RK Singh: Executing a powerful reforms agenda | Economic Times

The Economic Times brought together minister for power and renewable energy RK Singh and four top CEOs in the sector to discuss game-changing reforms the government is planning to transform India’s energy landscape. The minister said he was determined to push ahead with reforms, make sure that regulators are not influenced by state governments and create a system that forces state distribution companies to improve their performance, without which they will not be able to borrow. The panellists and minister agreed that making distribution companies viable was the most important and challenging reform. Edited excepts.MR SARDANA, YOU HAVE A LOT OF EXPERIENCE IN DISTRIBUTION. WHAT ARE YOUR THOUGHTS ON PUSHING REFORMS FORWARD AND OVERCOMING OBSTACLES?Anil Sardana, managing director, Adani Transmission and Thermal Power: In 2002, I was founding CEO of a Delhi discom. People said, ‘You came yesterday, today everything should be set right.’ Imagine, for 70 years, people had no voice, then suddenly, the voice of vested interest parties. I used to say that in Delhi, VVIP means voice of vested interest parties. The minister rightly said you have no right to load-shed. As an experiment, in an industrial area in Delhi, we said we’ll give 99.5% reliable supply in six months. If we don’t, we will fill oil in your generators at our cost, but for every unit, we will charge 35 paise reliability charge and 15 paise will go to staff as incentive. In three months, there was no load shedding. Also, we have 25% taxation in power. We can say those industries that will increase their revenues and manpower by, say 15%, should get 10-15% tax discount.MAHESH, HOW DO PROBLEMS IN DISTRIBUTION COMPANIES IMPACT YOUR BUSINESS?RK Singh, minister for power and renewable energy and minister of state for skill development and entrepreneur Mahesh Palashikar, president and chief executive, GE South Asia: The wide-ranging approach (of the minister) on discoms is extremely heartening. We will be very transparent with you. The issue of discoms is the biggest one. Today the senior-most global leadership in GE, they worry about that. If we don’t get cash collected, that’s absolutely killing for the enterprise. I think PFC-REC’s Rs 90,000 crore has started getting acted upon but money has to flow. We want to honour the MSMEs (micro, small & medium enterprises). We’ve been paying them throughout these six to seven months.78692456RK Singh, minister for power and renewable energy and minister of state for skill development and entrepreneurship:I will chase it. For disputes resolution, I’ve set up a body in the ministry of new and renewable energy. Wherever money was to be paid, it has been approved. We are putting in the law a separate bench in Central Electricity Regulatory Commission for contract enforcement. Palashikar: There are pretty large sums overdue for contracts we executed. Another forward-looking point (is) very good movement of round-the-clock (power) hybrid. We are very appreciative. We’ve been working with both ministries on natural gas. If that is something you encourage, plant utilisation factors would be pretty high. We have stranded assets and gas prices are ridiculously low.Singh: We have a bid for round-the-clock power, with 49% thermal and 51% renewable. We thought of adding gas but it was pointed out that gas is imported, so it will again be dependency on some other country, and prices are very volatile. In the next bid, we may open it up. We can make it source neutral. Also, I’ve taken note of that point about infusion. Don’t worry.. Against the Rs 90,000-crore limit for liquidity infusion … we’ve sanctioned Rs 75,000-80,000 crore. I’ll make sure disbursements are expedited and then I’m quite sure it will trickle down to all manufacturers. If they don’t, please let us know; we’ll work out ways and means to ensure all bills are paid.SUMANT SINHA, YOU HAVE HAD A BRUSH WITH DISCOMS. CAN YOU TALK ABOUT YOUR EXPERIENCE AND VIEW OF REFORMS?Sumant Sinha, chairman and managing director, Renew Power: It’s very heartening to know you are looking at the whole distribution sector with such seriousness. What is the status of the Electricity Act? When might it move forward? Singh: There was a storm of comments. Letters not only to me, but to the Prime Minister too. We have had discussions with the Prime Minister. They made a presentation to me of the final draft. It will go to the law ministry, then the cabinet, then we will introduce it. As far as appointment of regulators is concerned, we are not touching it. That has turned out to be a very, very sensitive spot with all states. We are putting in place provisions to ensure they uphold the law. If they violate any provision of law or tariff policy, that will be sufficient ground for their removal. A regulator is mandated to review tariff every year; he will have to do it. Sumant Sinha: We are going to have much more renewable energy in future. There are multiple storage technologies evolving and price dynamics will keep changing. I think it may be useful if the government comes up with an official view... It will give all of us roadmap of the government’s thinking and if certain steps come into place, say technology costs changing, then you will start doing these kinds of bids, or your strategy will change in this way. Singh: Okay, we will have that.PRAVEER SINHA, HOW DO YOU SEE REFORMS AND DISCOMS?Praveer Sinha, chief executive and managing director, Tata Power: First, I’d like to compliment the minister for a very candid discussion on the sector and the acceptance that distribution is the key because last-mile ability to get payment will drive all investment. Some aspects are coming as rules, which is very good, but it would be good if these are covered in the tariff policy, and both policy and Electricity Act amendment come, because that’s the real precursor to big changes.Singh: Actually Praveer, because the tariff policy looks at and seeks to correct so many things, you have this sort of care in the cabinet before they pass it. A group of ministers was set up. By and large we were able to convince it. Then there were two to three meetings, where all these provisions were gone through. When you propose changes seen as far-reaching, they want to look at it every which way before they adopt it. But it will get adopted. Praveer Sinha: The existing practice of rules and orders is a very welcome move...RK Singh: The policy is supposed to be a guiding document. Rule is like a law, definitive. That’s why open-access, rights of consumers and pass-through (of costs) rules. We are simplifying everything. Let’s say if the price of coal goes up, there should be a formula under which the per-unit impact comes enerout. Everything should become more automatic and simplified.Praveer Sinha: In the past six months, the sector has done exceedingly well. It has been able to generate, supply and sustain operations. (But) many renewable bids have been delayed. If renewable purchase obligation (RPO) is given a push, it will bring investment and help in creating production capacity for solar cells and panels under Aatmanirbhar Bharat.Singh: We are putting it in the amendment. We are increasing penalties for RPO violation. At present, every regulator lays down a separate RPO for the state. We are saying... the Centre has laid down RPO looking at international obligations, which is in its purview. Once the Union government has undertaken an obligation, it has to be implemented.EVERY STATE OPPOSED CHANGES IN APPOINTMENT OF REGULATORS BUT IN A SENSE, THE MINISTER OUTSMARTED THEM...Singh: There will still be halla (uproar) when I introduce the bill in the Parliament, don’t worry.MINISTER, WILL YOU BE ABLE TO PUSH THROUGH OTHER REFORMS, GIVEN RESISTANCE, IN UTTAR PRADESH FOR EXAMPLE?Singh: Yes. Through tariff policy, amendments or through rules, it will happen. In Uttar Pradesh also it will happen.WHAT ABOUT GST ON ELECTRICITY?Singh: I want that. But people tell me states will not agree. We will have a try. Sardana: That will become a big booster for the industry because if they are able to adjust GST eventually…Singh: It will help the consumer. Power costs will come down. That Rs 400 cess was appropriated by the finance ministry to make up for shortfall in GST collection. Now, it is there till 2022. After that, we can take it up that the cess be abolished. I see price of coal coming down.(Moderated by ET’s Himangshu Watts)