We could easily treble our capacity if the right opportunity was available: Rajiv Mishra

Interview with MD, CLP Power India

After making an initial investment in a 655-Mw, gas-fired power station in Gujarat in 2002 and then moving on to the wind energy segment, CLP Power India, the Indian arm of Hong Kong-based CLP Holdings, recently synchronised its first thermal power unit in the country, at Jhajjar in Haryana. Coming at a time when most of the new players’ investments in the sector are stuck, giving rise to concerns among financial institutions, managing director Rajiv Mishra tells Jyoti Mukul his company is constrained by opportunities, not finances. Edited excerpts:

How do you assess the company’s journey in India?
The parent company has overall market capitalisation of $20 billion and is among the largest of Asia-Pacific power companies. We have been in India for 12 years and are the largest foreign investor here in the power and renewable energy sector. We have 2,700 Mw of gas, coal and wind power generation plants, of which a 655 Mw gas-fired plant in Gujarat has been operating for 12 years. We recently synchronised the first of the two coal-fired units (660 Mw each) at Jhajjar. We expect to commission the second unit in a couple of months. We will also have 740 Mw wind (energy), of which approximately 500 Mw are already commissioned. The balance will be commissioned by March next year.

 

How do you perceive the fuel supply situation, for both coal and gas-fired stations?
Our entire fuel is tied up and yet we are facing problems. Gas is available as in regasified LNG (liquified petroleum gas) but is expensively priced. In the case of gas, there is availability but the problem is of affordability. In the case of coal, it is both. There is, clearly, a shortage in the domestic market but we have just commissioned our first coal unit. For the entire 1,320 Mw, we have a 5.2-million tonne linkage with Coal India (CIL). At the moment, we have got coal just for commissioning. The period of steady supply has not started. It is clear the solution will be a combination of supply from CIL as well as imports. For instance, we have been recently informed by the Central Electricity Authority that our plant will have to import a million tonnes in 2012-13. That tells you the expected import quantity.

What kind of problems do you visualise in the sector and when do you see these being resolved?
We are optimistic about the Indian power market in the long term. There is tremendous scope because India has one of the lowest per capita consumptions in the emerging world. In the immediate term, there are two major challenges—supply of fuel and the offtaker’s ability to pay. For any new investment, we have to make sure those two are in place. We would happily invest in projects which mitigate these two risks. It is a very project-specific philosophy we adopt. In the current market, we will be happy to bid for a domestic coal-fired UMPP (ultra mega power project), which comes with its own coal mine. In projects where one or both are not present, it would be difficult to get board approval. We will be interested only in pit-head UMPPs. We remain optimistic in the long term.

How comfortably are you placed on gas supply for the Gujarat plant?
Our total requirement for full capacity is 3.14 million standard cubic metres a day (mscmd), of which 30 per cent is domestic, which has been tied up with Cairn for 0.98 mscmd and with Reliance (RIL) for 0.98 mscmd. The remaining 70 per cent is imported regasified LNG, of which 0.36 mscmd is contracted RLNG and 1.8 mscmd is sourced on a spot basis.

What has been the per-unit increase in power cost due to the gas price hike? Have you been able to pass it on?
The per-unit fuel cost on RIL gas currently works out as Rs 1.61 a kwhr, contracted RLNG at Rs 3.8 a kwhr and spot RLNG at Rs 6.23 a kwhr. These are only indicative and depend on many factors such as load factor/load variations/fuel –mix proportion but, for us, fuel is a pass-through. We only take up projects where we have the ability to pass on fuel cost. We do not take a speculative position on fuel. We do not believe power producers are in the best position to do that. The year before, spot prices of gas were higher.

What are your plans? Will you tie-up with any company?
Our total project investment is Rs 12,000 crore. We could easily double and treble our capacity if the right opportunity was available. We do not have a fixed megawatt target. We have the experience and expertise but one has to be realistic. We do not want to get into distribution. In transmission, though we did bid, we did not win projects. All our investment is wholly-owned but if there were a partnering opportunity, we would like to a tie-up where we have the majority.