‘India needs to incentivise early commissioning of projects’
January 10, 2017Finance
Sterlite Power CEO Pratik Agarwal feels that the government needs to cut red tapism and incentivise early commissioning of projects to boost the power transmission sector in the country. Sharing lineage with Vedanta Group, Sterlite Power is currently executing 10 transmission projects in 15 States spanning nearly 7,000 circuit km with a capital commitment of approximately $2 billion. In an interview with BusinessLine, Agarwal said that demonetisation has not impacted his business. Excerpts:
The growth of the power sector in India is hinging on the need for infrastructure development. Has demonetisation affected the ongoing projects?
Typically, infrastructure projects do not involve cash transactions except for making payments to contract labour.
We are executing seven transmission projects in different States with the help of thousands of workers. While traditionally workers accept their wages in cash, our partners and contractors have been proactive in assisting them in opening bank accounts to ensure cashless payments of wages.
There will be no impact of demonetisation on any of our ongoing projects.
With supposedly excess power generation capacity in place, the focus is now on transmission. How can the government enable better and faster execution?
India will enter the New Year with 300 GW of power generation capacity and this figure will expand rapidly owing to the government’s thrust on renewable energy.
The government needs to increase its focus on volume and speed of transmission projects. It needs to build transmission ahead of demand, as is done in large countries such as Brazil.
It also needs to heavily incentivise early commissioning of projects and cut the regulatory red-tapism around such early commissioning.
These steps will go a long way in ensuring a robust grid which will become a market enabler and encourage further investment into generation and distribution.
While the Centre can enable larger policy initiatives for the power sector, it is very heavily dependent on States for executing the projects. As a private sector player, which States do you rank higher on your priority list for developing infrastructure?
State governments recognise that electricity is a key demand from the electorate and quite a few of them have a policy framework in place.
Also, the Centre’s UDAY scheme for State utilities will improve their financial health.
We expect the next wave of transmission projects to be State-driven as many of them are strengthening their existing infrastructure or creating new ones to bridge the gap between increasing power generation capacity and growing demands.
Our company has seen encouraging support from many States including Gujarat, Telengana, Jharkhand, Kerala, and Rajasthan. Also, we are getting good support from the 15 States where we own and operate inter-State projects.
How is the land acquisition hurdle being tackled as more private sector players are entering the transmission business?
By law, power transmission projects do not require land acquisition, yet obtaining ‘right of way’ for such projects remains a major challenge.
We can deal with this issue through three channels: by strengthening existing transmission systems, using smarter line routing technologies to avoid challenging corridors, use narrow base structures to reduce our footprint, and use of aerial technologies for construction.
Source: The Hindu Business Line