Inadequate, costlier fuel risk for power sector: Tata Power

Insufficient availability of coal coupled with costlier imported fuel pose a risk to the growth of India's power sector, Tata Power said.
"Domestic coal supply remains a big concern as the current supply growth is inadequate to meet the growth in capacity addition in the power sector," the company said in its Annual report.
Volatility in international coal prices and exchange rates are a potential risk, it added.
"The imposition of export restrictions or levy of taxes by energy exporting countries could make the cost of imported energy into India further more expensive and unaffordable for the common man," it said, adding that the delays in land acquisition, environmental clearances and other approvals remain areas of concern.

The country's domestic capacity is heavily skewed towards fossil fuels, and this impacts quite negatively from an environmental perspective, Tata Power said.
The poor financial health of the state electricity boards along with the rising cost of generation creates further stress due to inability of discoms to procure power at higher costs with the possible risk of generation assets getting stranded, it said.

"Shortage of domestic gas and expensive LNG imports affects the financial viability of gas-based power plants," it added.
The process of correcting the current state of financial stress of the discoms is a long term process and will continue to impact growth in the sector.

The company said that lack of water is another threat to the capacity addition plans as about 79 per cent of the upcoming capacity will be in areas of water scarcity.
"There is a need to address this through de-salination plants or developing coastal power plants," it added.
Tata Power said its key strategic risks and concerns are timely resolution and implementation of compensatory tariff issue and de-allocation of captive coal mines (Tubed, Mandakini).
It added however that for domestic and global market forays it has made adequate assessment of the risks and returns associated with each investment is carried out and appropriate mitigation measures are put in place.

CERC had allowed Tata Power to receive a compensatory tariff for its 4,000 MW Mundra ultra mega power project in Gujarat on account of increase in the cost of imported fuel.