India Power, Uniper JV to offer O&M, coal blending service: Srei

Srei Infra's power arm India Power has formed 50:50 joint venture with Uniper. The entity is to focus on a broad range of services in the power sector. Uniper, the German energy company has solar, wind, thermal and gas plants. Speaking to CNBC-TV18, Hemant Kanoria, CMD of Srei Infra, said this joint venture will provide services to existing and new power plants and will improve plant efficiency, provide operation and maintenance (O&M) and coal blending services. India Power Corporation (IPCL) has been a power distribution company essentially and has a 2,000 square km distribution.The company is well capitalised and is not looking at fresh infusion, he said, adding, 450 megawatt (MW) thermal plant at Haldia is to become operational by the end of this financial year.Below is the verbatim transcript of Hemant Kanoria's interview to Nigel D’Souza and Surabhi Upadhyay on CNBC-TV18. Nigel: Could you give us details, what does this exactly mean for the company going ahead as well, what can the numbers look like? A: India Power basically created this 50:50 joint venture with Uniper which is one of the largest power company and this is out of Germany. They are a 100 year old company, they are in power generation and they have solar, wind, thermal, gas so what we are doing is that through this joint venture partnership we will be in a position to provide the services to the existing power plants and any new power plant, which is coming up. Basically the services would be on O&M, the services would be on improving the efficiency, the coal blending mechanism which are there, they have very well developed mechanisms to improve the efficiency of the plants and also from the emission point of view because that is something which there is a lot of focus on the Sox and the Nox and how those can be brought in, so basically we have about 200,000 megawatt (MW) of power plants, which are already existing in thermal power plant. There is also about 100,000 MW which is also in the offing. This is a huge market and if we can improve the efficiency, reduced the costs it will help power plants and also it will help in bringing in efficiency to the generation companies which can be passed on to the distribution companies and then to the consumers at large. Because this kind of services are not provided and IPCL is in a position to as IPCL has been expanding its portfolio in the power sector both generation and distribution. This joint venture would not only provide services to its own captive units, but also the market on a large scale. Surabhi: If you could just run us through some numbers, some of the data that we had earlier, our colleague Anisha was pointing out. I believe IPCL total generation capacity was around 100 MW and there was some very ambitious targets to scale it up to 500 MW over the coming few quarters. Are those plans on track and to what extent does this joint venture help achieve those targets? A: See IPCL basically has been a power distribution company, so distribution business is being expanded. It has distribution in Asansol, Gaya, Bodh Gaya so it is having over almost about 2,500 square kilometres and the generation capacity is a backward integration, so 450 MW is coming up in Haldia, which will be starting within this year and then we have other acquisitions which are in the offing also and there is a 100 MW of renewal energy which is to wind, so basically the idea is to expand both the generation and the distribution, but it is an integrated model. Now what this joint venture does is improve the efficiency and the profitability of the present operations, plus it is not going to be limited to what IPCL is doing, but going into the market and getting more of these opportunities, because of a large opportunity which is there in the Indian market.Surabhi: You mentioned about 400 MW right now is coming up, is that wind, is that solar I am just trying to understand because the government is giving a huge thrust particularly on solar, they seem to be favouring solar over wind as of now? A: No, this 450 MW which is coming up is thermal, which is coal based power plant, which is at Haldia, which is almost the first plant is going to start off by the end of this calendar year itself and after that successively 150 MW and 150 MW will be also within this financial year. Basically, 450 MW is already ongoing and on the solar side, we have not put in that much of thrust, because being a distribution company we have to see that how we are in a position to blend the power that we are getting, because the consumers are requiring that is a demand match that we do. We have not gone in a huge way in the solar as yet. Nigel: Could you give us some details, what’s the usual plant load factors (PLFs), have you tied up any power purchase agreements (PPAs), what’s the average realisation, what you are looking to take it to, give us some brief details on those three aspects? A: Basically, as I mentioned again that we are a distribution company, so what we are doing as a generation would get integrated with a distribution model, because we have created an integrated utility model, so there maybe some mismatches sometime their distribution maybe more or the generation maybe more. At this particular time we are more of distribution than generation, so whatever generation is happening will get dovetailed into the distribution, so therefore we may not be going outside and looking for large PPAs to be effected with various other discoms. Surabhi: Is the company looking at raising any fresh capital for a lot of its expansion plans right now? A: No, fortunately the company is well capitalised, so therefore we are not looking at any capital raise in India Power. It is primarily expanding the business, improving the profitability and the return on equity would be the basic target that we are wanting to pursue at this point of time. Maybe next year or year after that we may look at something, but not immediately.