Tata Power plans to run Mundra UMPP at low capacity

Tata Power has approached the ministry of power expressing its concerns over the viability of tariff and seeking an increase in rates,says report.

Tata Power Company is preparing contingency plans to minimise loss from running the plant as the cost of imported coal from Indonesia has risen sharply, according to a report.

The report stated that Tata Group utility plans to run the 4,000-megawatt Mundra unit at low capacity, at around 72-78%, and is considering blending the fuel with cheaper coal of low calorific value.

Tata Power has approached the ministry of power expressing its concerns over the viability of tariff and seeking an increase in rates,says report.

Essar Energy ties up coal for Mahan I power project

Essar Energy Plc said on Thursday that it has been allotted a share of coal from the Amelia coal block by the Madhya Pradesh government. The coal will provide fuel to the company's Mahan I power project.

The allocation gives Essar Energy a second source of fuel to supply Mahan I, a 1,200-megawatt (MW) power project, in addition to Essar's existing Mahan coal block.

“The addition of Amelia will significantly extend coal availability from Essar's captive blocks for Mahan I from the current estimate of approximately 12 years. Both blocks are within very close proximity to the power project,” the company said.

NOTIFICATION

The State government has formally notified Essar Energy and another company, DB Mining Power, that they will jointly be allocated 40 per cent of the coal from Amelia, which has been allocated to and will be operated by the Madhya Pradesh State Mining Corporation (MPSMC).

Amelia is estimated to have around 214 million tonnes of coal reserves, according to the Union Ministry of Coal.

The block still requires environmental and other approvals before mining operations can begin.

Essar Energy will be supplied with its entitlement of coal from Amelia by MPSMC under a long-term linkage arrangement once a Fuel Supply Agreement (FSA) has been signed.

“The fuel supply agreement is expected to be signed once the required environmental and other approvals have been obtained. The coal will be supplied at prevailing Indian coal linkage prices,” Essar Energy said in the statement.

The company also expects to secure a separate shorter term tapering coal linkage arrangement to secure fuel for Mahan I until the Mahan block produces sufficient coal.

BHEL sure of raising capacity to 20,000 MW by 2012

Equipment major Bharat Heavy Electricals Ltd (BHEL) is well on track to ramp up its manufacturing capacity to 20,000 MW by March, 2012.

Speaking at the state-owned firm's 47th Annual General Meeting here on Tuesday, BHEL's Chairman and Managing Director, Mr B P Rao, said the company's capacity addition strategy for the current financial year also envisages an improvement in product cost-competitiveness and quality.

BHEL clocked a profit of Rs 9,006 crore for the 2010-11 fiscal and an all-time-high turnover of Rs 43,337 crore, he added.

The company secured orders worth a record Rs 60,507 crore in 2010-11.

Order book

With a cumulative order book of over Rs 1,64,145 crore at the close of the financial year, the company expects to achieve robust growth in 2011-12 and beyond, Mr Rao added.

Outlining the trends in the power sector, he said that environmental compulsions are driving the demand for sustainable development worldwide.

As a step in this direction, BHEL also plans to develop economically viable solar power equipment and it would be the company's focus area this fiscal.

BHEL is also developing Advanced Ultra Supercritical (Adv-USC) technology, in association with the Indira Gandhi Centre for Atomic Research (IGCAR) and NTPC, as part of the National Mission for Development of Clean Coal (Carbon) Technologies.

Essar Power eyes distribution licence

Essar Power is likely to be yet another private entity to enter the Mumbai electricity distribution business. The Essar group company has applied to the Maharashtra Electricity Regulatory Commission (MERC) for a licence to supply power in the suburbs, which already has two private players — Reliance Infrastructure and Tata Power.

V P Raja, the chairman of MERC, said they had allowed companies to apply for distribution licences beyond the application timelines, which closed a few months before “Essar has applied and we have already conducted a hearing.”

The regulator has asked the company to assess the amount of capital expenditure required to set up infrastructure to wheel power across Mumbai suburbs, which has around 2.8 million customers. “They can initially use the infrastructure which belongs to Reliance Infrastructure just like Tata Power, by paying wheeling charges and cross-subsidy surcharge,” said Raja.

However, the company will have to set-up its own infrastructure. The Mumbai suburbs are a competitive market where Reliance Infrastructure and Tata Power are already fighting for customers. As many as 160,000 consumers have crossed over to Tata Power since November 2009, when it started supplying power to the suburbs.

Wheeling charges are those paid by customers who have shifted to the Tata network, and use Rinfra's distribution. In addition, the state electricity regulator has levied a cross-subsidy surcharge on changeover customers, to provide cheaper electricity to low-end users, thereby intensifying the competition in the area.

This would be the maiden entry of the mining-to-shipping group into retail electricity distribution, if the application goes through. The company confirmed the move but since the process is at the initial stage, they refused to provide further details.

The power generation arm of the group has around 1,600 megawatts of capacity and has set a target to to build as much as 9,670 megawatts of power generation.

Regulator ‘can step in’ if power buyers seek PPA revision

The Central Electricity Regulatory Commission can step in if power procurers are willing to pay more to the generators, despite power purchase agreements in place.

Dr Pramod Deo, Chairperson, CERC, the regulator would come into the picture only after procurers/ utilities state their willingness to pay more and also establish that they are unable to obtain cheaper power from other sources.

He was referring to the plea of imported coal-based plants, which had earlier committed to supply power through PPAs now wanting higher rates to offset the increase in imported coal cost, especially from Indonesia.

He said the Indonesia policy change to price coal exports at the benchmark rates (market rates), would not affect generators who had tied up for mining coal there, as the price difference would go to the account of their Indonesian entities.

Tata Power wrote to the Power Ministry expressing its inability to absorb the hike in coal cost, while Reliance Power has slowed construction of its 4000 MW Krishnapatnam ultra mega power project, stating that lenders were unwilling to release funds with input fuel cost far above projections made.

The Power Ministry has already said increase in PPAs rates was an issue between the generators and procurers.

At the annual general meeting of Tata Power, Mr Ratan Tata, Chairman, touched upon the issue and said Tata Power would receive dividends from its coal subsidiary operating in Indonesia and that would to some extent offset the outgo from parent company.

In June, the Association of Power Producers wrote to the Power Secretary, stating that projects totalling 43,000 MW were awarded after the introduction of the competitive bidding guidelines of which 13,000 MW were based on imported coal.

Developers bid for the projects based on their bilateral agreements and arrangement with fuel suppliers, predominantly in Indonesia and as such existing contractual provisions do not protect coal price variations due to ‘change in law.’

In general, Power producers here with arrangements in Jakarta were set to ship out coal at $26- $30 a tonne, which is less than 50 per cent of international benchmark rates.

NTPC to scale down 12th Plan capacity target to 66,000 MW

Non-availability of gas and land acquisition issues may force state-owned power utility NTPC to scale down its capacity addition target of 75,000 MW for the 12th Five-Year Plan to 66,000 MW.

"Around 5,000-MW of gas-based capacity looks difficult, as there is no gas available, and another 4,000 MW because of the land acquisition problems," a Power Ministry official said.

On being asked whether coal shortages would also impact the company's capacity augmentation plans, he said, "Coal shortage is there, but land acquisition is a bigger issue."

NTPC currently operates assets with a combined capacity of over 34,000 MW, spanning most conventional energy sources.

The projects that are likely to be impacted due to fuel shortages are the expansion of the company's gas-based plants at Kawas and Gandhar (Gujarat), Dadri and Auraiya (UP), Anta (Rajasthan) and Faridabad (Haryana).

NTPC had earlier chalked out ambitious expansion plans for these projects, but the company has not been assured of any fuel for these plants by the government and purchasing gas from the open market is not a feasible option as it would lead to an increase in electricity tariffs.

"The company is also facing difficulty in acquiring land for its projects," the official said.

At present, NTPC is working on a basket of projects of about 40,000 MW capacity. Projects with capacity of over 14,000 MW are already at various stages of implementation.

It added capacity of about 2,500 MW during 2010-11 by commissioning the Dadri (490 MW), Korba (500 MW), Farakka (500 MW), Simhadri (500 MW) and Jhajjar (500 MW) units.

NTPC has mobilised loans worth Rs 10,000 crore from State Bank of India this fiscal (2011-12). It also secured a $300 million loan from Bank of Tokyo-Mitsubishi UFJ Ltd, Singapore.

Coal Ministry approves allotment of 5 coal blocks to thermal power plants of NTPC

The company has set an ambitious target of enhancing power generation capacity to 75,000 MW by 2017.

The coal ministry has reportedly approved, in principle, the allotment of five coal blocks to four thermal power plants of NTPC.

Sriprakash Jaiswal, Coal Minister was quoted as saying "We have in principle approved to allocate five coal blocks to NTPC. The identification of the coal blocks is still underway."

According to reports, the coal blocks would be allocated through government dispensation route to NTPC's four power projects - 500 MW in Raibareilly, UP; 1,600 MW at Kudgi in Karnataka; 1,600 MW at Gajmara in Orissa and 3,960 MW at Barethi in Madhya Pradesh.

The company has set an ambitious target of enhancing power generation capacity to 75,000 MW by 2017, added reports.

Kerala plans 1,200 MW gas-based thermal power unit

Kerala chief minister Oommen Chandy has said the state government proposes to set up a 1,200Mw gas-based thermal power station at Cheemeni in Kasaragod district with an estimated cost of Rs 4,500 crore.

Chandy said a detailed project report for the project has been prepared and the clearances were being obtained to finalise the developers by the beginning of 2012.

Stating that the Suminfra summit will evolve a clear road map for building infrastructure in south India for the overall development of the region, Chandy suggested CII that next year Suminfra 2012 would be held in Kerala.

“By hosting the event next year, we want to give a message to the world that Kerala welcomes investors and Kerala welcomes new models of development,” he said.

The two-day conference, beginning on Wednesday, is organised by the Confederation of Indian Industry (CII) in Hyderabad.

BGR Energy and Hitachi JV lowest bidder for NTPC bulk tender

The joint venture of Chennai-based BGR Energy and Hitachi, has emerged the lowest bidder for NTPC's bulk tender for buying supercritical turbine generator set for units of 800 megawatts each, beating rivals L&T-Mitsubishi and Alstom-Bharat Forge, sources close to the development said.

NTPC had invited bids for bulk supply of boilers and turbine generators for four projects in Karnataka, Orissa and Chhattisgarh with a total capacity of 7,200 megawatts. In the financial bids for supercritical turbine generator that were opened on Thursday, BGR Energy emerged the lowest bidder with a bid of 811 crore per turbine, followed by Larsen & Toubro -Mitsubishi Heavy Industries which quoted Rs 830 crore per turbine.

NTPC may award contract for five turbines to BGR Energy-Hitachi. Although, L&T- Mitsubishi quoted the second best price, it may get contract for only two turbine sets and state-run Bharat Heavy Electricals may get order for the other two. The rules of the bid provides Bhel "deemed L2" bidder status, which assures at least two projects. Others in the race for the turbine generator sets were - Alstom-Bharat-Forge and Toshiba-JSW Energy.

"Our 5,000-mw manufacturing unit would be commissioned by January 2013. Initially, we plan to import the first 2-3 turbines from Japan and do the balance work locally," BG Raghupathy, CMD, BGR Energy Systems told ET.Shares of BGR Energy soared 14.2% on the tender result to end at 367.65 on BSE on Thursday.

Analysts said that the result of the turbine generator tender is the second setback for L&T-Mitsubishi and Alstom-Bharat-Forge, which lost out in the race for the 800 mw steam generator packages. The financial bids for the steam generator packages, which were opened on Wednesday, saw South Korea's Doosan Heavy Industries emerging as the lowest bidder. While Doosan would supply five units of steam generator packages of 800 mw each to NTPC, state-run Bharat Heavy Electricals, which came second in the race, would supply four units, sources said.

"Pressures mounts on L&T; loss of orders to the new entrants in the forthcoming NTPC bulk tenders can be a potential de-rating factor for the stock with downward risks for their order inflows. We expect 6% growth in FY12 inflows, lower than management guidance. L&T is likely to face head winds if continued inflationary pressures and high interest rate environment persists, hurting large private sector capex," B&K Securities said in a note.

NTPC to give Rs 3,600-cr order to BGR Energy

A joint venture of BGR Energy and Hitachi to get orders worth Rs 3,600 crore from NTPC Ltd for the supply of super-critical steam turbine and generators has led the Chennai-based company to emerge as the winner for supplying nine units of stem turbines. However, it will take only five units, according to BGR Energy chairman and managing director B G Raghupathy.

The 1985-incorporated firm has emerged as the lowest bidder for all nine units of super-critical steam turbine generators. As per the tender conditions, the Delhi-headquartered power generating corporation will award 5/4 units of super-crtical steam turbines to BGR.

NTPC had invited bids for bulk supply of boilers and turbine generators for four projects —in Karnataka, Orissa and Chhattisgarh —with a total capacity of 7,200 megawatts. In the financial bids for supercritical turbine generators that were opened yesterday, BGR emerged the lowest bidder. The others who were qualified to bid include L&T Mitsubishi, Bharat Forge-Alstom and Toshiba.

The value of the five units of these turbines by BGR is estimated to be around Rs 3,600 crore. “We are interested in taking up the 2x800 Mw Gajmara Super Thermal Power project, Orissa, and 3x800 Mw Kudgi Super Thermal Power Project at Karnataka,” says Raghupathy.

The commissioning of the first turbine will be done in 42 months. The next will take two months thereafter. The contract provides price variation clause and foreign exchange variation clause.

BGR Energy is setting up a Rs 4,400-crore super-critical steam turbine factory with Germany’s Hitachi Power Europe GmbH and Japan’s Hitatchi Ltd. “The turbines for the NTPC contract will be supplied from a mix of imports from Hitachi,” says Raghupathy.The total capacity of the plant is 5000 Mw. The construction work will commence by January 2013 and completed within one year, he adds.

Thermal NTPC’s Simhadri project unit 3 is operational

National Thermal Power Corporation’s unit 3 of 500 MW of Simhadri Super Thermal Power Project is commercially operational from today (Friday). With this, the commercial capacity of Simhadri is 1500 MW and total capacity of NTPC is 30,330 MW

Doosan bags NTPC’s R10,000-cr contract

Korean power equipment supplier Doosan has won NTPC’s R10,000 crore-contract for the bulk supply of 800 mw supercritical boilers, beating competition from domestic players like L&T, Bhel, BGR Energy and Thermax.Price bids for the project were opened on Wednesday. Bhel has emerged as the second lowest bidder for the project, sources said. Price bids for the supply of turbines are due to open on Thursday.

The Korean company did not participate in NTPC’s tendering for the bulk of supply of 660 mw boilers earlier. But later it changed its mind and decided to bid for NTPC’s contract for 800 mw equipment.

It is setting up power equipment manufacturing facility in India with 100% foreign direct investment. NTPC plans to buy nine units of 800 mw supercritical units for its 12th Plan projects envisaged at places like Lara in Chhattisgarh, Darllipalli and Gajmara in Orissa and Kudgi in Karnataka.Kudgi is envisaged to have three units of 800 mw while the rest will have two units each. While equipment cost for these projects is estimated at R18,000 crore, expenditure of another R22,000 crore or so be will be required for undertaking implementation of civil construction, balance of plant (BoP) package works. It takes 48-52 months to commission one unit of 800 mw superciriticl unit. As per the terms of the tender document, Doosan and Bhel will share orders for NTPC’s projects. While Doosan will get orders for the supply of five boilers, the balance will go to Bhel.

The outcome is a setback for L&T, which was knocked out of the NTPC’s tendering for the bulk supply of 660 mw supercritical units. While it was able to participate in the re-tendering held by NTPC for the supply of boilers, the bidding is stalled due to a legal case filed by disqualified bidder Ansaldo. Bhel also emerged as the second lowest bidder for the NTPC’s contract for the bulk supply of 660 mw turbines.

Antwerp Port to invest in Essar's Hazira Port Project in Gujarat by end of next year

Belgium's Port of Antwerp, the second largest port in Europe, aims to pick a stake in Essar Group's Hazira Port in Gujarat by the end of the year. "Antwerp Port intends to participate in Hazira port project of Essar Group," Antwerp Port Authority managing director Eddy Bruyninckx told ET without disclosing numbers. "The talks are on between the newly-formed subsidiary, Port of Antwerp International (PAI), and Essar Group."

It is believed that PAI is working with reserves of 25 million and it has already acquired stakes in port projects in Oman and Congo. The move is in keeping with the Belgian company's expansion plans firmed up last year, when it evaluated 20 projects and zeroed in on a few of them to expand its presence out of Europe through equity participation. Subsequently, it signed an MoU with Essar Group in February for strategic collaboration in consultancy, investment, training and enhancing commercial relations in the port sector.

"We are exploring opportunities overseas to expand our footprint by sharing our expertise in port development and management through a newly-formed subsidiary. We have a strong belief in cooperation with India which has a huge potential and ambition to develop ports," Bruyninckx said.

Antwerp Port Authority is also keen to strengthen its ties with the Indian steel companies. "We want Indian companies to bring their steel service centres to Antwerp," said Bruyninckx. Essar Steel, which operates a capacity of 8.6 million tonne per annum and is set to expand it to 14 million tonne by the end of this financial year, routes its cargo to European markets through Port of Antwerp.

During the first six months of 2011, Antwerp port handled 96 million tonne of freight, an increase of 10.4% compared with the first half of 2010. Essar's port arm manages capacity of 88 mmtpa, which is being expanded to 158 mmtpa over the next few years at an investment of Rs 9,300 crore. It has two operational ports - at Hazira and Vadinar.

At Hazira, on Gujarat's west coast, Essar Ports operates an all-weather deep draft port with 30 mmtpa of dry bulk cargo capacity, which is being expanded to 50 mmtpa. "The company is setting up a dry bulk terminal at Hazira with a capacity of 20 mmtpa, which will be operational by the second half of 2013-14. Environment and CRZ clearances have been received. Forest clearance is pending for part of the project.

Energy saved is power added

Popularising energy-efficiency concepts among consumers can put India firmly on the path of sustainable development.India is poised to achieve a sustained economic growth rate of 8-9 per cent right up to 2031-32. This would require an increase in primary energy supply of three to four times the present level, according to Planning Commission estimates.

Fossil-fuel-driven energy sector growth, amidst emerging climate constraints, the uncertain availability of fuel and soaring fuel prices, could severely constrain the country's quest for energy security. That said, energy efficiency could be a key factor in moderating the demand for additional energy sources without compromising on energy availability.The Eleventh Plan (2007-2012) quantified, perhaps for the first time, energy efficiency as a resource in energy sector planning and targeted a 5 per cent reduction in consumption at end use. This is equivalent to 10,000 MW of avoided investments in thermal power plants amounting to Rs 50,000 crore.

The innovative policies and programmes of the Bureau of Energy (BEE), a statutory body of the Government of India under the Ministry of Power, have ensured that this target is likely to be exceeded. Encouraged by this achievement, the Twelfth Plan will initiate a thrust on low-carbon growth strategies fuelled by energy efficiency as a major resource.

ECONOMIC BENEFITS

The estimated medium-term potential for energy saving, as per the BEE's assessment, is of the order of 15 per cent, at a conservative level. This could potentially reduce the need for additional capacity addition of almost 100,000 MW from the 600,000 MW planned till 2030.The Government needs to herald innovative policy and regulatory measures that create and sustain an energy efficiency brand by a transparent mechanism of sharing economic benefits.

The BEE has focused on strategies and measures to ensure that the attractiveness of energy efficiency translates into their widespread diffusion and adoption. These measures centre on creating incentives to motivate the various stakeholders to gainfully engage in energy-efficiency based economic activities.

The efforts of the BEE have brought about a transition in some sectors, in particular the end-use appliance market, which is witnessing a transformation in favour energy efficiency.The effective one-to-five ‘Star' labels have provided the consumer a basis to make an informed purchase decision, taking note of the operating cost of the equipment over its lifetime.

EMPOWERING CONSUMERS

Such labelling information has empowered consumers to assess the life-cycle cost of various household energy consuming equipment (refrigerators, air-conditioners, fans, etc) and has made them appreciate the fact that the purchase value is only a fraction of the total cost they will incur over the lifetime of the appliance.

This recognition has enabled investments in energy-efficient equipment and the consumer is willing to pay a higher purchase cost as savings in electricity bills compensate for the higher cost over just one or two years.

Thus, while the ‘Star' label creates a brand of energy efficiency, the power saved generates the economic benefits.The same combination could, therefore, be used to promote equipment with much higher levels of energy efficiency than are available at present (also referred to as Super Efficient Equipment [SEE]).

Using similar methodology as that adopted for the BEE's energy efficiency programme, standards and informative labels for SEE could be developed. This could leverage the brand value created for the Star label.

Once this is done, modalities can be chalked out for securing, quantifying and sharing economic benefits. The ideal candidates for such savings are the electricity distribution utilities of States that are usually saddled with financial constraints as well as power shortages.Most of their expenditure goes for procurement of power, in particular expensive power at peak periods of the day (evenings, for instance).

SAVINGS IN PROCUREMENT

Any savings in energy demand could result in lower procurement at peak period and/ or an opportunity to provide additional power to commercial consumers. In both circumstances, the utility will be better off and, therefore, taking steps towards such a scenario is justified.

Setting aside incentives for deployment of SEE (such as ACs, refrigerators, fans, etc) that constitute a significant portion of the demand, makes eminent economic sense.

To illustrate the point, let us take the example of Delhi, where the utilities are procuring around 5,000 MW of power to meet the growing demand. If one lakh ACs are replaced by SEE ACs, the reduction in power procurement would be around 100 MW (or 250 crore units per year), presuming the increased efficiency of SEE to be 40 per cent over the existing.

At an average procurement cost of Rs 2 per unit for bulk power, this translates into an annual savings of Rs 500 crore. Such savings by the utilities could be shared with the consumers to enhance their willingness to pay for the higher incremental cost of super-efficient equipment.

This benefit-sharing approach, under the oversight of the regulatory process, could help create and sustain markets for SEE. The Star label brand could well be extended to SEE as well to leverage the brand value and acceptability of such equipment.

Utilities could provide incentives in the form of part subvention of the purchase cost of the SEE and the BEE could guide the utilities concerned and maximise the benefits to the country.

The combination of branding and sharing of economic benefits provides a mechanism to mainstream energy-efficiency. Innovations in programme implementation could help India become a hub of efficiency and embark on the path of sustainable development.

Thermal NTPC’s Simhadri project unit 3 is operational

National Thermal Power Corporation’s unit 3 of 500 MW of Simhadri Super Thermal Power Project is commercially operational from today (Friday). With this, the commercial capacity of Simhadri is 1500 MW and total capacity of NTPC is 30,330 MW

Lighting up with renewables

There is a scramble for energy in India, which has had a negative energy balance since the 1980s. Consider these numbers: India accounted for 3.5% of the world commercial energy demand in 2003. The Planning Commission projects that dependence on energy imports could double to 53% of commercial energy consumption in 2031-32 from about 25% in 2003-04. The demand for electricity is estimated to grow at the rate of 7% per year in India for the coming decade. Note that 84 million households lacked access to electricity in 2000, 57% in rural areas. Plus, 49% of all households, mostly women and children, have to travel to get their drinking water. Typically, women living in remote rural areas spend an average of three hours just collecting water; almost 50 million women days are lost each year in the process.

In 2004, Thalingi exemplified these statistics. It was one of the 100,000 un-electrified villages in India. There was no water supply in the village. Women and children spent an average of four hours getting water from the nearby river. Needless to say, there were no sanitation facilities. Government officials rarely visited the village. Situated in the Anamalai Tiger Sanctuary, on the border of Tamil Nadu and Kerala, Thalingi is a 10 km trek uphill from the Udumalpet-Munnar Main Road. Accessing the village is no mean task; apart from the obvious dangers associated with walking inside a wildlife sanctuary, one has to cross two rivers by horse or foot. In the monsoons, the village is cut off.

Fast forward to 2011. Thalingi, with a mix of renewable energy (RE) technology and energy efficient (EE) devices, is now a model clean-energy village. The story is one of sheer determination of both the villagers and a non-governmental organisation (NGO) working with the villagers. Non-conventional Energy for Rural Development (NERD), an NGO, motivated the community to secure its energy profile since grid electrification seemed a distant dream. Nine self help groups (SHGs) were formed, of which seven were women SHGs and two were youth SHGs. NERD collected funds for two biogas plants. A donor agency contributed funds for two more biogas plants. Biogas is produced by anaerobic digestion of organic matter, like manure, municipal waste, biomass etc. The plant converts the energy contained in the gas into electricity and heat. The SHGs were trained rigorously in the construction, maintenance and running of the plants. With inputs from the Agriculture University, Coimbatore, the Thalingi plants in 2008 were the first 100% biogas plants, generating power from cattle dung only (prior to that, most biogas plants used 80% gas and 20% diesel).

The biogas generator now not only provides electricity to all the 104 households of the village, it also lights up 28 street lights bought using the savings of the SHGs. Moreover, biogas cooking has replaced cooking with kerosene, which was an expensive option for the tribal BPL villagers of Thalingi. Colour TV sets, which had been given to all the 104 households by the government—ironically, when there was no access to electricity—are run now. The slurry from the plants is used as organic manure, which has improved the quality and quantity of produce manifold and has eliminated weed growth. The community, previously shy of moving out of the village, has enhanced negotiating capabilities. Trips to the Tamil Nadu Energy Development Agency (TNEDA) have yielded eight solar street lights and a solar pumping system to pump water into the village from the river. With an overhead tank of with a capacity of 50,000 litres, water is now supplied to the village tap, saving a minimum of three hours from the working days of the women. The solar pumping system is maintained by the youth SHGs. NERD, with a donor agency, has also installed smokeless chullas in all the households of Thalingi. Before installation, 200 awareness camps were held to motivate the community, followed by 80 trainings on the operation and maintenance of smokeless chullas and two workshops for experience-sharing.

Each family earns between R14,000-15,000 per annum, of which it contributes R10 per month to the SHG federation for the maintenance of the renewable energy/energy efficient devices. A villager is paid R800 per month from this fund for maintaining the biogas generator. Further, the SHG also rents out a tractor, which was given by the district authorities, to the nearby villages and makes an additional R5,000-8000 per year. Each SHG member (on an average there are 12 women/youth in one SHG) saves R20-30 every month, depending on the income, with their SHG which serves as a revolving fund for lending out money to the members. Loans are often taken to start income-generating activities. Thus, access to electricity, a steady supply of water, better sanitation facilities, and a diversification of incomes has addressed the multidimensional deprivation previously faced by the community.

In the 11th Plan (2007-2012), the Ministry of New and Renewable Energy proposed to spend R2,250 crore for rural applications of renewable energy and targeted 9,000 remote villages/hamlets for lighting with a budget of R650 crore. However, the compelling reality is that RE/EE projects fail because of a target-oriented approach of the government. Without suitably motivating the community to adopt new technology and take ownership for it, coupled with a lack of beginner and maintenance information, RE/EE systems run for a while and then lie defunct. A lack of information about the benefits of these technologies further translates into an unwillingness of BPL families to make monetary contributions for the upkeep of the systems. Also, a lack of incentives to banking and co-operatives for including biogas and solar financing in their portfolios has, in many cases, prevented motivated communities from realising small-scale RE/EE projects to fruition.

The acknowledged relationship between energy access and economic development has spurred the government to develop laudable goals for increasing energy access. The challenges are daunting. However, while stakeholders are engaged in dialectics, Thalingi has secured itself energy-wise.

NTPC to invest Rs 3,300 crore to expand capacity at Chhattisgarh

Country's largest power producer NTPC plans to invest about Rs 3,300 crore to expand capacity of its existing power project at Sipat in Chhattisgarh. The company is exploring possibility to set up a 660-mw power-generating unit at the site, its regional executive director for western region II SN Ganguly told reporters on Thursday.

The proposal, if implemented would increase the generation capacity of the Sipat power station to 3,640-mw. NTPC is undertaking capacity expansion at most of its power stations for optimal utilisation of land.

"Brownfield expansion results in savings in terms of cost and efforts. Land acquisition is one of the biggest challenges we face for setting up power projects," Ganguly said. The 2,980-mw Sipat power project is generating 1,000-mw at present. The project would begin operating at full capacity by March next year. Sipat project would consume two percent less coal than existing plants as it is based on supercritical technology.

NTPC would double capital expenditure in the current fiscal to Rs 26,400 crore. The company incurred Rs 12,818 crore for adding 2,490-mw power generation capacity in the year ended March 2011. The company plans to add 4,320-mw during 2011-12 to its existing capacity of 34,194-mw. It currently has 15 power projects under construction with total 14,748-mw capacity.

BGR Energy Systems-Hitachi power equipment plants to go on stream in 2013

Chennai-based BGR Energy Systems will become an integrated power equipment manufacturer by 2013 as its two joint venture plants will start functioning, a top company official said on Friday.The first plant will make steam turbines and generators and the other super-critical boilers.

"By January 2013 both the plants will start supplying equipment," chairman BG Raghupathy said. "We are investing Rs.4,400 crore in the projects and construction is expected to start next year."To become an integrated power equipment maker, BGR Energy Systems last year inducted two firms of the Japanese Hitachi group as joint venture partners in the two subsidiaries.

BGR Energy gave a 26 percent stake in BGR Turbines Company to Hitachi Japan to design, build and commission super-critical steam turbines and generators for coal-fired power plants.The Rs.4,747 crore Indian company divested a 30 percent stakes in BGR Boilers to Hitachi.According to Raghupathy, the two plants are coming up near Madurantakam along the East Coast Road, around 80 km from here, and 90 percent of the land has been acquired.

Officials said the orders for long lead machineries have been placed and boilers, turbines and generators will be shipped through Chennai or Ennore port here.The turbine plant will make its debut supplying to NTPC Ltd. BGR Energy on Thursday announced that it is the lowest bidder.

According to A. Swaminathan, director-sales and marketing at BGR Energy, two units of steam turbine and generator would be imported and supplied to NTPC Ltd. The joint venture plant would supply components for the remaining three units.

Raghupathy said: "We will supply for NTPC's Kudgi Super Thermal Power Project (3x800 MW) in Karnataka and Gajmara Super Thermal Power Project (2x800 MW) in Orissa. Both the projects are near the coast and easy to transport equipment to."

Green moratorium on two Coal India fields to stay

Spelling trouble for state-owned miner Coal India Ltd (CIL), the environment ministry is not considering lifting a moratorium on two of its major coalfields any time soon.

The ministry's Comprehensive Environment Pollution Index (CEPI) moratorium issued last year had brought expansion of the company's Korba coalfield in Jharkhand and Chandrapur in Maharashtra to a halt. Korba is the largest contributor of CIL's output among its 21 coalfields.

“Lifting the moratorium on the Korba and Chandrapur coalfields may not happen soon,” a senior environment ministry official told Business Standard, arguing the two state governments do not seem to be using effective mechanisms to bring down emission levels in the industrial clusters.Moratorium on five of the seven coalfields initially covered under CEPI were lifted gradually over the past few months. “The moratorium was lifted from the five coalfields after they cut pollution levels by pulling down production. If everybody starts bringing down emission using the established mechanisms, there will be duplication,” the official said.

The ministry had last year rated 88 industrial clusters across the nation based as most-polluted, based on their emission levels. Seven coalfields — Chandrapur, Korba, Dhanbad, Talcher, Singrauli, Asansol and IB Valley — fell under the moratorium, pulling down CIL’s 2012 production target from 486 million tonnes (mt) to 447 mt.

The CEPI issue had resulted in a loss of 18 mt of Coal India’s production last financial year. For the current year, the loss is estimated to be around 39 mt from 17 projects. The company, however, maintains that even if the moratorium is lifted immediately, it would take more than a year to restore production levels. Korba, with reserves in excess of 5.5 billion tonne, alone accounts for a fifth of Coal India’s production of 431 mt annually.The CEPI issue had cropped up during the discussions of a 12-member Group of Ministers on coal last month when Planning Commission member B K Chaturvedi had called for lifting of the moratorium from Korba and Chandrapur by September 30. Environment minister Jayanthi Natarajan had responded by saying that locals have complained against pollution levels in certain areas rising beyond permissible limits leading to respiratory problems. The ministry would consider “all aspects” before taking a final view, she had said.

Coal India reported a 12.9 per cent jump in net profit at Rs 10,867 c crore last fiscal over a total income of Rs 50,233 crore. The company’s share price at the Bombay Stock Exchange on Friday closed at Rs 377.8, up 0.4 per cent as compared to previous day’s close.

CESC ropes in Chinese vendor for Haldia plant

Sanjiv Goenka-controlled CESC has roped in Chinese Shanghai Electric Power Generation Group to supply boilers, turbines and generators (BTGs) for its 600 mw Haldia thermal power project.The Chinese firm is upbeat about the Indian market and has decided to float a company. “We have applied to the government for an approval to set up a company in India,” Shanghai Electric’s vice-president Zhu Denian said. He said if the company was given the approval, it would have its office at Gurgaon. “We are looking for a partner to tie up with us in case of setting up a manufacturing facility,” he added.

Sanjiv Goenka, chairman of the R14,000-crore RP-Sanjiv Goenka Group, said, “Shanghai Electric would supply the BTG package at an estimated cost of R1,000 crore for the 2x300 mw Haldia coal-fired project, to come up at an estimated cost of R3,250 crore.”

Punj Lloyd would supply the balance of plant. The project which requires 450 acres for the first phase already has 420 acres in possession, all necessary clearances and long-term coal linkage from Mahanadi Coalfields.“The plant will be commissioned by middle of 2014 and we consider Wednesday as the zero date,” Goenka said.

REC opposes NBFC norms

Rural Electrification Corporation (REC), a government-controlled non-banking finance company (NBFC) for the power sector, has opposed the central bank’s new discussion paper on draft guidelines for NBFCs. Seeking that the status quo on NBFC norms be maintained, the lender has asked the ministry of power to intervene on its behalf on the crucial issues of higher capital adequacy ratio for Tier-I capital and on tightening the exposure limit.

REC last week wrote a letter to the ministry on the norms proposed by a working group of the Reserve Bank of India (RBI). The company is also in the process of seeking clarification from RBI on the draft banking guidelines.

REC and Power Finance Corporation, another state-run lender for the sector, had planned to promote a bank but the draft RBI guidelines restrict setting up of banks to private promoters. “There are two proposals we are opposing. First, the criteria for eligibility of only promoters who are from private sector, and second, the condition of transfer of assets to the bank. These two conditions are not favourable to REC because we do not want to convert to a bank,” chairman and managing director H D Khunteta told Business Standard.

Khunteta said the company’s spread and net interest margins were far better than that of a bank. “If today we have to convert to bank, we will have to comply with the statutory liquidity ratio and cash reserve ratio. Besides, we are only in one sector but we will have to provide funds to other sectors,” he said.

The proposed norms envisage that NBFCs transfer assets and merger with banks but Khunteta said their objective was to promote banks by joining hands with foreign banks or an infrastructure finance company with rural network to enhance shareholder value. “Now, clarification from the government is required whether a public sector undertaking (PSU) can become a promoter.” He said the basic nature of the bank could remain in the private sector, with PSUs investing only 26 or 49 per cent of equity.

Besides, deferring transfer of assets should be allowed.The RBI working group on NBFCs had earlier proposed that the capital adequacy ratio should be 12 per cent for Tier I capital against 7.5 per cent at present. Second, it has suggested the exposure limit be reduced by five per cent. There are some advantages that the proposed norms offer like the tax advantage which is available at five per cent can be claimed at 7.5 per cent. “Last week, we had written a letter to the Ministry of Power for onward submission to RBI to follow the current guidelines.”

On classifying loans as non-performing assets (NPAs), REC wants a two-quarter norm be followed. The logic is that when banks charge on a monthly basis, they are allowed two months. Similarly, when NBFCs charge on a quarterly basis, they should be allowed the leeway of two quarters or 180 days. The current NPA norms deem an asset bad when a borrower does not pay for 180 days.

The RBI working group had recommended tighter norms for NBFCs to improve regulatory supervision and reduce the difference between these companies and banks, especially in terms of how they classify and recover loans. The working group, headed by former RBI deputy governor Usha Thorat, had released the discussion paper, to be finalised by September-end.

While the new asset classification norms may see higher NPAs for some NBFCs, the group wants to allow these companies to recover bad assets by bringing them under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarefaesi) Act of 2002. NBFCs will be given three years to take their Tier-I capital adequacy to 12 per cent.

NTPC to shut down 2 units at Ramagundam

Singareni Collieries production hit for second dayNTPC has decided to shut down two units of 700 MW capacity at its 2,600 MW Ramagundam plant in Andhra Pradesh from Wednesday night, as the company did not receive any coal supplies from strike-hit Singareni Collieries Company Ltd for the second day.

If coal supplies did not improve on Thursday, the power producer may take out the remaining units from Thursday night, raising fears of power shortage in Andhra Pradesh and neighbouring States, if the on-going strike called in support of a separate Telengana gets prolonged. The Ramagundam unit supplies power to Andhra Pradesh and Tamil Nadu, besides parts of Goa, Maharashtra and Karnataka.

Power crisis

Production at SCCL was affected for the second day today, with around 60,000 employees not reporting to work.SCCL provides coal to power plants in Andhra Pradesh, Karnataka and Maharashtra with a combined capacity of over 6,000 MW.

“Towards the evening some 30-40 employees reported at our mines at Manuguru and Sattupalli in Khamam district. We hope to despatch about 12,000 tonnes by mid-night,” Mr S. Narsinga Rao, SCCL Chairman and Managing Director, told Business Line.Mr Rao said although APGenco was relatively in a comfortable position with a nearly five-day inventory, NTPC's Ramagundam unit had stocks that could barely last a day or two.

“We are assessing the situation and may come out with an alternative if the situation does not ease by tomorrow,” he said. The power crisis could be more severe in Andhra Pradesh, with APTransco saying that due to NTPC's shutdown, the State will not be getting over 800 MW from this station.“Further, the current hydro generation of 65 MU daily is also required to be reduced due to reduced inflows to Srisailam and Nagarjuna Sagar reservoirs,” an APTransco press release said.

In the light of this, AP Discoms are forced to improve load relief and restrictions to domestic sector in towns and villages during day time.“All efforts are being made to get additional coal from Mahanadi and Western Coal Fields,” the release added.

Change power project bid rules, says Mercados

AF Mercados EMI, a Britain-based international energy consultancy, has backed the domestic power industry’s argument for changes in the government’s competitive bidding guidelines, to make these more flexible to deal with contingencies.

Case-1 bidding is conducted for projects where location, technology and fuel are not specified by the procurer of power, typically, a distribution company. In such cases, the bidder is responsible for obtaining clearances. The model is followed by states which do not have fuel resources of their own. Case-2 bidding is for projects where location, technology and fuel are specified by resource-rich states. The procurer of power, the state utility, obtains clearances.

In a report prepared for the industry body, the Association of Power Producers (APP), the firm has recommended wide-ranging modifications in the 2005 guidelines. These include allowing the price risk on account of high-cost imported coal to be passed on to consumers for projects awarded on Case-1 bidding and allowing the power generator to recover the capacity charge if plant availability is reduced owing to coal shortage in Case-2 projects.

“The case for revision of the bidding framework to make it more compatible to the dynamics of project development and the fuels sector is apparent. This would require changes in the policy and regulatory framework, and could require changes in legislation as well,” Mercados has said in its report dated September 2.

Power projects of 44,821 Mw capacity have been awarded on the basis of the competitive bidding guidelines since 2005. The report has concluded that most of these plants will face difficulties in meeting their supply obligations, as the guidelines do not protect the developers against issues such as coal shortages and the high cost of imported coal.

The report says bidding for imported coal-based projects should be on the basis of heat-rate (an efficiency indicator) and any risk arising from high cost of coal should be allowed to be passed on. “This will hold the developer responsible only for efficiency and fuel availability. It would also mean that the benefit of reduced cost would be passed on to the purchaser,” it says.

It has also recommended allowing the developer to seek a rate revision from the regulator in a ‘force majeure’ event (one freeing the parties from liabilities in case of an extraordinary event beyond their control), a relief not available in the current guidelines.

In Case-2 bidding, in case of reduced availability from a power station due to fuel shortage, “the seller should be permitted to recover the capacity charge corresponding to such deemed availability,’ it says.

It also suggests Case-2 bidding be launched only when all clearances have been obtained. These should be necessarily in place when the Letter of Intent (LoI) is issued to the selected bidder, the report says, referring to the latest tightening of environment and forest clearance norms.

About 21,000 Mw of capacity would be affected due to fuel shortages for plants based on domestic coal. “If the current provisions of 50 per cent Annual Contracted Quantity remains, developers may stagger their investments. Thus, plants may not come online,” the report states, referring to the recent insistence of Coal India Ltd to commit to not more than half the coal requirement of power plants.

Similarly, 14,200 Mw of capacity would be affected as plants based on imported coal grapple with the changes in law in the host country on mining and “abnormal changes in coal prices,” the report says, referring to the latest directive of the Indonesian government to align coal exports to international benchmark prices.

Power cos need to be insulated from risks: APP

Private power producers have sought key changes in the bidding guidelines for power projects to insulate developers from unforeseen business risks and cautioned that if action is not taken soon, investors could lose interest in the sector.

In a letter sent recently to the power ministry, Association of Power Producers (APP), a representative body of private power generators such as Reliance Power and Tata Power, has said that developers cannot be expected to bear fuel price risks related to changes in law in coal exporting countries as applicable under the existing bidding guidelines.

Key coal exporting countries like Indonesia and Australia have recently changed their coal pricing policy, making fuel cost calculations for projects like Mundra and Krishnapatnam ultra mega power projects go hay-wire.

About 38,000 mw capacity awarded for development through tariff bidding route is facing the prospect of default on power supply contracts as developers cannot pass on increase in fuel cost to electricity buyers, according to APP.

“The situation as it is unfolding wants immediate action as the consequence of inaction would have serious implications for the power sector, as well as the equipment supply and banking sector that is already facing huge exposure to the power sector,” the letter, which was written by Ashok Khurana, director general, APP, said.

APP has cited key findings of a report prepared by Italian energy consultant Mercados at the association’s behest to support its case.

“India has a unique distinction of having a long term procurement process that allows very little flexibility on sale price, but presents open ended risks on key input costs. This fundamental misalignment has been aggravated by the failure of the supply chain for fuel to keep pace. Thus, the 25-year supply framework sits poorly with the input side dynamics,” the Italian consultant says in the report.

“For imported coal based project, bidding should only be based on heat rate. Any risk linked to the price of imported coal should be a pass through under the PPA clauses. This will hold the developer responsible only for the plant efficiency (heat rate) and fuel availability but will allow the pass through of fuel prices to the power purchasers,” the report recommends.

Power projects with domestic coal linkage are also facing risks of default on power supply contracts due to inadequate coal supply by Coal India.

NTPC eyes joint venture partners in S Africa

Eyeing opportunities in the international markets for power plants, National Thermal Power Corporation (NTPC) is looking for joint ventures in the overseas markets. After Sri Lanka, NTPC is now exploring for possible joint venture partners in the South African market. The first overseas JV agreement is already signed with Ceylon Electricity Board, Sri Lanka for setting up a 500 mw (2X250 mw) coal-based power station with an investment of $700 million.

Talking to media after inaugurating the full load operations of unit three of Simhadri Super thermal power project, NTPC, Sushil Kumar Shinde, union minister of power, government of India, said that NTPC has chalked out plans to go global. “As part of its overseas plans, NTPC would be concentrating on coal, gas and hydel-based plants in South African market,” he said.

NTPC has entered coal mining business and has been allocated five coal blocks with production potential of 47 million tonnes per annum by 2017. Besides, it has adopted JV route for capacity addition and has 18 JVs and five subsidiaries to strengthen its business. It currently has 14,088 mw under construction and nearly 40,000 mw under various stages of bidding. Going forward, NTPC plans to become a 1,28,000 mw company by 2032.

Later, to a query on the shortfall of demand and supply of power, Shinde affirmed that there is no shortage and there are plans to bring transmission and distribution losses to 15% soon from 26% currently by bringing IT-based regulatory system. He also said that his ministry has decided to give top priority to issues of jobs and rehabilitation of the displaced persons in power projects who gave away their land for setting operations.

Shinde said that the energy deficit in the country has come down to 3-5% during the year as against 18-19% of the past and generation has also gone up by 7-8%. He also said that the government will not take any more land from the farmers and will take it only if essential and it will also give them equal share in the benefits as well as jobs and land, among others.

Simhadri Super Thermal power project of NTPC reached another milestone with unit 3 of stage II (2 x 500 mw) getting ready for commercial operation. The first coastal-based power project, located at Paravada, 40 Simhadri Stage I has an installed capacity of 1,000 mw with 2x 500 mw units.

The first 500 mw unit of Simhadri Stage I was synchronised in a record time of 39 months from the date of main plant order. The Simhadri project is claimed to be the most modern project in India with the state-of-the-art control and instrumentation systems. The generation capacity of NTPC Simhadri has gone up to 1,500 mw with the commissioning of the 500 mw unit-III.

Three units of Korba power station shut down due to damage by heavy rain

Three units of 500-Mw each in the Korba power station of the National Thermal Power Corporation (NTPC) had been shut down following damage caused to the ash-dyke due to incessant rains in the region.

The officials said that major damage had occurred to the ash-dyke and a repair work had been started at war-foot.

The Korba power stations of the NTPC has a total installed capacity of 2600 Mw. Besides four units of 500-Mw each, the station has three units of 200-Mw each. One of the three units of 200-Mw was earlier closed for annual maintenance. Following heavy rains in the region, the ash-dyke constructed by the company in Dhanras village was damaged and ash water started flowing out in the fields.

“This has forced us to close three units of 500-Mw each till further order,” NTPC Korba spokesperson Ashutosh Nayak told Business Standard.Since the ash-dyke has been severely damaged, the management is left with no other option to dispose the ash coming out of units if the production continued.

Rel Power scraps 4,000 MW project

Reliance Power has decided to scrap another 4,000 MW gas-based power plant, this time in Raigarh, Maharashtra. After this, almost half of its power projects totalling to 16,000 MW will be run on conventional fuel like coal and natural gas may not see light of the day. The company has written to the Raigarh district administration and cited land acquisition issues as reasons for withdrawal from the project, making it the third project facing bleak future. 

Last month, Anil Ambani-led firm stopped work on the 4,000 MW Krishnapatnam Ultra Mega Power Project (UMPP), citing sharp increase in the cost of imported coal. The company has sought government intervention to make the project viable. Last year, the firm had to scrap its biggest power project of 8,000 MW in Dadri due to non availability of gas and land acquisition issues. This dream project was capable of lighting mega cities like Delhi and Mumbai simultaneously . However,the firm is going ahead with commissioning of its 2,400 MW gas-based power plant in Samalkot, which is yet to get gas supply linkage due to falling production at KG basin of Reliance Industries. Reliance Power plans to add 5,000 MW of power capacity by 2012-end that may include Samalkot, Sasan phase I Rosa phase II and Butibori projects. When asked for comments , a spokesperson of Reliance Power said, "We are committed to the state of Maharashtra and are investing Rs 5,000 crore in power sector. Reliance Power is developing 600 MW project at Butibori near Nagpur. Butibori project will start power generation by March 2012. Company is setting up 200 MW wind project at Vaspet."

Efforts being made to reduce T&D losses: Shinde

Union Power Minister Sushil Kumar Shinde on 11-09-2011 said all efforts were being made to reduce Transmission and Distribution (T&D) losses in the country which was facing huge power shortage. Shinde was at Vishakhapatnam to declare the commercial operation of third 500 MW Unit on attaining full load at NTPC-Simhadri Super Thermal Power Station.
He said India will grow at a fast pace with rapid capacity addition and efforts are being made to reduce T & D losses to curb energy shortages. The minister said interest of all those giving land for power projects will be protected.
Simhadri project is the first coastal based coal fired thermal power project of NTPC with state-of-the art control and instrumentation systems. With commercial operation of Unit No 3, installed capacity of the station has risen to 1500 MW.
It is the first project in Asia to bag the coveted IPMA Award in 2005 for project implementation.Southern Region of NTPC has total installed capacity of 4,450 MW and ongoing projects of 2,500 MW. The region has new projects of 10,370 MW and 145 MW renewable projects in pipeline.
NTPC is the largest power utility of the country with an installed capacity of 34,854 MW.

Power cos Power Finance, REC, Essar, Tata Power and Reliance Power may default on Rs 135,000 cr of loans

Indian power companies have slowed down project implementation and are unable to operate new plants at targeted capacity, which may lead to defaults of over Rs 135,000 crore from the sector that is battling low tariffs, scarce fuel and land acquisition problems.

The banking sector's exposure to power projects, according to Reserve Bank of India data, is a staggering Rs 292,342 crore, about the same as India's total corporate tax collection last year. Half the loans sanctioned to existing power plants remain unutilised and fund flow to new projects has almost stopped. The power sector accounts for 7.8% of total non-food credit exposure, up from 4.8% at the end of March 2009.

Banks are being cautious in disbursing sanctioned loans to projects as power companies have not been able to make progress on project sites due to non-availability of coal, environment clearances and problems of land acquisition.

Lenders, including state-run Power Finance Corp and Rural Electrification Corp, have told companies that they will not disburse funds unless a project has firm fuel-supply contract. A few months ago, the lenders wanted companies to arrange fuel within a year of disbursement.

A survey by the Association of Power Producers and Mercados Energy Markets showed projects with a total capacity of 38,748 mw are impacted due to unavailability of coal. Industry officials say that assuming a capital cost of 5 crore per mw, the aggregate default to the banking sector could be Rs 135,618 crore, or 46% of the current banking exposure to the sector.

The survey shows that about 21,300 mw of electricity generating assets, including Lanco's Anpara C, Adani's Mundra, Tiroda and Kawai, are either running at lesser capacities or are idle due to lack of sufficient coal or regulatory clearances to mine.

"Work on the projects was started after receiving firm supply commitments from Coal India. Now, as Coal India is assuring supply of only 50% of the requirement, banks and developers are wary about their investments. It is also likely that the developers of these plants stagger investments and plants may not come up," Association of Power Producers Director General Ashok Khurana said.

The future of another 14,200 mw of power projects proposed to be run on imported coal looks bleak as supplying nations have decided to charge higher price. The impacted projects include Essar's Salaya, Tata Power's Mundra and Reliance Power's Krishnapatnam.

"The early signs of financial stress due to these concerns are evident from the fact that up to 50% of sanctioned power sector loans are lying around without drawdowns. The strain and slippages in funds lent to the infrastructure sector has been caused by project execution milestones being missed due to problems in fuel linkages and clearances. This has resulted in tighter norms for disbursement and banks are getting more cautious on incremental exposure in view of these uncertainties," the survey said.

The situation becomes worse as major Indian banks are close to hitting their group exposure limits for power companies fixed by the Reserve Bank of India. On an average, banks can lend 20% of their net worth to infrastructure projects.

Fuel sourcing is Adani Power’s responsibility: APTEL

Ruling against Adani Power’s move to terminate its power purchase pact with Gujarat state utility GUVNL on the basis of higher coal prices, the top electricity tribunal has said that sourcing of fuel is the responsibility of the seller and not the buyer.

Adani Power had cancelled the 25-year power purchase agreement with Gujarat Urja Vikas Nigam Limited (GUVNL), citing that it would not be possible to supply electricity at the earlier agreed tariff of Rs 2.35 per unit due to expensive coal prices.

The Appellate Tribunal for Electricity (APTEL) verdict, which could set a precedent in the country’s power sector, comes at a time when many power producers are seeking higher tariffs amid rising coal prices.

The tribunal’s ruling came in response to Adani Power’s appeal against a Gujarat Electricity Regulatory Commission (GERC) decision that power purchase agreements (PPA) cannot be terminated on the basis of the argument that the company was not getting domestic coal supply.

Queries sent to Adani Power seeking comments on the verdict remained unanswered. However, a research report suggested that the company might appeal against the tribunal’s verdict in the Supreme Court.

In 2007, Adani Power had inked a PPA with Gujarat Urja Vikas Nigam Limited for supply of 1,000 MW power at a tariff of Rs 2.35 per unit.

However, in December, 2009, Adani Power decided to terminate the pact, asserting that it could not get domestic supply, making the proposition of supplying electricity at the agreed tariff unviable, especially since imported coal is costlier.

Adani Power was mainly relying on coal supply from Gujarat Mineral Development Corp’s mines in the Morgha block in Chhattisgarh, but the same did not materialise.

As per the tribunal, the PPA was not based on the assumption that Adani Power would get coal from only GMDC.

Noting that it was Adani Power’s responsibility to make arrangements for fuel supply, the order has said the pact termination is not valid.

It was for the appellant (Adani Power) to arrange the coal from any source. It was Adani Enterprises Limited which had represented that it had tied-up with GMDC for supply of coal.

“It also represented that it had tied up for supply of imported coal with various companies in Germany and Japan as a source of fuel supply. Therefore, it is for the appellant to make arrangements for fuel from any source,” the tribunal noted.

The electricity is to be supplied from Adani Power’s 2x660-MW Mundra-II facility.