PM meets power CEOs; Assures reform before lights go out

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PM meets power CEOs; Assures reform before lights go out

A power-packed series of meetings between power company CEO's and the government today ended on a positive note with prime minister Manmohan Singh promising decisive action to avert a power crisis in the sector.

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Excerpts from India Business Hour on CNBC-TV18 Watch the full show » ALSO READ See latest News about Coal India See previous management interviews See what other Experts & Brokerages are saying about Coal India Coal India BSE | NSE 29/05/12 Are Mutual Funds betting on Coal India?

A power-packed series of meetings between power company CEO's and the government today ended on a positive note with prime minister Manmohan Singh promising decisive action to avert a power crisis in the sector, reports CNBC-TV18's Rituparna Bhuyan and Anshu Sharma.

Pulok Chatterji has been appointed by the PM to fast track some of these pending issues. While on the job, he has to monitor the sector with a 90 day deadline to re-charge the beleaguered power sector.

On today's series of meetings, Ashok Khurana, director general, Association of Power Producers said, "All issues related to the power sector were discussed. Fuel issues and related pricing issues were put before the PM and ministries. Captive mining issues and gas allocation issues were also discussed."

Post the half hour meeting, CNBC-TV18 learned that the PM assured the power sector CEO's of quick action including:

- Forming a Committee of Secretaries to look into the sector
- Setting a 30-60-90 days target to push sectoral growth
- Power Sector EGoMs To Meet in quick succession
- Coal, UMPP, gas EGoMs will be meeting shortly
- The EGoM On UMPP's meeting will take place on Jan 24 itself

But plagued by delayed environmental clearances and acute coal shortages it might not be an easy recharge process for the sector though power minister Sushil Kumar Shinde said that the budget is likely to provide clarity on the issue of duty on imported power equipment.

One of the power companies' problem was the signing of the FSA or the fuel supply agreement. On that Shinde said, "We have been asking for
FSA for the power sector because without them power plants will not be feasible."

Environment minister Jayanthi Natarajan said, "Power producers asked for clarity on policy and Power producers asked for clear timelines, so that they can plan their investments and work."

All eyes are on what happens over the next 90 days after which the power CEO's will have another meeting with the PM to asses the situation.

Anil Ambani, Cyrus Mistry, Anil Agarwal - it was a power packed list of CEO's meeting with top government functionaries including the coal and power, finance minister as well as the PM through the day today. 

Anil Ambani once again emerged as the master of ceremonies, says CNBC-TV18's economic policy editor Siddharth Zarabi. By rallying the troops after what he did for the telecom sector, he is now trying to do it for the power sector by getting them to put up a common front before the government and getting to meet people in one day that is the distinguishing feature which seems to be working.

The sector is faced with key structural issues that have sort of come to head over the last couple of years. It is a problem of coordination as well as in some ways a creation of this very government.

Coal being the largest fuel for India's power production accounting for well over three-fourths, not a single FSA has been signed by Coal India with any private sector developer since March 2009.

42,000 megawatt of constructed, ready to go on air capacity does not have fuel linkages. So 42000 megawatt would be available immediately for the national grid but is not happening because of Coal India.

We heard coal minister Shriprakash Jaiswal appear to reject a suggestion with regards to pooling of coal, which is an alternative suggestion even as Coal India ramps-up production. What are the basic numbers there? Power demand is growing at 9% compounded annually. Coal production by Coal India is growing at only 6% which is a huge gap that can't be met.

Gas - issues of production as well as priority of allocation, fertilizer continues to get priority although there are issues around import.

The next is the self created controversy by Jayanthi Natarajan's predecessor, the no-go issue with regard to coal mining blocks. One ministry hands out blocks, the other ministry says your data is not enough, we won't allow it. All of this really has happened in two years.

A month back, the issue of surplus coal for already allocated mines has not been sorted. The Coal Ministry does something then the Power Ministry announces something and is then taken off the website in half an hour. All of this at this stage is drawing the attention of the government to these issues.

If half of these issues are addressed, we would have 42,000 megawatt available in a very short time to feed the power deficit to reduce it. At this stage if the government doesn't do it then it will probably be too late to do anything about this sector.