Ans.: When you say the lack of demand, I can understand when you say lack of phenomenal demand or lack of extraordinary demand. But I am sure most of you are aware that in the last 3 years, India’s energy consumption has grown by about 6.5% CAGR, as against 6.15% CAGR in the decade before that – point 1.
Point 2 that still does not factor in the huge growth in captive generation of power. I am sure some of you here are in the captive generation and will recall the days when you never got coal to run your power plants. Today, there is not a single power plant in the country which is wanting for coal, and I have asked my office to check out what has been the increase in captive power generation in the last 3 years. And I suspect it’s going to be a phenomenal increase there.
3rd – you just mentioned about Ujjala, the LED distribution programme, we have already seen about 500 million LED bulbs sold in the last 2 years. We launched this programme on 1st May, we will have the 2-year anniversary day after tomorrow. 1st May we sold the first bulb by Energy Efficiency Services Limited. I remember those days bulbs used to come at Purchase Price of the government was Rs 310 per bulb. We launched that programme with an ambitious target to sell 770 million in about 5 years. We never imagined this is going to be such a runaway success that prices have fallen over 85%. 85% fall! The one government company has sold 230 million bulbs in 2 years and the private sector, some of whom may be sitting here has sold 270 million in these 2 years. Put together, you have about 500 million incandescent or CFL bulbs, CFL was very harmful for the people of India, being replaced by LED bulbs at a cost which is 85% less than what it was 2 years ago.
I remember asking Pawan Goenka who said we are going to replace all our bulbs in 2 years or 3 years, saying you should do it in 3 months, because it pays for itself in 3 months across the Mahindra Group. And I hope he gets that success because it’s literally a personal challenge. So, I think when you factor in that efficiency factor, you would have seen another 2 or 3% growth in energy consumption if we continued in an inefficient manner. So, I believe my job as a responsible player in the market or as a stakeholder through the government in this ecosystem is to improve India’s energy efficiency, to reduce consumption wherever it’s wasteful. I am going to come at agricultural pumps; the old motors next, and at the same time, ensure that the demand is met fully. We are working to make sure everybody gets 24/7 power. Anybody who is from UP would have seen the transformational change in less than one month in Uttar Pradesh. One month a new government led by Yogi Adityanath and you have seen a transformational increase in consumption from 240 million units per day to about 320 million units per day.
The system could handle this kind of growth. It was always there. I think the past, we were so used to shortages and the whole system was so despondent that in this changed environment where there is sufficient availability for all as much as they want. Now the, I could call it greed but that may not be the right word. But the expectation of a faster jump in growth is very valid. I would love to see more industry coming in, more investment coming in. And I would urge all the CII honchos, big honchos here to start looking at investing back in the economy.
Anchor: And the Minister makes the point there that there are efficiencies that are being released in this system, there are legacy issues that are also being solved as we go forward. He has just talked about how he would want industry to participate and have more confidence in this sector. What are the bottlenecks you feel exist Sumant in terms of where that hesitation could be coming from and how are you seeing changes on the ground that are making you more confident when it comes to putting money on the table?
Sumant Sinha (SS): I think that if you look at different aspects of the sector, there are different areas I mean, in which some of them investments are already happening. Renewables, obviously is a great example of that. You know, India has become one of the biggest markets in the world. Everybody now has conviction around the growth in this sector, and so therefore, not just Indian but also overseas, a number of investors are coming in. So that sector certainly is doing well. I think if you look at on the thermal side, clearly, growth in thermal is something that is difficult at this point, given low PLFs already in this sector so that will be the first order of business there. So that is not a sector that is going to attract a lot of investments.
Of course, gas we have, you know, no gas so therefore that isn’t something that is going to attract any new investments either. But the transmissions side, the distributions side, I think those are the areas where we could actually get a lot more happening as well right now. But I think on the transmission side there’s a lot of activity already happening. On the distribution side, there could be a lot of interest from not just Indian but also overseas companies. But again, we have to see faster movement in terms of actually privatizing that sector if that is the direction the government decides to go.
Ans.: First of all, let’s get clear, I hope everybody here puts a little mind to what is this low PLF all about? When I became a Minister, I was confronted with over a 100 GW of stressed and stranded generation capacity, a 100 GW, it’s not a small amount. No sensible man is going to invest in an industry where there is almost half the players in deep stress and down the tube almost. So, my first job was to get all of those plants sort out the various issues, and we literally sorted out issues at my level in my office to try and get things going. In the first 2 years alone, we had added 45 GW of thermal capacity. I think by now, we have in 3 years expanded our installed capacity, you aggregate from 243 GW to 320 GW, the one-third of what was done in 70 odd years has been added in 3 years.
Not that I started in most of those projects except the renewable ones, many of them were there, but they were all in stages where they would have all become NPAs, they would have all become stressed. Now when the denominator, the available capacity increases so exponentially, which again is because of bad planning by the erstwhile government, and the Planning Commission then. They couldn’t even calculate what would be the requirement of this country correctly. They perpetually created a scare in the country that there is a shortage of power, there is a shortage of coal. And under that scare, black marketing prevailed, there were companies which sold power for as high as 8 and 10 and Rs 12 per unit. Some of whom may be sitting here and may have benefited from that but it cost the Indian people very dear.
So I think I am very delighted that even yesterday in the peak hour, when I opened my Vidyut Pravah app, I found power available across the country at Rs 2.45 per unit, yesterday evening I am saying. And as regards investments, investments actually should change into energy efficiency; you are seeing huge investments there. Investments should correctly be directed towards transmission and distribution. We have added nearly 89% transmission capacity down south from what it was 3 years ago. My expectation is to double what it is now. So, effectively, it was 3,450 MW in 2014, by 2020 it will be 18,000 MW. For those of you from the South, it will be a delight to know that at no point of time you will ever have to be blackmailed by high prices, because we will have sufficient transmission in a grid which is nationally connected. We have just added another line from Agra to some place in Madhya Pradesh, which has added 1500 or 3000 MW, moving it from the Chhattisgarh belt where we have surplus power to UP and Northern region.
So, we are trying to create a grid where seamlessly power will be available round the clock. Distribution, the Deen Dayal Upadhyay Gram Jyoti Yojana and the IPDS alone are investing about $18 billion – 1,21,000 crores, only under these two schemes to upgrade the infrastructure. But again, that’s the tip of the iceberg. My underground cabling project in Varanasi alone as a pilot leads me to believe that we can look at easily a $200 billion investment only in putting cables below the ground across Indian cities, and it will pay for itself from the savings over the next 20 years.
So we are looking innovatively at our programmes. We are doing a root cause analysis to see where really investments should be directed and making sure that India remains an energy efficient country as well as India remains an energy sufficient country.
Anchor: It’s interesting you used the words root cause analysis, because I think a lot of this is actually about understanding what potential we already have given how the system is. I just want to understand from you Sumant, tell me little bit about the plans in terms of integrating renewable into the transmission network. Both of you can comment on this, how will that eventually work out, and could there by possibly some kind of a strain that is put on the system one of the innovative ideas around that, just give me a census as to how this is going to work?
SS: You know today renewables is about 7-7.5% of the grid as a whole in terms of generation capacity, in terms of the actual generation, in terms of capacity, of course, it’s more. But, you know, this number can go up to maybe about 15% without any fundamental changes to the existing grid, other than some upgradations on certain parts of the network. But I think to push the number beyond that, which is certainly the government’s intention and target, we will need to have better management of the grid and also better build out the physical infrastructure, and thirdly, I think along with that we need certain services to become part of the grid. For example, demand response is a very important element of that whole thing, which is how do you shift demand from one part of the day to another which then better aligns with the generation side and peaks and troughs of the renewable side, which also means that you need to have more spinning reserves, capacity that can go on and off, you know, very quickly, which usually in other parts of the world typically comes out of gas, which is a problem in India.
And then, you know, you have to look at some of these other types of great build out issues. Of course, the government is working on the Green Corridor programme as well, which is very important because there are certain parts of India where you have better resource availability. And so you need to be able to take the power out and then distribute to other parts of the country. So, there is a lot of work already going on and atleast the sense that we have as industry is that the government is fairly alive to the issue of can’t have too much renewables coming to the grid without being assured that grid development happens on the same time. There may be temporary mismatches I think at worst, but I think by and large, we are heading in the right direction. They key is going to be how do you take this number from 15% up to maybe 30% or 40%, because renewables is going to become so cheap going forward, that should actually become the primary source of all new energy. And then the real constraining factor is going to be the grid, so how you address the whole grid situation becomes very fundamental beyond 20-22.
Ans.: That’s clearly one of the most important elements of the nation’s energy security going forward. None of us here wants August, 2012 to be repeated. I am not an engineer like my good friend here. I didn’t go to IIT, even though I went to Aggarwal Classes to start preparing for IIT. But took the sensible call of doing my little bit of chartered accountancy to understand what money is, and as my father, late father, used to say, end of the day you have got to put everything down back to money terms, सबसे बड़ा रुपैया. And CII knows it better than anybody else. But I have been educating myself. I have been to grid managers in different parts of the world personally gone and discussed with experts in this field. And today I feel very empowered that India is absolutely well set to prepare itself for the grid in a manner never done before in the world.
We had a committee of experts, POSOCO and PGCIL, the grid managers, the grid operators. Everybody sat down and they have come out with a document, which will integrate a 175 GW of renewable power, which is our 2022 target, efficiently, without any problems maintaining grid frequency. And that document, by the way, is in public domain, it’s not in my files. We have put it out for the public to give comments, criticize, whatever, add value and wherever we get any criticism we look at it again. Wherever we get any value add, we keep revising it. It’s something which we are doing through a very great deal of stakeholder consultation. Having said that, we must also remember we will have about 50 GW of hydro power by 2022, so effectively, our renewable will be 225 GW. And that by itself will be about 500 million units in the country, out of about 1.5 trillion by that time or 1.7 trillion by that time.
So, we will effectively be close to 25 odd percent, and we are conscious of that. Of course, hydro has less challenges on integration; in fact, it can be a solution rather than a challenge. But, what India is doing, I am happy to share with all of you, is something very different. We are trying to introduce electric vehicles in a very big way, much as Mr Kirloskar doesn’t agree with me on that and doesn’t like the idea very much. But we are introducing electric vehicles in a very big way and we are going to make the electric vehicle just like the LED programme – self-sufficient, self-financing and not dependent on government subsidies. So, we can look at a large scale ramp up rapidly. And the idea is that by 2030, not a single petrol or diesel car should be sold in the country. Using that battery storage, which will be used to power these electric vehicles, we believe we will be creating a natural hedge, a storage capacity in the national grid, which will help us through demand side management to manage greater and greater degree of renewables.
And, of course, then there are those typical programmes about whether we can move the farmer out of the grid and put him through solar pumps and solar agricultural facilities so that that kind of demand also, which they would love to get in the day can be met by larger and larger renewable. So we are looking at innovative solutions and that’s where, in fact, the theme of your programme today – The Future of Globalization – where India is going to lead the world. We are not going to follow what the others tell us to do. We are going to tell the world how it can be done smarter.
Panelist: So these are localized solutions, right, which are taking advantage of our demographic, as we stand. The Minister telling us about these plans going forward, but just want to understand what are your thoughts when it comes to expectations on financing costs, banks, current rates, projects viability. Sumant I want to start with you and, of course, I am going to ask the Minister to come in, he’s smiling so.
SS: You know, the interesting thing is if you look at the cost of solar, for example, in India today, it’s about 5 to 5.5 is where the bids are happening at this point in time. Now the radiation level in India is no poorer than it is, let’s say in the Middle East. The capital cost to set up the project is very similar to what it is in other parts of the world. But the cost of solar in those countries is about 3 cents, so it’s almost 40% cheaper than it is in India. The 3 cents is Rs 2, right? Now can you imagine solar power in India at Rs 2 that will just be an even bigger revolution than we are having right now, right? Because then the question is why shouldn’t all the incremental demand coming from things like solar, it will start going actually replacing existing legacy systems.
The only constraining factor or the only fact that counts for this higher cost in India even though similarities of capex and radiation are there is the high capital cost. And, you know, cost of borrowing for most companies in India is about 10 to 11%, in other parts of the world it’s 5 or 6%. And, therefore, the expectation on return on equities also, you know, people are happy with 8-9-10% return on equity in other parts of the world, they want 15-16% in India. So if we can bring the cost of capital down, somehow or the other, and I know the Minister has been trying to do this for quite a while with hedging structures and so on. Unfortunately, we haven’t been able to find the right solution yet but if we can actually sort of find this magic bullet then actually you can get cost of solar and wind, in fact, even come down.
Panelist: He has been trying to do that and I am sure he’s got some very valuable insights on this particular issue.
Ans.: That’s where I am glad I did my chartered accountancy. Well, I think very valid point, particularly, renewable energy like wind or solar with almost zero added raw material cost so that they don’t have to get stressed like two very large companies who are currently under serious pressure after the demands for price correction have not been met. Atleast, unlike that in renewable you don’t have any raw material, you can be rest assured once your capex is done and you set your financing right. And we recognize that very early on in the game. Just to correct you Sumant, I am sorry, I hope you don’t mind, कुछ ज्यादा ही correction हो रहा है आज, that 3 cent price is a one off, one transaction, where land was free and there was a sovereign off take agreement. Our prices do not have a sovereign guarantee or off take agreement and you guys got to pay for land and all. However, I am delighted because today you set my new benchmark price for solar – 3 cents, so we will have to start working on that now.
The difference in India on the positive side is that we have large volumes. What the Middle East will do would be, what? 10 GW by 2030, something of that sort what I was told by UAE or Saudi Arabia even less than that. What we are planning is a 100 GW by 2022, by 2030 तो I would look for 300 or 400 GW, by that time we would have really matured this whole process and we would have domestic manufacturing. When India first got even Rs 4.64, which would be about 7 cents, even more 8 cents, everybody in this room and, whoever, all the experts in the infrastructure sector criticize that is never going to happen, programme is going to fail. One company failed and they said heavens are going to fall. It didn’t happen. The next bid became lower and lower and lower. When the bid in Rewa came at Rs 3.30, levelised, Rs 2.97 first year, I thought everybody decided that thus far and no further. One month after that, Rs 3.15, so India has been correcting what to my mind earlier was somewhat because of inefficiencies, somewhat because of corruption, somewhat because of very very low scales and somewhat because we never thought bold and big. We are correcting that.
Finance, of course, is an important element. We have seen under this government atleast a 200 basis point reduction in interest. Today, a good company can get in single digits financing for renewable energy, and I say it with authority in single digit. So, let any of the good companies with a good balance sheet, of course, where you will have to correct yourself. There is a large player in the renewable who says I will do it in an SPV without giving a corporate guarantee then it’s your funeral, that’s not my responsibility. You don’t trust your own project; don’t blame it on me for high interest rates. So, I think we need to have the corporate sector also understand, lower interest rates is a function of what you will also do. You got to put your money where your mouth is and your guarantees where the money is required.
Anchor: Sumant, before you answer that, very quickly because we are talking about finance, just tell me a little bit about the reverse bidding process in terms of how it’s actually worked on the ground?
SS: You know, at the beginning there was a lot of apprehension, I will be honest in saying that. I think as it’s progressed I think people have got more familiar with the process, more comfortable. And I don’t think anybody has any issues with the bidding process, you know, there were apprehensions on the wind side but I think those have also got addressed. The key in the comparative auction process, however, is that you need to have visibility of future capacity coming to the market. If that visibility is not there then, unfortunately, the way people operate in the private sector they get very desperate, then people have to build capacity, pipelines, they have to justify their jobs or whatever it may be. And people then end up bidding very low numbers which eventually ends up becoming negative for the sector because banks don’t fund it and so on. So if we just have more visibility of capacity coming up then I think people will be a little bit more, I think, pragmatic in the bidding process.
Ans.: Just to set the context right, wind power we added 3,400 last, the year before last, last year 5,400. Now it’s the wind people who decided that they wanted to object to reverse bidding or honesty. Reverse bidding is nothing but honest transaction, where there is no favours. You can’t set the FIT price to your liking; you can’t set high benchmark costs on capital goods and then force the feed-in tariff price to be high. It’s just setting the agenda for honesty and integrity, which I think this country desperately needed, which Prime Minister Modi and his government are committed to bring in. And all that we did was bring in that honesty and you saw prices right sizing themselves. As far as visibility is concerned, I agree with Sumant, we need to have more regular transactions. We have been seeing a little bit of a fit and start, but I am on record again and again to say you will have 100 GW coming out. We have increased 370% in our first 3 years. From 2,400 MW, it’s now 12,200 MW, 370% growth in only three years. And it’s going to just grow exponentially. It will be 20 GW by the end of this year. It will be about 35 by the end of next year, it’s going to come. As the prices are right sizing themselves, I am seeing states also realizing that at this price to lock in power for 25 years is a great deal. I mean imagine 25 years from now, I imagine coal prices or coal-based thermal power, which Ratul will have to worry about some day, will be at probably 10 bucks a unit. So, it’s time that we, and I am doing a little bit of a marketing job on behalf of all the renewable guys again and again talking to the states to try and lock in at these prices, faster. I am getting good traction.
There is a public sentiment towards environmental concerns and clean energy, I am very confident we will see more and more of that. I do wish we would see more domestic manufacturing and it’s a nice platform to kind of raise the thing. I am very concerned about import quality so we have to begin with on modules. We have already put in inspection standards and we are going to very closely inspect all the modules that are going to come in for orders starting from now. Within about 6 or 9 months, we are going to do the same thing for cells. So, all the companies who have been probably sometimes putting in some garbage into the system will have to be worried. Sensible people will understand what I am hinting at, and then maybe in a couple of years down the road we will do the same for wafers. Because, ultimately, this government believes in Swadeshi, we believe in strengthening our own industry and in making sure that we provide high quality good products to serve Indian market.
Anchor: Can I also, while we are talking about high quality good products, ask you a little bit about any policy and plans when it comes to offshore and production in terms of wind. And also, I understand that there is a very large potential that we have, that we can realize over there. I am not an expert in this department; it’s something that I have wondered about because people have brought it up repeatedly. What are the plans that the scalability ideas when it comes there, Sumant, both of you can tell me this, you are educating me on this front?
SS: I think offshore is certainly a very interesting opportunity; it doesn’t take up any land. You can set up huge wind farms, let’s say off the coast of Mumbai or Chennai and just feed power directly into the city. PLFs are much higher, they are of the order of 40-50% typically. So far, however, offshore has been very expensive, but now costs have been coming down, especially in installations that are happening in Europe. Prices are down to as low as 5 to 6 cents kilowatt hour, which really makes it much more interesting. And, obviously, EPC costs in those are a lot higher which typically in India we can manage at much lower costs. So I wouldn’t be surprised if we can do offshore at lower than 5 cents in India, so therefore, it becomes a very viable thing. But nobody is going to invest in that sector because there is no, you know, we can’t do it through comparative auctions in the beginning. So the government may have to, therefore, do some sort of a small feed-in tariff programme just to get this sector off and running.
Ans.: Fair enough, I am happy to do that. We do want to encourage new developments. In fact, if Prime Minister Modi hadn’t taken the leap of faith on solar power way back 5 years ago, then maybe we wouldn’t have been where we are today even now. And I remember it was a bold decision to buy power at Rs 12 and Rs 13 and Rs 14 at that point of time, but he was convinced that the world has to act. We can’t just talk about the inconvenient truth, we need to have convenient action when it comes to cleaning up the environment. He acted on his commitment. He introduced solar to India. He introduced canal top solar to India, and in fact, to the world. In offshore we have done some one or two I think pilot projects, I am not aware whether the process has started or not. Okay, something is going on but to be honest I haven’t put in too much time. But I grant Sumant, we will have to encourage that sector. We will have to look at it more like an R&D project. If required I will even get some of the government companies like NTPC who’s got very ambitious renewable programme going forward. They have just crossed 50 GW and become one of the largest players in the world in energy generation and now they are looking at seeing how they can double that in the next 7 or 8 years.
Panelist: We could actually, there are many points that I would like to bring up, but I think it’s fair enough now to actually give other people a chance to participate in this discussion. I just want to thank both of you for a very interesting discussion on the current status. Before I go to the floor, I understand there is a very fancy app that is coming my way and these are questions that are being given.
Minister Goyal this is for you, what will the government do to encourage grid scale storage and would this mean a significantly lower requirement of power generation. I think you sort of touched up on that but keep in mind that these are questions that are coming in from elsewhere?
Ans.: There won’t be grid scale storage in India, not yet atleast. It will only add significantly to cost so we will have to wait for these prices to fall further. But as things stand I am rather using it sensibly that let my electric vehicles use that storage and we will keep moderating and calculating when they should be charged, these batteries in the electric vehicles. So that indirectly we are creating a storage but using that to reduce our petroleum product imports and consumption, reducing pollution levels in the country and making it a win-win for the people of India.
Panelist: DISCOMs are not willing to buy hydro power under Section 62 of the Electricity Act 2003, and we cannot bid in comparative project bids because they are RTC – Round the Clock power. How do hydro power producers sell power in the long term. Now some of this is Greek to me so you can perhaps talk about it?
Ans.: Anybody who is not willing to buy power under Section 62 in hydro should come and just write me a mail, because hydro power still continues to be under Section 62. This sector is still not yet mature to a level that we can bring in competitive bidding. Though I must say that very soon going in the future, we will try and make these projects also plug and play, so that we can then look at competitive bidding atleast for the project itself and that will bring down the cost and, hopefully, keep hydro power cost down. Otherwise, some of the projects which are again stressed and stalled badly, some I have been able to resolve, some I am in the process of resolving, are a deterrent to any fresh investment in the hydro sector in the first place. And, second, have led to power cost becoming so phenomenally expensive that, obviously, the people of India are not going to pay that kind of price. एक बार आदत पड़ जाती है कोई चीज़ सस्ती मिलने की then nobody is going to add value. So, now Rs 3 is kind of a benchmark price at which everybody will have to look at all sorts of power and for a long time to come let me tell you.
Panelist: The power plants have in the past worked at a PLF of 70. I am going to open up to the floor after this question. You have answered this already so he is already gone through this, so we are not going to take this particular question. I think it’s more relevant if we just put this away now and just go to the floor now because people have been listening to this discussion and it’s far more valuable for us to be engaged. Can I just start with the gentleman over there, if you could just please announce your name and go ahead.
Q. Vinayak Chatterjee. Sir my question is on UDAY, I think from industry we have greatly appreciated your single-minded focus on probably the most important problem, the wholesaler in the business, which is DISCOMs which have held the country to ransom between the producer and the ….. And UDAY-1 has achieved its purpose of a financial reset. There is a buzz in the sector that you are already planning UDAY-2, which will be a structural attack on the way DISCOMs are structured today. And that will then fundamentally attack the issue of operational efficiency, which is reduction of aggregate technical and commercial losses. If it is not too much of a state secret sir, and if you can discuss something with us publicly, we would like to know your thoughts on UDAY-2?
Ans.: Vinayak you know I am the one fellow who has no secrets, even my meetings are publicly televised, which sometimes create problem for me also. I have absolutely nothing which is done on file. Everything is done through my mobile apps, everything is in public domain. UDAY has not been only about financial re-engineering. It’s also been about financial discipline. Many times some of the authors, I don’t know whether you have also written like this, I have not come across any article. But I read some very very ‘incompetent’ तो नहीं बोल सकते हैं ना journalism में, some very very, नहीं parliament में you say it and then you expunge the remarks. But some very ignorant people tend to say, अरे UDAY हो गया लेकिन bills are still not paid on time. Obviously, they are not going to be paid on time because this is the first time the government has come out with a programme where we have not given one cent to these inefficient DISCOMs, not one rupee.
In fact, when that cabinet note came and it was probably one of the most all-encompassing comprehensive reform in this sector, the financial implication column was zero. I am not spending one rupee. We are finally telling the naughty boy, no more chocolate for you. You learn to live in your own means, learn to improve your efficiency and we have told the bankers not to lend money to the inefficient DISCOMs. We have put caps on their lending. They are not allowed to lend for losses. And that’s bringing in financial discipline for the very first time. It’s what we do in business. Suppose, a section or a division is making losses, those of us who keep pumping in more money in that division only suffer at the end of the day. Those of us who stop putting in more money and focus on efficiencies I think we get good outcomes out of it. And I think nobody better than this group sitting here to know that, and I think that’s what we are trying to do.
We are trying to get the states to improve their own efficiencies, as regards restructuring is concerned that’s a state level decision. We are encouraging states to look at every possible way to improve their efficiency, to bring down their losses. There is lot of action being taken, like the state of UP has come out with an amnesty for 60 days, and after that they are going to come down with a tonne of bricks on those who are stealing power. They are looking at improving the efficiency levels and wherever the losses come down to below 20%, they are going to get guaranteed 24 hours power. So, the honorable Chief Minister has announced, you bring down losses, you will get 24 hours power.
We did that in Haryana to good effect, Panchkula, if some of you are aware of a place called Panchkula, near Chandigarh. Panchkula was the first area, district where 73 villages and the town started getting 24 hours when they all paid their bills and the losses came down below 20%. So we are using this across the Eastern belt where it is largely prevalent, South and West are quite good and they are now looking at further improvements. Overall, this country is on the right path, just to correct what Sumant said so that none of you goes with a wrong impression. I am the last fellow, absolutely the last man standing and in my term it’s not going to happen that there will be a runaway increase in tariffs or an increase in agricultural tariffs.
So I don’t want CII to become a platform of any controversies once again. We have had our fair share in the last two three days for no rhyme or reason. There is absolutely no proposal to increase tariffs for the agricultures; farmers are already under severe stress. On the contrary, I am trying to see if I can make it cheaper for them by giving them solar pumps and distributed energy and other forms of power. They need that, they deserve that and that’s what the nation owes to them. I have no proposal to force states to increase tariffs. My only insistence is become more efficient and if you have to give lower cost power to the poor, to the farmers, some of it gets cross subsidized, the rest of it pay from your state subsidy. So run your DISCOMs and Gencos and transmission companies profitably and efficiently, but doesn’t mean you pass on your inefficiency to the consumer.
Panelist: And I think you have made that point, Ratul I believe you have a point that you will like to make. I am sorry, I think someone should be giving you a mike. I will come to the middle of the room in a minute, in just a minute.
Q. Sir, firstly as a citizen I am Ratul Poori from Hindustan Power. As a citizen of this country, I think we have to congratulate you for your focus on energy conservation, especially, the LED programme I think is revolutionary. You talked about what you have done in UP, you know, you have grown demand 30% in the last one month, you supplied 30% more energy in the last one month so you met unmet demand. Can you talk about how you are going to take your learnings from the last month or month and a half in UP and drive it across India. Thank you.
Ans.: That’s a job the states will have to do. In fact, my department came up with a beautiful programme called Urjagiri. They made a beautiful presentation to me with video clips and the whole ad campaign around Urjagiri. My problem, ladies and gentlemen, is that I cannot act against somebody to bring down the AT&C losses. The action has to be at the state level. In the scheme of things, I am only a policymaker and I have to get the states to act on that policy. So I am encouraging the states, I am even willing to finance states to run such campaigns. It needs political leadership and determination, and nobody better than a leader like Yogi Adityanathji to really lead by example. I hope other states will see that and emulate that example, amongst other things also in the power sector.
And, I am in continuous dialogue, so what happens in UDAY which was not happening anytime Vinayak in the past is the monitoring. At my level with Chief Ministers of states, Secretary level with Secretaries of states, at my level with Power Ministers of states, almost continuously. Secretaries are interacting monthly. I interact with Chief Ministers roughly once in two or three months of the stressed states. The Power Ministers and I meet every 4 to 6 months and run through so we are meeting 3rd and 4th , focus is totally on UDAY. So our effort is to really bring about a paradigm shift in the way this sector has run in the past, not in the short or medium term, permanently. I am going to make sure that the policies and systems are left in such a fashion that if anybody desires also, there’s no scope, there’s no elbow room to once again mess around with that system. And, I mean those of you who have dealt with me or attended any of my meetings know that all of this is voluntary and yet.
Q. पियूष जी, मेरा नाम सत्यप्रकाश है, मेरे गाँव मुज़फ्फरनगर की 126 steel rolling mill बंद हो गयी हैं rate के कारण तो मुझे एक दर्द हुआ और मैंने एक apps बनाई, वह apps मैं आपको देना चाहता हूँ | उस apps के कारण 30% light बचेगी, 30% लोगों का स्वास्थ्य ठीक रहेगा और 30% लोगों का working performance बढ़ेगी | यहाँ house में यह समय नहीं है वरना मैं अच्छे से आपसे discuss करता मैं आपसे कब कहाँ और कैसे मिलूँ ताकि यह चीज़ share कर दूं और जिस तरीके से देश के विकास में आप सहयोग कर रहे हैं मैं भी दे दूं |
Ans.: आप ज़रूर मेरे ऑफिस में भेजिए, मैं appointments तो ऐसे नहीं तय कर सकता यहाँ बैठे हुए, लेकिन मेरे ऑफिस में आप एक email भेज दीजिये |
Q. मैं कई email भेज चुका हूँ सर, जवाब नहीं आया पर उसका, please?
Ans.: जवाब तो computer generated होता है वह तो पक्का गया होगा, पर उसमें तत्व मिला होगा आपके email में आप ज़रा ऐसे details दीजिए जिससे हमको स्वयं से लगे कि हम आपको जल्द से जल्द contact करें और उसका लाभ लें |
Q. मैंने सर बता दीं, तीनों बात बता दीं आपको?
Panelist: Excuse me sir, this is not a place to make appointments but we will do it later, thank you.
Q. This is a question for Mr Goyal, my name is VK Arora. I have attended a meeting about two and a half years ago when all the power plants were literally hungry for coal and that’s the time when you took the challenge and you said that I will make sure that enough coal will be provided to all of you. Now I am very happy and we are all very happy and must congratulate you that something which we had never imagined would happen in the country. And you made it possible. But my only concern is, at that time you also mentioned that the Power Plant Load Factor, which was at 70, it would go up to 80. But, unfortunately, despite the fact that all the coal is available now, why has it come down to 60. Now, that’s a question, you know, we would like to ……?
Ans.: Have I made that point clear in my earlier comments or you want me to repeat it again. Is anybody still in doubt about what I explained about the denominator going up, the stressed and stalled plants all getting operationalised, adding 33% to the national grid.
Q. Sir, the electric vehicles have been sort of waiting to take off in India for a long time and thanks to all the efforts that’s being put in by your department, by you personally. I think this is going to be the year of electric vehicles, that’s my belief. You have mentioned 2030 as the sort of deadline or when we will have no more diesel or petrol. But you always like to set milestones, so what is your plan for the next 12 months. What do you expect, where should we be after 12 months?
Ans.: Very good question. And I will tell you what my approach is, that approach will explain to you how this government thinks in overall context also, this government’s approach. And that’s the beauty of Prime Minister Modi’s thinking when it comes to transforming India’s economy. We are trying to make sure that this electric vehicle programme is not subsidy driven. It is driven by demand, demand which is based on a cost benefit to the consumer. What we need is about between 2 and 3 years of just handholding this industry and I believe that the cost of electric vehicles will pay for itself for the consumer. After that we will get the government out of this sector and just like today the auto industry is flourishing and Maruti is showing what? 30% more profits than last year! And just like the IT industry is flourishing, we would love to see the electric vehicle industry run on its own without government intervention.
For this first three year programme, what we are looking at is just to see how we can make it, we can encourage people to go in for this through lower cost financing maybe or some sort of GST support where I will need states to come onboard. Government is looking at investing in charging infrastructure across the country and to begin with in the larger consumer centres where pollution is at all time highs. If we will create the enabling infrastructure so that people are encouraged to go green and look at electric vehicles. Having said that, we are also looking at innovative ways if we can use swapping as a programme so that cars don’t have to wait for batteries to be charged. You can just drive into a petrol pump and swap your battery and drive out, less time than what it takes to put petrol in your car just like in the races Formula 1 you are counting the seconds within which the tyres are changed and battery is changed. So we are looking at innovative ways to separate the cost of the vehicle and battery and make this whole programme. I need 3 years, objective on these 3 years being to make it a self-sufficient model.
Q. Sir, my name is Abdul Kalam, I am not a journalist. I am a professional from Coal India (Retired), CMD, Director Technical. Sir, you have been very kind, you inaugurated a seminar last two years ago and you made a 2 billion target for Coal India. And, in fact, you made a point that Coal India has reached 1 billion tonnes. And I assure everybody was resistant, but you assured that it was done. So, I am happy sir they are going to do it. But some of my colleagues are a bit depressed that demand for coal is not there, so, anything for spurring demand. And sir, I am thankful to you I am from UP and my village gets 6 hours power daily, I think it comes more now. I am congratulating you for that improvement in UP. Thank you sir.
Ans.: Sir, as regards coal, I still stand committed to increasing supplies of coal significantly. At the same time, now my focus, since we have already got enough security of coal supplies, is on quality of coal supplies. So we want superior quality of coal. In fact, you will be happy to know that the specific consumption of coal, Specific Heat Rate has improved by 8% in the last 2 years because of better quality of coal alone, and some of you all may have experienced that.
Now this year, we have dedicated to coal quality, so our entire focus is going to be how to improve the coal quality. And I just want to make sure what they get is what they pay for in the first place and doesn’t have to go through series of confrontations and tests and all that. Having said that, as regards demand I am now focusing on flexible utilization of coal, you will all be happy to know that only last week, two days back, except one state, I think AP Genco which is also going to get finalized in the next two days. With every state and with every power generating company we have now got a master coal supply agreement.
Gone are the days that from Korba we will give to one Annapur plant or from Mahanadi we will give to some plant in Andhra Pradesh. Now all of Maharashtra has one contract, they can pick up coal from wherever they are linked and use it anywhere within their system. Next we are looking at, after this rationalization, we are looking at flexible utilization where you can give out your coal to whoever can give you power cheaper than your own plant if the variable cost of your plant is high. Third, I am talking to all those who can import coal to see how we can increase domestic coal in the import based thermal plants.
Before you conclude, one last point because I love to make a little comments about the legacy which I inherited. It’s a sad commentary on our country and its leadership that we never could envisage that we will ever be coal surplus and we will have sufficient coal in India mined out despite being amongst the world’s largest coal reserves demonstrated to be in hand, we encouraged tonnes and tonnes of generating capacity to come up on imported coal. हम इतने लाचार थे we were so goddamn incompetent and despondent that we never believed in our ourselves and our ability to be self-sufficient, that we encouraged thousands of megawatts of power plants dependent on imported coal. Today, I am suffering when I want to give them domestic coal, I am suffering because that plant is designed for a certain coal quality which I can’t supply. In fact, NTPC is now doing an R&D to see if we can re-engineer some of these plants to use domestic coal. Having said that, we are also working with the Shipping Ministry to see if Paradip can have a large coal terminal, Mahanadi I can increase 200 million tonnes you maybe knowing that. But I don’t have an outlet. So I am trying to see if I can get it to Paradip, barge it to the other coastal power plants, replace somewhat wherever it’s possible technically, imported coal with domestic.
So, I can assure you, we want to make India self-sufficient but some sad legacy issues are beyond my control to change.
Panelist: Minister Goyal thank you very much for your comments, Sumant thank you very much. It’s been wonderful to have both of you here and to have this discussion to give us a sense in terms of how things are really working on the ground. I am going to hand it back to you.
April 27, 2017 Speaking at South Africa National Day, New Delhi