3rd Power Focus Summit: Power distribution remain India’s Achilles heel

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The 3rd Annual Power Focus Summit was held today at Hotel Le Meridien, New Delhi. Mr. P K Pujari, Secretary, Ministry of Power, Government of India, Mr. Deepak Lamba, President TCL – BCCL, Mr Gopal Saxena, Director, BSES Rajdhani and Yamuna Power, Mr. Sanjay Sagar, Joint MD & CEO, JSW Energy and Mr Sudip Sural, Senior director, CRISIL Ratings addressed the delegates at the conference.

During his inaugural address, Mr Ratul Puri, Chairman, Hindustan Power Projects, emphasised upon the enormous growth potential of India’s power sector in attracting investments given its colossal energy demand. “A lot has changed in the last few years. India is on a growth path with a high GDP growth, a negligible current account deficit and a significantly reduced fiscal deficit. We have seen multiple programs like Make in India, Skilling India and Start Up India which can help India sustain this growth over the medium and long term. After a long time people outside are seeing India as a country which can truly deliver. Next 10 years are going to be the decade of India. There is a lot of trust on India’s potential. If we miss the bus this time, we will find it very difficult to deliver in future. One sector which has seen a major movement and change in recent times has been the power sector”.

According to Ratul Puri, 24×7 power for all by 2019 seemed a distant pipe dream earlier. “Today, that seems to be achievable in near and medium term. It is important to recognise the tremendous work from the Government’s side as well as other stakeholders in the sector to address the many challenges. At the same time, we need to be cautious as there are still many issues that need to be addressed,” Puri further said.

Mr Puri stressed that success of India’s renewable energy plans will also depend on the ability of discoms to absorb and uplift that power, which remains a debatable issue as of now. “The Government has been working proactively to rectify this anomaly. The launch of the Ujjwal Discom Assurance Yojana (UDAY) for financial restructuring of discoms is a welcome step in this regard. However, we must ensure its speedy implementation and look to improve fiscal discipline of discoms at the earliest to see the desired results”, Mr Puri said.

According to Mr Puri, low growth in demand for power and the accompanying collapse in pricing of power on the exchanges have emerged as an area of concern recently. There are limited medium term and long term bid opportunities wherein only 6000 MW of long term bids have been concluded in the last 2 years whereas there is over 15,000 MW of unsold power. In coal sector, Mr Puri felt that it is imperative that we maintain the momentum in coal production and immediately re-allocate mines cancelled by the Supreme Court.

On the solar front, while appreciating the falling solar tariffs in India, Ratul Puri cautioned that as stakeholders in the sector, we need to be circumspect and careful in bidding to avoid a repeat of the situation witnessed in case of coal block auctions which saw a number of unsustainable bids. “There has been a lot of talk recently on the low price bids we have seen on solar side. I think we need to be careful in not celebrating this too early. Maybe it is a good movement but if investors don’t generate a reasonable return on their capital and banks, once again, get hurt in this renewable cycle, I think we have set ourselves back by a couple of years”, Mr Puri noted.

Mr Puri also stressed on the need to urgently revive hydro sector. According to him, hydro power is an excellent long term source of energy for India as it is clean and renewable. But most importantly, hydro can be an ideal foil to solar and wind, with the ability to store energy and release as per demand. Further, bulk of hydro generation takes place during monsoons, when solar output is low. However, currently the risk reward ratio does not allow the development of new assets, which should be looked into.