Gujarat offers 4 sites for setting up UMPPs

Gujarat has offered four sites to the Power Ministry to construct two ultra mega power projects of 4,000 MW each in the western state.The government is planning to add five more such projects to its existing list of nine UMPPs in the country, which would help in the capacity addition programme in the XIIth Plan Period (2012-17).

"Three UMPPs are coming up in Maharashtra, Karnataka and Tamil Nadu, five new such projects are in the pipeline," a power ministry official said.

Two more such projects are likely to come up in the state of Andhra Pradesh, where Reliance Power is executing one at Krishnapatnam. And one more each in Jharkhand and Tamil Nadu.

"Gujarat (government) has shortlisted four sites for setting up two UMPPs in the state, we have to choose now," he said.

Tata Power is already executing a UMPP at Mundra in Gujarat. The 800 MW unit of this power project is expected to come up during the current plan period (2007-12).

The government has so far allotted four UMPPs to the successful bidders. Tata Power got one project -- Mundra (Gujarat) while Reliance Power bagged three such projects -- Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaiya in Jharkhand. It has also invited the initial bids for the UMPPs in Chhattisgarh (Sarguja) and Orissa (Bedabahal). The preliminary bids for the projects in Tamil Nadu, Karnataka and Maharashtra may be invited this fiscal.

Power Ministry has earmarked a capacity addition target of 1,00,000 MW in the next plan period of which a major chunk would come from these UMPPs.

NTPC plans to raise $300-mn syndicated loan

India’s largest power generator NTPC Ltd plans to raise a syndicated loan of $300 million (over Rs 1,380 crore) to finance its ongoing capacity addition initiatives.

A senior management team of the state-run power major last week held meetings with foreign banks to discuss the timing for mobilising the proposed loan. The move is crucial for NTPC despite it has cash reserves worth Rs 18,000 crore. NTPC has proposed capex of Rs 29,000 crore for the current year. The company, with an installed generation capacity of over 30,000 Mw, is currently engaged in adding capacity of 22,000 Mw by the end of the Eleventh Five-Year Plan.

An NTPC official, who did not want to be quoted, told  “The board has already given its clearance to raise a syndicated loan of $300 million essentially through external commercial borrowing (ECB). The company can go in for ECB of $500 million. Foreign banks and lenders have projected that the loan can be available at the interest rate of around 3 per cent.”

The official said the management team held discussions with the representatives of HSBC, KFW, Deutsche, UBS, Standard Chartered, City Bank and Bank of Tokyo &Mitsubishi.

The official also informed that NTPC had already prepared a war chest of around Rs 1.6 lakh crore for the next five years.

A representative of a foreign bank, said NTPC had the highest credit rating and its balance sheet is quite strong. Therefore, it won’t be a problem to raise the $300 million despite the current European crisis. “The good news is that the US economy is reviving,” he noted.

During 2008-09, NTPC had raised term loans of Rs 11,575 crore from banks and financial institutions and raised bonds worth Rs 1,900 crore. In the next financial year, it tied up the corporate loan of Rs 8,500 crore with a public sector bank and had signed loan agreements of Rs 4,850 crore with domestic lenders.

Gas allocation policy may favour new projects

The central government may reserve up to 30 per cent of gas for the greenfield power projects in the new gas allocation policy which will govern the next round of gas allocation.

The greenfield projects will get priority over expansion and redevelopment projects. We have also decided to reserve 30 per cent of the allocation for independent power plants, said a senior government official.

Work on the gas linkage policy was started in December 2009. The policy is going to largely follow the norms laid down in the coal linkage policy approved earlier by the government.

While the coal linkage policy gives priority to power projects being developed by state-owned companies like NTPC, it requires the companies to start new projects to get coal allocation. If a similar measure is adopted in the gas linkage policy, NTPC will find it difficult to get gas for its existing gas-based power plants.

However, other players like Reliance Power Ltd, GVK Power and Lanco Infratech would be the beneficiaries of such a policy as they are coming up with greenfield gas-based projects. The gas linkage policy will also have a point system in which project developers would get weightage on the basis of getting environment, land and water clearance from the concerned departments.

We want to allocate gas to only those plants that are likely to come up within 2-3 years of gas allocation. So, if a project is running behind schedule in getting clearances for its projects, it may not be allocated any gas, he added.

Revision of coal royalty rates: CEA suggests new formula

The Central Electricity Authority (CEA) has asked the Ministry of Coal (MoC) to explore the possibilities of adopting coal-mine specific royalty rates, on the basis of the availability of coal at the head of a mine. The royalty rates to be determined in such a manner will also be subject to escalation based on the wholesale price (WPI) index for coal. According to CEA, while the prevalent formula determines royalty on the basis of the fixed and variable costs of coal production, resulting in varying rates for even the same mine, the proposed modification would ensure uniformity of royalty rates for all the coal mines. This would also reduce end-use price fluctuations, resulting out of the variable component of royalty. The central agency put forward this proposal while furnishing its comments on the proposed revision of royalty rates to the Study Group, constituted by the MoC, for making recommendations on this matter.

Notably, following consultation with all the stakeholders, the Study Group, under the Chairmanship of the Additional Secretary to the MoC, Alok Perti, is due to furnish its recommendations by July 15, 2010, to facilitate the revision of the royalty rates by August 1, 2010. These rates were last revised on August 1, 2007.

NTPC TPPs post 90.09% PLF in May'10

Bolstered by improved performance at its gas-based stations, NTPC managed to surpass the 90%-level, operating its thermal plants at 90.09% PLF during May 2010. However, only the Singrauli super thermal power plant (STPP) and 460 MW Talcher TPP could achieve a 100% PLF, during the month. Singrauli STPP has registered a PLF of 103.74%, against 104.28%, recorded in April 2010, while Talcher TPP has posted a PLF of 100.43%. Amongst its 22 other plants, the coal based projects at Tanda, Ramagundam and Sipat were the best performers, with PLF-levels of 99.31%, 98.60% and 97.24%, respectively.

The improved gas availability at the gas-based power plants of the country, subsequent to the commencement of supply from the KG D-6 basin, has resulted in significant improvement in NTPC`s gas-based stations. The power major`s gas-based units at Dadri, Anta and Gandahar recorded PLF levels of 86.71%, 84.71%, 84.63% , respectively. In terms of energy generation, NTPC`s power stations produced a total of 19,116.1 million units (MU) of electricity during the month.

Tata Power to add 200 MW wind power capacity in FY'11

Private sector power major, Tata Power Company Limited (TPCL), has disclosed plans to add 150-200 MW worth of wind power capacity to its generation portfolio during the ongoing 2010-11 fiscal. This would largely comprise of 150 MW of wind power plants in Maharashtra and Tamil Nadu. The company is also in the process of acquiring wind assets totaling to 20.95 MW in Maharashtra, from Niskalp Energy.

Currently, Tata Power has an installed wind-based generation capacity of 200 MW, spread across the states of Maharashtra, Gujarat and Karnataka. A total of 100 MW capacity is based in Maharashtra, while Gujarat and Karnataka, each, contain 50 MW of such projects. “The company is progressing as planned on the path of renewable energy and today around 20% of the power generated is from ‘clean’ sources, which we will increase to 25% in 3-4 years. Today our wind portfolio is 200 MW and going forward we intend to add substantially to our renewables portfolio," Prasad Menon, Managing Director, TPCL.

While wind power generated in Gujarat and Karnataka is sold through long term power-purchase-agreements (PPA) with the state discoms, the wind power generated by its Maharashtra projects are sold to Tata Power’s distribution unit in Mumbai. Maharashtra is one of the leading states for wind power generation. The company’s wind farms in Maharashtra are located at Visapur and Sadawaghapur in the Satara district, Khandke and Supa in the Ahmednagar district, and Bramanvel in the Dhulia district.

NTPC backs out of coal transportation deal with Inland Waterways

In view of disagreement over various findings of the feasibility study report prepared by Inland Waterways Authority of India (IWAI), for the waterway transport of coal to the Farakka, Barh and Kahalgaon power stations, the power major, NTPC, has decided to not go ahead with a partnership with IWAI. In a recent missive, the power firm has made it clear that IWAI`s call for long-term commitments for ferrying 2-3 million tonnes per annum (MTPA) of imported coal to these power plants, using the proposed waterway, is not feasible, because NTPC doest not import coal directly. Rather, it imports coal via the state-owned companies-- Coal India Limited (CIL), State Trading Corporation and MMTC. Accordingly, NTPC has called on IWAI to devote its energy, instead, in negotiating with those trading firms, and not with the Maharanta PSU. On its part, NTPC has asserted that at best, it can make certain changes to the tender documents for coal import, to encourage these trading firms to use the waterway route whenever possible.

Pertinently, NTPC and IWAI signed a memorandum of understanding (MoU) in September 2008 to arrive at an appropriate methodology for the smooth and cost effective transport of coal to the three coal-starved power stations of NTPC. Subsequently, IWAI had commissioned a feasibility study by ILFS and a draft report was submitted to NTPC in February 2009, and later revised in December 2009, following NTPC`s recommendations. However, nothing much has happened after that, as, on one hand, NTPC started claiming that the feasibility study lacks credibility, while, on the other, IWAI has been maintaining that the proposed IWT is a competitive logistics solution for the transport of coal to the power major`s key power stations, in a scenario where the Railways is unable to fulfill all requirements of these projects.

EGoM may consider gas supplies to ADAG's proposed power plants

An Empowered Group of Ministers may meet next month to decide if exceptions to the present policy can be made so that Anil Ambani Group's proposed power plants can get fuel from Reliance Industries's KG-D6 fields by reserving or blocking certain volumes for it.The government's Gas Utilisation Policy does not provide for reservation or blocking of natural gas for plants that have only been proposed and all of the output from KG-D6 fields has been allocated to units that said could consume the fuel immediately.

"KG-D6 fields have finite resources and a limited output. So if supplies have to be made to certain plants that will come up in future, then output will have to be capped and volumes above that reserved for production when that particular unit comes up," a top source said.Alternatively, the government will have to cut supplies to existing customers to accommodate future plants of ADAG.

RIL and ADAG firm RNRL Friday said they have entered into a new Gas Sales Master Agreement that outlines the terms on which Mukesh Ambani-run firm would supply gas.Within hours of signing the GSMA, which as per the Supreme Court directive is in line with the government's pricing and utilisation policy, was submitted to the Oil Ministry for action.

The source said the EGoM headed by Finance Minister Pranab Mukherjee may meet in the next two weeks to consider changes in the present policy, as also to explore allowing ADAG to jump the long queue of power plants, fertilizer units and refineries that are seeking gas.

The GSMA, he said, does not mention of volume, tenure or price of gas but only lists the requirement of gas at ADAG's proposed units including the 7,800 MW Dadri plant near here and Shahapur plant in Maharashtra. The supplies may have also been sought for expansion of 220 MW Samalkot plant in Andhra Pradesh, 48 MW Goa project and 165 MW Kochi plant.

RIL has till date signed up for 57.8 million standard cubic meters per day of its output on long term contract. It has told the Oil Ministry that it can sign up for another 2.2 mmscmd on long term since output from KG-D6 can be sustained only at 60 mmscmd.The peak output of 80 mmscmd from KG-D6 fields, set to kick-in sometime next year, is to last for 7-8 years.The source said the government has set a price of USD 4.20 per million British thermal unit for output from KG-D6 fields for five years till March 31, 2014 after which it will be revised.ADAG plants may be at least 27-30 months away from taking first gas.

The apex court had last month rejected ADAG plea to get gas from RIL at concessional rates of USD 2.34 per mmBtu for 17 years under a family agreement, saying the government alone has the right to approve the price and fix its users.

Environment Ministry's no to ToRs for four N-power projects

Citing deficiencies in pre-feasibility reports, the Environment Ministry has refused to prescribe terms of reference for four atomic power projects proposed by the Nuclear Power Corporation of India Ltd. ToRs are the mandatory conditions granted to any project for undertaking detailed Environmental Impact Assessment (EIA) for the purpose of obtaining a 'green' clearance.

The projects which have been rejected are from Haryana, Madhya Pradesh, Gujarat and Andhra Pradesh. The plants were to be built by NPCIL, a public sector unit, with an objective to help the states overcome the acute power shortage.

An expert appraisal committee (EAC) of the Ministry, in its meeting held a fortnight ago, had asked the NPCIL to revise the project documents and submit the same afresh for further consideration by it.

In Gujarat, a nuclear power park (6x1000 MWe) was to be set up in Chhaya Mithi Virdi village in Bhavnagar district in three stages of 2x1000 MWe each with a gap of about three years, said a senior Environment Ministry official.

However, noting that the information submitted by the project proponent was incomplete, the panel refused to prescribe ToRs for undertaking detailed EIA study for the purpose of obtaining environmental clearance in accordance with the provisions of the EIA Notification, 2006.

It pointed out that the pre-feasibility report is "found to be lacking in the requisite details" and asked for land use details and land use map, environmental setting of the site and details of the township component.

Attributing similar reasons, the panel has refused to prescribe ToRs for two power plants each in MP atomic power project (2x700 MWe) in Madhya Pradesh, a 4x700 MWe nuclear power plant in Fatehabad in Haryana and a nuclear power park (6x1000 MWe) in village Kowada in Srikakulam, Andhra Pradesh. The nuclear power parks (6x1000 MWe) in Gujarat and Andhra Pradesh are proposed to be implemented in three stages of 2x1000 MWe each with a gap of about three years.

With each project, a residential township is also proposed to be constructed for which water requirement will be met through establishment of a desalination plant. After India signed a civil nuclear deal with the US, states have been in a spree of setting up atomic power plants with analysts pointing out that such projects will help meet future energy needs and reduce emissions of pollutants.

NPCIL is following a schedule of developing nuclear power plants in a period of 50 to 60 months, said to be among the fastest plant erection schedules in the world.

India, Canada sign civil nuclear deal

Breaking new grounds in their bilateral relationship, India and Canada on Sunday signed a civil nuclear cooperation agreement and strongly condemned terrorism in all its forms and manifestations. Prime Minister Manmohan Singh, the first Indian Head of the Government to visit Canada after I K Gujral's trip here 16 years ago, and his counterpart Stephen Harper hailed the signature of the nuclear agreement after their one-on-one and delegation level talks that will provide for cooperation in civil nuclear energy including import of uranium and equipment from Canada.

The civil nuclear agreement was signed by Srikumar Banerjee, Secretary, Department of Atomic Energy and Canadian Foreign Minister Lawrence Cannon in the presence of the two Prime Ministers.

The deal also envisages cooperation in fields of nuclear waste management and radiation safety.

The agreement assumes significance in the context of Canada's strong attitude in the past when it slaped sanctions against India after the Pokhran I and II tests in 1974 and 1998.

A joint statement issued at the end of the meeting said the two Prime Ministers committed themselves to the ratification of the agreement and completion of all remaining steps necessary to ensure its early implementation. They underscored the potential for mutually beneficial civil nuclear cooperation and trade.

Singh said he was convinced that a strong India-Canada partnership will facilitate solutions to global challenges such as energy and food security, sustainable development, climate change and the fight against extremism and poverty. "Towards this end, we have agreed to promote and maintain a high level dialogue between India and Canada, he said.

Two leaders committed to expanding a range of activities and institutional frameworks that will contribute to the shared goal of increasing bilateral trade to USD 15 billion in next five years.

They welcomed the conclusion of negotiations of social security agreement and looked forward to its early signing followed by ratification and implementation. Later speaking at a banquet hosted in honour by Harper, Singh said "India and Canada shared much in common . "We are separated by distance but we are united in our values. We both cherish our freedom, our democratic way of life, our pluralism and our spirit of tolerance."

Recalling late Prime Minister Indira Gandhi visit to Canada 37 years ago, he referred to her statement that “Greatest achievement of Canadian people was not the high economic standards they had attained but the fact that it is regarded as a nation of friends that had shown interest in expanding business ties with India."

Jindal seeks restoration of C’garh project

Apprehending a six-month delay in the start of the Rs 13,000-crore project in Chhattisgarh, Jindal Power on Sunday asked the environment ministry to reconsider withdrawal of the clearance granted to it. The Naveen Jindal-led company said it has not violated any green norm, and has already apprised environment minister Jairam Ramesh on the “more than six-month” delay the project could now face.

“We are shocked and surprised at the action taken on us without giving an opportunity to our company to explain the factual position. The facts mentioned in your letter are not correct and we would like to clarify,” Jindal Power director Anand Goel said in a letter to the ministry.

“We would request you to please look into the matter once again and give us an opportunity to present our case before the Expert Appraisal Committee as we have not changed the location of the expansion project and have only optimised the land usage,” he said in the letter dated June 24.

After giving the initial clearance or Terms of Reference (ToR) to the proposed 2400-mw project last year, the Union environment & forest ministry had revoked it earlier this month, citing violation of green norms by the company. The proposed expansion project will entail an investment of Rs 13,410 crore. A senior Jindal Power official confirmed writing the letter to the ministry and expressed hope that the company would be given an opportunity to present its case to the authorities concerned.

The ministry, revoked the ToR for the proposed 2400MW coal-based power plant at Tamnar in Chhattisgarh by saying “the proposal for setting up the power plant is premature.”

PowerGrid to invest Rs 58-k cr on transmission network

Central transmission utility PowerGrid Corp would invest Rs 58,000 crore for setting up network to facilitate evacuation of electricity from power surplus states to others. The company would execute nine high-capacity transmission corridors, which would transfer power from the hydro power projects in the North-east and thermal power projects in the Northern region to power deficient states. "We would construct nine high capacity transmission corridors in five years from now," CMD PowerGrid Corp S K Chaturvedi told."It requires an investment of Rs 58,000 crore and would be funded through internal accruals, World Bank and Asian Development Bank loans and partly from the proceeds of the FPO," Chaturvedi said. The transfer of electricity would take place between Jharkhand, Chhattisgarh, Sikkim, Andhra Pradesh and Tamil Nadu.

"The transmission network includes two corridors in the East, two in the west," he said, adding that the company has received the necessary approvals from power regulator Central Electricity Regulatory Commission (CERC). However, the quantum of power to be evacuated through the network cannot be ascertained now as it includes electricity from both operational as well as under-construction projects.

Meanwhile, PowerGrid is gearing up for its follow-on public offer through which it expects to raise 10 per cent fresh equity. The government is likely to divest 10 per cent stake in the navratna PSU. The company plans to invest Rs 55,000 core for adding 37,000 MW of inter-regional electricity transmission capacity in the country during the 11th Five-Year Plan (2007-12). It also targets to augment transmission capacity to 23,400 MW in the current fiscal from 19,800 MW at present. 

Tata Power says buying 20.95 MW wind assets

Tata Power, India's No. 1 private-sector power producer, said on Monday it was in the process of acquiring 20.95 megawatts (MW) operating wind assets in the western state of Maharasthra from Niskalp Energy Ltd. The company will also shortly place an order for 150 MW wind capacity to be set up in Maharashtra and the southern state of Tamil Nadu, to be commissioned during the course of this year and next year, Tata Power said in a statement.

NTPC reissues tender for bulk procurement of 660 MW boilers

After scrapping the controversial tender for 660 MW super-critical boilers, state-run NTPC, on Friday, issued a fresh set of bid documents to source 11 sets of boilers, for five coal based thermal power projects, that are scheduled for commissioning during the 12th Five Year Plan period. The Board at its meeting held on Monday, decided to scrap the original tender and call for fresh bids, after the bid submitted by the consortium of L&T Power and Mitsubishi Heavy Industries (MHI) was disqualified on technical grounds, which left only BHEL in the fray. NTPC has asserted that MHI should have formed a consortium with L&aT and not L&T Power, which is a subsidiary and does not fulfill the criteria set forth in the bid documents.

NTPC, in October 2009, invited two separate global competitive bids for sourcing 11 sets of boiler and steam turbine generators. BHEL and a consortium of L&T Power and MHI submitted bids for the boiler package and five companies -- BHEL, L&T Power-MHI, Bharat Forge-Alstom, Toshiba-JSW, Power Machine -- submitted bids for the turbine generator package. Two sets of boilers each for NTPC`s Mouda super thermal power project (STPP), stage-II, Solapur STPP, Damodar Valley Corporation`s Raghunathpur TPP, phase-II and Meja Urja Nigam Private Limited`s (MUNPL) Meja TPP and three boiler units for Bhartiya Rail Bijlee Company Limited`s (BRBCL) Nabinagar STPP are to procured through this bulk bidding process. MUNPL and BRBCL are the joint venture enterprise of NTPC with India Railways and Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited. These projects, being granted the Mega Power status, supplies of goods for this package shall be eligible for deemed export benefit.

Setting down strict qualification criteria, NTPC has clarified that in case of a bidder who wants to bid through its subsidiary company, then the subsidiary firm of the steam generator manufacturer should be registered in India, under the Companies Act 1956, for manufacturing of supercritical steam generator sets. If the subsidiary is registered as a public limited company, then it should have obtained certificate for commencement of business in India as on the date of techno-commercial bid opening.

Thus, MHI and L&T would now need to rejig their collaboration agreements to bid for this package, however, this time it may face a far tough competition as a few new players are expected to bid for this Rs 10,000 crore boiler deal. Pune-based engineering solution provider, Thermax, which has recently signed a joint venture with Babcock & Wilcox for manufacturing of boilers upto 3,000 MW capacity, is also likely to bid for the revised boiler tender. The bid documents for this contract can be purchased on submission of a written application and a non-refundable payment of Rs 22,500 or USD 500, till July 30, 2010. The last date of submission of bids for this package is August 25, 2010.

Mounting losses undermine electricity generation targets

Mounting losses in power transmission and distribution by state-owned electricity boards are undermining ambitious government plans to boost electricity generation, industry experts say.

Losses of state-run power utilities are estimated to nearly triple and reach Rs1.16 trillion by fiscal 2015, according to a report by US-based energy and metal information provider Platts, published this month, which cited a study by India’s Finance Commission.

“Finance Commission estimates that net annual losses of the state transmission and distribution utilities could almost triple by fiscal 2014/15 if the business as usual approach continues,” said the report. The net losses of power utilities are expected to increase to Rs68,643 crore in the current fiscal from Rs40,000 crore in fiscal 2010.In a report released in January, consulting firm KPMG estimated average transmission and distribution (T&D) losses in India to be 33% of the total power generated. Malay De, chairman and managing director of the West Bengal State Electricity Distribution Co. Ltd says the situation is “very alarming”. Even in West Bengal, which is one of the better off states in terms of operational efficiency, there is room for a 10-percentage point reduction in T&D losses that currently stand at 22%, he says. According to Arun Mishra, principal energy sector adviser at the Planning Commission, plans have already been made to cut down on losses by raising agricultural power tariffs.

“States like Punjab and J&K (Jammu &Kashmir) which were laggards have also improved,” he said. Punjab was a laggard because of high subsidies to farmers and they are also moving towards corporatization this year,” he told Mint.Mishra was referring to a move by the Punjab government towards unbundling the electricity board—the process of dividing state power utilities into separate generation, transmission and distribution units in line with the Electricity Act, 2003.Lack of compensation from state governments to utilities for the subsidized rates at which they sell power to groups such as farmers is a major drag on the finances of such entities, says Ross McCracken, editor of Energy Economist, the Platts publication that carried the report.

“State governments might not have properly funded the subsidies and do not have the money, or they are prioritizing other expenditures knowing that at least temporarily they can pass the burden on to the utilities,” McCracken said in an email response to queries from Mint. “This is not sustainable and undermines utilities’ ability to invest.”Planning Commission deputy chairman Montek Singh Ahluwalia said last month that India is targeting the addition of 20,359MW of power generation capacity this fiscal. Last year, it added only 9,585MW of a targeted 14,507MW.The Platts report quoted B.K. Chaturvedi, a member of the Planning Commission, as likening the situation in the power sector to a “six-lane road ending in a narrow lane”, referring to the large amount of private investment flowing into generation, but not being matched in transmission and distribution.

“Two to three months’ delays in making payments to power generating companies have started to surface in states like Jharkhand, Bihar, Uttar Pradesh, Jammu and Kashmir, and the north-eastern states except Assam,” said the official who spoke on condition of anonymity. “If the companies do not receive their payment on time, they might defer investment plans.”

Sudhir Nair, head of Crisil Research, an arm of Mumbai-based credit rating agency Crisil Ltd, estimates Rs5 trillion will be invested in power generation in the next five years compared with just Rs3.5 trillion in transmission and distribution. “In the developed countries, this is 1:1,” he said.

The situation will change, but only gradually.“In the next 10 years, the composition of power consumption will change with agriculture becoming aminuscule part because of factors such as urbanization,” Nair said. “That will give state governments more power to increase tariffs for this segment. It has already started to happen with the share of agriculture falling around 5% in the last seven years to 20% now.”

Greater engagement of the private sector in the distribution side of the power supply chain may be one solution.“In the Indian context, private sector involvement in distribution functions like metering, billing and collection might help in bringing in managerial efficiency,” said Kuljit Singh, partner, transaction advisory services, at international consulting firm Ernst and Young Pvt. Ltd.

Finmin plans action against cos evading tax on carbon credit sale

The finance ministry has mined data of Indian companies that have not been paying tax on the income earned by selling their carbon credits or certified emission reductions (CER). These entities are likely to face penal action once a case of tax evasion is established against them. They are like any other company evading taxes and penalties would be imposed, sources in the income tax department said.

Interestingly, some of the entities on the I-T radar which have not paid tax on already redeemed income on carbon credits are listed firms. In the data mining process, the department has prepared a list of all such entities that have accumulated carbon credits and subsequently sold them.

A senior finance ministry official said that scrutiny of the balance sheets of these companies revealed that some were offering the proceeds from sale of carbon credits to the tax department, while many were not.

The department may soon send notices to such companies that have evaded tax. An inventory will be sent across to different formations and field units to keep a close watch on firms which have accumulated CERs and may trade it at a future date.

Companies earn carbon credits by reducing their greenhouse gas emissions. These credits entities can then be sold in the international market to companies in rich countries that require the credits to set off against their reduction targets under the Kyoto Protocol. India, after China, is the biggest generator of certified emission reductions. By 2012, Indian companies are expected to earn more than 600 million CERs through green-tech investments made in at least 1,500 projects, involving capital infusion of more than Rs 1.5 lakh crore. Many of the cement and steel companies in India are among those which have traded their CERs in the international market. Recently, JSW Steel had sold some of its CERs at a rate of euro 13.50 per tonne. The price is likely to rise to euro 20 a tonne by the end of this year as the demand in Europe is likely to rise with the revival of economic activity.

Entities in China and India account for 70% of the total world carbon credit market, which is estimated to be more than $25 billion at present, and as per World Bank estimates may earn developing countries in excess of $100 billion annually by 2050. India has generated some 75 million certified emission reductions so far as compared to China's 210 million. It has an advantage as a developing country to install modern technology that emit less of greenhouse gases. Increasingly, many of the municipal bodies in India have installed waste disposal units that earn them carbon credits, besides industrial units using green technology.

Delhi to get country's first waste-to-power plant

Delhi is set to get the country's first commercial waste-to-power plant of 16 MW capacity that will convert one third of Capital's garbage into much-needed electricity for six lakh homes.

Delhi Chief Minister Sheila Dikshit today laid the foundation of the Timarpur-Okhla Municipal Solid Waste Management Project, which will initially generate 16 MW of power by using nearly 2000 tonnes of municipal solid waste produced in the city.

The clean energy plant established by Jindal Ecopolis with an investment of Rs 200 crore is expected to be operational in 12 to 16 months and, according to the company, it is the first of its kind in the country. In terms of scale, this plant will be in the top 10 in the world. The largest such waste-to-power plant is in Paris which processes 5,000 tonnes of waste per day.

Delhi currently generates an average waste 8,000 tonnes of solid waste daily and the plant in Okhla aims to process one-third of the waste, which will be provided by the MCD and NDMC free of cost. "Though initially we will process nearly 2000 tonnes of waste, but we will later be in a position to process as much as 4,000 tonnes," said Indresh Batra, Managing Director, Jindal SAW Ltd.

Asked about a failed attempt in the 1990's to set up a waste management plant in Timarpur, Dikshit said that involved importing of technology that subsequently did not suit the needs of the waste here. "That project was initiated over a decade back, with technology imported from a European country. But the calorific value of waste produced here was different from that in Europe and the plant turned out to be a mistake," she said.

The Chief Minister added that this time adequate home work has been done. The project, a public-private partnership with the government of Delhi, is also registered with the United Nations Framework Convention for Climate Change (IUNFCCC) for earning carbon credits. Dikshit said her government also aims to close the existing coal-based electricity plant once supplies from Bhiwani and Jhajjar started coming in. "Ten years down the line, this project will be a showcase for all cities of the country," said Batra. The plant will process the waste from the area, feed it into its boilers and generate valuable power, even as the remains of the waste will be rendered neutral before being fed out to the environment.

Exim decision on R-Power may affect Bucyrus's $310-mn order

A decision of the US Export-Import Bank to reject a request by Reliance Power, run by Indian billionaire Anil Ambani,may lead to the cancellation of a $310-million mining equipment order to Wisconsin firm Bucyrus, a media report said on Sunday. Bucyrus International Inc may lose a $310-million order for mining machinery from Reliance Power because of a decision by the US Exim Bank against providing loan guarantees for the project, the Wall Street Journal reported.  The mining equipment was supposed to be used for a coal mine that is to provide for a new power plant in Madhya Pradesh, India.

Sullivan was quoted as saying that the order from Reliance was contingent on the guarantees, and he feared Reliance would turn to rival suppliers from China or Belarus. Bucyrus International Inc designs and manufactures mining equipment for surface and underground mining. Bucyrus surface equipment is used for mining coal, copper, iron ore, oil sands and other minerals. Its underground equipment is primarily used to mine coal.

The US Exim Bank had rejected a request from Reliance Power to provide about $450 million for its $4.5-billion ultra-mega power project in Sasan, Madhya Pradesh, on environmental grounds.

At a meeting held in Washington on Thursday, the three- member Board of the US Exim Bank -- chaired by Fred Hichberg -- voted two to one against financing the Sasan project, a senior US Exim Bank official said.

According to people familiar with Indian power industry, the decision could deter the US power and mining equipment industry from participating in Indian projects.

The US Exim Bank had recently established and implemented a carbon policy that requires its board of directors to carefully consider the potentially adverse environmental impact of high-carbon intensity transactions. Reliance Power's Sasan plant was reportedly projected to emit close to 26,000-27,000 tonnes of carbon dioxide per year. This comes in the backdrop of US President Barack Obama determining that power projects of the kind should move away from carbon-based fuel towards renewable ones.

India, Japan set to begin talks for civil nuclear pact

The Japanese Foreign Ministry said on Friday that the country is all set to begin talks with India for sealing a civil nuclear cooperation pact. The first round of talks will be held on June 28-29 in Tokyo, the Japan's Ministry of Foreign Affairs said on Friday.The signing of a nuclear treaty between the two countries is likely to pave the way for companies such as Toshiba Corp, Hitachi Ltd and Mitsubishi Heavy Industries to sell reactors in India.Japanese firms are already in partnership with companies from the US and France and are engaged in joint development of nuclear reactors.

Hitachi Ltd works in cooperation with General Electric (GE), while Mitsubishi Heavy Industries works with France's Areva. Toshiba-Westinghouse is also scouting for projects in India.Areva and GE have already won orders for two reactors in India. But the two companies depend on Japan's nuclear reactor technologies.Both Areva and GE use reactor vessels made by Japan Steel Works Ltd, GE in particular relies on Hitachi Ltd for nuclear reactor projects.If Japan's deal with India does go through, it will be the first agreement between Japan and a country that isn't a signatory to the Nuclear Non-Proliferation Treaty.

The 46-member Nuclear Suppliers Group lifted a three-decade ban on providing atomic technology and fuel to India in 2008 after India had agreed to a moratorium on testing atomic bombs.The governments of the US, Russia and France have since signed nuclear agreements with India.

Earlier in the year, GE-Hitachi had already announced plans to source special steels and forgings from domestic player Larsen & Toubro's (L&T) new integrated forging facility coming up in Hazira.

The US and France had also urged Japan to sign a nuclear deal with India, which would clear the way for GE and Areva to use Japanese suppliers for nuclear projects in India.

Gas price: CEA, NTPC differ

The Central Electricity Authority and NTPC appear to be taking different stands on having a common price for gas from different sources, called pool pricing. CEA is open to considering separate price pools for power and fertilizer sectors with certain conditions, NTPC has outrightly rejected the idea.

Commenting on a report by Spain’s Mercados Energy prepared for gas utility GAIL, CEA said the pooling option excluding spot LNG (gas imported in ships) suits the power sector. Supporting separate pools for power plants, it said ‘‘electricity generated by burning gas is distributed in a competitive environment and tariff is decided by regulators... The nodal agency and the pool can be achieved with a few necessary operational regulations... and may be considered.’’

But NTPC has told the power ministry it is opposed to any kind of pooling as the resultant price will be higher than the present average cost of fuel sourced variously by power producers. With a common price, both power producers and gas importers will lose incentive to source LNG at competitive rates. NTPC said the pool term of 4-5 years will create uncertainty as power plants are planned on long term of 25 years or more and fuel supplies are also tied up as such on term contracts. Price pooling will put old plants at a disadvantage because of their lower efficiency. Power producers will also have no incentive to schedule their production plan efficiently and higher pool price could also affect viability of many projects that were financially planned with lower fuel costs.

PowerGrid's new bidding norms to hit Chinese vendors

In what could close the doors for import of Chinese equipment in power transmission, state-run Power Grid Corporation is making it mandatory for suppliers to have manufacturing facilities in India within three years. The company's board is likely to approve the proposal in its meeting on July 2.The move could encourage Chinese investment in manufacturing of equipment in India.PowerGrid is the dominant power transmission company in India.

“The Chinese equipment firms should have a manufacturing base in India or tie up with an Indian company for servicing. After sales service is a major issue. We have made a draft note on this, which will be approved by the board,” Power Grid Chairman and Managing Director S K Chaturvedi told Business Standard.

India’s largest power generator, NTPC Ltd, has already made domestic manufacturing a pre-qualification criterion for companies to bid for its boiler and turbine tenders. The controversy over the use of Chinese equipment, that are cheaper than domestic equipment, in the infrastructure sector has been on for some time. In the telecom sector, Chinese equipment suppliers Huawei and ZTE are significant players, but the government plans to make security clearance and audit mandatory for such supply.

In the power sector, the debate is more about quality, though Chinese companies are informally not hired for hydropower projects in border states. One of the major Indian companies that faces competition from cheaper Chinese imports is BHEL, which enjoyed a monopoly in power equipment supply till a few years back. A senior BHEL executive claimed its equipment in the long run was cheaper due to the lifecycle cost.

“Ninety per cent of contracts which we have got in the past one year are from private power generators who take into account long-term costs. Competition has been present for a long time, but other companies (including those putting up facilities in India) will take at least 10 years to achieve what we have already achieved,” he said.

POWER PLAY

* Move to impact Chinese vendors in power, after telecom

* Chinese equipment is cheaper, but after sales service is an issue

* NTPC has already made domestic manufacturing a pre-qualification

Though PowerGrid does not depend heavily on Chinese firms for equipment, it earlier this year awarded a contract worth Rs 760 crore to two Chinese firms, TBEA Scawang Transformer and Boarding Tianwei, for supply and erection of transformers and reactors.Chaturvedi said the Chinese equipment come at a cheaper price, but PowerGrid required long-term service support. With India planning to add 78,700 Mw of power generation capacity during 11th Five-year Plan, and another 100,000 Mw in the 12th Plan, huge investment in transmission will be required for evacuation of electricity. PowerGrid plans to make an investment of over Rs 85,000 crore in nine transmission corridors, in addition to Rs 55,000 crore in the 11th Plan period.

With Chinese companies preferring to work with their own nationals, mainly due to language constraints, undertaking projects here come with a request for employment visas. The Indian government has restrictions on issue of visas to foreign workers in the unskilled and clerical job categories. It requires permission from the ministry of labour. A Chinese national seeking an employment visa in India also requires clearance from the Intelligence Bureau.The power ministry has so far maintained that banning Chinese equipment in the power sector is no solution since that would delay coming up of new capacity, but a senior executive of a power equipment company maintained that domestic suppliers would be able to meet the demand.

NTPC's Korba-III unit to go on stream by Oct'10

After initial hiccups, NTPC`s 500 MW coal-fired unit at Korba-III thermal power project (TPP), in Chattisgarh, has now seemingly picked up pace and is likely to be operational by the third quarter of the ongoing fiscal. According to the power major, the unit is excepted to achieve full-load by October 2010, against its original schedule of August 2009. BHEL, the main plant package supplier, has already completed the steam blowing and the hydro test of the boiler feed line. Other important milestones, such as trial run of the circulating water (CW) pump, hydro test of the boiler feed line, etc., have also been achieved.

The execution of the project has been hampered, mainly, due to the delay caused in the civil work by the contractor, Subhash Projects and Marketing Limited (SPML). SPML was awarded the contract for the civil work of the main plant in September 2006, with a deadline of June 2010. Besides, constraints to land acquisition for the construction of the ash dyke have also led to trouble for the developer. The project was granted clearance by the Ministry of Environmental Clearance (MoEF) in August 2006. Working with a deep sense of urgency, NTPC`s Chairman R S Sharma is, reportedly, pushing BHEL hard to wind up the remaining work for the main plant as soon as possible.

KBUNL, BHEL in pact for Muzaffarpur TPP expansion

Kanti Bijlee Utpadan Nigam Limited (KBUNL), the joint venture (JV) enterprise formed by NTPC and Bihar State Electricity Board (BSEB), has entered into an agreement with BHEL for the turnkey execution of the 2x195 MW Muzaffarpur thermal power expansion project, located at Kanti, in the Muzaffarpur district of Bihar. Valued at Rs 1,076 crore, the contract envisages the design, engineering, manufacture, supply, erection and commissioning of the coal-based power units, on an engineering-procurement-construction (EPC) basis.

The new units will come up at a site adjacent to the existing 2x110 MW Muzaffarpur project. KBUNL has received clearance to commence acquisition of the land required for the ash dyke of the project. The Ministry of Environment &Forests (MoEF) has already prescribed the terms of reference (TOR) for the environment impact assessment (EIA) report. The coal ministry has also granted coal linkage, from SECL, for the 2.20 MTPA of feedstock requirements, while the state government has allocated the required amount of water to the project. The 30 cusec of water needed will be supplied from the Burhi Ghandak river, through pipelines over a distance of about 4 kms.However, the Central Water Commission is yet to provide its concurrence on supply of water.

The capacity of the proposed expansion has been revised from 2x250 MW to 2x195 MW as the plant site is very close to the Muzaffarpur Airport, calling for the chimney height to be restricted to 146.5 m.