The Power Purchase Agreement (PPA) for the said project has been signed with Gujarat Urja Vikas Nigam (GUVNL) for a period of 25 years.
Solar Modules for the project have been procured from Hanwha Solar One (China) and China Sun Energy while the Inverters have been sourced from Power One (Italy). The EPC Services have been provided by Sterling & Wilson (Shapoorji Pallonji Group Company)
The said installations of 3.45 GW includes 1,929 MW of wind, 86 MW of biomass, 782 MW of bagasse co-generation, 646 MW of small hydro and 9 MW of solar. Wind offers the maximum potential, with an untapped capacity of 11 GW. Obviously the huge untapped RE potential also creates an investment opportunity.
Significant potential also exists for solar, small hydro, bagasse co-generation and biomass sectors. Under the state's RE Policy, it is estimated that by 2014, there will be a generation of 6,600 MW of renewable electricity. The Renewable Purchase Specification in the state is for of 7%-10%.
Among others who took part in the meeting included the Finance Minister, Pranab Mukherjee, Environment and Forest Minister, Jayanthi Natarajan, Deputy Chairman Planning Commission, Montek Singh Ahluwalia. Prominent industrialists apart from Mr. Ambani and Mr. Tata included L. Madhusudan Rao, Anil Aggarwal, Prashant Ruia and Ashok Hinduja.
There may be some more good news to the Power Sector as Jayanthi Natarajan (the Hon’able Environment Minister, GoI) has announced today that Indian is planning for broader guidelines for environment clearances to the power sector; also the timelines of issuance of environment clearance will be prescribed.
"Within my mandate to protect the environment, our policy will be to have consistent, transparent guidelines," Jayanthi Natarajan said.
This move will substantially help the coal miners as:
Spark learnt that the outcome of thee meting with the Coal Minister was:
In a bid to achieve completion of 2 x 500 mw capacity addition in the 11th Plan Period, another unit of the same size is expected to be commissioned by March 2012.
The company is presently operating a total capacity of about 3,800 mw of which about 3710 mw is thermal while the rest at 144 mw is hydel. DVC has decided to add 4000 mw of fresh power generation capacity in the 12th Plan Period which starts from April 2012. The units will be put up depending on coal availability for the units.
The company is in talks with Life Insurance Corporation for raising funds through government guaranteed bonds, in order to finance its expansion plans. The power generator plans to raise a total of Rs 4400 crore from LIC and a clutch of banks for financing its capital expenditure through such bonds.
The company has been financing its projects on a 70:30 debt equity ratio.
In a big relief, there is some good news from banks for the power sector, especially to companies which seek a loan recast.
A number of state electricity boards (SEBs) or distribution companies (discoms) which had taken short-term loans from banks for liquidity support have found themselves in no shape to repay as committed.
Currently, talks are on between the Uttar Haryana Bijli Vitaran Nigam and its lenders, and between its counterpart in Tamil Nadu and the latter’s banks.
“Restructuring proposals from Rajasthan and Punjab are expected to reach bankers in the January-March quarter,” said Subhalakshmi Panse, executive director, Vijaya Bank.
There are other state agencies which had taken short-term loans (which run for around a year) from banks to bridge their revenue gaps. With repayment due, discussions on restructuring these have begun or soon would. Good news, isn’t it?
Coal India Ltd’s flagship company Mahanadi Coalfields Limited (MCL), will set up a 1600 MW power plant with super critical technology at its Basundhara area in Sundargarh district in joint venture.
MCL would be the only coal company in the country to venture into power generation. It intends to utilise its huge undespatchable coal reserve in Basundhara and invest its own surplus funds creatively.
A special purpose vehicle (SPV) Mahanadi Basin Power Limited has been formed last year. The Director Finance of MCL, Kulamani Biswal, has been appointed as the chairman of the Public Limited Company.
According to Biswal, the proposed coal-based power plant would be the first of its kind in the coal behemoth and is estimated to cost around `9000 crore. It will have two 800 MW units of super critical technology, Biswal added.
“The power project will be funded with debt-equity ratio of 70:30 where MCL will be holding 26 per cent of the stake. It may go up to 49 per cent. However, the management will be under a private partner,” Biswal said.
China Sunergy Co., Ltd. (“China Sunergy” or the “Company”), a specialized solar cell and module manufacturer, today announced that a solar PV project in Guajarat, India including China Sunergy’s solar panels was successfully connected to the grid. The 25 MW Project, of which 13 MW of high quality solar modules were supplied by China Sunergy, was completed in partnership with Visual Percept Solar Projects Pvt. Ltd (“Visual Percept”).
China Sunergy entered into its strategic partnership with Visual Percept, one of the leading solar project developers in India, last year. The CSUN solar modules deployed in the newly commissioned Project were supplied to Visual Percept in August 2011.
Stephen Cai, China Sunergy’s CEO commented, “The Indian solar industry has huge potential, and the country is keen to expand its alternative energy usage. We are very committed to this market, and are very pleased that this project is now up and running, which is a testament to our reliable product quality. China Sunergy is not only further diversifying its geographic focus but also endeavoring to create better life for people all across the globe with our value-added products.”
“China Sunergy’s high performance products and dedicated service strongly impressed us. We look forward to working with China Sunergy on future projects to realize India’s National Solar Mission,” said Mr. Akash Bhanshali, Director of Visual Percept’s parent company.
“Sharing savings is a widely used concept in the Western countries, especially in the US,” said S. Padmanabhan, Tata Power’s director of operations. “If we are buying expensive power at `8 per unit to meet a customers’ peak-hour demand, and his tariff is `5 per unit, and if he doesn’t consume that unit during peak hours, then I, as a utility, don’t have to buy that unit of power. So it brings savings to both me and him. In this case, the saving will be of `3 per unit. This saving can be shared based on a predetermined formula.”
Tata Power caters to one-third of Mumbai’s total demand, which is 2,400-2,500 megawatts at present and goes up to 3,000-3,100 megawatts during summers. The remaining demand is met by the Brihanmumbai Electricity Supply and Transport Undertaking (BEST) and Reliance Infrastructure Ltd. While BEST supplies power between Colaba and Nariman Point in south Mumbai, and Sion and Mahim in north Mumbai, Reliance supplies power to suburbs.
Power distribution utilities buy expensive power through short-term contracts to meet peak-hour demand. Typically, contracted power costs `2.5-4 per unit. Buying power in the spot market or through short-term contracts can cost anything between `5 and `11 per unit, depending on the season.
Tata Power’s customer base in Mumbai grew from around 22,000 in 2008 to over 250,000 by the end of 2011. Its power generation capacity for Mumbai is around 1,800 megawatts. During the winter season it purchases about 70-100 megawatts from the open market at the average rate of around `5 per unit. It also supplies power in Delhi through its subsidiary North Delhi Power Ltd. Power generated from Tata Power’s own generation capacity costs around `3.70 per unit. The demand can shoot up to 150 megawatts during summers, and so do the rates.
If supply does not match demand even after the purchase of the expensive power, utilities resort to load shedding. But since Mumbai is the only city in India to have 24x7 electricity supply, this option is not available to utilities like Tata Power.
Padmanabhan said the proposed sharing of cost savings is part of the company’s plan to implement several demand-side management programmes to reduce peak-hour consumption, which will help the company improve its profitability.
”Over the next five years, we expect (Mumbai’s power) demand will grow beyond 4,000 megawatts and our company is aiming to have a 50% market share of the total power supplied in Mumbai,” said Padmanabhan. The company is planning to invest `250 crore annually over the next four to five years to enhance its network. Currently, it is using Reliance Infrastructure’s network.
“To introduce such a (savings sharing) scheme, Tata Power will have to put in place information technology infrastructure to monitor the pattern of energy consumption of its customers,” says Ashwini Chitnis of Pune-based think tank Prayas Energy Group, which does research on issues and policies related to the energy sector.
Added Kameswara Rao, executive director and head of the infrastructure, utility and mining practice at consultancy firm PriceWaterhouseCoopers India Pvt. Ltd, “Such saving schemes can be implemented only for industrial and commercial consumers who are charged much higher tariff than average cost of power supply whereas residential and other consumers are subsidized by these industrial and commercial consumers.”
"Our exposure in the power sector is not stressed and there had been no case of restructuring of loan. (This) despite our exposure in the sector being 37 per cent," joint General Manager (risk and asset management), L&T Infra Dhananjay Yellurkar said on the sidelines of roadshow for infrastructure bonds.
In the power sector the problem is only in thermal power projects due to coal issues, he said.
Thermal power projects are just 13-14 per cent of their Rs 8,800 crore cumulative exposure and only 4-5 per cent of their exposure is in thermal projects linked to coal linkages from Coal India and another just two per cent linked to imported coal, Yellurkar said.
Telecom portfolio since last few years had shrunk to 12 per cent, he said adding the company is bullish on green energy sector in which company's exposure remains 20 per cent.
L&T Infra has exposure in renewables, hydro and cogeneration.
Last year, focus was in solar and this year it will be in wind, he pointed out.
Roads remained another area of focus with current loan portfolio of 17 per cent, but Yellurkar said they remained vigilant in selecting road projects.
"There was some aggressive bidding in some road projects compared to realistic traffic projections. So we have to vigilant," Yellurkar said.
Meanwhile, the infrastructure finance company raised Rs 530 crore through first tranche of infra bonds out of a total of Rs 1,100 crore in the current financial year.
The easing of yield on 10-year paper since December helped the company to reduce rate of the tranche 2 bond by 30 basis points to 8.7 per cent to raise upto another 470 crore.
The issue opened in January 11 and will close on February 11.
In an uncertain environment for Indian power players given concerns on fuel shortage and financial health of State Electricity Boards, we believe Reliance Power is favourably placed amongst its peers. RPWR's UMPPs have captive coal mines. Its UMPP tariffs are also the lowest, reducing risk of a SEB default. While concerns and uncertainty on coal for Krishnapatnam and Chitrangi remain, on conservative estimates, we arrive at a SOTP-based target of Rs115. Initiate with a BUY.
Fuel security: Out of 17.6GW of coal-based capacity under construction, 90% have captive coal blocks. For balance projects, CIL has assured a linkage of about 50%. Given most power capacities are facing delays and uncertainties due to coal concerns, we believe RPWR's projects will be on track.
Fears of SEB's ability to pay: With most of RPWR's projects tariffs being low, we believe it faces minimal risk of SEB default compared to peers.
Projects likely to earn IRRs in excess of 16%. Our analysis of RPWR's various projects indicates project IRRs in excess of 16% on conservative assumptions despite very low levelised tariffs.
Earnings CAGR of 25% over FY11-14: We expect the company's revenues to grow by 126% and earnings to grow by a compounded 25% over FY11-14. Most of the projects are currently in a construction stage and hence the company should benefit from a low FY11 base.
Valuations attractive, initiate with BUY: Serious concerns on fuel availability, regulatory uncertainties, availability of finance, and health of SEB's has resulted in de-rating of the sector. However, we believe RPWR's current low valuations are not justified. On conservative assumptions, our SOTP-based target comes to Rs115, an upside of 33% from current levels. We initiate coverage with a BUY rating.
The Reliance Power stock closed the day at Rs.88.80, up by Rs.1.95 or 2.25%. The stock hit an intraday high of Rs.90.10 and low of Rs.87.55.
The total traded quantity was 12.54 lakhs compared to 2 week average of 15.21 lakhs.
"The fuel surcharge will be collected from the consumers with immediate effect though there could be a delay with regard to some categories of consumers due to a stay granted by the AP High Court," AP Transco chairman Ajay Jain told TOI. According to sources, depending on the consumption, the fuel surcharge could range from Rs 120 per year to several thousand rupees per consumer.
However, in a big relief to the domestic consumers, they need not pay the fuel surcharge for 2008-09 as then chief minister Y S Rajasekhara Reddy had agreed for the state to reimburse their share to the discoms. But industrial and commercial consumers will have to pay the fuel surcharge for 2008-09. For the year 2009-10, all consumers including domestic have to pay the surcharge as YSR's successor K Rosaiah had refused to take care of the dues of the domestic consumers. Since the 28.5 lakh agriculture farmers in the state are being supplied free power, the fule surcharge will not apply to them.
Of the total Rs 3,050 crore that the discoms are coughing up from the various consumers for those two years, the domestic sector will have to pay Rs 807 crore. "The domestic consumers will have to pay about 0.18 paise per unit in addition to their regular bill which means about 18% increase in their bills from next month onwards," said a senior official with the AP Transco.
Lanco Infratech's subsidiary Udupi Power Corporation Ltd (UPCL) was unable to make a debt repayment of 90 crore that was due on January 15, as it has not received payments totaling 450 crore from the state distribution companies (discoms) in Karnataka for its first unit of 600 mw at Udupi. Also, inordinate delay in commissioning of the second unit of 600 mw has further worsened cash flows to the company.
"There has been delay in payment on outstanding of 90 crore as we have receivables due with the state discoms. We are working closely with the state government so that the issue is resolved and we have cash," a senior executive from Lanco Infratech said.
The company had raised a loan of 4,500 crore for the project from a consortium of 15 banks led by state-run Power Finance Corporation. Although the company did not reveal names of other banks, analysts said that the consortium included Bank of Baroda, Dena Bank, IFCI, Canara Bank, Bank of India, Indian Overseas Bank, Punjab National Bank, Indian Bank and IDBI. They said that ICICI Bank, Axis Bank and Rural Electrification Corporation do not have any exposure to the loan.
"UPCL has paid all installments until now. The non-payment in January is not yet a concerna¦it takes six months to consider it as a non-performing asset," Power Finance Corporation's chairman and managing director Satnam Singh said.
UPCL is in pact to sell power to eight state-run power distribution companies, of which seven are located in Karnataka and one in Punjab. The first unit of 600 mw, which sells power primarily to Karnataka discoms, started operations in 2010. The second unit is ready for commercial operations but is not able to do so as Karnataka Power Transmission Corporation has not been able to complete the transmission line due to delay in clearance from the ministry of environment and forests.
In April 2011, the company's loans were rescheduled due to a delay in commercial operation of the second unit from an earlier schedule of August 30, 2010, to April 30, 2011. It has been further postponed to August 2012.
Earlier this month, CRISIL Ratings downgraded the ratings on the bank facilities of UPCL to 'CRISIL B+/Negative' from 'CRISIL BB+/Negative' and cautioned that the company may not be able to service its debt repayment in January. The rating agency had said that UPCL was seeking an additional loan of 340 crore and was talking to its offtakers for payment to manage cash flow.
Power Trading snapshots of two major exchanges IEX (Indian Energy Exchange) and PXI (Power Exchange of India) for 17th January 2012.
Market Snapshot on IEX
| Category | Purchase Bid (MWh) | Sell Bid (MWh) | Unconstrained MCV(MWh) | Constrained MCV (MWh) | Unconstrained MCP(Rs/MWh) |
| Total | 51319.5 | 58891.5 | 37284.9 | 32770.8 | - |
| Max | 2835.2 | 3371.8 | 1837.0 | 1691.6 | 4100.5 |
| Min | 1715.6 | 1697.1 | 1140.1 | 993.4 | 2058.5 |
| Average | 2138.3 | 2453.8 | 1553.5 | 1365.5 | 3009.6 |
Market Snapshot on PXI
| Category | Purchase Bid (MWh) | Sell Bid (MWh) | Unconstrained MCV(MWh) | Constrained MCV (MWh) | Unconstrained MCP(Rs/MWh) |
| Total | 1826.4 | 4614.0 | 1069.7 | 606.9 | -- |
| Max | 87.6 | 272.0 | 79.8 | 40.4 | 4990.0 |
| Min | 56.6 | 50.0 | 1.5 | 0.2 | 2490.0 |
| Average | 76.1 | 192.3 | 44.6 | 25.3 | 3365.4 |
Legends:
