India probing ‘criminal conspiracy’ in Indonesia coal imports

India’s Central Bureau of Investigation (CBI) is probing what it calls a criminal conspiracy to sell inferior imported coal at inflated prices to NTPC Ltd., the nation’s largest power producer, defrauding the company of millions of dollars.

 

“The investigation involves coal shipments from Indonesia to two power plants that were labeled as a higher quality of fuel in import documents. The scope of the probe will include companies in India, Jakarta and Singapore,” the agency said in a statement posted on its website.

 

“Incriminating documents recovered during searches are being scrutinized,” the CBI said in the statement. The inferior coal may have cost the two plants Rs.116 crore ($18.6 million), according to the statement. An NTPC spokeswoman declined to comment on the probe.

The Singapore unit of a coal-trading company based in the central Indian city of Indore bought the coal from Indonesia and shipped it to India, according to the statement, which didn’t name the trader. “The coal providers and some NTPC officials entered into criminal conspiracy with an intention to cheat the company from 2011 to 2013,” the CBI said.

 

One of the power plants is NTPC’s 1,050-megawatt Unchahar plant, near the north Indian town of Raebareli. The second is run by NTPC-SAIL Power Co., an equal joint venture with Steel Authority of India Ltd., in the eastern town of Bhilai, according to the statement.

 

Arti Luniya, a New Delhi-based spokeswoman for Steel Authority, didn’t answer two calls to her mobile phone. Bloomberg

Coal imports rise 20% to fuel new power plants

India’s coal imports rose 20 per cent to 105.8 million tonnes in April-October from a year earlier as power producers turned to Indonesia to help feed new plants, according to data from mjunction services, an online market operator.

 

Regulatory and bureaucratic delays in adding new mines and expanding existing ones have made India the No. 3 importer of coal, even though it sits on what BP ranks as the world’s fifth-largest reserves. Imports leaped 34 per cent to 137.56 million tonnes in 2012-13.

 

April-October shipments of thermal coal, used in power generation, jumped 28 percent to 81.6 million tonnes, according to mjunction services, which is jointly owned by Tata Steel Ltd and SAIL.

 

India’s generation capacity increased in the seven months with the addition of new plants, while benchmark thermal coal prices fell, reaching their lowest levels in almost four years in September.

 

Imports of coking coal for making steel, the second-biggest contributor to total shipments, were nearly flat at 19.35 million tonnes.

 

The Indian government does not regularly release data on coal imports.

 

Its domestic production, 81 percent of which is from state-owned Coal India Ltd, could fall short of demand by 155 million tonnes this fiscal year, according to the Coal Ministry. That could lead to a 13 percent rise in imports.

 

Coal India has fallen short of its production target for at least the past six years due to difficulties in obtaining environmental approvals, lack of railway access and other issues. Its April-December output of 319.2 million was 4 per cent less than its target for the period.

 

The world’s largest coal mining company launched its first tender in November, seeking to import 5 million tonnes of coal to supply power producers until March 2015.

 

The need for reform of the coal mining sector means India is expected to remain a big importer, with Coal India estimating a shortage of 350 million tonnes for 2016-17.

 

Indonesia could be the biggest beneficiary. It already accounts for more than 50 per cent of India’s coal imports, ahead of Australia and South Africa.

 

Several coal blocks allocated to companies from 1998 to 2009 for development are yet to start production. Recent court-mandated investigations into the allocations by the Central Bureau of Investigation (CBI) have further delayed mining.

 

The CBI said last week it had registered two cases regarding the alleged supply of low quality Indonesian coal by a private company to fuel power plants operated by National Thermal Power Corp.

NTPC in Andhra Pradesh lags behind in power generation

The shortage of coal supply from the Singareni Collieries Company Limited (SCCL) following the incessant rains during the monsoon season and the frequent tripping of power stations had forced the National Thermal Power Corporation (NTPC), Ramagundam, lag behind in power generation during this financial year of 2013-14.

 

Against the target of generating 15,286 million units of power till January 1, 2014 (during the nine months period of the financial year), the NTPC could generate only 14,410 million units.

 

During the year 2012-13, the NTPC generated 20,785 million units of power against the target of generating 20,448 MU. Following its performance, the NTPC was fixed a target of generating 20,708 million units during the year 2013-14. However, it was short of 876 MU during the nine month period.

 

In the coming three months, NTPC Ramagundam had to achieve the remaining target by generating more than 2000 MU of power every month.

 

However, frequent tripping of power stations had become a big cause of concern for the management to achieve the targeted power generation and it would be forced to generate only 1800 MU to 1900 MUs in a month.

 

Freshly, the power generation was stalled at the 500 MWs fifth unit power station following the technical snag on Sunday.

 

The officials are taking all measures to restore power generation by rectifying faults on a war-footing.

 

Sources said that the delay in renovation and modernisation of all power stations is causing frequent tripping and affecting power generation.

 

However, they add that the NTPC management would definitely achieve the target before the completion of the financial year.

Power export to Pakistan on agenda

India is expected to sign an initial deal to export around 500 mega watts (MW) per day of power to Pakistan this month when the trade ministers of the two south Asian neighbours meet here.

 

Sources said the initial wheeling of power would be around 500MW but could be increased.

 

There are indications that Pakistan will increase the import to 2,000-2,500MW to meet the power shortage impacting its economy.

 

The wheeling of power between the two nations is expected to energise trade ties, resulting in Islamabad lowering the number of items on the negative list — a step towards granting most favoured nation status (MFN) to India.

 

The grant of MFN status means the two countries can trade on equal terms, giving each other low tariffs and high import quotas. India granted Pakistan the MFN status in 1996.

 

India’s Central Electricity Authority and Power Grid Corporation of India will be the nodal technical agencies. Pakistan will have the National Transmission and Despatch Company and Chief Engineering Advisor as its nodal agencies.

 

Officials said there was a broad agreement that cross border trading would be done through HVDC (high voltage direct current) coupling, as is being done with Bangladesh, ensuring that both the grids operate independently.

 

As Lahore is near Punjab, it will be economical to transfer power through Amritsar, officials said.

 

The project will require 45 kilometres of 220 kV transmission lines on both sides of the border — 25 kilometres in India and 20 kilometres in the neighbouring country.

 

The tariff is likely to be around Rs 8 per unit, which is almost similar to the rates in Pakistan, sources said.

 

Pakistan faces a 37 per cent, or 5,000MW, energy shortage and is desperately looking for ways to bridge the huge shortfall. Power shortages, along with endemic violence, have resulted in its textile mills moving to Bangladesh.

 

At present, Islamabad imports 35MW from Iran, which it plans to increase to 100MW. It is also considering importing another 1,000MW from Tajikistan.

 

Power production in Pakistan is only about 10,000-16,000MW against an installed capacity of 20,800MW. The sector is plagued by old plants, poor maintenance and high debt.

Pitfalls of surplus power in Punjab

Punjab is going to be first state in the country to become power surplus after the commissioning of all the units of Talwandi Sabo and Rajpura thermal plant.

 

The first unit of Talwandi Sabo thermal was synchronized with grid on December 31 and first unit of Rajpura thermal is likely to be synchronized with grid in next few days. The remaining units of two thermal plants will be commissioned by August.

Punjab State Power Corporation Limited (PSPCL) in its tariff petition has mentioned that the thermal plants at Talwandi Sabo, Rajpura and Goindwal Sahib will be generating 13444 million units (MU) and it intends to surrender 7987 MU from these private sector thermal plants.

 

The tariff petition also indicates that PSPCL intends to surrender a total of 12994 MU of power. The proposed surrender of surplus power will from central sector projects and private generating thermal plants established in state in order of merit their fixed charges. However, the generation from private sector thermal plants in private sector will be on higher side and the surplus power to be surrendered will be surrendered will be around15000 MU.

 

The state sector thermal plant units are likely to become unintended victim of surplus power in Punjab as these units will be backed down to pave the way for private sector generation as and when the power demand in the state takes a dip.

 

PSPCL in its ARR has not proposed any surrender of power from state run thermal plants at Ropar, Lehra Mohabatt and Bhatinda. If one looks into the track record of PSPCL for the current financial year it is the state sector thermal plant units which were ordered to be shut down on no demand to pave the way for power purchases made by PSPCL. The priority order of PSPCL for closing thermal units is Bhatinda units followed by Ropar and Lehra Mohabatt thermal units.

 

As per tariff petition Ropar thermal plant will net generation will be 8693 MU while for Lehra Mohabatt thermal plant and Bhatinda thermal plant net generation is likely to be 6272 MU and 2823MU respectively.

 

PSPCL which has been making efforts to sell surplus power to southern states may not be able to do so sell surplus power to southern states as the average rate of power of Punjab would be around Rs. 3.50 and with wheeling charges the cost of selling power may be above Rs. 4.20 Per unit. It may be mentioned that power in southern states will be available at cheaper rates from power exchanges in next financial year as southern grid will function in tandem with other grids in next few months.

Tariff increase

 

Further in case of increase of surrendered surplus power from 12994 MU to 15000 MU the fixed charges to be paid by PSPCL would increase from 1706 crore to 1961 crore. The burden on consumers on account of fixed charges will increase from 44 paise per unit to 50 paise per unit.

Power export to Pakistan

 

The only alternative available is to export power to Pakistan where power tariff is more than Rs. 7 per unit. CEA and Power Grid officials claim that power can be traded through HVDC coupling. The project would require 45 Kms. of 220 KV transmission line on both sides. Initially 500 MW is likely to be exported which can be increased to 2000 MW subsequently.

NMDC to shift its proposed power plant location from UP

NMDC, which is in the process of setting up a 500-MW power plant in Gonda district in Uttar Pradesh, has decided to shift the location of the project in view of the objections raised by a committee under the Ministry of Environment and Forests earlier.

 

According to official sources, Mecon, consultant for the power project has come up with three alternative sites and the Expert Appraisal Committee has asked the miner to prepare a detailed plan with regard to the environmental issues on the site at Turkadih-Siswa.

 

The EAC earlier refused to give clearance for the project on the grounds that place where the project is proposed, is fertile agriculture land and suggested the company to come out with alternative lands.

 

"Mecon has identified three alternate sites within and outside Gonda, with the help of Topo Sheets and Satellite imageries and extensive field survey. The EAC asked them to prepare Environmental Management Plan keeping Turkadih-Siswa site in mind," a source in the know of the development told PTI.

 

The source said an advertisement seeking land up to 500 acres in Gonda district was also released recently.

 

"We have not taken any investment decision yet. It depends on the DPR by Mecon. It will take some time for them to prepare the report," the source added.

 

In November last year, NMDC once again approached the EAC with the alternative site and the committee has asked the PSU to prepare a detailed Environment Impact Assessment study and Environmental management plan for the site.

 

In August last year, an MoU was signed between the NMDC Power Limited (NPL), a wholly owned subsidiary of Navratna Public Sector Undertaking, NMDC Limited and IEDCL, a subsidiary of IL&FS for setting up a 2x250 Mw Thermal Power Plant under Joint Venture at Gonda, Uttar Pradesh UP with the investment outlay of over Rs 3,000 crore.

 

NMDC Power will initially hold 48 per cent stake in the venture for setting up the power plant, while the remainder will be with IEDCL. Subsequently, NMDC would dilute its stake in the venture to 26 per cent, while IEDCL would have the rest 74 per cent stake, NMDC acting Chairman C S Verma had said at the MoU signing ceremony in August.

Maharashtra has no plan yet for CAG audit on Tata Power, RInfra

Electricity consumers in Mumbai will have to wait for an audit by the Comptroller and Auditor General (CAG) for Tata Power and Reliance Infrastructure as the Congress-led government in the state has not taken any formal decision in this regard. The state government has so far not indicated its plan to adopt the model adopted by Aam Aadmi Party-led government in Delhi to conduct CAG audit for Mumbai power companies.

 

Reliance Infrastructure has a consumer base of  2.8 million, while Tata Power has 425,000 consumers. When contacted, Tata Power and Reliance Infrastructure declined to comment. A state government official, who did not want to be identified, told Business Standard: “Currently, Tata Power and Reliance Infrastructure carry out their annual audits by deploying leading audit firms. There is no proposal as of now before the government to order CAG audit of these two companies for their Mumbai operations.”

 

However, the official admitted that CAG audit of these companies can be possible under Section 20 of the CAG Act, 1971, which regulates the audit of accounts of authorities or bodies that are otherwise not subject to audit by the CAG.

 

Section 20 reads: “The Comptroller and Auditor-General may propose to the President or the Governor of a State or the Administrator of a Union territory having a Legislative Assembly, as the case may be, that he may authorised to undertake the audit of accounts of any body or authority, the audit of the account of which has not been entrusted to him by law, if he is of opinion that such audit is necessary because a substantial amount has been invested in.”

 

Central Electricity Regulatory Commission's former chairman Pramod Deo said CAG audit of Tata Power and Reliance Infrastructure can be done. He, however, added that the state government will have to take a call in this regard.

 

Ashok Pendse, consumer representative at the Maharashtra Electricity Regulatory Commission, shared Deo's views saying that CAG’s audit of Tata Power and Reliance Infrastructure will be a reality. ''However, at the end of the day, what will come out of the CAG audit should not be like what actually appears out of magician’s hat,” he noted.

 

D Radhakrishna, a power-sector analyst, says a CAG audit should be carried out on the generating companies, too, because in power supply, the contribution of discoms is only 20 per cent and 80 per cent of the cost is attributed to generation and transmission.

 

“Thus, CAG audit for Mumbai power companies can be done as per Sec 20 of CAG Act 1971. The state government can order such an audit,” he added.