Centre throws lifeline to stranded power plants, ropes in cash-rich PSUs like NTPC, Coal India

Paying heed to the Reserve Bank of India’s (RBI) advice to improve operational efficiency of companies whose loan accounts have gone sticky through induction of new owners or managers, the government has lined up a plan under which cash-rich public sector undertakings like NTPC, Coal India, Power Finance Corpn and Rural Electrification Corpn will buy equity stakes in stranded power plants.

The country added an average of 20,000 MW annually to its thermal power capacity over the last five years. But lower-than-projected growth in demand, fuel shortage and the inability of debt-laden power distribution companies to enter into new long-term power purchase agreements (PPAs) have left a sizeable portion of these new capacities stranded. According to an estimate, a total of 25,000 MW capacity — commissioned or under-construction — is lying idle for want of buyers or assured fuel supply agreements. Tenders for just 11,000 MW have been floated by the states since 2011 for new PPAs.

Dwelling on resolution of non-performing assets, the RBI had said: “Creative search for new management teams, including the possible use of public sector firms or private sector agents, is necessary, as are well-structured performance incentives such as bonuses for meeting cash flow/ profit benchmarks and stock options.”

“NITI Aayog and Power Ministry are currently in discussion to see if PSUs such as NTPC and PFC can take over small projects,” a senior government official said. As on March 31, 2016, NTPC’s reserves and surplus stood at Rs 80,536 crore, PFC’s 34,445 crore, REC’s 27,630 crore and Coal India Rs 27,581 crore. A senior NTPC official said that no official communication has been received by the company about the plan and he enumerated several possible problems with such buyouts. “If the banks convert their loan into equity and looks for a buyer then NTPC can step in but there are always doubts regarding possible over-invoicing in buying projects directly from the private companies,” the official said.

While private power plants are left high and dry, lack of buyers is not affecting NTPC much as it had signed PPAs a capacity of 37,000 MW between October 2011 and January 5, 2011. That was just before the central electricity regulator made it mandatory for states to adopt competitive bidding for signing PPAs. As of now, NTPC capacity pipeline would itself be able to meet new demand from states, analysts said.

NTPC has an aggregate capacity of around 24,000 MW under implementation including 10,000 MW of renewable capacity to be commissioned by 2019. This translates into a capex of about Rs 1.6 lakh crore. NTPC has also formulated a long-term corporate plan to become a 1,28,000 MW company by 2032, while its current capacity of over 47,000 MW. The government wants the Maharatna to use inorganic route as well to meet this target, rather than relying completely on greenfield projects.

“The power sector is going through a phase of consolidation. This presents an opportunity for PSUs also to use their balance sheet and acquire some stressed assets, possibly at a discount,” another government official said. He cited the instance of JSW, which recently bought non-PPA assets from JSPL at about Rs 4 crore/MW.

The stressed assets (gross NPA and restructured loans) of public sector banks rose from Rs 7.46 lakh crore (14.62% of gross advances) as on March 2016 to Rs 7.83 lakh crore (15.74%) as on June 2016. The sectors that have high incidence of NPAs include power and roads. It is estimated that loans of about Rs 1 lakh crore to the power generation firms are under stress.

NTPC Group targets 50,000 MW installed capacity by March 2017

State-owned NTPC Group is gearing up to cross the milestone of over 50,000 MW installed power generation capacity by March-end 2017 with expected addition of over 4,630 MW.

“The NTPC Group, including its joint ventures and other subsidiaries, will have over 50,000 MW of installed power generation capacity by the end of this fiscal,” a senior power ministry official said. The NTPC Group has an installed power generation capacity of 47,228 MW, which includes 800 MW of hydro and 360 MW of solar energy.

“Even if there is some slippage in capacity addition, the NTPC Group as a whole will cross the milestone of 50,000 MW by March-end 2017,” the official said.

The company is expected to commission 550 MW of solar power project at Mandsaur, Ananthapuram and Badhla. Besides, thermal power generation capacities at Kudgi (1600 MW), Bogaigaon (250 MW), Mauda (660 MW), Solapur (660 MW), Nabinagar (250 MW JV) and Meja (660 MW JV) are in line for commissioning by March-end next year.

Various projects with an aggregate capacity of around 24,000 MW are under implementation at 23 locations across the country. This includes 4,050 MW being undertaken by joint ventures and subsidiary companies. Out of the total capacity under implementation, 1,329 MW is based on diversified sources of renewable energy.

The company is quickly moving towards its ambition of achieving a solar portfolio of 10 GW out of the 100 GW target of the government by 2022. Over 1,700 MW renewable energy projects of the company are under execution.

Tata, R-Infra asked to explore PPA options

Mumbai's peak power demand is expected to increase to 4,108 Mw in 2019-20, from 3,760 Mw now. Maharashtra Electricity Regulatory Commission (MERC) has, therefore, asked the two leading distribution companies, Tata Power and Reliance Infrastructure (R-Infra), to explore alternatives such as medium-term and long-term power purchase, through competitive bids, not continue to only tie-up with their respective group generation companies.

Tata Power’s distribution wing’s (Tata-D’s) agreement for power purchase from the group company's generating station at Trombay is ending in 2018. And, R-Infra D's agreement for power purchase from the group company's generating plant at Dahanu ends the same year. 

Tata Power has a consumer base of about 600,000. R-Infra distributes power to three million consumers in Greater Mumbai. MERC, in its rate revision order of last week, approved an average cut of 1.93 per cent for R-Infra and a 1.85 per cent rise, including regulatory asset charges, for Tata Power for 2016-17 in Mumbai. It has directed both distribution companies to approach it for approval of their future power procurement.

Tata-D said as the available transfer capability of the  transmission corridor was not sufficient to meet overall Mumbai peak demand, utilisation of embedded generation of the Mumbai system was essential to meet the overall Mumbai peak demand. Further, the company has cited several advantages of so tying up power, including reliability and islanding in case of a failure outside the Mumbai power system. Also, that additional charges on account of inter-state transmission and losses in such transmission would reduce the price competitiveness of any power bought from outside Maharashtra.

R-Infra D argued power purchase from the group company's Dahanu unit was beneficial, as this had a much lower fixed cost than newer plants. Also, technically unavoidable due to the islanding requirement of Mumbai. 

R-Infra D had signed a long-term power purchase agreement with another group company, Vidarbha Industries, for 600 Mw, approved by MERC.

PSUs to be roped in to manage stressed assets in power, steel and shipyards: Jaitley

The Centre seems to have zeroed in on a new solution to tackle the issue of stressed assets in power, steel and shipyards — all crucial infrastructure sectors.

It has now decided to allow, in some cases, banks to take over some stressed assets and hand these over to established public sector undertakings for an interim period. A management team of established PSUs in certain sectors will operate some of the plants and facilities of the stressed assets.

Briefing reporters after an over two-hour long meeting at North Block on Monday, Finance Minister Arun Jaitley said banks would invoke their contract, convert debt to equity and appoint a management team. “The concerned secretaries have been asked to coordinate with the banks. The measure will be taken immediately,” Jaitley said.

Today, one of the problems is when stressed assets are put out (for auction), there are no takers. “Now takers will be created,” Jaitley noted. Monday’s meeting was attended by officers of the Department of Financial Services, Department of Economic Affairs, and the Prime Minister’s Office as well as chairpersons of important banks.

Representatives of three departments — power, steel and shipping — also attended the meeting as well as Chairman and Managing Directors (CMDs) of three important PSUs: NTPC, SAIL and Cochin Shipyard.

Ashwani Kumar, Chairman and Managing Director, Dena Bank, said the meeting saw discussions around power, steel and shipyards. The extent of non-performing loans in power sector is estimated at about Rs. 4 lakh crore and about Rs. 3.5 lakh crore in steel.

Kumar said several possible solutions were discussed. “There cannot be one straitjacket answer to a stressed asset situation. Every asset has to be dealt differently,” he told BusinessLine .

The bankers present for the meeting included SBI Chairperson Arundhati Bhattacharya, ICICI Bank’s Managing Director & Chief Executive Officer Chanda Kochhar and Indian Banks Association (IBA) Chairman Rajeev Rishi.

Rishi is currently Chairman and Managing Director of Central Bank of India. Today, one of the problems is when stressed assets are put out (for auction), there are no takers. “Now takers will be created,” said Jaitley.

UDAY success to bring huge benefits for solar sector in India

The Ministry of Power’s Ujjwal DISCOM Assurance Yojana (UDAY), a financial and operational reform scheme for distribution companies (discoms), will bring several important benefits for the solar sector, solar sector research agency Bridge to India said in a report.

“First, offtake risk perception will come down and concerns related to non-payment of dues by discoms should disappear by next year in our view,” the report said. Second, availability and cost of private capital is expected to improve significantly with a cascading impact on competitiveness of solar power, it added.

“Finally, improving discom finances will address growing concerns around grid curtailment by improving demand for power (currently many discoms back down the grid rather than buying more power because they make losses on incremental sale of power to rural and residential consumers) and increasing investments in upgradation of transmission and distribution infrastructure,” Bridge to India said.

The report further said the Indian government has addressed two very critical challenges for the renewable sector. The solar parks policy has already addressed the issue of land acquisition to a large extent. Successful implementation of UDAY will help resolve the long-standing issue of DISCOM bankability and pave way for long-term growth of the sector.

The UDAY scheme aims to address debilitating financial health of most state power discoms leading to offtake concerns for private power generators and stress in the overall banking sector.

So far, 18 states including some of the most distressed states – Uttar Pradesh, Bihar, Rajasthan, Haryana, Punjab and Jammu & Kashmir – have signed up for the scheme with Tamil Nadu also expected to sign up shortly.

According to the Ministry of Power, UDAY has already addressed 62% of the Discom debt existing at the end of 2014-15. Preliminary data compiled by the Ministry of Power shows that bonds worth Rs 1.73 trillion ($26 billion) have already been issued by 11 states and the number is expected to increase as larger states such as Tamil Nadu and Maharashtra issue bonds. 13 states have filed for tariff review petitions in 2016-17 and most states have shown an improvement in distribution losses.

Difference between cost of supply and revenue per unit of electricity has reduced by more than half in some of the worst performing states – Haryana has reduced the deficit to Rs 0.23 per unit in March 2016 (Rs 0.65 per unit in FY15) and Uttar Pradesh reported a decline to Rs 0.41 per unit (Rs 1.17 per unit).

Essar Power resumes generation at Hazira plant

Essar Power on Tuesday said it has resumed operations at its 500 MW gas-based plant in Hazira, Gujarat.

The plant, owned and operated by its subsidiary Bhander Power Ltd, has benefited owing to falling gas prices and rising power demand from the captive customer Essar Steel.

“We were committed to restart the operations at the earliest opportunity and we have done it now,” said Nishith Dayal, CEO of Essar Power Hazira Ltd. “We expect input cost to remain stable and help us sustain our performance.’’The plant’s viability was impacted due to a surge in gas prices, which forced the company to suspend operations in 2014.

NTPC to set up floating solar plant

NTPC Kayamkulam will install a floating solar photovoltaic power plant of 100 kWp (kilowatt peak) on the premises of the thermal power plant there. The project has received approval and the work will start soon.

The plant will be set up at the lake adjacent to the Rajiv Gandhi Combined Cycle Power Project, operating on naphtha. The solar panels will be mounted on floaters. The company is in possession of over 1,100 acres of land at its project site, which includes waterbodies suitable for setting up a floating solar project.

The company had already commissioned a floating solar power project of 5 kWp on a trial basis and found it successful, company sources told The Hindu .

The company had set up a 10 kWp solar project a few months ago. Of this, 5 kWp project was set up on the land in order to have a comparative analysis. A solar rooftop power project of 84 kWp is already in operation. Another roof top solar project is on the anvil.

Floaters

The floaters, made of non-corrosive material, for fitting the solar panels, were developed by the NTPC Energy Technology Research Alliance (NETRA), the research wing of NTPC, in collaboration with the Central Institute of Plastics Engineering & Technology (CIPET). The panels were manufactured at Radiant Solar Company at Fabcity, Hyderabad.

Scientific studies have proved that floating solar panels generate higher output due to lower ambient temperature existing on the surface of the waterbody. This apart, evaporation of water from the lake will be minimal as the surface is covered by solar panels. The cost of the pilot project was around Rs.1 lakh per kWh.

Naphtha-driven

The NTPC thermal power plant of 359 MW is running on naphtha. The machinery at the plant has been modified to receive natural gas as an alternative fuel, but lack of gas connectivity and issues pertaining to pricing of liquefied natural gas have resulted in uncertainty over natural gas based power generation.

High cost of naphtha has led to higher cost in power generation. Successive State governments have not been keen on buying power at the offered rates. Consequently, the plant has been getting orders for power generation only for a few days annually.

Power projects of 24,000 Megawatt capacity facing viability issues

Thermal power projects currently under various stages of construction in the country are facing viability issues due to either weak sponsors and poor offtake by distribution companies or fuel issues, research and ratings agency CRISIL has said.

“CRISIL estimates around 24,000 Megawatt capacities are facing viability issues. Of these, 13,000 Mw capacities face commissioning risks because of weak sponsors, while the rest are reeling because of poor offtake by discoms or inadequate fuel arrangements,” CRISIL said in a statement today. It added around a third of the capacities with weak sponsors can be revived through debt restructuring or sale to a new sponsor.

The government has taken initiatives to increase coal production over the past year and the 5:25 refinancing scheme of the Reserve Bank of India (RBI) has reduced operational capacities at risk from 46,000 Mw estimated earlier to 40,000 Mw currently.

“While lack of fresh long-term PPAs continues to impact generation capacities, facilitation of medium-term PPAs and corresponding coal linkages, continued focus on augmenting domestic coal production, and facilitation of open access by states can help further reduce the capacities at risk,” said Sudip Sural, Senior Director at CRISIL.

The ratings body also said the aggregate gap, or loss of distribution companies (discoms) of 15 states that have joined the Ujwal Discom Assurance Yojna (UDAY) would more than halve to 28 paise per unit by fiscal 2019 compared to 64 paise last financial year (2015-16). Therefore, the aggregate losses of these discoms are seen declining 46 per cent to Rs 20,000 crore from Rs 37,000 crore earlier.

However, the gap will still be well above the ‘nil’ level envisaged under UDAY because some states with very high aggregated technical and commercial (AT&C) losses have lesser preparedness to reduce it because of inadequate feeder separation, feeder and distribution transformer metering, and poor track record of other efficiencies. Also, the ability to increase tariffs is restricted in some states because elections are due within 12 months, cross-subsidisation is high, and tariff orders are delayed.

The gap is calculated as the difference of average revenue realised (ARR) and the average cost of supply (CoS). “Rajasthan, Haryana, Chhattisgarh, and Uttarakhand are expected to fare better in the implementation of UDAY and are therefore likely to be the biggest beneficiaries. However, UP, Bihar and Jammu & Kashmir are expected to be the laggards. These three states would account for almost two-thirds of the gap in fiscal 2019. So concerted efforts by them will be critical to narrowing future gap,” said Gurpreet Chhatwal, Business Head - Large Corporates at CRISIL.

Energy requirements of discoms are expected to increase at a compound annual growth rate (CAGR) of 7 per cent by financial year 2018-19 as compared to around 4 per cent till 2015-16. However, this will not be a major respite to generation capacities that do not have long-term PPAs as fresh signing of PPAs seems unlikely. This is because 25,000 Mw of capacities with already-signed PPAs are expected to be operational by fiscal 2019 and there will also be some pick-up in plant load factors of existing capacities because of better fuel availability.

CRISIL said any uptick in long-term PPA signings is possible only if discoms turn profitable by fiscal 2019 and strive to meet the government’s ‘Power for all’ objective.

SC upholds NTPC's decision to reject Montecarlo coal mine bid

The Supreme Court has upheld a Delhi High Court verdict validating state-run NTPC Ltd's decision to reject techno-commercial bid of private firm Montecarlo for development and operation of Dulanga coal mining project.

"Where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the court should follow the principle of restraint.

"Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents relating to technical works and projects requiring special skills," a bench headed by Justice Dipak Misra said.

Rejecting Montecarlo's appeal against the high court judgement, the bench, also comprising Justice U U Lalit, said that tenders, dealing with auction of "public largesse", are on different footing and "bidder's expertise and technical capability and capacity must be assessed by the experts".

NTPC had rejected the bid of Montecarlo for the development and operation of its Dulanga coal mining project on the grounds that the firm was not meeting qualifying criteria on techno-commercial evaluation. Montecarlo went to the high court against decision of NTPC. The high court rejected the plea.

The apex court, dismissing the appeal of the firm, said, "Exercise of power of judicial review would be called for if the approach is arbitrary or malafide or procedure adopted is meant to favour one. The decision making process should clearly show that the said maladies are kept at bay. But where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the court should follow the principle of restraint."

CIL coal linkage likely for NTPC Pudimadaka power project

In a major boost to the 4000 MW NTPC thermal power project in Pudimadaka in Andhra Pradesh, the Union Power and Coal Minister Piyush Goyal has assured fuel linkage from CIL for the project.

This project was earlier proposed to be developed by using imported coal. This announcement comes following a review meeting of various power projects by Piyush Goyal and Union Information Minister M Venkaiah Naidu, according to a statement.

While reviewing the progress of other projects, the Government today said the Mannavaram Power Projects Equipment Manufacturing Plant will not be shifted and efforts would be made to ensure more business, the Power Minister assured.

Venkaiah Naidu convened a meeting with Goyal and Minister of Heavy Industries Anant Geete, and officials of NTPC, BHEL and NTPC BHEL Power Projects Ltd (NBPPL), coming up at Mannavaram in AP to review their progress.

A four member committee chaired by CMD of BHEL will explore and recommend measures for ensuring sufficient work orders for Mannavaram Project, including diversification. Piyush Goyal stated this project was poorly conceived and initiated in 2010 without adequate homework.

The Coal Ministry has also agreed to positively consider allocation of alternative coal blocks to AP Genco in place of Sarpal-Nupara block earlier allocated which is an high cost mining deep underground.

Tenders will be opened on Thursday (tomorrow) for commissioning another 125 MW of solar power generation at the 1,000 MW Kadiri Park in Ananthapur district. Already 250 MW of solar power is being generated here and for the remaining 625 MW, tenders will soon be called.

Regarding dwindling coal stocks of AP Genco due to stoppage of supply of coal from Singareni, it was decided Andhra Pradesh and Telangana will resolve the issue of pending payments.

CIL to start special spot e-auction for 20 mt coal on Thursday

State-owned Coal India (CIL) will tomorrow begin special spot e-auction of coal and will put on offer 20 mt of the fossil fuel for various sectors, including power, amid government’s efforts for 24x7 power to all.

According to an official, the auction will be conducted for four days beginning tomorrow. “The auction will be conducted on October 20, 21, 24 and 25,” the official said. The total validity for lifting of coal under the special spot auction window will be up to March 2017, the official added.

The reserve price will be limited to the upper cap of 20 per cent add-on over the notified price of coal for the non-power sector, the official said.

“The minimum quantity for bidding would be 50 tonnes and bid multiple would be in the multiple of 50 tonnes... whereas in the case of rail, the minimum quantity of bidding would be one rake and bid multiple would be in the multiple of one rake,” he said.

The rake size shall be as per prevalent railway rules. The quantity of coal in a rake will be as indicated in the notice of e-auction of coal companies. State-owned CIL had last month announced a one-time offer of 20 mt of coal under special spot e-auction in the ongoing fiscal.

The Coal Ministry had earlier said power producers being supplied coal through the MoU route by CIL will have to take it via special e-auction being conducted for the power sector. CIL, a major supplier of coal to the power sector, is eyeing 1 billion tonne production by 2020.

PM Narendra Modi’s big boost for Make in India: Prayas plan for solar energy to get $3.1 billion boost

Prime Minister Narendra Modi’s government is planning a 210 billion-rupee ($3.1 billion) package of state aid for India’s solar panel manufacturing industry, according to two officials.
The so-called Prayas initiative, short for for “ Pradhan Mantri Yojana for Augmenting Solar Manufacturing,” a central-government plan designed to lift India’s installed photovoltaic capacity as well as to create an export industry, according to two senior government officials with direct knowledge of the plan. They asked not to be identified because the policy isn’t yet public.
Modi wants to raise renewable capacity to 175 gigawatts by 2022 from 45 gigawatts at present. In addition to meeting its own energy targets, which Bloomberg New Energy Finance estimates may cost $200 billion, India wants to emulate industrial developments in neighboring China, where solar manufacturers have created a world-leading export industry.
The Prayas program, part of Modi’s “ make in India” campaign, is intended to create 5 gigawatts of photovoltaic manufacturing capacity from 2019 and build 20 gigawatts of projects in the country by 2026, according to the officials. The policy, which is being developed by the ministry in charge of renewable energy and industrial policy, along with the Niti Aayog government research group, will be presented to the Finance Ministry within a month before going to the cabinet for final approval, they said.

Indian Energy Exchange records highest monthly power trade

The Indian Energy Exchange set a record in September by trading a total of 3,630 million units of electricity. This is the highest since its inception of the exchange in 2008.

On a daily average basis, 121 million units were traded in September. Around 60% of the power purchasers were open access consumers while the rest were distribution companies. Power was on an average available at Rs 2.43 per unit, much below all sources of power generation.

Southern and northern states were the net buyer of electricity while the other regions were the net sellers. The tariff on the exchange varied from Rs 2.35 to Rs 2.73 per unit across regions in September.

“Most of the industrial and commercial establishments from south and north bid for electricity on a daily basis last month. Though the bidding cost varied within Rs 3, the landed cost or the final cost which the establishment pays will be around Rs 5 as it will include wheeling and scheduling costs,” an exchange official told TOI.

Even at Rs 5 per unit, the cost of power will be cheaper for industries and commercial establishments as the power sourced from a government-owned distribution company will be higher as it will also include cross-subsidy.

“Last month, the daily offtake of power was in the region of 200MW to 700MW through the exchange. Our sellers are independent power producers, captive power producers and at times even distribution companies like the Delhi distribution company which offered power for sale,” the official said.

Apart from industries and commercial establishments, even state-owned discoms bid for power. “We purchase 100MW from the energy exchange at Rs 2.47 per unit. Depending on the demand, we are planning to purchase power from the exchange as the cost is less,” said a senior Tamil Nadu Generation and Distribution Company (Tangedco) official.

More power would have been available for sale at the exchange but for congestion in the transmission lines. “Overall, around 3 million units were lost due to congestion on a daily average basis. Import of power, especially in the northern region, remained affected due to constraints on the inter-state transmission network. The northern import was congested about 40% of the time and southern import was congested 10% of the time during the month,” said the exchange official.

There were 1,223 participants traded in the spot market on an average daily basis. The highest participation was on September 13 when 1,291 participants traded on the exchange.

Prime Minister Dedicates 1732 MW to nation in Himachal

Prime Minister Narendra Modi today inaugurated three hydro-electric projects (HEPs) with a generating capacity of 1,732 MW in Himachal Pradesh.

The NTPC operated 800 MW Hydro Power Station in Koldam, 520 MW Parvati Project and SJVNL operated 412 MW Hydro Station in Rampur, are all equipped with equipment supplied and commissioned by Bharat Heavy Electricals Limited (BHEL), state-owned BHEL said in a media statement.

"These hydro projects will bring prosperity to the State of Himachal and other parts of the country," said P.M. Modi while inaugurating the Koldam Hydro Power Project. The project shall annually generate 3054 GWh electricity at 90 per cent dependable year basis, according to a NTPC press release.

Twelve percent of the electricity generated from Koldam is being supplied within Himachal Pradesh free of cost, while 1 percent is provided on account of Local Area Development fund.

A total 13.62 percent of electricity generated from the plant is supplied free of cost to Himachal Pradesh, remaining power supplied to other beneficiaries namely Delhi, Haryana, Punjab, Rajasthan, Uttar Pradesh, Himachal Pradesh, Jammu & Kashmir, Uttrakhand and Chandigarh, added the NTPC statement.

All the Project Affected Families are being provided 100 units of electricity every month free of cost which accounts for 0.62 percent of the total generation.  BHEL has a vast experience in hydro-electric projects having contracted more than 500 hydro generating sets with a cumulative capacity of more than 29,000 MW of various ratings in India and abroad.

BHEL's hydro installations are in operation in India and across the world in Azerbaijan, Bhutan, Malaysia, Nepal, Taiwan, Tajikistan, Rwanda and Vietnam.

India, Russia finalise agreement on units 5, 6 at Kudankulam

Scaling up cooperation in the atomic energy sector, India and Russia have finalised a general framework agreement and credit protocol for setting up units five and six at the Kudankulam nuclear plant.

The formal announcement of the pact and the credit protocol is likely to be made after bilateral talks between Prime Minister Narendra Modi and Russian President Vladimir Putin tomorrow in Goa on the sidelines of BRICS Summit.

“Russia and India finalised ‘General Framework Agreement’ and a ‘Credit Protocol’ for Units 5 and 6 and are planning to announce it in Goa,” Russian sources said. They said the two countries are also planning a ceremony of “first pour” of concrete to the foundation of Unit 3 and 4 and a ceremony of inauguration of Unit 2 of the Kudankulam nuclear plant.

Both ceremonies will witness the participation of Putin and Modi as well as Kudankulam engineers in Tamil Nadu via video-conference, they added. On August 10, the first unit of the Kudankulam Nuclear was dedicated to the nation jointly by Modi and Putin who had participated at the ceremony from Moscow via video-conferencing.

The Kudankulam 1 has been jointly built by the Nuclear Power Corporation of India and Russia’s Rosatom and it had started generating electricity in 2013. The agreement for the project was inked by former Prime Minister Rajiv Gandhi and then Soviet Union President Mikhail Gorbachev in 1988 but actual work on the ground started only in 1997.

The unit 1 and 2 of Kudankulam plant were built at a cost of Rs 20,962 crore. A major share of power generated in the plant goes to Tamil Nadu, followed by Karnataka, Kerala and Puducherry. Each of the units has a capacity to generate 1,000 MW of power. 

Govt may introduce new gas auction policy for stranded power plants

The government is contemplating it it would continue with the current policy of auction of imported regasified liquefied natural gas (RLNG) or it will work on a new formula.

Talking to media at the sidelines of an industry event here, power secretary PK Pujari said in two three months the government would decide if it would continue with the gas auction policy for stranded power plants or it would formulate a new policy.

"Our psdf gas scheme was for 2 years. It is finishing in March 2017. So at the moment we are looking at various options to come out with a policy for all the gas power plants, which is about 25000 MW of capacity," Pujari said.

"Whether we will do it with psdf support or not is not very clear. But we are looking at options, where we can get the gas without psdf support, provide assured gas at reasonable price. Of course it depends what is ultimate tariff that works out at the power. So these options we are examining along with gas suppliers. So may be in the next 2-3 months we will finalise the option and then take a call whether we continue with psdf or we switch over to another," he added.

The current policy is set to lapse in March 2017.So far, there have been two successful rounds of auctions where companies including GMR, GVK, Lanco, Dabhol power plants have secured RLNG.The auction process involves reverse bid of the subsidy amount that the government provides through through the Power System Development Fund (PSDF).

However, the third round of auctions were canceled after the participating companies decided to forgo the subsidy.The companies quoted negative bids which led to technical glitch in the system as it was not designed to operate on negative bids.

Consequently, the third round got canceled. The government said it would reschedule bidding after fixing the glitch in the bidding system. In the first round of auctions in June 2015, 14 gas-based power plants with a cumulative capacity of 8,100 Mw had bid.

The gas auction policy was introduced in 2015 under which every stakeholder in the supply chain would have to forego a part of their returns on operations. While the central government would give up the service tax it levies on gas sourcing, the power plant operators would forego return on equity.

Govt to provide solar panels at subsidized rate

In order to motivate people to install solar panels in their homes, the state government has come up with a scheme of subsidies. People, who will apply for solar panel producing two kilowatt solar energy, will be provided a subsidy of Rs 45,000.

The actual cost of the panel is Rs. 1.5 lakh. Solar panels can save Rs 15,000 to Rs. 17,000 invested on electricity in a year. Experts said that installation of solar panel would not be a costly affair since a household would be able to save the amount invested in around five years. To ease the process of subsidy, the government has authorized some companies to provide the subsided solar panels.

"We will sell the solar panels at subsidized rates. Customers will not have to run to government offices for subsidies. The government will transfer the subsidized amount to us," said Anurag Mundra, joint director, Ujaas Energy Limited. However, experts also said that while the generation of power will be mostly in day time, the use will be mostly at night.

Most of the people will be out for work during day time, then maintaining a storage system will be expensive. Maintenance of battery will increase the initial cost.

2,000 MW Mandvi power plant gets green nod

Infrastructure Leasing and Financial Services Ltd (IL&FS) group has received environmental clearance for its proposed 2000 MW gas-based power project in Mandvitaluka of Kutch district.

The expert appraisal committee under the union ministry of environment, forest and climate change recently gave its approval to Nana Layja Power Company Ltd, a special purpose vehicle created to develop the power plant.

The gas-fired power project will be developed within a multi-product special economic zone (SEZ) by IL&FS group at Mandvi. Details provided by the company say that in its environmental impact assessment report (EIA), the cost of the project for setting up the gas-based power plant is Rs 7,187 crore.

“The environment clearance accorded shall be valid for a period of 7 years from the date of issue of this letter for the start of production operations,“ the ministry said in its notification approving the project. Apart from the gas-fired power plant, a coal-based power plant with a capacity of 4000 MW has also been planned by the group at the same location. The investment for the same is around Rs 28,000 crore.

The proposed power plant is conveniently located and well-connected to the sea which gives it the advantage of bringing imported coal along with the indigenous coal and gas required for the power plants.Considering these aspects, both the plants are proposed to be developed in the multiproduct SEZ and free trade and warehousing zone (FTWZ) at Mandvi in Kutch. Estimated project cost for development of SEZ, including proposed power plants, is around Rs. 38,741crore.

Overall, IL&FS is developing an integrated maritime complex comprising a state-of-the art shipyard, a marine and energy SEZ and FTWZ. The marine and energy SEZ as well as FTWZ are being developed over 3,473 acres of land which will comprise of shipping and ancillary industries, power plants, fabrication & assembly units, heavy engineering units and other port-based industries.

Thermal power generation rose by 0.3 pc in Q2

Despite higher availability of coal, thermal power generation rose by a meagre 0.3 per cent during July-September quarter as compared to the corresponding period last fiscal, owing to lower system demand, brokerage firm Reliance Securities said in a report.

According to the report, the total power generation during the quarter rose by 1.3 per cent on year-on-year basis to 287 billion units (BUs). Thermal generation rose by meagre 0.3 per cent owing to lower system demand despite higher coal inventory, while hydel generation improved by 3.5 per cent y-o-y following improved reservoir levels.

Owing to the lower demand, coal production was curtailed in the last few months with high coal inventories to the tune of 50 million tonnes. "Slow industrial demand along with weak financials of the state-run power utilities (SEBs) led to muted growth. All-India Plant Load Factor (PLF) for thermal sector stood at 54.6 per cent in 2QFY17 compared to 60.5 in 2QFY16," it said.

The report, however, observed that the UDAY scheme would eventually lead to their improved financial health and ability to procure more power. "Despite lower per capita power consumption as a demand driver, subdued economic activity has led to lower power demand from the industrial consumers, which has led to the SEBs shedding load to the residential and agricultural consumers.

"However, improvement in the policy environment and infrastructure spend coupled with manufacturing activities will aid in reviving demand environment for the power sector," the report said.

According to the brokerage firm, implementation of UDAY scheme is expected to improve power demand in fiscal 2017-18, while increase in coal output would provide a much needed fillip to the sector.