RBI to issues guidelines to ease the debt burden on Power Companies…

Latest in the series of good news for power sector, recently Reserve Bank of India (RBI) has announced that it will issue guidelines to allow external commercial borrowing (ECB) by power producers to retire their rupee debt with Indian banks in next seven days.

 

This move came from the announcement by Hon’ble Finance Minister Mr. Pranab Mukherjee in the Budget 2012-13 to allow power sector companies refinance their rupee debt with cheaper funding from ECB and thereby opportunity to expand their loan portfolio with banks to muster funds required for their expansion and new projects.

 

Several banks and financial institutions have reached the sectoral exposure limit allowed by RBI for the power sector there putting pressure on power sector companies to mobilise funds from the domestic market.

 

The RBI will also issue guidelines to allow ECB for making capital expenditure on the maintenance and operations of toll systems for roads and highways.

 

The remaining decisions on ECB financing announced in the Budget would be taken up separately by RBI at a later stage.

 

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Ajay devegan has set up a 25 MW solar pv plant in Gujarat with Roha Group and Kumar Mangat…

Film actor and producer Ajay Devgn has forayed into solar power sector by setting up a 25-mw unit in Gujarat in a joint venture with the Roha Group and film producer Kumar Mangat.

 

As said by Mr. Devgan

“The thought behind our entry is that we believe solar power is the future of industry. We are aiming to reach 500 mw within 3- 5 years with a total investment of . 5,000 crore,”

The JV has commissioned the solar power unit at a project cost of . 350 crore, which includes 70% debt financed primarily by ICICI Bank.

The unit is a part of the Charanaka Solar Park in Gujarat that has an installed capacity of 200 mw and can be scaled up to 300 mw.

The project is scheduled to be inaugurated by Gujarat CM Narendra Modi on April 19.

Gujarat with two-third of India’s installed solar capacity, has attracted several investors by offering tariff as high as  Rs. 15 for every unit.

 

 

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Sinovel (China) & Mita Teknik (Denmark) to work together for customized wind turbine control systems…

Sinovel (China based wind turbine manufacturer) and Mita Teknik (Denmark based wind turbine control system provider) one of the largest players globally in respective fields have join hands to develop customised wind turbine control systems.

Speaking at the EWEA conference in Copenhagen, Sinovel, a wind turbine manufacturer and Mita-Teknik, a manufacturer of turbine control systems, said the products will be developed for Sinovel’s range of turbines.

The agreement comes after the two companies worked together to customise Mita-Teknik’s control system platform, WP4x00 Mark II, released in spring 2011, for use with Sinovel’s 1.5MW and 3MW turbines. The order for the control systems will be delivered later this year.

The pact will see the two companies co-develop the “next generation” of high efficiency turbine control systems for distribution to clients in China in particular.

Mads Høy Mortensen, key account manager at Mita-Teknik, said: “The agreement is based on a close and efficient cooperation between all levels of the two organisations, including R&D departments.”

Mita-Teknik has made all data from the control system available to Sinovel, allowing the Chinese company’s engineers to create unique solutions for their customers. One of the key features of the platform, which the Danish company said would boost its market appeal around the world, is the parametric grid object, which enables Sinovel turbines all over the world to connect using local grid codes.

The move comes as Mita-Teknik looks to advance its control system tools in the Chinese and Asian markets.
Jesper Andersen, chief executive of Mita-Teknik, said: “China is the largest, most fast-growing and promising wind power market in the world. By providing advanced technical support to Sinovel, Mita-Teknik’s technical advantages shall be demonstrated in China, and will help us to further penetrate the target markets, especially China.”

Sinovel has already used Mita-Teknik’s technology in its turbines and began collaborating on technical development in 2008. Under this week’s agreement, Sinovel owns the intellectual property rights to the modified and upgraded versions of the software and source code, as well as the right to use the initial version in all products the company produces.

 

 

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Power producers to meet PMO on low penalty level in CIL’s guaranteed FSAs…

We have posted a news that Coal India Limited  (CIL) has agreed to sign the guaranteed FSAs with the power producers however with the lowest penalty level. (See the post here).

With the current level of penalty, CIL would have to pay only Rs. 77 lacs annually if it fails to supply the guaranteed quantity of coal.

Private Power Producers, miffed at the CIL Board’s decision, are again planning to approach Prime Minister’s Office (PMO).

 

The events are happened in the below order.

• After last month’s presidential directive to the world’s largest coal producer, its board on Monday agreed to sign new FSAs with power companies at an 80 per cent commitment level.
• However, the board not only set a penalty level of a mere 0.01 per cent (one-hundredth) the value of the shortage below 80 per cent, it also wants the penalty to come into effect only after three years of signing FSAs. “If we keep the average price of coal for the power sector at about Rs 1,100 per tonne, the penalty we are going to pay after three years would be around Rs 1.1 lakh per million tonne. This shows the penalty clause of 0.01 per cent will not have any effect at all to the company’s profits,” a senior CIL executive admitted, on condition of anonymity.
• The maximum fine CIL would have to pay if it failed to meet the promised 70 mt of additional coal, according tot the FSAs, would be about Rs 77 lakh.
• Considering CIL had a turnover of about Rs 50,200 crore in 2010-11, the penalty would hold little meaning.
• According to a board member, in the seven-hour meeting yesterday, the main point of contention was the penalty clause. “Independent directors were not even ready to give a penalty clause. Finally, we decided to keep it at the least possible level,” he said.
• At present, penalty is paid by the coal supplier at 10 per cent (one-tenth) of the value of shortage below the committed quantity. The domestic industry has termed the board’s decision on low penalty level “irresponsible behaviour” and “a mockery of assured supply”.

Power producers are understandably complaining. “We feel the presidential directive has not been followed in spirit and intent.

So, the coal ministry should act suo motu (on its own) to address the concern. And, if it does not, we will take up the matter with the prime minister again,” according to Mr. Ashok Khurana, director-general of the Association of Power Producers. He, however, added any decision on FSAs would be taken by companies individually.

“Our allocation to the power sector would cross the 400-mt mark this year, compared with the current 383 mt. During the first two years, allocation won’t be a problem for us, as there would be no shortfall. So, even if imports take place, these would begin from the third year,” according to a  senior CIL executive.

 

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