Mumbai: Tata Power Company (TPC) was once the country’s largest power sector players. In 1911, it began generating power and also held distribution licences in Mumbai, Delhi and Hyderabad (the last through another company — Andhra Valley Power — which subsequently got merged into TPC).
Then, thanks to government policies in post-independence India, power generation was confined essentially to the government sector, and TPC could not expand.
Then in 2003, the power sector was opened up to the private sector, and TPC began rousing itself up from a lengthy imposed slumber.
It now plans to get back to its former glory and become the largest private power sector player in the country once again. If TPC’s plans work out as envisaged, it should be producing 25,000 mw of power by 2017.
Unlike many players in this sector, it will be active in thermal, hydro and even clean fuel-based power generation (solar, wind and the recycling of waste gases).
As Banmali Agrawala, executive director, strategy and business development, TPC, puts it, “We want to ensure that at least 8,000 mw to 10,000 mw will be from low carbon, or zero emission technologies like hydro, solar, wind or from hot gases. Today, 20% of our power comes from clean technologies. This may go down in the near term, but we aim to have at least one-third of our power through such sources.”
Another feature that differentiates TPC from many other power producers is that it (like Adani Power) wants to ensure that at least 80% of its power is sold through long-term purchase agreements (PPAs), and not more than 20% through the energy exchanges as merchant power.
“This ensures that we face less market risk, and also that there is no interruption in our generation either,” adds Agrawala.
Not surprisingly, in February 2001, Tata Power won the gold shield award from the ministry of power, Government of India, for its distribution business.
It also won the silver shield for its Trombay Thermal 250 mw Unit-8 generation facility as the second best fastest completion of a power station in the country for 2008-09.
As Prasad Menon, managing director, TPC, put it, “The awards reiterate Tata Power’s experience and execution skills in both the generation and distribution business.” However, the best recognition of TPC’s prowess and capability appears to have come from both the power regulators and the common people of Mumbai, as it became the most preferred power supplier in the city.
It may be recalled that Maharashtra Electricity Regulatory Commission (MERC), the state regulatory body, after directions from the Supreme Court, permitted TPC to supply power to areas serviced by its competitor Reliance Energy.
By December 2009, almost 50,000 requests poured into TPC’s office expressing a desire to switch over from Reliance to TPC.
By January, TPC weeded out 25,809 of these applications - as they had completed their documentation as required for them (Residential - 19,259; Commercial - 4,779; Industrial - 1,771). And by February, TPC had successfully effected the conversion of 18,215 Reliance Energy consumers to the TPC network.
Then, in February this year, the courts ruled that even consumers of the Mumbai municipal corporation managed BEST could switch over to any power distributor they liked. Applications from BEST consumers have now begun pouring in.
The reason why consumers have opted to switch over to TPC is because its tariffs are lower than those of both Reliance Energy and BEST.
The higher charges of its competitors are on account of a considerably higher cost of procuring electricity from other sources or because their costs of distribution are very high, or because of faulty metering. In some cases, all the three reasons have contributed to a surge in power tariffs.
There are instances where TPC’s tariffs have been around half those charged by their earlier power suppliers. In the case of commercial users, this could mean a saving of anywhere between a few thousand rupees to a few lakh rupees every month. This switchover itself is likely to see TPC’s load requirement for Mumbai to virtually double from the existing 480 mw annually to over 800 mw by 2011-12.
It now remains to be seen whether the courts permit consumers of other cities too to opt for a power distributor of their choice.
Once that happens, it could make consumers decide whether accepting the offerings of a particular power supplier was worth his money or not.
While the consumer distribution business has already brought TPC into the media limelight, it has begun quietly working on other fronts as well. For instance, unlike many other players, TPC is actively involved in setting up power plants in other countries too - notably Nepal and Bhutan for now.
It has already taken up equity stakes in hydro-electric power projects in both countries, and is looking at other countries as well.
At the same time, TPC also plans to take advantage of the government’s incentives for solar power and hopes to generate at least 300 mw within the next 3-4 years.
TPC is also upgrading its transmission lines, acquiring at least two Korean ships and working out long-term charter arrangements for six other ships to ferry the coal it will require for its power plants.
It may be recalled that TPC already owns significant coal reserves in mines it has acquired in Indonesia, thus securing its future requirement of this fuel. It will thus get involved both in coal mining (even in India where it has captive coal mines) as well as in shipping. All this in addition to the business of power generation, transmission and distribution.
Clearly, TPC’s managers will have their hands full in the years to come.