Firms have a choice to bid or not to bid, says Piyush Goyal

  • Aman Malik, Hindustan Times, New Delhi
  • Updated: May 18, 2015 02:46 IST

From a robust bidding process for ultra-mega power projects to smart metering, a lot of action is likely to be played out in India’s energy scenario in the next couple of months. However, certain issues still need to be sorted out, power minister Piyush Goyal tells HT. Excerpts.

When is the next round of coal block auctions likely to happen?

We have not decided. We are reviewing the demand-supply situation, the availability of coal blocks which have environmental clearances, land etc.

Do you think project viability would be an issue?

From the day we announced the auction of coal blocks, we have categorically announced that the reverse bidding process would operate in a manner in which whoever offers to supply power at the cheapest price would be the eligible winner of the coal mine. It was clear from the auction documents that the bidding guidelines would be revised, so that the benefits of lower fuel charges are passed on to consumers. We have said it in pre-bid meetings, on the floor of Parliament, in media interactions, not once, but several times. So everybody knew that they have to pass on this benefit. I am sure that they (the winners of the mines) are all intelligent, smart businessmen.

Are you saying that project viability is not so much of a concern?

I have to get an honest process in place... your project viability is your baby, how do I know at what price you are viable. You are the bidder. You have a choice to bid, not to bid, how much to bid. So, I have done my process honestly. If you have done your process inefficiently, that’s not my call to bail you out.

Reliance Power recently walked out of the Tilaiya ultra-mega power project (UMPP) in Jharkhand. Is the central government doing anything about it?

The central government only ran the bidding process. All agreements were between the supplier and the states, and I am sure they are taking appropriate action. We have a committee under the chairmanship of Pratyush Sinha (former chief vigilance commissioner), who is studying the entire bidding process, to make sure that in future UMPPs are more robust. The committee is likely to submit its report within the next 30 days.

Will there be a flexibility in the new bidding structure for UMPPs?

It will be hypothetical for me to speculate on that today... as far as that 4,000 (MW) number is concerned, I am flexible. There is a view that there could be 50-100% premium from state to state on 24x7 power supply...

All of these things will be done to scale, will be done more efficiently. I personally believe there should be zero premium on 24x7 power. Certain things including surplus power-generating capacity, transmission corridors etc are necessary for India’s energy security. Otherwise, 24x7 power will bring down diesel imports, and cut off people’s capex requirements on diesel-generation sets, extra inverters in their homes -- the savings will be far greater than the extra capacity they will build for 24x7 power.

How much of the upcoming contracts in transmission are likely to go to the private sector?

In the next 6-12 months, you can see a Rs 1 lakh crore worth of transmission lines being bid out. They (the private sector) will also have an equal opportunity.

What are the likely hindrances to big-ticket investments in both coal and power?

One is at the discom side. We have to work together with states. Another would be interest rates. It is a problem especially in an industry like power, where infrastructure costs are high.

On solar energy, don’t you think land costs and other regulatory issues are prohibitive?

Not at all. We are, in fact, toying with the idea of dollar tariffs, where we see a significant reduction in solar tariffs, coupled with that economies of scale. Once we’ve scaled up from the current 3,000 MW to about 1,00,000 (MW), competition will come in.

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