CERC notifies norms for utilizing intervening transmission facilities-I: Differentiated tariffs apply across categories of lines

The Central Electricity Regulatory Commission (CERC) has brought out norms specifying rates, charges and terms and conditions for use of intervening transmission facilities by trading, transmission and distribution licensees for dispatch of power via open access. Accordingly, the following rates and charges have been prescribed for different types of transmission lines, assuming a standard distance of 50 km or a part thereof:

•  Rates and charges for 400 kV (D/C) lines of 900 MW capacity 
• Rs 97,584/MW/year for long -term access and medium term open access.

•  Rs 11.14/MWh for short-term open access.
•  Rates and charges for 400 kV (S/C) lines of 450 MW capacity
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   Rs 109,006/MW/year for long -term access and medium term open access.
• Rs 12.44/MWh for short-term open access: .
• 
  
  Rates and charges for 220 kV (D/C) lines of 500 MW capacity
• 
  
  Rs 118,198/MW/year for long-term access and medium term open access.
• 
  
  Rs 13.49/MWh for short-term open access.
• 
  
  Rates and charges for 220 kV (D/C) lines of 250 MW capacity
• 
  
  Rs 145,318/MW/year for long-term access and medium term open access.
• Rs 16.59/MWh for short-term open access.
• 
  
  Rates and charges for 132 kV (D/C) lines of 180 MW capacity
• 
  
  Rs 182,525/MW/year for long-term access and medium term open access.
• Rs 20.84/MWh for short-term open access.
• 
  
  Rates and charges for 132 kV (S/C) lines of 90 MW capacity
• 
  
  Rs 325,209/MW/year for long-term access and medium term open access.
• Rs 37.12/MWh for short-term open access.
• Rates and charges for 66 kV (D/C) lines of 54 MW capacity
• 
  
  Rs 540,339/MW/year for long-term access and medium term open access.
• Rs 61.68/MWh for short-term open access.
• 
  
  Rates and charges for 66 kV (S/C) lines of 27 MW capacity
• 
  
  Rs 682,244/MW/year for long-term access and medium term open access.
• Rs 77.88/MWh for short-term open access.

India ready for huge coal import boom: Adani

Adani expects Asia's No. 3 economy to have the infrastructure in place to handle a surge in domestic coal demand from power, steel and cement industries, a senior executive said on Tuesday.
Coal powers more than half of India's electricity plants and import demand for the commodity, projected at 135 million tonnes by 2012, is expected to rise sharply along with its booming economy.
"The government is on track on this one. I don't see a major issue arising from potential infrastructure bottlenecks because a lot of port-based power plants are coming up," said Sandeep Mehta, chief executive of Adani's container and logistics business on the sidelines of an industry event.Adani plans to import more than 40 million tonnes of coal this year, up from 30 million tonnes last year, Mehta said.
India's government has promised to modernise its ports to accommodate larger vessels and make transporting iron ore and coal to roads and railways more efficient."There is sufficient rail availability," Mehta said. "Most of the coal is going to port-based power plants so there won't be any hinderance since rail will not be required."
Adani, which controls Indian power utility Adani Power will open a new terminal at its cape port, Mundra, in the first quarter of 2011, Mehta said.The new facility, one of India's largest, will be able to handle cape-size vessels and up to 50 million tonnes a year, of which half will be coal shipments. The port of Mundra already accounts for 60 per cent of India's coal imports.India's port capacity is expected to climb to 1.3 billion tonnes a year by April 2012 from the current 920 million tonnes, Shipping Minister G K Vasan said on Monday. 

Project visas: Ceiling of 10%, 300 workers to apply

In good news for project developers sourcing power equipment and erection services from overseas companies, it now appears that the ceiling for the number of foreign workers that can be employed at a greenfield power project has been increased to the lower of 300 and 10% of the entire on-site workforce. The same figures for brownfield expansion projects are 150 and 5%. Some other stipulations part of the soon-to-be notified guidelines, as revealed to this website recently by sources within the government are as follows:

• A person granted a project visa may not be allowed to take up employment in the same Indian Company for a period of two years from the date of commissioning of the project.
• Indian missions, on the reference sheets for Chinese nationals, in particular, must also include specific details of skills, technical qualifications and length of relevant job experience. These particulars, thus, have to be necessarily collected during the time of application.
• No more than two chefs and two interpretors may be allowed per project.|

Land acquisition takes off for Sundergarh UMPP

There is finally some headway on the 4000 MW Ultra Mega Power Project (UMPP) in Orissa proposed to be set up at Bhedabahal in Sundergarh district. Land acquisition work for the project has taken off.The UMPP, entailing an investment of Rs 16,000 crore, requires 3100 acres of land. The Orissa Integrated Power Limited, a fully owned subsidiary of Power Finance Corporation (PFC), the nodal agency for UMPPs, has already invited 'Request for Qualification' (RFQ) for this project. The deadline for responding to the RFQ is September 30.Water for this UMPP has been allocated from the Ib river and check dams and barrages would be put up on the river for this purpose. It may be noted that Meenakshi, Meenakshi-B and Dipside Meenakshi coal blocks have been allotted for the UMPP with a total reserve of 880 million tonnes.

A high-level meeting chaired by the state Chief Secretary B K Pattnaik was held on the site selection of the UMPPs. The meeting was also attended by senior officials of PFC and Central Electricity Authority (CEA).

Besides the Bhedabahal UMPP, it has been proposed to set up two additional UMPPs in the state. While the Centre had proposed to set up the second UMPP in Bolangir district, five locations were short-listed for the third UMPP- Kirtania, Dhamara, Astaranga, Paradeep and Gopalpur. The Centre has sought additional information on the suitability of these locations and the concerned departments of the state government would furnish the information on the same, said an official source.Orissa would get 1300 MW from the first UMPP at Bhedabahal and 50 per cent of the power generated by the other two UMPPs.

The Orissa government has signed MoUs (Memorandum of Understanding) with as many as 27 Independent Power Producers (IPPs) for setting up power plants with a combined capacity of 32,420 MW. The state government had asked 17 of these IPPs to go for super critical technologies.

In addition to this, National Thermal Power Corporation (NTPC) has announced to set up two new super thermal power plants in the state- 4800 MW plant at Darlipalli in Sundergarh district and one 3200 MW plant at Gajmara in Dhenkanal district.

The navratna power utility, which has an installed capacity of 3460 MW in Orissa, will pump over Rs 50,000 crore in generating additional capacity of 9320 MW in the state by the end of 2017.Besides establishing two mega power projects at Darlipalli and Gajamara, NTPC is also scaling up the capacity of its existing thermal power station at Talcher by adding 1320 MW (2x660 MW) through two supercritical units.

India Is Holding Talks With State Bank for $11 Billion Infrastructure Fund

India is in talks with the nation’s largest bank over an $11 billion fund as Asia’s third-biggest economy seeks to raise finances to build roads, ports and power plants, an aide to the prime minister said.The government is holding discussions with the State Bank of India and “a couple of other players” for a debt fund that would buy bonds sold by infrastructure companies, Montek Singh Ahluwalia, 66, said in an interview in Kuala Lumpur yesterday. The State Bank may act as an anchor investor along with one or two local or foreign funds, he said.

“We should be able to have an infrastructure debt fund announced somewhere in the beginning of next year,” said Ahluwalia, who is the deputy chairman of the nation’s Planning Commission. “It will require certain regulatory relaxations and they are working out what those would be.”

The effort is part of India’s plan to propel economic growth to a sustained average annual rate of 10 percent, from the 8.5 percent pace forecast for this year. Ranked below Ivory Coast for the quality of its public facilities, the nation will need an estimated $1 trillion in infrastructure in the five years to March 2017 to reach such an expansion rate.

Prime Minister Manmohan Singh last week allowed overseas investors to buy $5 billion more bonds with a five-year maturity sold by infrastructure companies, boosting permitted foreign investment in corporate debentures to $20 billion.

Behind China

The world’s second-most populous nation needs to “do more” on improving its infrastructure, Ahluwalia said. The government last year spent 6.5 percent of its gross domestic product on infrastructure, compared with about 11 percent by China, according to an Ernst & Young India report.

The South Asian country is ranked 89 out of 133 nations for its infrastructure, according to the World Economic Forum’s Global Competitiveness Index.India produces about 10 percent less electricity than it needs. Roads, which account for 65 percent of India’s cargo, are plagued by single lanes and irregular surfaces, slowing trucks to an average speed of about 20 kilometers per hour, according to a 2009 study by Transport Corp. of India and the Indian Institute of Management in Kolkata.

The average time taken by ships to unload and load at Indian ports is almost 96 hours, about 10 times longer than in Hong Kong, the government said in its latest annual economic survey.

Inflation Forecast

Turning to inflation, the Oxford University-educated Ahluwalia said it’s likely to slow in coming months. The benchmark wholesale-price inflation rate is likely to be about 6 percent by end-December and a further increase in interest rates will depend on the central bank’s assessment of inflation,“Inflation was a concern, remains a concern but actually is coming down,” he said. “It’s up to the RBI to determine whether the pace at which inflation is coming down meets with what they think the inflation objective should be or not.”

Reserve Bank of India Governor Duvvuri Subbarao on Sept. 16 raised the interest rates for the fifth time since mid-March, boosting the repurchase rate to 6 percent from 5.75 percent, and the reverse repurchase rate by a half point to 5 percent.Inflation moderated to 8.51 percent in August from 9.8 percent the previous month, a government report showed Sept. 14.Ahluwalia said economic growth will pick up to 9 percent in 2011.

CEA reworks land requirement for TPPs: Recommendations for domestic-coal based pit-head stations

Land acquisition has always been the Achilles' heel of many a power project in India. Taking cognizance of this fact, the Central Electricity Authority (CEA) has come out with fresh guidelines recommending lower land requirements for different categories of TPPs. The agency has issued these norms as a revision to its December 2007 recommendations. A comparison of total land area stipulated now for different unit configurations of pit-head TPPs using indigenous coal and that recommended earlier has been given below:

•  For 2x500 MW units (in acres)
• 
  
   Now: 1,090; Previously: 1,420; Difference: 330 (23%).
• For 3x660 MW units (in acres)
• 
  
   Now: 1,520; Previously: 2,050; Difference: 530 (26%).
• For 5x660 MW units (in acres)
•  Now: 2,145; Previously: 2,860; Difference: 715 (25%).
• For 6x660 MW units (in acres)
• 
  
   Now: 2,420; Previously: 3,280; Difference: 860 (26%).
• For 4x800 MW units (in acres)
• 
  
   Now: 2,140; Previously: 2,450; Difference: 310 (13%).
• For 5x800 MW units (in acres)
• 
  
  Now: 2,440; Previously: 2,770; Difference: 330 (12%).  

Dabhol in a mess: Completion of LNG terminal critical to project viability, says MoF

The Ministry of Finance (MoF) has urged the Ministry of Petroleum and Natural Gas (MoP&LNG) to take all possible steps to ensure the early operationalization of the LNG terminal at the Ratnagiri Gas and Power project. The ministry has asserted that detailed financial analyses have revealed that without tolling revenues from the terminal, the financial viability of the entire project, which is being developed in an integrated manner, is suspect.

•  This comes in view of the CERC's recent decision, which has disallowed the capital costs incurred on the LNG terminal in determination of the power tariff from the CCPP component. 
•  As of now, Ratnagiri Gas and Power Project Limited (RGPPL) can look forward to receiving its first cargo of LNG in December 2010. It, however, will not achieve its full rated capacity of 5 MMTPA before December 2012.
• It remains to be seen if the petroleum ministry is able to actually move up these deadlines.

R-Power sees eight-fold capacity rise in 2 years

Reliance Power is planning to commission its entire portfolio of projects by 2017, which would be around 35,000 Mw. At at the company annual general meeting today, Chairman Anil Ambani said it had embarked on a fast-track implementation of its huge portfolio, which include three ultra mega power projects (UMPPs).

"Over the next 24 months, we will rapidly accelerate the pace of new capacity addition, to leapfrog from the current 600 Mw to eight times that number, at over 5,000 Mw. This pace will intensify even further in 2013," said Ambani.

R-Power started power generation this year, as it commissioned the first phase of its 1,200- Mw Rosa Power Project, in Uttar Pradesh. It also started the construction of a 2,400 Mw gas-based power project at Samalkot, Andhra Pradesh, to be commissioned in two years.

The company achieved financial closure for 10,000 Mw in over a year. It raised around Rs 50,000 crore to fund two UMPPs by the company, at Sasan and Krishnapatnam.

In addition to power, the company is active in coal mining. Two of its power projects, Sasan and Tilaiya, have captive coal mines. The reserves are over two billion tonnes. "It can potentially support the generation of 20,000 Mw of clean thermal power every year for 25 years, future-proofing our growth strategy," said Ambani.

The company said it could also use gas from coal bed methane to generate yet another 2,000 Mw. RNRL, which was merged into Reliance Power this year, has coal-bed methane blocks in Andhra Pradesh, Madhya Pradesh and Rajasthan.

RPower will hire more people to support these rapid growth plans. The company plans to appoint 2,000 engineers over the next year for its various projects. "We will increase the total number of employees from 2,000 to 10,000 in the next five years, including those working at construction sites," said J P Chalasani, the chief executive officer.

CERC allows REC contracts at power exchanges: Double-sided closed bid auction to apply for price discovery

The Central Electricity Regulatory Commission (CERC) has accorded its permission for the trade of renewable energy certificates (REC) within Indian Energy Exchange Limited (IEX) and Power Exchange of India Limited (PXIL). The value of an REC will be equal to 1 MW-hour of electricity injected into the grid from clean energy sources.

• The Commission has mandated that a double-sided closed bid auction with a uniform price solution be utilized as the price discovery mechanism for such contracts. 
• The apex regulator will review the suitability of this methodology after one year, since trade in RECs is new to the Indian electricity market. The Commission may, at that time, prescribe changes on the basis of market feedback and effects on market liquidity and transaction volumes.
• A double-sided auction differs from a conventional auction process by the presence of many sellers and many buyers, as against one auctioneer and many bidders. The proposed auction will solicit bids from, both, sellers and the buyers of the RECs. 
• Besides, uniform pricing for the transfer of RECs will provide for the same price for every accepted bid that will be set according to the price limit of the last accepted bid. 

CERC fixes fees for REC mechanism

The Central Electricity Regulatory Commission (CERC) has notified the fees and charges payable by renewable energy (RE) generating companies to the National Load Despatch Centre (NLDC) for their registration and the subsequent issue of Renewable Energy Certificates (REC), as well as for accreditation with the state agencies. These fees and charges, which will be reviewed by the Commission after three years, have been listed below:

Fees and charges for registration

 --Applications for registration of the RE generating companies as ‘Eligible Entity’ for their generation projects shall be made to the NLDC with a non-refundable ‘One-time Application Processing Fees’ at the rate of Rs 1,000 per application.

 --Besides, ‘One-time Registration Charge’ at the rate of Rs 5,000 per application will applicable once the registration is granted by the NLDC.

 --The Eligible Entity shall also pay an ‘Annual Charge’ at the rate of Rs 1,000 per application by April 10 of each year.

 --The Eligible Entity shall pay charges towards Revalidation/Extension of Validity at the rate of Rs 5,000 per application.

Fees for issuance of REC 

 --The application for issue of REC shall be accompanied by a fee payable at the rate of Rs 10 per Certificate only.

Fees & charges for accreditation of RE projects with state agencies

 --An application for such accreditation shall be accompanied by a non-refundable ‘One- time Application Processing Fees’ at the rate of Rs 5,000 per application.

 --The Eligible Entity shall pay the ‘One-time Accreditation Charge’ at the rate of Rs 30,000 per application once the ‘Certificate of Accreditation’ is granted by the state agency.

 --The Eligible Entity shall also pay an ‘Annual Charge’ at the rate of Rs 10,000 per application by April 10 of each year.

 --The Eligible Entity shall pay charges towards Revalidation/Extension of Validity at the rate of Rs 15,000 per application.

Dip in international coal prices eases import bill in 2009-10

• Thanks to a fall in prices of coal in the international market, the total import bill of the country for coal, for the fiscal 2009-10, witnessed a dip, even as the quantity imported increased, as compared to last fiscal.
• Statistics reveal that the quantity of imports has increased from 59.003 MT in 2008-09 to 73.25 MTs in 2009-10. At the same time, the outgo, in rupee terms, fell, from Rs 4164.08 crore, to Rs 3917.90 crore.
• Calculations affirm that the per unit price of coal imported also fell, from Rs 7,006.55 per tonne in 2008-09, to Rs 5,348.66 per tonne in 2009-10.
• Still, almost a 200% increase in the total import bill was seen over the period 2005-2010. A mere Rs 1,490.095 crore was spent in 2005-06, a figure that increased to Rs 1,668.86 crore and Rs 2,073.84 crore in 2006-07 and 2007-08, respectively. The import bill for coal reached a high of Rs 4,134.08 crore in 2008-09, corresponding to international prices.

Mandatory tariff-based competitive bidding-I: CERC discourages deferral of regime

The CERC has recommended that the Ministry of Power (MoP) not defer the date for the introduction of mandatory tariff-based competitive bidding for all procurement of power and transmission services. The deadline for this important transition is, at present, set to January 2011.

• The CERC has based its assertion on the results of a comprehensive study that concludes that, even when view conservatively, tariffs computed under the cost-plus methodology work out to be significantly higher than the levelized tariffs discovered under competitive bidding for 12 out of the 14 projects analyzed.
• The Commission has cited moral hazard as a potential cause of this phenomenon, since the capital costs of projects in a cost-plus tariff regime is open-ended, due to room for numerous subsequent 'additional capitalizations' that keep on expanding the equity base for return on equity.
• Further, unforeseen cost increases are passed on to the consumers fully under the now-prevalent regime, whereas a sizeable portion of such increases is borne by suppliers under a tariff-based competitive bidding, because the seller is more likely to quote capacity and energy charges as non-escalable components in the latter case.

Mandatory tariff-based competitive bidding-II: Existing tariff regulations used to model cost-plus outcome

Via its study, the CERC has attempted to effect an apple-to-apple comparison by gathering detailed relevant data on variables and factors that can affect tariffs with respect to plants associated with winning bids over the past three to four years and then determining the price of electricity from such projects through the cost-plus method and norms for escalations provided in appropriate CERC Tariff Regulations and CERC Notifications on escalation rates.

• The levelized prices thus obtained have been compared with the actual levelized tariffs discovered under the competitive bidding process for each project.
• In addition, the exercise assumed that while calculating the price of electricity under the cost plus methodology, the value of interest applicable on the corresponding long-term debt component would be 7.0595% per year, which is the same as the average by NTPC for its Sipat Project. Working capital was taken to be financed at a flat 9% per annum.
• It has also been assumed that there would be about a 0.8% loss of coal in transportation, to add a degree of realism to the exercise. 

India may levy 14% duty on Chinese power equipment

India is likely to impose a 14% duty on power equipment imported from China, said Vilasrao Deshmukh, minister of the country's Ministry of Heavy Industries, on last Friday. Deshmukh said that the Ministry of Heavy Industries has asked the Ministry of Finance to levy the 14% import duty to protect domestic power equipment makers.

The ministry stated that power equipment producers in India are facing increasingly fierce competition from Chinese power equipment makers as the Chinese rivals sell at quite low prices. Bharat Heavy Electricals Ltd and Larsen &Toubro Ltd are the top two manufacturers of power generation equipment in India.

India aims to halve power deficit by next year

India aims to halve its peak power deficit within two years but environmental clearances for power plants could significantly impact future capacity addition, the head of the Central Electricity Authority said on Monday. Gurdial Singh told Reuters the deficit could fall to 6.5% in the fiscal year ending March 2012 from the current 13.8%, in what would be a major boost to fuelling energy-hungry India's return to high economic growth.He also said India's coal imports for power generation would shoot up by 85% to 85 million tonnes in 2011-12. India's power shortages, clogged and potholed roads and creaking railway network are seen as a significant brake on growth in Asia's third-largest economy, which aims to invest USD 1.5 trillion from 2007-17 to overhaul its infrastructure.

The government has scaled down its power generation target for the current five-year-plan, which ends in March 2012, to 62,000 MW from an initial estimate of 78,700 MW. "In case we commission the entire 62,000 MW, this will be sufficient to bring down the peak power deficit to 6.5%," said Singh, who has spent 38 years at the CEA, a body that monitors the planning and execution of India's power projects. "The slow development of the coal sector and concerns being raised by the Ministry of Environment, by declaring that large chunks of coal mines as no-go area, this is a very serious matter," he said, echoing concerns voiced by India's influential Planning Commission. "Capacity addition does not seem to be a big concern because we have given a good push," he said, adding, "the participation of the private sector has substantially increased".

Prime Minister Manmohan Singh's government is pushing to overhaul India's crumbling infrastructure to support double-digit growth rates as in China and lift hundreds of millions of out poverty. The economy is seen growing at more than 8.5% this fiscal year as it shrugs off the effects of the global financial crisis. But more than half of India's rural population does not have access to electricity, Gurdial Singh said. The Planning Commission said in July the country would not be able to cross into double-digit growth if it does not speed up power capacity growth. Land acquisition, environmental clearances for both building power plants and coal mining can delay projects for several years and can be a significant deterrent for private investors.

However, Singh said the private sector would account for around half the capacity addition target in the next five-year plan, which aims to add 100,000 MW, from around one-third now. "Coal will continue to be mainstay. Fuel availability has not increased at the rate we were expecting. We plan to build power projects on imported coal in the coast area," he said. Singh said giant power projects with 4,000 MW capacity -- the first of their kind to start operations in India -- will start generating power within two years.

"Tata Power may commission two to three units at its Mundra plant (in western India) by March 2012," he said, adding Reliance Power's 4,000 MW Sasan project in central India will be commissioned in 2012-13. Tata Power's Mundra project will have five units of 800 MW each, while Reliance Power's Sasan project will have 6 units of 660 MW, he said. India allows 100 percent foreign direct investment for building power projects but the response for overseas investors has been lukewarm so far. Singh did not give an estimate for how much foreign investment he expected in the sector in the coming years. But he said the fact that the likes of Japan's Toshiba Corp and Hitachi Ltd, and France's Alstom had set up shop in India signalled confidence in the sector. "They are looking at future demand in the country," he said. "It shows they have higher confidence in our plans and in our policies." India plans to add 18,600 MW capacity in 2011/12 against 20,359 MW in the current year.

Plan for 15-minute trading blocks on power bourses

Hourly trading blocks on Power Exchanges could be replaced with 15-minute time-blocks for attracting wind and solar generators to commit power for trading on the bourses.The move, being actively considered by power regulator the Central Electricity Regulatory Commission (CERC), is also aimed at enabling better price discovery of electricity as well as helping in handling transmission congestion issue.

“Wind and solar generators, which are dependent on wind velocity and sunlight availability respectively, carry a higher risk in bidding and committing supply for time blocks of one hour. Smaller bidding time blocks will increase their comfort to bid and will attract them to the day-ahead market.“This is also relevant especially in the context that there is a greater push towards renewable at all policy making levels,” a CERC official said. The matter was taken up at the CERC's Central Advisory Committee meeting on September 20.

Bidding and delivery

According to officials, the shift to a 15-minute bidding block will ensure harmonisation between the bidding in power exchanges and scheduling for physical delivery by system operator, as prescribed in the India Electricity Grid Code (IEGC).“Worldwide, the power markets are aligned with the scheduling philosophy,” an official said.

The move is also expected to increase the operational flexibility of the system operator and the utilities. As the utilities move closer to the day of operation, the uncertainty in forecasted demand is reduced and maximum flexibility is needed in the day-ahead procurement to balance their portfolio.This inflexibility manifests as imbalances in real-time operation, thereby posing a threat to grid security. This, according to officials, will get addressed with 15-minute bidding time blocks.

Cumbersome process

On the operational side, those against a change in the trading time blocks, argue that the hourly bidding model is simple and intuitive to understand and handle. With introduction of 15 minutes time block for the market, participants will have to bid for 96 time blocks, which may be cumbersome to handle manually. However, with usage of software systems this process can be automated, officials said.

The power exchange trading software application will require modifications and the bidding window will require modification to accommodate 15-minute bidding time blocks. Block bid definition will also need to be suitably modified by the two operational power exchanges.

PowerGrid wants fresh offers for Rs 7,000-crore project

State-run power transmission firm PowerGrid has called for fresh offers from shortlisted bidders BHEL-ABB and Siemens for its Rs 7,000-crore HVDC (high voltage direct current) sub-stations’ project.

While the entire transmission project consisting of HVDC sub-stations and a 800 Kv transmission line from Biswanath Chariali in Assam to Agra in north India is worth about Rs 12,000 crore, the sub-station portion is estimated at Rs 7,000 crore.

“We have called for fresh bids from existing bidders BHEL-ABB and Siemens for sub-stations in our transmission line due to some technical reason,” PowerGrid’s chairman and managing director, S K Chaturvedi, confirmed to Business Standard. The company’s Board recently gave its approval for fresh bids from the two bidders, a consortium of BHEL and Swiss ABB’s India unit, and Siemens Ltd, the Indian unit of Germany’s Siemens AG.The transmission firm owns and operates around 72,000 circuit km of transmission lines and alone transmits 45 per cent of all power generated in the country.
With India planning to add 78,700 Mw generation capacity during the 11th 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 transmission projects over the 11th and 12th Plan period.
It is also expected to come up soon with a follow-on public offer (FPO) of 10 per cent equity shares, with a fresh issue of 10 per cent equity. It plans to raise about Rs 4,000 crore through the issue. The government had earlier divested five per cent stake in the company. After the FPO, the government’s holding would come down from 86.36 per cent to 69.4 per cent.

Domestic firms to lead India power sector growth

India's power sector is increasingly attractive to investors, but domestic firms with local knowledge and improving access to offshore funding will still dominate the industry for the foreseeable future, a senior government adviser said. 

Overseas investors have mostly limited themselves to making loans or buying stakes in listed Indian firms, even though India allows 100 percent foreign direct investment (FDI) in power. 

"The main entrepreneur continues to be Indian. This model we find is not a bad one because he knows the conditions here, he's able to handle it much better than a foreign partner," said Bal Krishna Chaturvedi, the Planning Commission's member in charge of energy and infrastructure, "I don't see any completely independent plants being set up by foreign companies," he said in an interview on Monday for the Reuters India Investment Summit. 

India has targeted investment of $350 billion to $400 billion in the power sector in the five years ending March 2017. Half of India's total infrastructure expenditure between 2012-17 is expected to come from the private sector. 

Difficulties over land acquisition and securing coal, navigating the thicket of regulatory red tape and delays that can derail assumptions on returns have kept all but a few foreign players such as Hong Kong's CLP Holdings from operating their own plants in Asia's third-largest economy. 

The legacy of Enron Corp's $2.9 billion Dabhol plant, which was mothballed for years over a billing dispute with a state utility, also looms large, and FDI flows into the sector totalled $1.44 billion in the financial year ending March 2010. 

Chaturvedi said the bulk of foreign money would come from domestic firms' borrowings or in joint ventures. No foreign companies were likely to go it alone even in the timespan of the next five-year plan which starts in 2012.

India's frequent blackouts are seen as a drag on an economy growing at 8.5 percent a year that nonetheless grapples with a peak power deficit of more than 13 percent and frequent outages. 

A slew of reforms dating back to the Electricity Act in 2003, from giving states the flexibility to partner private firms, open access to transmission networks and more transparent regulations made private investment more attractive, he said. 

The Reserve Bank also eased external commercial borrowing limits on infrastructure, giving domestic firms more access to foreign funds, he added. But the Indian government must go further and faster on reforming the sector by tackling fuel shortages, strengthening loss-making distribution networks and speeding up construction of nuclear power plants, he said.

The government has scaled down its power generation target for the current five-year-plan, which ends in March 2012, to 62,000 MW from an initial estimate of 78,700 MW. "The area of weakness continues to be distribution, the area of weakness continues to be generation," said Chaturvedi, a former oil secretary and cabinet secretary.