Our goal is to revolutionize the power transmission sector: Sterlite Power

Sterlite Power is a leading developer of power transmission infrastructure with a portfolio covering over 16,000 ckm of transmission lines across India and Brazil. In this exclusive interaction, we have Arun Sharma, CEO, Infrastructure Business, Sterlite Power, discussing the company’s power transmission development business in India, whilst offering keen insights into critical policy-related issues. Sharma is confident that Sterlite Power, through its vast experience and its conscious approach of deploying revolutionary world-class technology, can make a significant contribution to India’s growing power transmission infrastructure needs. An interview by Venugopal Pillai.

 

Tell us about your Sterlite Power journey.

In 2018, when I first got in touch with Pratik (Pratik Agarwal, Managing Director, Sterlite Power), I realized that they were addressing the right issue. Energy generation wasn’t the issue because that had been sorted out by multiple technologies. Both traditional and renewable generation technologies had been commercialized and were showing high efficiencies. However, the real problem for the clean energy transition, as I understood, was that of logistics—transporting power from one location to another. This was and still is the biggest challenge.

In India, traditional coal-based plants are located on the eastern side, while the renewable generation is focused on Gujarat, Rajasthan, Andhra Pradesh, Karnataka, and the entire belt across the western and southern regions. These need to be connected to the national grid. This is where the whole idea originated.

When I spoke to Pratik 4-5 years ago, he was working on solving this exact problem of energy transportation. I believe that any company focusing on the aspects of time, space, and capital in the transportation of energy business is on the right path. Solving the problem of energy transportation is not easy unless you address these factors. That’s exactly what Sterlite Power is doing.

 

How has the introduction of 400kV and 765kV lines contributed to the improvement of power quality in India, and what advantages does the massive national grid offer the country?

The quality of power in India has improved immensely with the introduction of 400kV and 765kV lines, which form the top tier of our power transmission hierarchy. The 765kV lines offer 100 per cent availability across the system, while the 33kV lines and others provide a vast network, making our power grid one of the largest in the world. Our transmission system is parallel to America’s highway and road system, in terms of scale and importance.

And now, this brings us to the advantages that our country can draw from this massive national grid. For example, if power is generated in Rajasthan, it can be consumed in Odisha without any restrictions. Enabling government policies, such as the waiver of billing charges over the past two years, have significantly boosted this sector. The ISTS waiver is a major step taken by the government, and we should request the Honorable Power Minister to extend this policy for many more years.

The objective of the Electricity Act, 2003, was to give consumers the ability to choose their supplier, necessitating the separation of assets and supply. To encourage freewheeling and set up the system initially, the government wisely waived charges, which could be reintroduced annually to strengthen the system.

 

In FY24, as we understand, Sterlite Power won three interstate TBCB projects – Fatehgarh III Beawar, Beawar and Neemrana II Kotputli. What is the broad status of these three projects? When is physical construction expected?

We have won three significant renewable energy evacuation projects in Rajasthan. The first project is the Fatehgarh to Beawar line, which we refer to as Package G. The second project, running parallel to the first, is called Package F. Both projects are progressing well, with substantial support from both the Government of India and the state government, allowing us to open multiple Rights of Way (ROWs).

For Package G, which involves about 800 foundations, we have already completed 450. We aim to complete this project by March 2025, and I am confident that it will be finished by the first quarter of next year. Similarly, Package F involves approximately 1,100 foundations, with close to 400 already completed. The momentum for both projects is strong.

Our progress has been significantly aided by our robust EPC partners, including KEC International and Kalpataru Projects International. The innovative packaging of our contracts has been crucial. We geographically divided the route into two parts, assigning Package G to one party and Package F to the other. One of these parties is also responsible for the EPC of substations, which helps to reduce costs and control overheads. This approach allows multiple teams to work on the same tasks, improving efficiency. Assigning the entire line to multiple partners has proved to be very effective, ensuring smooth progress on these projects.

Also, these projects are in a potential Great Indian Bustard (GIB) area. Fortunately, the honorable Supreme Court cleared these areas before we proceeded, so we are not impacted by GIB concerns. However, as responsible citizens, we must take care of this area. We are committed to following all recommendations and applicable regulations to ensure the protection of the GIB habitat.

 

Of your current shelf of under-construction projects, do you expect any to be commissioned in the current fiscal year, FY25? For instance, when do you expect commissioning of the Mumbai Urja Marg project?

The Mumbai Urja Marg Ltd (MUML) project consists of four packages. Two packages, Ranchhodpura (Package A) and North Lakhimpur, are complete. The third package, the Padhge to Khargar Line in Mumbai, is approximately 85-88 per cent complete. We are hopeful that this package will be completed and put into service by August this year. Despite facing some hindrances, we have received immense support from both the district and state governments, which has been crucial in advancing our progress.

For Package C, our approach has been vital. We have worked closely with the community, engaging with them effectively and ensuring complete transparency. This approach has built trust, enabling us to work effectively and meet the community’s aspirations. Additionally, we have maintained a track record of making Land & Tree/Crop Compensation payments within seven days, further ensuring transparency.

We have conducted impressive CSR programs in response to community needs and demands. In Mumbai, we implemented a Youth Upskilling program, especially the Electrician Program, where we provided training for individuals to enhance their skills in their field of work, who got employment immediately. Through this program, we created an environment that fosters innovation and empowers participants.

The Mumbai area presents unique challenges due to the involvement of multiple agencies. Navigating through these complexities and effectively communicating the project’s strong objectives has been challenging. Maharashtra consumes about 4,000 MW of electricity, with 1,200-1,400 MW generated from coal within Mumbai. This creates a dilemma as we strive for a clean energy transition while still relying on coal to generate power in the heart of Mumbai, without building adequate transmission lines to transport Green Energy.

This dual focus on advocating for clean energy transition while managing coal reliance in Mumbai has been challenging. However, the Padhge project serves as a crucial connecting center from Aurangabad to Vadodara and the Khargar line. It enables us to route renewable power connectivity from Gujarat to Mumbai, making it a vital link for renewable energy transmission.

 

When we look at ISTS projects based on the TBCB model, the bid process coordinator (BPC) is expected to do much of the pre-project work, but it is argued that much of this work falls on the developer. What is your view?

There is always room for improvement in our development processes. As developers, we aim for as much pre-work to be completed as possible to minimize difficulties as we progress. However, there are challenges we encounter along the way, particularly regarding land acquisition. As developers we expect surveys and land availability to be addressed prior to our involvement, but there are limitations due to complex state specific process when it comes to land allocation.

Secondly, the timeline for project execution is often tight. The process of obtaining approvals, acquiring land (often a substantial area), and securing permissions from various authorities like forest, NHAI, state highways, and railways can take anywhere from 18 to 24 months. This timeline becomes even more challenging if wildlife, mining, etc. is involved. Additionally, in a country where the language changes at every 50 km, communication becomes difficult to manage, but we are doing our best. The good part is the government has been very supportive.

Despite these hurdles, the support we receive from the Central government, district administration, and the infrastructure review mechanisms like the war-rooms and the Pragati Portal chaired by the Honorable PM have been beneficial for us. While challenges continue, the processes established over many years are driving infrastructure execution on the ground. This alignment of efforts gives us optimism for overcoming challenges and delivering successful projects.

A lot has improved, especially the way the government, departments, and the CEA (Central Electricity Authority) have been very proactive and open about solving these problems. This is motivating for people like us. If there is a problem, the government immediately issues orders, and letters are sent to the state government for support. This happens at every level.

 

What is your general view on the e-reverse auction process adopted while awarding TBCB projects? Do you feel that e-reverse auction could potentially result in unviable tariffs?

Reverse auction brings a lot of transparency to the process. Secondly, it provides an opportunity for the top 4-5 players to lower their prices. Thirdly, if the players are knowledgeable, serious, and have conducted their due diligence well, then they should have a clear understanding of their costs. However, the problem arises when prices are continually reduced to very low levels. There is a risk that prices become so low that executing the project becomes financially unviable. This can occur because human nature tends to push commitments made during the reverse auction beyond practical limits.

While the reverse auction system is transparent and robust, it has a significant weakness if discipline is not maintained. This lack of discipline can potentially harm the sector.

While there are advantages to reverse auctions, there are also disadvantages. SECI attempted to address this issue in solar bids, which was a positive step. However, maintaining discipline and accurate pricing is challenging and difficult to enforce. It is not uncommon for ISTS and reverse auctions to last for 24 hours, indicating the need for safeguards. It is advisable to avoid excessive price drops and risking project execution.

 

Sterlite Power does not appear keen on bidding for intrastate projects under the TBCB mode. What is your take?

There is no doubt that Sterlite Power also considers intrastate projects. However, the ticket size needs to be just right to justify management bandwidth and resource deployment. Our EPC business handles state projects, and we have multiple ongoing projects from Rajasthan to Kerala and all the way to West Bengal, including a recent one in UT of Jammu & Kashmir. While we have a strong portfolio on the EPC side, we carefully consider various factors before taking up an intrastate project.

As part of our advocacy plan, we aim to expand the TBCB model in the states as well. We have urged the government to open opportunities for players in the TBCB framework. The TBCB model has proven to reduce project costs and completion times by 25-30 per cent, offering dual benefits. TBCB is the way forward, as most countries have struggled to implement the TBCB model, but India has succeeded as a country. Therefore, we aim to encourage its implementation in different states.

 

Sterlite Power is known to have deployed sophisticated and modern technology in its power transmission projects. Take us through recent innovations, highlighting the use of aerial technology.

Innovation is the core value at Sterlite Power, where we continuously strive to introduce new approaches and technologies. For example, we try to use drones into our projects and utilize helicranes for enhanced efficiency. Additionally, we have introduced new conductors with carbon core, and employ the use of sky robots for pulling in OPGW cables.

Recently, we are focusing on increasing stringing speeds in India. We are collaborating with a partner to deploy an innovative solution on a trial basis in one of our projects in Panipat. Stringing and conductors typically constitutes 30 per cent of project costs, and by reducing timelines, we can mitigate interest costs and expedite our capex recovery. The automated drone communicates with the ground machine, facilitating faster conductor pilot pulling. With controlled tension, the wire remains in position, minimizing entanglement with trees or crops along the route. We are aiming at achieving stringing speeds that are double of conventional process.

Our goal is to revolutionize the sector and increase efficiency by 3-4 times. We are in discussions with our EPC partners to integrate this technology into their projects as well. Given the rapid developments in the transmission sector across the country, it is imperative that we elevate ourselves, particularly in the stringing aspect. The contracts are already in place, and by Q2FY25, Rajasthan is expected to adopt this technology.

 

The Lakadia-Vadodara transmission project, commissioned by Sterlite Power, was undoubtedly a marquee project both for Sterlite Power and for the Indian power transmission landscape. Please recall some project execution challenges and discuss how they were surmounted.

Yes, LVTPL spans 350 km, linking the heart of renewable energy to consumption, in the green energy corridor. Considering that every MW of power consumes about 10 tonnes of coal daily, the potential reduction in coal consumption is significant with the corridor’s capacity to handle 8,000 MW of power. Connecting numerous green energy sites across Rajasthan, Maharashtra, and Gujarat, this project holds a substantial reduction in coal burning and CO2 emissions.

The project, which passes through seven districts, was closely monitored by the Project Monitoring Group in the Prime Minister’s Office, with the government of Gujarat overseeing it monthly. The most important aspect for us was the timely compensation to the landowners for the land, the corridor, and the crop compensation. Without timely payment and assessment, we would not have been able to execute this project.

The scale of the LVTPL project is substantial, utilizing hexa-conductors totaling 36 x 350 km and 12,000 tonnes of steel. Technical challenges, such as navigating 10-12 km of creeks, necessitated innovative solutions like piled foundations to accommodate fluctuating water levels. In areas that are permanently filled with water, where construction is difficult, we deployed a well point de-watering system, which continuously removes water from the area, allowing construction to proceed unhindered. This system uses vacuum technology to suck the water out of the way, enabling smooth progress of the work.

 

When NHAI had a lot of land acquisition to do for national highways, it came up with its own act to offer compensation at market-related rates. Does land acquisition for power transmission also reflect market rates?

There are diverse practices across Indian states; UP has issued uniform recommendation guidelines. In Maharashtra, the land compensation guidelines are linked to the market rate, making it more dynamic compared to other states. According to the amended guidelines, compensation includes an additional 30 per cent and 200 per cent of the land’s value. The district magistrate determines the land compensation rate based on the circle rate, stamp duty, or market rate. If the district magistrate deems the compensation inadequate after a public hearing, especially due to urbanization after the guidelines were set, they can enforce the payment of the market rate.

In contrast, Gujarat has also become more dynamic, opting for compensation based on the compounded 2011 circle rate. However, Maharashtra’s approach is notably more progressive, and it would be advantageous for other states to adopt similar practices to benefit the entire sector.

 

How are these compensation rates governed?

The compensation rates vary by state. The Government of India has issued certain guidelines that they have recommended state governments to adopt for compensation. Some states, like Gujarat, Maharashtra, and Karnataka, have adopted and even improved upon these guidelines, while others, like Rajasthan and Haryana, have not adopted them yet.

These guidelines are good but need to evolve with time. Currently, the guidelines stipulate that 85 per cent of the compensation is paid for the land where the network is set up, and 15 per cent is for the corridor, with the definition of the corridor varying by length. Fair compensation to landowner, implemented transparently, will ensure trust.

 

Thanks to the vast experience of Sterlite Power, in conjunction with its deployment of modern technology, how do you see the role of Sterlite Power in shaping India’s power transmission infrastructure in the years ahead?

If you look at the overall declared projects, investment of Rs.4 lakh crore is likely to happen by 2030. The 100-day plan for power transmission will have Rs.100,000 crore of bids getting out, so the opportunities are immense. Being the largest private player in power transmission and from the place where GIC has also invested, we have immense experience in our ability to pick up 20-25 per cent of the market. Historically we have maintained 20-22 per cent of the market share. We boast of having a lot of experience in picking up good projects that have a major green energy tag and those that will immensely benefit the economy. And as you know that our vision has been to empower humanity by addressing the toughest challenge of energy delivery to the best of our abilities.

 

(All industrial photographs seen in this interview relate to power transmission projects of Sterlite Power)