BackDamodar Valley Corp eyes new sectors
Firm plans to produce cement, shale gas and coalbed methane, build industrial parks, distribute electricity, enter tourism
Premium(Ramesh Pathania/Mint)
New Delhi: Damodar Valley Corporation (DVC), which controls floods in eastern India, supplies water for irrigation and drinking, and generates power, now plans to diversify by producing cement, shale gas and coalbed methane, building industrial parks, distributing electricity and entering the tourism sector, chairman R.N. Sen said.
DVC, which expects to earn an annual revenue of ₹ 7,000 crore in the last fiscal, has also been approached by Japan’s largest utility, the Electric Power Development Co. Ltd, which operates under the J-POWER brand, to set up power projects in India through a joint venture. To start with, J-POWER has proposed the replacement of two units at DVC’s Durgapur power plant with funding from the Japanese government.
“J-POWER wants to put in equity," Sen said. “We have asked them for technology transfer."
J-POWER couldn’t immediately be contacted for comment.
There have been significant changes in the Indian power sector, such as orders by the Central Electricity Regulatory Commission allowing Tata Power Co. Ltd and Adani Power Ltd to charge higher prices for electricity produced at their plants in Mundra in Gujarat that use imported coal as fuel. Tariff hikes, an initiative to restructure the debt of state electricity boards and steps to boost fuel supply have triggered hopes of a recovery in India’s power sector.
“The narrative of the Indian power sector is changing," said Deepak Amitabh, electricity trader PTC India Ltd’s chairman and managing director.
DVC, India’s first multipurpose river valley project, has an installed power generation capacity of 7,209.2 megawatts (MW); it plans to raise it to 13,000MW by 2022 and 20,000MW by 2027. The DVC Act of 1948 mandates it to operate within a 25,000 sq. km area covering the states of Jharkhand and West Bengal.
“We already have prepared a road map according to our corporate plan. We are working on that," Sen said. “The finances for power project expansion has been tied up."
DVC plans to be present across the energy value chain.
“We are talking to the government about shale gas and CBM (coalbed methane) and other things. We are working on that. I am only looking in my common area," said Sen.
India is working to finalize a policy framework for commercial exploitation of domestic shale gas reserves and launch auctions for shale gas blocks. Shale is fine-grained sedimentary rock containing organic material, called kerogen, which, when distilled, can produce oil and gas. CBM, which could be a viable alternative fuel for several industries, is a gas found in coal seams.
“We are also talking to both the states for getting into industrial parks. I will give land where I will be in a position to give power, water. I have some land also. Let us start with that as a pilot project," said Sen.
DVC owns large tracts of land. It has around 900 acres at Panchet and 1,000 acres at Konar in Jharkhand and 100 acres at Panagarh in West Bengal. It has submitted a proposal for developing tourism and setting up hotels and resorts at Maithon in Jharkhand.
“We are a social organization. Power is not our main business. Our main business is working with people," Sen said.
DVC, which has been facing problems at some of its coal mines and projects such as Saharpur-Jamarpani, Gondulpara and Koderma in Jharkhand due to the Maoist insurgency, plans to shortly invite expressions of interest for utilization of dry ash generated from its coal-fuelled projects by July.
“The plant will have an initial capacity of around 2 million tonnes (mt) to 3 mt. We are not going to make clinkers. Clinkers will come from the partner. It will be basically a plant to grind the clinkers and ash," said Sen.
The cement industry in India has a total installed capacity of 330 mt per annum.
The country is the second largest manufacturer of the commodity after China.
“While my majority areas are MCC (Maoist Communist Centre)-prone, we are trying to develop very good relationship with land users," Sen said. “There is a lot of resistance from local people. These problems are being handled."
Stiff opposition from Maoists may delay the expansion of DVC’s power plant at Chandrapura in Jharkhand, Mint reported on 11 June 2008. Projects in Jharkhand have had their fair share of problems due to Maoist threats. The rebels routinely call strikes, attack government property, and target industrial projects.
DVC, formed on the lines of the Tennessee Valley Authority in the US and owned by the Union government and the state governments of West Bengal and Jharkhand, will be entering the power distribution business by supplying electricity to eight districts in Jharkhand.
“A decision has been taken by the Jharkhand government and our board," Sen said. “We are working on that."
Experts want DVC to build its capacity before expanding.
“DVC has been lying dormant for a while and then have gone for expansion. Unfortunately, the projects have taken too long for coming," said Anil Razdan, former Union power secretary. “If DVC wants to diversify, it must develop its expertise first."
DVC also has unpaid dues of around ₹ 7,000 crore owed by its customers for electricity.
A case in point is Jharkhand State Electricity Board, which owes it around ₹ 5,000 crore.
“They (the board) are paying their current dues on a monthly basis for the last three-four months," Sen said. “Of the total outstanding, they are paying in tranches. We will recover this money."
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