much unviable. But if you see from a different perspective, country has a peak load problem and gas plants can be switched on and off within 15 minutes.

So they can act like a spinning reserve so I can actually use these gas plants to provide the peak loads whenever there is peaking demand, once the distribution and transmission set up is up and about. So I am hoping that a quick decision is taken by the courts where some of these gas issues are pending and we are able to see visibility in terms of the expanded gas supplies and then we will see what to do with these gas plants.

Will you ask for some financial relief for the stranded projects as an interim measure?

My effort is to see if I can do all of this within the framework of existing RBI guideline because I don’t think it will be fair on the part, or for any one sector in the country to change established rules of the game, or law of the land for a particular set of problems we have. Having said that, it may require some small dispensations which will not completely erode the RBI’s efforts to bring in more strength to the banking sector. I had a meeting with the bankers and it was a very good experience, I found them all to be very cooperative in our efforts.

I think they realize that we are making very sincere efforts. I have appealed to them that they also put one foot forward also and I have assured that I will put two feet forward for every one foot that they extend. I think if all us, stakeholders, govt, banks, generating companies, distribution companies, public at large, if all of us work together, and instead of sensationalizing every issue we give the whole process a certain amount of time to stabilize and set things right, I think the problem is not impossible and the problem is not daunting. It is doable.

Are you planning to open coal mining to private sector?

It’s not about private or public, I want to bring efficiency and better management practices in to the system, I would like to do the same things in Coal India Ltd as I would like the private sector to do if and when they do get into this sector. As regards opening up , that is up to the Cabinet to take a decision. It also depends on the Supreme Court, on the issue of mines which are under litigation because till that time I am not able to auction or open up a lot of mining.

But I certainly see a lot of competition as being good for the nation, I certainly believe if more competition comes in, coal reserves can be mined faster, new technologies can be introduced. Coal India will stand to benefit from competition in terms of its own improved efficiencies, benchmarking will be better for Coal India. I had a meeting with Coal India officials — people have always kind of held that company to be having a lot of problems — my effort is that to take shortest possible time to bring in high standards of probity and improve their efficiency, so even a Coal India employee can hold his head high when he goes and tell somebody that he works for Coal India.

Is there any proposal to restructure Coal India?

There has been a lot of talk about recasting/restructuring and what not of Coal India. I have examined the reports in this regard and they have flagged it as one possible option. In that respect, our government has its mind open on all options always. Like today I mentioned I am trying to rationalise the coal linkages. If I were to do that with seven separate entities, it would be almost impossible.

But with Coal India in a structure of one company, its far easier for me to rationalize this without any loss, inter say, so there are certain advantages. Obviously there are disadvantages in terms of valuation because holding companies don’t get the same value as individual operating entities. So one never knows what will happen in the future but as of now I think you need to focus less on form more on substance.

What about disinvestment in Coal India?

That’s for the Hon’ble finance minister and others to take care of. I have no problem in that either way. There’s no disinvestment as such. We are just asking more of the public to hold or own the fruits of Coal India because after all, it’s a public company.

The PM has been talking about the solar revolution. What are your plans for way forward?

Solar is a great thing, again something which helps the peak load, which comes in peak hours. Storage is getting cheaper with the new technologies so we could at some stage look at dovetailing solar with high storage capacities and that could become an excellent off-grid solution for remote villages and remote areas. Leh-Ladakh has some far off places where it may be difficult to move transmission lines but a solar-cum-off grid solution could be a great idea.

Similarly, looking at the huge potential of solar in India and the fact that it is renewable energy without any environmental degradation as long it happens on barren land, waste land and doesn’t affect the agricultural or irrigated land parcels, I think it is a great idea and we will expand on it significantly.

But money has been a problem…

Money, off late, has been a bit of a problem for everybody. We shall find a solution.

There is the other issue of imports vs domestic production. Are you seeking a reconsideration of dumping duty on solar panel imports from certain countries?

I have sought reconsideration from both commerce and the revenue ministries. Logic being that, this is based on data of 2012, or thereabouts. At that point of time, the solar mission was a very small mission. India has a capacity of producing 600-700 mw and we are doing 400 mw or so. For that point of time, it made decent sense that the 400 mw gets sold or sourced indigenously.

Now we are looking at expanding the solar mission manifold. And Indian manufacturing doesn’t have the capacity. If you put these kind of tariffs and barriers, we won’t be able to generate solar power to the extend we want to at competitive prices. Worldwide, prices have fallen so much that now solar can stand on its own feet. The tariff has come down to Rs 6.50-7. The critical aspect is that we certainly want to improve indigenous production. And we want to expand our capabilities and capacity in India to produce.

Source: TOI

About Ritesh Pothan

Ritesh Pothan, is an accomplished speaker and visionary in the Solar Energy space in India. Ritesh is from an Engineering Background with a Master’s Degree in Technology and had spent more than a decade as the Infrastructure Head for a public limited company with the last 9 years dedicated to Solar and Renewable Energy. He also runs the 2 largest India focused renewable energy groups on LinkedIn - Solar - India and Renewables - India
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