'We Are No More Restricted To Just Lignite'

Dr Sarat Kumar Acharya, CMD, Neyveli Lignite Corporation India (NLC) talks about his company's portfolio expansion outside lignite in coal and renewable and the ongoing work on acquiring the stressed power assets.

He also shares how his company has pitched to the government about the clean energy cess levied on lignite which makes it less competitive in comparison to the cheaper pet coke.

Post the successful result of the last quarter, how does the new financial year look for NLC India?
The New quarter will be better than the previous one and the numbers will be better than what we achieved in the previous one. In terms of power generation consolidated, we have been up by 27 per cent i.e. NLC and its subsidiaries put together. NLC alone is up by 14.07 per cent in power generation and mining we have been up by 9.14 per cent. For renewable we are adding capacity by 630 MW in Tamil Nadu, out of which we are expecting 130 MW to be commissioned by June 2018 and another 500 MW by March 2019. So far we were restricted to lignite and Neyveli but now it's NLC India with pan-India projects. We are no more lignite based and panning out into coal-based generation and renewable as well.

Coming to the mining, being a PSU are there any particular set of challenges that you face, especially when it comes to taxes?
Yes, we do face the challenges of mine, not of coal but lignite. Coal we are yet to start. For lignite, with the pet coke being cheaper in the market, lignite is not getting shored. Pet Coke doesn't come under the clean energy cess of Rs 400 per tonne as compared to the lignite which has been subjected to this cess. So, therefore, our cost of production added with the royalty and tax, increases and is not competitive in the market to be used.

So has this issue being pitched to the government?
Yes, we have filed a requested with the government. Lignite is a sub-optimal fuel than coke due to its less calorie value. So if you are taxed at the same rate, naturally it will make us less competitive. So we have requested the government if the tax rate could be less, it would be better for the sector overall. Second is the clean energy cess, which should also be levied on the pet coke which is more polluting compared to lignite. It is being dumped from the other countries and needs to come under the purview.

Would that make NCL more competitive?
See lignite is a sub-optimal player. So it is imperative for my cost of production to be competitive. When it comes to cost we have a legacy. There was a fertiliser plant which got closed and the manpower got increased, but the challenge was that our portfolio was not increasing. So this was a major cost challenge. But today, we are not adding more manpower with the existing resources either retiring or shifting to an advisory. This has created a net gap and we have been able to add to our production capacity in spite of less number of people.

Second, we have held back our lignite price line. For the last 2 years, though we have been allowed by our regulatory authorities to index the prices, we have held back.

What about the water evacuation which is another major challenge for the lignite mining…
Lignite is available on a sheet of water, what we call an Aquafarm. So, for 1 tonne of lignite 10 times of water needs to be taken out. Though we have to spend a lot of money on that, unlike coal, but it gives us the satisfaction that the water gets used in irrigation in the areas around and for drinking. And the good part is that we have an advanced technology available.

Last year you floated an expression of interests to acquire the stressed power assets. Has any progress been made on that?
Yes. First, we have zeroed on the power plant of Damador Valley Corporation (DVC) at Raghunathpur, West Bengal. That was to be taken over by JV mode on 76:24 ratio, a majority being ours. Because DVC was created as a corporation with the government of India and other states, we have got clearances from all except West Bengal. We have been expecting the approval to come since last financial year but are hopeful will happen soon.

Another aspect, where NCL has been in talks is the renewable portfolio. You have been very aggressive on that front as well, since the last year…
For the wind, our facility will have 51 MW out of which only 4.5 MW needs to be commissioned, rest all is done. Further, we are looking at another 200 MW plant to be built on. The proposal has already been floated; we are examining the tariffs from the Tamil Nadu government.

In solar we have a 10 MW power plant that is running in operation at the moment and 130 MW is under construction at the Nevyli complex itself, which we will be commissioning around June. 500 MW we have already tendered to be brought in various parts of Tamil Nadu which we are expecting to be commissioned by March 2018. Other than that we are in talks with the government of Orissa, UP, Maharashtra and MP. This fits well with our vision 2025 of renewable energy portfolio of 4000 MW plus.

Speaking of the tariffs, which stewed down so low recently, what are your views on that? Are you following the same model?
The things that are getting reported need to be seen along with the other aspects too. They were subjected to certain conditions and hidden facts. For instance, the cumulative utilisation factor is favourable in that state as compared to the others. Similarly, the evacuation facility, payments guarantee and other conditions were behind the bidding's success.

We do not follow this model. We are into the capex based reverse bidding model, where we invite the solar developers and operators to scout the land for us and supply, erect and commission the equipment on EPC mode and run the power station which has defined parameters for 15 years. Therefore, we follow a solar developer and operator model. We do not follow the tariffs based model.

Any other major plan lined up for the fiscal for lignite?
We will be developing one more mine- Mine 3 at Neyveli complex itself. We have also requested the government to give us two more lignite mines, again in the Neyveli complex, one in the South Vellar and Palam Kothari. This will give us additional capacity by 2500 MW through super critical boiler technology in lignite, which would be first one in India.