Tata Power COO, ED Ashok Sethi: Makes sense to give poor same tariff irrespective of where they stay
In the backdrop of falling PLF of conventional thermal power plants in the country, and a stay on compensatory tariff for Mundra UMPP, Tata Power feels its strategy to bring renewable portfolio to 40% of total capacity will keep the company in good stead in the changing landscape of power sector. Tata Power’s, chief operating officer and executive director Ashok Sethi in an interview with FE’s Vikas Srivastava outlines the company’s strategy for coming years. Excerpts:
As lack of PPAs continue to afflict private power producers with PLFs as low as 56%, what would be Tata Power’s strategy going ahead? How are your thermal power projects positioned especially after the setback for Mundra?
The situation clearly indicates that off-take of distribution companies or the consumer demand from industrial, commercial and residential segment has to increase. In future majority of power will come from renewable sector as government has set a target of 175,000 MW renewable target by 2022. We believe this power can be integrated with the stranded thermal power to improve the overall condition for the sector. Tata Power has streamlined its generation with focus on renewables contributing around 30-40% of total power generated in a year. Further the requirement for power will go up as Discoms take up the supply of power on 24X7 basis. Discoms have started to pay their dues post the implementation of Ujjwal Discom Assurance Yojana and around 25 states out of 27 have increased their tariffs to reduce the difference between billing and generation cost. Given the scenario there are number of factors that need to be worked upon. First, how do we integrate the renewable with the common power and what is the role that thermal power will play in the integration. Second is, how do we work on the tariffs so that the health of the discoms improve, and third how do we fuel the industrial growth.
After the stay on compensatory tariff for Mundra plant would you look at converting the plant to domestic coal based plant? Is there a possibility that the plant could be shut?
As far as Mundra is concerned the technology does not permit for conversion to Indian coal. Also, distance is a big challenge to bring coal from domestic mines to Mundra. We do not have any plan to close the plant, we have been running it for last so many years and plan to do so. Even the recent closure of two units were planned outages. Gujarat state has surplus power, so outages do not bother distribution companies. We have several plans for Mundra. At present we can not disclose much.
Are you planning to bid for new coal mines or looking for linkages for your thermal projects?
We are looking for coal linkage for Jojobera plant in Jamshedpur. For the 250 MW plant we will have a requirement for 1-1.2 mln tonne per annum coal. Once that opportunity comes we will take the linkage. Apart from that there is no requirement as of now. Mumbai has been one of the prime distribution centres for Tata Power.
With the demand for Power likely to leapfrog with numerous infrastructure projects like metros and water fronts coming up, how are you planning to cope-up with these pressures?
No other city in India has experienced reliability of power as much as Mumbai. But the situation is likely to change soon. Mumbai has been growing at a rate of 3% for last many years. But with the focus on developing water front, with the focus on developing SRA schemes and six- seven metros coming up, obviously, it is set to change. In my opinion, if not 6% it could definitely increase to 4%. It basically means that we will have to bring more power from outside. There are two aspects to this. One is that the corridors available to bring this power are getting congested and second there are lots of new constructions coming up in the city that would block setting up of new infrastructure. As time passes by it will be more and more difficult to bring power from outside. We need to look at transmission with a 20-30 years perspective if we have to maintain the reliability because any infrastructure development in power business takes time. We will have to concentrate on embedded generation or connected generation which are closer to the dispatch centres. Tata Power is setting up its first 400 kv line at Vikhroli in Mumbai. It will bring power from Kharghar and Talegaon. By 2022, these lines will bring additional 700-1000 MW. At present Tata Power’s total requirement for Mumbai is around 750 MW.
There is lot of discussion happening on uniform tariffs across India. What is your opinion on that?
For people with low consumption of energy it is assumed that their affordability is also low. So it makes a lot of sense that within a state or within a region the tariffs are always one for those people. It does not make any difference where the person stays. In those categories which are low consumption and especially 0-100 units, it makes a lot of sense to give them same tariff irrespective of where they stay. It is very prudent.