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India needs strict controls to avoid blackouts: power firm

MUMBAI (Reuters) – India needs a more cohesive energy policy and stringent grid management to avoid a recurrence of the power outages that hit hundreds of millions of people this week, the chief executive of Reliance Infrastructure Ltd said in an interview.

Reliance Infrastructure, India’s largest private electric utility, provides power to 30 million people in financial capital Mumbai and political capital New Delhi.

CEO Lalit Jalan said he was unsettled when the power went off while he was visiting a Delhi bureaucrat on Tuesday in a building supplied by his company and that he then felt relieved to learn it was caused by grid failure, not a company lapse.

Three of India’s five transmission grids collapsed on Tuesday, cutting power to states where some 670 million people live. The blackout, one of the world’s worst, followed a similar breakdown across the north the previous day.

The reasons for the failures were still being studied, but the central government has said some states overstepped quotas as a poor monsoon caused greater-than-expected demand by farmers to pump water for irrigation.

“The protection systems did not work, or they were bypassed, or the protocol was not followed – all very serious issues,” Jalan said on Friday.

“The second aspect is overdrawing, so the discipline was missing,” he said, adding that exemplary punishment was needed to enforce discipline in future.

“Depending on how many leaves of the onion you want to open, everything is an issue, and it is not that the issues are not known,” Jalan said. He cited overlapping governance by a number of ministries and states, lack of political will, lack of resources and turf wars.

Jalan said the power ministry did not have total control over the various building blocks of the power sector.

“He (the power minister) has no control over fuel. Coal is with somebody; natural gas is with somebody; atomic with somebody. He has no control over land … he has no control over finance … he has no control over states, so what does he have control over?”

Jalan said, “Clearly there is a need to have an integrated energy (plan), which has been mooted for a long time.”

Jalan also said Delhi could develop a so-called islanding system like that of Mumbai, which ensures the city’s supplies are isolated in the event of a grid failure so that its lights stay on.


Reliance Infrastructure is also involved in a number of road and metro projects across the country, with mixed results.

It operates India’s only airport express metro in Delhi, but the line had to be shut last month following the discovery of construction faults. Jalan said the line, which was commissioned just last year, was unlikely to open for another six months. It was constructed by state-run Delhi Metro Rail Corporation.

Reliance expects to commission one line of the Mumbai metro by the end of March 2013, two years beyond its targeted timeline due to land issues.

Jalan said it was unlikely to proceed with a second line of the Mumbai metro, again due to land-related delays.

As for roads, the company has started collecting tolls on seven projects and expects to start collecting from another three this year and one more next year.

Its pipeline of new projects is otherwise empty after it lost out to more aggressive bidders last year, Jalan said, adding that the company was evaluating 20 to 30 proposals of road asset sales by distressed private companies.

Jalan appeared unperturbed that the cupboard of projects was looking bare.

“I get myself to be debt free and get ready for the good days to show up,” he said.

With a net debt to equity ratio of 0.5 percent at the end of March 2012, the company has relatively moderate leverage, Barclays said in a recent report.

“We are in a brilliant, beautiful spot … We are the lion waiting for its kill,” he said.

(editing by Jane Baird)

Published Date: Saturday, August 4th, 2012 | 02:36 AM

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