It is a tale of two countries for Anil Sardana, managing director of Tata Power, India's largest private sector power producer. The over-a-century-old company, along with Norwegian partner S N Power, bagged a 236 Mw hydroelectric project at Duger in Himachal Pradesh in April 2011. Work on this has not started. In fact projects worth 3,000 Mw in this area are languishing because there is no road to carry equipment.
Frustrated at road construction not starting for years, the joint venture partners bid for a 400 Mw project in Georgia and won it in May 2013. Work on the project started within six months.
"I will be very happy if I can start the construction at Duger in the next two years," says Sardana, who has now made it his target to add 10,000 Mw of capacity by 2022 in India and abroad. "The India projects may remain at 7,000-8,000 Mw even after five years, and there is a likelihood that our overseas expansion will overtake," he says. Tata Power is setting up 2,600 Mw of capacity abroad.
"In India, the moment the government awards a project, it takes a back seat and leaves everything to you," says Sardana, explaining how the construction of the road in Duger is left to the Border Roads Organisation, which has not put it on its list of priorities. Tata Power's experience in Georgia was different because the government there facilitated the project by resolving issues and construction started within six months.
Sardana's statement comes at a time when Adani Power is expected to become India's largest private power producer after announcing plans to acquire Lanco Infratech's 1,200 Mw Udupi Power Corporation plant last month. Currently, the company has 8,580 Mw of power generation capacity against Tata Power's 8,613 Mw. Once the acquisition is complete, the Tatas will lose pole position in the industry for the first time in a over a century.
Another competitor, Reliance Power, is also catching up fast. The Anil Ambani-promoted company stated it had signed an exclusive agreement to acquire 1,800 Mw of hydroelectric assets of the Jaypee Group. More power plants are expected to come on the block as lenders tighten their noose around highly leveraged companies. But Tata Power is abstaining from acquisitions.
"We have admitted to ourselves that perhaps we cannot manage the system and therefore our qualification to take over those risks is going to be difficult to answer to shareholders," acknowledges Sardana.
His caution is guided by Tata Power needing to preserve cash till the issue of rates at the 4,000 Mw Mundra ultra mega power project is not resolved. Last month, the Supreme Court stayed an order by the Appellate Tribunal for Electricity allowing Tata Power to charge higher prices for electricity produced from this plant. The company had sought a rise in rate to compensate for an increase in the price of imported coal that fuelled the plant. The Supreme Court has directed the tribunal to dispose the matter soon.
About three years ago Tata Power created four clusters: India and SAARC based out of Mumbai; South Asia centred out of Indonesia; Africa centred at Zuurberg; and Middle East and Turkey centred at Istanbul. Sardana made it clear that whichever cluster closed the opportunity would get the advantage of investment approval. And with this he has been able to put 2,600 Mw under progress abroad.
Besides Georgia, there is a 1,200 Mw coal-based power plant in Vietnam, a 600 Mw plant in Myanmar and two plants of 54 Mw and 240 Mw each in Indonesia in the Southeast Asia cluster.
In the Africa cluster 120 Mw of hydropower has started off the ground in Zambia. In the Middle East and Turkey cluster, a large project is being pursued by the company in Turkey.
- Tata and its Norwegian partner S N Power, bagged a 236 Mw hydroelectric project at Duger in Himachal Pradesh in April 2011
- Work on this has not started. Projects worth 3,000 Mw in this area are languishing because there is no road to carry equipment