Even as the 2015 fiscal proved to be a good year for the Indian power sector that witnessed highestever capacity addition of 22,566 MW, it is still plagued by a plethora of issues like fuel supply, weak financial health of state distribution agencies and stressed projects. M K Goel, Chairman & Managing Director, Power Finance Corporation Ltd (PFC), shares Corporation’s future plans and his insights on the Indian power sector with Jessy Iype of Elets News Network (ENN)
What are the key initiatives that the Power Finance Corporation has undertaken?
We have taken several initiatives to diversify our areas of expertise, as demonstrated by our wholly owned subsidiaries. The PFC Consulting Limited (PFCCL) was incorporated on March 25, 2008 to provide exclusive focus towards offering consultancy services to power sector. So far, consultancy services have been rendered to 51 clients for 93 assignments by PFCCL. It is also undertaking the work related to the development of UMPPs (Ultra Mega Power Projects) and ITPs (Independent Transmission Projects). Further, during the fiscal 2015, total income of PFCCL was `49.40 crore compared to `55.19 crore in the previous fiscal 2014 and the net profit earned by PFCCL during fiscal 2015 was `21.70 crore as against the corresponding net profit of `26.96 crore last fiscal.
Besides, PFC Green Energy Limited (PFCGEL) was incorporated on March 30, 2011 to extend finance and financial services to promote green sources of energy.
What is your outlook on the Power Sector of India?
The fiscal 2015 was a good year for Indian power sector with (i) highest capacity addition in a single year, of 22,566 MW, (ii) power generation growth of 8.4 per cent, the highest in the last 20 years, (iii) power deficit reduction to 3.6 per cent— the lowest ever, (iv) highest ever increase in transmission lines to 22,100 ckm, (v) highest-ever jump in sub-station capacity to 65,554 MVA, (vi) highest coal production growth of 8.3 per cent in last 23 years and (vii) first time-ever exceed in renewable capacity addition targets.
The Indian power sector, however, is still plagued by structural challenges like fuel supply issues, weak financial health of state distribution utilities, and stressed projects and balance sheets of power developers. The Central Government has already introduced several reform initiatives and measures to address the problems. The uncertainty, post cancellation of 204 coal blocks in 2014, was adequately addressed to by the government through quick reallocation of coal blocks through a transparent e-auction process. The government has also formulated two new schemes aimed at distribution reforms, namely Integrated Power Development Scheme (IPDS) for urban areas and Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) for rural areas.
Additionally, Restructured Accelerated Power Development and Reform Programme (R-APDRP) scheme was subsumed into IPDS. The government has finalised a loss reduction trajectory for bringing down national AT&C losses from current level of 25 per cent to 15 per cent by 2020. To promote efficiency, competition, renewable energy and improve quality and reliability of power, government has approved amendments in the Electricity Act. The amendments envisage ensuring grid stability, competition in distribution sector, operationalisation of open access, strengthening regulatory commissions and tariff rationalisation among others.
On the renewable energy front, solar capacity has been increased by 42 per cent in 2015 fiscal. Out of planned 25 solar parks with capacity of 1000 MW, already 17 solar parks in 14 States have been approved. Renewable energy global meet held in Feb, 2015 attracted commitments of 273 GW. Green energy corridors are being rolled out with an investment of `38,000 crore to ensure power evacuation from renewable energy plants.
On the power transmission front, Government has approved National Smart Grid Mission to bring efficiency in power supply network and reduce losses and outages. About `1,00,000 crore of transmission projects are to be bid out in next one year. To achieve sustainable development of power sector, Government of India has set a long term plans of 24×7 power for all by 2019, doubling Coal India’s production to 100 crore tonne by 2020, increase power generation by 50 per cent by 2020, increase renewable capacity by more than 5 times to 175 GW by 2022 and energy saving to increase to 10 per cent of current consumption.
How can technology help in the Indian power finance sector?
The cyber era is driven by Information and Technological breakthroughs. In today’s competitive scenario, IT and Digitisation are crucial factors for any business. Information system plays the role of ‘enabler and facilitator’, which endows tactical options to officials and is a considerable boost to the quality of administration. Taking a leap into the technological arena, PFC has started keeping digital copies of vouchers, invoices and payments, and hard copies of the existing documents are being converted into digital format.
Taking a leap into the technological arena, PFC has started keeping digital copies of vouchers, invoices and payments, and hard copies of the existing documents are being converted into digital format
PFC has successfully established a stateof-the-art Data centre for ERP and in-house developed applications, which is capable of processing transactional data at a very high speed with zero downtime, for seamless business availability round the clock.
What are the CSR initiatives being carried out by the PFC?
PFC believes quite strongly in fulfilling its responsibility and commitment to society at large. To oversee the activities of CSR, the company has in place a Board-level CSR Committee of Directors headed by an Independent Director. From setting up toilets in schools, as part of the Prime Minister’s Swachh Bharat Abhiyaan, to funding LED lamps in remote, off-grid villages, PFC remains dedicated to fulfilling its CSR commitments. During fiscal 2015, PFC sanctioned CSR projects worth `304 crore.
What, according to you, are the core areas of growth for PFC?
PFC will continue to play a significant role in the overall development of the Indian power sector. PFC prides itself in being at the forefront of the Government of India’s plans for the Power Sector. We are the key implementation partners for three of the Government’s flagship programmes – Ultra Mega Power Projects (UMPPs), Integrated Power Development Scheme (IPDS) and Independent Transmission Projects (ITPs).