“… it is not the power but the productive power that is required by India,” says Rajiv Agrawal, Secretary, Indian Captive Power Producers Association (ICPPA)
 From 1992 onwards, investment in captive power plants (CPPs) was reasonably high. Even the growth of CPPs was much higher than national power growth. In an exclusive interview with EPR, Rajiv Agrawal suggests how one can expect investment to pour in and put up large industries without assured cost-effective power.
With about 51,000 MW, captive power sector forms 18 per cent of India’s total installed capacity. Can captive power plants be the saviours for power-hungry India?Just as land, water and other resources are required for setting up industry, cost-effective quality power from captive power plants (CPP) is also a requirement. If the government wants industries to really grow and more investments as they are asking through “Make In India”, it is very important that discrimination with CPPs should end. The government thinks that the IPPs can provide 24/7 power. They forget that it is not the power but the productive power that is required by India. 24/7 can be a political slogan but in reality India has to catch-up with China’s 67 per cent share of industrial power consumption from 44 per cent level. If you tell integrated steel plant to start the operation without having captive generation, they will say we won’t invest in this plant. Grids can’t guarantee quality of power. We find that public sector powerhouses are selling electricity at Rs 5-11 per unit. Private IPP have PPA at Rs 1.5-3, but the same power reaches the industries at Rs 8. In addition, most CPP are located at the place of consumption, so there are no T&D losses. And this is how CPP are sustaining the country.
How badly is the lack of coal-linkage to CPPs going hurt industries and economy?It is already hurting. For any power intensive industry, mostly converting natural raw materials, the cost of energy form 30-60 per cent cost, depending on the type of industry. If you increase this cost, everywhere down the line the cost will go up. This is where it is affecting the economies. The policies are good, but the process of implementing has either taken them a backseat or is implemented to favour a few.
Why is the investment scenario in this sector becoming sluggish?From 1992 onwards, investment in CPPs was high. Growth of CPPs was much higher than national power growth. It is an open story that when IPP went to Manmohan Singh in 2012 seeking coal, but Coal India assured only 50 per cent. Than under presidential directives, they got FSA for 65-80 per cent. This additional coal is diverted from the share and linkages of CPPs. So how do you expect investment to pour in and put up large industries without assured cost-effective power.
India imported 7.9-million tonnes of coal for the steel and cement industries and 32.8-million tonnes for thermal power plants during first quarter of 2013-14. How can we stop our dependency on imported coal?The way our Indian coal prices are going up; there is already reducing cost benefit for using Indian coal due to shortages, poorer quality by 2-5 grade slippage, increasing taxes, charges and royalty and increasing railway freight. For example, it is on record that from Central Coal Fields Ltd., industries are getting shortage of 150-300 tonnes (3-8 per cent) in a single rack. Despite follow-up from last 2 years, CCL Chairman is not willing or unable to take any effective actions. When 200 tonnes lesser weight was found at re-weighing enroute, as per rules, railways charged higher of the two. And CCL is anyways charging for coal not supplied by it. It only means omission or commission on the part of CCL. Another issue is government obstructing even linkage coal supply to industries for diversion to power houses. Due to this, SECL customers located far away from area could only get 20 per cent of coal in the last one year. They will definitely have to rely on imports.

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“… it is not the power but the productive power that is required by India,” says Rajiv Agrawal, Secretary, Indian Captive Power Producers Association (ICPPA)
 From 1992 onwards, investment in captive power plants (CPPs) was reasonably high. Even the growth of CPPs was much higher than national power growth. In an exclusive interview with EPR, Rajiv Agrawal suggests how one can expect investment to pour in and put up large industries without assured cost-effective power.
With about 51,000 MW, captive power sector forms 18 per cent of India’s total installed capacity. Can captive power plants be the saviours for power-hungry India?Just as land, water and other resources are required for setting up industry, cost-effective quality power from captive power plants (CPP) is also a requirement. If the government wants industries to really grow and more investments as they are asking through “Make In India”, it is very important that discrimination with CPPs should end. The government thinks that the IPPs can provide 24/7 power. They forget that it is not the power but the productive power that is required by India. 24/7 can be a political slogan but in reality India has to catch-up with China’s 67 per cent share of industrial power consumption from 44 per cent level. If you tell integrated steel plant to start the operation without having captive generation, they will say we won’t invest in this plant. Grids can’t guarantee quality of power. We find that public sector powerhouses are selling electricity at Rs 5-11 per unit. Private IPP have PPA at Rs 1.5-3, but the same power reaches the industries at Rs 8. In addition, most CPP are located at the place of consumption, so there are no T&D losses. And this is how CPP are sustaining the country.
How badly is the lack of coal-linkage to CPPs going hurt industries and economy?It is already hurting. For any power intensive industry, mostly converting natural raw materials, the cost of energy form 30-60 per cent cost, depending on the type of industry. If you increase this cost, everywhere down the line the cost will go up. This is where it is affecting the economies. The policies are good, but the process of implementing has either taken them a backseat or is implemented to favour a few.
Why is the investment scenario in this sector becoming sluggish?From 1992 onwards, investment in CPPs was high. Growth of CPPs was much higher than national power growth. It is an open story that when IPP went to Manmohan Singh in 2012 seeking coal, but Coal India assured only 50 per cent. Than under presidential directives, they got FSA for 65-80 per cent. This additional coal is diverted from the share and linkages of CPPs. So how do you expect investment to pour in and put up large industries without assured cost-effective power.
India imported 7.9-million tonnes of coal for the steel and cement industries and 32.8-million tonnes for thermal power plants during first quarter of 2013-14. How can we stop our dependency on imported coal?The way our Indian coal prices are going up; there is already reducing cost benefit for using Indian coal due to shortages, poorer quality by 2-5 grade slippage, increasing taxes, charges and royalty and increasing railway freight. For example, it is on record that from Central Coal Fields Ltd., industries are getting shortage of 150-300 tonnes (3-8 per cent) in a single rack. Despite follow-up from last 2 years, CCL Chairman is not willing or unable to take any effective actions. When 200 tonnes lesser weight was found at re-weighing enroute, as per rules, railways charged higher of the two. And CCL is anyways charging for coal not supplied by it. It only means omission or commission on the part of CCL. Another issue is government obstructing even linkage coal supply to industries for diversion to power houses. Due to this, SECL customers located far away from area could only get 20 per cent of coal in the last one year. They will definitely have to rely on imports.

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