“We cannot have a regulatory vacuum. There will have to be some norms. How we address the power ministry’s concerns is the question,” said one official.
Another said, “An indefinite delay is not feasible. If the power sector finds these too costly and impossible against the existing deadline, there has to be another deadline we agree to. Our conversations have not reached that point as yet.”
Power Minister Piyush Goyal was earlier reported as saying, “We took up the issue with the environment ministry. They agreed with us that deadline should be extended, so that old polluting plants can be replaced with super-critical, super-efficient plants. This will reduce the pollution to 10 per cent of the existing levels of these old plants.”
His officials and he did not respond to written queries from Business Standard
. And, environment ministry officials disagreed with the suggestion that they were on board with the idea of an indefinite delay. “As of today, the notification imposing the pollution norms still continues. This suggests there is some way to go in resolving the issue,” said the second official quoted above.
Power ministry mandarins have raised the issue of technology suitable for Indian coal and, more important, the capital expenditure required to put in the pollution-lowering equipment.
At the time of notification, the environment ministry, as required by law, had opened the draft notification to consultations with all stake-holders, including the power ministry. These objections were not raised at that time, two years ago. And, the notification was issued in December 2015. The power ministry did not respond to queries on how the circumstances or the costing had changed at this juncture, as compared to the time the draft norms were discussed.
The Central Electricity Authority (CEA) recently estimated that implementing the standards now would imply an increase in retail electricity rates by 45-55p a kilowatt hour, with a steep rise in that of 15-20-year-old units. There are 340 power plants, of a combined 61,128 Mw capacity, that were set up before 2003. In its report, the CEA has also mentioned technical issues that could prove tricky in timely implementation.
Ratings agency ICRA in a report notes implementation of the norms has been slow, with the industry having reservations over recovering the cost of additional investment through revision of power purchase agreements and inability to raise higher debt to fund the additional capital expenditure needed for plants under construction.
The new standards for the first time added sulphur dioxide, nitrogen oxides and mercury to the list of pollutants to be controlled, beside particulate matter. Different and relatively lax standards were put in place for older existing plants as compared to the new ones – which were asked to match the global benchmarks.
Controversy hit the application of the norms last year. Thermal power units take time to set up. Many project developers whose plants would come up after 2017 applied for their mandatory environmental clearances after notification of the new pollution norms in December 2015. But, the environment ministry enforced the standards for these plants selectively through the mandatory environment clearances, shows ministry data. A case on this is currently being argued before the National Green Tribunal. The environment ministry has justified its decisions.