July 5, 2017

Speaking at Launch of MERIT app, New Delhi

Thank you very much ma’m, please don’t worry, don’t look at so many papers and worry that it will be so long. A warm welcome to you Mr Bhalla, you have worked with me in the Coal Ministry and it’s a pleasure to have you back in my team. I wish you well and i wish you many-many new initiatives, such as the one we are launching today.

Ms. Shalini Prasad, Additional Secretary Power; Rajivji, CMD of PFC; Ms. Jyoti Arora, Joint Secretary, Ministry of power. I would like to, particularly, recognize Mr Bawa from POSOCO and Mr Sandeep Naik, Director in the Ministry of Power and their respective teams who have made both these very very important initiatives possible today, lot of colleagues from the Ministry, different PSUs; Gurdeep, Dr Jhunjhunwala and Mr Soni. I won’t take everybody’s name, but thank you very much for being here.

A very warm welcome to all the friends from the media, and again, particularly, the regional media who have come up in very large number today. Thank you very much despite the short notice. I think I gave the time only at 6 o’clock or so in the evening yesterday. And, I am delighted to see that I have to have them remove the partition, add more chairs. I hope, ऐसे ही तो किसी को नहीं बुलाया ना रूम भरने के लिए?

I can see very familiar faces. I have interacted with my friends from the regional media earlier also, but very-very happy that you could all come, and, of course, my own media friends who cover my beat normally. A special thanks to Mr Malhotra, we decided at 6 o’clock and he’s been able to get all of you to come. I think he deserves a special recognition. Ladies and gentlemen.

When Prime Minister Modi used to be Chief Minister of Gujarat, two things, and in some sense, there were also election slogans – Speed, Skill and Scale. Many of you may remember that, and the other was, Minimum Government – Maximum Governance. I think in both the initiatives launched today, will reflect a government in action fulfilling the promises made to the people of India. This must be one of the fastest developed app even in our Ministry. I think we just launched a portal on this Merit Order Dispatch, which was called Vidyut MOD earlier, about two weeks back before the regulators. And, I found it so good and so powerful that I requested them to make an app out of it.

Usually, portals, public at large don’t sit down and – it’s a very drab subject. But, a app is something and I keep watching the count of visitors on the various apps that we have launched. I find there is much more enthusiasm, much more excitement, easier for the media also to quickly download the app on their phone and, occasionally, open it, so that you can monitor our work, keep questioning what is happening in the power sector and helping us to do a better job. And, within four or five days Jyoti was in my office with an app and, unfortunately, I could not get time to launch it earlier. But, I am delighted that the app has been really very-very well presented, very well developed and has brought to public notice so many things which were otherwise, kind of, in a mist. The kind of opaqueness that was there in pricing of power and in the information relating to state government’s purchase of power left everybody mystified. So, people used to ask me, if on Vidyut Pravah, power is available at Rs 1-Rs 1.50, Rs 2-Rs 2.20. Why are we required to pay so much?

Some of that will get demystified today. It will come out in public domain that power is purchased based on power purchased agreements, sometimes also from the exchange, at different prices. And then, people can start asking question, are we the most efficient procurer of power in our DISCOM? What Jyotiji just said is a very important element of today’s new app, the fact that in two tower stations located in two parts of India, one is a northern state, one is a southern state. Both set up in 2014, both running at a Plant Load Factor, roughly between 70 to 75%. Certainly, the one which is very far south has a slightly higher variable cost, though I suspect even that could be open to scrutiny. Because, the northern state is equally far from the coal mines as the southern state is, unless they are have not yet rationalized their coal linkage. But the big picture is that the fixed cost in one phase is almost twice, rather 2.3 times, the fixed cost of another. This is a very serious matter.

And, therefore, if one sees today’s whole engagement is really an interplay between different Ministries, different departments, and now also the regulator. The regulator will have to ask these questions. States will have to look at what’s happening in their state. Coal Ministry will have to see whether we have the very scope for rationalization. Just before I came here, I was on the phone with the Coal Secretary and I said please look at today’s app very carefully. Because of paucity of time, we could not invite regulators, coal officials here. But, I requested them in the morning, please look at today’s app very carefully. You will find a scope to further improvise on the coal rationalization, linkage rationalization, supply rationalization, maybe you may find some imported coal in some plants where domestic can be used and can be replaced, so that Coal India doesn’t have to cut down production because of high stocks and inadequate sale of coal.

I hope that’s not the headline for tomorrow, by the way. But, on a serious note, just imagine when you take off your hat as a government official or even as a media person, you as a consumer with a limited budget, concerned about rising electricity bills will be empowered to ask questions, to ask why should my state be paying twice for power when there were possibilities, which this app very clearly demonstrates through the availability of information on the merit order. And, I think, by and large, I hope most of you understand, merit order is basically the variable cost of different sources of power based on which the power utility, DISCOM, decides which power has to be scheduled first, so the cheapest variable cost, fixed cost, they have to pay, whether they buy power or they don’t buy power, that’s a part of the power purchase agreement.

And, I am saying it for some of my friends from the regional media who may not necessarily be covering the power sector. Every power purchase agreement has a fixed cost element and a variable cost element. Fixed cost has to be paid round the year, irrespective of whether you buy power or not. Variable cost determines whether you will buy power from a plant or not, and you will buy from the cheapest source. Of course, there are a few exceptions like nuclear power, or hydro, which is Run-of-the-river, which has to be scheduled, because otherwise that water just goes away, the electricity is wasted. Wind or solar, which are renewable forms of energy which enjoy a must-run status, and I have requested that that all should be kept on the extreme left and maybe the must-run or those which are not a part of the merit order should be separated out, so consumers also recognize what the state has to pay for that.

Also, we as policymakers will now recognize that are we burdening the consumers or the state DISCOMs beyond reasonable requirements. There may be some requirements for stability of the grid. There may be some requirements for better environmental protection, those will be necessary concerns and very necessary factors before we decide the merit order. But, for the rest of the plants, more particularly, coal-based thermal power plants, certainly, there is huge scope for improvement. While Jyoti was being very conservative in her estimate of 3000-4000 crores, I was thinking that 5 years down the road, once our country crosses the 2 trillion mark in power consumption. We are right now at 1.2 trillion, which means 1,20,000 crore kilowatt hour or units of electricity – 1,20,000 crore units of electricity we are consuming today.

5 years down the line, 7 years down the line, this will be about 2 lakh crore units of energy. And, my own sense is that against the business as usual scenario, using all these various methods that have just had the fixed cost being checked, rechecked for vintage. Their merit order being recognized and respected and the cheaper variable cost being scheduled first. If we take the figure that Jyotiji said of 10 paisa per unit, we will actually land up saving nearly 20,000 crores every year, 20,000 crores every year – straight saving for the distribution companies and, obviously, that saving then goes to the consumers.

It’s no mean achievement. And, that ladies and gentlemen, reflects the 360-degree approach of the Modi government. When we are tackling an issue, we are looking at how we can – it’s like a piggy bank, right? We have children probably, in the good old days we had these small piggy banks. आजकल पता नहीं अपने बच्चों को वह आदत है कि नहीं | But we, at least, as a child I remember having a piggy bank, you put in a few coins regularly and then you had the box full, either you buy a toy, or you donate it somewhere depending on whatever you decide or the family decided.

The approach of the Ministry of Power, Coal, Renewable Energy, Mines, and the government at large, when it reflects on the environment interface with us, finance interface with us, all of us have broken the silos,  inter-departmental silos, working as team, as Prime Minister says ‘Team India’, working to serve every consumer in this country, more particularly, the poor, the socially and marginally  deprived sections, the farmers of this country, to see how from different pockets, small-small-small-small savings can be brought on the table and, collectively, it can have on impact on the people of India.

As they say, if you count the pennies, the pounds will take of themselves. It’s only when you add all the drops in the ocean that an ocean is made. And, in that sense, if you go to see the interplay, so just a few days before this, the Ministry of Power reduced a minimum technical at which thermal plants have to run from 70% to 55%. See the interplay between these various steps. By doing that, now you have an ability to schedule power from a more cheaper source, from a more affordable source, lesser variable cost source at higher levels while backing down other plants instead of only up to 70% right down to 55%. If they had not taken that step, then today’s exercise could have become almost futile.

POSOCO – continuously working, and I saw on the 30th, in an earlier press conference, 9 reports were already there and the 10th one I launched that day by I think Narsimhan and Jacqueline, two authors. And we engaged with the world at large that was under a joint cooperation with the United States to try and see how we can bring the best of technologies in India, so that grid integration of renewables becomes a robust mechanism. Because, unless you do that, you may again land up with a situation that you cannot back down certain plants or you cannot have a genuine must-run for the renewables. If we don’t do the must-run for renewables then the renewable cost goes up. If renewable cost goes up, we cannot expand to the scale at which we want to expand it. If we don’t expand it the way we want renewable to grow, when our concern for the environment comes before us, when we are not able to really improve the environment quality, reduce the levels of pollution. You see the interplay of the entire thing.

Of course, if we don’t reduce the affordability of power, the common man, the poor man cannot afford power, he will not buy power. He doesn’t buy power, he, his family, his children are relegated to poverty for all times. After all, electricity is that one factor, which can really help this country get everybody out of poverty, give equal opportunity to all children to get quality education in the remotest of villages. Farmers, they won’t be able to bear the burden of increased cost of electricity. If we continue to cross-subsidize beyond a point, I am reiterating what I said on many occasions, I recognize and support cross-subsidization to give farmers and the poor cheaper power. But, if it becomes irrational, then industrialization will suffer, new job opportunities, economic activity will suffer. Once that happens, banking sector suffers.

You see the huge interplay. That, ladies and gentlemen, has been recognized, for the first time, if I may humbly submit. And I would urge you to reflect on it. You have all worked 20 years, 30 years in your different areas, many of you. There may be some people I see, Dr Jhunjhunwala has had a 45-year career almost, reflect on the last as many years as you can, whether there has been a occasion when such 360 degree working across the central government, state governments, utilities, bankers, in some sense, 125 crore people as stakeholders, has ever been attempted before. You can see that in so many steps, you have the GST right before you. The kind of game changing transformation India is going to see with the implementation of GST is really difficult sometimes to even explain and for most people to comprehend.

Prime Minister Modi has been committed from Day 1 that I have to stop corruption in this country, I have to get rid of black money in this system. After all, what are these steps, these two portals? The e-bidding portal actually we had brought out this quite some months ago, the procedure by which people could flexibly use their coal through, I think in the common parallels you call it …… where you can use your coal, use it in the most cost-effective plant to produce power and supply it to you, so that you replace more expensive power with power procured from anybody who can supply it cheaper using your coal reserves.

So, if a state has, let’s say, a million tonnes of coal. They have two choices. They can use it in their own coal plant. A plant in Solapur where you have to transport the coal so far away, produce power and then use it. There is a particular effective cost of coal transport plus transmission or alternatively give that one million tonne through a transparent process, bidding process, to some plant near the coal mine, drastically reduce transport costs. Maybe, and also the losses in transport of coal or the grade slippage, sometimes, that happens in transportation over long distances. Add the cost of transmission and see if net-net there can be a saving.

Now, are these not all steps, which will help serve the people of India with cheaper power? And, of course, in some sense, the MERIT mobile app also is one more step to reduce corruption. Without taking any names, without going into more details, there are instances when I found out that people have been able to manage the hours power gets sold, somebody else’s power doesn’t get sold to a state, and flimsy reasons are accorded for that, for extraneous reasons. Or it could be happening all the time.

I don’t know. I have no personal knowledge. If I had knowledge I would have stopped it by now. But, I have got the best ways, let it be public. Let the information be public. And, this need not be real time daily, it can by 48 hours later, so that a reason is put on that column why they have scheduled a particular power and why not a cheaper source of power. Let the states be told that they have to put a reason. After all, this data whether I get it today, for today or I get it 3 days back, effective action, I will be able to take in both cases.

So, let it be 2…48 hours, certainly 2 hours, whatever the states are comfortable with. I don’t want to stress them. But, let them give a reason, and I hope my friends from the media will take time, and all other people are, after all, you are also paying electricity bills. Some of you may be staying in different parts of the country. You are all paying electricity bills. Would you not like to know whether your state could have been doing it better? And, कई बार ignorance में भी हो जाता है | Let’s not always allude a motive. It could also be ignorance. It could also be lack of understand of the state.

So, I would urge you Mr Bhalla that POSOCO also should set up a small loan wing, which spends half an hour-one hour on studying the data, once it is loaded after 2 days or 3 days to guide and cajole states to do their job better. We need not be policing them. We can guide them. We can mentor them how this can be done better. And that is the true spirit of federalism that we are trying to work with. It’s truly very-very satisfying that we are moving towards 24/7 affordable and clean power certainly, but also, uninterrupted, adequate and good quality power. All of these are steps which will help us reach the goal faster, all of these are steps which will bring more transparency and honesty in the system. All of these are steps which will make giving business in India far more open, far more transparent, far more attractive, therefore, attracting investments, attracting economic activity, creating new job opportunities, working opportunities, entrepreneurship opportunities.

And, when we look at the entire picture, the vision of new India that Prime Minister Modi has envisaged, an India where everybody has his own home, has 24 hours electricity, clean water, toilet, good schooling, nearby good medical facilities – many of these using the digital world, using space technologies. For example, using telemedicine for better healthcare for our people in the rural areas. When we look at all of these, electricity, availability of electricity, round the clock availability of electricity, and affordable cost of electricity are an important element.

I have no doubt that all of us in the Ministry stand committed and we will continue to serve our nation with the same level of sincerity and commitment that I have found in the last 3 years. On more than one occasion, I have acknowledged and recognized that I have been blessed with some of the finest officials, finest public sector companies, a wonderful team which has helped me over the last 3 years work through this great journey of improvement that we have embarked on. I acknowledge and thank each one of you, in the room or not in the room, for all that you have contributed, all that you have done.

A special thanks to Jyoti who will be taking up other responsibilities later from tomorrow. Thank you very much Jyoti for your many years in the power sector. You have done some very very important work in the last many years. I am sure all of you in this room would like to acknowledge her role and her contribution to this sector.

I am sure you will continue to serve in different capacities, in different areas of work that you will continue to get in the days to come, and in the same spirit of transparency, in the same spirit of national good, if each one of us makes this our mission, wants to leave a legacy just like Jyoti, on her last day leaves behind two very very important tools from her division, with her team’s effort. When each one of us decides upon themselves that we stand committed to leaving behind a legacy, I think the job will become far easier, will become far better, far more enjoyable, and will create a larger impact for the people of India.

Once again, thank you very much to all of you.


Next Speech

July 2, 2017 Speaking at GST Event, Bengaluru

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