Hydropower major Satluj Jal Vidyut Nigam Ltd (SJVNL), the business operations of which were earlier limited to the Nathpa Jhakri hydropower station (NJHPS) in Himachal Pradesh, is rapidly expanding its footprint in other parts of India and in neighbouring countries like Nepal and Bhutan. The PSU has envisaged capacity addition of 3,588 mw over next few years. It also plans to enter new business areas like wind and solar generation, besides power trading. SJVNL chairman HK Sharma spoke to FE’s Noor Mohammad about company’s growth plans. Excerpts:

How has generation been at NJHPS this fiscal?

During April and May, NJHPS has recorded more than 25% growth in power generation over the same months last year. The power station achieved gross generation of 1,366 million units of electricity against 1,086 million units in the same period last year. The reported generation is also 137 million units more than the memorandum of understanding (MoU) target of 1,228 million units.The unit achieved a plant availability factor of more than 100% during the period.

In the fiscal 2009-10, the power station had generated a record 7,018 million units of electricity, which was over 400 million units more than the MoU target set by the power ministry. This fiscal is expected to be even better.

The Central Electricity Regulatory Commission (CERC) has revised the tariff norms for power stations. What is its impact on NJHPS’ revenues and profit?

Our profit should go up from the new CERC tariff guidelines. For example, the regulator has increased the recoverable return on equity (RoE) from 14% to 15.5% in the revised tariff guidelines. Besides, the CERC has also increased recoverable charges on account of operation & maintenance (O&M) from 1.5% to 2%. Also, the normative plant load factor for the plant has been fixed at 82%. If we exceed the threshold, we will get additional profits.

Our downtime for annual maintenance was 50 days in 2004-05, which has come down to 10 days since, leading to higher generation and profitability. Increased cash flows would help us finance envisaged capacity additions.

How much capacity additions have you envisaged?

We are in the process of setting up ten hydro power projects in India, Nepal and Bhutan to add 4,000 mw capacity. Work at the 412 mw Rampur hydroelectric project in Himachal Pradesh is in an advanced stage and the project is expected to be commissioned by 2013. The 775 mw Luhri and 66 mw Dhaulasidh are the other projects being developed by SJVNL in the state.

We have submitted a detailed project report (DPR) for the Luhri hydroelectric project to the Central Electricity Authority (CEA) for its approval after completing the survey and investigation work. Meanwhile, the feasibility report for the Dhaulsidh project has been submitted to the Himachal Pradesh government. Site investigation work for the preparation of DPR is on.

We have also signed agreements with the Uttarakhand government for setting up three hydroelectric projects in Uttarakhand?Jakhol Sankri, Devsari and Naitwar Mori. These projects have been allocated to us for implementation on a build, own, operate and maintain (BOOM) basis.

While DPR for the 252 mw Devsari hydroelectric project is under CEA’s review, we have finalised the preparation of DPR for the 59 mw Naitwar Mori project. DPR for the 45 mw Jakhol Sankri project is being prepared. We expect to commission this project by October 2015.

SJVNL has bagged the right to develop the 1,500 mw Tipaimukh hydroelectric project in Manipur in collaboration with NHPC. SJVNL will have a 26% stake in the project.

We have been allocated 900 mw Arun-III hydroelectric project in Nepal for development. An MoU was signed in March 2008. As per the terms, 21.9% power from the project is to be supplied to the Nepal government free of cost and the balance can be exported to India. To export power to India, the company needs a stable cross-border transmission inter-connection. SJVNL has entered into a memorandum of agreement with IL&FS to pick up 26% equity in Cross Border Power Transmission Company Private Ltd (CPTC), which would lay the required transmission line on the Indian side. Powergrid and PTC Financial Services have also agreed to take 26% and 11% stakes, respectively, in the transmission project.

We have secured the mandatory survey generation licence from the Nepal government. The survey and investigation work is in progress. A feasibility report on the project has been submitted to the CEA.

SJVNL has also been awarded the 900 mw Wangchhu and 486 mw Kholongchhu hydroelectric projects in Bhutan. A pre-feasibility report for the Wangchhu project has been submitted to the CEA for its approval. Meanwhile, work for the preparation of DPR for the Kholongchhu project is under way.

Do you have any business diversification plan?

SJVNL is also exploring the possibility of setting up wind and solar power projects. The company’s board has given its an in-principle approval to set up a 50 mw wind power project. We are looking for a consultant to identify the location and prepare DPR for the project. We also plan to get into the power trading business.

What are SJVNL’s key strengths?

We have gained valuable experience through NJHPS, which is India’s largest hydropower plant and is based in the geo-technically sensitive Himalyan region. The design of the plant is unique in tune with the region’s complexity and it has enabled us to achieve operational and maintenance efficiencies.

We expect to leverage our experience from the NJHPS to develop and operate our future projects.Our experience in dealing with public interest groups, NGOs and local communities as well as in land acquisition should also come in handy in taking up future projects. Ever since the full commissioning of the NJHPS in 2004, we have consistently exceeded the normative PLF fixed by the CERC for the plant.