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Interview

On the prowl | We are exploring acquisitions in renewable power, Tata Power chief tells V Rishi Kumar

With an installed capacity of over 10,500 MW,a non fossiI fuel capacity of 3 ,060 MW and an aim to increase capacity up  to 20,000 MW by 2025, rata Power Limited, the country's  leading Independent   Power Producer has a lot on its plate. After its several acquisitions, including the renewable  portfolio of Weispun, it continues  to huntwithin  and outside the country for business opportunities. In an interaction  with Business Line, Anii Sardana,  MD & CEO, Tata Power elaborates on regulatory issues, company  plans and the way forward. Excerpts:

 You have recently  crossed  the 3,000 MW milestone   in non-fossil fuel capacity. What is the  pipeline  across solar, hydel, biomass and others?

Tata Power's non-fossil operating capacity is now 3060 MW. We aim to have a significant contribution    of 35-40 percent generation from clean power sources by 2025. To aggregate our clean and renewable energy portfolio, we have initiated the process of carving out 500MW clean energy assets from our books into Tata Power Renewable Energy Ltd, a 100 per cent subsidiary. TPREL's present operating capacity is 1,876MW.We wish to increase our solar businesses significantly as government   is also expected to bid out large scale projects. For wind, we will continue to look at opportunities   as they corne up, both Green- field and acquisitions.

To capture the market for solar, wind, and hydro based generation, we are in the process of acquiring suitable land parcels in several states. Tata Power's non-fossil operating capacity is now 3060. We aim to have a significant contribution    of 35-40 percent generation from clean power sources by 2025. To aggregate our clean and renewable energy portfolio, we have initiated the process of carving out 500MW clean energy assets from our books into Tata Power Renewable Energy Ltd, a 100 per cent subsidiary. TPREL's present operating capacity is 1,876MW.We wish to increase our solar businesses significantly as government   is also expected to bid out large scale projects.

For wind, we will continue to look at opportunities   as they crone up, both Green- field and acquisitions. To capture the market for solar, wind, and hydro based generation, we are in the process of acquiring suitable land parcels in several states.

How is your overseas business in both the fossil and non-fossil segment?   Any new projects in the offing?

We have an international   non-fossil portfolio with an operational wind asset in South Africa and  hydro   assets   in Zambia   and Bhutan. We are evaluating opportunities   to grow globally both in the conventional    as well non-conventional   energy space. The company  has prioritized  seven countries  in We are evaluating  opportunities  to grow globally both in the conventional as well non-conventional  energy space four  geographies    for  international     play. These include South Africa and other sub- Saharan  African countries,  Indonesia,  Vietnam, Turkey and Middle East. In 2016,we commissioned  two units of 60 MW each at the 120 MW Itezhi Tezhi hydro power project in Zambia. Cennergi (Pty) Ltd, Tata Power's 50:50 joint venture with Exxaro Resources in South Africa has running  assets of 229 MW of wind  project. The 187 MW hydro project in Georgia is the largest-ever private hydro power investment in Georgia and the first hydropower project here to be certified by the United Nations  Framework  Convention on Climate Change for carbon emission reductions.

In Bhutan the  126 MW Dagachhu  hydro project  in partnership   with  the  Royal Government  of Bhutan is also operational. While the domestic  market  continues  to remain   the   primary   focus for us,  it  also dawned  on  us that  due  to  fuel shortages, land-availability  and delays in various clearances,  the  pace  of domestic opportunities may move slowly. We are setting up 2,600 MW of capacity abroad.

After acquisition of Wei spun renewable assets, are you looking at more  such initiatives?  I understand   a number of wind assets are up for grabs?

We continue to evaluate all possible opportunities both organic and inorganic. We are committed   to maximizing long term share- holder value for our stakeholders   and are constantly on the lookout for new and exciting opportunities.

How do you see the country’s renewable energy sector faring this year? Do you foresee accelerated   development?

To promote  adoption   of renewable  energy resources,  the  Government  has been  offering various  incentives,  capital  and  interest subsidies,   viability   gap   funding,   concessional  finance,  and fiscal  incentives.  Major schemes on implementation    of solar parks-, solar rooftop have been launched   during the last two years to achieve the renewable energy target of 175 GW by the year 2022. There is an accelerated development   from the renewable  energy ministry(MNRE)   that has also created a road map for the next two financial years, 2017-18and 2018-19.Over the next two years, India is looking  to add 42.6 GW, almost  equivalent  to its cumulative  renewable energy capacity to date. 

There are a number of issues relating  to power  sector  which are yet to be resolved.  These seem to be causing concern to IPPs. What is your perspective?

The power sector still faces many challenges, primarily due to structural and systemic is- sues which have resulted in financial stress for discoms. Distribution remains the weakest link, with the customer not being   at the centre-stage   of the delivery process   and fiscal viability.  Aggregate   Technical   and Commercial (AT&C) losses continue   to be one of the highest across the globe. However, we have examples within the country that prove that it is possible to achieve the bench- mark of low AT&C   losses.

Are there some more regulatory concerns bogging down the renewable   space?  Is GST a major concern?

Some  of  the   key  concerns   include   con strained   inter-regional   transmission    capacities, delay in payment  to  generators,  regulatory uncertainties,    and delays in signing or non-signing  of Power Purchase Agreements (PPAs).Recently, the Union  Power Ministry has told the GST Council that implementing GST in its current  form could push up power generation   cost, especially of renewable  energy, which  will further  dent  the  ability of debt-ridden  discoms  to serve electricity un- less  specific  relief  measures   are  built  in. Solar panels and other equipment   used for power production will crone under GST and for this, the ministry  has proposed   giving either deemed  export status or zero GST rate for renewable  energy.