In an interview with NDTV Profit, Union Power Minister Sushil Kumar Shinde talks about the problems the country’s power sector is facing. He says that while power demand has increased in the past few years, supply hasn’t managed to keep up. He warns the country will not have much coal left for meeting targets for the 13th Five-Year Plan.
Read the full transcript below. You can also watch the video here.
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- Q: About 65 per cent of power production is dependant on coal. This is one issue that is marring the power sector. What are the steps that you are taking as Power Minister to solve the issue? You are being blamed for it. That is not the fact, right?
- A: It is not the fact. You also said (it) in your preliminary remarks. The country knows. The body is there. Unless you feed the body, the body cannot survive. It is like that. Power sector (is) in a very critical time of 11th Plan, we have given this country 55,000 megawatts (MW). This was the first time in the country that in five years, 55,000 MW was completed. It was two and a half times of the 10th Plan.
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- Q: In the last year of the five year plan, 20,000 MW, which is equivalent to the 10th Plan...
- A: Such a speed was given. Such a concentration was given in the power capacity addition of the country because this country needs power. Today if you go to the big cities, you can see malls. Everywhere you can see light. But this increase has created more problems. However there is another main cause. Demand has increased but the supply is less. If you see the 9th , 10th, 11th Plans, the supply has increased. It cannot be said that the supply was less. But it was never expected that the country will need power in such large numbers. In the 12th Plan, we have decided to add 88,000 MW capacity.
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- Q: Is 88,000 MW the final figure?
- A: That has not come. In our discussions with planning commission officers and other important members, it was first decided to keep the figure to 77,000 MW. But then the nuclear plan was added. And also some plans of the 11th plan was also carried forward. So all together, it will come to 88,000 MW. You will ask me ‘What will you do when there is a shortage of the coal?’. But we were aware of all these things. We have tied up during last three years, about 76,000 MW with the linkage. So, I am not worried about the 12th Plan. My main worry is on the 13th Plan. There will not be much coal in the Indian sector. We brought the issue to the notice of the Prime Minister. The PM personally went into the details He has asked his PMO, he has asked his secretary. Mr (Pulok) Chatterjee is looking after the issue. In fact he assisted us so much so that today, the FSA (Fuel Supply Agreement) problem has been brought down to very minimal size. PM has asked the coal ministry to increase the production. If the coal production is increased, I don't think that there will be much more problems. Yes, there is a problem at the moment – of the rainfall. I still hope that rainfall will be there. But we will have to see whenever such emergency comes. Usually during the rainy season, we take out our machinery for the maintenance. Now, we will delay it. That is the only alternative. We will try to give power to the country.
- Q: Have you send a directive from your ministry to the thermal power plants to delay the maintenance period?
- A: So far we have not done because so far we are waiting. We have to wait another 15-20 days for the monsoon and then we will see.
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- Q: Let’s break up the problems the power sector has. First, of course, is the fuel linkages. Second is gas, and the third is coal. Gas is a scarce commodity. As far as imported gas is concerned, there is not much of infrastructure in the country. So why don't you ask the power companies to set up their own LNG terminals in east and west coast of India to import gas and feed their gas based power plants. Is there any proposal for it?
- A: No, so far we have not asked the companies to set up their own gas based terminals in the country. Today the terminals are there but we are using it for their own consumption. But in the long run, some people will have to take initiative. This sector is a reasonably good sector. In the 10th Plan, there was Rs 1 lakh crore of investment. Now it has gone to Rs 3 lakh crore. Tomorrow, there will be some people who will be interested to have their own terminals and to have their own gas-based projects. It is possible. So far we have not taken it up. It is a good suggestion....
- Q: Petroleum ministry is making a policy framework for setting up LNG terminals in different parts of the country. So probably you can advise them on it. Also, in the domestic gas, there is fall in production in the KG basin, which was one of the celebrated discoveries in the country. What are you doing about it?
- A: It is a fact that in KG D6 basin, production has fallen. There are different types of opinions. In one of the EGoM (empowered Group of Ministers), the chairman has referred the matter to the law ministry to find out whether we can increase the price of gas. Because the prices are 3-4 years old and now the prices have gone up. There is a contract. According to the contract, price cannot be increased till 2014. It is like PPA (Power Purchase Agreement). What happened in PPA, the same thing happened. So unless we assist these people, investment will not come in and there will not be much response from the private sector.
- Q: Has the private sector said anything to you. Have they represented that they are willing to pay little bit more for the gas?
- A: So far I don’t remember whether they have made any reference that they are willing to pay. But there view is that if they are willing to pay more, then they want pooling pricing system... That cannot be done.
- Q: So you are saying that pooling price is not feasible?
- A: Right.
- Q: What is the discussion that is going on with the coal ministry? PMO gives directive that implement 80 per cent of trigger level but the coal ministry says we can't do that. How can this logjam be broken?
- A: When PMO says, every ministry has to work, the PMO is our leader. And the PM is our boss. So, we have to follow him.
- Q: So probably Coal India is not doing the right thing by not following?
- A: Yeah, they will follow.
- Q: What went wrong with the ultra mega power projects (UMPP)? Why hasn't it picked up?
- A: Four ultra mega power projects are already ready. The fifth is coming up. There were environmental clearance problem. No-go area has created much more problem. That is being sorted out. Now the matter is being taken up in the cabinet. The Orissa project is likely to come soon.
- Q: After Orissa, which one is on the anvil?
- A: The Chhattisgarh project.
- Q: So those are more or less clear?
- A: Chattisgarh is not yet clear.
- Q: What about the already allocated ultra mega projects like Krishnapatnam?
- A: The people of Andhra Pradhes have gone to court. The project has not started. We are watching the situation.
- Q: Yesterday you met state electricity boards. That is one problem which everyone is talking about and again the blame has come to the Power Ministry that it is doing anything. But it is not your fault, so how do you plan to revive state electricity boards?
- A: This has been a worry for a very long time the Discoms (Distribution companies) are not giving results and distribution sector is completely at a loss. Planning Commission has come out and given numbers. The total is about Rs 2 lakh crore. I was thinking it would be between Rs1.25 to Rs 1.35 lakh crore but these are all carry-forward losses. Yes, we have suggested. Now, a group has been appointed under the Planning Commission chairmanship of Mr Chaturvedi who is the member of the Planning Commission. The Deputy (member, Planning) is also interested, they have a worked out plan and they have got to our notice and we have prepared a Cabinet note now to help them. (We) will surely help them with but I cannot explain more on this Cabinet note. But this will have to be one time we have to give them assistance and then there wouldn't be any problem. We have also taken a lot of precautions, we have asked them to increase tariff, we have asked them to file returns regularly, we have asked them to increase tariff every 6 months or year. Not only that, we have also asked PFC (Power Finance Commission) to find out because all this TND (transmission and distribution) losses are coming together – distribution, commercial losses and theft loss – they are all putting together. So, we have also asked (them) to make compartment-wise figures to find out from where exactly, whether it’s from theft or commercial losses or distribution losses, these three-four things. We have asked them to separate it so we will know exactly where losses are occurring and tap it since we have be tied up with restructured APDRP (Accelerated Power Development and Reform Programme). All are being IT-enabled so that it will be very easy to find it. We have taken a lot of precautions on this but still the demand is such. Now, for example, Bharat Nirman has given us the target of 1 lakh villages but we could do 1,04,000 villages, we have surpassed. The same thing happened in transmission line – the work we have put out in very fast (manner). The power that we have given to 1,04,000 villages that has also increased so that has increased, surely. And if you go to any mall and if you see the illumination there you will be surprised, it looks all good, but it’s all electricity!
- Q: So now…?
- A: Which is why I say that the consumption has increased as compared to demand of 20 years. If you find out the demand, whatever we have generated today its more than enough for the supply.
- Q: Yesterday in your speech there was a very interesting fact – that the national electricity fund can be used for giving one-time assistance to the electricity board. How will that work?
- A: That is an interest-free loan, free subsidy that will be given from 5-7 per cent.
- Q: Just for our viewers, can you tell us how big is the National Electricity Fund, how can that be done?
- A: There will not be any dearth of funds, this is a continuous process, we will get because PM is very eager to give that money.
- Q: In this section now let me ask you a very old question about power equipment. Earlier, your ministry or your sector wasn't very keen about increasing the duty on imports of power because of which many power sectors were impacted but now it looks like you have agreed for it. So when will it happen?
- A: Before the 11th Plan there was only one company that existed in India which was BHEL (Bharat Heavy Electricals). When we were working to give so much of capacity in the country, we must need more factories because the capacity earlier was only 5,000 MW.
- Q: And this has increased to 20,000 MW now…
- A: Yes, and we needed 20,000, but we had no factories. So, we announced to have joint sector factories to come to India. In one of the FICCI meetings I had announced this and it was very well received and responded to, and now seven factories have come up in India. So, it is the natural duty of the government to protect those who have come with interest to establish their own factories here and promise them protection in any form.
- Q: What is the duty structure?
- A: I can’t say that, the matter is with the Cabinet.
- Q: But it has been widely reported that the minor committee has suggested 19 per cent of the duty plus 2 per cent addition, so 20 per cent, something of that kind?
- A: No, no, that I cannot say…
- Q: If I may ask you, you have done a fantastic job, which I agree to, but at the same time people say that is not enough, 55,000 MW is not enough. Do you think you could have done something better, that 78,000 Mhz of original target of the 11th Plan could have been achieved?
- A: No not 78,000 but first you should see we had accepted the target four times bigger than the 10th Plan, which was impossible to do….
- Q: Impossible, but you did it?
- A: I did it because it was a challenge to us and particularly to me because PM got me from the governorship to here as a minister, and here, specifically, Sonia Gandhiji directed me to give results so I was working very hard. So, I could have done 64,000 if I had gas for 7,000 MW.
- Q: So it’s because of gas?
- A: I could have covered up mid-term appraisals…
- Q: So is it, the political high command, also asking you to (do) some more service to the party or to the government, or somewhere else too?
- A: I don’t know, wherever they ask me, Chief Minister, Governor...
- Q: Or Home Minister?
- A: No, I don’t know, but I am a humble worker of the Congress Party and whereever my leader Sonia Gandhiji asks me to go, I will go.
- Q: So tell me, because Pranabji is nowhere in the picture as far the Cabinet is concerned, so there is a chance of a reshuffle. So, when do you see, as a senior leader, having some idea about what’s going to happen?
- A: That will have to be done before the Parliament starts.
- Q: Do you see yourself in a different position?
- A: I don’t know, it has been totally left to the PM and Soniaji.
- Q: I always wanted to ask about NTPC and coming back to coal, there are five blocks given to NTPC but they didn’t develop those on time. Those were de-allocated but now its reallocated. What is happening on that front?
- A: No I have ask them to give it to the private developer excavations.
- Q: And will it be reallocated?
- A: ... Exploration rather.
- Q: So will it be reallocated to NTPC?
- A: No, whatever we have it right now and whatever has gone we aren't demanding .
- Q: And anything on the divestment front since the department has asked you to divest some of the power companies.
- A: No, no, nothing as such.
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