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Thursday, February 24, 2011

CEA set to monitor development of UMPPs

The power ministry has asked Central Electricity Authority (CEA) to regularly monitor the implementation of ultra mega power projects (UMPPs), with generation capacity of about 4,000 Mw each. Currently, implementation of four such projects are underway, of which three are being developed by Reliance Power (Sasan, Krishnapatnam and Tilaiya) and the fourth - Mundra project - is by Tata Power.
A power ministry official, who did not want to be named, told Business Standard, "Periodical monitoring is necessitated to avoid any slippages in the commissioning of the projects in a phased manner. CEA and the Power Finance Corporation, which is a nodal agency for the UMPP implementation, can in fact carry out monitoring separately so that the developers stick to the stipulated timelines."
The official said that the ministry wanted that the UMPP development should go hand-in-hand with laying of transmission lines for evacuation of power. This would address the issue of congestion in transmission network. The official said the ministry was concerned over the revised schedule from Reliance Power for the commissioning of the first unit of the 660-Mw Sasan project in January 2013 instead of March 2012.
The company argued that January 2013 was quite ahead of the schedule stipulated in the revised power purchase agreement (PPA). The company had informed that the boiler foundation work for Unit-II and Unit-III had already been completed.
As far as Krishnapatnam UMPP in Andhra Pradesh is concerned, the official said Reliance Power had originally proposed 5x800 Mw units. Subsequently, the developer had obtained consent of procurers for change in unit size. The company had received approval from the Central Electricity Regulatory Commission for a change in the unit configuration to 6x660 Mw. Amended PPA for 6x660 Mw had been executed with the procurers. The first unit is expected to be commissioned in June 2013. In the case of the Tilaiya UMPP in Jharkhand, the project developer had received forest clearance in November last year and started ground work.

Cong seeks CBI probe in gas-plant deal

Congress today sought a CBI probe into the alleged benefits being given by the state Bharatiya Janata Party-government to Sravanthi Energy Pvt Ltd, a Gurgoan-based company, for setting up a 225 Mw gas-based combined cycle power plant in Uttarakhand.
Leader of the Opposition Harak Singh Rawat at a press conference here claimed that the state government notified 46.7 acres of land at Kashipur area for industrial purpose for setting up the Sravanthi plant, when the environmental clearance was only for 30 acres.Rawat further alleged, the state also lost the right of 12.5 per cent of free royalty from the proposed project as it was not sanctioned by the power department. “Sravanthi entered into agreement with the industrial department to set up the plant. Had it entered into such agreement with the power department, the state must have been benefited with a royalty of 12.5 free power,” Rawat claimed.

Besides, the power department also issued a ‘No Objection Certificate’ to the office of commissioner of customs at Mumbai for the clearance of the import of goods required for the gas plant when it was not in picture. Sravanthi had recently imported gas turbines from US-based GE Energy.
Sravanthi is setting up its power plant at Kashipur after GAIL began constructing its Karanpur-Moradabad-Kashipur-Rudrapur pipeline to cater to the gas demand in the region. According to officials here, GAIL has committed 0.6 mmscmd of gas to Sravanthi company.
Sravanthi Energy expects the commercial operation of phase one to begin in the third quarter of 2011 and phase two in the first quarter of 2012, it said.
When contacted, a power department official described the charges levelled by the Opposition as “baseless” and said the government has done nothing wrong in the project. Last year, the government came under scanner after the High Court cancelled 56 hydropower projects after corruption allegations.

Coal India to raise prices - Inflationary pressure, low production put pressure on CIL

Inflationary pressure and rising international prices might compel Coal India Ltd to increase prices during the early half of the next financial year."We are suffering from huge inflationary pressure and a wage revision would (also) happen with effect from July 1. The volume of production is also not increasing because of environmental roadblocks, so prices need to be raised. It will be in such a way as to cover the inflationary pressure," said Partha Bhattacharyya, chairman.

According to sources, the inflationary pressure on the company is 4-4.5 per cent, much less than the overall inflation rate.

If the state-run coal major, the world's largest in the sector, goes for a price rise, it would be the fifth after coal prices were completely deregulated in January 2000. The Kolkata-based company raised prices in February 2001, June 2004, December 2007 and October 2009.

"CIL moved away from the normal cost-based coal pricing during the administered regime in 1996, and continued with partial deregulation till 2000. Even after that, we had not done it with consulting the ministry," said a top company official. "Globally, coal prices have increased globally by around 40 per cent."

"Over the years, we had gone for only responsible increase in prices. Once the company shifts to washed coal, with better quality, the rates will naturally rise. However, for coking coal, the rise in prices will depend on international prices only," Bhattacharyya said. Currently, international prices are $130-140 per tonne.

Analysts seemed sceptical. "I don't think the rise will be enough for the company, as the overall inflation figures are much higher. Even if they increase prices by 4-4.5 per cent, they will be selling coal at much less than international prices. However, power companies will suffer a bit and their cost of production may increase by about five per cent," said Ravindra Deshpande, an analyst from Elara Capital.

High LNG prices force Guj to stall generation of 500 Mw power

The rising LNG prices in the international markets are posing a threat to gas-based power plants in Gujarat. Power generation capacity to the tune of six million units (roughly 500 Mw) in the state has to be stalled following steep hike in LNG prices.
According to top government functionary, the power generation from the gas-based power plants in state was badly hit due to higher prices of imported LNG. Unlike other gas-based power plants in the country, those in Gujarat depend entirely on the imported LNG for the fuel requirements. The state is one of the largest gas consumers in India with around one-third share in the country's total gas consumption. Besides, power plants, the city gas distribution (CGD) is also heavily dependent on imported LNG, which costs around $7 per MMBTU against $4.2 under the administered price mechanism (APM). According to industry experts, gas prices for the industry units have risen by almost 10 per cent since January.
The minister of state for energy, Gujarat government, Saurabh Patel said, "Gas-fired power plants in the state are finding it difficult to generate power in the wake of high cost of imported LNG. The high input cost translates into higher power cost for the state. Nearly 500 Mw of power generation is estimated to have been stopped in past four months. How can we afford to provide power at Rs 6 per unit? It is very unfortunate that they (Centre) are giving KG gas to the steel industry and not giving it to Gujarat. We had to shut down around 10 million units of generation, approximately 500 Mw, due to high cost pressure of imported LNG."
Currently, Gujarat has around 13,000 Mw of total installed power generation capacities, while 5,000 Mw of additional capacities are expected to come up in next one year. However, those upcoming capacities will also have gas-based plants. For this, Patel added, "We hope by that time, we will be able to get KG gas for these plants." Gujarat imports LNG from its two LNG terminals each at Dahej, operated by Petronet LNG and Hazira owned by Shell India and Total of France. One more LNG terminal is planned at Mundra in Kutch district by Ahmedabad-based Adani group and state-run Gujarat State Petroleum Corporation (GSPC).

Wednesday, February 23, 2011

India's coking coal requirements could increase by nearly 22 per cent to 85.34 million tonnes in the next fiscal: Jaiswal

India's coking coal requirements could increase by nearly 22 per cent to 85.34 million tonnes in the next fiscal, according to Coal Minister, Mr Sriprakash Jaiswal.
“Coking coal requirement for steel production is expected to be 85.34 million tonnes in 2011-12, as steel production is dependent on coking coal,” said the Minister.
The domestic steel industry is expected to use about 70 million tonnes of coking coal in the current financial year ending Mar 31. The country is likely to produce about 65 million tonnes of steel in the current financial year.
India meets about 70 per cent if its coking coal needs through imports from countries including Australia, Indonesia and the US.The Minister said that thermal coal requirements for power utilities, too, would grow at 10 per cent during the next financial year. “Coal demand from the domestic cement industry also looks bright and it is expected that coal need would rise steadily during 2011-12,” he said.

Railways-NTPC Adra JV for setting up a 1,320 MW thermal power plant in West Bengal caught in Mamata-Nitish tussle

A proposed joint venture between the Indian Railways and NTPC Ltd for setting up a 1,320 mw thermal power plant in West Bengal has been caught in a tussle between the railway ministry and Bihar government over issues relating to a similar joint venture. The power plant, proposed to be set up at Adra in Purulia district of West Bengal, has been made a part of Bhartiya Rail Bijlee Co Ltd, a 26:74 joint venture between the railways and NTPC. 
This venture was floated to set up a 1,000 MW thermal power plant at Nabinagar in Bihar, where the Bhartiya Rail Bijlee Co is headquartered. 
The Adra project was earlier proposed to be an independent thermal power station with a similar holding pattern. 
"There has been no development on the Adra project after the memorandum of understanding was signed between NTPC and the railways ministry some six months back," an NTPC official told ET. "The railway ministry and the Nitish government have locked horns over the location of the headquarters of Bhartiya Rail Bijlee Company and the name of the company." 
"The railway ministry wants the headquarters of the company shifted to West Bengal and its name replaced with a Bengali-sounding name. But the Bihar government is not too keen on the proposal. It wants the company's name as well as it head office to remain the same as they are now," the official said.

Limited availability of coal could threatening to destabilize new power generation projects - Developers have already invested Rs 750 bn

An acute shortage of domestic coal is threatening to destabilize new power generation projects in which developers have already invested an estimated Rs75,000 crore. 
"New capacity of about 15,000 Mw is likely to be stranded for want of coal," a senior official with the power ministry told ET. This capacity is enough to light up three states bigger than Delhi. 
Coal India Limited had promised to supply 92 million tonnes (mt) of fuel to these projects, most of which were expected to be operational over the next one year. But the state-run firm now says it can deliver only 13mt. The available coal, which needs to be blended with imported coal before it is ready for use by generating companies, could produce barely 3,000 Mw of power. 
"Coal India has indicated that availability for power utilities is likely to be 319mt only. Of this, fuel supply agreements have already been signed for 306mt generating units commissioned up to March 31, 2009," the official said. "There is coal available at pit head locations, which is not being mined out due to inefficiency of Coal India and its subsidiaries," he added. 

Power project developers on Tuesday called on the Central Electricity Authority (CEA) to raise their concerns over the fuel supply issue but the authority said it could not do much. "We are helpless as Coal India has indicated that there is no coal for new projects," a CEA official said. 
The coal ministry official said CIL production would not improve unless the environment ministry clears the hurdles for mining projects. He said more than 150 mining projects of Coal India are awaiting clearance from the environment ministry. These projects have a coal production potential of 210mt. 
Experts say importing coal will also not solve the problem for new projects as there is a limit to which Indian boilers can use imported coal. 
Imported coal has higher heat value as compared with domestic coal and it is believed that it also corrodes boiler parts and emits more smoke when used in Indian boilers over longer period. Supply of coal by CIL to power utilities over the past few years has been falling short of requirement for the electricity generation targets. The utilities had reported a loss of 10.9 billion units in 2008-09, 14.5 billion units in 2009-10 and 5.3 billion units between April 2010 and December 2011.

Petronet to take LNG to customer's doorstep

Petronet LNG is turning into a marketer of natural gas from being just an importer and regassifier of liquefied natural gas (LNG). The country’s biggest gas importer has launched a pilot project in Vadodara, Gujarat.
A hotel in Vadodara has agreed to source gas directly from the company’s terminal at Dahej, also in Gujarat. “The company board has agreed and approved direct marketing of gas besides the quantity that is being marketed by the promoters —GAIL, Indian Oil Corporation and Bharat Petroleum Corporation. We would look at direct marketing of gas in areas not serviced by our promoters,” Chief Executive Officer and Managing Director A K Balyan told Business Standard.Under the pilot project, the hotel will put up the infrastructure such as a dispensing unit. “We have started supply of small quantity to a Vadodara-based hotel. We have many more requests for direct supply which we will evaluate in the future,” Balyan said.

The company is also looking to expand the supply of gas by roads and is evaluating creation of small storage hubs along the highways. Though regassified LNG is considered expensive by fertiliser and power companies, there is no dearth of consumers in the industry who want to move away from more expensive fuel like diesel and naphtha.
Power foray plans
The company is also ready to seek a final Board approval for setting up a power project near its terminal at Dahej. “We will seek a final approval from the Board in the next two months,” Balyan said. The Detailed Feasibility Report has already been prepared and it has favoured the foray into power. The Gujarat government has already allotted 50 hectares of land for the same. Petronet may look at setting up a 1,200-Mw gas-based power plant with an estimated investment of Rs 4,000 crore. The proposed project will have an additional benefit of availability of “cold energy” extracted from LNG. The cold energy utilisation will enable the company to raise the plant capacity and consequently reduce cost of generation.

Tuesday, February 22, 2011

Capacity addition failure haunts NTPC

In 11th Plan (fiscal 2008-2012), during which NTPC was expected to add some 22,400MW. Even if it installs 5,000MW in the year to April 2012, it will have fallen some 50% short of its target
That number is a tad less than the approximately 6,000MW it has added since fiscal 2008. In the past couple of years, the firm’s execution record has been poor. Take the 11th Plan (fiscal 2008-2012), during which NTPC was expected to add some 22,400MW. Even if it installs 5,000MW in the year to April 2012, it will have fallen some 50% short of its target.
Yet, for a company that enjoys regulated 15.5% return on equity (RoE), it is capacity addition that will make it more attractive for investors.
The delay in building new factories is roughing up its profits as well. For the quarter ended December, NTPC’s power generation grew by a measly 0.2% from a year ago. Grid problems and the parlous finances of state electricity boards, its main consumers, also meant that some of them could not take delivery of contracted power. As a result, energy units actually delivered rose 0.8%. However, revenue grew 20% from a year ago. This was due to a 23% rise in fuel costs (a pass through in the assured RoE model), due to a price hike by main supplier Coal India Ltd at the end of December 2009.
A rise in employee and other costs means that earnings before interest, tax, depreciation and amortization grew 10%. Higher taxes (moving to minimum alternate tax due to an increase in RoE) have also hit the profits and net profit grew 0.3% from a year ago. Shorn of some one-offs, such as prior period sales, the new tax norms and a change in depreciation policy, the adjusted profit after tax shows a growth of 11%, in line with estimates.
But that isn’t overly impressive. Many brokerages have cut down their earnings estimates for the next two years. That, coupled with the execution track record, has meant that investors are not very gung-ho about NTPC. For a stock that is considered a defensive bet, its returns mirror those of the Sensex since the beginning of this year. The numbers are more telling since the firm declared its results. Since then, NTPC has underperformed the benchmark index by 7.5%.

NTPC Kaniha plant crisis deepens - Another 500 MW unit shut down; 5 out of 6 units have been put out of operation due to coal crisis

Another 500 Mw unit of 3000 Mw NTPC-Kaniha thermal power plant was shut down today due to lack of coal supply on the fifth day of Talcher rail blockade.So far five out of six units of the plant have been put out of operation due to coal crisis.

According a top NTPC official, the Unit-2, linked to eastern grid, has been shut down today. Only one unit, Unit no 4, linked to southern grid, is kept running with a lot of difficulties as the plant has to keep at least one unit in operation. The 500 MW Unit 4 is generating 400 MW.
The power generation of NTPC-Kaniha, which was 3000 Mw daily before the crisis, has come down to 400 Mw today, regretted the official stating that this has led to sharp fall in power supply to 17 consuming states.
The coal authorities managed to supply three rakes (10000 tonnes) of coal from Lingaraj coal mine to Kaniha plant through Merry-go-round system today. However, it was stopped in the afternoon by the rail roko activists, who led by local MLA Bjraja Kishore Pradhan, squatted on the rail track near the mine.
N N Mishra, director (operations), meanwhile, rushed to the Kaniha plant and held an emergency meeting with the local officials. He is learnt to have gone to Bhubaneswar to take up the matter with the state officials.
Meanwhile, the economic blockade imposed by locals continued on fifth day today peacefully. The Local MLA who is leading the agitation has boycotted the high level meeting being held at state secretariat by the transport secretary.
“First the Railways should restore the suspended passenger trains to the Talcher station before talks are resumed”, said Pradhan.
It may be noted that in the wake of the strike, the Railways had suspended existing trains to the station.

As the coalmines were off from the purview of the agitation, all the seven open cast mines operated normally but there was no coal despatch due to blockade of rail track near the station.

BHEL announces successfully test run of its first indigenously manufactured turbine developed in collaboration with GE of the US

BHEL has announced it has successfully test run its first indigenously manufactured turbine developed in collaboration with GE of the US and plans to deliver two more units by the end of the current fiscal.According to a statement, the first advanced class 9FA+e (250 MW) gas turbine manufactured at BHEL RC Puram, Hyderabad was successfully test run today.
The highlight of the test run was that it was successful in the first attempt. This is the first 9FA advanced class Gas turbine developed in collaboration with GE. The value of the test facility is Rs 400 crore. Mr R. Krishnan, Executive Director, in a statement said “this is a historical achievement for BHEL and adds to India's power generation capacity.”
BHEL has been designing and manufacturing gas turbines of various ratings in collaboration with GE since 1981. Successful establishment of manufacture and listing of this advanced class gas turbine will go a long way in aiding BHEL in achieving its objective of desired capacity addition.
This new test facility has many features which were hitherto never been established before. The unique features of this advanced Gas Turbine are use of HSD (High Speed Diesel) as fuel. The entire control system was designed and configured by BHEL indigenously.
BHEL has two more identical units in advanced state of manufacture and ready to be delivered before the end of this financial year.

Monday, February 21, 2011

NTPC plans doubling low-ash coal buy from 2.5 to 5 million tonnes - Eyes Shonepur Bazari open-cast mines of Eastern Coalfields

NTPC Ltd is planning to step up its negotiated purchase of low-ash (A and B grade) Ranigunj coal from Coal India Ltd from 2.5 million tonnes to five million tonnes. Negotiates sales (also referred as sales through memorandum of understandings) were one of the major contributors to CIL's profit during the October-December quarter.Available in very small quantities (10-11 million tonnes) in the Eastern Coalfields Ltd, a wholly owned subsidiary of CIL, the low-ash A and B varieties have a heat value of 5,600-6,400 kilo calorie, comparable to South African coal. In October 2009, the Centre allowed ECL to charge ‘import-linked' prices for such coal.


According to sources, NTPC has expressed interest in getting additional supplies of 2.5 million tonnes a year from Shonepur Bazari open cast mines of ECL. Both the companies are expected to enter into an MoU in this regard shortly. This is over and above NTPC's existing annual purchase of 2.5 mt of Ranigunj coal at negotiated price.Confirming the move, an NTPC source said domestic low-ash coal is used as an import substitute by the company. “Apart from the price advantage, domestic sources are always preferred over imports on availability concerns,” the official said.NTPC consumes approximately 160 million tonnes of coal — including 12 million tonnes of imported varieties — annually to generate 33,000 mw of power.


While the details of the price negotiation between CIL and NTPC are not known, sources told Business Line that that the coal major has fetched an average price of approximately Rs 4,000 a tonne on negotiated sales during this fiscal.Assuming an average landed price of South African coal at $ 100 a tonne and an exchange value of Rs 45 a dollar; a back-of-the-envelope calculation suggests that CIL is selling Ranigunj coal at 10-11 per cent discount to the imported coal.According to sources, CIL is expected to sell nearly 5.5 mt of coal at negotiated price during the first nine months of 2010-11.Considering CIL's average return of approximately Rs 1,100 a tonne on the total sales, negotiated sales have generated an additional revenue of nearly Rs 2,900 a tonne, leaving a net positive impact of approximately Rs 1,600 crore on the bottomline during April-December 2010.In other words, nearly a quarter of the Rs 6,646 crore net profit of CIL during April-December 2010 was contributed by negotiated sales.

Coal shortage forces NTPC to shut down four units at Kaniha - Currently producing 700Mw against normal daily generation of 3000MW

Power generation from 3000Mw NTPC-Kaniha plant, the second largest power plant in India, has drastically come down with four out of six 500 Mw units of the thermal station being shut down due to lack of coal.
The power plant is currently producing about 700Mw against a normal daily generation of 3000MW. NTPC-Kaniha provides power to 17 states.The company authorities have been forced to shut down four units as coal supply to the plant has come to a grinding halt from Thursday last due to rail blockade agitation by local people near Talcher coalfields. Not a single tonne of coal has reached the plant from Friday due to the stir.
“We are running only two units with partial load of 700 Mw with the available coal at our stock yard,” said a top NTPC official warning that even this minimal operation of the plant cannot be possible beyond Sunday (today) if coal supply through Merry-go-round system of linked Lingaraj mine is not resumed by this evening. The steep slash in generation has had an adverse impact on national grid, he stated.
The power plant has been running with hand to mouth coal supplies for the last three years. As a result the authorities have not been able to build up coal stock to meet such eventuality. Besides drawing coal from Mahanadi Coalfield Limited (MCL), the plant has been using imported coal to meet the shortfall. But the rail blockade, cutting off coal supply from all sources, has jeopardized the functioning of the plant.
According to the official, four units of the NTPC-Kaniha plant are dedicated for the southern states. These states are now drawing only 350 Mw from running Unit 4 instead of normal drawal of 2000 Mw. Similarly, another 350 Mw is evacuated to eastern grid from Unit 2 against the normal supply of 1000 Mw.
Alleging chronic negligence of Railways to Talcher station, hundreds of locals led by local MP Tathagat Satpathy and MLA Braja Kishore Pradhan resorted to rail roko stir near the Talcher station from last Thursday blocking coal supply from Talcher coalfield. Talcher coalfield of MCL provides coal not only to different industries within Orissa but also to power stations in Tamil Nadu, Andhra Pradesh and other states.
All the power stations in these states, dependant on Talcher, are now in super critical state, according to a colliery officer.
The striking locals demand that all the Intercity and Express trains plying on Sambalpur and Bhubaneswar line should come to Talcher station instead of by-passing the station and running through Talcher Road, a few Kms away. “We have been demanding this for a long time, but Railways is not listening to us”, said MLA Pradhan announcing to continue the agitation indefinitely.

Govt likely to give breather to power sector by extending tax holiday by another year - All 11th Plan power plants to be benefited

The government is likely to give a breather to the power sector by extending the tax holiday for the sector by another year. The move will benefit power projects, including ultra mega ones (UMPPs) and transmission projects, that are slated to be awarded in the remaining period of the 11th Plan (2007-12).
This could be part of the Budget announcements on February 28.
The power sector currently gets tax break under Section 80-IA of the Income Tax Act. The sop ends on March 31, 2011 making projects which are awarded after the cut-off date ineligible for the benefit. Under the provisions of the section, power projects get deduction of up to 100% profit for any ten consecutive years out of the first fifteen years of commissioning of a project. Earlier, the benefit was to end on March 30, 2010 but government extended it by an year in the last Budget, enabling.projects awarded since then to be eligible for the benefit.
“Power sector could get an additional year to enjoy the benefits under Section 80 IA, which will also ensure that all projects awarded in the 11th Plan get similar tax breaks,” said a government official privy to the development.
The biggest beneficiary of the extension will be state-owned NTPC, while projects of companies such as Sterlite, Jindal Power, Lanco, GMR and other state utilities could also avail of the tax sops. In addition, few private sector transmission projects could also benefit from extension of Section 80 IA benefits.
“ Direct Tax Code is slated to become operational from fiscal 2012-13, which will discontinue all profit-linked tax incentives for infrastructure sector projects,” the official added.
The draft DTC Bill seeks to discontinue profit-based tax incentives and provides for an expenditure-based incentive (capital expenditure) scheme in relation to specific industries such as infrastructure (roads, ports and airports), power sector and SEZ developers.

Though the companies enjoying tax incentives under any existing scheme would continue to get them for the unexpired period, projects awarded (and where developers have made some investment) after the cut-off date will be governed by provisions in the code. The proposed changes will help power projects in excess of 20,000 mw that is likely to be awarded in the 2011-12 fiscal. It will also benefit UMPPs, as the government expects that at least three such projects may be bid out in next fiscal.
“We have asked for tax holiday similar to the one that is available under 80 IA to be provided in the Direct Tax Code Bill, at least up to March 31, 2017 so that continuity is maintained and uncertainty is avoided,” said an official in the power ministry. The ministry in its pre-budget submission.before the finance ministry has also sought extension of this Section up to 2017 to give benefit to ultra mega power projects and transmission projects planned for Eleventh and Twelfth five year plan periods. “ The government should have a uniform policy of incentives till Direct Tax Code is implemented. This will remove uncertainties and help projects to get financial closure,' said an industry expert. A thermal power projects requires an investment of close to Rs 5 crore for 1 mw of power. With country planning to add over 62,000 mw in 11th Plan and another 80,000-100,000 mw in the 12th Plan, tax holiday could act as catalyst to attract investment. India currently has a power generation capacity of 1,70,000 mw.
Even for the 11th Plan projects, the government has calculated huge shortage of funds to the tune of over Rs 4 lakh crore. This is expected to increase substantially.in the next plan period. In view of the situation, already several measures have been taken to augment funds for the sector and more are being explored to see that necessary investment comes in the sector.
Development of power sector is crucial for growth needs of the country as a deficit situation inhibits industrial activity. Already the country is facing over 12% peaking shortage that is considered unsustainable for a country that aspires to take up its GDP growth rate to double digit mark

Jairam Ramesh's rider puts brakes on Rs 170 billion ultra mega power project planned at Bedabahal in Orissa

The 17,000-crore ultra mega power project planned at Bedabahal in Orissa might not see light of the day as power ministry has not agreed to the conditions imposed by environment ministry for granting clearance to attached coalmine. 
Environment Minister Jairam Ramesh has granted mining approval to the project provided NTPC and Orissa Power Generation Corporation give up their respective Dulanga and Manoharpur coal blocks in the vicinity. As per data available with coal ministry, Dulanga block is expected to have 260 million tonnes of reserves, while Manoharpur and Dipside Manoharpur blocks have combined coal deposits of about 281 million tonnes. 
Bedabahal project was allocated three coal blocks in IB valley coalfield in Orissa with a total 886 million tonnes reserves in 2006. The environment ministry has denied mining permission to Meenakshi coal block with estimated 285 million tonnes of reserves while the other two have been cleared. 
A senior power ministry official said the central government was not authorised to decide upon projects of NTPC and Orissa Power Generation Corporation. "NTPC is a listed public sector company while Orissa Power Generation Corporation is controlled by the respective state government. We cannot agree to the environment ministry's conditions on their behalf. On the face of it, the proposal seems impossible to be agreed upon," he said on condition of anonymity. 
The power ministry last week received an official communication from the environment ministry on the issue and is expected to take a final call soon. The power ministry is comfortable with the second condition of the environment ministry asking for a reduction in the coalmining area of Meenakshi block. 
The condition emphasises on reduction of coalmining area by 10-15%. "We have reworked the boundaries and as per preliminary studies we have found that this would not affect the size of the ultra mega power project." 
Power Finance Corporation , the nodal agency for bidding out ultra mega power projects, had initiated international tariff-based competitive bidding for Bedabahal in June last year. PFC had last month extended bid submission deadline for Bedabahal to March 31. 
The power ministry official said companies like NTPC, Tata Power, Reliance Industries , Larsen & Toubroand Essar Power are vying the project. 

Saturday, February 19, 2011

NTPC seeks long-term pricing comfort from Petronet LNG for its Kayamkulam power plant in Kerala

With four state governments conveying their unwillingness to sign power purchase agreements (PPAs) with NTPC Ltd for its Kayamkulam power plant in Kerala, the biggest power generator in the country has sought long-term pricing comfort from Petronet LNG Ltd.
NTPC has told the LNG importer it cannot sign a gas sales purchase agreement (GSPA), since the cost of power works out to be high and states are unwilling to sign PPAs at that rate.
Signing of a GSPA with NTPC is crucial for PLL’s Kochi regasification terminal, some 120 km away from the power plant, since it provides a surety of offtake to the marketers of regasified LNG (RLNG). “Discussions are still going on, since a larger part of regasified LNG is likely to go to power plants in that area. GAIL is putting up pipelines,” PLL managing director A K Balyan told Business Standard.Besides Puducherry, NTPC had approached Tamil Nadu, Andhra Pradesh, Kerala and Karnataka for selling power from its 1,030-Mw, Stage II of the project. “We have some understanding with GAIL (the marketer of RLNG) and PLL to get us gas for Kayamkulam but this will become effective once we are able to sign PPAs. We have not signed (GSPA) because at that very high rate of LNG, that for power is coming to Rs 8 a unit. Beneficiary states do not want to buy power at that price,” said NTPC chairman and managing director Arup Roy Choudhury.
NTPC has also offered RasGas of Qatar a stake in the power plant with the hope of getting an assured supply. Balyan said Indian customers were keen on a long-term contract but Qatar was trying to hold on, to see that the phase of global over-capacity of LNG was over to ensure a better price.PLL has a long-term supply contract with RasGas for supply of 7.5 million tonnes LNG annually. This gas is currently being received at its Dahej terminal in Gujarat. For Kochi, 1.4 mt LNG supply is expected to start in 2014 from the Gorgon field in Australia.
NTPC buys around 15.5 million standard cubic metres a day (mscmd) of gas, of which 4-5 mscmd is RLNG and the remaining domestic gas. At an average cost of around $7 per mBtu, the power rate works out at Rs 5 a unit. NTPC is currently buying RLNG at $10-16 per mBtu from PLL’s Dahej terminal, depending on whether it is spot or long-term LNG. The delivered price of Gorgon LNG would work out to be almost double the current RLNG price.

BJP alleges Rs. 56,000 crore Power scam in North East

Seeking to queer the pitch further for the Congress-led UPA, already on the back foot over issues of corruption, the BJP unveiled a report by its fact-finding team to claim blowing the lid off scams - worth several thousand crore - related to Rs 4 lakh crore hydropower projects in Arunachal Pradesh, and numerous others across the North-Eastern States, mostly ruled by the Congress.
The BJP pegged the total value of the scam in Arunachal and other N-E States at around a whopping Rs 58,000 crore, including Rs 20,000 crore kickbacks in AP. It sought a time-bound probe into the ‘loot' by the Congress Governments in the North East States.
The report points to dubious companies with hardly any experience in the hydropower sector and without enough funds in its accounts getting projects worth several hundred crores. In some cases, allotment was done within days of the companies coming into existence.
"A tour and travel company, stock broking and trading firms, non-existing and Benami companies have been allotted projects worth hundreds of crores of rupees," the report claimed.
With documentary proof in hand, BJP chief Nitin Gadkari chose the occasion to hit out at Congress president Sonia Gandhi. "Sonia Gandhi had made tall promises against corruption. But they are so hollow; not only are the Central leaders corrupt, even the Chief Ministers of Congress-ruled States are making money," he told the media here on Saturday.
Gadkari said since Prime Minister Manmohan Singh represents the North-East in Parliament, it was his ‘responsibility' to check the scams which were hindering the pace of development in the region.
While Leaders of Opposition in the Lok Sabha and the Rajya Sabha would meet the Prime Minister in this regard, he would personally lead a delegation to the President to submit the report, sources said.
The fact-finding committee of BJP comprising MP Bijoya Chakravoorty, general secretary Tapir Gao and national secretary Kirit Somaiya claimed Rs 20,000 crore kickbacks were paid for hydro-power projects worth Rs 4 lakh crore in Arunachal Pradesh.
The Dorji Khandu Government in Arunachal Pradesh signed as many as 137 MoUs and MoAs with dubious and newly formed companies for projects, the committee claimed, adding there were at least 50 different scams in Arunachal Pradesh, Assam, Manipur, Meghalaya, Sikkim and Nagaland
The committee also found that licence fee paid by developers to the Arunachal Pradesh Government for hydro projects was deposited with the Apex Bank, a cooperative bank already facing scam charges.
"The total bribe amount involved in a year in BPL households availing 11 different services is estimated at Rs 8,830 crore," the committee claimed. It also claimed to have found that rice meant for poor was being smuggled into Bangladesh markets, through the Assam border and sold at Rs 10 per kg.
"Similarly, transportation subsidy is claimed in hundreds of crores of rupees and pocketed by transport contractors, who are none other than the Ministers' families," the BJP team alleged. The NIA also unearthed a scam of around `1,000 crore in North Cachar Hills Autonomous District Council, it pointed out.
Interestingly, the committee also found that in Government records every individual in Damin, a revenue circle in Kurung Kumey District of Arunachal, had consumed at least 24 kg of salt per month. This salt was meant for distribution through PDS. "In Koploriang circle, every individual was shown consuming 64 kg of rice per month," the report claimed.
"In Manipur, a loot of more than Rs 300 crore has been committed in the name of cleaning the Loktak Lake. The firm to whom the contract was awarded was found dubious and is suspected to be owned by the Manipur Chief Minister's nephew," the report stated.
Under the SGRY scheme, a bill of Rs 2.31 crore was raised for lifting 2,500 quintals through head load to cover a 5-km distance. "Instead of providing employment to poor, the Khandu Government gave transport contract to the Chief Minister's wife's company," the BJP said.
It also found Nayuma Cable, owned by the family of Sikkim Chief Minister Pawan Chamling, involved in an Entertainment Tax scam wherein the firm acknowledged 2200 cable subscribers, but deposited tax for only 170 of them for several years in row. The Sikkim Government also gave contract for supply of TB medicine to the families of Ministers, who in turn supplied sub-standard medicines.
Tip of Iceberg
  • Arunachal Pradesh hydropower projects worth Rs 4 lakh crore included kickbacks of Rs 20,000 crore
  • Tuff Energy allotted project of 70 MW, worth Rs 400 crore, within 50 days of its incorporation without any bidding
  • Mumbai-based Patel Tours & Travels, with just 200 sq feet of office, given two projects of 15 MW and 12 MW capacity each
  • Nido Energy Systems Private Limited, previously Lulla Construction & Trading Pvt Ltd, was allotted projects of 25 MW capacity. Its address in Government records is that of a Government's servant quarters
  • Sai Krishnodaya Industries Pvt Limited was allotted five projects, out of which four were allotted on the same day - July 27, 2007
  • In some cases, allotment was done within days of the companies coming into existence 

Centre approves Rs. 5800 crores FPO of PFC

The UPA government  approved follow-on public offer (FPO) of Power Finance Corporation (PFC) that is expected to raise Rs 5,800 crore in the first quarter of next fiscal.The Cabinet Committee on Economic Affairs has approved the public offer that includes 15% fresh issue of shares by the company and 5% divestment by the government, an official statement said. Retail investors and PFC employees will be eligible for a discount of 5% on issue price, the statement said. Currently, the government holds a 89.78% stake in PFC. The Centre divested a 10% stake in the company through an initial public offer in 2007.
A PFC official said the public issue was likely to hit the capital market in the first quarter of 2011-12. The company's shares closed at Rs 251.95, down 1.56%, on the BSE on Thursday. Fresh issue of equity shares would enable PFC to maintain a comfortable gap between the present and required capital adequacy ratio and enhance equity base for meeting growing future investment needs, the statement said.
PFC in July last year was categorised as NBFC infrastructure finance company. The status requires PFC to maintain capital adequacy ratio of 15%. At present, PFC's capital adequacy ratio stands at 18%. Up to 0.12% of the issue, would be reserved for PFC employees. After the proposed FPO, government's stake may go down to about 85%. The reservation of equity shares for PFC employees are subject to the limit prescribed for retail investors by Sebi, which will not exceed 0.12% of the issue size.
A discount of 5% of offer price will be given to retail individual investors and eligible employees. The public offer would help PFC to meet the eligibility requirement of maintaining a capital to risk assets ratio of 15% for industrial finance company status.The FPO will also enhance equity base of the company to enable it to meet the growing future investment needs of the power sector.
PFC is a non-banking financial institution that provides loans for various power projects in generation, transmission and distribution sector as well as for renovation & modernisation (R&M) of existing power projects. The government has set a target of raising Rs 40,000 crore from disinvestment this fiscal, against Rs 25,000 crore last fiscal.

NTPC's project in Lanka hits hurdle - Sri Lanka Attorney General's office raises 70 queries on basic issues at the nick of time

The Sri Lanka Attorney General's office has raised 70 queries on basic issues at the nick of time, which has delayed signing of a deal for India's first overseas power generation project that has been in the works since 2006.
After years of negotiations, state-run National Thermal Power Corporation (NTPC) and Ceylon Electricity Board agreed on the nitty-gritties for setting up a 500 mw coal-fired power plant at Sampur in Sri Lanka's Trincomalee area as an equal joint venture. The NTPC board approved the agreement in July last year.
Sources said the CEB board too cleared the deal around the same time but did not officially communicate it to the Indian power generation major since it was yet to get the A-G's concurrence. Government sources said the A-G's office took four months —after CEB submitted the agreement for concurrence —to raise questions.
The queries pertain to such basic issues as Lanka government's budgetary support to CEB's equity, process of invoking government's guarantee, laws governing the joint venture and place of arbitration. "These are very fundamental to the understandings reached among NTPC, CEB and the Lanka government over the last two years and should not be reopened," one official said.
Not surprising then that the project's slow progress has drawn the attention of the Prime Minister's Office. The project has been billed as a major milestone in bilateral ties with foreign nations.
It also figured in the joint declaration issued during Lanka President Mahinda Rajapaksa's visit in June 2010. Subsequently, both governments also decided to speed up the project's progress during Lanka power minister's October 2010 visit.
The sources said the external affairs ministry has advised NTPC against responding to the queries for the time being.
In the meantime, the CEB has invited a team of NTPC executives for discussing the issues but is yet to offer a schedule. New Delhi had agreed to extend a $200 million line of credit on soft terms to enable the Lanka government to fund construction of jetties and other infrastructure near the project site.

Friday, February 18, 2011

4000 MW Bhedabahal UMPP in Orissa gets green nod

The union ministry of environment and forests has given the green signal for the 4000 MW Bedabahal ultra mega power project (UMPP) in Odisha, clearing the road for the power ministry to award the project. "We have got clearance for the Odisha UMPP. This would be the fifth UMPP that we would award in the past five years," Sushil Kumar Shinde, union minister for power, said at press conference in New Delhi.
With the environment ministry continuing to soften its stand on environmental clearance for large projects, the power minister said he is hopeful of receiving the documents from the environment ministry soon.Two of the three coal blocks associated with the Bedabahal UMPP - Meenakshi B and the 'dipside' of Meenakshi - had fallen in 'no go' areas, where the environment ministry had barred any mining activity.
This had led Power Finance Corporation, the nodal agency for implementation of UMPPs in the country, to postpone the process of inviting preliminary bids to next month - the seventh time bidding process for the project has had to be put off.
However, the environment ministry has said that only two projects could mine for coal from the blocks, categorised as no-go area. If the government proceeds with Bedabahal, either an NTPC project or an Odisha government project will not get coal.

L&T to construct Dhuvaran 375 MW gas project for GSECL

Engineering major Larsen & Toubro said it has received a Rs 1,100 crore order from Gujarat State Electricity Corporation (GSECL) for setting up a 375-MW gas-based power plant at Dhuvaran, near Baroda.The project, which will be executed by the gas-based power projects business unit of Baroda-based L&T Power, will be commissioned during the next Five-Year Plan, L&T said in a statement.
L&T will design, supply, install and commission the entire power project on a turnkey basis. It will procure advance gas turbines and high-efficiency steam turbines for the plant from Siemens AG, Germany.
"The EPC order was bagged by L&T under global competitive bidding against stiff competition from domestic and international power plant equipment manufacturers," L&T said.L&T's scope includes design, detailed engineering, supply, installation and commissioning of the complete power plant on a turnkey basis. The plant will incorporate state-of-art advanced class Gas Turbines and high efficiency Steam Turbines from Siemens AG, Germany, which will be procured by L&T.

L&T-Sargent & Lundy, a subsidiary of L&T, will carry out the plant integration and detailed engineering, using propriety technology of Sargent & Lundy LLC, USA. L&T will design and manufacture critical equipment for the plant, like heat recovery steam generator, de-aerator, condenser, cooling tower, switchgear and valves. Project management, construction, installation and commissioning will also be carried out by L&T.
This project will be executed by the Gas Based Power Projects Business Unit of L&T Power, based in Baroda, and will be commissioned during 12th plan period, within 30 months from date of notice to proceed. L&T's well established strengths in design, engineering and construction, accompanied with robust quality and safety standards, and on-time delivery are vital contributors to its success in the power industry.
L&T has already executed several large gas based power projects and has recently commissioned a 238.5 MW cogeneration power plant for Indian Oil Corporation Limited at Panipat in Haryana, whereas another large 2 x 384 MW gas based power plant for GMR Group is at an advanced stage of execution at Vemagiri in Andhra Pradesh on EPC basis.
Seven decades of a strong customer-focused approach and the constant quest for topclass technology and quality have enabled L&T to attain and sustain leadership position in its major lines of business.
L&T has already executed a number of gas-based power projects and recently commissioned a 238.5-MW co-generation power plant for Indian Oil Corporation at Panipat. It is also executing a 2x384-MW gas-based power plant for GMR Group at Vemagiri, in Andhra Pradesh.

Power from Jaitapur nuclear Power plant will cost Rs. 5 to Rs. 8/KWh

The electricity generated from the proposed 9,900 MW Jaitapur Nuclear Power Project (JNPP) will be double, even triple the cost of electricity from coal- or gas-fired plants, according to a report. Depending on the cost of capital, the unit cost of electricity from Jaitapur would come to Rs5 to Rs8 per kilowatt per hour. The same unit from a thermal or gas operated plant costs Rs2 to 2.5 only, says the report published by the Coalition for Nuclear Disarmament and Peace (CNDP).
It also mentions that the capital cost of setting up JNPP, which consists of six European Pressurised Reactors (EPRs), would involve Rs200,000 crore of public money.
The report, prepared by eminent journalists and activists such as Praful Bidwai, Rafeeq Ellias and Vaishali Patil, raises serious questions about the economic cost of the project.
The reactors, which have not been commissioned fully anywhere else in the world before, are expected to cost Rs21 crore per megawatt (MW) of energy they produce. This figure is conditional upon the fact that the ongoing construction of EPR at Olkiluoto, Finland, does not escalate beyond the estimated 5.7 billion euros.
The cost estimate, however, does not include fuel or maintenance costs, storage of hundreds of tonnes of the nuclear waste generated annually; also the cost of reactor decommissioning, which could amount to one-third to one-half of the construction cost.
It also does not include the extensive additional physical security costs, including anti-aircraft batteries and the extra Coast Guard deployment. In addition, there are environmental costs, and health costs on miners, plant workers, and the public living close to nuclear installations, and the associated medical expenses.
The Nuclear Power Corporation of India Limited (NPCIL) has been maintaining right beginning that the EPR technology is completely safe and the it has taken all possible precautions to ensure the safety of the project.
However, the report which has also scrutinised the EPR technology, has listed out countries and organisations which have raised serious objections on the reactor's design.
It is mentioned that the French nuclear safety agency itself has noted several problems in the reactor design, while the US Nuclear Regulatory Commission (NRC) has delayed its design certification to the EPR from June 2012 to February 2013."(In Finland) Several safety, design and construction problems have pushed its start-up to the second half of 2013 - a delay of 42 months, with a cost escalation of 90%," said the report.

Thursday, February 17, 2011

India Poised for Record Capacity Addtion of 15000 MW this Year : Shinde

Power sector in the country is poised for record capacity addition of 15000MW during this financial year said Shri Sushilkumar Shinde, Union Minister of Power inaugurating International O&M Event “Indian Power Stations - 2011” today in New Delhi to commemorate the commencement of power generation from NTPC’s  first unit at Singrauli (Uttar Pradesh) on same day in 1982.  He congratulated NTPC for its achievements and gear up for further challenges.  Shri Shinde said that after nearly thirty years of humble beginning, NTPC has a total installed capacity of over 33000 MW and plans to be a 75000MW company by 2017.
Shri  K. C. Venugopal ,Minister of State for Power in his keynote address urged the power companies  for new and innovative initiatives  for futuristic impact on power situation in the country by supply of reliable and quality power to all sections of the society.
Shri P Uma Shankar, Secretary, Ministry of Power in his address said that 13 February is a historical day for both NTPC and central sector. The government’s plans to add capacity in the country continue to centre around NTPC. He added that expectations from NTPC are very high for significant contribution to the sector in the country, in view of the ambitious capacity addition target of 12th plan.
Speaking on the occasion Shri Arup Roy Choudhury, Chairman and Managing Director, NTPC said that the company is pursuing inclusive growth model meeting all its stakeholders including displaced persons, population around its projects and also ensuring quality power at reasonable cost to the consumers. He also spoke about challenges faced by the company in the areas of fuel security.
Shri Gurdial Singh, Chairperson, CEA, and Shri N. N. Misra, Director (Operations), NTPC Limited also addressed the gathering of distinguished invitees and participating Power Engineers from all over India and abroad.
The inaugural function of the Event Operational Performance beyond Excellence shall be followed by technical sessions and an exhibition to be held at NTPC Power Management Institute NOIDA on the 14th. In all, over 50 technical papers on Power Plant Operation and Maintenance shall be presented and discussed during the conference, including 7 technical papers from International organizations. The exhibition will show case new and innovative products for Power Generation Industry, from a wide cross section of Indian and Multinational manufacturers.

Lingering since 1999, will the North Karanpura project of NTPC finally take off?

NTPC will shift its proposed 1980mw thermal power plant in Jharkhand’s Hazaribagh district because the site is over a huge coal reserve.
The project land in the North Karanpura area sits over six billion tonnes of coal, which make up 9 per cent of the country’s total reserves. The coal will now be available for excavation.
At an inter-ministerial meeting between the departments of coal and power, with representations from NTPC and Coal India, it was decided that the project would be shifted from the original location to a suitable non-coal bearing area.
A ministry source said the Central Mine Planning & Design Institute has already identified five such locations that are free of coal deposits; after an examination, NTPC would select the site.
The Rs 8,000-crore project spread over 2500 acres was planned nine years ago but is yet to take off.
The first blow to the 3x660-mw supercritical power plant came when the erstwhile state of Bihar got divided into Bihar and Jharkhand. In 2007, the Japan Bank for International Cooperation declined to extend the Rs 1,500-crore debt it had earlier committed.
Finally, Coal India objected to the project because it would block the excavation of six billion tonnes of reserves underneath the project site.
The North Karanpura coalfield is spread over 1,230 square kilometres and has proven reserves of 14 billion tonnes.
Yesterday’s meeting also decided that NTPC and CIL would form a joint venture to mine the coal made available after relocating the project.According to sources, a second inter-ministerial meeting will be held within a month to take this proposal forward.
Bengal effect
The coal ministry will not allow industrial projects on coal-bearing areas in Raniganj in Bengal, a ministry official said.
The Bengal government had already earmarked land for three steel plants to be set up by Bhushan Steel, the Videocon group and the Abhijeet group, besides the Videocon group’s 1600mw power project, in the Asansol-Durgapur region that partly coincides with Coal India subsidiary Eastern Coalfields’ licensed area. The total investments for these three steel projects are estimated at Rs 49,000 crore.
The coal ministry’s move assumes significance as it has decided to henceforth auction coal blocks for captive use.