Rel Power CEO defends commissioning date of Sasan unit

Reliance Power has landed into a controversy over the commissioning of the first unit of its 4,000 megawatt Sasan power plant in Madhya Pradesh. The company's CEO, Jayarama P. Chalasani, defends the move during an interaction via a video conference with Anilesh S. Mahajan. Edited excerpts:

Q: There are allegations the Sasan unit did not meet the required conditions during the commissioning test. What happened?

A: This (unit) was scheduled for commissioning in March. This was agreed by all procurers. Even if others are telling you that it is done only to take all year's tariff in one day, it is all false. They all knew that the tariff period ends on March 31. The March date was agreed almost six months back. As per the PPA (Power Purchase Agreement), May was the deadline but we decided to do it in March. Everybody knew that if this is commissioned in March what will happen according to the PPA.

Now comes what happened during the tests. There is full correspondence between us and WRLDC (Western Regional Load Despatch Centre). They gave us in writing that there is a grid restriction because of the holi festival and low demand. There is a process for tests. The buyers' representative (Madhya Pradesh Power Management Company is the lead buyer) and the independent engineer both stayed at the plant. They saw the load was not going up because there were restrictions.

On the last day, after 63-64 hours of the test, WRLDC said now you tell us your plan. They did not say we allow you. They said, depending upon the grid condition, we may allow you to take full load. Now, it is 72 hours of continuous operation tests. A unit of 660 MW you made it run on a low load of 130-140 MW, it is not a joke. It is always easy to run a unit on 500-550 MW, but not at 130 MW. It is very tough, because it is running on oil. Coal has to be supported by oil. You burnt oil in the boiler for 60-odd hours.

The simple question which was asked on the particular day to the independent engineer and the lead buyer's representative was what is important - reaching full load or continuous 72-hour operation. It was clearly said that for 72 hours this operation has to run. We told WRLDC that this is the condition of the boiler, obviously we cannot do this now. At 8 pm the test completed. The independent engineer gave his certification. Obviously, supercritical parameters could not be reached because it could not reach that load, and similarly the ramping rate could not be certified as the test was not done. This certificate was given to WRLDC, which accepted the commissioning in writing. And WRLDC said it is willing to schedule the power up to 101 MW. Next day, the lead buyer wrote a letter to us with copies to all other buyers accepting the commercial operations date (COD). Then there is process under the PPA for retesting. WRLDC asked us to take these letters from all the buyers accepting COD.  Every buyer, Haryana, Punjab, Rajasthan, Uttar Pradesh, Uttarakhand, and the private companies from Delhi - including Tata Power's NDPL - accepted the COD.

Q: The PPA says that, for achieving COD, the unit shall achieve 95 per cent of the contracted capacity, or in your case 620.4 MW generation, for 72 hours.
A: This provision is there in clause 6.3.1 (of the PPA). If you do not achieve it, then there is a provision in 6.3.2. If that is the only case then you do not require other provisions. The letters speak about 6.3.4, that they accept the COD under these circumstances. The implication of this clause is once you accepted the COD at 101 MW and till we do the retest, the capacity charge would get reduced in the same proportion. Thereafter, you have eight repeat tests in 180 days to increase the capacity. Till that time the fixed cost is reduced, the PPA is very clear on this. So in this case, out of 70 paisa tariff, the impact will be on the fixed cost of 12.5 paisa per unit which would be reduced. We just have to do the retests. We have reached 600 MW and already tested supercritical technology.

Q: Are you ready to de-rate the capacity?
A: This is exactly what these letters (from buyers) are saying. There is no question of me accepting this. It is a question of only one month. How does it make any difference? There are questions that the PPA does not provide provisions of the COD at a lower capacity. But I am clearly saying that the PPA has provisions. The only consequences are that till the time a higher capacity is re-established, the fixed cost gets reduced. Permanent de-rating comes after 180 days. Today, under the PPA there is no issue. The independent engineer says he has no issues, all the procurers including the private players say they have no issues. Then where is the problem?

Q: WRLDC has moved the Central Electricity Regulatory Commission (CERC) seeking quashing of this COD…
A:  They have no locus standi to question the COD. They were asked by the quorum of CERC that if they believe the COD was not done why did they agree to schedule the power, to which they had no response… (WRLDC) is nobody to tell me if the COD is done or not. The COD is between me (Sasan Power Ltd) and procurers. If there is a dispute it has to be between me and procurers, which anyway they gave it to me in writing…

Q: WRLDC is also saying that your plant is not stable and is tripping regularly, and it is not good for the grid…
A: There is no plant in this country which does not trip in the first four to five months of the stabilisation period… But when you run your plant on 20 per cent of your capacity, you are bound to trip more… Even during the test the plant was run for 72 hours. There should not be any problem to anyone. WRLDC is coming into the picture because I am accusing it of not giving me full load… If we try to understand the grid system, the grid comes into a problem if more than 20 per cent of its capacity trips. If someone is saying that with the tripping of a 660 MW unit the western grid is in danger, it could be a joke. The capacity of WRLDC is much larger. A one 660 MW unit is nothing.

All I am saying is that during the tests WRLDC did not give me load… (WRLDC) took the exactly opposite stand in another case involving another private power producer, where they said they have nothing to do with the COD.

Q: But WRLDC defended this by saying that these were two different incidents.
A: Obviously, they will say this. How can you take two different stands? The COD is an issue between us and procurers… If the procurers say they don't accept this COD, there is a mechanism in this PPA to resolve the issue… I got consent from Madhya Pradesh, which has the right to take decisions on behalf of all the procurers, as per provisions in the PPA. WRLDC unreasonably asked me to get consent from all the procurers. It had no business asking me for this. But I still went to them to get their consent.

Q: But at CERC these procurers are also objecting to the COD in separate petitions. Moreover, Haryana is supporting WRLDC's petition officially…
A: This is exactly what I am saying. They may say anything now, but they gave their consent to me in writing… The CERC only has jurisdiction on tariff-related issues. If they (buyers) have any dispute they can go for arbitration, but I am sure they will not go. Because they know the moment they move this, I will show them the letters they sent me.

Q: If WRLDC was not giving you load because of restrictions, wasn't it a better option to reschedule the test for some other day?
A: For me the commissioning had to happen in March, for which everyone agreed. Why should I reschedule the test because of someone else's mistake?

Q: You could have come out much cleaner. Nobody would have questioned you …
A: Everyone knew that this unit is achieving COD in March. They gave the consent in writing. There are no aspersions and aspirations in this. They knew that this power is available on this tariff only for a few days in March. They agreed to it.

Q: But they would have expected COD at 620 MW, not at 101 MW…
A: The COD had to happen in March because the tariff year was ending. There were commercial interests of the company… It was a commercial decision, because the tariff year will change.