Dr Pawan Singh, Managing Director and CEO, PTC India Financial Services (PFS), speaks about the existing situation of the power sector, steps needed to tackle them and opportunities in the renewable energy sector among others during an interview with Swati Khandelwal, Zee Business.
Edited Excerpts:
Q: How do you see the current situation of the power sector and what immediate steps are required to tackle the stressed assets in the power sector?
A: The problems associated with the power sector can be segmented into two parts and they are (i) thermal and (ii) renewable. Renewable has its own challenges while thermal is facing a different set of challenges especially the private sector thermal assets that went into stress. When it comes to renewable then there are few (one or two) states where counterparty risk is being faced and the government is trying to address it. The court has also granted some interim relief. The interest being shown by both, the court as well as the government, gives a sense that things will resolve soon. Our renewable book, which is more than 50%, has zero stress in it. This is the power sector that will grow as we are talking about the next 10 years. The country’s current capacity stands at 350 Gigawatt (GW) of which around 230-240 GW comes through thermal production. But we are talking about the next 10 years then there will be a marginal increase in thermal capacity while the renewable that stands around 80 GW at present will be taken up to 250 GW. So, the growth will be seen on the renewable front.
Q: How do you see the growth in the renewable energy sector, and what kind of order you are expecting in the near future?
A: Government has a special thrust towards renewable and almost every renewable oriented company have devised ambitious targets for the same. Our growth target for next year stands near 20 per cent.
Q: Name the segment, i.e. power, oil & gas, coal, mine and port, that is most stable at present in terms of financing?
A: We are getting out from the thermal domain, which had 30 per cent participation in our book size three years ago has been brought down to 10 per cent. It will be brought down to 5 per cent by June 2020. Renewable makes 50% in our books and it is going to be a thrust area for us. Besides, the government also have its ambitious plans for it and we want to be a part of that growth story. Renewable is sustainable financing and we will have a special focus on the new developments associated to the segment – that is likely to have a hockey stick kind of growth – like CBG Gas, e-vehicles, waste-to-energy, waste management and city -water distribution system among others. These segments are closely related to our existing business model and we will focus on them.
We will focus on this segment because a large part of our borrowing comes from the international developmental financial institution as they have an inclination in this area and that’s why we receive low-interest capital in that domain. For instance, Japan International Cooperation Agency (JICA), Japan’s development agency, will for the first time lend to a private sector. Similarly, PROPARCO, the French DFI (Development Finance Institution) and AIIB have together approved an in-principle fund of $150 million to us. We meet it on both, liability and asset, sides and we are getting an opportunity in the focus area. So, we will maintain our core competency and focus on the same area. Interestingly, more than the required opportunities are available to us.
Source: zeebiz
