According to reports, the telecom department plans to urge Asian Development Bank to extend long-term soft loans to India’s cash-strapped telecom sector which has been clamouring for viability gap funding (VGF) as a precondition to invest in capex-intensive green energy technologies mandated by the government.
The telecom industry, reeling under Rs 2,50,000 crore of debt, says it’s in no position to take on the additional Rs 66,000 crore burden which it estimates to be the cost for creating green energy capacity. But DoT is likely to approach ADB only after global consultant. PricewaterhouseCooper provides an estimate of the VGF required by the telecom sector for meeting the government’s green energy targets.
PwC’s Indian arm was engaged by the telecom industry on Thursday to examine the techno-commercial feasibility of powering some 3.5 lakh mobile towers with alternative energy source such as solar, wind, biomass or fuel cells over the next seven years. It is likely to submit a detailed project report in 12 weeks. PwC didn’t respond to emailed queries. The decision to engage PwC India was a joint initiative of mobile phone companies operating on both the GSM and CDMA platforms and tower operators in consultation with DoT.
“PwC has been asked to suggest which green energy technologies either in isolation or in combination are best suited to achieve DoT’s green targets in a cost-efficient manner,” said Rajan Mathews , director general of Cellular Operators Association of India (COAI), the industry body representing GSM operators such as Bharti Airtel, Vodafone, Idea Cellular and Telenor amongst others. Mathews, who was present in the DoT meeting on September 27, added that PwC’s assessment on VGF would hinge on the green energy technology variants it recommends for mass deployment.
Discussions on incentivising green energy were triggered by DoT’s refusal to ease targets linked to renewable energy deployment for running towers sites. The green policy requires telcos to migrate 50% of all cell towers in rural areas and 20% in urban areas to hybrid power by 2015. By 2020, operators will need to run 75% and 33% of cell towers in rural and urban zones, respectively, on hybrid supplies. Hybrid power has been defined as a mix of grid supplies and renewable energy based on solar, wind, biomass or fuel cells.
The government has of late warmed up to industry’s demand of VGF for meeting a portion of capex since less than 1% of the current installed base of 4.4 lakh mobile towers are powered by hybrid supplies nearly 20 months since the green policy was announced in January 2012. More so, since telcos continue to rely on an expensive and environment unfriendly fuel like diesel to keep their towers running 24×7 amid erratic grid support. A senior executive representing Tower & Infrastructure Providers Association (Taipa), the industry lobby body for telecom infrastructure operators, claimed the VGF requirement had been “internally estimated by the telecom industry at roughly Rs 12,000 crore for powering 3.5 lakh tower sites on renewable energy, but DoT wants PwC to confirm this before it approaches any multilateral funding agency like ADB or even the World Bank”.
DoT has also sought views of Universal Services Obligation Fund (USOF) on VGF required for achieving the green telecom targets. The USOF, an independent DoT arm that subsidises rural telecom infrastructure rollouts, is likely to advice the government based on findings of Indian Council for Research on International Economic Relations (ICRIER) on this issue.
Over the past two years, ICRIER has examined actual costs involved in deploying renewable energy solutions like solar in mobile tower sites in 20 states as part of a USOFsponsored pilot. It has examined issues like grid power availability and diesel dependence in energy deficient zones to assess actual costs of solarising mobile towers across India.