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Interaction | August 2015

SEBs are to be blamed for low PLF

Ravi Arya, VP ´ Thermal, Hindustan Powerprojects, is aiming his guns at the SEBs for the PLF mess. However, he suggests strict approach on AT&C losses, will strengthen their financial losses.

The Modi government has claimed several records in its first year in office. Do you agree?
Yes. The Modi Government deserves to be complimented for above achievements since we have been a power deficit nation for decades. Our per capita power consumption is one third that of China and the world´s average. This capacity addition will go a long way in realising the ambitious plan of the Centre in providing 24x7 power supply across the nation, to all consumer segments and promote ´Make in India´.

The government hasn´t pointed out that 2014-15 also recorded the lowest PLF in over 15 years. Shall we hold this government responsible for it? Why?
Yes, it is a fact that average PLF has declined over the last few years due to fuel constraints and power evacuation issues. However, the biggest reason for this decline in PLF is that state discoms are refusing to procure additional power, in spite of facing shortages, due to poor financial health. This is a serious hazard in overall power sector reforms, but the solution lies more with the state governments. They need to reduce high AT&C losses in the distribution system, which arise because of multiple factors.

This demands a comprehensive strategy and action plan besides political will. If state regulators issue statutory advice making it mandatory for discoms to supply power for say 20 hours across segments in the year, unmet demand in the grid will get unlocked and it´s a win-win situation for IPPs and public. Besides, more attention needs to be paid towards augmenting transmission and sub-transmission infrastructure in the country.

The government has stepped into its second year, list your agendas to wake up them from slumber?
Besides above initiatives, the government needs to move ahead with an e-auction of coal blocks. Further, we need to have a long term approach for the 13th Plan period (2017-22). We need to realise that no fresh investments have been made in conventional power generation business over the last 3-4 years. This may have serious impact on the economy, in the medium to long term, especially once the new investments fructify in other sectors, as being envisaged by the Modi Government.

List out few ´structural reforms´, that will change the entire generation sector?
Since generation is the middle segment of overall electricity value chain, we need to create free market structures on either side the fuel and distribution segments. Once there is broad understanding of stakeholders on this approach, future policies can be designed so as to fulfill such a market design.

By when can we expect new projects as most EPC companies are complaining about the lack of order inflow?
The central government needs to appreciate that the power sector being capital intensive needs huge funds from private players. Foreign investors will increase their exposure once the regulatory uncertainties across the sector are addressed and a stable policy regime is in place. Further, they will come in only after the domestic players start making fresh investments.

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