The Tata Group entered the power business back in 1911 and has emerged as a leading and credible player with generation capacity of 8,500 MW. It goal is to reach a capacity of 26,000 MW by 2020. Of late, the company has been faced with various challenges, including shortage of fuel, turbulence in coal markets across the world, and stagnation in policy and direction in the power sector back home.

Anil Sardana, Managing Director, Tata Power, was instrumental in changing the power distribution scenario in Delhi for the better and making the privatisation experiment successful , both for the Tata Group and the Delhi government. Now, he has taken the task of steering Tata Power to new heights amid a state of policy paralysis. Excerpts from a recent interview he gave to The Hindu:

Could you spell out the problems facing the power sector and its impact on India’s growing economy?

Independent power producers have been affected because of the prevailing fuel shortage scenario. Both the coal and gas-based thermal power generations have been impacted by the shortage. Despite these challenges, the private sector has been persistently working towards contributing to the growth of the sector. Ensuring a stable, dependable and cost-effective fuel supply for power generation should be high priority for the government at this stage. Despite huge coal reserves, the domestic power sector has faced a coal shortage with production from Coal India Limited (CIL) being flat over the last 5-7 years. Inland plants in the sector had to resort to imports to meet their requirements. The scale of imports (more than 100 million tonnes in 2012) is instrumental in driving up coal prices in Australia and Indonesia, the principal sources of imported coal for India. Indonesia’s move to link coal prices to international benchmark has made coal 150 per cent more expensive. As a consequence, a number of projects based on imported coal that had signed power purchase agreements (PPAs) with state utilities have become unviable as the PPAs do not allow these increased costs to be passed on to customers. In addition, there is a need to improve transport infrastructure which includes the need to stress on the development of feeder lines, connecting roads from mines to rail heads/highways, which still remains a major obstacle in the way of smooth coal transportation infrastructure. There is also urgent need for the Railways to gear up for increasing rail rakes in the wake of anticipated increases in future demand for coal. The need of the hour is to immediately evolve a long-term National Energy Security Policy. In its energy security policy, the Centre must consider mediating and help resolve the pending fuel supply agreements for long-term fuel linkages in India and abroad.

How is Tata Power positioning itself to meet the challenges? Will it make major investments in generation and distribution overseas?

At present, Tata Power has an installed generation capacity of 8,500 MW. The company’s strategic intent is to have 26,000 MW in generation, 4,000 MW of distribution and 40 million tonnes per annum fuel sources by 2020. The aim is to get 20-25 per cent contribution from clean power sources which will include a mix of hydro, solar, wind, geothermal and waste gas generation. The company has prioritised seven countries in four geographies for a purposeful international play. These include South Africa and other sub-Saharan Africa countries, Indonesia, Vietnam, Turkey and the Middle-East. The company is in the process of deploying resources in these geographies to understand the market dynamics and scout for opportunities.

How do you propose to achieve 26,000 MW by 2020?

Tata Power is India’s largest integrated power utility with business presence across the power value chain (generation-both conventional and non-conventional, transmission, distribution, trading and fuel and logistics). The company is also one of the largest renewable energy players in the country with significant capacity in wind and solar. It has ambitious plans to keep fuelling its multi-fold growth across the power value chain. Towards this end, it has various projects in the pipeline. In distribution also, the company is making steady progress in Mumbai and has crossed the 3-lakh consumer mark and is now a significant player. The company’s distribution presence in New Delhi, through its subsidiary Tata Power Delhi Distribution Ltd., is doing very well.

What technology is the Mundra project using, and how does it differ from traditional technology? How environment-friendly is the use of the low-calorific value coal at Mundra?

The Mundra ultra mega power project (UMPP) uses supercritical technology. This technology and the choice of unit size helps the project produce lower greenhouse gas emissions than regular coal-fired power stations. In addition, the choice of coal significantly lowers sulphur emissions. This technology also helps the project achieve higher efficiency saving on fuel and reduced greenhouse gas emissions. The greenhouse gas emissions per kilowatt hour of energy generated will be about 750 grams of carbon dioxide per kWh, as compared to India’s national average of 1,259 grams CO2/ kWh for coal-based power plants. The world average is 919 g CO2/ kWh, while the average for Organisation for Economic Co-operation and Development (OECD) countries is 888 g CO2/ kWh. It is expected that India will continue to be dependent on coal to meet its power requirements because of the limited availability and high prices of gas, hydro, and other renewable sources. Hence, the need of the hour is to promote thermal power projects that have lower greenhouse gas emission and superior performance to help the country meet its energy needs. Also, Mundra UMPP uses eco coal which has low sulphur and ash content.

Tata Power had approached the Central Electricity Regulatory Commission (CERC) for a hike in power tariff for the Mundra UMPP. What is the current status on that?

Tata Power had filed a petition with the CERC for its consideration and the outcome is still awaited. The company has already commissioned all of its five 800 MW-sized super critical units. While the matter is sub-judice, the company continues to explore alternatives to mitigate this situation to the extent possible, including blending of coal with imported eco coal. The issue of rise in the cost of imported coal is not just related specifically to Mundra but all existing imported coal-based projects and which would need to be developed in future. It is important to note that the CERC had predicted 3.46 per cent increase in coal cost annually, as a trend, which has been more than 130 per cent against what would have been 17 per cent as per CERC guidelines. It is important to add that Tata Power had contracted coal from Indonesia on terms which were a mirror of its subsidiary Coastal Gujarat Power Ltd. (CGPL) tariff for coal. However, since the Indonesian Government has changed the export norms for coal, Tata Power can’t get imported coal based on contracted terms. The problem has got compounded as Australia and African countries have also changed their norms.

What do you think of price pooling for coal? Is it going to help the power sector tide over the fuel shortage in the future?

Coal price pooling is a necessary phenomenon considering that domestic production is not going to be enough to meet requirement. However, the mechanism to provide imported coal as a blend choice should be transparent. Tata Power, like any other utility, would hope that all power projects in India would be supplied coal at the same price so that there is no differentiation on account of fuel price and all the differentiation that ultimately surfaces is on account of efficiency of operations and tolling of fuel.

sujay.mehdudia@thehindu.co.in