Stressed power assets will fetch better value if fuel, discom and regulatory issues are resolved and the extension of deadline mentioned in the Reserve Bank of India circular is available, power secretary Ajay Bhalla told ET’s Sarita C Singh in an interview. He said banks are expected to take decisions on about 10 stressed power projects in 15 days while the recently set up high-powered committee would resolve sectoral issues. The government will soon electrify over 1.5 lakh houses daily to meet its electrification target by December 2018, he said, and has sought Rs 10,000 crore excess funds allocation for Saubhagya scheme, which was launched to provide electricity to all households. Edited excerpts:
The government has electrified 1crore of the 4 crore unelectrified households. How confident are you on meeting the December-end deadline?
When we launched Saubhagya last year, our assessment for unelectrified houses was 4 crore. But when the detailed project reports were prepared, the number came down to 3.5 crore. We have just energised 1 crore houses on Sunday (August 5). All states have started work in full swing. There were issues of monsoon in some places and floods in Odisha and Assam which stalled work for some time, but in the remaining months up to December, we expect this target to be definitely achieved. A few days back we achieved electrification of 1.12 lakh houses in a day. For what we are targeting we need to go up to 1.5 lakh houses per day and maybe at some point of time 2 lakh households per day.
Does lack of distribution infrastructure in some states pose a threat to the programme?
One difficulty which we anticipate in implementation of the scheme is that in some states, there is poor infrastructure in the villages. In states such as Uttar Pradesh, Assam and Jharkhand, a lot of work needs to be done on infrastructure side. We have sanctioned money for infrastructure but states have demanded more. We have taken steps to provide more funds and assured states that the money will be provided. Since this kind of infrastructure building takes a little time, states such as Uttar Pradesh, where almost 50% houses are unelectrified, have awarded contracts for districts to big companies on turnkey basis.
Have you sought more funds for Saubhagya?
The total allocation for Saubhagya was Rs 16,000 crore, which includes Rs 12,000 crore budgetary support, and a good part has been released. Of course, we need Rs 8,000-10000 crore more for infrastructure. Infrastructure was supposed to be built under DDUGJY (Deen Dayal Upadhyaya Gram Jyoti Yojana, aimed at electrifying rural India). But there are some gaps in what DDUGJY would achieve and we need additional funds. We have requested finance ministry for sanction of additional funds.
How many of the stressed power plants are likely to be salvaged given that August 27 deadline, as per RBI circular, is nearing?
About eight projects, with capacity of 8,000 MW, have been resolved through Shakti scheme and other measures. Fourteen projects are already in NCLT (National Company Law Tribunal) or are under process for admission to NCLT. In remaining 12 coal-based assets, there are some with PPAs (power purchase agreements) and some without PPAs. I understand from the lenders that they have bid out some of these commissioned projects and they are looking at how these can be restructured. Lenders may be able to decide in the next 15 days about what can be done to these assets. Some of these assets, if they are not going to be resolved, are supposed to move to NCLT. Recently, for a case in Allahabad High court, we filed a report prepared by the Department of Financial Services (DFS) seeking six months’ time, so that some of the issues concerning power sector can be addressed. There are certain sectoral issues connected with these projects. If we can address those, then these assets either can be resolved easily or will fetch more value. RBI has informed that they do not agree with extending any timelines and that the matter should be resolved in time or as per the IBC (Insolvency and Bankruptcy Code).
What is the future of the stranded gas-based power projects?
There are about 10 gas-based projects of about 6,000 MW in ‘stressed’ category. The main issue that needs to be addressed is fuel supply. For other assets, the PLF (plant load factor) is very low due to less availability of domestic gas, and if we import LNG the cost of power becomes very high. At this moment we are not able to find a solution. Of course, a high-powered committee which has been constituted would also look at this aspect.
By when will the committee submit its report?
We will hold a meeting of the committee first and make presentations on various aspects brought out in the DFS report. Largely 4-5 issues are there connected to fuel, payment by discoms and regulatory issues. Once we are able to address those, some of these assets will become much more viable.
Coal shortage seems to be a major concern…
Coal supplies have increased over last year. We are concerned that the stocks have not built up, especially in power plants located away from the pithead. We are meeting ministries of railways and coal regularly, and trying to resolve some constraints. Coal India has about 35 mt coal stock and we are identifying the sidings from where more rakes can be loaded. Coal imports by the imported coal-based plants have come down for certain contractual reasons. They have not been able to supply power. But for blending with domestic coal, certain plants are importing small quantities. Till the end of June about 5 mt of coal was imported for blending.
Are states keen to sign contracts with winners of the Centre’s pilot PPA auction?
Against 2,500 MW PPAs offered, we got bids worth 1,900 mw. Discussions are on with the states to finalise the contractual arrangements. Linkage of coal would ensure only 55% of PLF and states’ requirement may increase during a certain time frame. An exercise is being done to ensure settlement at the earliest and developers are in discussion with PTC India. We expect this to be resolved.