Madhya Pradesh wipes out power deficit in 3 years, enjoys 24-hour power supply

Sarita C Singh, ET Bureau | 30 Jul, 2013

NEW DELHI: It took 5,000 young professionals, guidance from PricewaterhouseCoopers and dogged determination from officials to inject a performance-driven culture in an orthodox set up, but in barely three years, Madhya Pradesh has wiped out huge electricity shortages and losses in a rare success story in the distribution sector. After a series of reforms, tariff hikes, involvement of private firms in supplying electricity to some cities and customer-friendly initiatives, Madhya Pradesh now enjoys 24-hour power supply. Latest data available with the Central Electricity Authority shows that the state does not have power deficit. Distribution losses, which have crippled many state utilities, have fallen from 37% to 27%, narrowing the gap between revenue and cost to 60 paise per unit from 1. The gap is expected to fall to 43 paise this fiscal. Losses in the transmission segment are at 3.5%, which is one of the lowest in the country.

To bring fresh air in the system, the state hired and trained 5,000 young professionals, including 1,500 engineers in the past three years. It also framed new service rules to ensure a performance-driven culture.

Madhya Pradesh principal energy secretary Mohammed Suleman said the government began with identifying the problem areas, including assessing the actual demand for electricity of the state.

States accept the demand projections given by the Central Electricity Authority and Planning Commission. The state's assessment showed the demand to be far higher than the earlier projections for the state. The state hired PricewaterhouseCoopers (PwC) for providing all-round consultancy to the government and the generation, distribution and transmission companies. "PwC undertook a six-month long detailed modeling of districts for assessing the demand. We have a fair idea of power demand in relation to GDP till 2020 and we have accordingly planned for the availability," Suleman said. PwC executive director (infrastructure) Kameswara Rao said the state needed a strong leadership, a clear action plan and the discipline to implement it. The consultancy firm helped the government in designing, implementing and monitoring the broad-based reform implementation work in various key functional areas like finance, technology and regulatory framework. Madhya Pradesh invested about 9,700 crore in expanding and upgrading electricity distribution network by piggybacking on the Centre's flagship schemes. It also laid separate electricity feeder lines to rural houses. These steps helped it to increase the consumer base to 110 lakh in 2013 from 65 lakh in 2004. The state pushed for electricity generation improvement, leading to a 126% increase in availability of long-term contracted power. At present, about 5,000 MW of new capacity is under development with which Madhya Pradesh will be power surplus by 2018 and its power procurement costs will be among the cheapest. The distribution companies have launched many customer-focused measures for easier bill payment, timely issue of new connections. The state government implemented a financial restructuring plan by converting loans, and offering transition period support to distribution companies. The state regulatory commission has also been raising tariffs annually. Structural reforms were taken up sincerely along with the investments.

 

Gas-based power plants may have to rely on imported fuel

Richa Mishra, New Delhi, July 29

To make such power projects economically viable for the producer, subsidy support from the Government will be necessary, while to lessen the impact on the end consumer, options such as price pooling across power sector – gas, coal, hydro etc – will be required, say industry officials.

A similar suggestion has been made by the Petroleum & Natural Gas Ministry in its presentation for the empowered group of ministers (eGoM) meeting which was scheduled for July 22. However, the meeting was postponed and is now expected to be held in the next few days.

While the ministerial panel is yet to take a call on re-prioritisation of domestic gas allocation due to drop in domestic output, the power sector is in a bind over the extreme variation in gas availability projections being made by the Petroleum & Natural Gas Ministry.

Substantial gas-based power capacity was built up in expectation of gas availability, but with a drop in output from the largest gas fields (Reliance Industries operated KG D6) today almost 24,000 MW of power capacity, or Rs 1,00,000 crore of power investments are stranded, power industry officials said.

In fact, the Power Ministry has issued an advisory to power developers not to plan projects till 2015-16.

At present, most of the gas from KG D6 gas is consumed by the fertiliser sector. The block is producing less than 14 million standard cubic metre a day (mmscmd) and this is expected to dip to 11 mmscmd. It is expected to increase to 19 mmscmd during first quarter of 2015 and remain at this level till 2016-17.

Additional domestic gas will be available largely from 2014-15 from fields of ONGC, Oil India and GSPC.

However, the quantity will not be significant. Substantial quantity in domestic production is expected only in 2016-7 and 2017-18 from ONGC and Reliance Industries.

In the last eGoM meeting, the panel had rejected a proposal to divert some of the D6 block gas from fertiliser to power sector.

In that meeting the Fertiliser Ministry was asked to indicate the additional quantum of urea that can be imported given the infrastructure constraint, indicate additional imported gas that can be absorbed by the sector, and additional requirement of gas for the newly converted plants.

 

NTPC may opt out of mining in Jharkhand

Siddhartha P. Saikia, New Delhi, July 29

The country's largest power producer has been allocated four blocks – Pakri Barwadih, Kerandari, Chhatti Bariatu and Chhatti Bariatu-II – in Jharkhand to feed its power stations.

"The company is caught in the cross fire. NTPC is now thinking to come out of mining in Jharkhand due to obstacles and demoralisation of the staff," a source privy to the development told Business Line.

The recent firing incident between police and villagers near Pagar is one such incident. Though NTPC was not involved in the incident the local police has registered five first information reports (FIRs) naming NTPC officials.

Nearly 26 companies have been given coal blocks in the State. However, no one is able to go-ahead with their projects because of law and order issues, the source added.

NTPC is planning to start coal production from Pakhri Barwadih in 2013-14, but it would get further delayed.

The Jharkhand Government approved the resettlement and rehabilitation (R&R) plan for Pakri Barwadih on February 27 and Chatti Bariatu on July 8. It is only after these approvals that NTPC can start disbursal of final rehabilitation money which has been agreed to by all concerned.

NTPC, as per Government directions, has increased land compensation to Rs 15 lakh an acre from Rs 10 lakh. Further, Rs 36,000 an acre per annum

annuity is being given in lieu of a job and a good house is being allotted in the rehabilitation colony.

 

BGR CMD B G Raghupathy passes away

T E Narasimhan | Chennai July 29, 2013

The Chairman and Managing Director of BGR Energy Systems B G Raghupathy (known as BGR) passed away in Chennai on Sunday night. Company spokesperson confirmed the sudden demise of the 59-year old first generation entrepreneur who incorporated the company in 1985 as a joint venture with GEA Energietechnik GmbH, Germany. On June 28, 2007, the company name was changed from GEA Energy System (India) Limited, to BGR Energy Systems Limited and in 2008 the company was listed on the stock exchanges. BGR Energy carries on the business in two segments, the supply of systems and equipment and turnkey engineering project contracting. Prior to founding the Company, Raghupathy worked as a marketing executive specialising in the sale of industrial equipment, instruments and control systems. He subsequently served as the CEO of Introls, a company engaged in trading. He had over 34 years of experience in the fields of marketing, sales and management. People close to him say that the company saw a phenomenal growth in the last 30 years and one of his aspiration was to join the league of companies like BHEL in the sector. Raghupathy was developing independent power generation projects of 2,640 MW in India. BGR Systems reported a net profit of Rs 163.67 crore and a revenue of Rs 3,107.17 crore in 2012-13. BGR Systems was originally incorporated to manufacture and sell On-line Condenser Tube Cleaning Systems, Debris Filters and Rubber Cleaning Balls used in Thermal and Nuclear Power Plants. In 1993, Raghupathy and members of his family became the sole shareholders of the company and began to expand the range of product and services range in the Power and Oil & Gas industries. Raghupathy's wife Sasikala Raghupathy and his first daughter Swarnamugi Karthik joined the Board in February this year. The other two daughters and son are also with the company in different positions. Arjun, who completed his BE recently is going through training in the company and it was learnt Priyadarshini did engineering and management courses. The company which has got an order book of around Rs 11,000 crore has been in the forefront in bagging some of the big orders including the recent one being a Balance of Plant (BoP) contract from Odisha Power Generation Corporation for OPGC's coal-based Super Thermal Power Project - 2x660MW project at Banaharpalli in Jhasarguda district of Odisha. Value of the contract is estimated to be around Rs 1,573 crore. It has another Rs 1,548 crore project from National Thermal Power Corporation (NTPC's) to supply steam turbine and generators (STG) among others. BGR Energy has a strategic partnership with Hitachi for manufacture of Super-critical Boiler, Turbine and Generators of 660 MW, 800 MW and 1000 MW. The partners are setting up a manufacturing plant with an investment of around Rs 2,750 crore. The group is a multi-product and multi-location business enterprise. Raghupathy has to his credit achieved successful finalisation and consummation of many technology and equity collaborations with European, US and Japanese companies. The company has grown to a full service EPC company for turnkey engineering and contracting for Power and Process sector projects. He has led the company to execute and deliver upto 500/600 MW coal-based power projects and gas-based combined cycle power plants. The company is now one of the three market majors in EPC business for power projects in India, including capability to manufacture a portfolio of large and high-tech equipment.

In the year 2008, BGR Energy was listed on NSE and BSE under his leadership. The group employs more than 2,000 professionals comprising of Engineers, CAs, CSs, Legal and management graduates.

 

The curious case of Vikash Metal & Power

Digbijay Mishra | Purulia July 30, 2013

What once was a state-of-the-art steel plant of Vikash Metal and Power in Poradiha village in this district of West Bengal is now a ghost of itself. The plant, which used to employ 5,000 people at one point, is guarded by policemen to prevent whats remaining from being stolen. A little flashback might help understand what happened. In its annual report for 2011-12, the Kolkata-based steel maker said it was a victim of robbery at the Poradiha plant. Among what was taken away were a factory shed, heavy machinery used to make steel rods and stocks worth crores of rupees. For the year ended June 30, 2012, the company clocked in a revenue of Rs 476 crore and a loss of Rs 179 crore. Over half the loss was an exception item, loss due to robbery, according to the report. At the moment, the curious case of Vimal Patni, promoter of Vikash Metal, is one of the most talked about stories in the area. The plant is under the jurisdiction of Santuri police station and Sekhar Mitra, officer-in-charge, extends some help to understand what happened. The plant was closed in October 2011 but the story goes back further. Since early 2011, promoters had cut down on production. Workers were told not to work inside the plant but only lurk around the facility, said Mitra. According to him, some miscreants caught stealing from the plant were found to be company workers. We carried out raids and made some recovery but investigation revealed many thieves were comforted by the promoters and were propelled by them to carry out wrongful activities. Locals claimed the promoters had lost interest in the facility. Interestingly, the promoter group held nearly 59 per cent in the company at the end of December 2010 but brought it down to around 15 per cent, according to the December 2012 quarter filing. It was the last shareholding pattern filing by Vikash Metal. Moreover, around 68 per cent of the shares are pledged with lenders. The lead bankers for Vikash Metal are Bank of India, Union Bank of India and IDBI Bank and they had, about a month ago, put out a possession notice at the plant with the intent of taking over the property soon. The notice has been kept safe in the police station, said Mitra. The promoter group consists of Vimal Kumar Patni, 63, and sons Vikash Patni and Akash Patni. The company could not be reached for comments. We are putting out our men and agency sourced guards at the plant, but it requires fees and despite several communications made to company officials, they havent paid a single penny. This clearly shows they do not care about the plant, added Mitra.

A local resident said, There are two other plants, Mark Steel and Vision Sponge in the vicinity but they are not facing any problems.

 

A year after grid collapse, power systems remain vulnerable

Sudheer Pal Singh | New Delhi July 30, 2013

On July 30 last year, India woke up to its hour of shame, and darkness. An early morning grid collapse led to the worst global power failure, demolishing the myth of India's superiority in operating power grid systems. A year later, while the government has corrected some of the issues responsible for the mishap, most of the work is yet to be done. The grid failure last year had plunged 20 states into darkness; it was followed by a bigger grid collapse the following day. The collapse was caused by a combination of factors, including multiple outages that made the system weak, overdrawal by northern states, absence of power islands to insulate essential services and regions from the impact, backfiring of protection systems and the absence of regional inter-connecting links. In a hurried press conference on July 30, then power minister M Veerappa Moily had promised wide-ranging reforms, including tightening of the grid frequency band, ensuring states didn't overdraw, auditing protection systems to improve grid health and setting up power islands.

An analysis of the key parameters of grid security through the past year shows the northern grid's daily power frequency remained in the red zone (outside the permissible range of 49.5-50.2 Hertz) for most of the period. And, outages of transmission elements are as prevalent as they were a year ago. According to Northern Region Load Dispatch Centre (NRLDC) data, as many as 45 elements were under forced and planned outages on June 18 this year. On August 18, 2012, 45 elements were out; the number of lines under outage rose to 110 on January 18. Also, northern states continue to overdraw, though the quantum of overdrawal has declined. Uttar Pradesh overdrew 90 Mw in April and 102 Mw in May, according to Central Electricity Regulatory Commission (CERC) data. Haryana overdrew 81 Mw and 69 Mw in April and May, respectively. Immediately before last year's grid collapse, Uttar Pradesh was overdrawing 723 Mw, while Haryana drew 557 Mw more than the scheduled power. Experts say complete grid security isn't possible without functioning power islands. "Proposals of islanding schemes have been received from Uttar Pradesh, Punjab, Haryana and Jammu & Kashmir. Other states are being followed up," the power ministry said in an e-mail response to a detailed questionnaire by Business Standard. The scheme works by cutting a region's connection with the national grid in the event of a fault and subsequently, supporting its demand from generators within the island. No new power islands have come up since July last year.

"The problem is installing systems that are part of an islanding scheme requires investment by distribution companies. Given their ill health, it is a problem," said a source close to the development. The power ministry said it had submitted a project report for a "country-wide secure grid scheme" at a cost of about Rs 5,500 crore for funding secure grid operations through the Power System Development Fund. The ministry claims it has sensitised states and audited protection systems. The nerve centre of last year's grid disturbance was a 400-Kv double-circuit transmission line between Agra and Gwalior, one of the half dozen AC links connecting the northern and western regions. A part of the line was under planned outage; the other half tripped, as demand from northern states shot up due to the failure of the southwest monsoon and surplus in the western region. Outage of this line led to cascade tripping the other links, disrupting the entire AC link and completely separating the northern region from the North-East-West grid. A senior NRLDC official said the Agra-Gwalior line had been strengthened and upgraded to 765 Kv in May. "Further inter-connection link (765 Kv Satna-Gwalior and Gwalior-Jaipur) is under construction," the ministry said. This is expected to further strengthen the transmission system connecting the two regions. The ministry also said it had filed a petition with CERC for tightening the frequency band to 49.9-50.1 Hertz. This would deter states from taking fault alarms casually. Also, the unscheduled interchange norms are being reviewed by the regulator.

However, a major problem, that of insulating state utilities from political interference, remains. During a hearing on the grid failure in CERC earlier this month, Avneesh Awasthi, who was the Managing Director of UP Power Transmission Corp when the collapse occurred, told a CERC panel he had to exempt certain areas in the state in July 2012 from emergency rostering (series of scheduled load-shedding to save the grid and manage high demand), owing to the election schedule. The state's election commission had notified the election schedule of the Municipal Corporation, Nagar Palika and Nagar panchayat from May 25 to July 7.

The exemption was one of the reasons why overdrawal had to be resorted to. CERC slapped a penalty of Rs 1 lakh on Awasthi for failing to comply with the provisions of the Electricity Act and the Indian Electricity Grid Code.

---

LESSONS NOT LEARNT

* Adequate inter-regional power transfer links yet to be established; southern grid yet to be fully synchronised

* Continuing overdrawal by states; decision awaited on tightening permissible frequency range

* Outages, both forced and planned, refuse to die down, making system weak

* Essential services and regions vulnerable as enough power islands yet to be established

* Insulating load-dispatch centers and state utilities from political interference remains a tough task

 

CoalMin may review CIL performance on Aug 7

Coal Minister Sriprakash Jaiswal is expected to review the performance of state-owned CIL, which has been missing production target, in a meeting likely on August 7.

"The meeting under the chairmanship of Coal Minister Sriprakash Jaiswal to review the performance for Coal India Ltd (CIL) is likely on August 7," a top Coal Ministry official said.

The meeting will be attended by officials of the Coal Ministry and CIL Chairman and Managing Director S Narsing Rao among others, the official said.

The meeting, which was scheduled for July 25, got postponed due to the minister's other engagements.

CIL had missed its output target and produced 32.57 million tonnes (MT) of coal in June. Its production target for the month was 35.23 MT.

The maharatna firm had also missed its offtake target of 39.85 MT in June. Output in the April-June quarter was 102.87 MT, as against 106.88 MT. The state-owned miner had produced 452.5 MT of coal in the previous financial year, compared with a target of 464 MT.

The Coal Ministry has set production target of 482 MT and offtake of 492 MT for CIL for 2013-14.

 

Pakistan seeks help from Tata Power on coal-based plants

Subhash Narayan Posted online: Monday, Jul 29, 2013

Mundra (Gujarat) : Pakistan has sought cooperation from Tata Power to help develop large coal-based plants on the lines of company's 4,000-MW Mundra ultra mega power project and help it revamp the sector dependent on imported oil and gas.

A delegation, led by Punjab Power Development Company CEO Syed Farrukh Ali, visited India's first fully-commissioned UMPP in the Gujarat port city early this month. The team also sought direct participation by Tata Power in an imported coal-based project there.

"We have an offer from the neighbouring country to help develop coal-based power plants. Though we would like to explore this opportunity, it is premature to give any commitment as the issue needs to be first discussed between the two governments," said an official of Coastal Gujarat Power (CGPL), a Tata Power company running the UMPP.

The official added that Pakistan wanted to build at least 10,000 MW of coal-based capacity to change its power mix and reduce fuel imports. A large part of this capacity is expected to come from imported coal using the Karachi port facilities, just 150 km from Mundra. Hence, Pakistan is keen to learn the logistics from Tata Power.

A source in the power ministry said that Pakistan also wants extension of Indian power transmission lines in the region to border so that the surpluses on these lines could be used by the neighbouring country to meet its shortages. "This is also a possibility as border from Mundra is just over 100 kms and surpluses, if any, could be exported without large investments," said the CGPL official.

Pakistan is facing severe problems in meeting its local demand for power as the sector is largely dependent on oil and gas as fuel source, the price of which has risen sharply in the international markets, forcing state utilities to default on payment to generators. The electricity generation in Pakistan (installed capacity of about 24,000 MW) has shrunk by up to 50% in recent years due to an over-reliance on fossil fuels.

 

Long-term power supply contracts down to trickle

Noor Mohammad Posted online: Monday, Jul 29, 2013

New Delhi : Notwithstanding the policy emphasis on the sector, new power supply contracts have dried up over the last couple of years, owing to a host of factors like domestic fuel shortage, increased reliance on expensive imports, poor financial health of state electricity boards (SEBs) and the continued delay in finalisation of bidding guidelines by the Union power ministry.

Using as alibi the ongoing revision of standard bidding documents (SBDs) for power procurement, SEBs are going slow on the signing of long-term power purchase agreements (PPAs). Their real problem, though, is financial. Only 4,700 MW electricity was requisitioned by the SEBs over last two years – 2011 and 2012 — under long-term contracts. In comparison, tenders were floated by them for as much as 27,000 MW in 2010 alone.

Cash-rich SEBs from Gujarat and Maharashtra have in the meantime taken recourse to the short-term power market, where prices remain quite low. For example, prices have stayed at R2 a unit at Indian Energy Exchange, which accounts for 97% of total electricity traded through exchanges in India. In comparison, discovered price was in the range of R4-10 a unit against tenders issued by SEBs in recent months. For instance, the weighted average of prices quoted by power companies for electricity supply against tenders issued by Uttar Pradesh in December was R5.89 a unit. Similarly, the average price offered by generators in April for electricity supply to Rajasthan worked out to be R5.41 a unit. The figure is estimated at R5.66 a unit for bids received by Tamil Nadu in May for power supply.

Power companies are quoting high prices because of the prevailing uncertainty over fuel supply from Coal India (CIL). Under the existing coal distribution policy, penalty clause in the fuel supply agreements (FSAs) kicks in only when coal supplied by CIL is less than 50% of the annual contracted quantity.

If a power plant gets only 50% coal of its requirement, it would be able to run at 42-43% plant load factor (PLF) only. But the developer would be able to recover full fixed-charges only if it operates the plant at a minimum 85% PLF. That leaves power companies with no option but to load unrecoverable fixed costs on power buyers.

Domestic coal production is targeted at 604 million tonnes (mt) in 2013-14 while demand is pegged at 769 mt. That leaves a gap of 165 mt to be met through imports.

"The prevailing uncertainty on fuel and bidding framework are to be blamed for drying up of PPAs," said Shubhranshu Patnaik, a senior director at consulting firm Deloitte Touche. Former power secretary RV Shahi too voiced concern over the drying up of new power projects. "Inaction on the part of discoms, state government and the power ministry has led to a stagnation in starting new generation projects," Shahi said.

However, another former power secretary P Uma Shankar, who was actively involved with the exercise to revise SBDs, dismissed the suggestion that the delay in SBD finalisation had anything to do with the drying up of PPAs. Uma Shankar told FE: "SEBs can use existing bidding guidelines until SBD revision is finalised."

Although CIL has now committed to meet 80% of the entire coal requirement of power plants (78,000 MW capacity to be commissioned between April 2009 and March 2015) under the new FSA, it will provide only 65-75% coal from domestic sources. The balance fuel requirement will be met with imports.

Imported coal is about 40% costlier than domestic coal on gross calorific value basis. Discoms, majority of whom are in a financial mess, avoid buying expensive power generated from imported coal. With availability of 65% coal, a power plant can run only at 54% PLF. At this low level of capacity utilisation, the developer can recover his full fixed charges only by quoting a higher price for power supply.

What has further complicated the situation is the long time taken by by the Union power ministry in finalising bidding norms for projects. The Cabinet Committee on Economic Affairs (CCEA) has recently approved a proposal to allow pass-through of imported coal costs for 78,000 MW capacity to be

commissioned during April 2009- March 2015. However, that is yet to reflect in the bidding guidelines. After more than two years, the ministry is yet to complete a review of the existing guidelines.

Discoms procure electricity through long- and medium-term PPAs. But over the last two years, no medium-term PPA has been signed by power companies as the coal ministry has refused to release coal against such contracts despite the power ministry's intervention. Power generators have been left disappointed by the ministry's decision. "The MoC [ministry of coal] decision of not allowing coal supply against medium-term PPAs is arbitrary because these are in accordance with the existing regulations and an important instrument to meet power demand-supply mismatch," said Ashok Khurana, director general, association of power producers ( APP).

Meanwhile, capacity-addition programme for the 13th Plan programme remains in a state of limbo with coal linkage still undecided for envisaged projects. There is already talk of freezing coal linkages to power projects for at least two years given CIL's difficulty in stepping up production. If that happens, new PPAs may not be signed during the moratorium.

 

Going ahead with bond issue is NHPC decision: Jyotiradiya Scindia

 

PTI | 28 Jul, 2013

NEW DELHI: NHPC Ltd, India's biggest hydro- electric producer, will independently decide on raising Rs 1,000 crore through bonds, Power Minister Jyotiradiya Scindia said steering clear of timing of the issue in stressed market conditions. "Let them (NHPC) take an independent decision. I don't believe in putting my finger in every pie. Let the management take an independent decision," he told PTI in an interview. He said: "Why do you want the Minister of Power to dabble in everything... Then there would be no accountability. My way of functioning is very clear... Once you have chosen a team that needs to be held accountable." NHPC plans to raise Rs 1,000 crore through issuance of tax-free bonds in the domestic market. This would be first tax free bond issue by the company. The sum raised from the bond issue will be utilised towards the company's expansion plans. However, sources said the company was reluctant to go ahead with the bond issue as the market conditions are not favourable and NHPC's stock has been battered in the market.

Also the company is yet to have a full-time Chairman and Managing Director which is impacting decision-making at the top level, sources said. At present G Sai Prasad, Joint Secretary (Hydro) in the Ministry of Power is holding the additional charge of Chairman and Managing Director of NHPC. At the same time the government is also planning to sell 11.36 per cent of its stake in NHPC through an Offer For Sale (OFS) on the stock markets to raise up to Rs 2,400 crore. Patting himself for bringing better valuation for the state-run NTPC's share sale, Scindia added, "If there is an inter-ministerial problem which will effect the valuation of the company such as what I resolved in NTPC then I believe in resolving them because it cannot be resolved at their level." NHPC, which has a generation capacity of 5,295 MW, missed target to become a 10,000 MW company by 2010 due to delay in various regulatory clearances for its projects. Government currently holds 86.36 per cent stake in NHPC. NHPC got listed on the bourses in 2009 after the government divested 5 percent stake while company issued 10 percent fresh equity. The government plans to raise Rs 40,000 crore through disinvestment in the public sector unit during the current fiscal. So far during the current fiscal, the government has raised raised Rs 568 crore through divesting 9.33 per cent stake in MMTC and Rs 260 crore from the sale of 4.01 per cent stake in Hindustan Copper. In 2012-13, the government had raised Rs 23,920 crore through disinvestment.

 

Goa Regulators's conference to discuss bottlenecks in power

PTI | 28 Jul, 2013

NEW DELHI: Electricity regulators from all over the country will meet this week to iron out the hurdles in the distribution segment and suggest measures for improving the power dissemination situation in the country. "The 4-day long Regulators and Policymakers Retreat, in Goa this week, will attempt to address the burning issues in the Indian Power Sector and look at the challenges of Democracy and Development," a release by IPPAI, the organiser of this event, said. This annual event receives participation from Chief Ministers, Members of Parliament, regulators, policymakers, industry players in generation, transmission and distribution and other eminent personalities. Independent Power Producers' Association of India (IPPAI) was set up in 1994 to provide a forum to facilitate private sector investments in the Indian Power Sector. Some of the key issues which are likely to be discussed during the 4-day long event include Electricity Act 2003, fuel supply constraints and issues in distribution. The event is also expected to be attended by representatives of various regulatory commissions, private power companies, sectoral experts, among others. The present installed generation capacity of the country stands at over 2,10,000 MW and the government aims to add 88,000 MW by 2017 after the fuel scarcity (coal and gas) is addressed.

 

Tata Power seeks 'certain waivers' from Mundra UMPP lenders

PTI | 28 Jul, 2013

NEW DELHI: Tata Power has sought "certain waivers" from lenders to ensure further disbursements of loans to the 4,000 MW Mundra plant, the country's first operational ultra mega power project. Hit by higher imported coal prices and lower tariff realisation, the Mundra project is grappling with significant financial burden including impairment provisioning against its assets. Mundra project, fired by imported coal from Indonesia, is being run by Coastal Gujarat Power Ltd (CGPL), a wholly-owned subsidiary of Tata Power. In response to a query on whether the company has sought restructuring of loans given to the Mundra UMPP, a Tata Power spokesperson replied in the negative. "Not yet. As mentioned, the company has sought certain waivers from lenders to enable further disbursements of loans," the official said. Without disclosing specific financial details, the spokesperson said the amounts for which the waivers have been sought are "related to certain terms in the loan agreement". The original cost estimate for Mundra project was Rs 17,000 crore. It has funding from IFC, IIFCL, ADB, Korea Eximbank, BNP, SBI and nine other lenders. The debt to equity ratio for the plant's financing is 75:25. According to Tata Power's annual report for the 2012-13 fiscal, consequent to the impairment loss with respect to Mundra UMPP, certain covenants governing the loans borrowed for construction of the project have not been met at the end of March 31, 2013. Subsequently, CGPL received waiver from compliance of the covenance up to June 30, 2013. "Further, CGPL has sought revision in certain terms of financing agreements and expect to execute such revision. Accordingly, loans aggregating to Rs 11,512.55 crore are considered to be long-term borrowings (including current maturities of long-term borrowings of Rs 686.32 crore)," the report said. CGPL has accounted for an additional impairment of Rs 850 crore related to Mundra project for the year ended March 31, 2013. Besides this, the company had recorded an impairment of Rs 1,800 crore for the year ended March 31, 2012. In April this year, Central Electricity Regulatory Commission (CERC) had asked entities procuring power from Mundra UMPP to form an expert panel to decide on compensating the company for higher cost of coal imports from Indonesia. The directive came on a petition filed by Tata Power seeking relief. The panel is believed to be looking into the issue. Currently, Mundra UMPP has five units of 800 MW each. Electricity produced from the plant is being supplied to five states -- Gujarat, Rajasthan, Punjab, Haryana and Maharashtra.

 

Huge business opportunities beckon in power sector in Bihar

PTI | 28 Jul, 2013

PATNA: With an estimated Rs 28,000 crore being proposed to be invested in power sector in Bihar, a senior official today urged investors to lap up huge business opportunities in transmission and distribution segments in particular.

"There are booming opportunities in power sector in Bihar especially in transmission and distribution segments with an estimated Rs 28,000 crore likely to be spent over the next few years under various plan heads," the Energy Secretary Sandeep Poundrik told reporters here. "The huge investment in power sector will be made under various schemes like the Backward Regions Grant Fund (BRGF), Accelerated Power Development and Reforms Programme', Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY), besides funding by other multilateral organisations and the state's own annual plans to take the total proposed investment amount to Rs 28,000 crores," he said. With the state government committed to provide electricity to each village of Bihar by 2015, there was enormous business opportunities beckoning on the private investors to lap up projects in distribution and transmission segments, he said. Poundrik, who is also the Chief Managing Director (CMD) of the Bihar Power Holding Company Ltd, sought to woo the investors in power sector by assuring them that the law and order situation has improved and the road infrastructure laid throughout Bihar makes it a perfect environment for the investors to do business in the power sector in the state. He said that the Bihar State Power Holding Company Ltd has recently held conferences on the topic - 'Destination Bihar' in New Delhi, Hyderabad and Bombay to woo the investors.

 

EGoM may give no significant gas to power sector this fiscal

Press Trust of India | New Delhi July 28, 2013

Over $21 billion powers plants being stranded for want of fuel notwithstanding, an Empowered Group of Ministers (EGoM) may not give any significant natural gas to the fuel-starved units till domestic production rises in 2016-17.

The EGoM headed by Defence Minister A K Antony is to meet shortly to squeeze out some gas from current year output of 105 million standard cubic meters a day for the power plants.

Official sources said things have been complicated by fall in Reliance Industries' eastern offshore KG-D6 field to just 14 mmscmd at present. It is projected to 11 mmscmd this fiscal before rising to 19 mmscmd in the first quarter of 2015 and remain at that level till 2016-17.

The fall in KG-D6 from 62 mmscmd achieved in March 2010 means 25 power plants that signed up for 29.74 mmscmd of KG-D6 get no gas.

Sources said on instructions of EGoM the Oil Ministry carried out a detailed exercise to assess additional gas available and the demand.

About 4-5 mmscmd additional gas will be available from fields of ONGC and GSPC in 2013-14. A similar additional volume may be available in the next fiscal and a further 2 mmscmd from GSPC in 2015-16.

This additional production will have to make up for fall in KG-D6 this fiscal and the next as also meet 3.8 mmscmd need of 5 newly converted fertiliser plants for whom allocation had previously been approved by the Cabinet and EGoM.

Also, 2.95 mmscmd has to be given to LPG extraction plants of GAIL and ONGC, they said, adding LPG has been given second priority after urea manufacturing units.

Moreover, there will be an additional demand of 2.17 mmscmd of gas for petrochemical plant of ONGC at Dahej. The EGoM had at the time of

deciding priority of gas allocation, had taken a call that all molecules from the gas should be extracted before it is burnt as fuel. ONGC's C2/C3 plant will fits into that priority.

Sources said out of additional availability of 4-5 mmscmd in 2014-15, availability for power sector would be 2-3 mmscmd. Most of this will flow to the Dabhol power plant that had been given equal priority as fertiliser plants after its revival at a cost of Rs 13,000 crore. No KG-D6 gas flows to the plant now despite it being allocated 7 mmscmd of KG-D6 gas.

Additional availability of about 10 mmscmd during 2015-16 could be provided for the power sector, they said adding further availability of 29 mmscmd from ONGC during 2016-17 and 11 mmscmd from RIL's R-Series fields in KG-D6 block in 2017-18 would be sufficient for power and fertiliser sectors.

For the present, the power sector may be asked to consider buying more imported LNG to produce electricity.

At present, only a third of the 72 mmscmd of gas needs of the 18,713 MW gas-based power plants is being met. Another 8,000 MW capacity is almost ready for commissioning but there is no gas availability to fire the plants.

At its last meeting, EGOM rejected the proposal to snap natural gas supplies to urea plants and divert that fuel to power companies.

 

Govt modifies New Coal Distribution Policy

 

Press Trust of India | New Delhi July 28, 2013

The government has modified the New Coal Distribution Policy in view of the presidential directive asking state-owned CIL to enter into pacts for assured supply of fuel to power firms ms 78,000 MW capacity.

"Government has approved a revised arrangement for supply of coal to the identified thermal power stations (TPPs) of 78,000 MW.

Taking into account the overall domestic availability and the likely actual requirements of these TPPs, it has been decided that FSAs will be signed for the domestic coal quantity of 65%, 67% and 75% for ACQ (annual contracted quantity) for the remaining four years of the 12th Plan," according to an Official Memorandum.

Earlier, the Policy said the Coal India (CIL) would supply 100 per cent of the committed quantity to power plants at prices to be notified by the coal PSU.

It also said that in order to meet the domestic requirement, CIL would import coal as required from time to time, if feasible and adjust the overall price accordingly.

Highlighting the amendment in the policy the memorandum said, "To meet its balance FSA obligations towards the requirement of the said 78,000 MW TPPs, CIL may import coal and supply the same to the willing power plants on cost plus basis. Power plants may also directly import coal themselves, if they so opt."

"The New Coal Distribution Policy...Stand modified," it said, adding that "CIL and its subsidiaries and SCCL are advised to take further action accordingly."

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Manmohan Singh, on June 21 asked CIL to sign FSAs for a total capacity of 78,000 MW including cases of tapering linkage, which are likely to be commissioned by March 31, 2015.

Last year, the government issued a Presidential directive asking CIL to supply at least 80 per cent of the quantity committed to power companies.

 

AP aims at 410 Mw more hydel capacity by FY15

BS Reporter | Hyderabad July 28, 2013

To meet the ever-increasing demand for power due to changing lifestyle and increased usage of electrical appliances, the Andhra Pradesh government is contemplating achieving additional hydel capacity of 410 Mw by 2014-15 with the construction and commissioning of more units at Nagarjuna Sagar, Pulichintala and Jurala. At present, the state has the largest hydel capacity in the country with 3,829 Mw. While the first unit of lower Jurala (Mahaboobnagar), with a capacity of 80 Mw, is likely to be commissioned within two months from now, the second and third units with a capacity of 80 Mw each are to be commissioned by July 2014. The Nagarjuna Sagar tailpond unit (Nalgonda) of 50 Mw and Pulichintala (Guntur) of 120 Mw are expected to be completed by 2014-15. Reviewing the future prospects of hydel generation in view of good inflows from Krishna-Godavari basins, M Sahoo, principal secretary (energy), said it had been decided to optimise the power generation through hydel units of APGenco (Andhra Pradesh Power Generation Corporation Limited) plants to the maximum extent possible to meet the requirements of electricity consumers. Sahoo, who is also chairman of APGenco, said the early monsoon and good inflows into various reservoirs in Andhra Pradesh, both in the catchment areas and upper reaches, had helped APGenco to generate 1,015.76 million units (mu) till date during 2013-14, as compared with 633.16 mu in the same period last year, an increase of 382.6 mu (60 per cent). "The Srisailam hydro power plant has started and is able to generate 700 Mw as against its full capacity of 770 Mw. The reservoir level at Srisailam has crossed 855 feet. If this trend of inflows continues, the government hopes to cross the targeted hydel generation of 6,755 mu for the year 2013-14," he said.

 

OPGC kick starts 1320 Mw expansion

 

BS Reporter | Bhubaneswar July 28, 2013

The Odisha Power Generation Corporation (OPGC), a joint venture between the Odisha government and the US based utility major AES, has kick started its 2 X 660 Mw expansion project, comprising unit 3 and 4 of its 420 Mw Ib Valley power complex, with the issue of work order in favour of BHEL and BGR Energy Systems ltd. OPGC had earlier signed contracts with BHEL and BGRE on 27th April and 11th July, 2013 respectively for the award of work for the main plant (BTG) worth Rs 4,051 crore and Balance of Plant (BoP) worth Rs 1,573 crore. The above costs taken together works out to about Rs 4.26 cr/Mw (firm price in rupees without any risk of foreign currency exchange variation) which is by far the cheapest of the bids finalised in the country since 2010 for 660 Mw plant configuration, claimed a company release. The OPGC expansion project, which is targeted to be completed within 12th Paln, had secured financial tie-up with Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) in November, 2012.

 

Power from CESC plant in Maharashtra finds no takers

Fri, Jul 26 2013

The financial viability of CESC Ltd's 600 megawatts (MW) Chandrapur power plant in Maharashtra is under a cloud as it cannot find takers for more than 100MW of electricity to be generated by it even two months before commissioning and hence cannot secure adequate fuel supplies from Coal India Ltd (CIL).

It has managed to sign only one so-called power purchase agreement (PPA) with the state-owned distribution company of Tamil Nadu for sale of 100MW at the administered tariff.

In the wake of the controversy over coal block allocation last year, the Union government has mandated that power producers cannot seek coal supplies from CIL, which sells the fuel at a significant discount to global prices, without signing PPAs.

This means CESC could be forced to import coal to feed its Chandrapur plant, which is being built at a cost of `3,800 crore. But this would mean the plant won't be able to recover operating costs for at least one year of operation, according to CESC chairman Sanjiv Goenka.

The government's decision not to allow power producers to seek coal supplies from CIL was "unfair" on companies such as CESC because they had conceived several projects expecting to secure fuel from the state-owned miner. Financial calculations went awry because of the directive, Goenka said.

State-owned distribution companies not signing PPAs is a "major concern" for upcoming power generation units, said Arvind Mahajan, executive director at consulting firm KPMG. "It is the politics of buying power, not the lack of demand, that's affecting the industry," he added.

There is, however, no such concern about CESC's upcoming unit at Haldia in West Bengal. The 600MW plant, which is being built at a cost of `4,000 crore and is to be commissioned in late 2014, will sell power to CESC's own consumers in Kolkata and its suburbs at administered tariff.

It could hence seek coal from CIL for its entire capacity whereas for the Chandrapur unit, supplies will be restricted to 100MW only, or as much power as it can sell at the administered tariff.

The Haldia unit will be profitable from day one, according to Goenka, "but there could be issues to resolve with our Chandrapur unit for at least one year". For a long-term solution, CESC is looking to acquire coal mines in Indonesia, he added.

Meanwhile, on Friday, CESC, formerly a British company, severed its last link with London by obtaining shareholders' approval to withdraw its shares from trading on the London Stock Exchange (LSE).

The company continues to have about 160 shareholders in the UK, Goenka said, but that didn't justify the cost of remaining listed on the bourse. CESC's shares have not been traded on the LSE for years, he added.

 

Coal distribution policy amended to reduce CIL’s supply commitment

FE Bureau Posted online: Saturday, Jul 27, 2013

New Delhi : The coal ministry on Friday changed the existing coal distribution policy to clear the legal hurdle for Coal India (CIL) to reduce its coal supply commitment from 100% to 80% in new fuel supply pacts and importing coal to meet production shortfall.

CIL has been asked by the government to commit a minimum supply of 80% of coal required by power plants while signing fresh fuel supply agreements for 78,000 MW capacity that may be commissioned during April 2009- March 2015.

During the remaining four years of the current 12th Five-Year Plan, the coal PSU has to supply 65-75% coal from domestic sources while the balance fuel requirement can be met with imports.

CIL will supply imported coal on cost plus basis. However, the power companies have choice to import coal on their own.

CIL will supply 65% domestic coal during 2013-14 and 2014-15, 67% in 2015-16 and 75% in the terminal year of the Plan.

The company had earlier agreed to sign FSAs for coal supply to 60,000 MW capacity only.

But later the cabinet committee on economic affairs asked it to sign FSAs for additional 18,000 MW capacity including 7,000 MW of stranded capacity.

Following that, the coal ministry has issued another presidential directive to ensure that CIL signs FSAs for coal supply to 78,000 MW capacity and not just 60,000 MW.

The first directive was issued by the ministry to CIL in April last year after the PSU's rejected the government proposal for it to meet at least 80% coal requirement of power companies under fresh FSAs.

Since all the projects are unlikely to be commissioned on time, the state-owned company remains confident that it would be able to deliver coal quantity against additional FSAs signed by it.

The move to amend the existing policy is in line with the advice provided by the central electricity regulatory commission to the power ministry.

 

CII takes 62 stalled infrastructure projects to fast-track panel

Our Bureau, New Delhi, July 26

Industry chamber Confederation of Indian Industry (CII) has submitted a list of 62 stalled projects to the project management group (PMG), which was set up by the Government to fast-track infrastructure projects.

The projects, each with a size of Rs 1,000 crore or more, have total investments of over Rs 3.93 lakh crore. Among these, 27 are in the power sector. These include the Rs 33,000-crore Jaitapur civil nuclear energy plant, Reliance Power's Jharkhand Integrated Power project, and several large projects of Tata Power, Essar, Lanco, and Adani groups.

Land acquisition, fuel supply and environmental clearances are the major reasons cited by the promoters as hurdles, along with mining and other issues.

"CII has been requesting fast-tracking of at least 50 large projects to unlock investments and boost growth," Chandrajit Banerjee, Director-General of CII, said.

Appreciating the clearance of 17 large infrastructure projects in the last two weeks by the PMG, Banerjee hoped this would have a multiplier impact on the economy.

Vinayak Chatterjee, Chairman of Feedback Infrastructure Services, said while the decision of Government to form the PMG was indeed significant, as regular and effective monitoring was critical to reinvigorate the growth momentum.

"Given the current scenario, it becomes important to award projects only after securing sovereign clearances to accelerate implementation of projects," he suggested.

Apart from power projects, CII's list includes 11 projects in the roads and highway sector, eight in the hydropower sector, five each in oil and gas and ports, four in cities/townships sector and one project each in airport and urban mobility.

Hydro projects are mostly delayed due to environmental issues, local resistance as well as forest clearances. For roads and highway projects, land acquisition is the major challenge, while state support agreements and borrow area permits, too, have been delayed.

Many other issues plague the sector, ranging from shifting of existing pipes to permissions for water usage. Delayed projects block available funds and lead to inefficiencies in capital use, besides adding to bank's non-performing assets, CII said.

 

IMG to CoalMin: Seek LawMin's view on mines named in FIR by CBI

Press Trust of India | New Delhi July 26, 2013

The Inter-Ministerial Group on coal blocks has asked the Coal Ministry to seek an opinion of the Law Ministry with regard to six mines which have are alloted to firms like ArcelorMittal, Sterlite Energy, Lanco, Reliance Energy and are named in FIR registered by CBI.

"In cases of...Six blocks, where an FIR has been registered by CBI against the allocatee or one of the allocatees of the coal block, IMG...Remitted the matters back to the Coal Ministry to take a view in the matter in consultation with Law Ministry," an official document said.

The six blocks, include Rampia & Dip Side of Rampia mine jointly alloted to Sterlite Energy, GMR Energy, ArcelorMittal, Lanco Group, Navbharat Power and Reliance Energy, Thesgora-B/Rudrapuri mine alloted to Kamal Sponge Steel & Power and Revati Cement and Bander mine alloted to AMR Iron & Steels, Century Textiles & Industries and J K Cement.

The Central Bureau of Investigation is probing alleged irregularities in the allocation of 192 coal blocks between 1993 and 2011.

The agency has registered three preliminary enquiries, which are related to allocations between 2006 and 2009, blocks awarded between 1993 and 2004, and allotments to joint ventures.

The government had formed the IMG last year to review the progress of coal blocks allocated to firms for captive use and recommend action, including deallocation.

Last month, the IMG had recommended issuing show cause notices to allocatees of 27 coal blocks and seeking explanation for slow progress in development of 21 mines.

The coal ministry had earlier issued notices to allottees of 30 captive coal blocks for failing to develop the blocks on time.

 

Coal India at lowest level since listing

SI Reporter | Mumbai July 26, 2013

Coal India has dipped nearly 6% to Rs 277, its lowest level since listing in November 2010 on BSE, on concerns that the company may miss its production and offtake target for third month in a row. Coal India and its subsidiary companies produced 32.57 million tons (MT) of coal in June, missed the month's target of 35 MT. The company's offtake in June was 37 MT against the target of 39.8 MT, the company said in a BSE filing on July 2.

In May, the company has produced 34.5 MT of coal against its target of 36.5 MT, while its offtake stood at 38.2 MT against the target of 40.9 MT. The miner recorded a meagre production growth of 0.4% during the April-June quarter, recording a cumulative output of 102.87 MT. The Coal Ministry had set a production target of 482 MT and offtake of 492 MT for Coal India for 2013-14.

Meanwhile, the Coal Ministry has postponed a meeting in early next month to review the performance of Coal India, which has missed production targets.

 

Coal India, NTPC sign fuel supply pacts for 16 power plants

Press Trust of India | New Delhi July 26, 2013

Coal India Ltd (CIL) has signed fuel supply pacts with NTPC's 16 power plants and joint ventures, while 11 more agreements with the power major and its JVs are being processed. "CIL has signed 82 FSAs of 34,793 MW capacities. These include 11 FSAs with NTPC and 5 FSAs with its joint ventures. Besides this, FSAs in 6 cases of 4,480MW capacity with NTPC and 5 cases of joint ventures of NTPC are under process of signing," an official statement said today. The Coal Ministry said CIL has been directed to sign FSAs for about 78,000 MW within four weeks after the power producers fulfil the requisite conditions. A Presidential Directive has been issued by the ministry in this regard.

"Ministry of Coal has directed CIL to sign FSAs for about 78,000 MW to ensure committed supply of coal to power sector," the statement said. The ministry further said that some more FSAs are likely to be signed soon as five cases of State sector and 11 cases of private sectors have already achieved the requisite milestones for conversion of their LOAs (Letter of Assurances) to FSAs. "Seven cases are awaiting declaration of commercial operation date by Central Electricity Authority while in five cases milestones are under verification before finalisation of FSAs," the ministry said.

Earlier, CIL was directed to sign FSAs for 60,678 MW capacity which was the projected requirement for 131 power plants commissioned or to be commissioned by March, 2015. NTPC had refused to enter into FSAs with CIL over quality issues of the dry-fuel supplied to it and had stopped payment to Coal India subsidiary, Eastern Coalfields Ltd. Retorting to the step, the world's largest coal miner had temporarily stopped supply of fuel to NTPC. The issue was resolved following government intervention.

 

Ind-Barath to commission 350 Mw unit by Nov

BS Reporter | Bhubaneswar July 26, 2013

Ind-Barath Energy (Utkal) Ltd (IBEUL) will start electricity production from the first 350 Mw unit of its 700 Mw power station at Sahajbahal near Jharsuguda from the second week of November. The company had signed a memorandum of understanding (MoU) with the state government for setting up the coal-based power plant in February 2009. "Our 350 Mw unit will go on stream from November. The company would be offering 84 Mw to the state grid. Presently, we have coal linkage for only the 350 Mw unit," said Muralidhar Mishra, president of IBEUL. IBEUL has already implemented the rehabilitation & resettlement (R&R) programme for the project. Only eight ST families had to be displaced for the power project. The company has built 22 houses at a cost of Rs 1.74 crore with 10 decimal land plot around each house. The R&R colony has been provided with pucca roads, electricity, ponds and drinking water supply for 24 hours. IBEUL has offered a compensation of Rs 4.5 lakh to each of the ousted families. Presently, 1,774 people are engaged in IBEUL's project that includes 1,200 locals. As part of its commitment towards periphery development of the project area, the company is providing allowance of Rs 1,000 per month to 25 physically challenged persons and Rs 200 every month to 168 people as old age pension. IBEUL is also in the process of installing its 400 KV high tension transmission line which it hopes to commission after getting approval from the gram sabha.

 

One-third of Gujarat’s power capacity remains idle: Patel

 

Rutam Vora | Vadodara July 26, 2013

Over one third of Gujarat's power generation capacity from conventional sources is lying idle due to lower demand for power and non availability of natural gas from Centre, Gujarat government officials informed today. Out of the total installed capacity of 17,300 megawatt (Mw) from coal and gas resources, nearly 6500 Mw generation capacity is not producing power. "Gujarat's 5000 Mw of gas-based capacity involving an investment of around Rs 20,000 crore is lying idle due to non-availability of gas," said Saurabh Patel, energy and petrochemicals minister, Gujarat government, while addressing an industry event organised by Baroda Management Association (BMA) in Vadodara today. "Centre's policies are responsible for idle capacities of gas-based power plants. We do not get cheaper gas due to faulty policies of Centre," Patel said. Also, the senior government officials informed that already 1500 Mw of coal-based power plants are shut for over last six months due to the lack of buyers. Notably, the state has the peak electricity demand of 12,350 MW.

"Idle gas-based capacity is causing loss to the tune of Rs 1,000 crore annually in the form of fixed cost," Patel told media persons on the sidelines of the event. "Another 1500 Mw of coal-based capacity is idle for past six months due to lack of buyers. This has caused a loss of Rs 600 crore as a fixed cost as plants remain idle. Annually this loss works out to be around Rs 1200 crore," a senior government official said. According to sources, the state is unable to sell power in the open market as there is low demand. "Southern India faces shortage of power. But we are unable to cater to this market as there is no connectivity between southern transmission corridor and western corridor," Patel added. He also mentioned that many industrial consumers are increasingly buying cheap power through power exchanges. "Open access has posed another challenge as we see most of the HT consumers buy from open market. This is bad for the power sector in the state," he said.

 

Power sales down as buyers black out

Katya B Naidu | Mumbai July 27, 2013

India's power generating companies are going through a bad patch. On the one hand, costlier imported fuel and inadequate domestic supply have increased the production costs. On the other, power distributors have been lowering their purchase of power from power generating companies. According to India's largest power generator, NTPC (formerly National Thermal Power Corporation), the volume of power purchased across the country will dip further. "Almost all states at some part of the day ask us to back down our supply," it said in response to a questionnaire. Early monsoon, pleasant weather and increased generation by hydro power utilities are some of the reasons why it could be seasonally low. In FY13, NTPC, which has an installed capacity of 41,184 MW, lost 20.4 billion units (BUs) due to either low schedule or backing down and 13 BUs due to fuel shortage. This year till May 2013, the company lost 3.9 BUs due to low schedule / backing down and 4.5 BUs due to fuel shortage. "Thus, it is ironical that on the one hand we are facing peak and energy shortage, on the other, the capacity is getting stranded for want of fuel / schedule," said an NTPC executive.

The main reason behind lower power purchase is the tight financial condition of state distribution utilities. "In any other country, power off-take is a function of demand. Here, it is a function of bankrupt discoms," said Ashok Khurana, director-general of the Association of Power Producers (APP). According to rating agency India Ratings, this trend would translate into higher offtake risk for power generators, which use costlier imported coal. Plus, the government recently accepted recommendations that would double the cost of natural gas produced in the country. "A higher incidence of back-down instruction by off-takers can also lead to lower operating efficiency in the form of higher station heat rate, auxiliary consumption and secondary oil usage resulting in losses on fuel costs for plants operating under cost plus regime," said India Ratings in its report. Newer capacity of power, which has recently been added and in the process of coming is also at huge risk. According to an estimate by consulting firm Deloitte Touche Tohmatsu, as much as 22,000 megawatts of power capacity in India is waiting for buyers to sign long-term contracts with them. "Discoms are neither buying long-term nor short-term power to fulfil their entire requirement. Around 22,000 MW capacity, which is going to come up in the near future is waiting to be tied up," said Debashish Mishra, senior director at Deloitte Touche Tohmatsu. Case 1 bids are called for by states where they purchase power from generators without any liability of providing them with either land or fuel. Electricity traders, who have been banking on an election surge in power demand, are also waiting and watching. If there is an election effect on power prices, it is yet to be seen, say traders. The last election saw a huge surge in power demand, taking up power costs above Rs 7 a unit. The factor that contributes to the lack of interest in more power is general reduction in peak power demand. "The peak deficit for power is at around 7-8 per cent now. It has always been at around 13-14 per cent. The theory that India will continue to have energy deficit for ever is being tested now," says Mishra. Some states are also inching towards becoming power-surplus, almost closing avenues for long-term contracts to be signed which last as long as 25 years. Gujarat, Maharashtra and Chhattisgarh are on the threshold of being power-surplus. Madhya Pradesh is expected to be power-surplus by the next year. Punjab and Haryana have already tied up their requirements for the next three years, leaving the three southern states of Tamil Nadu, Karnataka and Andhra Pradesh in power deficit. While states do not need more power, consumers are still battling power outages. Discoms are forced to go for power cuts, making high electricity consuming areas such as Gurgaon go for expensive diesel generating sets. The unit cost of power produced by a diesel genset is at Rs 17. "There is around 6-7 hours power cuts in Gurgaon, Faridabad and Ghaziabad," says Khurana, who resides in Delhi. APP has given a suggestion to the central power regulator to increase power sales. If power is available at a rate below Rs 5.50 per unit, discoms should not force cutdowns. However, discoms will buy power only when they can afford to buy.

 

Nuclear power mitigates economic & carbon impact: Shah Nawaz Ahmad

Sanjay Jog July 27, 2013

The protests against nuclear power notwithstanding, India continues to attract global attention in this regard, owing to the immense potential here. Shah Nawaz Ahmad, senior advisor, World Nuclear Association (WNA), in an interview with Sanjay Jog, explains how a decent mix would help India tackle the rising demand for power. Edited excerpts: How does WNA see India's move to increase nuclear capacity? In India, the need for electricity is huge. The highest levels of the country's establishment are committed to nuclear power, and this has been proven over time. There may be some issues on civil nuclear liability laws, funding, production costs and localisation. These are under various stages of negotiations. While it may be necessary for the public to know how these discussions are progressing, when there are technical and commercial discussions, you are likely to hear the good news only when the agreements are signed. A bit of patience would be of immense help. During the period between 2005 and 2013, we have, perhaps, not seen the sort of fruits expected. But we have to realise India has its own culture and mechanisms in the area of international cooperation. The fact that Australia has agreed to supply uranium to India is seen as a victory of diplomacy and negotiations. In the beginning, Australia had insisted on NPT (Nuclear Non-Proliferation Treaty), but later, it changed its stand. These things take time. On the energy mix issue, I agree with former Atomic Energy Commission chairman Anil Kakodkar's view that all resources — conventional, renewables and nuclear — have to be harnessed to meet India's electricity requirements. There is great consistency needed in conceptualising the country's energy needs. In India, those against nuclear power cite safety issues. Obviously, if any stakeholder has concerns, those have to be addressed. The nuclear community is very good at technical communication, but there is need for more associative communication in dealing with the concerns of the people. Perhaps, it needs augmentation and capable people who know local languages and have competencies on the technical side. There is a need to build trust over the long term by associating all stakeholders — right from the inception stage. Also, we have to tap experts from outside the government — credible experts from the academic community and from local leaders. The first step would be to educate stakeholders at their level of interest and understanding, in their language. This is an important job; communication with affected parties would yield positive results.

Has nuclear power lost its vigour, especially after the Fukushima nuclear accident in 2011?

The nuclear landscape improved in 2012. For reactors across the world that were on a 'delay' mode after Fukushima, we have seen restarts. The world went into a mode of re-examining reactor safety, visualising what could happen in their systems.

Once satisfied after stress tests, they decided to go ahead. Many countries say they plan to shut nuclear plants, even as the time comes to continue operating these. WNA estimates at least 73 Gw of net new capacity would be added by 2020. Agneta Rising, director general of WNA says, "Countries representing more than 50 per cent of the world's population are committed to building nuclear power plants." We have to remember power demand is huge, particularly in developing countries. For instance, by 2034, the demand for power in China would grow by more than the current demand of Japan and the US together. A substantial part would be met through nuclear power. Of course, it is a big challenge, as major decisions have economic and political impacts. In Germany, the cost of electricity rose after the country revisited its policy on nuclear power; it is also finding it difficult to meet its carbon commitment. The continuation of nuclear power would, at the least, mitigate the economic and carbon impact. This is applicable to India as well. We have found extra care in the case of construction of plants and the quality of materials used leads to plant life, originally 40 years (according to design), safely being extended by 20-40 years. The economic impact of life extension means adding megawatts at a very low incremental cost. This has enabled the Tarapur nuclear power plant to supply cheap power. So, if it is safe, why not continue to operate? But there may be a need to convince the public by laying stress on transparency. Countries and reactor suppliers have raised concern on India's civil nuclear liability regime. The concern expressed by countries and companies, genuine from their points of view, has to be addressed. As the law stands, operators of nuclear power plants are liable for any damage caused by them, regardless of a fault; the government is willing to step in with extra money, should the demand be beyond the operator's capability. Under certain conditions, recourse to suppliers is available to the operator and vendors want their liability to be more precisely stated. Cost and liability are interlinked; hopefully, these issues would be resolved simultaneously. This, when achieved, would spur international cooperation in the civil nuclear area. Some principal actors have publicly stated they are comfortable with the current laws.

What is your take on the government's move to put in place an independent regulator for the nuclear sector?

We have to differentiate between perceived and executive independence. For safety, executive independence is extremely important. I think the Atomic Energy Regulatory Board is independent enough. However, the government's move to set up an independent regulator is a step in the right direction. It would further empower the regulator and its perceived independence.

 

Power tariff set to rise 5% in Delhi from August

BS Reporter | New Delhi July 27, 2013

Power tariff in Delhi is set to rise five per cent from August, with the Delhi Electricity Regulatory Commission (DERC) allowing a Rs 15,360-crore revenue gain for the city's three private distribution companies (discoms) during FY14. The hike comes on the back of a 60 per cent jump in prices over the past two years. DERC, however, waived off the additional eight per cent surcharge levied on consumers for the quarter ending September 30. "After doing away with the surcharge, there will be a minor 0.5 per cent hike in tariffs for BSES consumers and a two per cent hike for TPDDL consumers in the current quarter. Even after this hike, Delhi's power tariffs will be lower than those in any other metro city," said DERC Chairman P D Sudhakar. The surcharge, revised every quarter, is levied to make good the losses of discoms accumulated over the years. Reliance Infrastructure-owned BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd supply power to over three million consumers, covering around two-thirds of the city's consumers. The rest of the consumers are supplied power by Tata-owned Tata Power Delhi Distribution Ltd. Sudhakar said power tariffs would increase by an average five per cent across all consumer categories. In the domestic category, DERC approved increasing tariff for consumers with less than 200 kilowatt hour (KwH) load from the existing Rs 3.7 per unit to Rs 3.9 per unit. The regulator increased tariff for consumers using between 200 and 400 KhH load from the current Rs 5.5 a unit to Rs 5.8 a unit. Tariff for consumers in the 400-800 KwH category will increase from existing Rs 6.5 per unit to Rs 6.8 per unit. Also, the commission added a new slab for consumers with over 800 KwH load. The three discoms had petitioned DERC for an annual revenue requirement (ARR) of over Rs 19,044 crore in 2013-14. At the increased tariff, the total revenue accruing to the three discoms works out to Rs 15,360 crore, compared to the approved ARR of Rs 14,448 crore, leaving a surplus of Rs 912 crore for discoms this financial year. After taking into account the eight per cent surcharge, total revenue will go up by an additional Rs 1,228 crore, leaving a net surplus of Rs 2,140 crore with the companies. This surplus will offset a major portion of the accumulated revenue gap of Rs 3,497 crore, leaving a net incremental shortfall of Rs 1,356 crore in FY14. The fresh tariff hike comes four months ahead of assembly elections in Delhi. Chief Minister Sheila Dikshit-led Congress government has been facing criticism from the opposition parties — including the Bharatiya Janata Party and Arvind Kejriwal-led Aam Aadmi Party — for increasing power prices to allegedly extend undue benefits to private discoms.

 

Odisha cabinet okays energy proposals

The state Cabinet chaired by Chief Minister Naveen Patnaik cleared the proposal to install 520 new 33/11 KV sub-stations in the state over a period of three years at a cost of Rs 2,600 crore. These new sub-stations will be over and above the existing 573 sub-stations. The distribution companies have not been able to upgrade the distribution infrastructure, resulting in high aggregate technical and commercial (AT&C) losses. The Cabinet also gave its nod for installation of separate feeders for agriculture and fisheries sectors. The scheme envisages investment of Rs 1,000 crore to be spent in four years from 2013-14 to 2017-18. The new substations will help overcome the problem of low voltage and separate feeders for agriculture will ensure uninterrupted power for the farmers", said chief secretary J K Mohapatra.

Out of Rs 2,600 crore needed for installation of the new substations, Rs 200 crore has been set aside in the Budget for 2013-14.

 

TN to add 4,191 Mw by March 2014

BS Reporter | Chennai July 25, 2013

Tamil Nadu will add an additional 4,191-Mw to its power generation capacity by March 2014, said O Panneerselvam, state finance minister. TN is facing a power shortage of around 4,000 Mw. Addressing bankers and industry at a financial sector conclave organised by the Federation of Indian Chambers of Commerce and Industry (Ficci), along with the Southern India Chamber of Commerce & Industry and Hindustan Chamber of Commerce, he said the government was working towards lifting all restrictions and control measures to ensure uninterrupted and quality power supply. "Tamil Nadu was the first state to have successfully completed the financial restructuring plan of discoms," he said.

The state has initiated the process of revamping its transmission infrastructure at a total project cost of Rs 5,000 crore for which it secured Rs 3,600 crore assistance from the Japan International Cooperation Agency. Besides, the state is also taking up new power projects to narrow the future demand-supply gap, added Panneerselvam. The government has also started the State Skill Development Mission by earmarking Rs100 crore every year aimed at creating a partnership between government and the industry to achieve mutual goals. R Subramanian, president, Hindustan Chamber of Commerce, mooted an idea to set up a financial city in Chennai as a hub for all the financial service sector players to set up their base for carrying out operations across the country.

 

Akhilesh launches projects worth over Rs 3,400 cr

Virendra Singh Rawat | Lucknow July 25, 2013

Emphasising on power, infrastructure, education and health as the focus areas for faster economic development, Uttar Pradesh Chief Minister Akhilesh Yadav on Thursday launched 350 power and infrastructure projects worth more than Rs 3,400 crore. While, some of these projects were inaugurated on completion, foundation stones were laid for the others. Yadav said inaugurations and laying of foundation stones would be a regular feature in the remaining four years of his regime to fulfil the poll promises of his party. He slammed the previous Mayawati government for uncompleted development projects, especially infrastructure projects, which had allegedly led to massive cost overruns, causing loss to exchequer. He referred to a bridge project over river Rapti, which he claimed had been lying uncompleted for the last 22 years, but would now be ready by 2014. Meanwhile, he inaugurated and laid foundation stones of 222 power projects of Rs 1,141 crore for setting up power substations (both for distribution and transmission) of varying loads. Moreover, 131 infrastructure projects of Rs 2,272 crore for bridges and roads were launched at his official residence. Addressing the media, Yadav said the power transmission and distribution system was unable to bear the load at peak hours, and hence, needed urgent upgradation for uninterrupted power supply. State Public Works Department (PWD) Minister Shivpal Singh Yadav said his department had completed 363 bridges and 100 more would be completed this year. The state had identified road projects measuring 1,300 km, of which, 650 km would be completed this year and the remaining would be taken up soon. He urged the chief minister to allocate Rs 3,000 crore as supplementary budget for completing the pending projects.

 

JSW Energy eyes overseas coal assets to boost fuel security

Press Trust of India | Mumbai July 25, 2013

JSW Energy today said it is exploring opportunities to acquire overseas coal mining assets to achieve fuel security for its power projects. The power producer, which has an installed generation capacity of over 3,140 MW, has "put most of its expansion projects" on hold awaiting clarity on policy and regulatory issues. Sajjan Jindal, Chairman and Managing Director of JSW Energy, today said the company continues to explore and evaluate various opportunities to acquire coal mining assets, "especially in the overseas market with an aim to achieve fuel security". Addressing shareholders at the company's annual general meeting, he said that JSW Energy is developing relationships with coal miners in large coal exporting countries to ensure procurement of quality thermal coal at competitive rates and over term contracts. Talking about future plans, Jindal said it would focus on organic growth and reduce exposure to merchant capacities as the regulatory scenario improves. "We believe as the sector matures and consolidates, there will be inorganic growth opportunities for evaluation with a strategic fit to your company," he said. JSW Energy's total installed capacity touched 3,140 MW after commissioning of the last four units of its 1,080 MW Barmer plant. Regarding new projects, he said the 240-MW hydro project at Kutehr in Himachal Pradesh has received approvals from the Environment Ministry. Further, the company's joint venture with Toshiba has commenced production activity for the supply of 2x660 MW and 3x800 MW supercritical turbine generator sets for NTPC. Besides, the joint venture is expanding its capacity from 3,000 MW to 6,000 MW. "During the year (2012-13), pending clarity on policy and regulatory issues, your company decided to consolidate operations and has put most of its expansion projects, with the exception of the Kutehr hydro project, on hold," Jindal noted. In the last fiscal, the company raked in a consolidated profit after tax of Rs 904 crore. "India's power sector, a critical component of the economy, was similarly affected given the adverse economic conditions and sector-specific challenges," Jindal said. The domestic power sector is facing multiple woes including poor financial health of state distribution companies, fuel shortages, issues related to Power Purchase Agreements (PPAs) and hurdles in getting project clearances.

 

Alstom T&D bags 5 contracts worth Rs 256-cr from Power Grid

Press Trust of India | New Delhi July 25, 2013

French firm Alstom's India arm Alstom T&D today said it has bagged five contracts worth 37 million euros (Rs 256 crore approximately) from state-run Power Grid Corporation for pan India projects.

"In India's western region, Alstom T&D India won two contracts worth Rs 166 crore for the supply, erection, testing and commissioning of 400 kv (kilovolts) substation packages," the company said in a statement.

The company secured a contract valued at Rs 40 crore for the delivery of transmission equipment for various substations across India, it said.

The statement further added, the other two contracts include supply of equipment for Power Grid's Padghe, Aurangabad, Bhiwani and Meerut substations for a value of Rs 27 crore equipment for the public sector unit's Khandwa, Purnia, Gajuwaka, Baripada and Bhiwani for Rs 23 crore.

These equipment are expected to strengthen the power transmission network in Northern and Western regions of the country and mitigate the gap between demand and supply of power.

"The selection of Alstom T&D to augment the transmission network in the country demonstrates Power Grid's confidence in the strength of our offerings across the entire T&D value chain," Rathin Basu, Managing Director, Alstom T&D India said in the statement.

 

PowerMin seeks urgent solution on fuel for $21 bn worth power projects

Press Trust of India | New Delhi July 25, 2013

With over $21 billion of power plants stalled due to natural gas shortfall, Power Minister Jyotiraditya Scindia wants an urgent solution on fuel woes to generate an additional 14,000 MW of electricity. Besides seeking untied gas currently produced or likely to be produced in future by companies like state-owned ONGC and GSPC, Scindia wants fertiliser plants to spare some gas after fulfilling the requirement for producing urea. In an interview to PTI, Scindia said, "30 million tonnes of fertiliser needs to be produced (to meet) the requirement of the agriculture sector (which) indeed was a priority but inspite of that we have to see whether there is any scope to eke out some gas for the power sector."

The Minister said the need of the hour is to get gas for the power plants during the current financial year. At present, only a third of the 72 million standard cubic meters per day of gas requirement of the 18,713 MW gas-based power plants is being met. Another 8,000 MW capacity is almost ready for commissioning but there is no gas availability to fire the plants. "Right now, the discussion is focused as to what can be done in current fiscal. We have to see what tweaking we can do --- 3 or 4% or whatever it may be, to come up with some relief for the plants," he said.

Admitting it was a challenging situation to provide gas to the power plants during the current fiscal, Scindia said, "In the short term i.E. In FY'14 it is going to be a problem because we need to supply 30 million tonnes of fertilisers. The next meeting of the Empowered Group of Ministers' we will look into the solution for this part, it is work in progress.

"We have to see whether there is any possibility, can something (gas) be eked out for the power sector and if yes, what is it going to cost," he said. At the same time he added that one or two meetings of the EGOM cannot guarantee decisions and it is work in progress. Last week, Defence Minister A K Antony headed EGOM rejected the proposal to cut natural gas supplies to urea plants and divert that fuel to power companies. Woes of power plants are largely due to drastic fall in production from Reliance Industries' eastern offshore KG-D6 fields, with present output of just over 14 mmscmd being enough to meet requirement of fertiliser plants, who have been accorded top priority in receipt of gas. No gas flows to 25 power plants that had signed up for 29.74 mmscmd of KG-D6 gas. The ministerial panel would meet again soon to discuss methodology of making available gas from other sources to power sector in the short term and medium term. Asked whether pooling prices of gas is a solution to the problem of scarcity of the fuel, Scindia said it can only be decided once power sector is brought on par with fertiliser in terms of receipt of gas. "That is a separate a issue.First we have to be able to look at giving equal priority to power and fertiliser, " he said adding that based on this decision the issue of price pooling can be dealt with. "We will then look at what are permutations and combinations for pooling of gas prices," the Minister said. However, the Power Ministry is confident of supplying gas to the plants in the long term i.E. 4-5 years. "In the long term we do not see that there is going to be any problem with regard to the supply of gas for the 26,000 MW capacity gas plants which means four to five years down the road.

And also there would be no problem once the supplies from KG-D6 comes back on line and also when there are more gas finds, we will be able to supply more to the power sector," Scindia added.

 

PMO sets the ball rolling on key infra projects

Our Bureau, New Delhi, July 25

The projects are across railway, highway, airport, port and power sectors.

Many of these projects were proposed during the UPA-I period and have not been awarded yet.

The progress on the preparatory steps to ensure meeting of the project award deadline will be monitored on a regular basis, an official statement said on Thursday.

This will ensure that the Ministries or departments are clear about not just the final deadline but also all requisite steps such as land acquisition, environment clearance, that need to be completed so that there are no slippages.

The Principal Secretary to Prime Minister has directed all ministries/departments to nominate a nodal officer each, of the rank of a joint secretary or above, who will report on a weekly basis on the progress of their department's project(s). The names would be intimated to the Prime Minister's Office by Friday, the statement said.

The meeting also decided that the Ministry of Railways will take a call on reissue of request for qualification (RFQ) for the Mumbai Elevated Rail Corridor Project within a week.

Besides, in addition to Navi Mumbai airport, the Ministry of Civil Aviation will make efforts to move ahead on Goa (Mopa) airport as well.

New airports

The Ministry will also work towards awarding the operate, maintain and transfer (OMT) contracts for four to five airports by March 31, 2014. These airports include Lucknow, Ahmedabad, Jaipur and Guwahati.

 

CEA norms soon for supercritical tech design in power plants

V. Rishi Kumar, Hyderabad, July 25

Manjit Singh, Member, Thermal, CEA, said, "This was felt necessary to ensure that various manufacturers in the country conform to the standards. As we get into higher capacity supercritical technology based power plants of 800 MW and even more than that, such norms would ensure consistency."

The country had its first 660 MW unit based on supercritical technology in December 2010. Thereafter more than 13,900 MW capacity have been commissioned using this technology. The Tata Mundra project has set up five units of 800 MW.

Of the 44,950-MW of thermal generation capacity now coming up in the country, it is estimated that more than 50 per cent of this capacity addition is based on supercritical technology, he said.

Supercritical technology based projects deliver higher efficiencies, consume less power and have lower emission levels.

BHEL and NTPC have been working on advanced supercritical technologies with about 700 degree centigrade. There has also been significant progress in a project taken up by NTPC, BHEL and US Aid with regard to 180 MW integrated combined cycle plant. NTPC has also worked on a 10-MW integrated project.

Referring to fuel shortage leading to demand supply gap, he said the Ministry of Power, Coal and various other departments are working to resolve the issue.

The supply gaps will be bridged but it is difficult to ensure 100 per cent coal supplies given the current scenario. Therefore, import of coal and blending is one option for power plants.

 

Govt likely to relax norms for PSU staff to join NPS

Press Trust of India, Jul 24 2013

The government is considering relaxing norms to enable PSU employees to join the National Pension Scheme (NPS) and a cabinet note in this regard is likely to be moved soon, interim pension regulator PFRDA said on Wednesday.

"We have taken up this matter with the department of public enterprises (DPE) secretary and he has prepared a note which he would be soon taking to the cabinet," Pension Fund and Regulatory Development Authority (PFRDA) chairman Yogesh Agarwal said here.

Under the existing guidelines, if an employee of central public sector undertakings (CPSUs) does not have a minimum 15 years of service, he or she cannot join NPS, Agarwal said on the sidelines of a seminar titled Financial Consumer Protection here.

"Even with the government employees earlier, the instruction was if you do not have 20 years of services, you can't have pension. When the government notified the guidelines for NPS, they did away with the criteria," he said.

Talking about NPS Swavalamban, he said, it is a financial inclusion product operationalised by PFRDA.

There has been an overwhelming demand for the product launched in 2010, with a CAGR of 90 per cent in the three years of operation, more than 50 per cent of the eligible subscribers being below the age of 40, he said.

The scheme, with 72 per cent of the subscribers being women, has managed to bridge the supply gap in the unorganised sector for a long term defined contribution pension scheme, he added.

Agarwal also said that PFRDA has a strong consumer-protection mechanism. "It is evident from the fact that we receive very few complaints. In order to have real consumer protection, we need to introduce features in the product design itself, which could prevent mis-selling," he said.

He further said that improving financial inclusion with adequate consumer protection requires a multi-stakeholder framework of consumer, financial institutions, industry, regulators and the government.

 

Electrical equipment industry output to be raised to $100 bn by 2022

Electrical equipment industry output to be raised to $100 bn by 2022

Wed, Jul 24 2013

India plans to increase the output of the electrical equipment industry to $100 billion by 2022 and become a destination of choice for overseas producers of such equipment.

The size of the industry is valued at around $25 billion, a fourth of it made up of power generation equipment, and transmission and distribution contributing the rest. The industry provides direct employment to about 500,000 people and indirectly to about 1 million.

The target was outlined in a 2012-2022 mission plan for the electrical equipment industry released on Wednesday by the ministry of heavy industry.

"It is imperative to build our own industry to make it competitive for its global growth, also looking at ways and means to draw in more investment," said Praful Patel, minister for heavy industry, who launched the plan.

"The size of the sector is growing, and companies can pool their resources for investing in R&D (research and development) for moving ahead," Patel said.

Patel said the Indian electrical industry's progress has been hampered by a slowdown in the entire power sector, conceding that policy makers may have adopted a lopsided approach that may have exacerbated its problems. Imports have grown, especially from China, while exports have lagged.

The power sector is battling fuel shortages and problems in land acquisition and securing mandatory approvals, stalling several projects.

 

Money starts flowing in for UP power board revamp

Deepa Jainani Posted online: Thursday, Jul 25, 2013

Lucknow : UP State Electricity Board's revamp is finally getting a head start. As many as 8 banks of the 20-member consortium that had approved the power board's financial restructuring plan (FRP) for R31,680 crore of short-term liabilities, with a loan component of R15,840 crore, have started sanctioning the money. Out of these 8, two banks have already disbursed the loan amount.

Lead banker, Punjab National Bank (PNB), has disbursed R1,000 crore and Oriental Bank of Commerce (OBC) has disbursed R 391 crore. Speaking to FE, a senior official of the state government said Rs 1,391 crore received so far from the banks have been used to settle outstanding dues against the electricity purchased.

"While R1,100 crore has been paid as dues of the Central sector, R200 crore has been used to make regular payments to private power generators, including Reliance Power and Lanco Infratech," he said.

In fact, non-payment of dues became a major reason of discontent among private power generators early this year, forcing them to either suspend or cut down generation for some time.

"The remaining banks, too, will start disbursements soon. The second tranche of money will be used to pay off debts of sugar mills and the remaining dues of the Central sector. While co-generation dues amount to almost R1,200 crore, the Central sector dues are to the tune of R1,500 crore," the official said, adding that the only bank having some problems in sanctioning the loan amount is Allahabad Bank.

"Allahabad Bank's loan of R2,000 crore is the only one in question as of now due to it crossing the exposure limit," he said. Allahabad Bank's exposure is pegged at R9,000 crore.

In order to improve its financials, UP has submitted a tariff hike plan for the next eight years, which has already been ratified by the consortium of banks.

As part of this, tariff hikes are being evenly spread out over the years, starting with a 9% hike in 2014, a 10.38% hike in 2015 and another 8.36% hike in 2016. In fact, UP has already raised power tariffs by over 30% from last month for the first time in four years. It may be mentioned that the SEB restructuring package of R1.9 lakh crore has already been approved by the Central government. Around 70% of these losses are estimated to have been contributed by SEBs in six states — Rajasthan, Tamil Nadu, Uttar Pradesh, Haryana, Punjab and Madhya Pradesh.