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  • Kameswara Rao - Leader Energy Utilities and Mining , PwC

    Kameswara Rao

    Leader Energy Utilities and Mining , PwC

    DATE: January 16, 2017, 11:45 AM

    SUBJECT: Where is India's power & energy sector headed and what push could it expect from Budget 2017?

    BUDGET->BUDGET 2017

CHAT CLOSED. READ TRANSCRIPT BELOW

  • MODERATOR:

    Hello and welcome to a live chat with Kameswara Rao, Leader, Energy Utilities & Mining, PwC, on where India's power & energy sector is headed and what push it could expect from Budget 2017.


    KAMESWARA RAO:

    Hello, everyone


  • P

    PIRAJI

    It seems nothing new is happening in the power industry? Are there any hopes after the Budget? Where are we in comparison to the world?

    KAMESWARA RAO

    In fact, there has been substantial progress: we have crossed 300 GW in capacity; serious supply shortages are history; and active policy support to green energy is delivering results. Globally, despite the slowdown, we are one of the fastest growing energy markets. This is why global investors continue to focus on India.


  • R

    R KHARE

    After allocation of private coal blocks, what is the status of production from these mines?

    KAMESWARA RAO

    There is some delay because of the complex nature of the transition viz., in taking over the assets, getting certain consents, issues of stamp duty etc. Also, new mine operators had to be procured or old contracts re-negotiated. Having said, the progress is creditable so far (about 30-35 MT). It will further improve with global coal prices having doubled in last one year


  • V

    VISHWAJEET SINGH

    How much excess capacity is there in the country, region-wise?

    KAMESWARA RAO

    It depends on how we define this (in terms of timeline and coverage). In the present instance, low PLFs at 55-60% suggest "excess capacity" but in terms of capacity that can be scheduled to meet peak demand, we have a thin margin i.e., just about sufficient. So, in my view, looking at the demand forecasts, we still need new capacity to be built


  • R

    RAJASHANKAR

    Given the current low levels of capacity utilisation, when do we expect revival in order books of capital sector industries? With reduction in cost due to technological improvements in solar power and storage systems, will there be a slowdown in new capacity addition for conventional power?

    KAMESWARA RAO

    There has been a sizeable capacity addition (100 GW) over last five years which has hugely reduced the shortfall. For now. The demand is likely to bounce back with large investments in corridors, transport, and growing commercial and domestic use. We should start to see order book in conventional too revive in a year's time.


  • R

    R KHARE

    Which are the mines from where production is yet to start? What is the future of non-producing mines?

    KAMESWARA RAO

    Several of the currently non-producing mines face practical local issues in starting development works. There is a monitoring process and there is a good case to allow some additional time to meet their production plans. Let's also not forget the main purpose of this viz., to mitigate supply shortages; and we should focus on adequacy of supply (which there is) rather than on meeting some pre-fixed production targets.


  • R

    R KHARE

    Have the non-producing mines retrenched employees?

    KAMESWARA RAO

    It's hard for me to comment as I do not have the visibility.


  • R

    R KHARE

    Do you think de-allocation and again start from scratch on allocation of the mines was in the interest of industry / nation?

    KAMESWARA RAO

    I believe the policy evolution for resource allocation is in national interest. Many other countries too have gone through similar process in different sectors, namely, how scarce resources are to be allocated when market demand for it evolves to an economic scale. In our case, we have the additional benefit of fiscal transfer to the states.


  • S

    SOHAIL KHAN

    Has the health of SEBs and discoms improved? How much power can they supply? Do they bill and how much do they recover?

    KAMESWARA RAO

    The financial health of utilities was impacted by both, ongoing operational losses and debt overhang. The debt largely incurred to cover operating losses is addressed in the scheme, but not operating losses. These operating losses, on average are 18-20% of cost - so, the financial health continues to deteriorate to extent not covered by subsidy and tariff increases.


  • Y

    YASH MITTAL

    Solar tariff has been coming down. At the current pace of capacity addition and tariff, does it threaten thermal and hydro power?

    KAMESWARA RAO

    These are two different asset-classes and it's not possible to compare just on pricing. For the hydro projects, we must take into account their longer project life (2-3 times of other projects) and ability to provide peak and ancillary support. They are highly cost effective in the long run. Further, the recent gains in solar pricing (besides panel costs) were achieved by provision of infrastructure in solar parks and improved credit profile with central sector agencies acting as counterparty.


  • M

    MIMISHA OJHA

    What's the current demand-supply scenario, monthly and year-wise?

    KAMESWARA RAO

    The details are readily available on the CEA portal. In short, the demand - supply gap is now less than 1% which is mainly in the northern and north-eastern states.