Lack of financing for new power projects a big concern: KPMG

The absence of funds for new power projects is an area of big concern and should be dealt
with seriously, according to a report. "A big concern today is a lack  of financing available for new projects. The 13th plan (2017-22) requires Rs  1.27 lakh crore of private sector equity and the project pipeline looks weak,  and if we don't correct the situation immediately, we will be back into a cycle  of high deficits,"  consultancy firm KPMG  said in a report.
There is a strong imperative to bring in strategic and financial investors, it  said. The lack of funds and the poor pipeline are due to the current  stalemate on various projects. Power projects face delays in land acquisition  and environmental approvals and issues related to allocation of coal and passing
on costs of importing the fuel.
"Over 33,000 MW of projects are  operating below 60 per cent plant load factor, mainly due to fuel issues,"  according to the report "This could pose a risk to over Rs 1 lakh crore of bank loans, which could turn  into NPAs  (non-performing assets)."
Delays in environment and forest approvals  are taking a huge toll on projects. Clearances are pending for about 1,03,000 MW  of power projects and 726 million tons per annum of mining capacity, it said. 
Each day of delay for 100 million tons per annum of coal production costs the  nation Rs 42 crore and USD 17 million in foreign exchange due to imports, according to  the report.  KPMG also said that there is need to rope in global  participation in underground coal mining, which is currently less than 10 per  cent of India's coal production.
"Bring in international participation  in underground mining and operational excellence initiatives in mining  companies," the report.Underground mining needs to be given a fillip as it is needed for long-term coal  security, it said. 

Power project delays put Rs 1 lakh cr of loans at risk: KPMG

Delays in implementing power projects, mainly due to fuel issues, could turn Rs 1  lakh crore of bank loans into NPAs  if prompt action is not taken, according to a study by KPMG.
"Lack of  financing and a poor pipeline is due to the current stalemate on various  projects. Over 33 GW of projects are operating below 60 per cent plant load factor, mainly due to fuel issues. This could pose a risk to over Rs 1 lakh  crore worth bank loans which could turn into NPAs (non-performing assets) if we don't take action quickly," KPMG said.
According to the  consultancy firm, 33 GW of capacity in an advanced stage of readiness is either
tied up or under negotiation for supply based on competitive bidding.The power sector is heavily indebted and has one of the largest exposures from  banks. Their loans to private power companies stood at Rs 1.57 lakh crore as of  FY13, compared with Rs 30,251 crore in FY09, according to KPMG.
That apart, the exposure of banks to state-run distribution companies in the  form of short-term loans stands at Rs 1.9 lakh crore. "For projects  which have entered into PPAs (power purchase agreements) under existing  competitive bidding guidelines, government should allow import of coal for the  quantity equivalent to shortfall in domestic coal supply as per the signed fuel  supply agreements (FSAs).

"These projects may turn into non-performing assets because of non-availability  of fuel," KPMG said. The consultancy firm observed that quick  implementation of government decisions is necessary. "The government  should formulate a guideline on how the decision in respect of select projects  can be implemented quickly. A speedy implementation of this decision will go a  long way in reviving sentiment and the investment cycle," the report said.

KPMG has suggested that Coal India could issue a certificate for the shortfall  quantity and the cost of imported coal procured against this approved quantum  can be made a pass through by the regulator based on the guideline.

Maharashtra govt gives nod to Mundra UMPP rate revision with riders

Maharashtra government today approved an application from Tata Power's 4,000 MW  ultra mega power project (UMPP) at Mundra seeking tariff revision, as  recommended by the Deepak  Parekh panel, but with some riders. The decision was taken at a  Cabinet meeting here, official sources said.
Maharashtra's power  distribution arm MahaVitaran has tied up for getting 800 MW from the coal-fired  UMPP in Gujarat. But the state is currently getting 80 per cent of this and  wants the company to ensure it gets the entire quota.
One of the riders says  once the price of imported coal (used in UMPP) falls, the tariff should be
revised downwards accordingly. Another caveat calls for an undertaking from the  private firm to reduce its return on equity or RoE (a measure of company  profitability) as far as possible, they said.
If the revision  materialises, the power tariff may increase by 59 paise per unit for  MahaVitaran. But according to a state discom official, they expect the effective increase to be 35-45 paise a unit. 
The state government has accepted recommendations of the panel, headed  by HDFC Chairman Deepak Parekh, which had called for a hike in tariff for power  supplied by Coastal Gujarat Power, an arm of Tata Power that runs Mundra UMPP.
Central  Electricity Regulatory Commission (CERC), in April this year, had allowed Tata  Power to pass on to consumers high cost of coal imported from Indonesia for the Mundra unit, which supplies power to five states. The regulator had asked all states which receive power from the project to file an
affidavit in this regard.
According to the MahaVitaran affidavit, Tata  Power should pass on the benefit of any reduction in Indonesian coal prices and  also reduce the RoE as far as possible. It called on financial institutions,
which have funded the project, to reduce their interest rates.  It said even after the entire exercise, if the tariff is unviable, the state  will have the option of cancelling the purchase pact without giving any
compensation.  Punjab and Haryana, receiving power from Mundra UMPP,  have opposed the CERC nod to hike in tariff and have moved the court against the  decision.

Pilot plant to mitigate CO2 at NTPC Faridabad

NTPC have set up pilot plant for Bio-fixation of CO2  from the flue gas through micro algae at NTPC Faridabad. Two conjoining algae ponds of area have been constructed to draw CO2 from stacks at the project. The  inoculation in small pond was done earlier in the month and in bigger pond today
to generate micro algae much ahead of the targeted date of Jan'2014.
This project is part of NTPC's plan to meet environment challenges of 21st cent .and beyond where the company plans to adopt latest environment practices and  protection systems to minimize the impact of power generation on environment.  CO2 is a major green house gas contributing to more than 50% to the total  predicted warming of the earth's atmosphere. NTPC is pursuing the  objective of environment protection as one of its prime responsibilities and  focuses its efforts to mitigate the impact of its operations on surroundings.  Around 12-15 % of the project cost is spent on various environment protection  equipment's.
IOCL (R&D Unit) and NTPC signed an MOU in February 2010  for research in this field with the setting up of algae ponds at NTPC gas  project in Faridabad.Technical support for the project has been  provided by IOCL (R&D Unit) Faridabad and NTPC scientists from NETRA.

NTPC starts using inland waterways to transport coal

The National Thermal Power Corporation Ltd (NTPC) has started transporting imported coal to its Farakka power station in West Bengal using the cost-effective inland waterways mode.

Official sources said this method would help the company save nearly 15-20 per cent of the transportation cost through land. 

The very first consignment of 69,060 tonnes of coal for Farakka arrived at Sandheads, the transhipment point in the Bay of Bengal, on October 15.

NTPC has entered into a tripartite agreement with the Inland Waterways Authority of India and Jindal ITF, the operator. The latter is tasked with unloading and transporting the dry fuel from the high seas to the plant, it is learnt.

As per the agreement, 3 million tonnes of coal would be moved to the Farakka plant through inland waterways over the next seven years.

Kolkata Port Trust has approved a wharfage charge on coal for the period. Jindal ITF has procured 19 barges of 2,000 tonnes capacity for the job. A conveyor belt moves the coal from the jetty to the stockyard.

After Farakka, NTPC plans to have a similar mechanism for its upcoming power plant at Barh in Bihar, where it is commissioning the first 660 MW unit this fiscal. The entire project, with capacity of 3,300 MW, would require 16 million tonnes of coal a year.

The imported coal would most likely be sourced from Indonesia and the entire process likely to cost Rs 1,200 crore, sources said.

PSUs need more autonomy, freedom from bureaucratic control: PM

Pitching for public sector enterprises being made more competitive, Prime Minister Manmohan Singh today said the state-run companies need to be given greater functional autonomy, be freed from bureaucratic control and not shielded from private sector competition.

"Going forward, our governments will have to increasingly adopt competition-neutral policies... Competitive neutrality requires that the government not use its legislative and fiscal powers to give undue advantage to its own businesses over the private sector," Singh said.

Speaking at the BRICS International Competition Conference here,  Singh said "solution lies in giving public sector firms greater functional autonomy and freeing them from bureaucratic control and not in tolerating a slip in their competitiveness and then shielding them from competition".

Addressing the anti-trust regulatory authority officials from the five countries forming BRICS block -- Brazil, Russia, India, China and South Africa -- Singh said that a competitive public procurement market can make bid rigging more difficult.

Stating that the state-owned companies or PSEs (Public Sector Enterprises) may have long enjoyed captive markets, he said the government's ownership in such entities does not mean that these enterprises should be shielded from competition.

"There is an increasing need to recognise the complimentarities between competition law enforcement and liberalisation of markets for procurement," Singh said.

Emphasising that public procurement forms a substantial slice of state spending, the Prime Minister said competitive procurement markets can help save valuable fiscal resources.

The Prime Minister said the crucial issue is exposure of public sector companies to competition."The government may own a public sector firm and exercise the normal rights for ownership.

This does not mean it should shelter the firm from competition as well," Singh said.

Issues in the coal sector are beyond allocation and auction

The coal situation in India reminds me of the famous line, "Water, water, everywhere, but not a drop to drink!" India, with estimated coal reserves of 280 billion tonnes, is said to be the fifth-largest in terms of reserves. Of this, 110 billion tonnes are "proven" reserves. At our current rate of production, just the proven reserves are enough to carry on for more than 100 years. But even then, our coal production falls short of actual requirements and India needs to import coal.

So, we have 280 billion tonnes of coal reserves, but inadequate availability! With demand for electricity greater than supply, the Indian economy is on the verge of a power crisis. A principal reason for this is inadequate availability of coal. Coal, as a fuel, accounts for almost 59% of India's total power generation (132 GW of a total 226 GW of electricity output is from coal). Coal is also an input for a large number of other industries, like iron and steel, cement, fertiliser and so on.

In 2012-13, total domestic demand for coal was 773 million tonnes while production was 569 million tonnes. The deficit was largely met by imports and almost $16 billion worth of coal was imported from Indonesia, Australia and South Africa. This has been happening every year and such imports are aggravating the current account deficit, one of the reasons why the rupee has been depreciating against the dollar.

Coal is primarily mined and controlled by Coal India ( CILBSE 0.64 %), but the current level of mechanisation at the public sector behemoth is inadequate, compromising the productivity and efficiency levels and resulting in shortage of coal. Thus, the scarcity is absolutely artificial. It is difficult to take a call on which route for assigning coal blocks is better: allotment or auction. The government of India had allotted coal blocks on a project-specific basis, but little support was extended to them in terms of enabling them to start mining.

 

Not being able to start mining effectively leads to cancellation of allotment. On the other hand, it has been argued that coal being a finite, nonrenewable natural resource, auction is a better option. But auction of a key raw material like coal is bound to have an inflationary impact across the board, be it agriculture, industry or service sectors. So, allocation of coal blocks must be dealt with in an intelligent manner, keeping in mind in mind the interest of the general public.

 

Today, lack of state-of-the-art technology prevents prospecting of the quality of coal before allocation or auction of coal blocks. Until the right industry has the right quality of coal at its disposal, it makes little sense whether they get a coal block via an auction or allocation. The ash content in coal determines its suitability in various industries.

For example, steel needs coking coal that has minimum ash content, whereas for power production, coal with high ash content is good enough. Coal produced in India is primarily non-coking type and has high ash content, in the range of 25-35%. Thus, India has enough domestic reserves to meet its power sector demand for centuries, but will need to rely on import of coking coal for steel plants.

The government should usher in state-of-the-art technology in the mining processes through the publicprivate partnership route. The involvement of the private sector, especially international mining players with a proven track record, will bring in fresh investments and technology and expose this sector to globallyaccepted best practices. The private sector expertise needs to be leveraged to bring in higher efficiency and productivity and enabling production of this critical natural resource in in a cost-effective manner.

 

We should create a national data bank of coal blocks and the quality of coal available there. Based on that data bank, mapping should be undertaken to provide coal linkages to the entities so that they are able to source coal from the nearest possible block. This would also ensure that costs in terms of logistics remain low. Move away from both allocation and auction of coal blocks and, instead, embrace a policy of providing coal linkage on a case-to-case basis. For the power sector, priority should be accorded to projects that have already achieved financial closure.

Plan to outsource production at CIL mines may be delayed

The Government’s plan to outsource production at Coal India Ltd (CIL)’s mines to private developers through tenders may be delayed with the state-run miner resisting the Planning Commission proposal.

 

Under the proposal, CIL, the country’s monopoly coal miner, would be required to offer ready-to-operate mines to “developers and operators” (MDOs) on 25-year contracts.

 

Sources say the company has opposed certain clauses in the proposal, saying it, in the current form, is tilted in favour of the contractor.

 

The government had been keen on awarding the first set of MDO contracts before March 31, 2014. Seven blocks (five opencast and two underground) were short-listed for the purpose.

 

amendments

 

Faced with opposition from CIL, the Plan panel, at its last meeting on November 15 (a day after Business Line put out a report “Outsourcing model may undermine CIL”), agreed to make changes to the model concession agreement it had designed for the miner at its behest.

 

CIL wanted to rope in private parties to speed up land acquisition and for getting various clearances.

 

While the Plan panel has already decided to drop the clauses on mining charges, it is still to address in full CIL’s wishlist.

 

To safeguard its commercial interests, CIL had wanted the force-majeure and contract termination clauses, which it said were heavily tilted in favour of the contractor, diluted.

 

The company also wants the contractors to share the legal and financial burden of securing regulatory clearances (mainly forest and environment) and land acquisition that together form the biggest hurdle to coal production.

 

“The next meeting on the concession agreement is scheduled for November 29. However, considering the complications involved, we anticipate many more rounds of discussions. Also, unless it is a win-win for Coal India and the contract miner, the plan may be spiked by the boards of CIL and its mining subsidiaries,” a company official told Business Line, requesting anonymity.

 

“Under these circumstances, there is little possibility of awarding such contracts this fiscal,” he added.

NTPC seeks Sebi nod to issue tax-free bonds

Power producer NTPC has sought market regulator Sebi’s approval to raise up to R1,750 crore through tax-free bonds in the current financial year. “Public issue by NTPC of tax-free secured redeemable non-convertible bonds of face value of R1,000 each in the nature of debentures having tax benefits... for an amount aggregating up to R1,000 crore with an option to retain oversubscription up to R750 crore for issuance of additional bonds aggregating to a total of up to R1,750 crore in fiscal 2014”, says the draft prospectus filed with Sebi.

 

REC to boost loan to $300 m from $250 m Rural Electrification Corp (REC), the state-owned lender to electricity companies, plans to increase its five-year dollar-denominated loan facility to $300 million, according to a person familiar with matter. The company plans to close syndication on November 22 and is offering a margin of 150 bps more than the Libor.

 

SKS Microfin classified as NBFC-MFI

SKS Microfinance has informed the BSE that the RBI, based on the company's application dated January 31, has classified it as a Non Banking Financial Company-Micro Finance Institution (NBFC-MFI) (non-deposit taking). Earlier it was regarded as a Non-Banking Financial Company (non-deposit taking) Systematically Important (NBFC-ND-SI).

 

Power ministry seeks gas for Dabhol

The Dabhol power plant, the Centre's most prestigious business rescue mission, has been languishing for almost nine months now. But it took ICICI Bank MD Chanda Kochhar's warning to shake the power and oil ministries out of their stupor.

 

As TOI first reported on October 7, Kochhar wrote to power minister Jyotiraditya Scindia to warn that Rs 8,500-crore loan to the Dabhol project could turn sour for lenders as the plant was running at merely 3% of its capacity and unable to pay installments.

 

After Kochhar's letter, the power ministry asked the oil ministry to give the Dabhol project top priority at par with fertilizer sector and allot gas from new sources available in 2013-14. The power ministry has sought more than a million cubic metres a day (mcmd).

Moily hopes India will be energy self-sufficient by 2030

Achieving energy self-sufficiency is an important step towards securing true “economic freedom”, Union Minister of Petroleum and Natural Gas M Veerappa Moily said.

 

After inaugurating the group gathering station of the Assam renewal project of Oil and Natural Gas Corp (ONGC) recently, the minister lauded the efforts of ONGC, Oil India Ltd and other public sector energy companies in helping India head towards energy self-sufficiency.

 

He hoped that India will become an energy self-sufficient country by 2030. At present, the country is importing more than 70 per cent of its energy requirements.

 

S. Vasudeva, ONGC Chairman and Managing Director, said this was the first of many projects planned by ONGC in an ambitious plan to revamp and modernise the company’s infrastructure.

 

P.V. Krishna Reddy, Managing Director, Megha Engineering and Infrastructure Ltd (MEIL), highlighted its features such as advanced flare system, high pressure gas lift system and the control system installed in this project.

Maharashtra gives Tata Power conditional nod for tariff hike

The Maharashtra cabinet has approved state power distribution utility Mahavitaran’s proposal to allow Tata Power Co. Ltd’s 4,000MW (megawatt) power project in Mundra, Gujarat to raise tariffs, but with a set of tough riders.

 

Tata Power can raise the tariff for electricity generated from its ultra-mega power project (UMPP) in Mundra provided it maintains return on equity at a minimum level, and factors in its stake in Indonesian mines while deciding compensatory tariff, Mahavitaran said in a statement on Wednesday.

Mahavitaran also wants any electricity generated “above normative capacity to be made available to it without capacity charges”. Besides, the state utility said it should have the right to walk out of its power purchase agreement (PPA) with Tata Power—“without paying any damages”—if it finds the compensatory tariff unviable.

 

Normally, 80% of a power plant’s generation capacity is considered to be its normative capacity, which means if a plant’s capacity is 100 MW then throughout the year it should produce at least 80 MW of power daily. A Tata Power spokesperson declined to comment on the development as the Central Electricity Regulatory Commission (CERC) is hearing the company’s petition to be allowed to charge a higher tariff for electricity generated from its Mundra UMPP. Analysts say Mahavitaran’s conditional approval is tantamount to saying “No” to the tariff hike.

 

“I don’t think the conditions put forward by Mahavitaran will stand legal scrutiny. They seem to be an emotional response to the legal issue and a nice way to say no,” said Arijit Maitra, counsel for Probiyon Power, a regulatory advisory firm.

“CERC has no jurisdiction over financial institutions. It can’t order financial institution to lower their interest rate,” he added, talking about the lenders. Mahavitaran’s PPA clause, too, drew criticism. “Since the PPA signed between all the parties is a long-term agreement, Mahavitaran can’t insert a condition like walking out of the PPA at any point of time,” said a partner and leader of energy practice at a consultancy firm, declining to be identified. The Mundra project ran into trouble after Indonesia linked prices of coal exported from that country to spot prices in the international market in September 2011. This made the long-term contract signed by Tata Power null and void.

 

The company took a hit of Rs.2,450 crore due to impairment charges (after assets were revalued) due to losses at the Mundra UMPP.

 

All these factors made it ask to be allowed to raise its tariff. Power tariff comprises fixed charges or capacity charges and variable charges. Fixed charges include cost of plant, wages and interest costs, among others, while variable cost is mainly fuel expenses.

 

After all distribution utilities refused Tata Power’s proposal for a tariff hike, the company filed a petition with CERC demanding a tariff hike.

 

In April, while accepting Tata Power’s demand for a compensatory tariff in principle, CERC appointed a committee under the chairmanship of Housing Development Finance Corp. Ltd’s chairman Deepak Parekh to suggest a formula for deciding a compensatory tariff.

 

Punjab rejected any move to increase tariffs and Rajasthan expressed its reservations, while Gujarat informed CERC about its conditional consent for a tariff hike.

 

The Parkeh committee submitted its report in September suggesting a tariff hike of 59 paisa per unit.

SC ruling to raise CNG & PNG prices in Mumbai by 20-25%; Delhi unaffected

Consumers using natural gas to cook food and run automobiles will now have to pay less than before, especially in Gujarat and Uttar Pradesh, with the oil ministry issuing a directive on Supreme Court's instructions to distribute cheaper domestic gas to all cities equitably. The move will, however, adversely affect consumers in Maharashtra as their allocation of cheaper gas will come down.

 

The Supreme Court had rejected the ministry's plea to overturn Gujarat High Court's ruling that directed the Congress-led coalition at the Centre to stop discrimination against opposition-ruled states, particularly Gujarat. City gas distribution agencies in the BJP-ruled Gujarat had approached the high court alleging that the central government was supplying cheaper domestic gas to distributors of Delhi and Maharashtra while they were forced to import five times costlier liquefied natural gas (LNG) to serve their customers, government and industry officials said.

 

"The oil ministry has already issued an order to supply domestic gas to all city gas distribution agencies equitably. A distribution agency in any city will get domestic gas to meet about 80% of its requirement at a uniform base price," said an oil ministry official, who did not wish to be named.

 

Gas distribution agencies will have to meet the balance requirement through imported LNG. Most of the domestic gas is sold at $4.20 per unit while imported gas costs about $20 per unit in the spot market, the official said.

 

Industry experts estimate that the move will lead to a rise in prices of compressed natural gas (CNG) and piped natural gas ( PNG) by about 20-25% in Mumbai and Pune. But it will help Gujarat-based agencies such as GSPC Gas, Gujarat Gas, Adani Gas, Sabarmati Gas and Charotar Gas to slash fuel prices by 15-20%.

 

Mahanagar Gas, which supplies gas in Mumbai, meets almost its entire demand from domestic resources. "With new gas distribution guidelines coming in place, we are expected to lose 20-25% of our cheaper gas, which will have to be replaced by expensive imported gas," said Mahanagar Gas MD VC Chittoda. Consumers around Delhi will remain largely unaffected because their local agency, Indraprastha Gas, already imports slightly more than 20% gas to meet  the demand, experts said.

 

"The impact on IGLBSE -0.04 % can be worked out only once the quantity of domestic gas allocated and the applicable rates are made available," an IGL spokesman said.

 

Dhrangadhra Prakruti Mandal and Gujarat Rajya Autorickshaw Federation had initiated the legal battle against the discrimination separately in 2011. Both had demanded an equal share of cheap domestic gas, which was predominantly supplied to Delhi and Mumbai.

Govt orders sale of gas at uniform price to city CNG projects

After a rap from the Gujarat high court, the government has decided to allot natural gas at a uniform price to retailers of the fuel in different cities.

 

Presently, cheaper domestically produced gas is mostly allocated to firms in Delhi and Mumbai for sale to automobiles and households, while costlier, imported gas is sold to such suppliers in other cities.

Compressed natural gas (CNG) is used by automobiles and piped natural gas (PNG) is supplied as a cooking fuel.

 

The Gujarat high court had on 25 July last year ordered that gas be made available for city gas distribution (CGD) projects in Ahmedabad at the same rate as in Delhi and Mumbai. The Supreme Court upheld the order on 30 September but it was not implemented.

 

The Gujarat high court last week ordered the oil secretary to appear before it if the order was not complied with by 18 November. The oil ministry on 14 November issued guidelines for “allocation/supply of domestic natural gas to CGD entities” for sale to automobiles and households. It allocated 6.4 million standard cubic meters per day (mmscmd) of domestically produced gas, which is currently sold at $4.2 per million British thermal units, to meet almost 80% of the requirement of CNG and PNG in all cities.

Allocation to cities is to be made in proportion to demand, the order said, adding that presently, 8.02 mmscmd of gas is consumed by city gas projects.

 

State-owned gas transportation and marketing monopoly GAIL India Ltd has been asked to ensure “uniformity in supply of domestic gas across all CGDs for CNG and PNG segments without discrimination among CGD entities, subject to operational imperatives,” the order said. This would mean that some of the cheaper domestic gas meant for CGD entities in Delhi and Mumbai will be diverted to other cities such as Ahmedabad. Any supply shortfall will be met from imported liquefied natural gas (LNG), which costs almost three times more than domestically produced gas.

 

“The consumption figures of CNG and PNG for the purpose of proportionate distribution of domestic gas to CGD entities shall be periodically (annually) reviewed by GAIL.” “In case of increase in demand (including that arising from new CGD entities) for CNG and PNG, GAIL would ensure to distribute the available quantity of domestic gas for CNG and PNG in proportion to the demand, without discrimination among CGDs,” the order said.

 

Of the 6.4 mmscmd allocated for CGD projects, 5.93 mmscmd would come from fields operated by state-owned Oil and Natural Gas Corp (ONGC) and the remainder from the BG-operated Panna/Mukta and Tapti fields off the west coast.

PowerGrid’s share sale likely to open on Dec 3

State-run Power Grid Corp’s sale of shares, valued at about $1.2 billion, is likely to open on December 3, three sources with direct knowledge of the matter said on Tuesday. The share sale is part of the government's drive to revive the divestment programme.

 

The Power Grid offering, which was approved by the Cabinet earlier this month, includes fresh issue of company shares and the government's divestment of a 4% stake.

 

The government's planned sale of stakes in Power Grid and other state companies including miner Coal India is critical to relieving pressure on public finances that could put the country's investment-grade credit rating at risk.

 

India has targeted raising $6.4 billion from selling stakes in state companies in the fiscal year ending March 2014, but has so far managed about $230 million, as ministries squabble over the timing of the issues and the rupee's fall against the dollar.

 

The Power Grid issue is likely to remain open for investors to bid until December 6, said the sources, who declined to be named as they were not authorised to speak to the media before a public announcement.

A Power Grid official said the issue was likely to be launched in December but he was not aware of the launch date. Ravi Mathur, secretary at the department of disinvestment, was not immediately available to comment.

 

Shares of Power Grid were trading down 1.3% at R95.10 on Tuesday. At the current market price the sale of 787 million shares, of which 185 million will be sold by the government, will raise about $1.2 billion. Power Grid said on Monday that it had filed for the follow-on offering with the market regulators.

 

BHEL bags Rs 1,300 cr NTPC contract

State-run BHEL today said it has bagged a Rs 1,300 crore order from NTPC for supplying equipment to the electricity generator's Unchahar plant in Uttar Pradesh besides installation work.

 

"BHEL has bagged main plant package contract for 500 MW thermal power plant of NTPC," the company said in a statement.

 

The Rs 1,300 crore order includes supply and installation of the main plant package for the upcoming 500 MW Feroze Gandhi Unchahar Thermal Power Project in UP.

 

The order has been received from NTPC BHEL Power Projects Private Limited (NBPPL), a joint venture between NTPC and BHEL, the statement said.

 

BHEL's scope of work in the contract envisages design, engineering, manufacture, supply and erection and commissioning of Steam Generator, Steam Turbine Generator and their auxiliaries.

 

It also includes Electrics and Switchyard with associated Civil Works along with Controls & Instrumentation (C&I).

 

On commissioning of the unit, 12 million units of electricity will be added to the grid, every day.

 

The key equipment for the project will be manufactured at BHEL's Trichy, Ranipet, Haridwar, Hyderabad, Bangalore and Bhopal Plants, while the company's Power Sector Northern Region will be responsible for erection and commissioning of the equipment.

 

BHEL has established the capability to deliver power plant equipment of 20,000 MW per annum.

 

Shares of BHEL were quoting at Rs 141.65, apiece in the afternoon trade on the BSE, up 1.29% from the previous close.

India will be leader in nuclear energy: CNR Rao

India will become a leader in nuclear energy with new technology which is being used for

the first time to build a fast breeder reactor to generate 500MW at Kalpakkam near Chennai, a

top scientist said Sunday.

"We are building a fast breeder reactor, the first of its kind to generate 500MW through a process which

is different from the usual nuclear reactor," Prime Minister's scientific advisory council chairman CNR Rao told IANS here. Rao, who was named Saturday for the country's highest civil award, the Bharat Ratna, for his outstanding contribution in science, said if the new technology succeeded, the reactor would be commissioned by April 2014 at the Kalpakkam atomic power plant, about 80km from Chennai in Tamil Nadu. "If this succeeds, we will become a leader in nuclear energy with completely new technology, which we have mastered," Rao said.

Claiming that Indian scientists had performed well despite marginal investment in science infrastructure, Rao said the scientific community had done much more than the money it was given over the decades.

"The best money the government gave scientists was only enough for 20 percent of their requirement. We have never made full investment in anything. Ask the government and politicians why they have given so little for us. If I have to get $1,000, I get only $10, which is 10 percent and comes late," Rao said at his home-office in the green campus of the premier Indian Institute of Science (IISc) in the city centre.

Noting that China was already doing peta-computing and hexa-computing, Rao said he was fighting with the government to invest in super computing so that at least a great institute like IISc would have a centre, which was proposed a decade ago.

"India is worst in computing power. We don't work hard like the Chinese. We are easy going because we are not nationalists. Every Chinese is proud of his country. How many Indians are proud to be so? Given a little chance, they run away to America. We too could have done that, but did not because we had pride

to be Indians and work for the country. This is the second negative part of Indian psyche," Rao

said. Regretting that the quantity of scientific papers published in India remained flat, the eminent

scientist said China had increased its scientific publications and was going to be number one in the world in the area next year.

"Though America is currently number one, publishing 16.5 percent of the world's scientific papers,

followed by China with 12 percent, China is set to over take next year, while India's contribution has not increased from 2-3 percent," Rao said.

 

Reliance Infra commissions transmission line in Maharashtra

Reliance Infrastructure has commissioned the transmission line connecting Pune and Parli in Maharashtra, as a part of the part of the Western Region System Strengthening Scheme (WRSSS) II project, the company said Monday.

 

The company, through its subsidiary Reliance PowerBSE 0.27 % Transmission, is setting up the 1,500 kms long WRSS project at a cost of about Rs 1,700 crore. The company bagged the project after tariff based international competitive bidding process and is setting up the transmission project under the Build-Own-Operate model. Under the project, the company is setting up six transmission lines in Maharashtra and three in Gujarat, of which one project remains to be completed in each state now.

 

"Despite the right of way (ROW) and other local challenges, our dedicated team could complete this critical line in time, which is instrumental for inter-connection of Western and Southern grid," Lalit Jalan, Chief Executive Officer was quoted as saying in a release.

 

"On completion, the project would enable evacuation of surplus power of about 4000 mw from the Eastern part of the country to the Western region," Jalan said.

 

The company said it is currently executing five transmission projects with a total outlay of Rs 6,600 crore.

NTPC scraps Rs 700-crore turbine order with Ansaldo

State-run NTPCBSE -0.39 % has terminated its Rs 700 crore contract with the Italian company Ansaldo for sourcing turbines for its gas-based plant at Dadri in Uttar Pradesh.

 

"NTPC has eliminated its previous contract with Ansaldo, a group company of Finmeccanica," sources said.

 

Finmeccanica is also the parent company of AgustaWestland, which is facing probe after bribery charges were levelled against it in the Rs 3,600-crore helicopter deal with India.

 

According to sources, the company wants to play safe and does not want to get into any controversy and therefore has decided to annul the contract.

 

The tender, which was floated under the company's R&M (renovation and modernisation) programme, was terminated after seeking legal opinion.

 

The bids were invited last year and Ansaldo emerged as the lowest bidder for the contract.

 

NTPC's Dadri plant is a Rs 960.35-crore gas-based power project that supplies electricity to Uttar Pradesh, Uttrakhand, Rajasthan, Delhi, Punjab, Haryana, Himachal Pradesh, Jammu & Kashmir and Chandigarh. The plant also supplies power to railways.

 

The company is also operating a 1,820 MW coal-based plant at the same location.

 

However, whether the company will issue a fresh tender for the same contract could not be ascertained.

 

Shares of NTPC were trading at Rs 155.35, up 1.77 per cent on the BSE.

Indo-Nepal cross border power transmission capacity to get augmented

Nepal with high hydropower potential and its neighbor India with high power demand have agreed to significantly boost up trans-border power transmission line to conduit the excess power from new hydro projects in West Nepal to India. A new World Bank loan sanctioned recently will facilitate early completion of the capacity augmentation project.

 

The planned immediate capacity augmentation is for at least 1000MW. In addition to the long planned Butwal in West Nepal to Gorakhpur in India line, There are simultaneous plans to construct three other cross-border transmission lines from Butwal-Gorakhpur, Duhabi-Purniya, Anarmani-Siliguri or Dhalkebar to Mujaffarpur.

 

After having the issue discussed with Indian authority through Nepal's External Affairs Ministry, both the countries have come to a final agreement on the matter in meeting of Energy Group under the South Asian Sub-Regional Cooperation.

 

With a recently granted World Bank loan of USD 37 million, Nepal and India will have at least two double circuit transmission corridors between Dhalkebar-Muzaffarpur and Hetuda-Dhalkebar-Duhabi. These will be of 90 and 40 km length respectively.

 

According to Nepal Minister for Science, Technology and Environment Mr. U. Jha, this augmentation of power import is must for Nepal especially in dry season. Hydropower rich, Nepal gets highly power starved during dry winter season due to low water flow through its rivers. Then it needs to import around 150MW power to meet even basic minimum need. But the present cross border transmission infrastructure gets only around 50MW to Nepal.

 

On the other side, more than five big hydropower projects with a collective capacity of around 20,000 MW are under feasibility study in West Nepal. Nepal cannot consume the output of those. If exported, the surplus power, generated out of these projects with renewable source to India, can get the financially crunched Nepal into a more comfortable situation.

 

Across the border, "Demand in Indian national grid is increasing rapidly. Rate of this demand growth in Eastern India is high. Proper power evacuation from Nepal can be of great help for India to meet up this extra demand," said Power Grid Corporation Limited officials.

Power gear companies raise alarm over surging Chinese imports

Indian power equipment makers say that the rapidly rising Chinese imports is a big security risk as Beijing can disrupt the Indian economy by withdrawing technical support to plants built with cheap imports.

 

Indian import of power equipment from China climbed to 45% in 2012-13 from 15% in 2005-06, according to the Indian Electrical and Electronics Manufacturers' Association (IEEMA), whose members have a combined annual turnover of over Rs 1,25,000 crore.

 

IEEMA plans to take up the issue with the Central government as it feels that the Indian power sector is leaning too heavily on China.

 

Slowdown in Indian power sector and import of aggressively priced Chinese equipment have compelled Indian manufacturers to operate at well below 70% of capacity utilisation, it estimated.

 

"We need to be cautious about banking on a single nation to such an extent. Intrusion at border is watched by Indian forces and intelligences, which are well equipped and trained to deal with it. But it has gone unnoticed in Indian power generation, transmission and distribution.

 

Chinese electrical equipment and their service centres may function in fair weather, but we want to draw attention of the policy makers what happens to this critical machinery in turbulent times when they withdraw support of spares and engineers and technology," the association's directorgeneral Sunil Misra told ET.

 

He said Chinese firms are in process of setting up service centres in India after some of the power producers have started experiencing hiccups in functioning of imported equipment. The Central Electricity Authority said in a recent report that operation of Chinese equipment needs more human intervention and is not as efficient as the gear supplied by BHEL. Adani Power, Reliance Power Lanco and Power Grid Corporation are some of the largest importers of  Chinese equipment in India.

Misra said he is not against foreign direct investments from China. "But we should not pay high cost for cheap equipment. China won't buy any critical product from India in such a huge quantity," said Misra, who spent three years in China during his stint with the Confederation of Indian Industries. "With the introduction of modern technologies such as smart grid, many things will be controlled by computers. This poses new set of challenges for security of critical systems. So should we not think how much we buy from where," he asked.

 

Misra said that hidden subsidies and cheap inputs have helped Chinese manufacturers dominate markets. "Like many other products, Chinese manufacturers have beaten even advanced countries in power equipment making. They are largely controlled by the government and they have a very different notion of cost and pricing strategies for their products. Indian players would have succeeded if they were given level playing field against the Chinese players, who are backed by hidden subsidies and cheap inputs," said Misra.

AP power utilities step up efforts to recover dues from Govt departments

Power utilities in Andhra Pradesh have stepped up efforts for recovery of dues from Government departments such as rural water supply, irrigation and civil bodies.

 

These departments account for heavy consumption and have also piled up heavy dues. The utilities plan to request the State Chief Secretary to hold a meting of these key departments to help in recovery of dues since the financial health of power sector will play a pivotal role in the overall economic development of the State.

 

According to a statement from the State Energy Coordination Cell, the State power utilities have appealed to all electricity consumers to pay monthly electricity bills promptly before the due date either at designated centres or through online payment mechanism. It mentioned that the timely payment helps power utilities ensure quality power supply and in effective implementation of various consumer welfare programmes.

 

IT initiatives

 

Reviewing the latest IT initiatives, Citizen Charter and various issues of power sector, Suresh Chanda, Chairman and Managing Director of AP Transco has requested net-savvy electricity consumers to avail the facility of paying electricity bills through online facilities without any extra transaction charges. He advised consumers to utilise various consumer services and grievance redressal mechanisms.

 

The CMD said the corporation was adopting comprehensive IT system for enhanced accountability. He advised high tension (HT) consumers to pay their electricity bills through Real Time Gross Settlement System.

 

The State has 2.57 crore electricity consumers including 32.68 lakh agriculture pump sets. These pump sets account for about 95 per cent of farmers getting free power.

 

He said efforts will be made to address grievances of consumers by conducting regular consumer meets and rythu sadassulu. The power utilities are striving hard to extend quality and adequate power to the extent possible to all categories of consumers even by additional power procurement.

 

The State power utilities have focused on adhering to the Citizen Charter issued to attend to the grievances such as billing discrepancies, replacement of stuck up/burnt meters and to release the new connections, transfer of ownership and conversion of categories in a time-bound manner.