JSW Energy strongly advocates for SBD and fuel pass through

JSW Energy strongly advocates for SBD and fuel pass throughSanjay Sagar, Joint Managing Director and CEO, JSW Energy talks to Subhajit Roy and highlights the issues that thermal power sector is facing. He raises his voice on NTPC-CIL loggerhead and the need of SBD and fuel pass throughJSW Energy posted a 49 per cent rise in its consolidated net profit for the fourth quarter. How do you react to this?Highly satisfied, we are one of the companies who stood out in this sector. I have reasons to be satisfied.What are the reasons that made you perform well amidst such tough situationsThe answer is very simple! We did not get in to the speculative long term contracts and that is paid-off for us. We sold our power in merchant, What were the short term strategies you had for last one year or so?There were no such strategies to mention. However, two things happened during the last one year. Firstly, we did not tie up our capacities in to long term contract, so we had the advantages. Secondly, almost all discoms in the country started going for the short term tenders due to the absence of clarity on the Standard Bidding Documents (SBD). Will you be able to maintain such kind of growth even in the next year?I don’t see the SBD is coming out clearly or in a universally accepted manner in near future.  So, the short term bids will continue. However, we certainly see some pressure on the merchant tariff as the new capacity is coming-in, in the western and northern regions. But at the same time the coal prices are likely to remain subdued or even moderate a bit given the current economic conditions in Europe. So, if the rupee remains in the band rate that is maintaining currently, then I do not see any reason why we cannot take such performance forward.So, what sort of growth you expect?Well the growth is going to come. The Vijaynagar and the Ratnagiri plants are operating on full capacity. In Barmer plant, half of its come only in the last quarter. So, the growth is going to come from Barmer and this is going to be the first full year operation in this plant with full capacity – that is where the growth is expected from. Otherwise what the other plants are operating at very high PLFs (plant load factors) already we cannot expect improve on those. Vijayanagar plant sustained a high PLF of 101 per cent whereas Ratnagiri plant has achieved a PLF of 89 per cent.When do you expect the SBD to come out?I have absolutely no clue on this, only the govt can answer. How it is going to be beneficial for the power sector?The current bidding document and the bidding process are nearly failed and everybody is in a mess due to these. So, once rationalised, these will certainly benefit. Fuel pass-through is too essential; the govt has encouraged plants to be set up on coastal locations. The plants at coastal locations are not going to be given linkages so they have to be dependent on imported coal. And if you depend on imported coal, you have to allow fuel pass-through and currency fluctuations as a pass-through. So, if SBD comes, at least this aspect will be taken care of and the sector will be benefitted greatly.How it is going to be difficult if the SBD is not implemented?There is lacuna in the bidding process where we realise if we ask for pass-through, we would be nowhere, so we did not bid for those. So, if the things remain same, the biddings documents are not up to the mark and fuel pass-through is not allowed, we would continue to do that, we cannot take risk. We had operated on the imported coal in Vijaynagar and Ratnagiri plants and we have been proven correct by the experience of Adani and Tata. The fuel pass-through is essential.In the press conference, you mentioned that you do not have much long term CAPEX plan as of now. What’s the reason?The reason is there is no clarity on the policy either on fuel or on the sale of power, as of now. So, at this stage it doesn’t make any sense to invest in thermal generation. There is no assurance of coal supply and sell of power. That is the reason we are not anticipating any expansion in thermal side. However, we are going for a small hydro projects – a 240 MW project in Himachal Pradesh which will be initiated this year.You have huge land in Barmer, do you have any plan to set solar power plant there?The huge land in Barmer is essentially for the mining and we cannot put a solar plant on that land as it has coal under it. But, ultimately, when the mines are dug out, we will have huge over burden dumps. And on top of the overburden dumps, we will have lot of land. By that time, I am expecting the solar energy would achieve grid parity or near grid priority. That is the time when we will probably expand it to solar.What are the other long term strategies you have?The long-term strategy is to expand our capacity to about 15,000 MW provided there is clarity on the policy.You have a unique strategy of blending mix of different categories of coal to meet coal requirement, is it going to be a sustainable one?At least for the coming year we expect this to be sustainable. As the discoms are going to continue purchase on short-term and we don’t see the coal price is really jumping in the short term, so it will remain sustainable.What about the long term?For the long-term, unless pass-through is allowed, you cannot move ahead. There is no one willing to sale coal on long-term. Tomorrow if we want to get into a long term coal contract, there is no seller.In recent times, NTPC and Coal India had a loggerhead on quality and pricing of coal, what’s your comment?NTPC is correct because Coal India does supplies boulders and as the fuel supplier they should be held responsible for loss of generation if they don’t supply the fuel. Why should the generator be held responsible or the generator sustain losses?At this juncture, what kind of initiatives you expect from the govt or the policy makers?I think it’s high time to end the Coal India’s monopoly. NTPC has been given a lot of mines. So to a great extent, NTPC’s dependence on Coal India has to come down. NTPC is also initiating its mines now