Damodar Valley Corporation is a unique multipurpose project of India. The DVC has a long successful history flood control social development and power generation for the last 4 years or so it has come under financial pressure. The Chairman of the organisation Andrew W K Langstieh, in his interview with BE's Kishore Kumar Biswas touches upon various problems of the DVC. Excerpts follow :
Q. It is said that DVC has been creating excess capacity of power production by setting up more and more power producing units. This is partly because the demand for power is not as high as it was once thought to be by the Indian planners. Additionally unutilized capacity should have financial impact. What is your take on this issue?
A. It is a fact that DVC went in for massive capacity addition in the 10th and 11th Plan and our recently commissioned 1200 MW Ragunathpur plant and 500 MW Bokaro plant were a part of this planned addition. Today our installed capacity stands at 7790 MW out of which our unutilized capacity is around 1900 MW. So in this situation, DVC in the medium term is not planning any fresh projects. Today our country has adequate installed power generating capacity not counting projects in the pipeline which will come on stream in the next few years, to take care of our country's projected energy requirements in the coming years. DVC in this situation is focused on consolidating its operations and actively looking at retiring some of its old generating units.
Q. What is the amount of payment due from Jharkhand and West Bengal and other power purchasers? After the implementation of UDAY scheme what is the financial position of DVC regarding payment dues? What is its overall financial status?
A. We supply power to several Discoms like Punjab, Kerala, Haryana, MP, Jharkhand, etc. across the country. Jharkhand, which is one of our bigger consumers is paying its current power dues regularly. Post UDAY, Jharkhand has piled up some dues but we are hopeful that this amount will be cleared in 6 installments very soon. West Bengal takes only 50 MW power on regular basis from DVC. Additionally, we have also have around ` 2000 crore of past dues from several customers but these are all tied up in litigation.
Q. What is the present status quo of sharing ownership of the Raghunathpur unit? Has the sharing of ownership of this unit become an unnecessary source of problem for DVC?
A. The 1200 MW Raghunathpur unit of DVC in Purulia district of West Bengal has been a challenge as we have Power Purchase Agreements (PPA) from this plant for only 450 MW. To overcome this situation, we are looking at forming a Joint Venture (JV) with Neyveli Lignite Corporation (NLC), a PSU under the Ministry of Coal, to take over Ragunathpur. NLC has PPAs for around of 660 MW which in addition to the PPAs we have against the unit, will enable the plant to run at full capacity. We hope a JV will come true shortly.
Q. The union power minister is in favour of gradually lowering power production cost to ` 3 per unit. This relates to India’s increasing cost competitiveness. Do you think it is possible for DVC to produce power at or close to this level on future? If yes, how?
Lowering the price of power is an imperative if the national objective of supplying 24x7 reliable and cheap power to households and industries is to become a reality. DVC has pithead plants which should have given us an advantage over other power generators cost-wise. For a variety of reasons however, this has not happened. With the recent measures we have implemented to improve the quality of the coal we get, there has been a significant reduction in our variable cost, i.e. fuel cost. Unfortunately, the gains on this account have been offset by the significant increase in coal prices by Coal India Ltd. and increase in freight charges by the railways in this period. Nonetheless, we are constantly looking at ways to reduce the cost of our power. I am confident that once our dependence for fuel on Coal India Ltd. is reduced which will happen once our Khagra-Joydev and Tubed coal blocks are operationalized, DVC will certainly be able to bring the cost of its production down to the levels indicated by the Hon'ble Minister.
Q. Have you enough source of coal to meet your present and future need? If not what is your plan?
A. Presently 100% of our coal requirement is met by Coal India. As I mentioned DVC has been allocated two coal blocks, Khagra-Joydev in West Bengal and Tubed in Jharkhand. We hope that in about 18 months these mines will be operational. Khagra-Joydev's planned production capacity is 3 million MT per annum and Tubed's 6 million MT per annum. These two blocks will cater to around 40% of our current requirement. We are also trying to locate other suitable coal blocks in the vicinity of our plants which we will then request the Coal Ministry make allotment to DVC. We recognize that fuel security is very important to us.
Q. You have huge unutilized land. Do you have any future plan to set up a renewable power unit?
A. We have planned a 12 MW solar plant at Panchet but beyond this, we are not looking at any further additions to our renewable energy portfolio in the immediate future. Yes, we have plenty of land at many places but in patches and not of the size needed for setting up major solar installations.
Q. How Bengal would gain if the JV comes through?
A. While the JV for the Raghunathpur unit will be a win-win situation for all stakeholders, it will be more so for West Bengal. The State will earn around ` 500 crore per year by way of royalty and cess on coal consumed by the Ragunathpur plant. Operating the plant at full capacity will boost the local economy and create employment opportunities for the people living around the project area. More importantly, the Coal Ministry has assured that East Damaguria coal block which is in West Burdwan district of West Bengal will be allotted to the Ragunathpur plant once the joint venture becomes a reality. This will mean an investment of at least ` 1,200 crore in the State which is the capex needed to operationalize this coal block.
Q. The DVC was established aiming at all round development of people in your jurisdiction. Has the DVC been planning to reduce the role of development? Why?
A. As you have correctly pointed out, DVC was independent India's first multi-purpose project mandated with ushering in all-round socio-economic development in the 24,000 sq.kms. area of the Damodar Valley. CSR was therefore, embedded in our DNA from the day DVC was born way back in 1948. There is therefore, no question of reducing our expenditure on social development. Our CSR activities presently cover 629 villages in West Bengal and Jharkhand. In addition, we run hospitals, schools and ITIs. Once DVC is financially on its feet again, these activities are only bound to increase in scale.