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SEP 10 2014

`It is better if power firms focus on core areas'

  • Economic Times, ET Bureau / Hyderabad
  • Created: Wed 10th SEP 2014

Expanding the energy basket is a logical path for any company in the power sector. But the Government thinks otherwise. The Power Ministry is exploring the feasibility of consolidating all State hydro power projects under NHPC, while transferring all thermal units to NTPC. Piyush Goyal, Minister of State (Independent Charge) Power, Coal and New and Renewable Energy, said it is only a `thought' that he had over the course of review meetings at the Ministry.

"Nothing has been formalised if something better emerges, we could consider that as well," he told Business Line .

The `idea' is to merge the hydro projects of SJVN Ltd, NEEPCO (North East Electricity Power Corporation) and THDC Ltd with NHPC.

Even if still at the concept stage, the idea has already attracted opposition from other smaller and regional players in the hydro sector. Goyal said this plan emerged after he noted in his review meetings that public sector hydro power companies were foraying into thermal power generation while those in thermal generation are getting into the hydro-elrctric area.

"It is better if each concentrates on their core areas, I feel," the Minister said. Industry trackers believe there is merit in this argument. "It would be best if NHPC focussed on hydro and NTPC on thermal alone as the skill-sets needed for both are distinct and no meaningful purpose may be served through an overlap across the two skill-sets," said Kuljit Singh, Partner, Infrastructure Practice, at global audit and consultancy firm EY.

"It is clear that hydro projects need significant technical expertise and are prone to unpredictable externalities, such as poor geology, and all of these result in very elongated time periods for hydro power commissioning," he added.

NHPC has signed agreements with Bihar and Chhattisgarh to set up thermal power plants in the two States.The company plans to set up a 1,320 MW plant in Bhagalpur, Bihar and another 1,320 MW plant in Chhattisgarh.

SJVN Ltd entered the thermal power space by deciding to execute the 1,320 MW Buxar Thermal Plant, for which the company has been allotted a coal block in West Bengal.On the other hand, NTPC is set to begin operations at its first hydro power plant in Koldam, Himachal Pradesh, with a capacity of 800 MW.

The company is also building a 520 MW hydro plant in Tapovan Vishnugad, Uttrakhand, and a 171 MW unit in Lata Tapovan, Uttarakhand.Opposing the proposal, SJVN has said that the proposed merger of all projects under one entity is likely to raise the existing hydro electricity tariffs.

The entire process is likely to delay the project completion, leading to increased costs and, ultimately, higher tariffs. It is against the public national interest if a company has 10-15 mega hydro projects simultaneously under construction, SJVN said in a letter to the Power Ministry.

Project implementation

It said that the three hydro power companies with NHPC will lead to the "diffusion of attention of top management" in addressing the issues of project implementation.

Currently, NHPC has around 3,010 MW of hydro power capacity under construction at six locations while SJVN Ltd has around 3,180 MW of capacity at its nine locations, all of them at various stages of development but not yet in the construction phase.

Goyal said this idea emerged after he noted in his review meetings that public sector hydro power companies were foraying into thermal power, while those in thermal generation are getting into hydro electric generation.

Tags

Uttarakhand Bihar West Bengal North Eastern Electric Power Corporation Limited National Hydroelectric Power Corporation Ltd. Renewable Energy Coal THDC Ltd NTPC Ltd Energy Minister of State Indus Power Electricity

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