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Wednesday, March 30, 2011

Another power tariff hike on the cards

Consumers in the state, who were recently burdened with a power tariff hike, the second in the past nine years, are likely to get a fresh shock. The power tariff may be revised upwards yet again, thanks to Mahanadi Coalfields Ltd (MCL) which has jacked up prices of 'F' and 'G' grades of coal, used in thermal power plants, by 19 per cent and 23 per cent respectively.
Add to this, MCL, a subsidiary of Coal India Ltd (CIL), has started billing of excise duty on coal at the rate of five per cent from 1 March this year. With coal accounting for nearly two-thirds of the cost of power generation of thermal power plants and hydro power generation in the state falling drastically, fresh revision of power tariff seems only inevitable."The recent hike in power tariff has not factored in the sharp increase in coal prices by MCL which is the only CIL subsidiary to have scaled up prices of ‘F’ and 'G' grades of coal, used in thermal power plants.

Besides, the coal company has started billing of excise duty on coal at the rate of five per cent. This is bound to trigger another power tariff hike.
In the past couple of years, the price at which Grid Corporation of Orissa (Gridco) purchased power from NTPC has moved up from Rs 1.60 per unit to Rs 3.50 per unit and with the revision in coal prices, our bulk purchase price is set to go up to around Rs 4 per unit. For the end consumers, the hike could be possibly in the range of 70-75 paisa per unit, keeping in view the distribution losses”, a top Gridco official told Business Standard.
From the Co-Generation plants, Gridco was currently buying power at the rate of Rs 2.75 paisa per unit while Arati Steel, which runs a 50 MW captive power plant, has demanded a price of Rs 4 per unit for supplying power to the state grid.
The cost of hydro power generation in the state is only 65 paisa per unit but hydro power generation has shown a sharp decline and it meets only 17 per cent of the state's overall demand, the official stated.
Moreover, the average generation cost of thermal power has surged by two times in the past couple of years, he added.
In the last week of February this year, MCL had revised price of 'F' grade of coal from Rs 480 to Rs 570 per tonne while the price of 'G' grade coal was raised from Rs 350 to Rs 430 per tonne.
Industry sources pointed out that there was no justification for MCL to revise coal prices since the coal company posted a cash profit of Rs 4500 crore in 2009-10.
Meanwhile, on the excise duty front, the authorities of Orissa Power Generation Corporation (OPGC) have requested MCL to have a re-look at the levy of excise duty on coal supplied.
OPGC has requested MCL to examine the possibility of charging excise duty at the rate of one per cent without Cenvat benefit in the overall interest of the state.
"Power is not an excisable product and accordingly, a power company like OPGC has no option to set off the excise duty paid. In view of this fact, full excise duty of five per cent is to be borne by the consumers which will increase the coal price by Rs 29 per tonne. The financial burden on the consumers of Orissa on account of the enhanced excise on coal billed to OPGC would be Rs 7.5 crore per annum”, Venkatachalam K, managing director of OPGC said in a letter to the chairman and managing director of MCL.
As per the recently revised tariff, which will come into effect from 1 April, the consumers now have to pay Rs 1.40 per unit for the first 50 units, instead of first 100 units as provisioned earlier.
Domestic consumers using electricity up to 200 units will now have to pay Rs 3.50 per unit while for consumption of electricity between 200 and 400 units, the tariff will be Rs 4.30 per unit. Consumers using above 400 units would be charged at the rate of Rs 4.80 per unit, according to the latest OERC tariff order.Earlier, consumers had to pay Rs . 3.10 per unit to use up to 200 units and Rs 4.10 per unit for consumption beyond 200 units.

Tuesday, March 29, 2011

Shortfall in D-6 gas-: Agreement says RIL should pay ship-or-pay charges, invoking Force Majeure conditions only option out for company

Gas users have furnished agreements signed with RIL and RGTIL to argue that the ship-or-pay payments to be made under the Gas Transport Agreement for shortfall in the supply of KG D-6 gas should be made by the seller, in this case RIL, than by the buyer.
  Users quote the following clause under the head "Sellers` Supply Agreement":
  • Sellers shall reimburse Buyer for Monthly Ship-or-Pay Payments (as defined in the RGTIL GTA) paid by Buyer under the RGTIL GTA that would have been avoided had Seller made available the quantity of Gas nominated by Buyer on each Day in such Month up to the DCQ on any Day but excluding quantities that Sellers failed to make available due to Force Majeure or for which Sellers have reduced the scheduled quantity as permitted for Planned Maintenance Days"
  •   Then again, the seller is required by contract to make up for the shortfall in gas under the following clause:
  • In any Contract Year, Buyer shall pay for all Shortfall Gas at the Sales Price applicable to the Contract Month in which the Shortfall Gas is taken, and shall pay all other amounts payable under this Agreement in respect of Gas deliveries."
  • The option left for RIL to escape these clauses is the evoke the Force Majeure clause. RIL can argue that for circumstances beyond their control, like encountering reservoir conditions not foreseen earlier, it is not in a position to supply the contract quantity of gas.

Maha govt, NPC discuss safety concerns at Jaitapur, Tarapur

In the wake of the Japan nuclear disaster, the Maharashtra government held a marathon meeting with the Nuclear Power Corporation (NPC) today to take stock of the operational and emergency safety measures at the Tarapur atomic power station and the proposed nuclear plant in Jaitapur.
A state government team led by chief secretary Ratnakar Gaikwad met NPC chairman and managing director SK Jain, Atomic Energy Regulatory Board chairman SS Bajaj, Department of Atomic Energy additional secretary AP Joshi to address the concerns.
An NPC official, who attended the meeting, told Business Standard: “The government was apprised of the safety measures deployed at Indian nuclear plants especially at the Tarapur plant which is the only plant operational in Maharashtra. Tarapur I & II have boiling water reactors similar to the one in Fukushima I unit. Tarapur station, which comprises Tarapur unit I (160 MW), II (160 MW), III (540 MW) and IV (440 MW), has well defined emergency plans for fire, earth quake, flood & tsunami.”
The official said as far as the proposed Jaitapur project is concerned it was in the seismic zone III. The project site actually has much greater safety margins and it is quite safe and engineerable from seismic criteria. “The Station is also conducting Radiation Emergency (Plant, Site & Off-Site) Exercise routinely to check response of various agencies.”
The official said the nuclear power reactors to be set up at Jaitapur – the evolutionary pressurized reactors (EPRs) or Generation III+ nuclear power reactors – are state-of-the-art in terms of safety.
The EPRs are commercial reactors and not experimental reactors and they have several advanced safety features. These reactors essentially are an upgraded version of the French N4 and German Konvoy reactors which have demonstrated safe and reliable operations over several years.
French EPRs are currently under construction in Finland, France and China.
A senior state government official, on conditions of anonymity, said today’s meeting discussed the present state of safety measures at Indian nuclear plants in the wake of Fukushima incident.
“Both the central and state governments have made it amply clear that the Jaitapur project will be developed and there was no reversal on any decision in this regard. However, in the wake of the Japan nuclear disaster, safety measures will be revisited. Chief Minister Prithviraj Chavan discussed the issue with the minister of state for environment and forests Jairam Ramesh on Saturday in New Delhi. The issue of NPC’s preparedness to apprise locals on safety and security measures was also discussed at the meeting.”
On claims of the Jaitapur project severely affecting marine life, NPC officials said the ministry of environment and forests has, in its clearance, restricted the temperature to 5°C. Detailed scientific studies have also been conducted on the thermo-ecological aspects of discharge dispersion, with a view to restricting the temperature rise within 5°C. “There will be no adverse effect on the marine life around the site.”

North-East will have 5,000 MW by 2014, says Power Grid Corporation of India's Chairman and Managing Director

The North-East will have 5,000 MW of power available for consumption by 2014, Power Grid Corporation of India's CMD SK Chaturvedi said on Monday.
Although known to be a potential powerhouse, the region's peak demand is now 2,100 MW, but its own generation is only about 900 MW.

"About 1,200 MW is being transmitted to the region by Power Grid currently," Chaturvedi said, adding that four key projects coming up in the region would be onstream by 2013-14.
"The 740-MW Palatana thermal project executed by ONGC in Tripura and NTPC's Bongaigaon Thermal Power Station (750 MW) would be exclusively for the region. The Palatana project should be commissioned by end of this year or early next year," he said on the sidelines of the IIM Shillong convocation here.

North-East will have 5,000 MW by 2014, says Power Grid Corporation of India's Chairman and Managing Director

The North-East will have 5,000 MW of power available for consumption by 2014, Power Grid Corporation of India's CMD SK Chaturvedi said on Monday.
Although known to be a potential powerhouse, the region's peak demand is now 2,100 MW, but its own generation is only about 900 MW.

"About 1,200 MW is being transmitted to the region by Power Grid currently," Chaturvedi said, adding that four key projects coming up in the region would be onstream by 2013-14.
"The 740-MW Palatana thermal project executed by ONGC in Tripura and NTPC's Bongaigaon Thermal Power Station (750 MW) would be exclusively for the region. The Palatana project should be commissioned by end of this year or early next year," he said on the sidelines of the IIM Shillong convocation here.

North-East will have 5,000 MW by 2014, says Power Grid Corporation of India's Chairman and Managing Director

The North-East will have 5,000 MW of power available for consumption by 2014, Power Grid Corporation of India's CMD SK Chaturvedi said on Monday.
Although known to be a potential powerhouse, the region's peak demand is now 2,100 MW, but its own generation is only about 900 MW.

"About 1,200 MW is being transmitted to the region by Power Grid currently," Chaturvedi said, adding that four key projects coming up in the region would be onstream by 2013-14.
"The 740-MW Palatana thermal project executed by ONGC in Tripura and NTPC's Bongaigaon Thermal Power Station (750 MW) would be exclusively for the region. The Palatana project should be commissioned by end of this year or early next year," he said on the sidelines of the IIM Shillong convocation here.

PowerGrid seeks CERC nod to utilize existing electricity transmission infrastructure for telecommunication purposes

State-run transmission utility PowerGrid Corp has sought sectoral regulator CERC's permission to utilize existing electricity transmission infrastructure for telecommunication purposes.The power utility has approached the Central Electricity Regulatory Commission (CERC) to "engage in other business for optimum utilization of the assets."
"The power lines are installed on towers of varying height and can solve the dual purpose of carriage of power conductors and Wimax antennas (used for telecom)," PowerGrid Corp of India Ltd (PGCIL) said in its petition to CERC.
Mainly into power transmission, PowerGrid owns about 1,50,000 power towers nationwide.
As per the petition, PowerGrid has received request from the department of telecom for the potential use of the firm's infrastructure including power line towers for providing "rural (telecom) connectivity".

"(PowerGrid) has been receiving queries from existing service providers and infrastructure providers regarding the utilisation and sharing of power grid line towers for mounting of antennas for the purpose of coverage in rural and remote areas," according to the petition.
The entity already has a broadband optical fibre network of 21,000 kilometers on its extra high voltage (EHV) 400/220 kV power transmission infrastructure, that connects over 129 places including cities and remote areas.
PowerGrid has said that it would sign infrastructure sharing agreement with the concerned entity that intends to utilize the company's assets for telecom and other business.
The state-run entity has earmarked a capital expenditure of Rs55,000 crore for the current 11th five year plan period (2007-12) and to part fund that capex, it raised over Rs7,000 crore through a follow-on offer (FPO) last year.

Monday, March 28, 2011

Australia's Thiess, Singareni in race for NTPC's nearly $3 billion worth of contracts for developing coal mines in Jharkhand

Australian consultancy group Thiess and state-owned Singareni Collieries are in race for NTPC's nearly $ 3 billion worth of contracts for developing coal mines in Jharkhand. 
"Thiess and Singareni Collieries have shown interest in the consultancy and development works of the Chhatti Bariatu and Kerandari coal blocks in Jharkhand," a Power Ministry official said. 
"The Chhatti Bariatu contract is for about Rs 9,000 crore and the Kerandari is for about Rs 4,500 crore," he said.Together, the two contracts would be worth Rs 13,500 crore (around USD 3 billion). 
According to him, the extractable reserves from the coal mines are usually 50 per cent. The geological coal reserves of the Chhatti Bariatu and Kerandari are 194 million tonnes and 285 million tonnes, respectively. The minable reserves in these two sites are 151 million tonnes and 142 million tonnes, respectively. 
NTPC has seven coal blocks including Pakri Barwadih, Chhatti Bariatu (North and South), Kerandari (Jharkhand), Dulanga (Orissa) and Tallaipalli in Chhattisgarh. 
For the other two blocks, CIL NTPC Urja Company Pvt Ltd , was formed in April 2010 by NTPC and Coal India Ltd to jointly undertake the development, operation and maintenance of Brahimini and Chichro Patsimal in Orissa. 
The country's largest power producer NTPC has already spent Rs 272 crore for Pakri Barwadih, Rs 52 crore for Chhatti Bariatu and Rs 69 crore for Kerandari coal blocks. 
Thiess India is already working as mine developer cum operator for Pakri Barwadih Coal Mining Project of NTPC. 
The geological reserves of this mine is about 1,436 million tonnes whereas the minable ones are about a third or 503 million tonnes. 
NTPC, one of the largest consumers of coal in the country, is looking to secure more fuel to meet requirements, including from overseas. The firm is exploring opportunities in coal-rich countries like Indonesia, Australia and Africa. The Power Ministry has set a 14 million tonne-coal import target for NTPC for the current financial year (2010-11).

Earth Hour: Delhi switches off lights, saves 296 MW power

Households, shops and offices across the capital city voluntarily switched off lights for an hour as the clock struck 8.30 pm Saturday and saved 296 MW power as part of the third edition of Earth Hour, a global initiative on climate change. 
The participation in the drive, however, was patchy in the city due to ignorance among people. Also, a majority of commercial establishments, including malls and markets, could be seen illuminated brightly. 
"I have no idea about the Earth Hour. Moreover, we do brisk business in the evenings and cannot afford to switch off our lights," said Suraj Chawla, a shopkeeper in central Delhi's bustling market Karol Bagh. 
Mamta Chandani, a resident of Vasant Kunj in south Delhi, said: "I knew about this because I had read about it in the newspaper but many of my friends and relatives are oblivious. There should have been more advertising of this cause." 
There were many who did their bit to save power. "I switched off all lights and savoured a candlelight dinner on the terrace with my husband. We feel proud to be part of this initiative," said 27-year-old Manupriya Verma, a homemaker. Some resident welfare associations in the city did their bit to enforce Earth Hour by going from house to house and urging people to switch off lights. 
A programme was also organised at the India Gate lawns which included performances by popular dance troupe Adaa and musical band Euphoria. Bollywood star Vidya Balan who is this year's cause ambassador was also present at the event. 
Delhiites came in droves to witness the event and were enthralled by the performances. Colourful balloons were released in the sky as soon as the lights were switched off and the lead singer of Euphoria, Palash Sen began singing. 
"I left my office early this evening and came to support this cause with friends and family. We have been switching off our lights at home every year on this day and have been successful in convincing many of our relatives as well," said Saurabh Gambhir, a 36-year-old chartered accountant.

Power Finance Corporation's Rs 60 billion follow-on public offer likely to hit the market in the second week of May

Power Finance Corporation's (PFC's) Rs 6,000-crore follow-on public offer (FPO) is likely to hit the market in the second week of May. The FPO of the Navratna PSU is expected to open on May 10 and close on May 13, investment banking sources said. PFC, which finance infrastructure projects within the country, had earlier this month filed draft prospectus with the capital market regulator Sebi. The issue is awaiting approval of the Sebi, which is expected to come by mid-April. The company would be coming out with an offer for sale of 22.95 crore equity shares of face value of Rs 10 each.
This would include fresh issue of over 17.21 crore equity shares and an offer for sale of about 5.74 crore equity shares by the government, as per the draft red herring prospectus (DRHP) with Sebi. BofA Merrill Lynch, Goldman Sachs , JM Financial are among the five investment bankers managing the PFC issue. With this PFC would be the first PSU to hit the capital market in the next fiscal (2011-12). The government currently holds a 89.78 per cent stake in the firm. It had divested a 10 per cent stake through an initial public offer ( IPO )) in 2007.

PFC to hire consultant for banking foray - Rural Electrification Corporation planning to tie-up with a foreign bank

Power Finance Corporation (PFC), India’s leading power-sector financier, is weighing acquiring a bank or buying a stake in one, while younger sibling Rural Electrification Corporation (REC) is planning to tie-up with a foreign bank.PFC filed its draft red herring prospectus (DRHP) on Thursday for a follow-on public offer.
“We haven’t finalised anything yet on the issue. We might set up a bank or acquire one depending on the options available,” a very senior PFC official told DNA Money, on the condition of anonymity.He refused to explain the benefits of such a move but said the company would soon appoint a consultant for this.The company’s prospectus also does not talk much about the initiative, but said it is looking at options. “We are currently in the preliminary stages of evaluating the possibility of establishing or acquiring a bank and are in the process of appointing a consultant in connection with such an initiative,” the prospectus said.
REC has also had some negotiations with foreign banks to launch its commercial banking foray through a tie-up or a joint venture.“We are waiting for the Reserve Bank of India to come up with the guidelines and then we can finalise a plan. But we have discussed with some foreign banks for a possible joint banking foray in the country, but things are yet to materialise,” said a top REC executive, who also did not wish to be named.The company, he said, could launch its banking venture along with PFC. “If PFC agrees, we can even go ahead jointly,” he said.However, analysts are a little wary of the issue as both PFC and REC don’t have a countrywide presence and also have a small workforce compared with other private non-banking financial institutions (NBFCs).

Maharashtra eyes Krishna-Godavari gas for its proposed 1,200-MW gas-based combined cycle power plant at Uran

The Maharashtra government is eyeing allocation of gas from Krishna-Godavari (K-G) Basin reserves for its proposed 1,200-MW gas-based combined cycle power plant at Uran, in Raigad, Maharashtra.
The Maharashtra State Power Generation Company (MSPGCL) has proposed to set up two units of 406-MW and 814-MW capacity, respectively, in Uran.
“We are pursuing our case with the Centre for supply of fuel from the K-G Basin. Since we have already invited tenders for the project and are likely to start the construction in the next 2-3 months, we expect to get the gas allocation by this year-end,” State Energy Secretary Subrat Ratho said.
MSPGCL expects to get 5.5 million metric standard cubic metres per day (mmscmd) of gas from the source.
The state expects to commission the first block by July-August, 2013, and the second by October-November in the same year.
MSPGCL had proposed the project over two years ago, but it could not get underway as the state government did not receive an assurance from the Union ministry of oetroleum and natural gas about fuel supply.

“We had acquired land and also received all the necessary clearances for the project. But since we did not get any assurance from the ministry for the fuel, we had not begun the process,” Ratho said.

Saturday, March 26, 2011

12th plan under construction projects-I: MoP asks CEA to re-consider 12th plan capacity

Expressing doubts over the country's ability to meet the capacity addition targets for the 12th plan period, the Ministry of Power (MoP) has asked the Central Electricity Authority (CEA) to re-visit its targets to more realistic levels. 
  • During a recently held meeting to deliberate on 12th plan under construction projects, the MoP has emphasized that the capacity addition likely in the first two years of the 12th Plan viz., 2012-13 and 2013-14, being in excess of 25,000 MW, was too ambitious and has bleak chances of actually being attained. 
  • It has suggested that it would be worthwhile to do a project-wise detailed analysis of projects, that have been delayed, to understand the reasons for the delay and to realistically assess the time required to complete these projects. 
  • This apparent uncertainty may be driven by the fact that the country is already on the verge of missing its 11th plan capacity addition targets. The initial target of power capacity addition for the 11th FYP was 78,577 MW, which was later scaled down to 62,374 MW by the Planning Commission, in consultation with the power ministry. 
  • Now, however, it appears that even this downwardly revised target will be missed by March 31, 2011, as various projects continue to face delays due to myriad reasons, including bottlenecks in supply of required equipment. It is for this reason that the MoP this time is more keen to set targets that are more realistic and achievable. 

12th plan under construction projects-II: Online monitoring of private projects on the cards

 At a recent meeting held on February 15, 2011, under the Chairmanship of Power Secretary, P.Uma Shankar, to talk over progress of 12th plan under construction projects, the Ministry of Power (MoP) has called for the introduction of a rigorous online monitoring system to monitor progress of projects that are under various stages of development by the private sector.
  • Such a system, if in place, would help to scrutinize activities of the private project developers in a more transparent and efficient manner. Importantly, it was noted that information and feedback on progress of projects under the private sector is not as rigorous as it is with the central or state sectors, necessitating the introduction of such a system. 
  • Pertinently, more than half of capacity addition envisaged for addition during the 12th plan period, is expected to be added by the private sector. In terms of numbers, private sector contribution during the next plan is likely to be 46,026 MW, majorly thermal generation, out of the overall capacity addition target of about 75,000 MW. 

12th plan under construction projects-III: Two-phase monitoring of BoP contracts to be undertaken

 So that the shortage of Balance of Plants (BOP) suppliers and contractors in the country, does not threaten the timely execution of upcoming projects, the Ministry of Power (MoP) has called for a two-phase monitoring of BoP facilities. 
  • While the first phase would determine the loading of BoP vendors vis-a-vis their delivery capacity, in the second phase, execution of BoPs would be monitored. This came up in a meeting under the Chairmanship of Power Secretary, to discuss the progress of 12th plan projects under construction. 
  • Such a system, MoP asserts, would ensure that the commissioning of projects is not delayed due to non-readiness of BoPs on account of under- performance of vendors, mainly arising as a result of overloading. Special Secretary (Power), during the same meeting, has emphasized that loading of BoP vendors should be assessed beforehand, to ascertain that they are not booked beyond their capability to deliver in time.
  • Furthermore, NTPC has called for the Central Electricity Authority (CEA) to provide details of BoP vendors and their loading to project developers, so that the same can be considered by them while ordering the BoPs for their respective projects.

12th plan under construction projects-IV: Power evacuation to form a part of preliminary reports

Power Secretary, P.Uma Shankar, has suggested that for all upcoming power projects in the country, the power evacuation system should be a part of initial reports establishing the viability of projects, that form a part of capacity addition targets. 
  • He has further opined that all clearances, necessary for the execution of transmission lines, should be obtained well in advance, so that the construction of transmission lines is not held up for want of clearance. 
  • Additionally, it was suggested that the associated transmission schemes for power projects, identified for likely benefits during the 12th Plan, should also be developed in synchronization of the generation project, to avoid bottling up of power. 
  • It is seen that transmission projects are quite often delayed due to issues such as Right-of-Way (RoW), forest clearance etc. Timely clearances are also hampered due to substantial number of Gram Sabhas involved in long transmission lines. 

Outcome Budget 2011-12 of the Ministry of Coal-I: Reform measures and policy initiatives taken

The Ministry of Coal (MoC) has initiated the following reforms and policy measures to ensure efficient distribution of the coal produced:
  • Supply of coal to small and medium sector consumers: Under the MoC's New Coal Distribution Policy (NCDP), 8 million tonne of coal has been earmarked for distribution to the consumers with annual coal requirement upto 4200 tonne per annum, through agencies nominated only by the State Governments. The concerned State and Central Government departments exercise administrative control over these agencies to ensure that the coal allotted for the targeted consumers is distributed in a fair and transparent manner. These agencies are liable to receive a certain percentage as service charge, over and above the basic price charged by the coal company, from their consumers. In all, 27 State agencies were allocated 5.76 MT coal for drawal under FSA. 
  • Supply of coal on "cost plus basis": Under this scheme, financially non viable specific mines or projects are offered on cost plus basis to ensure a minimum IRR of 12% and to maintain a certain level of production. Consumers are required to enter into a cost plus agreement for supply of coal from such mines. Such projects can be offered to existing linkage holders, FSA holders and to future LOA applicants - with preference to power sector including IPPs, followed by fertilizer, cement, sponge iron plants. 
  • E-auction of coal: NCDP paved way for launching of a fresh scheme for sale of coal through E-auction. While spot e-auction is almost similar to the old e-auction scheme in operation prior to the NCDP, where under any intended buyer can participate in the auction of coal, in case of forward e-auction, only end-users are eligible to have assured coal supply over a period of one year. In case of spot e-auction, coal is offered at 30% above the notified price, as minimum reserve price, in case of forward e-auction, however, the reserve price is fixed 60% over and above the notified price of coal, irrespective of whether the mine is running in profits or not. During April 2010 to December 2010, about 32.36 MT of coal was allocated under spot e-auction, while 4.33 MT was allocated under forward e-auction during the same period.  

Outcome Budget 2011-12 of the Ministry of Coal-II: Details of emergency coal production plan

 In a bid to bridge the widening gap between coal production and supplies, Coal India Limited (CIL) prepared an Emergency Coal Production Plan, through which, it aimed to enhance production from its subsidiaries. The website carries here, details of the same plan. In all, 16 projects fall under this plan, some of them being: 
  • Lakhanpur OC Expansion, MCL: Sanctioned capacity: 10 MTy; enhanced capacity proposed: 15 MTy; incremental production capacity: 5 MTy; capital for incremental capacity: Rs 116.54 crore
  • Asoka OC, CCL: Sanctioned capacity: 6.5 MTy; enhanced capacity proposed: 10 MTy; incremental production capacity: 3.5 MTy; capital for incremental capacity: Rs 341.63 crore
  • Kusmunda OC Expn, SECL: Sanctioned capacity: 10 MTy; enhanced capacity proposed: 15 MTy; incremental production capacity: 5 MTy; capital for incremental capacity: Rs 450.56 crore
  • Magadh OC Expansion, CCL: Sanctioned capacity: 12 MTy; enhanced capacity proposed: 12 MTy; incremental production capacity: 8 MTy; capital for incremental capacity: Rs 706.40 crore
  • Bharatpur OC Expansion, MCL: Sanctioned capacity: 11 MTy; enhanced capacity proposed: 20 MTy; incremental production capacity: 9 MTy; capital for incremental capacity: Rs 131.39 crore

Outcome Budget 2011-12-III: Coal PSUs to spend Rs 8,882 crore in FY 11-12

 The website carries here, the budget outcome of the Ministry of Coal (MoC) for the ongoing fiscal, and its Plan and Non-Plan budget for 2011-12. The MoC`s revised revenue expectations for 2010-11 stand at Rs 447.66 crore, roughly the same as proposed in the initial budget, whereas its expectations for the next fiscal are about 5% higher at Rs 468.72 crore, which comprises of Rs 420 crore as Plan Budget and Rs 48.72 crore as Non-Plan Budget.
  • According to the Outcome Budget for 2011-12, MoC`s initial plan outlay (investment in public enterprises), of Rs 13,518.39 crore in 2010-11, has been revised to Rs 8,388.12 crore, down 38%. Meanwhile, its capital expenditure target for 2011-12 has been scaled down by 31%, to Rs 9,302.85 crore. These investments are to be entirely funded through Internal and Extra-Budgetary Resources (IEBR).
  • Coal India Limited`s (CIL) planned outlay of Rs 9,800 crore in 2010-11 has now been revised to Rs 5,418.9 crore, and its expenditure for 2011-12 has been pegged at Rs 4,220 crore, down 57%. Neyveli Lignite Corporation Limited`s (NLC) expenditure expected for 2011-12 has been scaled down to Rs 1,858.55 crore, down 6%, from the Rs 1,983.46 crore earmarked in 2010-11.
  • The 3 Public Sector Undertakings - CIL, NLC and Singareni collieries Company Ltd. (SCCL)-- are now expected to spend a total of Rs 7,988.12 crore during the ongoing fiscal, a figure that will increase to Rs 8,882.85 crore in the next fiscal.
  • For FY 11-12, CIL's, NLC's and SCCL`s expenditures have been pegged at Rs 4,220 crore, Rs 1,858.55 crore and Rs 2,804.30 crore, respectively

Friday, March 25, 2011

NTPC: Merchant power entry may pay limited dividends

Public sector power major NTPC has only recently forayed into merchant power, having recently commercialised its Korba unit-7 and commissioned Farakka Unit 6, both 500-MW each. The company has received permission from the Ministry of Power to sell 15 per cent of the power generated from both these projects at prevailing merchant tariffs.
The commissioning of these projects has coincided with merchant tariffs firming up from their lows in the December quarter 2010.
Given that NTPC has definitive coal linkages for most of its projects, it may get excellent returns on this proportion, while this may not be the case with other power projects that are exposed to international coal prices.
However, the fact that NTPC today operates just 150 MW of merchant power capacity out of its installed capacities of 33,690 MW of power today reflects the Government's reservations about the sustainability of high merchant power tariffs over the medium term.
Market's perception
From a stock market standpoint, while merchant power capacities were viewed as a high potential segment until last year, the wild fluctuations in merchant tariffs over the last year have infused caution and shown how power company financials may be adversely affected by swings in these tariffs.
The merchant power tariffs, through the bilateral trade route, have fallen from an average of Rs 7 and Rs 6.4 a unit during calendar years 2008 and 2009 to Rs 4.93 a unit in 2010. With 2011 being an election year, the rates may rise again in the short term, but the additional power capacities of around 20,000 MW that are planned to be commissioned during the next 13 months, will eventually exercise a moderating influence on tariffs.
More power sold through the short-term route over the last one year also shows the moderation in tariffs. On an average, 10 per cent of the total power generated was sold through short-term route over the last one year as against four per cent and 3.3 per cent during the previous calendar years.
In addition to majority of fuel being sourced from coal linkages, NTPC also has a pass-through component for rising fuel prices, thanks to its cost-plus model in power purchase agreements. Before the CERC deadline for regulated Power Purchase Agreements (PPAs) came to an end, NTPC managed to sign PPAs based on regulated tariffs amounting to 1,00,000 MW. That places the company at an advantage, even as it trebles the current capacity, it will not be exposed to the same risks that the private companies are facing, while earning steady returns (current 15.5 per cent).
Given that tariffs through short-term route and competitive bidding are expected to converge going forward, NTPC with its higher reliance on regulated tariffs may deliver more stable and predictable earnings.

Foreign companies eye clean technology projects in India

Western companies are in the race for slice of the lucrative market for clean technologies such as renewable energy and water or soil treatment projects in India and China, which corporate leaders say will be worth trillions of dollars in a few years as the Asian giants grapple with rising oil prices and pollution.
Companies are excited about business prospects in India, which has announced a $20-billion plan to build 20,000 MW of solar energy capacity in the next decade. The Asian country has levied a tax on coal to fund green projects, and is struggling with high oil prices at a time when the country's dependence on imports is projected to rise to 95%of demand in 20 years from about 75% now.
"The good news is that Indians are responding aggressively to the challenge of environmental sustainability through a clean-tech revolution. There is real meat on the bones," said Nick Parker , chairman of the Toronto-based Cleantech group, a respected market intelligence firm, which advises investors and corporates on trends and technologies to combat global warming, pollution and renewable energy solutions.
He said rising oil prices would eventually create a balance-of-payments (BOP) crisis for India, which would catalyse policy initiatives in the renewable energy sector just as a crisis had helped India abolish industrial licensing and paved the way for a boom in the export-oriented software sector. And rapidly-urbanising China has already committed hundreds of billions of dollars for clean technology, he said.
Canadian companies expect huge opportunities when India takes serious steps to combat soil and water pollution - an area of expertise for firms based in the country. Western companies expect India to undertake projects to reverse the severe degradation of soil by the relentless use of chemical fertilizers and pesticides, triggering calls for a more sustainable green revolution in various parts of the country.
"The opportunities are humongous," said Jim Constant, chief executive of Ozomate, a company that specialises in patented waste-treatment technologies using ozone. "India is way behind everybody on ozone. It's a huge potential market," he said.
He said market was gigantic because in Montreal alone, which has a population of barely 2 million, the total cost of water treatment plants is estimated to be $2-3 billion, including half a billion in one project alone, Ozomate's Mr Constant said, adding that there were only a handful of companies that had the expertise, scale and experience required for such projects.
"The scope for collaboration is staggering," said Shaun Wedick, Canada's consul and senior trade commission based in Chennai.
Parker, who has pioneered "sustainability-driven" private equity funds and had founded an environment finance firm during his 15 years in the financial world, said a lot of money was already flowing into clean technology projects. He said venture investments in local Indian clean-tech companies totalled over $800 million in the past four years and are rising, while globally, the number of IPOs to fund such projects had risen dramatically, particularly in China.

Projects below 200 MW not to get coal supply from govt

Projects below 200 MW coming on stream after March next year will not get coal supplies as the government looks to promote higher-capacity power plants that consume less fuel. The new policy, however, won't apply to captive plants to be set up by industrial units.
The power ministry will not recommend coal linkages to central, state or independent power projects with unit size below 200 MW under its amended policy for projects in the 12th Five-Year Plan, beginning next year.
"The amendments have been made keeping in view our target to shift to energy-efficient technology," a senior power ministry official said.
The government expects that supercritical technology would be used in three out of five thermal plants in the 12th plan and in all such plants by the 13th Plan. Power plants based on supercritical technology require less coal for generating same amount of heat and less polluting.
The move also assumes significance in the backdrop of huge coal shortage faced by the country as available coal linkages are barely sufficient for sustaining 3,000 MW of additional power supply.
IFCI Financial Services research analyst Sachin Mehta said that the amendments to the policy have been formulated to discourage developers from setting up lower capacity coal-based plants. He said of the 58,000-MW projects that are under construction for commissioning in 12th Plan close to 50,000 MW capacities is based on coal and most units are of more than 200 MW.
In the earlier coal linkage policy announced in October 2009, the government said coal supplies for captive and private power projects of less than 200 MW would be considered only if equipment was sourced from reputed domestic manufacturers.
The policy would still give priority to energy-efficient power plants being set up by central and state public sector undertakings and projects to be bid out on tariff-based competitive bidding. Balance coal would be distributed among private and captive projects.

Orissa UMPP bid submission date extended to Mar 31

Power Finance Corporation (PFC) has extended the bid submission date for the Orissa ultra mega power project by another two months to March 31, with environmental issues relating to the mining of allocated captive coal blocks still being unresolved. “Following an instruction from the ministry, we have deferred the bid submission date for the Bedabahal UMPP,” an official in PFC said.
This is the fourth extension in bidding date for the project, for which notice was issued by PFC, the nodal agency, in July.
The ministry of environment and forests has declined to provide approval for mining work in the Meenakshi B, part of which falls in the ‘no-go’ area. Pending resolution of the issue, PFC cannot go ahead with bidding for the project.
Expectations were raised of an early resolution to the mining issues when senior officials from the ministries of environment and forests and power met early last month in a bid to work out modalities to allow mining in the environmentally sensitive block.
The Meenakshi and the dipside of Meenakshi along with the Meenakshi B— which are estimated to have coal reserves 885 million tonne — have been allocated to the UMPP by the coal ministry. Meanwhile, bidding for Chhattisgarh UMPP also remains stalled for similar reasons.
The government has bid out four UMPPs so far. Of this, three—Sasan, Tilaiya and Krishnapatnam have been bagged by Reliance Power while the fourth one at Mundra has gone to Tata Power.
While Sasan and Tilaiya UMPPs are based on domestic coal, Krishnapatnam and Mundra projects are to be fired with imported coal.
Mundra UMPP is the only project expected to start power supply during the current plan by commissioning 1,600 mw capacity. Other projects would be ready for generation in the 12th Plan only.
Reliance Power had earlier promised to the the power ministry that it would commission at least one unit of the Sasan UMPP in the 11th plan. However, the project has got delayed and now the first unit is expected to be commissioned in January 2013 only.

Thursday, March 24, 2011

Absorption of electricity duties in GST: MCI to examine impact on power tariffs

Even as the proposed Goods and Service Tax (GST) regime, which aims to provide a common national market for all goods and services, will take some more time to be introduced, apprehensions regarding its likely impact on power tariffs have already been expressed. 
  • Therefore, the Ministry of Commerce and Industry (MCI) is expected to come up with an analysis on the impact of the GST subsuming all electricity duties. For this purpose, it has asked all power generation companies to furnish the relevant data. 
  • NTPC has already submitted the information required to the ministry, in the form of figures for taxes embedded in the costs for a typical 1000 MW coal based power plant (assuming Simhadri TPP), the latest audited financial results for FY 2009-10, details with respect to expenditure and income of the company during 2009-10 and technical information on installed capacity, generation, PLF etc. 
  • Pertinently, given the current administrative structure of energy industry in India, absorption of all state electricity duties under the GST regime may not be feasible, as the cost of power generation differs from mode to mode and in many cases from plant to plant. Moreover, electricity tariffs are arrived at differently across states, without a uniform scientific model for electricity pricing.   
  • Further, administrative problems can arise in accounting for the transmission and distribution losses between states. Also, before such a regime is introduced, the multifarious agencies and authorities in the power sector need to be integrated.  

More coal projects likely to get go-ahead in upcoming GoM's meeting on coal mining in go and no-go areas: Jaiswal

The Union Coal Minister Mr Sriprakash Jaiswal on Tuesday said more projects of Coal India are likely to get go-ahead in the upcoming group of minister’s (GoM) meeting on coal mining in go and no-go areas.
“The symptoms are good..... We are hopeful that more projects will be cleared in the next meeting GoM,” Mr Jaiswal said reporters here.
The second meeting of 12-member group of ministers which was to be held in the second week of March is yet to take place.

The Minister also said the ongoing nuclear crisis in Japan will have an impact on prices and supply in the global coal market in the short-term.
“Negative sentiments have developed on nuclear energy post crisis in Japan. In the long run nuclear energy is important but right now there will be pressure on coal,” the Minister said.

Mr Jaiswal expressed optimism that the coal production will grow by 7 to 8 per cent from the next financial year.
“We have started getting clearances (of projects) from Ministry of Environment and Forest (MoEF).... it is likely that there will be growth of 7 to 8 per cent in the next financial year,” Mr Jaiswal said.
Mr Jaiswal did not completely rule out the revision in coal prices post wage revision for Coal India employees likely to take place in June. “It is likely that coal prices may increase after wage revision,” the Minister added.
The 12-member GoM that also comprising among others Mr Jaiswal, Power Minister Mr Sushil Kumar Shinde, Steel Minister Mr Beni Prasad Verma and Road Transport Minister Mr C P Joshi, met last month in the backdrop of various controversies, mainly over “go” and “no go” areas in coal mines.
In the midst of the inter—ministerial rows, Finance Minister Mr Pranab Mukherjee had asked Environment Minister Mr Jairam Ramesh to respond to issues raised by the Coal Ministry by March 15.
The meeting remained inconclusive. Mr Jaiswal had then exuded confidence that most of the issues will be resolved.
The ‘no-go’ classification by Environment Ministry in 2009 had disallowed mining in 203 blocks with the potential of producing 660 million tonnes of coal a year.

According to Coal Ministry estimates, the output from these blocks could have been used to generate around 1.3 lakh MW of power per annum.

National Thermal Power Corporation's new 500 Mw unit-VII of Korba project starts commercial production

National Thermal Power Corporation Ltd stated that its Korba Super Thermal Power Project's Unit VII of 500 MW has commenced commercial operation with effect from March 21.
NTPC is involved in the generation and sale of bulk power to state power utilities. It also provides consultancy and other services, including engineering, project management, construction management, and operation and maintenance services for power plants.
Moreover, the company is also engaged in the exploration and development of oil and gas, as well as in coal mining business. It has an installed capacity of approximately 32,194 megawatts; and 15 coal based power stations and 7 gas based power stations, as well as has 4 power stations in joint ventures.

Coal shortage may trip power production - CIL's failure to meet supply targets may stop some 17,000 mw of generation capacity

 Just when summer is approaching, the power ministry has sounded a warning bell on fuel shortage tripping electricity production, government sources said. 
Power minister Sushilkumar Shinde has told thePrime Minister's Office that state-run Coal IndiaLtd's failure to meet supply targets may stop some 17,000 mw of generation capacity that are in the pipeline from being switched on. 
Similarly, 5,593 mw of generation capacity that has been coming on stream through 2009-10 would produce less than half their rated capacity because they would not have enough coal. 
That could mean a sweaty summer ahead. About 70% of power is generated by coal-fired plants in the country. These plants form the bulwark during summer months when hydel production declines as water levels in dams run low but power demand rises exponentially. 
Shinde has told the PMO the government would have to scale down targets for ramping up generation capacity in 2011-12 as well as during the 12th Plan if coal supply is not augmented immediately. 
Sources said coal shortage had increased since the growth in CIL's output did not match the "rapid" pace of generation capacity addition. The ministry reckoned some 52,000 mw of coal-fired capacity under execution would be in jeopardy unless coal production rose 20%. That may be a tall order for CIL or the coal ministry. The power ministry knows it too well. An internal note prepared by the ministry partly blames the environment ministry's "Go, No-Go" policy for blocking development of coal mines. 
The note puts the present shortage at 60 million tonnes that is expected to rise to 85 million tonnes in 2011-12. It says power stations would need 532 million tonnes to run at 90% of their capacity during 2011-12. Supplies from CIL, however, are estimated at 414 million tonnes.

Tuesday, March 22, 2011

Coal India Limited's 77 projects having a production capacity of almost 185 million tonnes under various stages of completion

77 projects having a production capacity of almost 185 million tonnes (MT), have been cleared by the government and are under different phases of completion."...77 projects with an ultimate capacity 184.78 Mty (Million tonnes per year) have already been approved and are under various stages of implementation," Outcome Budget 2011-12 document said.
The said projects are among 142 projects identified by CIL, which are to be taken for the XI Plan Period (2007 - 2012), the document added.The remaining 65 projects, according to the Outcome Budget 2011-12 document, having a capacity of 195 million tonnes are under different phases of approval."Rest 65 projects, with an ultimate capacity of 195.44 Mty are under various stages of approval/formulation," the document said.Coal Ministry had earlier in March said that 46 projects of CIL were delayed due to various reasons, including environmental hurdles.

Nine Power projects of 5,674 mw capacity get green nod - Developers now need clearance from environment ministry to start work

An environment ministry panel has cleared power projects with total proposed capacity of 5,674 mw. Developers will now need clearance from the environment ministry to start work. 
"The Expert Appraisal Committee has cleared about 9 projects in two successive meetings held on March 7-8 and on March 14-15. The total proposed capacity in these projects is about 5,674 mw," a senior environment ministry official told ET on condition of anonymity. The committee looks at the technical aspect of proposed power plants, and after critical evaluation recommends for either clearance or rejection of the projects. In the past, most projects cleared by the committee have also received clearance from the ministry. 
The projects cleared by the panel at its first meeting were DMIC Development Corporation's 1,300 mw plant in Raigarh, Adani Power's 1,320 mw plant in Rajasthan and Indiabulls' 1,350 mw plant in Amravati, Maharashtra. Clearance was also given to ARS Metals' 120 mw captive power plant in Tamil Nadu and Raymond's 7.2 mw captive power plant in Gujarat. The second meeting saw the committee clearing projects with capacity of about 1,582 mw. These included DMIC Development Corporation's 1,300 mw plant at Guna, Adani Power's 270 mw unit in Jharkhand and a 12 mw biomass project in Chattishgarh.

Lanco Infra links 600-MW Anpara unit to grid through its step-down subsidiary Lanco Anpara Power

Lanco Infratech Ltd on Monday announced that the company has through its step-down subsidiary, Lanco Anpara Power Ltd, synchronised with the grid the 600-MW unit-I of the 1,200-MW thermal plant. The 2x600-MW Anpara thermal plant was the first competitive bid project awarded under the Electricity Act. The second unit is s scheduled for commissioning before June 2011.

Heavy turbines for state-owned ONGC's 726 MW power project in south Tripura being brought via Bangladesh

Heavy turbines for state-owned ONGC's 726 MW power project in south Tripura are being brought to the state via Bangladesh. The turbines will be ferried from the Ashuganj river port in eastern Bangladesh to Tripura on big lorries, said an official here Friday.
The turbines will arrive next week to start generating electricity by this year-end.

'The over-dimensional heavy turbines would be carried from Ashuganj river port in Meghna river in eastern Bangladesh to Tripura on big lorries. The heavy consignments came to Ashuganj port last month by the water way from Haldia port in West Bengal,' an ONGC official told reporters.

He said India has developed a jetty in Ashuganj river port, 45 km from Agartala, and expanded the roads in Bangladesh and developed 31 bypasses across the border and inside Tripura to ferry the heavy equipments for the power project.

'The generation of electricity would start from the first unit (363 MW) of the power project, the biggest ever thermal power plant in northeast India, in December this year. The project would be fully operational by March next year,' the official said.

The state-owned ONGC's biggest power project is being commissioned in south Tripura's Palatana, about 60 km south of here, at a cost of Rs.9,000 crore.

The Bangladesh government had earlier agreed to allow India to use its waterways to transport the turbines and heavy machines for the power project, for which Prime Minister Manmohan Singh had laid the foundation stone in October 2005.

The ONGC official said that carrying of the heavy equipment by surface within India through the mountainous northeastern states was extremely difficult. This led the Indian authorities to carry the machineries through Bangladesh.

'A consortium comprising of the US-based General Electric (GE) and India's state-run BHEL has been awarded contract to supply the all-important gas turbines for the thermal power project,' he added.

According to ONGC officials, the state-run Power Grid Corp of India Ltd (PGCIL), ONGC Tripura Power Co Ltd (OTPC), a new company formed for commissioning the project, and the northeastern states would set up a 660-km transmission line at a cost of Rs.1,771 crore to hook Palatana with the national grid at Bongaigaon in western Assam.

The much expected commissioning of the power project, a co-generation waste heat recovery power plant and ONGC's first major commercial project, has been delayed due to difficulties in transporting heavy turbines and machineries to south Tripura.