Delhi HC restrains NTPC from opening supercritical boiler bids

NTPC faces further delay in award of its Rs 20,000-crore contract for the bulk supply of 660 mw supercritical boilers, with the Delhi High Court on Wednesday restraining the central utility from opening price bids while acting on a petition filed by disqualified Italian bidder, Ansaldo Caldie. NTPC was expected to open price bids for the project on Thursday.

Bidding for the project is already running behind schedule because NTPC had to re-tender after L&T Power was disqualified on technical grounds earlier, leaving Bhel as the sole bidder for the project.

A Division Bench comprising justices Sanjay Kishen Kaul and Rajiv Shakdar while asking the power ministry and NTPC to file replies within a week also directed the corporation to keep in abeyance the commercial bids till February 3, the next date of hearing.

Four bidders — L&T, Bhel, Ansaldo and BGR Energy — had responded to the NTPC’s fresh tender for the supply of 11 units of 660 mw supercritical units. Only Bhel and L&T Power had shown interest against the original tender issued by the public sector generator for the project. NTPC had to scrap the tender after L&T Power’s bid was rejected on technical grounds, leaving Bhel as the sole bidder for the project. Ansaldo Caldaie Boilers India, jointly promoted by leading construction company Gammon India and Italian firm Ansaldo Caldaie SpA, was also disqualified for the supply of turbine-generators to the NTPC’s project on a similar ground. However, the developer decided to go ahead with tendering as three bidders were still in the race. Bharat-Alstom has emerged as the lowest bidder for the project.

The high court’s interim order came on a petition filed by Ansaldo challenging its disqualification on tecghnical grounds. Stating that NTPC had excluded it from participating in the commercial bid unfairly on technical grounds. Ansaldo said it complied fully with the technical bid requirements of the project. The petition filed through counsel Prashant Kumar said that NTPC being a State should “act in a fair, reasonable and transparent manner in dealing with all tenderers and not act capriciously failing which such actions would be construed as violative of Article 14 of the Constitution of India.”

It also sought a direction to NTPC to permit the company to participate in the tender process including the technical discussions and to furnish its commercial bid in the project.

When NTPC issued original tender for the procurement of boilers in September 2009, Ansaldo had expressed interest in bidding for the project. However, it wanted two-month's extension in bid submission date. In a hurry to expedite procurement process, NTPC declined Ansaldo’ request. As a result, only Bhel and L&T submitted bids. While nine units will be used in NTPC’s projects, the balance is meant for Damodar Valley Corporation (DVC).

The government has envisaged introduction of supercritical power equipment in the country through bulk orders by central utilities like NTPC and DVC for their 12 th plan projects. Following a decision by the Cabinet Committee on Economic Affairs (CCEA) in January 2009, NTPC initiated tendering for the bulk procurement of eleven sets of 660 mw supercritical boilers and turbines. While nine sets of equipment will be used in NTPC's own projects, two are meant for DVC. Bidders are required to have equipment manufacturing facility in India.

PFC looking at equity funding of nuke projects

Power Finance Corporation (PFC), the biggest lender in the power sector, is open to the possibility of equity participation in upcoming nuclear projects in the country.

PFC has held initial discussions with the Nuclear Power Corporation of India Ltd (NPCIL) on funding possibilities, where the state-owned lender has offered to provide debt financing and consultancy services to start with, and explore the possibility of equity participation in due course.

Amid emerging opportunities in the nuclear power sector, NPCIL has indicated to lending institutions that it might need upwards of Rs 1,00,000 crore over the next 5-10 years for funding its aggressive plan to scale-up capacity, executives involved in the exercise said. PFC is keen on tapping all possible funding opportunities, including equity financing in the long run, they said.

Capacity expansion plans

NPCIL plans to have a capacity of 20,000 MWe (mega watt electric) on stream by 2020 and 63,000 MWe by 2032. Currently, it operates 19 nuclear power reactors with an installed capacity of 4,560 MWe, while three of its reactors with a total capacity of 2,220 MWe are in advanced stages of completion.

In addition, four indigenously designed 700 MWe pressurised heavy water reactors, two each at Kakrapar in Gujarat and Rawatbhata in Rajasthan, have been launched for construction last year. NPCIL's installed capacity is expected to go up to 9,580 MWe by 2017, with the progressive completion of the nuclear power reactors under construction. It is also working on plans to set up imported light water reactor-based projects at a number of coastal locations.

Financial resources

The nuclear power major — which has a surplus of Rs 12,000 crore, including cash reserves — can manage only to set up about 10,000 MWe through its own financial resources.

Hence, funding from other sources is needed to supplement NPCIL's efforts, especially in the wake of the extensive funding requirement envisaged for the imported LWR-based project on the anvil. PFC had in October last signed an initial agreement with NPCIL for providing financial assistance for new nuclear projects and for refurbishment of existing atomic power stations.

PFC's asset base, cumulative loan sanctions and disbursements as on June 30, 2010, stood at Rs 85,597 crore, Rs 2,88,932 crore and Rs 1,47,056 crore, respectively.

CIL moving towards signing 10-year thermal coal pacts with Indonesia, Australia, South Africa and the US - 15 cos invited for meeting

After nearly a year-long preparation, Coal India Ltd is finally taking a definitive step towards entering into 10-year thermal coal off-take (import) agreements with producers in Indonesia, Australia, South Africa and the US.

According to sources, 15-odd companies having global presence in coal mining sector are invited to participate in a meeting in Kolkata in January-end as a precursor to invite global tenders in this regard.

The participants in the pre-bid conference are selected against 29 specific proposals – pertaining to different mining assets in the four countries – submitted by the companies in response to a CIL tender inviting expressions of interests (EoI) from global producers.

The Coal India Chairman, Mr Partha S. Bhattacharyya, had previously mentioned that the Indian major was aiming to import coal at a discounted price when compared to the existing imports through term agreements in the country.

“We are aiming to strike long-term off-take agreements at 10 per cent discount to the index price (of thermal coal),” he said previously.

When contacted on Wednesday, Mr Bhattacharyya, refused to comment on the pre-bid meeting and other details.

However, according to sources merchant banking industry, of the 29 proposals for long-term supply of coal to CIL in India, 18 belong to coal assets in Indonesia; three proposals each were received with regard to assets in South Africa and Australia and; five proposals were received for importing coal from the US.

While the names of the companies to attend the pre-bid meeting are not available, industry sources told Business Line that almost the who's and who of global coal sector including Rio Tinto, Xstrata, Anglo American, Peabody, Massey Energy, Arch Coal, Foresight Energy, Murray Energy, Sinarmas and others submitted a number of proposals in response to the tender inviting EoIs.

India's Adani group having assets in Indonesia and Australia has reportedly submitted a number of proposals.

According to sources, the Indian coal major has divided the proposals in two categories depending on the calorific value of coal to be supplied. While bulk of the proposals received were for supplies of coal below 5000 kilo-calorie per kg, CIL would consider only higher heat value (over 5500 kcal) coal for supplies from far flung places like the US, so as to offset the high freight cost.

NTPC to defer opening of commercial bids in the tender for supply supercritical boilers

Public sector power generator NTPC will defer the opening of commercial bids in the tender for the supply supercritical boilers — a consequence of Ansaldo going to the Court against the power major.

Ansaldo, the Italian power equipment manufacturer which is now majority-owned by Gammon India, went to the Court against NTPC last week, after it was disqualified in the ‘technical bid' round of the tender.

It is learnt that BHEL, L&T-Mitsubishi Heavy Industries and BGR Hitachi, have made it to the ‘commercial bid round' in the equipment supplier selection process.

NTPC is handling the tender process on behalf of the Government, which wants to see the setting up of 11 units of supercritical power plants, 660 MW each, spread over five locations in the country. (Supercritical boilers are those in which water is converted into steam at high pressure — a process which heats water quicker, saving fuel.)

The value of the order would be around Rs 25,000 crore – big business, and therefore bitterly fought.

It is understood that Ansaldo was disqualified on the grounds that the ‘evaporator' – a boiler component – of the plant offered as the reference plant, was not designed by Ansaldo. Ansaldo feels that since its licence agreement with the technology supplier, Siemens, covers the evaporator, NTPC has no grounds to disqualify it.

The matter came up before the judges Mr Justice Sanjay Kishan Kaul and Mr Justice Rajiv Shakdhar. Sources in Ansaldo told Business Line today that when NTPC's counsel said that the matter was of great importance and it would not be wise to delay, the judges suggested that there would be harm if the opening of the bids was deferred by a few days.

NTPC will now file a reply to the Court, stating why it had disqualified Ansaldo, after which Ansaldo will have an opportunity to file its rejoinder. The matter will next be heard on February 3.

No consensus on NTPC's proposed 1,980-MW North Karanpura thermal power project, coal & power min to meet again

Failing to reach a consensus at a high-power meeting to sort out their dispute over the location of NTPC's proposed 1,980-MW North Karanpura thermal power project today, the coal and power ministries have scheduled another round of consultations by the end of this month.

"The meeting took place today, but nothing concrete came out... Both the ministries will meet again by this month-end to decide on NTPC's North Karanpura thermal power project," a source with the Coal Ministry told PTI.

Prior to the meeting, Coal India Chairman Partha Bhattacharya and NTPC Chairman and Managing Director Arup Roy Choudhury will also meet to discuss the issue, the source said.

The Coal Ministry has been pressing for relocation of the project, arguing that the proposed site is situated above an estimated six billion tonnes of coal reserves.

NTPC's North Karanpura project -- situated in Chatra district of Jharkhand -- was supposed to be implemented during the Eleventh Five-Year Plan (2007-12). However, it subsequently got entangled in the dispute between the coal and power ministries over its location and has been stalled ever since.

According to media reports, the Coal Ministry wants the plant to be set up at another site in Jharkhand. In this regard, the Coal Ministry claims the Power Ministry had earlier given its consent for shifting the location of the proposed plant. However, the Power Ministry later reversed its position and refused to cooperate, the Coal Ministry said.

The foundation stone for the Rs 8,000 crore project was laid in September, 2001, at Chatra. However, no work has taken place on the ground ever since.

In addition to the dispute between the coal and power ministries, the project suffered delays due to problems securing debt-funding by the Japan Bank for International Cooperation (JBIC). It seemed that things were sorted out after NTPC revised the project parameters in 2006 -- following which it tied up with JBIC for financing the debt component of the project -- but the continuing differences between the coal and power ministries has thwarted hopes of any progress being made. The project is proposed to be implemented in a debt-equity ratio of 70:30.

NTPC's Kayamkulam-II project: Concerns of commercial viability hinder Qatari investment

Notwithstanding the fact that NTPC has finally managed to evoke interest amongst the prospective Qatari stakeholders to invest funds in the 1,050 MW Kayamkulam Stage-II gas-based project in Kerala, the delay in signing power purchase agreements (PPA) for sale of expensive RLNG-fueled power from the project seems to come on the way of the much-awaited deal.

 8After a joint appraisal of NTPC's proposal by the Qatari nodal agency for the proposed 40% equity infusion in the project, Qatar Petroleum International (QPI), and Qatar Electricity & Water Company (QEWC), the Qatari side has expressed their apprehensions about the prospects of sale of imported gas-based Kayamkulam-II power to the regional beneficiaries in their last meeting with NTPC in December 2010.

 8To further assess the situation on ground, a delegation from Qatar is expected to visit the project site in the last week of this month.

 8Importantly, NTPC has been persuading with the Qatar government since the year 2006 to assure gas supply and funds infusion to the Kayamkulam-II or Ragiv Gandhi combined cycle power project (RGCCPP) Stage-II.

 8However, the delay in finalization of the deal with Qatar forced NTPC to arrange gas supply for the project from Gorgon of Australia, via Petronet LNG Limited (PLL), at an exorbitant rate of $21.1 per mmbtu, taking the cost of power generation to close to Rs 8 per kilowatt hour.

 8The power firm has even offered Qatar to supply gas and buy stake in 1,050 MW expansion of RGCCPP-II and 2,100 MW expansion to NTPC's joint venture project-- Ratnagiri project in Maharashtra.

Electricity boards may face losses after shift to IFRS

India's GAPP allows for later adjustments against tariff and fuel prices, foreign currency fluctuations, among other things. But under IFRS, these components are charged to the profit and loss (P&L) account.

India's state electricity boards with so-called regulatory assets face massive cumulative losses once Indian accounting standards converge with international financial reporting standards (IFRS) in April due to a crucial accounting difference. These losses, as calculated by the utilities, could be as high as Rs. 17,457 crore for Tamil Nadu Electricity Board (TNEB), '3,257 crore for Maharashtra State Electricity Distribution Co. Ltd and Rs. 1,445 crore for Uttar and Dakshin Haryana Bijli Vitran Nigam Ltd. Experts said the loss could be averted if the International Accounting Standards Board (IASB) agrees to change IFRS to bring it in line with generally accepted accounting principles (GAPP) used in India and some other countries. Regulatory assets or liabilities are components of electricity prices set by the regulator for future adjustments. India's GAPP allows for later adjustments against tariff and fuel prices, foreign currency fluctuations, among other things. But under IFRS, these components are charged to the profit and loss (P&L) account. There are serious anomalies relating to regulatory assets in India's power sector, the Association of Power Producers- whose members include Tata Power Co. Ltd, Adani Power Ltd and Reliance Power Ltd-has told the government in a letter, reviewed by Mint. "All regulatory assets presently directed to be recognized by licensees in power distribution such as electricity boards will have to be de-recognized. Thus, for example, TNEB has created regulatory assets...of Rs. 17,457 crore.

Under IFRS, this will have to be written off and a loss of this magnitude recorded," Prasad Menon, managing director of Tata Power and chairman of the association, said in the letter to the corporate affairs ministry, copies of which have been sent to the Prime Minister's Office (PMO) and the finance ministry. The letter adds the Haryana board has recognized regulatory assets of Rs. 1,445 crore and potential regulatory assets of Rs. 3,716 crore, aggregating to Rs. 5,161 crore; while the regulatory assets of the Maharashtra board amount to Rs. 3,257 crore. "All of these regulatory assets of electricity boards will under IFRS be converted into losses," Menon said in the letter. Tata Power did not respond to emails and phone calls for comment. Typically, regulatory assets add up because the power sector regulator does not allow distribution companies to raise tariff in public interest. It, instead, offers them sops such as reducing depreciation rates and writing off losses due to foreign exchange fluctuations, and allows them to defer the adjustment of these costs to the future.

India's apex power sector regulator said it is not aware of the problem. "We are not aware that IFRS will have such an implication. The forum of regulators will examine the issue and consider further action," said Pramod Deo, chairman of Central Electricity Regulatory Commission. Experts working with the power sector on IFRS convergence said there could be a way out for distribution companies. In 2009, the IASB issued a proposal, known as exposure draft (ED), to consider regulatory assets and liabilities under the IFRS framework, as happens in the Indian GAPP. But the body is yet to decide. Dolphy D'Souza, partner, assurance and national leader, IFRS Services at the consulting firm Ernst and Young, said the corporate affairs ministry should talk to the IASB about this. "If the IASB is hopeful that the ED will become a standard and that, eventually, regulatory assets will be treated as revenue/assets within the IFRS framework, there is no harm in taking that view right away under Indian standards. This could solve the problem," D'Souza said. The US, which is also planning to converge to IFRS, was estimated to have regulatory assets and liabilities of $675 billion ('30.57 trillion) and $450 billion, respectively, in 2007. Canada is facing a similar problem, D'Souza said.

L&T Power bets Hazira facility will drive topline eightfold in four years

Larsen &Toubro commissioned its spanking new thermal power-equipment facility last week. It was created ground-up in less than 24 months, considered a record in India.

As many as 16,000 concrete piles were driven down the 500-acre facility on the backwaters of the Tapti river in Hazira, Gujarat, to build the superstructure.That speed, said Ravi Uppal, CEO and managing director of L&T Power, will afford the company first-mover advantage and help drive sales eightfold to $3 billion in four years from $400 million now.

“This is the country’s largest integrated power facility (with an annual capacity to make equipment that can produce 5,000 mw) and helps us bring down costs greatly,” Uppal said in an interview with DNA.

The company has already spent Rs3,000 crore on the plant and will be spending another Rs1,000 crore in the next 6-8 months on a steel castings unit.Uppal said the commissioning should help because “clients get confidence when they see the plant on the ground, up and running”.L&T currently has orders for 10,000 mw of equipment worth nearly Rs32,000 crore.

Arvind Mahajan, executive director at KPMG, the Big Four audit firm, concurs with Uppal’s view that a ready plant engenders confidence among equipment buyers.“Obviously, with most joint venture facilities (to make power equipment) not yet functional, private power producers have been placing orders with Chinese firms,” Mahajan said.

Capacity at BHEL, the only other domestic power equipment maker in the country, at 15,000 mw a year is far short of demand.

The state-owned giant intends to augment this by a third, but hasn’t given a timeline for it.As a result, since October last, Chinese majors have won $15 billion — or Rs70,000 crore — worth of power equipment contracts from Indian firms, setting off a wave of angst in the domestic industry.

“It is rather unfortunate that most companies are going to China for sourcing equipment,” said Uppal. Stuff manufactured in China are up to 25% cheaper than in India on account of various direct and indirect subsidies offered by Beijing, he said.

The Hazira plant helps L&T Power and partner Mitsubishi Heavy Industries of Japan take lead in a business valued at `60,000 crore annually, according to World Energy Outlook.

Global firms, including Japan’s Hitachi, US-listed companies SPX Corp and Babcock & Wilcox Power Generation Group, and France’s Alstom are partnering BGR Energy, Thermax and Bharat Forge, respectively.

“We hope to get orders in the coming year,” said M S Unnikrishnan, managing director of Thermax, adding the company’s boiler facility with Babcock would be ready by September 2012.

What drew in private and global players was the government’s announcement to add 100,000 mw during 2012-17 to its current installed capacity of 166,366 mw.

But a rival to L&T, apart from the choc-a-bloc BHEL, is a long time away because none of the joint ventures is anywhere near completion.BGR, the Chennai-based power sector company, has two ventures with Hitachi to make boilers and turbines.

BGR and Hitachi are investing Rs3,000 crore to make turbines.

The Japanese major has a 26% in the venture that’s called BGR Turbines.

They will invest another Rs1,400 crores to make boilers. Hitachi Power Europe GmbH has a 30% stake in this venture, called BGR Boilers.

B G Raghupathy, chairman and managing director of BGR Energy, said both plants will start production some time in 2012.

The company had an order book of Rs10,500 crore at the end of September last.Another joint venture between Bharat Forge and Alstom is investing Rs2,400 crore to set up a plant at Mundra in Gujarat; this will start only in 2013.Uppal believes L&T’s decision to set up the plant near the backwaters of Tapti also serves two important purposes.

First, manufacturing synergies are engendered as the company’s heavy engineering plant is just a stone’s throw away.

Secondly, close proximity to port helps L&T use sea lanes for transportation of goods and save on costs incurred on trucking over land.

There’s another marketing pitch Uppal makes: “If you buy a Mercedes from Germany (and if there are no service centres in the country) would you run to Stuttgart every time your car broke down?” he asks, alluding to some domestic power entrepreneurs placing contracts with Chinese companies.

One more factor going for L&T, he says, is that thermal power remains the best bet in India because of cost factors.

“I believe there will be a huge demand for power at tariffs comfortable for the masses — like mobile telephony rates,” he said, hinting thermal power can facilitate this.

L&T — and other equipment makers — are wagering serious bucks on the commoditisation cycle such demand would spawn.

‘NHPC working on Rs 26k-cr capex

NHPC has been spearheading the government’s green drive in the power sector, harnessing the huge hydro power potential of the country. With an installed capacity of about 5300 MW, the company is among the largest power producers in India, and has ambitions to be a top hydro power producer globally. The company has projects of about 15,000 MW in the pipeline for implementation over the next decade. NHPC, which had an IPO last financial year, now aims to expand its overseas presence. Its director finance and chairman & managing director ABL Srivastava spoke to FE’s Subhash Narayan about recent developments in the hydro power sector and, more specifically, in the company. Excerpts:

Hydro power is increasingly becoming an important source of power generation. What kind of potential do we have?

India is endowed with abundant hydro power potential of about 149 gw (giga watts), of which only 25% has been developed so far. The untapped potential provides ample opportunities to hydro power developers. NHPC, on its part, is executing 12 projects with an aggregate capacity of of 5322 MW. Though these were part of the Eleventh Plan (2007-12) projects, some of the projects may now spill over to the next Five-Year Plan.

Three projects with an aggregate installed capacity of 1150 MW—namely Teesta-V (510 MW) in Sikkim, Omkareshwar Power Station (520 MW) through NHDC in Madhya Pradesh and Sewa-II (120 MW) in Jammu & Kashmir—have been commissioned during this Plan. The construction work on six more projects of over 1200 MW is in full swing. The installed capacity of NHPC at the end of this Plan period is likely to be around 6500 MW and we are aspiring to become a 9500 MW company by the end of 2013.

For the next Plan, NHPC proposes to add 1895 MW of new projects together with 2960 MW of capacity spilling from the Eleventh Plan projects. In addition, the company is working on a capex of Rs 26,000 crore for its future capacity addition.

Hydro power companies face many barriers like the long-gestation period of projects. How does NHPC overcome these barriers?

Construction of hydroelectric projects is a challenging task that not only involves meticulous planning and huge investments but also numerous unforeseen hurdles that can stall work at any point of time. Law and order, geological surprises, contractual complexities, delay in obtaining statutory clearances, difficult logistics, inclement weather conditions, poor infrastructure, land acquisition problems, dearth of trained manpower and additional demands by state governments have been the major impediments to the progress of hydro power projects.

NHPC is addressing these issues with focused attention so as to accelerate the pace of hydro power development in the country. The company has now started executing projects in a definite time-frame. This capability has been demonstrated by the early completion of the 300 MW Chamera-II Project in Himachal Pradesh, 1000 MW Indira Sagar Project and 520 MW Omkareshwar Project in Madhya Pradesh.

NHPC is going beyond hydro electric power into thermal and renewable energy. What is the progress on these fronts?

NHPC will not enter into thermal power generation on its own. This initiative will be carried out by our subsidiary NHDC— joint venture between NHPC and the Madhya Pradesh government. This company will set up a 1320 MW thermal project at Revapur in Khandwa district. Another thermal power project of 1320 MW at Shahpura in Jabalpur district has also been offered to NHDC. Besides, NHDC has been allocated site in the state for 100 MW wind power project in the Kukru region of Betul district.

Is NHPC contemplating any overseas expansion of its operations?

Our expertise in hydro power development is being utilised in countries like Bhutan, Myanmar and Tajikistan. NHPC has entered into agreement in Bhutan for providing engineering & consultancy services relating to pre-construction activities of Mangdechhu Hydroelectric Project (720 MW) in that country. Besides, the company has been contracted to prepare DPRs of 670 MW Chamkarchhu-I and 1800 MW Kuri-Gongri HE projects in Bhutan. NHPC has been designated as the executing agency for the 1200 MW Tamanthi and 642 MW Shwezaye hydro power projects in Myanmar.

What role has NHPC played in the preservation of the environment?

NHPC is deeply committed to the preservation of the environment even as it meets its objectives of harnessing hydro power. NHPC has given paramount importance to executing and operating its projects in an environment-friendly and socially responsive manner. The company conducts comprehensive environmental impact assessment (EIA) studies, on the basis of which environment management plans (EMPs) are prepared to address the concerns of environment conservation. In the event of any adverse impact on the environment from its construction activities, the company takes care to mitigate such impact through compensatory measures.

How will competition affect NHPC?

As per the CEA assessment, the hydro power potential of the country is 1, 48,701 MW, out of which only about 37,000 MW has been developed so far. The balance, approximately 75% of the total potential, still remains to be tapped. NHPC will continue to remain the number one in hydro power development irrespective of competitions in the sector.

Dabhol Terminal: Fresh bids invited for breakwater facility; full capacity unlikely to be achieved in next three years

Ratnagiri Gas & Power Pvt Ltd (RGPPL) has resumed its search for a competent contractor for completing the balance construction work on the breakwater facility for the Dabhol LNG Terminal. The company recently invited single-stage bids for hiring the services of a contractor for constructing the breakwater. The tender says that the breakwater facility should be constructed within a period of 33 months. Given an additional three months for processing the tender, it seems quite likely that the job will take three years or more to finish. Till that time, the Dabhol terminal will not be able to work at full capacity.

• The marine facilities at the LNG terminal include a 2.3 km long offshore breakwater, approach channel, 1,750 metre long approach trestle and jetty head. Pertinently, construction of the marine facilities was initially awarded to a consortium of Besix and Kier. The work commenced in 1999 and approximately 55% of the breakwater and 95% of the jetty was completed by the contractor when the works were abandoned in 2001. Subsequently, a detailed assessment of the existing marine facilities was carried out in 2006 as part of the revival of the project. Thereafter, the tender for construction of the breakwater facility was awarded on three different contractors, the latest being in June, 2009. However, the contract was terminated on account of poor performance by the contractor. 
• The current contract is only for completion of the breakwater and not for balance jetty work. The scope of work for the completion of the breakwater comprises the engineering and design; including model testing, mobilization, temporary works, surveys, acquisition and development of quarries. Other work under the contract include supply of all materials, fabrication of accropodes, loading, transportation and placing of rock core and removal of temporary works, including mobilization and demobilization of all personnel, equipment and marine spread, among other work. 
• The construction of the breakwater facilities is scheduled to be completed in a period of 33 months from the data of award of the contract. The last date for submission of bids is February 28, 2011. 
• It may be recalled that for the time being, the Dabhol Terminal is equipped to handle crude only through smaller ships as dredging and construction of breakwater facility is not yet complete. As a result, the terminal can currently operate at 30% to 40% of its total capacity. 
• The bids for completion of dredging work has already been invited on December 27, 2010, the last date of bid submission being January 31, 2011. 

Sebi settlement was voluntary: Anil Ambani

Anil Ambani today claimed that his two group firms -- Reliance Infra and RNRL -- settled the Sebi probe voluntarily and the regulator has not imposed any ban on the companies or their directors from participation in the capital market.Contesting media reports that Sebi barred two group firms and its directors from dealing in the capital market, Ambani told reporters, "Sebi has not banned R-Infra, RNRL, Anil Ambani, other directors from capital markets or from stock markets."

"Sebi has placed no restrictions on raising of equity and debt resources by any Reliance ADA Group company or individual... The matter has been settled through voluntary consent proceedings as stated in the Sebi order," he said.

Ambani's clarification comes in the wake of Sebi passing a consent order on Friday to settle a probe into the alleged violation of regulations for foreign investment and unfair trade practices by Reliance Infra and RNRL.

The terms include payment of Rs 50 crore as settlement charges, which have been paid by the directors without any financial burden on the companies involved.

Furthermore, the two companies, their Chairman Anil Ambani and four other directors offered to abstain from any investment in listed stocks subject to certain conditions, according to the Sebi order.

While R-Infra and RNRL cannot invest in the secondary market till 2012, Chairman Anil Ambani and the other directors will not do so till December, 2011.

However, the debarment of companies and officials does not apply to investments in mutual funds, primary market issues, buybacks and open offers.

The other officials named in the order include Reliance Infra Vice Chairman Satish Seth and three directors -- S C Gupta, Lalit Jalan and J P Chalsani.

The case relates to a probe by Sebi into dealings in the shares of another Anil Ambani group firm Reliance Communications and alleged violation of foreign investment and unfair trade practices norms by R-Infra and RNRL.

"In accordance with Sebi consent mechanism, the settlement is without admission or denial of guilt. Settlement (was) made in interests of investors to preempt unnecessary and time-consuming litigation," Ambani said.

Sebi had also said the consent order was without prejudice to its right to initiate enforcement action, including reopening of the proceedings pending against the entities if any of its terms were breached or any of the representations made before it were found to be untrue.

Asserting that Reliance Power (since RNRL has merged with RPower) will be India's largest power generation company, with a market cap of over Rs 40,000 crore already, Ambani said the company retains the full financial flexibility to raise resources and implement its growth plans. 

Similarly, Reliance Infra is also poised to be India's largest infrastructure company, with over a market cap of Rs 22,000 crore, he said."In the interests of 11 million investors, directors have made payment of entire settlement fee. No burden on R-Infra and RPower," he said.

Ambani also said the company has already adopted a policy for mandatory rotation of statutory auditors every three years, as stipulated in Sebi's Consent Order.When asked whether any other case against him is still pending with Sebi, he said, "No case has been pending against me with Sebi."

Nuclear Power Corporation of India starts preliminary construction work at Jaitapur in Ratnagiri district of Maharashtra

Nuclear Power Corporation of India (NPCIL) has commenced preliminary construction work at Jaitapur in Ratnagiri district of Maharashtra, even as protests continue against its upcoming plant there.

Since almost all the land required for the project is in the possession of NPCIL, construction of a 3-km boundary wall has started, NPCIL's Project Director, Mr C.B. Jain, told Business Line.

For study of the local soil, which is essential before construction of the plant and other ancillary buildings, soil samples from depths of 30 to 100 meters are being taken with bore drills. This study will help in designing and constructing the foundations of the buildings, he said.

Land pricing

“The contract for building the wall has been split into 10 parts so that local contractors could be used for building the wall and they can benefit from the project,” Mr Jain said.

NPCIL has acquired about 938 hectares from 2,335 farmers in Jaitapur. Of the total acquired land 67 per cent is barren, for which NPCIL had offered Rs 53,000 to Rs 1.05 lakh per hectare as compensation to the villagers. Grazing land constitutes another 26 per cent of the plant area; for this Rs 1.2 lakh to Rs 4.22 lakh per hectare was offered. And for farm land, depending on the quality of the land, Rs 1.8 lakh to Rs 6.34 lakh per acre was offered.

However, out of the 2,335 farmers only 100 have accepted their compensations cheques. A section of the farmers is waiting to see whether the State Government and NPCIL enhance the compensation package, while yet another section is not willing to part with their land.

Farmers' view

Mr Pravin Gavankar, local farmer and activist with Janhit Seva Samati, an NGO fighting for the rights of Jaitapur farmers, said that the local farmers don't trust the State Government or NPCIL.

“Land was also acquired from farmers while setting up the Koyna dam and Tarapur power plant but it proved to be disastrous for the locals. The relief and rehabilitation package was never properly implemented,” he said.

Mr Gavankar alleged that the land acquisition in Jaitapur has been done under the emergency powers of the Government. The process of acquisition was undertaken only by invoking section 144 of the IPC, which prohibits unlawful assembly of people, he said.

Cheap power vs reliable power

How can a system where the cost of supply is more than the cost recovered from its consumers ever succeed? With the commercialisation of such a system, the only option left for utilities is to sell less power to reduce their losses. It is then no surprise that various state electricity boards resort to load shedding. This is absurd and has to be corrected.

Even private utilities are not allowed to recover all their costs from the consumers. They are instead allowed to build a ‘regulatory reserve’. The ‘regulatory reserve’ is nothing but an ‘IOU’ from the consumer, which means the consumer has simply postponed paying what is due to be paid. The inevitable increase is only being delayed. One wonders how will the ‘IOU’ be ever paid for because the price of energy is only going to increase. It follows that in the future, the consumer will have to not.only pay for higher energy costs of the future but also the ‘IOU’ of the past.

Such weak political will at the state level is surprising since a large number of consumers is willing to pay more for reliable electricity. This is also evident from the fact that the alternate arrangements that people make to secure reliable power supply, such as diesel generation sets/inverters, are far more expensive than a modest increase in the electricity price. Further, in some regions like Pune, where a reliability charge was levied to ensure uninterrupted power , was heartily supported by the citizens.

While some states like Gujarat have chosen to provide reliable power to all, though slightly expensive, other states have decided to hold on to the price line and deprive the people of power. The difference in the development of basic indicators, such as literacy, infant mortality, depletion of ground water levels, change in area under cultivation, changes in soil conditions etc, between the two approaches of ‘reliable power’ and ‘cheap power’ is there for all to see. The so-called ‘cheap power’ is meaningless if no power is being supplied! ‘Reliable power’, even at a marginally higher cost, has generated all-round prosperity.

Fortunately, there is still room left to minimise the impact of increasing energy prices by minimising the inefficiencies in the system. The aggregate transmission and commercial losses (AT&C) losses have reduced only marginally from 32.7% in 2007 to 29.9 % in 2009. There is still ample room for improvement and a sizeable 15% to 20% savings can be made by simply reducing these losses. The total under-recovery of revenues, about 30% now, can be reduced to just about 10% by focussing on loss reduction. Here again the political will to privatise distribution is very weak and hence losses continue unabated.

NTPC's 750 MW Assam project may miss deadline - Delay in completion of civil works by SPML Infra blamed

NTPC may miss the Eleventh Plan (2007-12) commissioning targets for the proposed 750 MW (3 X 250 MW) Bongaigaon thermal power station in Assam, according to sources.

The Rs 3,750-crore project is making slow progress apparently due to delay in completion of civil works by SPML Infra (formerly Subhash Projects and Marketing Ltd).

Little progress

Conceived in 2007, two units of 250 MW each of the project were scheduled to goon stream in 2011-12. According to sources in Bharat Heavy Electricals Ltd (BHEL), the power equipment vendor has erected one boiler and work is on for the second. However, the turbines could not be installed as related civil construction was not done.

“We were ready to commission the boiler-turbine-generator package in time. We have installed the boiler of the first unit. However, we could not test it as water was yet be made available. We have already transported most of the equipment to the project site, however, turbines could not be installed as the “turbine-generator hall” was not ready, a BHEL source told Business Line.

NTPC officials admit that the commissioning programme of the project was affected due to delay in execution of civil works by SPML. “For expediting project execution, we have decided to offload the balance civil works of Unit-II & III at the risk and cost of SPML,” an NTPC official said. The power major had invited tenders in this regard.

According to NTPC sources, according to the revised commissioning targets set by the company, one 250 MW unit is scheduled to be on stream by March 2012. Commissioning of the residual capacity is expected during the Twelfth Plan period (2012-17).

Sources close to the development, however, feel that setting up even one unit during the current Plan period would be a steep target as nearly 80 per cent of the civil works of the first unit itself has to be completed.

SPML refused to comment on the issue. However, sources close to SPML blamed the political volatility of the region, resulting series of bandhs, strikes, threats from extremist organisations as well as heavy rains for delaying the company's construction activities.

Adverse conditions

“The project is located at Salakati in Kokrahjhar in Assam, which is the heart of Bodoland and productivity in any month never exceeds more than 10 days during a heavy rainy season. Annual productivity for construction does not exceed 6 months,” a source said.

Reliance Infrastructure and Reliance Natural Resources barred from secondary market till Dec 2012

Anil Ambani companies Reliance Infrastructure Ltd (R-Infra) and Reliance Natural Resources Ltd (RNRL) have been barred by SEBI from accessing the secondary market until December 2012.

Also five individuals associated with these companies, including Mr Anil Ambani, have been barred until December 2011, said SEBI in its consent order which disposed of its proceedings against the two companies.

The ban on these entities and individuals is not applicable to instruments such as mutual funds, primary issuances, buy-backs and open offers.

Payment of settlement fees of Rs 25 crore each (Rs 50 crore in total) was made jointly and severally by the companies as well as the five individuals, according to recommendations made by a SEBI-constituted high powered advisory committee. Apart from the settlement charges, the committee asked the company to rotate its statutory auditors. The companies in question said in a news release that this has already been implemented. The consent terms shall apply even after these companies undergo any change on account of merger, amalgamation or any other corporate action. The committee found R Infra and RNRL responsible for “misrepresenting the nature of investments in yield management certificates/deposits and the profits and losses thereof” and misusing the framework of SEBI's FII regulations.

The conclusion was based on investigations done by SEBI into the dealings either directly or indirectly in the shares of Reliance Communications Ltd by ADA group companies using ECB /FCCB proceeds for fraudulent and unfair trade practices under the relevant regulations.

Reliance Power requests for EGoM meet on gas allocation for Samalkot project

In view of the advanced stage of construction status of the Samalkot 2400 MW domestic natural gas based power project, being developed by Reliance Power Limited (RPL), the company has requested the Ministry of Petroleum and Natural Gas (MoPNG) to urgently convene a meeting of the Empowered Group of Ministers (EGoM) so that gas allocation for the above project could be expedited. 

• If the company's claims are to be believed, the project can be commissioned from November 2011, i.e. within 10 months from now, if it gets the required allocation in time. Notably, it has sought allocation of gas to the tune of 6.4 mmscmd in 2011 and 3.2 mmscmd in January 2012. 
• Further, boasting of good progress on site,  it has informed that one Gas Turbine has already been tested and is ready for dispatch. This obviously calls for gas linkage at the earliest. In addition, the expansion project is also being appraised by Indian lenders led by State Bank of India, who are awaiting final confirmation on gas allocation to the project.
• Also, it already has PGCIL's approval to connect the plant to the Vemagiri-II pooling station, via a 2x400 kV quad DC line. It has further affirmed that water allocation for the entire plant has been granted. 

onsultative Committee meet: BJP's Yashwant Sinha wants quick settlement on North Karanpura STPP site

The BJP-leader, Yashwant Sinha, has asked the coal and power ministry to expeditiously settle their long-standing tussle over an appropriate location for NTPC`s 1,980 MW North Karanpura super thermal power project (STPP) in Jharkhand.

• In this context, the member of Parliament to Lok Sabha from the coal-rich state has proposed that the MoC convenes a meeting with all stakeholders concerned, in order to arrive at an amicable solution. 
• Progress at the project remains stalled due to the impasse created over the concerns raised by the MoC over the existence of coal reserves under the site proposed for the plant. 
• While the present location, in the Chatra district of Jharkhand, is reportedly in accordance with a decision taken jointly by NTPC, CIL, Central Coalfields Limited (CCL) and CMPDIL, the coal ministry wants relocation of the plant, a view opposed by the power ministry. 
• In the meantime, to placate the coal ministry, NTPC has already reduced the land requirement for the project, from the original 2,306 acres, to 1,550 acres and, subsequently, to 970 acres, concessions that have, however, failed to move the ministry.
• The North Karanpura STPP consists of three 660 MW units and is being financed by a loan from Japan International Cooperation Agency (JICA). 

Delays at power projects-I: NTPC boasts of good commissioning records

NTPC has often been criticized for lassitude when it comes to on-time commissioning of its projects. However, if the power major is to be believed, its performance is not as bad as claimed by its critics.

• During a presentation at the fourth meeting of the committee of Ministry of Statistics and Programme Implementation (MOSPI) on time and cost overruns in implementation of Central sector projects, NTPC has asserted that out of 35 units of 500 MW, each, commissioned till date, 26 have been commissioned within the stipulated time schedule.
• Out of the remaining nine units, six units are in the Eastern region, including Farakka, Kahalgaon and Talcher TPP. Law and order issues, insurgency problems, and infrastructure constraints have been cited as the major culprits for delays, especially in the Eastern region.
• The following are the other major factors causing cost and time overruns at few of its projects, as cited by the company:
• Limited number of players in Balance of Plants (BOP), particularly DM Plant, PT Plant, AHP Plant, Chimney, NDCT cooling tower, etc.
• Inadequate infrastructure, particularly roads, for transportation of heavy equipment consignments
•  Shortage of skilled manpower
• Delay in supplies from BHEL due to its limited capacity
• Dispute on contractual issues.
• Delay in main plant civil works due to slow progress of works by contractors.