Photo: Harry Goldstein

For an audio sample of this interview, please click here.

Grove-White: I guess you’ll get a sense that it’s slightly precarious now, that the past can’t necessarily predict the future.

Spectrum: I’ve had a little of that, but maybe you can explain more.

Grove-White: I think, my view is that the load is rising a lot faster and a lot quicker than anybody realizes. I look out my flat and every tower crane I see, I see increased load. And where you see an old building in south Bombay come down, and up goes a 20-story block of flats, that’s it. And the investment in generation has not kept pace. Whereas up until almost last year—last year we scraped by. This year the jury is out when summer comes. That puts a very, very high priority on getting more generation completed. And we actually have on our own count 250 megawatts of coal-fired plant; steel erection started on the first of January out at Trombay, which will go some way to filling that gap. And we are pushing as hard as we can to gain all the necessary consents and acquire the land to build what initially will be a 1600-MW plant on the other side of the harbor, with all probability a third unit going in to take it up to 2400 MW, but that is at least…(I was plotting out the coal that we require yesterday), and it’s somewhere in the middle of 2010 if all goes well, in terms of consent and acquiring the land and everything else, and that will be the first unit commissioned in 2010. If that happens, then we’re okay. But between now and 2010 it looks fairly difficult. That’s all against a developing regulatory environment, trading environment, transmission infrastructure, improving in parts. So it’s not easy to be certain that we will get through that summer without a few days of load shedding. Which would be a great shame, but you know, this is the reality and you’ve got to take these decisions [to add more generation] five or 10 years earlier.

And I think what’s happened is that the economic acceleration has taken people by surprise. My return to Bombay up until last October was just once a year, and it was a snapshot. Now I’m firmly convinced that it took some by surprise that the Indian economy ramped itself up from 2 to 3 percent growth rates in the 1980s, to 5, 6, 7 percent in the ’90s, and then suddenly these last two years it’s up to 8, 9, 10 percent. And in certain states, a hell of a lot more than that; the western states in particular, in Gujarat and Maharashtra, their economic growth has been well in excess of 10 percent, I’m sure. And that’s put the stress on the system. If you look back, if you ask the question, how did Bombay cope? Why has it been successful in ways that other cities in India have not? Milton Friedman would clearly say that it was because it was a privatized license, and lo and behold, the lights stayed on in Bombay. That would be the defining feature that differentiates the license and the presence of private, profit-making entities.

Spectrum: So is there a lesson?

Grove-White: There certainly was. Whether private entities can solve India’s problems, I’m not so sure. Privatized companies are part of the solution, but we come from a very small base. Tata Power is the largest private power company, and it has 2300 MW—that’s a very low place. NTPC [National Thermal Power Corporation] is out there in the top four or five worldwide, and they’ve got 35 000 MW. That’s not to say that we don’t have aspirations. We just won a bid to build a 4000-MW station. We’re delighted with that, and if we can win another one, we’ll do that as well. And that will start to give us some critical mass.

Spectrum: Is there a move to take advantage of the new trading infrastructure?

Grove-White: We were one of the earliest participants in trading power in India. We have a wholly owned subsidiary called Tata Power Trading. And it’s an active trader, but it’s against a background that the amount of surplus power available to be traded is small in absolute terms. And if we look at, I mentioned earlier, the development of the station to the south on the other side of the harbor, it’s likely that a good portion of that will be traded. Probably half of it will come into the licensed area and therefore under MERC [Maharashtra Electricity Regulatory Commission]. And half will either be sold on contract, and we’ll keep some available to trade. And I think a lot of private investment in power stations will sell their output in that manner, some on contract, some to their own distribution businesses if they’ve got them, and the rest will be put in trading entities. I think the trading platform that is being discussed—I’m not against the establishment of a trading platform—but I think what they’re talking about at the moment is essentially a day ahead market. It’s just too short. Why would anyone trade a day ahead? It’s just not that sophisticated. What we want is to sell strips—six months, nine months.

But back to [what makes Bombay different from the rest of India]. The licensed plants have served the city of Bombay well. And it’s not just the generation side. It’s the transmission and the distribution. And people can apply for connections and get them pretty damn quick. That’s the other side of the coin that doesn’t always get recognized is that the whole infrastructure is present in the city, not just the generation side.