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We are attacking problems across value chain of power sector: Scindia

The responsibility of lighting up the country today rests on the young shoulders of Jyotiraditya Scindia. Just three months into his new job, the power minister has set an electric pace to energise the sector. He shares his vision with ToI in a freewheeling interview with Sanjay Dutta:

About 24,000 mw gas-fired generation capacity is idling due to domestic gas shortage. This is threatening to turn more than Rs 1 lakh crore investment sour. What is the mechanism proposed by your ministry to make imported liquid gas-fired power affordable?

The problem is a little more complicated than you described. Gas plants today are running at 40% PLF (plant load factor or capacity). Almost a Gig (giga watt) capacity is completely stranded, not even idling. How do you resolve the situation?

I am 100 days into my job. What I am trying to do is resolve issues across the whole value chain of the power sector. That’s generation, transmission, distribution and last mile. What we are trying to do is deal with issues in each and every bucket: We have dealt with FSAs (fuel supply agreement) of coal; dealt with issues with regard to NTPC — that’s reallocation of coal blocks; allocation of new coal blocks for 8,460 mw, or 42 mtpa (million tonne per annum), which would be done in this auction; whether it was the public issue of $2.3 billion; we’ve got approval for 2,600 mw for hydro projects from environment and forest clearance.

On the transmission side, we are trying to give independence and full autonomy to POSOCO (grid operator); we’re looking at the clauses in the Electricity Act that need amendment to ensure that the incident (grid collapse) that happened last July does not happen again.

On the distribution side, we are trying to look at the FRC, where eight states have come on board, we have full commitment of those states. The only thing I need to get done is confirmation of the transitional financing mechanism from the ministry of finance. The moment we do that, close to Rs 1.2 lakh crore short-term liabilities will be rescheduled… 50% from the banks and 50% from the state governments.

I am also trying to bring out the creditory (rating) system for discoms where we will do the first half and a full year to show transparency and accountability to the lenders. It is also important that you don’t have solution for all the power sector issues and you must involve all stakeholders.

In the last 100 days I have tried to do that and trying to fix mechanisms for the same. For the first time, in three months I’ve had three meetings with the Parliamentary Consultative Committee on power. I have set up an advisory group of bankers on Februray 5, I have also met the CERC and regulators to make sure that there is clear signal on the regulatory side, I will hold annual and semi-annual meetings with that we have the message very clear and have annual meetings with them, I have also put together an advisory group which met on Februrary 19, which encompasses all the stakeholders in the power sector — ex secretaries of coal, power and environment sector, renewable energy side, financing, institutional authorities. What I am doing with them is attacking problems. Gas is an issue, availability is not there and the only solution that I can come up is to use imported RLNG, which you get for Rs 8 or Rs 9, as a substitute to diesel gensets which is costing the industry close to Rs 20 crore. I have put this up as an item to discuss with the advisory group.

Our next meeting is very much on SBD-2 which is on March 6 and I have already circulated the papers and have the sitting with them. And I am trying to get my hands on each part of the problem. If you ask me very candidly, I don’t have a solution today…

The standard bid document for case-2 projects wherein state government gives land etc proposed by your ministry has universally been rejected by all promoters and nobody is happy with it. Why are you sticking with it?

There is lot of noise about SBD. You have to come out with a regime that makes sense for bankers, investors and it makes sense for all stakeholders, including state governments. SBD Case 2 is a very different product to SBD Case 1, where the state govt will give you land and a linkage, you are a developer, your return is based on the efficiency of your enterprise…we have put together parameters which are as transparent and accountable as possible…there is great deal of noise about is because all the facts and clauses are not known . I am taking this to EGoM as you know, based on the advisory group. I have told the stakeholders we are on the same side of the table… I will first meet with you, discuss it and will only then take it to EGoM, which is why we are meeting within two weeks we are having the second meeting with the advisory groups on the March 6.

Promoters are facing problems due to fluctuation in the rupee’s exchange rate. Have you thought about any step to mitigate the problem?

As I said, I am right now concentrating on four things — generation, transmission, distribution, last mile. Hedging in terms of foreign currency exposure is something, to be very honest with you, to which I have not applied my mind yet. I am not very clear, but not sure whether it really falls into my domain as power minister.

Projects using imported coal have been hit by a double whammy – rise in cost of imports and notices for paying Customs duty, even though the 2012 Budget had assured of an exemption?

I am discussing it with the FM. It’s not a Budget item, it’s off-Budget. We just need a clarification. The issue is of steamed coal Vs indigenous coal. I am aware of that. I am coming up the learning curve as soon as possible.

One comment

  1. Mr.Minister (Mr. Scindia) : You are only 100 days old, but, your department is more than 50 years OLD. Policies are made by Government in Power with Indian Administration Service (to have continuity and it shall act independent of Government to ensure the policy benefits for which those are created). You need to stop passing on buck to Centre to State, am new etc, instead fix the accountability for the failures and revival of the idling power stations. When the policy was made, the entrepreneurs, large corporate companies (both PSU and Private) used public money, which is now swindled on GAS PROJECTS, so who evaluated them with a fore sight and why only support them further? Instead, create business plans and append as policies, provide funds and keep a government nominee in the new private small enterprise with small capacity at many places to reduce the overheads…..

    Gas based projects were expensive and will remain expensive, instead opt for renewable with low cost interest to set off the expenditures already made at the same location as these power projects were sanctioned with huge land banks, so let them use for Solar PV or Solar Thermal applications by engaging new set of entrepreneurs, so that wealth is distributed among many business men and only to two brothers of Reliance or Essar or Torrent etc.

    This does not even need 100 days to realise as it is a case and all of us are mute spectators in your hands and i know being an young and new generation leader, you stop supporting only the large companies, instead with Government participation in the board (till the loan repayment), mentor and promote new small entrepreneurs with a clear business plan as an appendix to Policy with low cost funding so that many jobs can be created.

    Yes, there are few dynamic challenges like Forex fluctuations (due to fictitious import and export to convert Dollars to Rupees due to technical glitch in Commerce Ministry statement of huge export, when the whole world in recession??) and these needs to be curbed to avoid further erosion of our economy….. which some one said, “Export documentation is a graceful method to get the Stashed Money (black, white or red, i do not know) from abroad”, which needs to be unearthed to control the FOREX fluctuation…..

    Can you or your department or government do it??

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