Union power minister RK Singh has said electricity demand is expected to grow manifold but coal supply remains an area of concern. In an interview to ET, he spoke about allowing the cost of imported coal to be passed on to consumers and kick-starting combined PPA auctions for thermal and solar power. While stakeholders believe that aggressive solar bids may lead to non-performing assets in the renewable energy sector, Singh disagreed that solar power tariffs were aggressive, saying they were submitted by businessmen after calculations. Edited excerpts.
As power demand grows with schemes such as Saubhagya, what is the biggest challenge you see in meeting demand?
Coal supply is a challenge. Supply to power stations compared with last year has increased almost 6-7%. But the problem is —actually, I am happy to share this — the power demand is increasing much faster.
This quarter, demand is increasing almost 10%.There are two reasons— one, we are adding about one lakh consumers daily. The second is higher per capita income. So, people are adding appliances. These two are accounting for the growth. The government has given almost Rs 1,35,000 crore under Deen Dayal Upadhyaya Gram Jyoti Yojana for rural electrification and Integrated Power Development Scheme to the states to strengthen their distribution systems. Rising incomes have also accounted for this power demand growth and demand is going to continue. Up till now, we have managed, but we have to quickly expand coal production.
How are you dealing with the issue of stressed assets?
A high-level empowered committee was set up under cabinet secretary PK Sinha and has given its recommendations. Now, a Group of Ministers has been set up under finance minister Arun Jaitley. I will be the convener of the group to look into the recommendations. A number of aspects will be addressed in that. Basically, you can divide assets into two parts. There are many assets which are salvageable and many which are not. For instance, they are in the initial stages and their promoter did not bring equity or there is just land and nothing else.
There are instances where somebody has bid unrealistic prices. But other plants, which are on track of completion, stand a good chance of coming back on stream because of the increasing demand.
We had earlier aggregated and auctioned PPAs. Now, we plan to issue other bids as well. We now plan to come out with bids for procuring power from the stranded generation assets and bundle it with renewable power. This will reduce prices of power and also enable states to meet their renewable power obligation targets. This will also help in reducing stress. As far as coal supplies are concerned, that has to be addressed. Some of the recommendations of the cabinet committee will address that.
We plan to come out with a provision which will be part of the revised tariff policy. We will say that if anybody does not get domestic coal and he wants to import, he can. Additional costs will be passed through in tariffs. Solar tariffs have been a point of contention.
The government has been capping the tariffs and developers have been bidding aggressively. Basically, people bid only after calculating very closely as to what is viable.
They are all businessmen. We don’t see anybody bidding something without calculations. So anyone saying Rs 2.44-2.55 per unit tariffs are not viable is not acceptable.
Nobody would have bid if it was not viable. The bids are happening and people can participate.
Do you plan to relax the cap?
The cap is fixed after calculations, depending on available sites, land availability in higher insulation areas and prices of components. It is not random.
The 10-GW solar tender received dull response. What is the way forward for promoting solar manufacturing?
We will continue with our efforts to promote manufacturing — that’s an objective. We have other schemes under consideration for promoting manufacturing.
Can we expect a similar large tender?
I am not going to announce anything.