Monthly Highlights of Indian Power Sector – Nov 11

All India installed capacity at the end of November 2011 (1,85,497 MW):

• Thermal
  • Coal : 1,02,863 MW (56% of total)
  • Gas : 17742 MW (9.6% of total)
  • Diesel : 1200 MW (0.6% of total)
• Nuclear : 4780 MW (2.6% of total)
• Hydro: 38748.4 MW (11 % of total)
• Other Renewable: 20162 MW (11% of total) (Based on 30.06.2011)

Total Electricity Generation till November 2011.

• Thermal       : 4,53,837 MUs (Target – 7,12,234 MUs)
• Hydro           : 1,00,565 MUs (Target – 1,12,050 MUs)
• Nuclear        : 21,206 MUs (Target – 25130 MUs)

All India Thermal PLF: 71.58% (Till Nov 11)

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RPower commissions another 300 MW unit of Rosa Power Project…

According to  Sources, Reliance Power Ltd, has commissioned another 300 MW unit of its Rosa Power Project in Uttar Pradesh on 28th December 2011. With this the company’s total operating capacity has became 900 MW. According to RPower, companies total installed capacity will reach at 5000 MW by the end December 2012 which will include thermal, gas, wind and solar projects.

The total planned capacity of Rosa Power Project is 1200 MW, out of which 900 MW has been commissioned, the balance 300 MW will be commissioned in March 2012. With an investment outlay of over Rs. 6,000 crore, the Rosa project is the largest private sector investment in Uttar Pradesh. Once fully commissioned, electricity generated from the Rosa plant would meet about 15 per cent of Uttar Pradesh's power requirement.

Another projects in the planned 5000 MW of capacity to be installed by December 2012, first unit of 600 MW Butibori Project (Maharashtra), 2400 MW Samalkot Project (Andhra Pradesh) and 660 MW Sasan Project (First Unit).

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Adani Power hits 52-week low as expansion plans put on hold…

According to Sources, share prices of Adani Power Ltd (Gujarat based Power Generating company) have been slipped to their 52-week low of Rs 61.50.

This was due to the company’s announcement to put on hold its plans for capacity expansion of 6,500 megawatts because of a lack of clarity on coal supplies.

Adani Power, currently operates 3,300 MW of power projects and is waiting for the coal allocation by the Government for 3 of its planned projects. The combined coal requirements of these projects is about 25 Mn tonnes per year.

Adani Power’s shares were being traded 7.7% lower at Rs. 62.00. The stock has corrected over 50% so far in the year 2011.

Adani Power is in a downtrend and there are no signals suggesting that the stock is going to move higher immediately. Shares of the company are trading below their 13-day exponential moving average which is at Rs 70. So unless Adani Power crosses Rs 70 and stays above that level, until then the stock will remain under pressure. Adani Power has touched its lifetime lows in trade. The stock is trading at its lowest prices since listing and Hindustan Unilever has done exactly opposite, it is at a lifetime high. Adani Power is in a pretty serious downtrend. Spark  would not see much out of them until the market itself bottoms out finally.

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RPower in talks with U.S. and Chinese banks to raise debt…

According to Sources, Reliance Power Ltd (RPower), the Reliance Group (ADAG) company is currently approaching banks and financial institutions of United States and China to raise funds for its UMPPs Chitrangi and Tilaiya.

As found by Spark, some of the Chinese banks have already funded $1.1 Bn for the Sasan project. 

Overseas debt will be cheaper for RPower as the interest rates of Indian Lenders have been increased sharply due to the RBI’s 13 consecutive rate hikes in two yeas time.

As RPower, buys and will buy equipments from US and Chine, it will help in securing loans from these countries.

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CERC sets up fund to promote renewable energy projects…

According to reports, the Central Electricity Regulatory Commission (CERC) has set up a renewable energy fund (REF) to promote projects in India. This fund is aimed at compensating states if they fail to meet the target given under their schedule of renewable energy (RE) projects. All RE projects are required to provide a schedule of generation to CERC from 2012.

Officials explained REF would bear charges imposed on states hosting RE projects that fail to comply with their supply commitments.At present, only wind energy projects without sale arrangements with states are required to give declarations forecasting their generation to state load despatch centres. CERC allows 30 per cent deviation in the supply commitments, beyond which penalties are levied or incentives offered. The Electricity Act, 2003, and the National Action Plan on Climate Change (NAPCC) provide a roadmap for increasing the share of RE in total generation capacity. Under this plan, every state has to purchase five per cent of total power requirement from renewable resources like wind, solar or water.

The power purchase obligation is fulfilled by trading of RE receipts, which is a tradable receipt representing a value of one megawatt hour (MwH) of power injected into the grid through renewable resources. From 532 RE certificates issued in March, total issuances till date have gone up to 352,0260. Under the proposed fund, deviation beyond 30 per cent is proposed to be shared among all state distribution companies in a ratio of their peak demand met in the previous month. The states, in turn, would be compensated for these charges out of the renewable regulatory fund. Explaining this, an official said if a state proposed to provide 50 Mw of RE power but could supply only 40 Mw, then the state in which the project is located have to draw 10 Mw power from central pool and supply. This is termed as unscheduled interchange and is charged at a higher rate.

This extra cost will be borne by all state distribution companies, which would be compensated by REF. The logic is that some states like Gujarat, Rajasthan or Tamil Nadu are preferred to set up RE projects due to abundance of energy resources like wind or water or sunlight. Thus, the contribution of that particular state in the central pool becomes higher, whether or not it is prepared to commit such supply.

“In case there is short supply, it has to make good the shortfall by drawing power from the central pool. Since the state is naturally endowed with such a resource, it is unfair to expect that it compensates for individual projects’ shortfall. Therefore, such a compensation plan is worked out to promote power projects in states, where there is natural endowment of resources,” they added.

This facility for REF will be applicable for wind energy farms with collective capacity of 10 Mw and above, at connection points of 33 Kv and above. This is irrespective of whether the project is connected to the transmission or distribution system of the state or to the inter-state transmission system, and who have not signed any power purchase agreement with states or union territories. Similarly, for solar generating plants, the cutoff for REF eligibility will be a capacity of 5 Mw.

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SunEdison puts seven India projects on the block…

According to reports, SunEdison, a solar power developer and a subsidiary of the US poly-silicon major MEMC, is looking to sell 49 per cent stake – the most allowed under the power purchase agreements – in seven of its solar projects in India. (Each project is under a company and SunEdison wants to sell 49 per cent in each.)

Sources close to the development say that a US-based company is in talks with SunEdison for this.

Sources among investment bankers have told Business Line that these seven projects total to a capacity of 52 MW. The biggest of the seven is the 25-MW project in Patan, Gujarat. The others are: three in Surendranagar (Gujarat), Sirohi and Jodhpur in Rajasthan and Jhansi in Uttar Pradesh.

SunEdison estimates that over the lives of these projects, they would earn $140.69 million net cash, i.e., tariff and carbon credit revenues minus development costs, maintenance costs and taxes. Forty-nine per cent of this works out to $68.94 million.

Projects other than Patan (25 MW), Sirohi (1 MW) and Jhansi (1 MW) are jointly-owned. While IDFC is the co-owner of the Jodhpur project (5 MW), OPIC, a part of the US government and L&T Infra Finance are the co-investors of the Surendranagar projects.

Incidentally, only last week did SunEdison announce raising $110 million in debt from OPIC, L&T Infra and IDFC.

These seven projects are in various stages of completion. All of them will be generating solar electricity by January 2012.

How the stake-sale pans out is a matter of great interest to the solar industry globally. This is because India is a very recent entrant in the solar power generation sector but is a big and growing market.

With sunshine all through the year, India is a promising solar nation, where the panels are expected to produce more than in, say, Europe or the US.

However, there are other issues such as difficulties in project implementation, and the absence of solar irradiance data. SunEdison’s success in putting through the stake-sale deal will kind of become a benchmark for others

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Suzlon eyes $1-billion worth of new orders every quarter…

Wind power major Suzlon Energy, which recently took complete control of its German subsidiary REpower, has said it will focus on value engineering to remain competitive and has set a target of bagging USD 1 billion worth of new orders every quarter for the next few years.
"We are working on value engineering by introducing new products like the S9X series of turbines that will not only enable us reduce cost, but also give us a competitive advantage in the market. With the new technology, we aim to bag orders worth USD 1 billion every quarter, every year," Suzlon Energy chairman and managing director Tulsi R Tanti told PTI in an interview here.
Currently, the Pune-based world's fifth largest wind turbine maker's order-book stands at USD 7 billion and has a topline of USD 5 billion.
The company has created the S9X suite of low wind speed turbines - S95 and 7, with a 2.1 MW rating for all markets, which is an advancement over the successful S88 wind turbines.
"The smart S9X innovation and comprehensive design increases energy yield by 14-19 per cent, improves service ability and ease of maintenance," Tanti said.
The 2 MW-class turbines come in two variants of 90-m and 100-m hub heights and the rotor diameter of 95 m and 97 m.
"The wind industry is rapidly evolving. The center of gravity has shifted to emerging markets, which are re-shaping the renwable energy sector. This shift is also dictating the direction of technology development, as more moderate and low wind sites become available in these new markets. The S9X suite of turbines has been developed to take advantage of these emerging opportunities," Tanti said, adding Suzlon has already received orders for 800 MW for its this new turbine.
Suzlon has also started working on manufacturing products in the 9X suite, with a capacity of 3 MW and 6 MW. While the 2 MW turbines are designed for developing markets, the 3 MW will cater to the developed markets and the 6 MW for the offshore markets, he said.
"By brining in these new technologies, we expect to bring down material consumption in all the three platforms by 10 per cent each. The S9X product suite is designed to provide higher return on investment for our customers through higher generation, greater efficiency and improved technology," the company chairman said.
"We are working on bringing down further the cost per energy through the technology. We expect to reduce the cost per energy by 25 per cent over the next two years through technology," Tanti said.
On its USD 1.28-billion order from Britain's Caparo Group to generate 1000 MW, he said, "500 MW worth of capacity will be commissioned in this fiscal, while another 500 MW will be commissioned within the following year." Suzlon to save Tanti has also said with REpower coming fully under its control, Suzlon expects to shave off 200 million euros from its overall cost structure next fiscal, which primarily involves sourcing more components from India and China.
"Nearly 65 per cent of our spends are on components, a majority of which comes from Europe. But given the current scenario, we plan to concentrate on the domestic market as well as China for components. This will help in reducing our material cost by nearly 100 million euros in FY13 and another similar amount from other heads," Tanti said.
The cost-saving will be on the back of acquisition of the REepower. "With the successful acquisition of the complete stake in REpower, we see ourselves well-placed in the market. We will be focusing on market positioning, joint procurement and joint technology development for all our current and future projects. REpower, which was otherwise buying components from Europe will now import it mostly from India," Tanti added.
Suzlon, present in 32 markets with an installed capacity of 18,000 MW (7000 MW in the country), recently bagged USD 6.5-billion worth orders for the next three years, making it the biggest order in the area.
It can be noted that Suzlon stocks fell nearly 40 per cent in the past one week. Capping lack of investor confidence was the report that promoters sold 2 per cent stake to address margin calls to bankers.
When asked about this, Tanti said, the current debt of nearly Rs 9,000 crore is not a problem, considering our healthy order-book of USD 6.5 billion. "With a USD 7 billion order-book and USD 5 billion topline, USD 2 billion in debt is not a big deal."
On whether the company will be in a position to pay back the USD 550 million FCB redemption due for next June and September, he said "Of course. I am not seeking any extension."
The company has Rs 10,000 crore debt, out of which, around Rs 6000 crore is working a capital loan, and Rs 4000 crore is a long-term debt, which is to be re-paid over 5-7 years. Over the next 12 months, it has a repayment obligation is USD 750 million.
Tanti said, "As of the September quarter, the net debt to equity ratio is 1.6 times, which we want to bring down to 1.4 by the end of the year and by March 2013, it will be be at 1:1, and that too, without raising any equity."

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KEC International sees 20% uptick in revenue…

Buoyed by the growth prospectus in the power sector in domestic as well as international markets, infrastructure EPC major KEC International said it is eyeing 20 per cent annual growth in revenue this year.
"Currently, the power sector is witnessing a slowdown in the domestic market, but there is huge demand in the international market. Since we are present in both, we expect to grow 20 per cent every year," KEC International managing director and chief executive Ramesh Chandak told PTI here.
KEC, the flagship company of the RPG Group, which operates in five verticals, including power transmission, power cables, telecom, railways and water, has businesses in 40 countries and an order book of over Rs 8,400 crore.
"All the five sectors, in which, we are operating are quite promising. Despite the challenging global economic environment, our strong global presence and diversified business portfolio has helped us in securing new orders," he said.
Transmission is the core business of the company with nearly 70 per cent revenue contribution.
"We expect more orders coming from this sector over the next one year, even as the other sectors will slowly grow," he said.
On the domestic power sector scenario, Chandak said, "We are bullish on its growth here. Though there is a slowdown on the generation side due to uncertainty on fuel availability and other challenges, we expect the situation to get better over the next year. But the transmission sector has not been affected as we continue to get orders from the PowerGrid."
While 60 per cent of its orders come from the international market, 40 per cent is contributed by the domestic market, he said.
"Since we have presence in so many countries, KEC is well placed for achieving its growth targets," Chandak said.

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PSBs have Rs 2.97 lakh cr loan exposure to power sector…

Public sector banks have extended loans worth over Rs 2.97 lakh crore to the power sector at the end of September quarter, with maximum credit doled out by State Bank of India.
Official figures show that 26 state-run banks have a total exposure of Rs 2,97,762.53 crore to the power sector, which is currently grappling with acute fuel shortages and mounting losses of electricity distribution companies.
Country's leading public sector lenders State Bank of India (SBI) and Bank of India accounted for nearly Rs 87,000 crore of the total loans given to the power sector till September 30.
SBI's exposure stood at Rs 47,880.89 crore while that of Bank of India was Rs 39,078 crore.
Another major lender to the power sector is Punjab National Bank, whose exposure stood at Rs 20,410 crore.
Amid worsening health of power distribution companies and stranding of projects due to fuel shortages, there are rising concerns about possible default on loans extended to the power sector.
Maharashtra, Gujarat and Rajasthan are among the states that have been high amount of loans in the power sector from public sector banks, official data showed.
Going by reports, banks are exercising caution in lending to the power sector.
As per estimates, the aggregate debt of state power utilities stood at Rs 3,10,912 crore in FY'10.
Power sector is expected to see a capacity addition of nearly 1,00,000 MW in the 12th Five Year Plan (2012-17).
A recent report by rating agency Fitch said that losses of power entities in the states of Rajasthan, Tamil Nadu, Madhya Pradesh, Uttar Pradesh and Bihar, alone accounted for over 70 percent of the overall loss incurred by state power utilities (SPUs) nationwide in fiscal year 2010.

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Coal min opposes proposal for sale of coal by block holders…

The Commission, in a letter to the Ministry last week, had suggested that incentives could be provided to block holders for the development and production from the mines by allowing them to sell coal.

"The value of the mineral held by the captive coal holders is very high in terms of today's prices and block holders will be unduly benefited if permitted to sell coal. If the suggestion of the Planning Commission is agreed to it... will pave the way, allowing captive block holders to make huge profits," coal ministry has said in reply to the Plan panel.

Sources said the issue is likely to come up in a meeting of coal and power ministries tomorrow on ways and means to meet the growing demand for coal in the power sector. It is scheduled to be chaired by Prime Minister Manmohan Singh.

Contending that only 28 coal blocks out of 193 alloted to various power, steel and cement firms in the past 18 years for captive use have come to production, the ministry is of the view that if they are permitted to sell coal they would not show interest in bringing up their end use plants.

"...If a part of these reserves are diverted... Block holders would again turn to government for making available equivalent amount of reserves for meeting their requirements sometime in future after extracting profit from reserve...If they start selling coal, they would never show interest in bringing up end use plant," the coal ministry said.

Contending that the block holders were alloted mines free of cost for power generation, it added that the proposal of selling coal will not only lead to government's criticism but would allow firms to take undue advantage of the allocation.

Arguing that any such move will be violative of the provisions of the Coal Mines Nationalisation Act, the Ministry said, if the government believes that the coal sector should be opened for commercial mining, it would be prudent to pass the pending Coal Bill 2000.

"We have already delayed this decision and the Bill has been pending in Parliament since 2002," it said, adding that this is all the more important to attract large scale investments.

The Ministry also disagreed with the panel's suggestion of increasing the prices of domestic coal to partially meet the high generation cost, saying "it will go against the spirit of power sector reforms."

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Hindujas to renew its power foray with Vizag 1040 MW project…

The Hinduja Group plans to renew its thrust into India's power sector with the much delayed Vizag project in India expected to be fully operational by September 2013.

The Vizag project picked up steam in 2008, a decade after it was proposed, but was hampered by regulatory issues since.

The 1040 MW project, being executed by the group's power sector vehicle, Hinduja National Power Corp, is part of a plan to produce 10,000 MW for power hungry India over 5 to 6 years.

Mr Ashok Puri MD at Hinduja National Power told reporters that the first phase of the USD 1.2 billion project comprising one unit of 520 MW will be commissioned by June 2013.

The group has already invested 14 billion rupees in the project which sources coal from Mahanadi Coalfields in the neighbouring Orissa state, a unit of Coal India Ltd.

Mr Puri said that the firm is looking for sites in Maharashtra, Karnataka, Gujarat and Orissa For new projects where it can get requisite fuel linkages.

Mr Abin Das group director said that the Hinduja Group, which has interests across banking, media, power and automobiles in India, remains committed to its INR 500 billion investment for the country, bulk of which would be power focused.

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Reliance, Tata Face Energy Caps in $3 Billion Efficiency Market in India…

According to reports, India has set targets for companies including Reliance Industries Ltd. (RIL) and Tata Steel Ltd. (TATA) on energy consumption reductions in preparation for a $3 billion-a-year market for trading efficiency credits.

Companies have been notified of their targets and audits of their energy consumption have started, said Ajay Mathur, director of the Bureau of Energy Efficiency.

“By mid-2012, we should be able to start issuing tradable certificates,” Mathur said in an interview this week. The government may disclose the individual targets assigned to 563 facilities, including oil refineries, steel plants and paper mills in its official gazette as early as next month, he said.

The program aims to lower fossil fuel use in the world’s third-largest energy consumer by forcing eight industries to reduce their power needs. Companies that save more power than required earn credits which they can trade on power exchanges to others seeking to meet their targets.

Other companies with facilities falling under the program include NTPC Ltd. (NATP), Hindalco Industries Ltd. (HNDL), Essar Steel Ltd., JSW Steel Ltd. (JSTL) and Reliance Power Ltd. (RPWR), according to a list from the bureau.

By using energy more efficiently and reducing losses, India may avoid building 10,000 megawatts of new power capacity, saving 1 trillion rupees ($19 billion), according to the power ministry. That’s the equivalent of about 9 new nuclear reactors.

Over three years, the energy-efficiency program should reduce power consumption across the eight industries by about 5 percent, Mathur said. India became the world’s third-largest energy consumer after topping Russia in 2009, the International Energy Agency said in its annual outlook this month.

Trading of the credits may create a market worth $3 billion annually, according to Baman K. Mehta, chief executive of Darashaw & Company Pvt., a Mumbai-based investment bank. Within five years, that could climb to $16 billion, Mathur has estimated.

India’s trade in international carbon credits could be affected because of an impasse over the renewal of the Kyoto Protocol, the world’s only climate treaty that created the carbon market.

Annual climate negotiations begin next week in Durban, South Africa. Japan, Canada and Russia are expected to refuse an extension of the treaty requiring industrialized nations to cut emissions through 2012.

With the future of a global emissions trading market at risk, India is pressing ahead with domestic environmental trading programs to slow emissions and promote clean energy.

In April, trading began in India’s renewable energy market that requires power distributors and large energy consumers to buy a certain amount of their electricity from clean sources like wind farms and hydropower plants.

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Power Finance Corp sets up monitoring cell to keep watch on loan-book…

In the wake up difficulties being faced by the energy sector, state-run Power Finance Corp (PFC) has set up a project monitoring cell to keep an eye on the stressed loan portfolio, a top official said today.

"Though the idea of monitoring cell was conceived in 2009, we have recently set up a separate cell for this to better check the progress of the projects to which we have lent money,"

Monitoring of the projects would be in a broader sense to see the debt servicing capacity of borrowers, he said. "We will do monitoring in financial terms, which will be different from a typical project monitoring unit that emphasises on execution. We will keep an eye on the critical milestones set by the company and see whether they are met or not."

Currently, financial institutions are worried about the advances extended to electricity boards of Tamil Nadu, UP, Rajasthan, Bihar, Haryana, Madhya Pradesh and Punjab, which according to rating agency Crisil, are the most vulnerable.

As per Crisil, losses of discoms rose 24 per cent to Rs 27,500 crore between 2006-07 and 2009-10, which could have risen to Rs 35,000-Rs 40,000 crore last fiscal, mainly because of problems in utilities, which are not free to revise the already low tariffs. Also, many green-field projects are stuck due to land issues and coal linkage problems.

"Many of the green-field projects are stuck due to coal linkage and land acquisition related issues. Though we don't have any control over these issues, we will try to minimise the risk by diversifying our portfolio," he said.

PFC posted net profit of Rs 419 crore in the second quarter, down 40 per cent from 700.8 crore in the year-ago quarter on the back of forex losses, despite 24 per cent rise in income to Rs 3,142 crore from Rs 2,531 crore.

Gross NPA rose 0.22 per cent in the first half of this fiscal from 0.02 per cent in the same period last year. Net NPA rose to 0.19 per cent during the period from 0.01 per cent a year ago.

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Delayed Indian Solar Projects May Lose Contracts, Official Says…

According to reports, two of India’s first solar projects under a state program offering favorable tariffs to build 20,000 megawatts of capacity suffered delays, a ministry official said, adding developers may lose contracts if deadlines are missed.

“Two of the projects are behind schedule,” said Tarun Kapoor, who is responsible for overseeing the program as joint secretary at the Ministry of New and Renewable Energy.

Entegra Ltd. (EIL), whose majority shareholder is MW Corp Pvt., hasn’t yet begun building a 10-megawatt solar-thermal plant in Rajasthan, Kapoor said in an interview in New Delhi yesterday.

Enterprise Business Solutions was also given a two-month extension after being fined for missing an October deadline to build a 5-megawatt photovoltaic plant in Punjab, he said, adding that construction at the site has since begun.

Entegra Chairman Mukul S. Kasliwal said the company faced problems raising financing for its 2 billion rupee ($38 million) development because of “unreasonable” government restrictions on using a so-called special-purpose vehicle for the project. The company expects to resolve the issue and complete the plant by its 2013 deadline, he said, declining to give a timetable.

“We haven’t started because we’re not going to do something that doesn’t make sense financially,” Kasliwal said in a phone interview today. “Had we been allowed to function as an SPV, then we would’ve finished financing long ago.”

The bar on the vehicles, which allow companies to isolate risks from funding large projects, means Entegra is limited to raising smaller loans backed by its balance sheet, he said.

The company, which at the same time is building a 400- megawatt hydropower plant in Madhya Pradesh state, has already invested 100 million rupees in the solar project and is in talks over alternative funding, Kasliwal said, declining to elaborate.

Neither Kapoor nor A.K. Maggu, general manager of state-run power trader NTPC Vidyut Vyapar Nigam Ltd., was able to provide contact details for Enterprise Business Solutions. The trader signed power contracts with the developers. Bloomberg was unable to find a website or contact for EBS in an Internet search.

Both projects are part of the “migration” program to build a first round of plants under the national Solar Mission and boost solar capacity by the equivalent of about 18 nuclear power plants by 2022. Under the migration plan, projects get deals to sell power for as much as 17.91 rupees a kilowatt-hour. That’s about four times the average wholesale fee for coal power and above the average 12.16 rupees for more than 600 megawatts of projects awarded in India’s first solar auction last year.

Developers will lose their preferential tariffs if they fail to complete their projects on time, Kapoor said.

The central government plans to award more solar permits next year to meet its target of adding at least 3,000 megawatts of capacity in the five years from 2013, he said. Officials at the finance, power and renewable energy ministries are in talks over how much capacity should be auctioned in 2012, Kapoor said. “In a few months, we should have a clear picture,” he said.

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India to Cooperate with Germany on Energy Sector…

India and Germany have discussed bilateral cooperation in the fields of renewable energy, energy efficiency, solar energy, clean coal technology and carbon capture and sequestration. Some countries are reviewing their nuclear power programmes. Reports indicate that the Governments of Germany and Switzerland plan to phase out nuclear power by 2022 and 2034 respectively. Italy has decided not to reintroduce nuclear power. The demand for growth in power generation in these countries can be met by renewable energy sources. This appears to be the reason to be the reason for their distancing from harnessing nuclear energy.

In view of India’s vast and growing energy needs, nuclear energy is an important clean energy option and will be pursued with full regard to safety, environment and livelihood of the people in the neighbouring areas along with other energy sources, including solar energy, as no single energy source would be adequate to meet India’s energy requirements, said  the Minister of State in the Prime Minister’s office Sh V Narayanasamy.

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Renewable energy ministry of India seeks 10-fold increase in fund outlay…

According to reports, the renewable energy ministry has sought a 10-fold increase in fund outlay for the next five years. The ministry estimates requirement of Rs 40,000 crore to ramp up its capacity to 30,000 mw by 2017.

An outlay of Rs 4,000 crore was earmarked for development of renewable energy in the 11plan period of 2007-12. India’s present renewable energy capacity is over 20,000 mw of which wind farms alone generate 14,000 mw while the rest is shared between biomass, small hydro and urban-industrial waste. Solar energy capacity currently stands at 35 mw.

“The progress in the renewable energy sector is happening at a fast pace but it’s not so impressive. Road-map for the next five years is very crucial for its growth,” renewable secretary GB Pradhan said at 11th Sustainable Energy Summit on Wedenesday.

The ministry also has plans to achieve grid parity in the solar energy sector by 2017, which means that electricity generated by solar plants would be sold at the same rate as conventional electricity. Along side, it will also increase the quantum of grid connected solar power aiming at 20,000 mw.

“To achieve it, we need a strong domestic manufacturing base which can absorb technology advancement,” said Pradhan. In just two years, capacity of grid connected solar power has increased from 2 mw to 35 mw in 2011. By the end of 11th plan, ministry hopes it will reach 300 mw.

The government is also encouraging solar power with its Jawaharlal Nehru National Solar Mission, which aims to tap solar power in India, estimated to be around 5,000 trillion kWh per year energy.

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Moser Baer emerges as 1st solar PV manufacturing company globally to be accredited with ‘Green Leaf Mark’ certification…

Moser Baer Solar (MBSL), a subsidiary of Moser Baer India has been awarded ‘Green leaf’ Mark by Intertek AB Semco, Germany for its latest Max Series ‘Lead free’ solar PV modules. Intertek’s Green Leaf Mark certifies that this product has been independently tested and found to conform to the multiple existing environmental regulations, such as RoHS laws, REACH and Eco Design.

With this MBSL has been accorded the rights to display the prestigious ‘Green Leaf’ mark on product packaging, at point of purchase in displays, product advertising and literature to highlight its superior environmental credentials.

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Karnataka Renewable Energy receives 22 bids for setting up solar projects…

• Karnataka Renewable Energy Development Ltd (KREDL) has received 22 bids for setting up solar power projects under the ‘Karnataka solar policy’. Today was the last day for submitting the bids. Mr N S Prasanna Kumar, Managing Director, KREDL, said. As part of its 350 MW programme, KREDL had floated a tender inviting bids for setting up projects that total to 80 MW. The projects would be allocated under ‘reverse bidding’ process. They will be allocated to bidders who have quoted the steepest discounts to the tariff fixed by KREDL (Rs 14.50).

• Mr Kumar however declined to comment on the other details such as the total capacity of all the bids submitted and the prices offered. “We cannot check the technical details of the bids till the RFP (request for proposals) for bidders under the Phase I Batch II of the National Solar Mission is closed,” Mr Kumar pointed out. (The last date for submission of bids under the Batch II of NSM is December 2. Disclosing the winning tariffs in Karnataka would influence the bidding process under NSM.) The allocation of projects with respect to these tenders would start soon, he said. The government has identified land to set up the 80 MW of solar plants, which would be allotted for a period of 30 years of lease, Mr Kumar said.

• However, it is learnt from sources that only two bids, totalling 20 MW, have been received for ‘solar thermal’ projects. KREDL had invited bids for 30 MW of solar thermal and 50 MW of photo voltaic. While the ‘thermal’ part of it has been under-bid, the PV portion has received bids for substantially more than 50 MW. Apar t from the projects under the solar policy, Mr Kumar had recently said that projects with a total capacity of 200 MW would be taken up under the REC scheme of the Ministry of New and Renewable Energy (MNRE). “Some companies have already applied for projects under REC mechanism and we will allot the ‘REC mechanism projects’ very shortly,” Mr Kumar said. For these, however, there is no deadline as it is a “continuous process”.

Source

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Petroleum Ministry may block domestic gas supply for merchant power plants

• The Petroleum Ministry has proposed that domestically produced natural gas should not be supplied to power plants that do not sell electricity to state-run power utilities at regulated rates. “There is no proposal before the government to ban gas supply to merchant power plants,” the Oil Minister, Mr S. Jaipal Reddy, said in a written reply to a question in Lok Sabha. “However, there is a proposal in which domestic gas will be available only to those power plants that supply electricity to state power utilities under a Power Purchase Agreement (PPA) at regulated rates,” he said. Domestic natural gas is available at one-third the price of imported LNG.

• Against the demand of 230 million cubic meters per day, domestic production amounts to 142 mmcmd, including about 42 mmcmd from Reliance Industries’ eastern offshore KG-D6 fields. KG-D6 gas and other domestically produced gas is priced at $4.20 per million British thermal units, while imported gas in its liquid form (called liquefied natural gas, or LNG) costs upward of $13-14 per mmBtu. “In view of the scarcity of domestic gas, the current and future allocations of domestic gas will be subject to the condition that the entire electricity produced from this gas shall be sold under long-term Power Purchase Agreements to the grid/distribution companies at regulated tariffs approved by the regulator(s),” an Oil Ministry official said.

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NTPC gets approval to exit International Coal Ventures consortium…

• The power ministry has approved NTPC Ltd’s proposed exit from International Coal Ventures Pvt. Ltd (ICVL), in a move that could hurt India’s efforts to acquire overseas coal assets. ICVL was promoted by five state-owned firms two years ago to buy coal mines overseas. While Steel Authority of India Ltd (SAIL) and Coal India Ltd own 28% each of ICVL, NTPC, Rashtriya Ispat Nigam Ltd and NMDC Ltd own 14% each. The 14% share of India’s largest power generation utility in the consortium, which hasn’t managed to close a single purchase, is expected be split proportionately among the remaining partners.

• The exit will end the acrimony among the partners that surfaced last year when then steel minister Virbhadra Singh had said that NTPC and Coal India could exit the consortium if they wished to. ICVL was floated on the coal ministry’s initiative and has an initial equity capital of Rs.3,500 crore and authorized capital of Rs.10,000 crore. An NTPC spokesperson confirmed that the exit is taking place and that the details will be worked out after “requisite due diligence”. Coal India continues to be part of the consortium. A top power ministry official, who spoke on the condition of anonymity, said earlier that it had informed the steel ministry “that NTPC would like to opt out”.

• Mint reported on 21 September that ICVL seemed headed for a split with NTPC wanting to exit. NTPC subsequently made a presentation to its parent ministry elaborating on the reasons for this. According to NTPC, while the power producer needs thermal coal to fuel its power projects back home, ICVL’s o ther stakeholders are largely interested in metallurgical coal reserves to feed their steel mills. And the thermal coal offered to it does not meet the utility’s technical requirements. “Our controlling ministry has given its assent to our proposal. We have already received a letter in this regard. Now, only the process part is left. Our share will be proportionately acquired by the remaining partners,” said a senior NTPC executive aware of the development who didn’t want to be identified.

• The exit could actually work to the benefit of NTPC, said an expert. “For NTPC, the development may mean a focused approach in the pursuit of coal resources,” said Dipesh Dipu, director, consulting (mining), at Deloitte Touche Tohmatsu India Pvt. Ltd. “Chasing opportunities on its own and simultaneously being part of a consortium may have led to strategic ambiguity.” Still, the breakup will pose a challenge to “the efforts of the government to create a sovereign fund like arrangement and create a unified acquisition resource pool in the form of ICVL,” he said.

• NTPC’s decision comes at a time when the country is facing its worst coal shortage. India faces a shortage of both metallurgical and thermal coal. A top ICVL executive who didn’t want to be identified said the company “had received a copy of the (power ministry’s) letter”. This person said the company would discuss what needs to be done with the power utility’s stake. While private Indian firms have been successful in securing coal resources overseas, government-owned entities such as ICVL and NTPC have not been able to do so. The split in ICVL only highlights the challenges involved, Dipu said.

• “While government-owned firms have been in the race too it seems the compliance requirement (for) procedures and lack of tolerance to risk-taking has caused them to be slow. Alignment of individual corporate objectives may hav e been yet another reason for the same,” he added. NTPC, which generates 8 megawatts (MW) of every 10MW it produces by burning coal, is looking to increase installed capacity from 34,854MW now to 75,000MW by 2017 and 128,000MW by 2032. It needs 160 million tonnes (mt) of coal in fiscal 2012, of which around 16 mt has to be imported. The utility has already placed orders for importing 12 mt of coal and placed a tender on Monday to import another 4 mt.

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Financial Tech launches 5 new energy exchange solutions

• Financial Technologies (India) Ltd (FTIL) on Thursday said it has launched five new software solutions in the power trading arena. A leader in multi-asset and multi-currency trading and settlement solutions, the company launched its PowerARMS, Tradedart, TSO Computation System, Registry and ECS (Exchange Customisation Services) offerings in the Indian market, which are capable of allowing global power exchanges to operate seamlessly across borders. These end-to-end applications featuring seamless connectivity cover various aspects of power exchanges and their clearing operations a company statement said.

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Power companies fail to lift e-auctioned coal - 50 lakh tonnes of coa l offered by CIL in October remains unused

• A recent and shocking development in the Indian coal sector has brought planners and bureaucrats face-to-face with the stark policy conundrum afflicting the sector. It also brought to the fore the criticality of coal as an input for key infrastructure industries in the power, steel, sponge iron, cement and fertiliser sectors. It all began last week when cabinet secretary Ajit Kumar Seth was chairing a high-level meeting on coal shortage. The huddle saw Coal India Ltd (CIL) revealing that power utilities failed to lift even a single tonne from the 50 lakh tonne of e-auction coal the state-owned miner offered it in October.

• Such kind of a mute response from the power companies to the coal quantity specially earmarked for them on demand enabled CIL -- the world’s largest coal miner -- to emerge clean in the ongoing tussle with the power ministry over fuel shortage for power plants. The Kolkata-based company had offered the quantity in a one-of-its-kind experiment involving diversion of coal meant for spot sales to the power sector.

• The ministry had accused the Maharatna of curtailing supply to power companies and selling coal on e-auction to fetch higher prices. E-auction had to be stopped for a few days to accommodate the diversion experiment which worked as a litmus test for the power sector’s offtake capacity. “Just that power companies could not lift the offered coal proves that banning e-auction, as has been demanded, is not a solution,” a senior CIL official said on Thursday. “Coal India cannot be held responsible for the power sector’s woes on fuel crunch. We have enough coal to supply to power sector utilities, but they have failed to lift it,” he said.

• The pri mary reason for the subdued response by power utilities to e-auction coal is logistical difficulty. As a matter of policy, any coal quantity tied up at e-auction has to be lifted from mine heads, significantly increasing the buyer’s input cost. The cost of transporting coal through road is on an average at least five times higher than Indian Railways’ Rs 125-per-tonne-kilometer charges. Besides, the quality of coal sold in the spot market is also a suspect, according to experts. “While e-auction coal was offered to us, we did not take part because of concerns on transportation and quality,” said a senior executive from NTPC Ltd, India’s largest power generator. The state-owned energy services provider requires over 160 million tonnes of coal by the end of this fiscal to run 36,000 Mw of its installed power capacity.

• The Association of Power Producers said the e-auction offered only an ad-hoc window even as the power industry was looking for a long- term solution for coal shortage. “Also, the increased price of this coal owing to transport is not a pass through for private companies,” pointed out Ashok Khurana, director-general of the industry body. “Only when these two aspects are clear that the power industry will lift coal.”

• For the record, the demand for coal in the country has grown at an annual rate exceeding 8.4 per cent over the past five years. The supply, on the other hand, has fallen grossly short of it, registering a dismal annual growth rate of 5.4 per cent during the same period. For the current financial year (2011-12), India’s coal demand is estimated at 696 mt, while a mere 554 mt is likely to be available. That leaves a gap of 142 mt -- to be met through imports.

• More than 80 per cent of India’s annual 530 mt of coal production comes from CIL. The 1975-founded company sold around 10 per cent of its 431 mt production through e-auction last fiscal, wh ile 18 per cent of its revenue came from the scheme. For, coal was sold at e-auction at a premium of a whopping 81 per cent over the notified price of Rs 900 per tonne. This compelled the buyers to opt for the costly e-auction coal, thanks to historic shortages.

• Despite reporting flat production in 2010-11, the company denies any lag in output. another senior CIL official said it “isn’t the power ministry’s business” to question the company’s production. “They should only ask for supply. We are providing it,” he said. Further, “thanks to evacuation constraints, we have more than 50 mt stock at the moment. But this is prone to catching fire. Thus, increasing production beyond a point will only add to stocks.”

• A majority of coal transport in the country occurs through the rail route. The coal ministry had identified two chief reasons for last month’s severe coal crunch: lack of adequate rail connectivity to major coalfields and unavailability of railway rakes. That had brought a third of the total 81 power stations with a capacity of 87,000 Mw on the brink of closure. Adding to the travails were heavy rainfall disrupting transportation and a simmering unrest in Telangana region that supplies coal in a big way.

• While CIL requires 200 rakes for daily offtake, the availability is only less than 180. Of these, an average 127 rakes were used for despatch of the material to power utilities in October. The coal ministry has been trying to push rakes availability to 180 for the sector. As for the planning commission, it has identified another major bottleneck in the movement of coal to end-users: the time taken by the Railways for building critical rail links. Four rail links were identified as critical for the evacuation of coal from CIL’s coalfields during the current Plan period. This included Tori-Shivpur rail link in North Karanpura (Jharkhand), Gopalpur-Jharsuguda (Ori ssa) in Ib Valley, Baroud-Bijuri in Mand-Raigadh (Chhattisgarh) and Sattupalli-Bhadrachalam link (Andhra Pradesh) in Singareni Collieries Company command area.

• The commissioning of these lines was expected to enable movement of 130 mt of coal to end-users, much more than the current domestic shortage of 86 mt. However, none of the links has been commissioned so far. In fact, the Jharkhand government recently rejected forest clearance for the Tori-Shivpur link.

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Karnataka to start allocation of 400-MW grid-linked solar projects in six months…

According to reports, grid-connected solar power generation is set to get a boost in Karnataka in about six months as the State is expected to start allocation of 400-MW grid-connected solar power generation projects by then.

Disclosing this at an interaction meeting with the Federation of Karnataka Chambers of Commerce and Industry (FKCCI) here on Tuesday, Karnataka Renewable Energy Development Ltd. (KREDL) Managing Director N.S. Prasanna Kumar noted that tenders had been floated for setting up projects with a total capacity of 80 MW. The allocation of projects with respect to these tenders would start in 15 days, he said.

The projects would be allocated under reverse bidding process, where a company which quotes a maximum quantum of discount to be offered in the tariff of Rs. 14.50 a unit, prescribed by the State regulator, would be chosen for implementation of the project, he said. Under the same model, projects with a total capacity of 120 MW would be allocated in about six months.

In addition to this, projects with a total capacity of 200 MW would be taken up under the Renewable Energy Certification Scheme of the Union Ministry of New and Renewable Energy in six months to a year, he said.

Appealing to individual households and industries to switch over to off-grid solar power to partially take care of their power requirements, Mr. Kumar maintained that it was possible to find a solution to the power crisis gripping the State within a year, if a majority of households opted for off-grid solar power.

FKCCI president J.R. Bangera, senior vice-president Shiva Shanmugam and Energy Committee co-chairman S. Ramesh were present.

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PFC hopeful of over 20% loan growth despite sector woes…

State-owned Power Finance Corporation (PFC) is hopeful of posting a loan growth of over 20 percent in the current fiscal despite the regulatory concerns relating to the energy sector.

"We will stick to our previous guidance and are hopeful that loan disbursements will be healthy in the current fiscal," PFC finance director R Nagarajan told PTI here.

The power finance firm, which posted around 17 percent growth in the loan sanctions in the first quarter of current fiscal, has witnessed a healthy 26 percent jump in advances during the second quarter.

"After a healthy loan growth in the second quarter, we expect the momentum to continue in the second half," he said.

PFC is also planning to disburse around Rs 35,000 crore of loan during this fiscal for which it aims to borrow around Rs 43,000 crore in this period.

Referring to regulatory concerns, Nagarajan said there were some positive actions in the regulatory front and we hope that all issues would be solved in time.

"Announcement of power tariff hike by Tamil Nadu government is a big positive in making state electricity boards viable. So as the tariff is raised by SEBs, the concerns relating to credit default by such entities will not arise," he said.

Nagarajan, however, said the coal linkage problem should be sorted out soon to avoid delays in execution.

Currently, financial institutions are worried about the advances extended to SEBs in Tamil Nadu, Rajasthan, Uttar Pradesh, Bihar, Haryana, Madhya Pradesh and Punjab, which according to the rating agency Crisil, are the most vulnerable utilities.

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CER prices fall, feel European crisis pressure…

The price of CER certificate on the Intercontinental Exchange (ICE) has halved from $18.52 a tonne in May-end to $9.21 this week.

This is a fallout of the lack of demand coupled with economic turmoil in the European market, a major buyer of the CER certificates.

On November 3, CER prices on ICE touched their life-time low of $8.78 a tonne. Before the global financial crisis, in July 2008, prices had peaked to $ 41.72.

Earlier, several Indian companies generating carbon credit used to hold them and sell at an appropriate time. However, now that European market is passing through uncertainty, the selling pattern has changed.

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GMDC to commission 100MW wind projects in 2011-12…

GMDC, a minerals major has already chalked out plans to add about 40 megawatt (MW) of wind power generation capacities to its existing 60 MW capacities in the current financial year.

In september this year, state mineral and mining PSU Gujarat Mineral Development Corporation (GMDC) said it will set up a 5 MW solar plant on the reclaimed land of mined out pits at Panandhro in Kutch district.

GMDC is setting up 100 megawatt (Mw) wind farm with an investment of Rs 700 crore and expect it to be commissioned by December 2011. Also, on the solar power front, GMDC is setting up 5 Mw solar power plant with an investment of Rs 100 crore and will be commissioned before December. Further plans for additional 50 Mw wind power generation capacities in Gujarat with an estimated investment of Rs 350 crore has been planned.

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Shares of power cos take a beating as bank loans to discoms dry up…

• Alarmed by the critical financial condition of state-owned power distribution companies, investors have started dumping shares of power companies putting downward pressure on their prices. The decline in power companies' share prices is much steeper than the general fall in stock prices. This is evident if one goes by the NSE's infrastructure index which comprises power companies.
• The hardest hit are companies engaged in power trading business. The poor finances of state utilities have led investors to sell off stocks of power companies as a precaution, which has resulted in decline in prices. For example, the share price of PTC India fell by as much as 32% between August 22 and November 22 at the NSE. Lanco Infratech's share price declined 27% during the same period. Adani Power's stock price declined 12% while NTPC's lost 11% during the period. While PTC India is directly exposed to risks in the power trading business, Lanco, Adani and NTPC undertake power trading business through subsidiaries. Share prices of Reliance Power and PowerGrid have not seen any sharp declines during the period but their scrip has remained under pressure.
• Power trading companies like PTC India and NTPC Vidyut Vyapar Nigam are unable to get timely payment from states like Tamil Nadu and Uttar Pradesh, where discoms' losses have reached unmanageable levels. These discoms owe more than R1,000 crore to PTC India alone for power supplied by it. This has forced power traders to raise fresh capital for meeting their working capital requirement.
• This despite the fact that in a watershed development, state electricity regulatory commissions (SERCs) have recently given undertaking to ensure annual tariff revision ,if necessary, by using their suo motu powers. The apex electricity regulator Appellate Tribunal for Electricity has also ruled that SERCs do have suo motu powers to revise tariff and they must exercise that authority. Tamil Nadu discom has sought 38% hike in tariff, which should lead to additional cash flow of R8,200 crore to the discom. Uttar Pradesh has assured bankers that it would increase tariff by more than 30% once assembly polls are over.
• Industry experts say that investors have overreacted in panic as the fundamentals of the sector remain robust despite the problems in power distri bution. PTC India has been trading power since 2000. Till March this year, it was able to recover 100% of its R4,000 crore dues. "Financial health of discoms will improve due to the recent policy and regulatory initiatives," Pramod Deo, chairman, central electricity regulatory authority, said. "Policy makers have begun work on structural solutions to pressing issues. But these could take a while to implement," RBS Bank said in a recent update to investors.
• "Share prices of power companies are under pressure as payment to private power generators from discoms is not smooth. However, the scenario could change if reforms are implemented by states in the true spirit," HD Khunteta, chairman and managing director, Rural Electrification Corporation, said. "Scenario regarding concern on account of receivables from distribution utilities should soon change in view of SERCs taking steps to increase tariff. Also, APTEL's judgement, based on power ministry's r equest, exhorting SERCs to suo motu initiate proceedings for tariff revision in case there is delay in tariff filing is very welcome step in this regard," Tantra Narayan Thakur, chairman and MD, said. Due to pressure from state governments, discoms are reluctant to approach regulators for tariff revision.

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Private sector drives power capacity additions - Adds more than the Central and State utilities combined…

• Fuel shortages and funding woes notwithstanding, private sector developers accounted for much of the power capacity addition that has taken place so far this fiscal. During April-October 2011, the private sector added 4,301 MW, more than what was added by the Central and State sector utilities put together. The continued hold-up at the near-complete Kudankulam nuclear power units, though, could ensure that the actual capacity added could be well short of the 17,716 MW target for the current fiscal, which is the terminal year of the current Plan period.

• Key private sector generation units commissioned during the fiscal include Adani Power's 660 MW Mundra (second unit), Tata Power-DVC's 525 MW Maithon project (Unit 1), two 300 MW units at JSW Energy's Ratnagiri project and Sterlite Energy's 600 MW Orissa unit. The strong private sector perform ance is in line with the progressively improving trend of private developers to capacity addition during the first four years of the current Plan period. And this is despite most of these projects not having firm power purchase agreements, difficulties in getting site clearances, problems in open access, lower preference in allocation of fuel linkages, and impediments such as the need to furnish bank guarantees for getting transmission corridors built.

• In 2010-11, despite slippages, a record power capacity addition of 12,160 MW had been achieved, higher than the previous record for generation capacity commissioned in a single year of 9,585 MW in 2009-10. To put things in perspective, the capacity added during just two years of the Eleventh Plan (21,745 MW added during 2010-11 and 2009-10) was higher than the cumulative capacity addition achieved during the entire five years of each of the last three Plan periods. The country had seen a capacity add ition of 20,950 MW in the Tenth Plan (2002-07), 19,119 MW in the Ninth Plan and 16,423 MW in the Eighth Plan.

• With the capacity addition last fiscal tipping 12,000 MW, and if a similar figure is achieved in the current fiscal, an overall capacity addition of around 48,000 MW is seen as a possibility during the Eleventh Plan, another record by a wide margin. This is, however, going to be well below even the downward revised target of 62,000 MW pegged for the current Plan period, which started with a target of 78,700 MW.

• The overall capacity addition achievement during 2009-10 was about 66 per cent of the target (9,585 MW against a target of 14,507 MW). It was 31 per cent in 2008-09 (3,454 MW against a target of 11,061 MW) and 57 per cent in 2007-08 (9,263 MW against a target of 16,335 MW). According to Government data, of the 9,263-MW commissioned in 2007-08, the private sector accounted for only about eight per cent. This improved to 25 per cent in 2008-09 (883 MW out of the 3,454 MW commissioned that year) and to 45 per cent during 2009-10 (4,310 MW out of 9,585 MW).

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India plans to sell 500MW electricity to Pakistan : Two countries scheduled to meet next month to finalise tariff and grid connectivity…

• India plans to sell 500 megawatts power to Pakistan, according to an Indian newspaper. Officials of the two countries are scheduled to meet next month to finalise the t ariff and grid connectivity. Electricity trading with Pakistan is part of a larger plan of a South Asian transmission link, which will help countries in the subcontinent harness energy potential of the region, it said. "The two countries have reached a formal understanding on the sale of electricity. The finer points are being worked out. The grid connectivity across the border would help Islamabad tide itself over outages," the report quoted senior Indian Power Ministry officials, as saying.

• The officials said that both the sides are considering setting up transmission infrastructure in a joint ownership to wheel around 500MW via Amritsar. As Lahore has complete transmission lines and grids and is near grid in Punjab, it will be economical to transfer power through Amritsar, they said. The tariff would be a crucial issue to be discussed during the meeting, scheduled for early December, they said. "There is a political will among the leaders of the two nations to enhance trade ties and this would work in early solution of issues," the officials said.

• South Asian electricity trade is being seen as a major area of cooperation among the countries that will bring prosperity to the subcontinent by providing power to the deficit parts of the region. "South Asia is a major hub of fast-growing economies, having 25 percent of the world's population. There is an ongoing shift in focus from agriculture to manufacturing. No South Asian country can meet its energy needs entirely from within its own domestic resources. We need to integrate entire region with a robust power grid," Indian State Minister for Power, KC Venugopal, said.

• India will need around 250,000MW by 2017, a fivefold increase, to sustain its economic growth. A South Asian grid will give the region 100,000MW to trade and help India tap hydropower and natural gas reserves of its neighbours, he said. The grid model connecting Norway, Denmark, Sweden and Finland and another linking South Africa, Botswana and Zimbabwe are being studied. "The energy and electricity cooperation are non-traditional areas of trade relationship development. Bhutan has managed to balance its trade with India with large exports of hydroelectric power. Similar potential exists for Bangladesh and Nepal," according to a study conducted by the Confederation of Indian Industry.

• An integration of electricity grids across South Asia will reduce the power cost and enhance manufacturing competitiveness of all the members. Nepal, Bhutan, Afghanistan and India have huge hydroelectric potential, which can be tapped for intra-regional power trade, the study revealed. While a transmission link with Bhutan is in place, there are plans to tweak existing line to enable imports up to 5,000MW into India by 2020. Indian firms are working on hydel projects of 10,000MW in Bhutan and 1,000MW in Nepal to be able to share power from these projects. New Delhi is setting up a link with Bangladesh. Plans are underway to set up transmission link to exchange up to 1,000MW with Sri Lanka, the report added.

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Chhattisgarh to stay power-cut-free state for 20 yrs: Raman Singh, Chief Minister…

• Providing the cheapest energy to consumers, mineral-rich Chhattisgarh will remain a no-power-cut state for the next 20 years, Chief Minister Raman Singh has said. "There is no power cut (today) and there will be no power cut in Chhattisgarh in the next 20 years - be it industry, agriculture or domestic sector," Singh said. The young state, which was created out of Madhya Pradesh eight years ago, would add power generation capacity of 3,000 MW every year for the next two-three years, he said.

• "In 2012-13, we are adding 3,000 MW... say around per year 2,000-3,000 MW," Singh said. The state is expected to add over 20,000 MW by 2016. It has the potential to produce up to 50,000 MW. Per capita power consumption is one of the key indicators of development. This is where Chhatisgarh has shown a marked improvement, the Chief Minister of the BJP-ruled state said. "Per capita power consumption in 2001 was 600 units. Now, it is 1,560 units, which is better than Delhi and next to Gujarat," he added.

• As the state electricity board levies minimal wheeling charges, it can transport and sell power to deficit areas in any part of India, Singh said. The country's largest power producer NTPC, which has a generation capacity of over 35,000 MW, operates two of its biggest thermal power plants in the state - Korba (2,600 MW) and Sipat (1,660 MW). The advantage with the state is that the power producers can source coal right at the pit, as it has rich coal reserves. This is also the main reason for the cost-effectiveness of generation activities in the state.

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Power situation improves in Orissa, yet 3-hour cut must…

• The deficit energy situation in the State leading to unscheduled and frequent power cuts has, in the meantime, improved to some extent with the Energy Department now holding that to manage the situation for a few days more it has to continue with minimum three hours of power cut daily - two hours during day time and one hour at night. The problem started with drastic reduction of power generation at the thermal power units including the NTPC at Kaniha due to shortage in coal supply resulting from reduction in the production level of coal for various reasons. On the other hand, coal price in the international market has gone up, putting pressure on the power generating units. Although the Coal India has stuck to its price level, its subsidiary, the Mahanadi Coalfield, has effected a change on the plea of higher production charges.

• This is a major fact or which has influenced power generation at the thermal power plants that made up three-fourths of the State's total energy requirement. This apart, dependable hydro-power plant sources like the Balimela, Indravati and Upper Kolab plants have gone lean on production, generating only 10 mw each. However, after two units of the Ib Valley Project, The Sterlite Energy and the NTPC at Kaniha agreed to provide 160 mw, 320 mw and 150 mw more, the deficit has slid to 300-350 mw, promising some improvement in the grim situation. The Energy Department has also asked the captive power plants of various industries to generate power to their full capacity which may help tide over the crisis completely.

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'Civil nuclear deal key to India-US prosperity'…

• Observing that completing the civil nuclear deal is central to the long-term prosperity of India-US relationship, the Obama Administration said ensuring a level-playing field for its companies in India's civil nuclear industry is its top priority. "Completing the US-Indian civil nuclear cooperation partnership is central to both our nations' long-term prosperity and India's future energy security," the State Department said yesterday in a written response to a question being asked by Indian journalists for the past several days. "Ensuring a level-playing field for US companies to invest in India's civil nuclear industry remains a priority for the State Department," the state ment said.

• "We are continuing to study India's regulations on civil nuclear liability," the statement said in reference to the recent gazette notification by the Indian Government in this regard. Given that it is almost over 10 days now after the Gazette notification was issued, informed sources familiar with the deliberations said that the United States is not at all happy with the notification as it feels that US companies would be at a disadvantage and its core issues have not been addressed. However, despite being repeatedly asked by journalists at the daily press briefings of the State Department, its officials are reluctant to publicly air their differences with India on this particular issue.

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CIL appoints PFC to select a suitable partner and operator for its proposed 1,600-MW power project in Orissa…

• Mining major Coal India said it had appointed the Power Finance Corporation to select a suitable partner and operator for its proposed 1,600-MW power project in Orissa. "We have appointed PFC to identify a partner for management of power plant at a tariff based pricing system," Coal India (CIL) Chairman N C Jha said. "We are looking for a 50:50 JV with the partner," he added.

• CIL had mooted the 1,600-MW coal-based power plant to utilise the coal from Vasundhara coalfields in Orissa. "If we want to raise production, there must also be consumption. We are planning for more thermal power plants at coalfields where there is inadequate evacuation infrastructure," Jha said. He said there were two more such locations where power projects could come up, one in Bandraigarh in Chatttisgarh and the other in North Karanpura in Jharkhand. At present, CIL tries to evacuate coal by selling it through e-auction and already has permission to sell 20 per cent of the coal from these locations through the auction route.

• Coal sold via auction is evacuated by buyers via road. Asked about coal supply to power plants, Jha said the supply to the sector is more than 80 per cent, or 1 million tonnes, a day. "We have already signed a fuel supply agreement for 600 million tonnes and from availability of 250 million tonnes, so how can we supply?" Jha said. Remaining coal has to be imported. Either they import or we can import if there is firm commitment, he said. CIL had already mooted a new JV company with the Shipping Corporation of India for imported coal supply to consumers. Meanwhile, CIL has expressed dissatisfaction with the progress of coal washeries projects due to delay in getting environmental clearances.

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Chhattisgarh to add 1,500 MW by 2012 - To raise its power generation capacity to 3,424 MW from the current 1,924 MW…

• Coal-rich Chhattisgarh will add 1,500 MW electricity by 2012 that will raise its power generation capacity to 3,424 MW from the current 1,924 MW, official sources said on Tuesday. "The work on 1,000 MW power project at Marwa-Tendubhata in Janjgir district and 500 MW Korba West power project are going on at war-footing and both projects will begin generation by 2012. It will raise Chhattisgarh Government's power generation capacity to 3,424 MW," an official of the State Energy Department said.

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Coal India open to utilise up to one-fourth of its projected Rs 600 billion cash reserve as of March 2012…

• Coal India Ltd has told the Union Government that it is open to utilise up to one-fourth of its projected Rs 60,000 crore cash reserve as of March 2012, to help the Centre mitigate the fiscal deficit; provided the company is 'assured' of a return, not less than the existing interest income from such reserves. CIL earned an int erest income of nearly Rs 1,800 crore in the July-September 2011 quarter from a cash reserve of Rs 45,000 crore. The interest income was nearly 70 per cent of the net profit of the company during the quarter.

• With chances of meeting the disinvestment target through public offer getting slimmer due to sluggish market condition, the Union Government recently asked the Central public sector companies to ascertain the cash position. The initiative is reportedly aimed at exploring options such as share buyback by cash-rich PSUs or encouraging PSUs to pick up stake in peers thereby releasing the much needed cash for the Government. "The Government had recently wanted to know about our cash reserves position. We will have reserves of about Rs 60,000 crore by March 2012. We have indicated that we will require three-fourths of it to meet capex requirements," Mr N.C. Jha, Chairman, Coal India, said on the sidelines of a seminar organised by the Confederation of Indian Industry here on Tuesday.

• He, however, clarified that the Government has not issued any directive on possible use of such funds, as ascertained by the company. Sources, however, said that the company in its response clarified that the company could part with the cash against an "assured income". "The cash reserve brings us an assured interest income and is contributing to the net profit of the company. We can part with some cash, if the shareholders so desire, provided, it does not impact our profitability," a source added. Shares CIL closed at Rs 302.55, 1.68 per cent higher than the previous closing, at BSE on November 22.

Source

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Suzlon gets 23 mw worth wind turbine order from Gail India…

Suzlon Energy has received an order from Gail [India] to supply 11 wind turbines with a total 23 mega watt capacity to enhance the gas utility's captive power requirements. This is the fourth order that Suzlon has received from Gail and the turbines will be commissioned in the states of Tamil Nadu and Karnataka by the end of the current financial year [2011-12], the company said. Following this order, Gail's total wind power capacity with Suzlon will exceed 67 mw, it said.

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150 MW solar power plant to be set up at Dhule soon…

• A 150 MW solar power plant will be set up in Dhule with financial assistance of Euro 250 million from KFW, a German investment bank. The project is claimed to be one of the biggest in the country. Speaking to TOI on conditions of anonymity, a senior director from Maharashtra State Power Generation Company Ltd said, "This would be one of the first solar power generation plants for which finance is coming from abroad. The total cost of the project is Rs 1,800 crore, of which some Rs 1,700 crore (Euro 250 million) is being financ ed by KFW and the state government will pump in the rest of the amount." The project is expected to start generation by the end of 2012. This would be the first solar project that will be connected to the national grid, he added.

• Photo voltaic cells will be used in the solar panels for storing power. The cells are durable and have higher efficiency than the silicon wafers. The state government has signed the supply contract in May this year with manufacturers of solar power panels. Lanco Solar and Juwi Renewable India Ltd will jointly supply crystalline technology-based photovoltaic solar panels for building a 75 MW power plant. The supply for the remaining 75 MW plant would come from other two partners, one of which is a Spanish company.

• The efficiency of the power panels is 20% of the total heat absorption, said the official. The proposal for the project came from the Union government, where the requirements for setting up a power plant were high radiation, bright light and dry climatic conditions. Dhule is one of the few districts in the state that has suitable climatic conditions. Data received from National Aeronautics and Space Administration ( Nasa) about radiation from solar rays revealed that Dhule will have maximum days with bright sunlight and heat for better power generation as it falls in the same line of radiation level as Rajasthan and Gujarat, said the official.

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Sunborne Energy mulls Rs 6 billion solar thermal plant in South India…

• Sunborne Energy, a Haryana-based solar power producer backed by General Catalyst Partners and Khosla Ventures, is contemplating setti ng up a 50-Mw solar thermal power project in Andhra Pradesh for an investment in the range of Rs 500 crore and Rs 600 crore (including land cost). The company has already acquired 200 acres in Andhra Pradesh and is now trying to work it out with the state government to set up the plant.

• "We are keenly watching the policy framework developments in the state. As and when we get a nod from the Andhra Pradesh government, we will go for it. We are technology-agnostic and we want to go with a technology (photo voltaic, crystalline or thin film) which is reliable and bankable, and is closer to the lowest cost of energy (LCOE)," Gagan Vermani, executive director and chief operating officer, said. Vermani said, they had seen Rajasthan, Gujarat and Karnataka coming up with some sort of policies, besides the National Solar Mission. "In AP, we have to wait for the right (policy) environment," he said.

• Sunborne, which had so far rais ed $25 million in a two-round funding from General Catalyst Partners, recently signed a power purchase agreement with the Gujarat government, for a 50-Mw solar thermal power plant and is expecting the project to be commissioned in the next couple of months. Also in the pipeline is a 5-Mw power project in Rajasthan under the MNRE scheme, to be completed by March 2012. "We are looking to expand aggressively and want to achieve a 20-Mw on-ground installed capacity by the end of this financial year and reach 200 Mw (only photo voltaic) in the next fiscal," Vermani said, adding the company was targeting a grid-parity by 2014 in photo voltaic by 2014.

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Green Infra commissions 10-MW solar plant in Gujarat…

• Green Infra Ltd, a renewable energy-focused power generation company, has commissioned its first 10-megawatt (MW) solar photovoltaic (PV) power plant in village Mervadar in Rajkot district of Gujarat. The company invested Rs 130 crore in the facility and has commissioned it ahead of its schedule, according to a release. This is the first solar plant to be commissioned under the second phase of Gujarat's solar policy, Mr Shiv Nimbargi, Managing Director and CEO, said. The solar PV plant is expected to generate 16 million units of energy annually, supplying electricity to over 4,000 homes and saving 12,000 tonnes of carbon emissions.

• With the commissioning of this plant, Green Infra's operating capacity now stands at 174 MW. The company is on track to implement an additional 150 MW by the end of this financial year, with a longer term plan to reach total generating capacity of 3,000 MW by 2015 across several renewable energy secto rs in a diversified portfolio including wind, solar, small hydro, biomass and energy efficiency sectors. Incubated by IDFC Private Equity Funds in 2008, Green Infra now has 174 MW of operating assets under management in Tamil Nadu, Karnataka, Maharashtra and Gujarat.

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PFS sanctions Rs 7.16 bn to 4 power projects…

• PFS has sanctioned financial assistance aggregating to RS 7.16 billion to 4 power projects in the current quarter taking the aggregate amount of loan sanctions to Rs 22.55 billion till date in FY12. This exceeds the aggregate amount sanctioned during the entire FY11 which was Rs 16.58 billion. Similar growth momentum has also been maintained in different key parameters of the company. The gross revenue rec orded in H1 FY12 was Rs 970.7 million, which is 89% of the gross revenue recorded in the entire FY11.

• Similarly, interest income on debt recorded in H1 FY11 was Rs 540.9 million which is 73% of the interest income on debt in entire FY11. Profit before tax (PBT) and profit after tax (PAT) during H1 FY12 records growth of 36% and 29% respectively over the corresponding figures of H1 FY11 despite foreign exchange translation loss on ECBs and mark to market loss on outstanding derivative contracts undertaken for hedging of ECBs amounting to Rs 43.6 million during H1 FY12.

• These are not the actual losses as the ECB drawls are for long term tenure of 12 years with 3 years moratorium for principal repayment. However, the provision, though not actual loss, was required to be provided for in terms of accounting standards applicable in India. If adjusted for the same, PAT for H1 FY12 would have been Rs 358.2 million which is 97% of PAT for the entire FY11. It may be mentioned that post Q2, on October 05, 2011, the company has concluded sale of investment pursuant to a ``Put Option`` exercised by the company during the current quarter. In accordance with the applicable accounting standards, gain of Rs 476.1 million arising on this transaction would be recognized in the subsequent quarter i.e. Q3.

• Another development subsequent to Q2 FY12 is that the company has executed necessary agreements for divesting its part stake in Indian Energy Exchange (IEX). Application for FIPB approval is being made. It may be mentioned that during FY11, PFS divested 4.88% stake in IEX at Rs 115.41 a share which was subscribed by PFS at face value of Rs 10 a share. PFS has loan pipeline of projects both for long term and mezzanine funding, which offers potential for additional sanction of more than Rs 40 billion. The effective undisbursed debt sanction as at the end of H1 FY12 was Rs 31.02 billi on. Increase in exposure norms on PFS becoming IFC, and increase in net worth on capital raising through IPO in March 2011, has increased the lending business of PFS significantly.

• The outstanding debt amounting to Rs 9.91 billion as at the end of H1 FY12 recorded increase of 63% over the outstanding debt as at the end of H1 FY11. Normally, the pace of disbursement is more in the later part of the financial year. PFS` portfolio of projects includes IPPs, and PFS has no exposure to distribution companies. There are NIL NPAs as on date. There is increasing number of proposals for mezzanine/short-term funding and for renewable projects, which may result in to quicker disbursement. The growth in the business of PFS is despite the stricter due diligence process followed for appraising the projects under prevailing risk environment for the power projects.

• Because of the low-cost resources available and ability to pass-through i ncreased interest cost, the Net Interest Margin (NIM) stands at 6.57% for Q2 FY12 and spread at 3.88%. Net Interest Income considered for NIM does not include interest income of Rs 54 million earned on treasury float on temporary surplus funds. NIM and Spread for Q1 FY12 were 4.97% and 3.03% respectively. The average cost of borrowings in Q2 FY12 has reduced to 10.22% from 10.50% in Q1 FY12.

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PTC India Financial Services eyes Rs 500 million from stake sale in energy exchange…

• Infrastructure lender PTC India Financial Services (PFS) expects to garner as much as Rs 50 crore from sale of over 16% stake in the country's largest power bourse, Indian Energy Exchange (IEX). PFS, which currently holds 21.12% stake in the power exchange, would probably divest more than 16% to one or more overseas players, sources said. On a conservative basis, the divestment of over 16% stake is expected to mop up about Rs 45 to 50 crore. The sale is expected to be complete by end of December, they added. he promoters of IEX include diversified group Financial Technologies (India) Ltd and PFS, a group company of leading power trading solutions provider PTC India.

• PFS has already approached the Foreign Investment Promotion Board (FIPB) for the planned stake divestment. The proposed stake sale is part of efforts to comply with the regulatory requirements . As per the Central Electricity Regulatory Commission (CERC) norms, an entity trading in electricity cannot have more than five% in a power exchange. Without divulging the names of prospective buyers, sources said the share sale by PFS would also help allay concerns of the investors about the overall power sector and the power exchange business, in particular.

• Last fiscal, PFS had sold 4.88% stake in IEX at a price of Rs 115.41 per share and brought down its shareholding to 21.12%. The stake sale and fetched PFS about Rs 14 crore at that time. Other key shareholders of IEX include Adani Enterprises, Infrastructure Development Finance Company (IDFC), Lanco Infratech, Reliance Energy, Rural Electrification Corporation (REC) and Tata Power Company. A non-banking finance company, PFS has sanctioned loans worth Rs 2,255 crore so far this fiscal. The company posted a 11% increase in profit after tax at Rs 22.64 crore for the three months ended September .

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Neyveli Lignite set to light 250 MW unit…

• Integrated mining-cum-power generation company Neyveli Lignite Corporation (NLC) is planning to light up one of the two 250 MW Circulating Fluidised Bed Combustion (CFBC) boilers Friday, said a senior official. "We are planning to light one of the boilers Nov 25. We hope to generate 150 MW initially and gradually increase that to the full capacity," an official told media preferring anonymity. According to officials, the second unit is expected to be commissioned next March once the unit gets stabilised after addressing the teething problems.

• He said officials from the Central Electricity Authority (CEA) had visited the unit recently. NLC officials said power generation will have to be increased gradually as the technology is new and issues have to be resolved. Officials said generation in the first unit was increased up to 150 MW during the test phase while issues were plugged d uring the process. Power equipment major Bharat Heavy Electricals Ltd ( BHEL) had supplied four CFBC boilers for NLC. While the two 250 MW units are located in its home town and near the pit head at Neyveli, the other two units - 2x125 MW - are in Rajasthan. The two units at Rajasthan were dedicated to the nation in June 2010, but the boilers started facing problems and power generation had to be halted.

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NTPC floats tender for importing 4 million tonnes of coal - Move to bridge shortfall in domestic supplies…

• NTPC Ltd has floated a tender on Monday for importing 4 million tonnes of coal to bridge the shortfall of the fuel from domestic sources. The country's biggest power producer has decided to import the coal directly, rather than depend on designated trading agencies, to cut down on delays. Coming at a time when the rupee has weakened sharply against the dollar, higher coal imports by NTPC could spell bad news for consumers as the move could impact power tariffs. NTPC consumes around 164 million tonnes of coal a year to fire over two-thirds of its installed generation capacity of around 35,000 MW.

• The imported coal is to be used across 14 of the power major's thermal stations in the coming months. NTPC is already in a pact to import around 12 million tonnes of coal through State Trading Corporation. The new tender, along with the STC contract, would make up the company's coal import target of 16 million tonnes set for the current fiscal.

• In the coming future, NTPC is looking at striking long-term contracts spanning 25 years for sourcing 10-15 million tonnes to ensure steady supplies and lower price volatility. NTPC' s average imported coal blending during 2010-11 was close to 8 per cent in comparison to about 6.5 per cent in the previous year. This could be much higher this year, as the domestic coal shortage is only getting worse and imports are surging. In the long-term, the state-owned power utility aims to meet about 20 per cent of its coal needs through captive mines by 2017. The Centre has allotted seven mines to NTPC, including two blocks to be developed through joint ventures.

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Power reform programme to be implemented soon…

• The Restructured Accelerated Power Development and Reform Programme (R-APDRP) of UT electricity department will soon be implemented as the Joint Electricity Regulatory Commission ( JERC) has accorded its approval to the department for availing the funds from the central government through the Power Finance Corporation (PFC). These funds will be used towards the implementation of Part-A of R-APDRP scheme for creation of reliable and automated systems with IT intervention for sustained collect ion of accurate baseline data.

• R-APDRP will have projects which would be undertaken in two parts - part A and part B. Part-A includes the projects for establishment of baseline data and IT applications for energy accounting/auditing and setting up IT based consumer service centres. Part-B shall include regular distribution strengthening projects. Part-A also covers SCADA implementation which facilitates centralized control of power supply position in Chandigarh. PFC has been appointed as a nodal agency for this Central Government funded scheme.

• The Government of India will provide 100% loan for part-A of the scheme and the entire amount of loan for it shall be converted into a grant after establishment of required baseline data system within a stipulated time frame. According to electricity department officials, the R-APDRP system will sort out various problems, while adding that the data related to meters and electricity consumption in various places will be available at the click of a mouse with the management information system. Also areas where there will be a power cut would also be identified early.

• A total of 17 modules are to be implemented in part-A, making most of the work of the electricity department computerized and web-based. The consumer will get to know the progress of any work by logging on to the electricity department's website. The centralized customer care centre will also be established which will work 24X7. The consumer can approach the centre at any time with his or her complaint and would get a number for further reference. Touch screen kiosks will also be established through which consumers will be able to get any information they want and pay their bills at any time.

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