Nearly 10,000 mw coal-based capacity remains unviable, says power secretary – bloomberg quint gas vs diesel prices

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For the remaining projects, we have divided them into two-three buckets. First are power plants which have PPAs, but there are some other issues like aggressive tariff where they can’t service the debt. So, these are the assets which were in the re-structuring process before the RBI circular came in February.

The circular also gave some flexibility to the bankers and SBI had told us that they are looking at finding out a resolution plan. So, SBI held a meeting with all the lenders in Mumbai and they are working on what could be the level of sustainable debt, rating, etc. The Ministry of Power can resolve the other regulatory hurdles once the resolution plan is there.

There are issues of change of ownership in power purchase agreement, fuel supply agreement if it exists or availability of linkage. We are also looking at change in issues vis-à-vis the regulator—the Central or State Electricity Regulatory Commissions—and pass-through costs of the new emission norms. But let the lenders come out with the resolution plan first and we will work on a plan which is acceptable to them.

The billing efficiency is on the increase. That is the major issue which we are pushing with the distribution companies. They need to increase the billing and to bring more customers into the billing system to save theft or leakage of power. So, billing efficiency is on the increase. Even if it is a small percentage, it has reached about 83 percent as the nine months data tell us. We need to bring it over 90 percent. Our trajectory is that the losses should not be more than 15 percent. So, some of the states are within the trajectory decided under UDAY scheme but for some of the state are not yet there.

State governments are also approaching the regulators regularly for the tariff revisions. Tariff revisions have taken place and we have accessed the impact of it as well. The revenues of these states have increased by Rs 10,000 crore, purely due to tariff revisions. So, these are the advantages which have come under the UDAY scheme. We expect these to continue and attitudinal and cultural change will come which will finally turnaround the discoms.

It is till December 2018. We have already been allowed extra spend and to raise extra budgetary resources during the current financial year to Rs 15,000 crore which would be mainly used for Saubhagya. This scheme is for the last-mile household connectivity but real issue is the infrastructure within the Din Dayal Upadhyaya Gram Jyoti Yojana which was sanctioned earlier but is being developed now. Some of the habitations are not connected in bigger states like Uttar Pradesh. So, a lot of money is being provided under the Din Dayal Upadhyaya Gram Jyoti Yojana for strengthening of feeders, replacement of transformers, carrying intensive electrification of villages under which large funds have been provided. In last four years, Rs 24,000 crore have been provided under the Yojana. More than 95 percent contracts are in place and work is going on. That is the real base on which Saubhagya will work. Unless there is infrastructure, household connectivity will not work. So, both the schemes are complementary to each other and there too we have put the target of December 2018.