NHPC CMD Balraj Joshi shares the company’s focus areas for this fiscal and his views on the development of the hydro power sector.
India’s largest hydro power generator NHPC Ltd is working aggressively to implement a plan for spending Rs 3,800 crore. In an exclusive interview with ETEnergyworld, Chairman and Managing Director (CMD) Balraj Joshi discusses the capex and expansion plan and shares his views on the challenges plaguing India’s hydro power development. Edited excerpts..
What is the overall capital expenditure and capacity expansion plan for the current financial year (2019-20)?
We are expecting final nod from NCLT for Teesta-VI HE Project and government approval for Teesta-IV H E Project. The capex for the current FY shall be around Rs 3,800 crore and this may see major upward revision based on the progress we make in Teesta-VI and Teesta-IV hydro projects. We have received the government’s nod for Teesta-VI HE Project and as soon as NCLT okays the acquisition, construction phase of the project will start. The HRT works of Parbati-II H E Project are also gaining momentum and we have positive expectations about restarting Subansiri Lower project, too.
NHPC’s financial numbers were somewhat muted in the third qarter ended December 2018..
Hydro power generation is seasonal by nature and historically 3rd quarter numbers are muted as the monsoon trails off in the later part of 2nd quarter. Sale/ Revenue from operation in 3rd quarter was Rs. 1571 crore against Rs. 1498 crore in 3rd quarter of FY 2017-18. PAT for this quarter stood at Rs. 182 crore.
How do you see the government’s decision of giving renewable status to large hydro projects and the extended budgetary support?
The decision shall bring the large hydro power at par with Solar and Wind and it shall provide impetus to the hydro sector. Moreover, govt. with this initiative has attended to most of the issues affecting hydro sector. Most of the unexploited hydro potential is in the hilly and remote corners of the country and the enabling infrastructure cost for these projects is quite substantial, resulting in higher tariffs. Now, the proposed budgetary support for enabling infrastructure shall help in making the tariff from these projects competitive.
The monsoon is projected to be below normal this year. What kind of impact do you expect on the power sector?
The hydro sector is dependent on monsoon and good rainfall is always welcome. However, at micro level the rainfall at the river basins where the hydro projects are located have bigger impact.
How do you evaluate the overall pace of growth in the hydropower sector in India? What should be the strategy to address issues like geological challenges and capital intensive nature of the hydro plants?
Hydro power for the better part of last century played a key role in industrial development in India. However, 1980 onwards hydropower came off the radar of the planners and consequently we witnessed hydropower taking back seat and today it contributes around 13% of total installed capacity from the highs of 40%. Our country is endowed with enormous economically exploitable and viable hydropower potential yet more than 60% of it remains untapped. It is the best available renewable source of energy, yet growth has been sluggish. The major issue plaguing the sector is that it is a capital intensive sector with long gestation period. The wide array of uncontrollable externalities further drives up the project cost thereby increasing the tariff. The constrained financial situation of the distribution sector is another risk for developer and financers, further complicated by the problems in long term power purchase agreements in some cases. All such factors, combined with technical challenges and geological uncertainties associated with hydropower do not make it the preferred choice of investors. This sentiment is amply manifested by lower share of private investments in hydro sector. To overcome these challenges multipronged strategy shall have to be adopted which shall include easing of clearance processes, long term soft loans and making state Govts a willing and proactive partner.
What are your plans for business diversification? Any new areas you are planning to explore?
NHPC is the leading organization in the field of hydro power development and hydro sector has given us recognition and identity, so it will continue to remain our top priority. However, we have been proactive in business opportunities in other RE sectors and as you may be aware we have already commissioned one solar and one wind power station. We have also entered into power trading and we expect significant contribution from it to our bottom line.
How do you see the growth potential in pump-storage business? What is its scope in India?
Globally, PS is an established, proven and cost-effective technology for storing electricity at times of high generation and or low demand which can then be released into peak demand periods. There is some 140 GW of PHS capacity installed globally providing well over 95 per cent of global electricity storage capacity. Pump storage business has not matured to the extent opportunities available in our country. In India we have 2.6 GW capacity under operation and another 3.1 GW is under construction. One of the major reason is associated R&R issues with large storages. However, with the expanding Solar and Wind capacity the need for storage shall become critical and here Pump Storage can play big part.