Lanco Infratech Chairman L. Madhusudan Rao, on Monday, blamed the ill-health of distribution companies (discoms) and inadequate fuel supply in addition to delay in getting environmental clearances and permissions for the present crisis being faced by the power sector in the country.
“Nearly 60 per cent of the current problems are basically on account of ill-health of the discoms while 30 per cent could be put on inadequate fuel supply. It is a really strange situation that we are experiencing extreme conditions in the sector in terms of adequate power generating capacity on one hand and severe power shortages being faced by industries as well as agriculture, domestic and commercial consumers,’’ Mr. Rao told The Hindu.
He said the situation was so bad with discoms that they were neither in a position to pay for the power they buy nor they have the liquidity to buy additional power to meet shortages. “It is because of this reason that most of the power companies are operating at low plant load factor (PLF). The fuel supplies committed by various public sector entities are also not being met to more than 50 per cent power producers,’’ he added.
Mr. Rao said when there was a serious shortfall of almost 60 per cent in adding generation capacity during the IX and X Plans; it was the independent power producers (IPPs) who made the XI Plan achievable.
Replying to the issue of recent downgrading of Lanco by rating agency Crisil, Mr. Rao said there were huge receivables pending for long from various discoms. “While power generating capacity keeps growing, if it is not supported properly by discoms, fuel supplies, and transmission companies, it will lead to serious problems and challenges. Lanco has been in the power sector since 1997 and it has built successful projects over the past 15 years. Our power assets have been performing great for the last many years. It is the current situation that is affecting the performance of companies such as Lanco and other IPPs,’’ he said.
He said time has come for the government to take bold steps to correct the situation in the power sector and support IPPs. “We are confident that the recent initiative of discoms to raise tariffs in various States and the reforms-based support by the central government will certainly bring liquidity back to discoms and the power sector will start performing strongly in the next 12-15 months,’’ he said.
Mr. Rao felt that the focus should be on land acquisition reforms, including quicker acquisition and satisfactory rehabilitation and resettlement of people in mineral rich areas. Efforts should be made to look at innovative options to increase fuel supply. “Lanco has got receivables of about Rs.3,400 crore due from various discoms. We are also planning to sell out non-core assets and raise private equity holding. This would fetch us about Rs.6,000 crore by March 2013,’’ he added.