Power plants are national assets and large haircut is not always the best solution: Anil Razdan
Certain regulatory measures and tariff decisions have not been entirely fair to the private sector vis-à-vis the public sector, Anil Razdan, Former Power Secretary, tells ET Now.
What happens from here? Another 180 days’ extension that the power sector defaulters had wanted has not come through. These cases will be taken to the NCLT and on a case by case basis the resolution is foreseen. What do you expect to happen from here?
Honestly, I am a little disappointed because while the RBI has to look after the banks, here is a situation where we have seen different wings of government, acting in silos. The problems of the power sector are not a problem of the banks alone.
This large capacity came up on projection of a certain amount of demand which has not come up. At the same time, we have certain regulatory measures and tariff decisions which I think has not been entirely fair to the private sector vis-à-vis the public sector.
The distress is somehow more in the private sector as opposed to the public sector. The way the regulators have decided the tariff petitions, is not even handed. Beyond that, it is good that we go for clean energy. We have been accelerating the renewable capacity addition programme but let us not forget that a lot of this renewable capacity addition programme has not been linked to Make in Make in India objective.
A large number of the thermal plants have virtually come up on Made in India machinery. And if there is sickness in this industry, it is going to lead to sickness in the generation sector as well. I would like there to have been some regulatory quality.
More important, as far as banks are concerned, there has to be some introspection. When investment is being done, there has to be due diligence at that point of time so that there are no avoidable time and cost overruns, that the tariff does not exceed a certain threshold and the product is marketable.
The three-four wings of governance have to come into play together and find a solution to this because these are national assets and large haircut is not always the best solution.
If demand picks up in the future, particularly for thermal power, then it could lead to a windfall gain for those who acquired these assets.