first unit of the 800 MW at Krishnapatnam Thermal Power Project to be commissioned soon...

 

The first unit of the 800 MW at Krishnapatnam Thermal Power Project will be commissioned this year followed by second unit of 800 MW, Kakatiya 600 MW and Hinduja second unit of 520 MW next year, Andhra Pradesh chief minister N Kiran Kumar Reddy has said.

Speaking at the sixth power awards function on Friday, he said apart from these projects, 255 MW from Tuticorin and 120 MW from central generating stations is also expected during the year. Besides, 500 MW solar and 500 MW wind energy projects are also likely to be added during the year, he said.

The government is planning to add 365 33/11 KV substations during the current year and around 1,800 in the next four years. It has been proposed to add additional one lakh distribution transformers every year in the state in the next 4 years.

The state government has also put in place solar policy with subsidy for roof-top solar cells and allowing net metering facility, the chief minister said.

‘’We encouraged investments in gas-based power plants and ultimately after huge investments in capacities, we reversed the policies stating that power generation using gas is not a national priority. Our state alone has close to 7000 MWs installed capacity and hardly one tenth of it is being used today,’’ he remarked.

‘‘Our transmission and distribution losses have come down to 15.72 p.c from 24.15 p.c.,’’ he said.

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Factor in lifetime costs of power plants while importing from China: CEA

 

Reports say that Indian imports of power equipment from China have hugely shot up and risen to 45% of the market in 2012-13, up from just about 15% in 2005-06.

Now, there are gains from trade, and the power producers can be seen as duly taking advantage of attractive prices and prompt delivery schedules of Chinese power gear.

However, a recent study by the Central Electricity Authority (CEA) has reportedly reiterated, again, that Chinese equipment already installed routinely underperforms on all key parameters, compared to those designed and built domestically. The need is to design incentives to factor in lifetime rather than initial costs.

When it comes to operating ratios, heat rate, auxiliary consumption, forced outages, etc, the imported power systems have been deficient. We need to address the real risks of malfunction and compromised safety at the Chinese-equipment plants.

It is possible that the imported power systems have not been designed to accommodate the various peculiarities of Indian coal and operating conditions. It surely makes a cast-iron case for Chinese equipment makers to mandatorily set up facilities here in India to design, build and maintain power systems.

In any case, about 25,000 MW of installed generation capacity, which is a considerable chunk of the total nationally, is already based on imported Chinese equipment like boilers and turbines, and to service and maintain the systems, local presence ought to be imperative.

Domestic power producers can be encouraged to import equipment provided, of course, that the capital goods meet domestic operational standards in actual working conditions. In tandem, domestic power equipment makers need market access and a level playing field in China.

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CCI intervention likely in RGPPL gas allocation issue...

 

The power ministry may refer the issue of gas allocation for Ratnagiri Gas and Power (RGPPL), formerly the Dabhol Power Company, to the Cabinet Committee on Investment to fast-track the process and prevent lenders’ exposure of R8,500 in the project from turning into a non-performing asset.

A source said while an EGoM on March 28 has approved priority gas allocation (along with the fertiliser sector) to the project, the 1,967-MW plant is non-operational since August 1, 2013. “Involvement of a high-level body to resolve the issue quickly may prevent the project from getting bust,” the source said.

The power ministry has already raised the issue of gas allocation for RGPPL with the oil ministry that is understood to have expressed its inability to give additional gas allocation to the project. Considering the seriousness of the issue, an EGoM meting could also be convened.

Faced with a low outputfrom RIL’s KG-D6 block, the EGoM on August 23 capped gas supply to fertiliser units at 31.5 mmscmd and allowed all additional gas available beyond this upto 2015-16 to the power sector. But this exercise would leave only 1.125 mmscmd of gas for power in 2013-14, 3.980 mmscmd in 2014-15 and 6.895 mmscmd in 2015-16, leaving little for priority allocation for RGPPL.

“...the company is finding it difficult to meet its debt service obligations to lenders who have large exposure in RGPPL of about R8,500 crore,” ICICI bank managing director and CEO wrote to power minister Jyotiraditya Scindia flagging off the issue.

“Immediate supply of at least 2.5-3.0 mmscmd to RGPPL from APM sources as an interim measure is needed in order to bring parity with other gas based power plants which are currently operating at around 25-30% PLF. This would ensure that company is able to meet its debt service obligations without default,” she said.

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New bidding norms to make power tariffs realistic...

 

Why are the new bidding norms so important for the power sector?

Fuel uncertainty over the years has impacted power projects in a big way in the absence of a reasonable pass-through mechanism in the power purchase agreements (PPAs).

This led to abnormally high tariff quotations in the PPAs, which the state distribution utilities battling with deteriorating financial health can't handle. The situation became so difficult that there was a PPA lull since 2010 and for those few that are under the process, or have been signed recently, in states like Rajasthan and UP, the tariff is abnormally high. Going by the PPAs signed recently in Rajasthan, Uttar Pradesh and Tamil Nadu, the developers have quoted prices as high as R5 per unit to the distribution companies and yet won the contracts. These exorbitant prices, apparently beyond the market’s capacity to pay, are mainly due to the uncovered fuel risk in the existing case-1 bidding provisions. The new prices discovered for long-term, up to 25 years power supply, are significantly higher than the price level of R3-3.50/unit quoted by the developers in 2010.

How will the new bidding norms help in solving this problem?

The new framework cleared by the government now allows pass-through of the additional cost of fuel and also safeguards any misuse of the fuel source linked to a power project. The new bidding norms will remove fuel uncertainties associated with quoting of tariff and, in turn, will allow bidders to project realistic tariffs.

Which are the different categories of projects covered by the new bidding norms?

The power ministry has issued model RfQ, RfP and Power Supply Agreement for procurement of power through tariff-based competitive bidding for construction and operation of thermal power stations set up on design, built, finance, own and operate (DBFOO) basis by distribution licensees.

The new guidelines for procurement of power under these documents with effect from November 9, 2013, have also been notified. In terms of guidelines notified in 2006 and amended from time to time, procurement can be done under two categories:

* Case-1: Where location, technology or fuel is not specified by the procurer.

*Case-2: For hydro-power

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