Power tariff will have to reflect fuel prices: Anil Ambani

The company has entered into an alliance with Shell to set up a floating LNG terminal in Andhra Pradesh

Reliance Power Chairman Anil Ambani today said electricity tariff needs to reflect the fuel prices to ensure that power producers and distributors remain in business.

"Power tariffs will have to go up reflecting the reality of the prices of fuel. It is necessary to ensure that generation companies are paid their rates if the power sector is to remain healthy," Ambani said addressing the 18th annual general meeting of the company here.

Stating that power is a major growth multiplier, he laid emphasis on "a very concrete and clear-headed strategy to meet the challenges in the power sector, which is plagued by a host of challenges, such as fuel shortages, cumbersome clearance processes and issues related to land and water availability".

Listing out the achievements of RPower, Ambani said during the past fiscal, Reliance Power has formed a strategic partnership with RWE of Germany, which is the world's largest integrated power and mining company to develop its Tilaiya coal mines.

It has also entered into an alliance with Shell to set up a floating LNG terminal in Andhra Pradesh, he added.

"With 65 MT per annum from domestic mines and 30 MT from Indonesia, Reliance Power will be among the world's largest coal companies," Ambani said, adding its coal resources will not only ensure fuel self-sufficiency for a large proportion of our power plants, but also gives it a sustainable competitive advantage in the marketplace."

In the second quarter of the current fiscal, RPower, which had reported a net income of Rs 867 crore in FY12, partnered with China Datang for technical collaboration. It has also started production at its controversial Sasan coal mines six months ahead of schedule, which has an annual capacity of 20 mt.

The Sasan coal mines is the largest in the country in terms of volume handled, also the fastest allocation-to-production for any greenfield coal mines in the country, Ambani said.