PFC plans to raise nearly Rs 16,800 cr

Power Finance Corp is hoping to raise nearly Rs 16,800 crore in the coming months through issue of securities, including tax-free bonds.

The state-run lender for the power sector has already started the sale process for tax-saving infrastructure bonds and tax-free bonds, which together could raise up to Rs 11,900 crore.

Further, PFC has received regulatory approval for $1 billion (about Rs 4,900 crore) Medium Term Note (MTN) programme that would tap international bond market.

All these issues could mop up as much as Rs 16,800 crore.

“We have started the process of issue of long-term infrastructure bonds, through which we can raise up to Rs 6,900 crore.

“It began on September 29. The first tranche is for Rs 200 crore,” PFC Director (Finance) Mr R Nagarajan told PTI.

There would be both 10-year term bonds carrying an interest rate of 8.50 per cent as well as 15-year term bonds having an interest rate of 8.75 per cent.

According to Mr Nagarajan, PFC issue is expected to see better response, since at present there is no other public issue in the market.

ICICI Securities and SBI Capital Markets are lead arrangers for the issue.

PFC has also started the issue of tax-free bonds on September 29, that could raise a maximum of Rs 5,000 crore.

In addition, the company has received the green signal from the Reserve Bank of India for $1 billion (about Rs 4,500 crore) MTN programme.

“Depending on market conditions, we expect to start this programme in November or December,” Mr Nagarajan said.

The RBS and Bank of America have been appointed as managers of the issue.

Last month, PFC saw good response for its Rs 2,000 crore domestic issue of long-term bonds.

PFC expects to raise around Rs 30,000 crore in the current fiscal and is estimated to have raised nearly half of that amount.

Among others, PFC offers project term loans, equipment lease financing and short term loans for power projects.

Cash crunch forces power firms to tap foreign funds

A sharp rise in coal prices, delays in land acquisition and environmental clearance have led to delay in project implementation

Rising interest rates on rupee loans and banks’ reluctance to lend more money to the power sector as most have reached their sectoral exposure limits are forcing power firms to tap alternative funding sources such as the external commercial borrowing (ECB) route to fund projects.

While there are regulatory norms for banks’ exposure to individual firms and groups, industry exposures are decided by individual bank boards.

A sharp rise in coal prices, delays in land acquisition and environmental clearance have led to delay in project implementation. This has made banks reluctant to lend to these firms, senior bankers and industry experts said.

The Association of Power Producers (APP), the industry lobby of independent power producers such as Tata Power Co. Ltd, Reliance Power Ltd and Adani Power Ltd among others, has asked the government to relax rules to help power firms borrow more from the global market, said Ashok Kumar Khurana, director general of APP.

“We have approached the government to hike the ECB limit to the maximum possible level from $30 billion,” Khurana said.

The 12th Five-Year Plan beginning 1 April has projected a 100,000 MW capacity expansion. According to Central Electricity Authority estimates, the power sector will require financing of Rs13.9 trillion in the 12th Plan.

To meet a realistic target of capacity addition of 75,000MW in the 12th Plan, the country will need an investment of Rs9.73 trillion, including debt, APP said.

Prabal Banerjee, chief financial officer of Adani Power, said just raising ECB limit is unlikely to help; the government should also relax the cap on interest rate on such loans from 5% to 7%.

Foreign lenders are more comfortable lending to projects near completion. Refinancing rupee loans through ECB is restricted at 25% of total debt and this cap needs to be removed to let firms raise funds through ECB, Banerjee said.

“The larger concerns currently faced by the power sector are availability and pricing of fuel and financial health of state electricity boards, than funding issues,” said Vikram Limaye, executive director of the Infrastructure Development Finance Co. Ltd. “Unless these concerns get addressed, the sector is unlikely to see a free flow of credit.”

Most banks have touched their exposure limit to lend to infrastructure sector, making new disbursements difficult, said a Union Bank of India official, requesting anonymity.

Typically, banks lend to power firms at an interest rate of 12.5-13.5% and the maturity of these loans vary from 12 to 17 years, depending on the profile of the project. Most banks have nearly 60% of their total infrastructure loans to power firms.

Indian banks have lent Rs2.98 trillion to the sector as on 26 August. Sectoral loan growth rose 35.8% in 2010-11 from a year earlier, less than the 48.5% in the previous fiscal.

“Power firms will certainly benefit if they are able to borrow from international lenders as their overall cost is around 8-9% as against 13-14% domestically,” an IDBI Bank Ltd official said.

States scramble to raise power tariffs as bank finance dries up

A recent Reserve Bank of India (RBI) directive to tighten loans for state power distribution companies (discoms) seems to have had the desired effect. The drought in short-term finance has forced at least seven states to raise tariffs and reduce losses for their discoms.

Punjab, Haryana, Rajasthan and Orissa have allowed their discoms to revise tariffs in the last two months, while Tamil Nadu and Uttar Pradesh have assured banks that they would follow suit.

“We have received assurance on tariff revision from Tamil Nadu and Uttar Pradesh. However, the latter has said it will initiate the process after Assembly elections in April-May, 2012,” a senior banker told FE. The two states, which had recently sought bailouts for their discoms, failed to get any assurance in this regard. Both may have to hike tariffs by a hefty 30% each, banking sources said.

Orissa has raised tariff by 19.74%, Rajasthan 20%, Madhya Pradesh 6% and Delhi 22%. Punjab and Haryana have revised tariff by 37 paise and 7 paise a unit respectively. Jharkhand has hiked tariff by 15-50 paise a unit across categories. It has also increased fixed charges by Rs 12-40 a month. States like Madhya Pradesh are planning another revision after the initial modest hike failed to impress banks.

However, industry experts see this as ad hocism. “It should be made mandatory for discoms to seek tariff revision on an annual basis,” said Shubhranshu Patnaik, senior director (energy & resources consulting), Deloitte India.

“These are just temporary measures. Unless there is a change in ownership of discoms, things will not improve,” said Kuljit Singh, a senior energy consultant with Ernst & Young.

Most state-owned discoms are mired in losses, thanks in large part to political opposition to tariff hikes. Combined losses of discoms as of March 2009 are estimated at Rs 74,000 crore. Discoms have been using bank loans to finance their cash losses arising from non-revision of tariffs.

Expecting little risk of default on these sovereign loans, banks and non-banking finance companies have been routinely extending short-term loans to discoms without much due diligence, building a mountain of Rs 1.53-lakh crore debt. With such alarming levels of debt, the Centre asked the RBI to tighten lending norms for discoms to put pressure on states for tariff revision.

Power tariff in Delhi may rise further

Power tariff in Delhi may rise further to allow power companies to pay off increased costs, Lalit Jalan, chief executive of Reliance Infrastructure Ltd, said in an interview. Edited excerpts:

Can you throw some light on your recent 1,500km power transmission project?

This is the first project which was bid on competitive bidding for the private sector. It’s 100% owned by the private sector. The project was awarded and we got all the clearances to be ready for construction by end of 2009. This is a 1,500km double circuit 400KV line predominantly in Maharashtra and Gujarat, comprising nine separate lines and this can help bring 4,000 megawatts (MW) of power from East and North-East to the power hungry states in the western region. Starting construction in 2009, we have been able to complete five of the nine segments in significantly less than 24 months and by the end of this financial year the entire project will be operational.

Can you take us through the recent Delhi tariff order, which gives the sector some leeway?

If you see the tariff that a consumer pays, the total revenue that the utility collects from a consumer, 80% of that goes towards paying for the power that the distribution utility procures from its various generators. In Delhi, we buy about 70% of power from NTPC and 20% of my power comes from state generating stations of Delhi. From 2005 to 2011, there has been no tariff increase in Delhi whatsoever. During this same period, the power costs have gone up by more than 100% and this increase in cost is owing to two major factors. One is the very high cost of coal, the high cost of gas liquids that these utilities use, and the much higher fixed costs that the new stations bring with itself.

So, this mismatch between the costs that are realized and the cost, which I have to pay to the generating stations, the tariff which is set by the regulator, I have no leeway on that. (It) created a huge cash flow mismatch for all the Delhi utilities, leading to major financial problems.

The current regulator has realized the issues and we are seeing the first 22% tariff increase, which has become effective from 1 September. He has also introduced the fuel adjustment charge, which is a standard practice across India and this was a practice which existed prior to privatization, which means that if the coal cost goes up and the generator passes on that increase of coal to the distribution utility, distribution utility can cover it during the same year leaving no backlog costs. These backlog costs eventually are paid by the consumers at bank rates of interests and I don’t think it is in the interest of consumers to accumulate these costs.

Along with this 22% increase we are getting closer to the cost reflective tariff, there would be more tariff increase required in times to come and the recovery of the old dues, so as not to give a tariff shock to consumers. (It) could take five to seven years for this entire past recovery, which the regulator has recognized. He has recognized almost Rs.9,000 crore as unrecovered costs for the three utilities and that will take maybe five to seven years.

Government to pull up Coal India for missing production targets

CIL has blamed its failure to keep to production targets in Q1 this fiscal on rains and delays in securing green clearances, but the Coal Ministry is in no mood for excuses and has called a meeting this week on the issue, where it is likely to berate the Navratna PSU's top brass.

"Coal India (CIL) will be pulled up for missing its output target in the production target review meeting to be held this week," an official in the Coal Ministry said.

The meeting, to be chaired by Coal Minister Sriprakash Jaiswal, will be attended by officials of the Coal Ministry, CIL Chairman and Managing Director (CMD) N C Jha and the CMDs of all the subsidiaries of CIL, the official said.

CIL had blamed early rains and inclement weather in the eastern region for playing spoilsport in achieving its 98.7 million tonne (MT) coal production target for the first quarter.

In addition, a plethora of problems like delays in the grant of green clearances for its projects hurt production by the state-run firm, which missed the April-June target by 2.4 MT.

"Given the production trend in April and May, we were quite hopeful of meeting the 98.7 MT target for the first quarter. However, early and heavy rains hit most of our coalfields in the eastern belt, making production as well as transportation tough," Jha had said.

With more than double the average rainfall recorded at Eastern Coalfields Ltd (ECL), Bharat Coking Coal Ltd (BCCL) and Central Coalfields Ltd's (CCL) operating regions in June this year, Jha had said that the company could achieve only 96.3 MT of coal production in Q1.

Out of the eight subsidiaries of CIL, five are situated in the eastern region, including Mahanadi Coalfields Ltd ( MCL).

The company had, however, exuded confidence that it would achieve the overall production target of 452 MT for the current fiscal.

With more than 150 mining proposals of the company facing delays in environmental clearance, the world's largest coal miner had missed last fiscal's target by recording an output of 431.325 MT, as against the revised limit of 440.20 MT.

CIL had blamed the slippage on delays in the grant of clearance to its projects.

The Coal Ministry, too, has repeatedly expressed concerns over such delays, saying the green delays could result in a production loss of about 190 MT by March, 2012.

Coal supply may unplug power sector

Capacity addition in India’s electricity sector in the 12th Plan (2012-17) runs the risk of getting derailed because of uncertain domestic availability and volatile international prices of coal, unless immediate reforms are undertaken to augment coal supply.

The alarm has been raised by a paper by industry chamber Ficci and consultant in energy sector ICF.

The paper asks for allowing captive mines to sell surplus coal at market prices to incentivise additional production and full-scale commercial mining at market prices through amendment in the Mines And Minerals (Development And Regulation) Act.

To meet its growing demand, the approach paper of 12th Plan targets to set up 100 Gw of capacity. However, domestic fuel shortages, financially precarious condition of distribution utilities and the issues around competitive power procurement process have emerged as a challenge.

Also, the issue of adequate coal linkage to power projects has assumed critical importance as nearly 25,000 Mw of thermal power capacity is presently stranded.

“It is heartening to note that the 12th Plan envisions about 50% share from private sector in capacity addition. However, unless fuel sector reforms keep pace with power sector reforms, India’s growth story could be jeopardised,” Ficci secretary general Rajiv Kumar said.

Powerless festive season

The festival season has been marred by a spate of power cuts in the city. As the situation stands, the present power crisis in the city is unlikely to improve in the coming few days. The power department officials said that load-shedding will continue till the supply of coal is resumed.

“Due to shortage of coal, the National Thermal Power Corporation’s (NTPC)’s power plants at Dadri I, II, Singrauli, Rihand–II, Farakka and Kahalgaon I and II have been generating and supplying significantly less power than their installed capacities. Mining and loading of coal has been badly affected due to heavy rains as well as the ongoing festival season in the mining areas in the east,” said a senior power department official.

Clubbed with these is the shortage of water due to a temporary closure of the Agra canal. Water is required to cool the power plants.

Water supply to Badarpur Thermal Power Station (BTPS) has been reduced further, compounding the issue and further reducing the power supply by around 100 MW.

“Power generating stations within Delhi including BTPS, Gas Turbine and Rajghat were producing around 410 MW less; they normally supply around 1100 MW to Delhi,” added the official.

The power distribution companies have been carrying out load-shedding in many areas. In certain parts, the load-shedding lasts as long as four hours.

“Due to the extent of the shortfall, discoms have been carrying out load-shedding. Though being a Sunday, the load was comparatively less but the situation might be alarming on Monday,” added the official.

“For the first time, we had a candlelight dinner because the electricity was out for more than four hours. It returned briefly at 10pm but went off within 15 minutes,” said Namrata Bhardwaj, a resident of Mayur Vihar, Phase-1.

“The power situation has suddenly become more problematic now than during peak summer. It’s begun to hinder regular day-to-day activities because we find it difficult to even run the water pump since the electricity goes off at the time when the water supply starts,” said Aakriti Sethi, a Greater Kailash-I resident.

Rs 1 lakh crore investment stuck in power sector due to fuel shortage

Over Rs 1 lakh crore of investment in the power sector is stuck, as 25,000 MW of thermal power capacity is stranded due to non-availability of coal and gas linkages, which may hamper energy generation capacity addition in the country, says a report.

"The issue of adequate coal linkage to power projects has assumed critical importance as nearly 25,000 MW of thermal power capacity is presently stranded. This implies a locking up of Rs 100,000 crore in stalled power projects," a report by industry body FICCI said.

Most critical challenges being faced by the power sector today are domestic fuel shortages and financially precarious condition of distribution utilities.

The Ministry of Power had set a target of adding 78,000 MW of power during the current Plan period (2007-12) but was curtailed to 62,000 MW by the Planning Commission due to various factors like fuel shortage, environment clearances and land acquisition problems.

The report observed that the capacity addition in the 12th Plan (2012-17) also runs the risk of getting derailed because of uncertain fuel availability and volatile international process of coal, unless immediate reforms are undertaken to augment domestic coal supply.

To tide over the problem, the report suggested a few remedies, which includes allowing captive mines to sell surplus coal at market prices which will incentives additional production and full-scale commercial mining at market prices through amendment in the MMDR Act Mines and Minerals (Development and Regulation) Act.

The government has set a target of adding 1,00,00 MW capacity in the 12th Plan period, however, the sector needs to respond quickly and definitively to the challenges, the report said.

REC aspires to become top NBFC

Rural Electrification Corporation, a dedicated power sector lender, remains bullish on credit off-take despite growing concerns about the fuel security of power projects and the poor financial health of state power distribution companies. The rising interest rates have also not hurt the company’s outlook. Its positive sentiments are supported by the robust growth in credit off-take in the current financial year. REC has logged a 15% growth in its disbursements in the first six months of the current financial year over the same period last year.

“There is a 15% growth in our credit off-take in the first half. We disbursed R11,600 crore compared with R10,191 crore in the corresponding period of the past year,” HD Khunteta, chairman and managing director, REC told FE.

While loan sanctions of REC have been slower in the first half, the company expects to round off the year with a decent growth rate in sanctions. The company sanctioned loans of R33,270 crore in the first half compared with R33,425 crore in the year-ago period.

“Sanctions in the first half are lower because our board did not meet during September. Our overall sanctions would be higher,” Khunteta said.

REC sanctioned loans worth Rs 65,000 crore during 2010-11. “We expect loan sanctions of Rs 70,000 crore this year. We have loan proposals that will be put up before the board soon”, Khunteta said.

But the company's costs of borrowings are rising and so are its lending rates, following the hikes in key policy rates by the Reserve Bank. The company's cost of capital for outstanding borrowings of Rs 75,000 crore works out to 8.15%. But its current cost of borrowing is at 8.72%, which may further increase in the coming months. “We expect the cost of borrowing in the current year to average at 8.75%,” he said. The company's current lending rate is upwards of 12.25%.

The only point of revenue recovery for investments made in the power sector is distribution. But power distribution companies are in a bad shape owing to non-revision of tariffs. The combined loss of state discoms is estimated at R74,000 crore as of March 2009.

However, the REC chief is not alarmed at the worsening financial health of discoms.

He believes that the situation will start improving soon.

“Seven states, including Rajasthan and Delhi, have already increased tariffs in recent weeks. Others like Tamil Nadu and Uttar Pradesh, where discoms have incurred high losses, might follow the suit,” Khunteta said.

The RBI has recently asked banks and non-banking finance companies to be cautious while sanctioning loans to the discoms. This is expected to put pressure on the states to allow tariff increases.

“We are asking discoms how they are going to meet the gap in their expenditure and revenue. Besides, we are also putting a condition that the state government will clear payments of outstanding agriculture subsidy to discoms in two-three tranches. States have to go ahead with power reforms,” he said.

While the company is concerned about the fuel crisis facing the power sector, it hopes that the situation will improve soon. Fuel is a major issue. Many generating companies are not buying power from plants where the generation cost is higher. However, things should improve in a year or so.

“We want to become the number one company in the NBFC space and maintain the quality of assets,” Khunteta said.

CPSUs may get to buy assets abroad without Cabinet nod

The Central public sector undertakings (CPSUs) will soon be allowed to acquire natural assets like oil, coal and mines abroad without prior Cabinet nod. According to sources, the Department of Public Enterprises (DPE) will be moving a Cabinet note suggesting that an empowered committee headed by Cabinet Secretary could clear these projects.

This is expected to help the CPSUs to compete with private firms who are also eying raw material assets overseas to cut costs.

The move would also help fight competition from Chinese firms. These deals need to be struck at short notice in a highly competitive environment.

The idea is that the empowered committee clears the CPSE proposals for buying natural assets abroad within three weeks. Currently, the approvals through the Cabinet/CCEA route takes up to six months. The empowered committee will also comprise secretaries of the administrative ministry (in charge) of PSU, the Chairman and Managing Director of the firm and representatives from ministries of external affairs, law and finance.

World’s largest coal producer Coal India who is currently is in talks with the US-based Peabody Energy and Massey Energy for stakes in the mines owned by these companies seems to be the early beneficiary if the proposal gets approved soon.

Even state-run steel major Steel Authority of India (SAIL) along with NTPC, Coal India, Rashtriya Ispat Nigam is scouting for coal mines in abroad independently as well as through International Coal Ventures (ICVL).

Alstom India Plans to Consolidate Position

Alstom India has launched a comprehensive plan to consolidate its position in the country, especially after the 12th Five-Year Plan has projected an investment requirement of $1 trillion in the infrastructure sector alone. The Indian subsidiary of Paris-headquartered Alstom Group, which is a global leader in power generation, transmission and rail infrastructure, has decided to extensively focus on the power sector including renewable and thermal power and urban transportation like metro and high speed trains.

Alstom India, undeterred by losing out NTPC’s `8,000-crore contract for the supply nine units of 800-Mw steam turbine and generator units to BGR Energy during a recent bidding process, plans to go back to the drawing board to rework its strategy thereby relook at the new benchmark in this sector. The company is geared up to participate in the bidding for all types of turbines both super critical and non-super critical during the 12th Plan.

Alstom India said the country was a “happening story”, given the “visible movement” in the infrastructure sector. “More and more power is being added to the grid and host of infrastructure projects being launched,” pointed out Sunand Sharma, its country president. “Our company is exploring opportunities in the field of power that includes thermal comprising gas, steam, nuclear, service and power automation and controls and renewable power, including hydro, wind and other renewables,” he told Business Standard .Alstom India has full capabilities in engineering, manufacturing, project management and supply of power generation equipment.

As far as hydro is concerned, Sharma said the firm had so far signed contracts for hydro turbines covering 10,923 Mw and generators covering 12,850 MVA. Out of this, approximately 6,000 Mw are in commercial operation. More recently, Alstom got three contracts for hydropower development in India— of 293 Mw capacity.

Drop in power output at NTPC Ramagundam hits southern States

Power generation at NTPC Ramagundam super thermal power project located in Andhra Pradesh has been adversely impacted due to shortage of coal supply from Singareni Collieries Company Ltd (SCCL).

SCCL miners are agitating in support for separate statehood of Telangana.

Of the 2,600-MW of installed capacity at Ramagundam, NTPC plant is able to generate about 1,520 MW today from the six units of 2,100 MW. It has shut down the seventh unit of 500 MW from Saturday due to coal shortage as it does not make sense to generate power with low plant load factor.

“In spite of making alterative arrangements from Mahanadi Coalfields, South Eastern Coalfields and from mines in Chhattisgarh and Orissa, and making other alternative arrangements from Coal India Ltd, we are able to generate only about 1,520 MW today,” a spokesperson of NTPC told Business Line.

As against average requirement of about 36,000 tonnes per day, NTPC now has supplies for about 18,000 tonnes.

The power generated from NTPC Ramagundam is supplied as per the allocation made to various southern States. Accordingly, Andhra Pradesh gets about 31.5 per cent, Tamil Nadu 25 per cent, Karnataka 19 per cent, Kerala 15 per cent, Puducherry and Goa about 5 per cent, respectively.

Due to lower power generation at NTPC plant, all the southern states have been impacted due to lower supply.

Reliance Infra commissions 150-km power line

Reliance Infrastructure has commissioned its fourth 400-kV double circuit transmission line of about 150 km between Parali and Solapur in western Maharashtra.

The project, on build own and operate mode, is part of the Rs 1,400-crore Western Regional System Strengthening project totalling 1,500 km.

RInfra's wholly owned subsidiary, Reliance Power Transmission has commissioned the first three transmission lines of the project — Solapur – Karad, Limdi – Ranchodpura and LILO (Line in line out) under Lonikand – Kalwa. The project is expected to be completed by FY12.

The WRSS is designed to facilitate free flow of 4,000 MW from power-rich eastern region to the western region of the country and benefit regional utilities, besides relieving grid congestion.

Mr Lalit Jalan, Chief Executive Officer, R Infra, said: “The successful commissioning of the project before scheduled time reflects our strength in executing projects.” RInfra is executing five transmission projects across the country with a total outlay of Rs 6,600 crore.

NTPC may review joint ventures, subsidiaries

NTPC Ltd is planning a restructuring exercise that requires the state-owned power generator to review the future of its numerous joint ventures and subsidiaries.

The move has been prompted by the utility’s desire to ensure that its management bandwidth and resources aren’t stretched too thin.

“The idea is to see whether these joint ventures and subsidiaries need to be restructured, closed, or reoriented,” said a person familiar with the development, who spoke on condition of anonymity.

“The plan is to rationalize or exit (ventures in) areas that don’t make sense,” added a senior NTPC executive, who too did not want to be identified.

NTPC chairman and managing director Arup Roy Choudhury confirmed that a restructuring was on, but denied that this would lead to exits from some ventures.

“No such issue,” he said in a text message. “Any good company should keep reinventing itself to become a ‘great’ company.”

NTPC has appointed Deloitte Touche Tohmatsu India Pvt. Ltd to prepare a report that will form the basis for the review. A Deloitte spokesperson declined to comment, but a second NTPC executive, who also didn’t want to be identified, said the utility was “waiting for Deloitte to submit the report” and that the next step “depends upon what the report has to say”.

The restructuring exercise comes at a time when NTPC has already expressed its desire to exit International Coal Ventures Pvt. Ltd (ICVL), a company promoted to buy coal mines overseas.

NTPC has 18 joint ventures and five subsidiaries in areas such as electricity distribution, services, energy efficiency, equipment manufacturing, power trading, power exchange and coal mining. In addition, the company has announced plans to form a joint venture with the Asian Development Bank​ and Kyuden International Corp.

The environment in which the country’s largest power utility operates has become more competitive with the introduction, this year, of a tariff-based competitive bidding process for NTPC. Previously, NTPC has been building plants on a cost-plus basis, which means it gets to charge a price that factors in the cost and a certain return.India has a power generation capacity of 181,000 megawatts (MW) and expects to add 62,374MW by 2012.

In the 12th Plan period (2012-17), India plans to add 100,000MW with NTPC expected to play an important role towards meeting the power demands of the countryNTPC, which has a share of around 20% in India’s power generation capacity, is looking to increase its capacity from 34,854MW now to 75,000MW by 2017 and 128,000MW by 2032. It has projects totalling 14,088MW under construction.

Thanks to PM, power-starved AP gets 1,000 MW

The Prime Minister, Dr Manmohan Singh, has come to the rescue of power-starved Andhra Pradesh directing supply of 1,000 MW, including 800 MW from the eastern grid during 11 p.m. to 6 a.m. and 200 MW from Haryana from Jhajjar power plant.

According to a statement, the State Chief Minister, Mr N. Kiran Kumar Reddy, thanked the Prime Minister for coming to the State's rescue at this crucial juncture. The Prime Minister's directive comes in the backdrop of the State's request to help tide over the current power demand-supply crisis faced due to dwindling coal supplies.

Miners of the State-owned Singareni Collieries Company Ltd are agitating in support of Telangana. This has hampered coal production and power generation in the State.

Mr Reddy mentioned “agricultural sector is passing through a crucial phase. If power supply at the present level is not ensured there is danger of the standing crop getting damaged.”

While NTPC Ramagundam is generating 1400 MW out of 2600 MW, NTPC Simhadri is generating 1300 MW against 1500 MW. NTPC of Ramagundam and Simhadri would be able to generate full capacity if coal is procured from other sources.

The State Government requested for diversion of 1.3 MMSCMD of gas of GMR Vemagiri which is shut down since September 17 to other projects to generate 350 MW. A meeting of the Empowered Group of Ministers (EGoM) has to be convened for diversion of the gas. The State has requested the Ministry of Coal to allocate additional 2 lakh tonnes from Western Coal Fields to APGenco.

Meanwhile, the State has permitted purchase of 980 MW of additional power during October, including 330 MW from RLNG and 550 MW from other sources.

Due to the strike, the daily production of coal from SCCL has come down to 36,700 tonnes per day from 1.5 lakh tonnes per day.

This has meant loss of 17.2 lakh tonnes for the past 20 days.

The State is spending Rs 600 crore towards additional purchase. AP Genco's thermal stations are generating 3,000 MW as against 5,093 MW capacity. The loss is around 56 MU per day (38 MU from AP Genco and 18 MU from NTPC Ramagundam and Simhadri.

The Hydel generation which was around 65 MU per day is now 39 MU per day. The power deficit has reached 48 MU on October 1 with the demand at 275 MU, against last year's 223 MU.

Reliance Infra commissions 150-km power line

Reliance Infrastructure has commissioned its fourth 400-kV double circuit transmission line of about 150 km between Parali and Solapur in western Maharashtra.

The project, on build own and operate mode, is part of the Rs 1,400-crore Western Regional System Strengthening project totalling 1,500 km.

RInfra's wholly owned subsidiary, Reliance Power Transmission has commissioned the first three transmission lines of the project — Solapur – Karad, Limdi – Ranchodpura and LILO (Line in line out) under Lonikand – Kalwa. The project is expected to be completed by FY12.

The WRSS is designed to facilitate free flow of 4,000 MW from power-rich eastern region to the western region of the country and benefit regional utilities, besides relieving grid congestion.

Mr Lalit Jalan, Chief Executive Officer, R Infra, said: “The successful commissioning of the project before scheduled time reflects our strength in executing projects.” RInfra is executing five transmission projects across the country with a total outlay of Rs 6,600 crore.

Drop in power output at NTPC Ramagundam hits southern States

Power generation at NTPC Ramagundam super thermal power project located in Andhra Pradesh has been adversely impacted due to shortage of coal supply from Singareni Collieries Company Ltd (SCCL).

SCCL miners are agitating in support for separate statehood of Telangana.

Of the 2,600-MW of installed capacity at Ramagundam, NTPC plant is able to generate about 1,520 MW today from the six units of 2,100 MW. It has shut down the seventh unit of 500 MW from Saturday due to coal shortage as it does not make sense to generate power with low plant load factor.

“In spite of making alterative arrangements from Mahanadi Coalfields, South Eastern Coalfields and from mines in Chhattisgarh and Orissa, and making other alternative arrangements from Coal India Ltd, we are able to generate only about 1,520 MW today,” a spokesperson of NTPC told Business Line.

As against average requirement of about 36,000 tonnes per day, NTPC now has supplies for about 18,000 tonnes.

The power generated from NTPC Ramagundam is supplied as per the allocation made to various southern States. Accordingly, Andhra Pradesh gets about 31.5 per cent, Tamil Nadu 25 per cent, Karnataka 19 per cent, Kerala 15 per cent, Puducherry and Goa about 5 per cent, respectively.

Due to lower power generation at NTPC plant, all the southern states have been impacted due to lower supply.

NTPC Lanka plant report likely to be ready by Jan

NTPC Ltd plans to get the detailed project report for a proposed $700-million thermal power project in Sri Lanka ready by January.

While the coal-fired project is important in being NTPC's first overseas unit, there is also a larger strategic significance as China has already made an entry into the island-nation's electricity sector.

Official sources said the progress on the NTPC project was reviewed at an interaction between the power ministers of both countries on the sidelines of a SAARC Energy Ministers' meet in Dhaka recently where it was decided that the DPR would be prepared by early next year to get the project off the ground.

Financial closure

Earlier last month, NTPC had announced the formation of a joint venture with Ceylon Electricity Board (CEB) to establish the 500-MW plant (2x250 MW) near Trincomalee in eastern Sri Lanka. The joint venture company is to be incorporated in Sri Lanka, with 50:50 equity contribution by NTPC and CEB. The project is expected to achieve financial closure in about a year's time.

India will offer a line of credit of $200 million to Sri Lanka for the joint venture project, which is expected to be completed by mid-2016. The project capacity may be enhanced by 500 MW.

China already has a presence in Sri Lanka's electricity sector, having commissioned a 300-MW unit at CEB's Norochcholai coal power project in the north-western region.

The second phase of the project, involving another two units of 300 MW each, is to be set up by the China National Machinery and Equipment Import and Export Corporation and will get access to concessional Chinese financing in the form of a soft loan.

Alstom India Plans to Consolidate Position

Alstom India has launched a comprehensive plan to consolidate its position in the country, especially after the 12th Five-Year Plan has projected an investment requirement of $1 trillion in the infrastructure sector alone. The Indian subsidiary of Paris-headquartered Alstom Group, which is a global leader in power generation, transmission and rail infrastructure, has decided to extensively focus on the power sector including renewable and thermal power and urban transportation like metro and high speed trains.

Alstom India, undeterred by losing out NTPC’s `8,000-crore contract for the supply nine units of 800-Mw steam turbine and generator units to BGR Energy during a recent bidding process, plans to go back to the drawing board to rework its strategy thereby relook at the new benchmark in this sector. The company is geared up to participate in the bidding for all types of turbines both super critical and non-super critical during the 12th Plan.

Alstom India said the country was a “happening story”, given the “visible movement” in the infrastructure sector. “More and more power is being added to the grid and host of infrastructure projects being launched,” pointed out Sunand Sharma, its country president. “Our company is exploring opportunities in the field of power that includes thermal comprising gas, steam, nuclear, service and power automation and controls and renewable power, including hydro, wind and other renewables,” he told Business Standard .Alstom India has full capabilities in engineering, manufacturing, project management and supply of power generation equipment.

As far as hydro is concerned, Sharma said the firm had so far signed contracts for hydro turbines covering 10,923 Mw and generators covering 12,850 MVA. Out of this, approximately 6,000 Mw are in commercial operation. More recently, Alstom got three contracts for hydropower development in India— of 293 Mw capacity.

NTPC wants to go solo on coal hunt

NTPC has started hunting overseas coal assets for long term off-takes, while considering to come out of International Coal Ventures (ICVL), which five PSUs formed for acquiring overseas coal assets.

Arup Roy Chowdhury, NTPC chairman, said the company was not yet out of ICVL but its purpose was not in sync with what ICVL was doing.

“Whatever assets ICVL identified assets were mainly coking coal assets — a requirement for the steel industry. In Indonesia, it located some thermal coal assets but the calorific value of those coal were between 5,100 and 5,700, which we generally don’t require. The Indonesian government has decided to ban exports of coal below the calorific value of 5,100, which could have been our requirement. So ICVL doesn’t serve our purpose,” Roy Chowdhury said.

He said it was not NTPC’s decision whether to stay in ICVL or not but it was up to the Cabinet to take a decision, since ICVL was formed at the decision of the Cabinet. “We have written to the Cabinet about our concerns and we will now wait for it to decide,” Roy Chowdhury said.

ICVL, formed by SAIL, CIL, RINL, NMDC and NTPC, was incorporated in May 2009 and was conferred the power of a Navaratna company for acquiring foreign coal assets. Although the company has not yet struck any acquisition, sources said it was carrying out due diligence of assets worth $1.2 billion at present. The assets were spread around in Australia, the US, South Africa and Singapore.

Roy Chowdhury said NTPC could go for hunting coal assets alone but it would be interested in such mines, which were either ready for production or were already producing.

Officials said the company could acquire stake in an operational mine or could strike a long term offtake contract.

Roy Chowdhury made it clear that whatever deal NTPC struck, it would not be supplies above 10% of its requirement. NTPC’s current coal requirement was 160 million tonnes (mt) which would go up to 240 mt by the end of the 12th Plan period. Supplies of coal should match its requirement and any deal struck would have to be framed accordingly.

CPSUs may get to buy assets abroad without Cabinet nod

The Central public sector undertakings (CPSUs) will soon be allowed to acquire natural assets like oil, coal and mines abroad without prior Cabinet nod. According to sources, the Department of Public Enterprises (DPE) will be moving a Cabinet note suggesting that an empowered committee headed by Cabinet Secretary could clear these projects.

This is expected to help the CPSUs to compete with private firms who are also eying raw material assets overseas to cut costs.

The move would also help fight competition from Chinese firms. These deals need to be struck at short notice in a highly competitive environment.

The idea is that the empowered committee clears the CPSE proposals for buying natural assets abroad within three weeks. Currently, the approvals through the Cabinet/CCEA route takes up to six months. The empowered committee will also comprise secretaries of the administrative ministry (in charge) of PSU, the Chairman and Managing Director of the firm and representatives from ministries of external affairs, law and finance.

World’s largest coal producer Coal India who is currently is in talks with the US-based Peabody Energy and Massey Energy for stakes in the mines owned by these companies seems to be the early beneficiary if the proposal gets approved soon.

Even state-run steel major Steel Authority of India (SAIL) along with NTPC, Coal India, Rashtriya Ispat Nigam is scouting for coal mines in abroad independently as well as through International Coal Ventures (ICVL).

Rel Power’s Tilaiya UMPP to generate over R2k cr in carbon credits

Reliance Power’s 3,960 mw Tilaiya ultra mega power project in Jharkhand has bagged entitlement for carbon credit benefits under the UNFCC’s clean development mechanism programme, in a move that should help it generate additional revenue of over R2,000 crore over the initial ten years of its operations.

The project, which is to be based on supercritical equipment, will start generation from the year 2015. It will generate 21.3 million certified emission reduction (CER) certificates, which can be sold in the market. Reliance Power’s Sasan and Krishnaptnam UMPPs are already registered with the UN agency for similar carbon credit benefits.

Tilaiya is a pit-head power project with two captive coal mine blocks — Kerandari ‘B’ and ‘C’ — that have estimated reserves of almost 1.3 billion tonnes. The mining plan approved for the project envisages production of almost 40 million tonne of coal a year.

On completion, the Tilaiya UMPP will become India’s largest integrated power plant. Power generated form the proposed will be supplied to ten states of northern and eastern India at a levelised tariff of R1.77 a unit. The developer plans to finance the integrated power project, which is estimated to cost R24,000 crore, in the debt and equity ratio of 75 and 25. It expects to achieve financial closure for the project soon.

Cabinet approves new Mining Bill

The Union Cabinet on Friday approved the Mines & Mineral Development and Regulation Bill that calls upon the miners to share profits and royalty with the locals.Coal mining companies have to share 26% of their profit with the local population, according to the new Mining Bill.

Coal mining companies have to share 26% of their profit with the local population, according to the new Mining Bill.

Non-coal mining companies would have to share an amount that is equivalent to 100% of the royalty outgo. The New Mining Bill is expected to be introduced in the next session of Parliament, according to reports. The original plan was to impose a 25% levy on all mining activity. But, that plan was dropped by a Group of Ministers (GoM) headed by Finance Minister Pranab Mukherjee. The new Mining Bill is likely to badly affect the operations and finances of public sector giant Coal India Ltd. The funds raised from the mining companies are proposed to be spent across 60 tribal-dominated districts in Jharkhand, Chhattisgarh, Orissa, Madhya Pradesh and Karnataka. Each district in these mining rich states is likely to get Rs. 1.8bn on an average every year

CIL expects to revise regulated coal price in 3 months

Coal India (CIL) today said it expects to review the price of regulated coal meant for core industries in the next three months.

"Within the next three months we will be able to get indications of the wage hike impact on us and then we will look into price of regulated coal price," CIL chairman NC Jha said here today at the AGM of Indian Coal Merchants' Association.

Regulated coal for the core sector accounts for almost 77% of total coal offtake for CIL. The world's largest miner will take up coal price for all grades except A and B.

In February, the price of grade A and B coal was hiked by 150% and some other grades for non-regulated consumers.

Jha said coal price for the regulated sector was not touched for the last two years.

Reacting to the Cabinet approval for 26% profit sharing for mining, Jha said, "If it is a government decision then we will have to implement it."

NTPC pays Rs 2,647 cr dividend to govt

State-owned power generator NTPC has paid a total dividend of Rs 2,647.60 crore to the government for the financial year 2010-11.

NTPC Chairman and Managing Director Arup Roy Choudhury today presented a final dividend cheque of Rs 557.39 crore to Power Minister Sushil Kumar Shinde here.

It had given an interim dividend of Rs 2,090.21 crore in February.

"NTPC has made a total dividend payment of Rs 2,647.60 crore to the Government of India for the financial year 2010-11," the company said in a statement.

The power generator has paid dividend to the government for 18 consecutive years.

According to the statement, the company has paid a total dividend of 38 per cent of its paid-up capital for financial year 2010-11, amounting to Rs 3,133.27 crore.

NTPC has an installed capacity of 34,854 MW.

Shareholders approved a final dividend of eight per cent, amounting to Rs 659.64 crore during their annual general meeting on September 20.

Reliance Power set for $2.2 bn loans from US, China banks

Anil Ambani group firm Reliance Power today said it has received Reserve Bank of India's (RBI) approval for raising USD 2.2 billion from the US and Chinese banks, for the 3,960 MW-Sasan power project in Madhya Pradesh.

Of the total amount of funds, USD 1.1 billion would be extended by Chinese banks, including Bank of China, China Development Bank and Export Import Bank of China, Reliance Power said in a statement.

"The funding from Chinese banks represents the first-ever project financing done by Chinese banks," it added.

The Export Import Bank of United States has also approved funding of USD 917 million for the Sasan Ultra Mega Power Project (UMPP).

"We are delighted that these prestigious financial institutions in the US and China have the confidence in our power generation business and are willing to provide long-term loans to us even in challenging global conditions," Reliance Power CEO J P Chalasani said.

"It reduces our cost of debt and widens our source of funding for the Sasan project," he noted.

Sasan Power Ltd, a fully-owned subsidiary of Reliance Power, is executing the project.

Apart from USD 2.2 billion, Sasan project has also received USD 150 million funding from other sources, the statement said.

The first unit of Sasan power project is expected to be commissioned by January 2013.