Aggressive bidding in coal e-auction to hurt power sector…

 

According to some of the Power Sector Bidders, the aggressive bidding by some of the bidders would lead to disaster in the tariff and capital cost of the power projects.

Several bidders have taken a very aggressive call discounting the mining fee by making money elsewhere such as coal sizing/handling costs, washing costs, selling of rejects/middling in open market, port charges, transportation/shipping costs etc. in their landed price of coal to their power plant.

This will lead to a chaos in the sector and will hamper the sustainable growth of the coal sector.

It was expected the Power Ministry will prepare new Standard Bidding Documents & Guidelines by incorporated the past experience and plugging all the loopholes to encourage the bidders to bid for serious and mature bids which will be sustainable in the future and provide overall growth in the Sector.

However this philosophy is not evident in the present coal block auction process and the entire process is plagued with several important loopholes.

If the present auction process continues in the same way then it will defeat the sole purpose of the sustainable and transparent growth in the sector and will lead to a complete failure of the system which will end up providing control of the majority of the mines in the hands of few mighty bidders only.

The sector experts also pointed out that aggressive bidding will also not encourage investments in the sector. Some even suggested that the best solution today will be to handover these mines to Coal India in the interim and let the Ministry to develop a full-proof bidding guideline first so that the serious & sustainable bidding takes place leading to an overall growth of the coal sector.

Source

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NLC production to jump to 11,195 MW in a decade…

 

The implementation of new power projects would increase the production capacity of Neyveli Lignite Corporation to 11,195 MW from the present 2,740 MW within a decade, B Surender Mohan, Chairman cum-Managing Director of NLC said today.

In his Republic Day address, Surender Mohan outlined the progress of new power projects. The 2 x 250 MW TPS-II Expansion projects would commence commercial operation in the current fiscal.

Units I and II of the (2 x 500 MW) joint venture project 'NTPL' at Tuticorin is expected to be commissioned in February 2014 and May 2014 respectively, he added.

As regards the 2 x 500 MW Neyveli New Thermal Power Project, Unit I is likely to be commissioned in August 2017 and Unit-II in February 2018.

"4,000 MW coal based Sirkali Thermal Power Project in Nagapattinam is under our active consideration. We are pursuing the matter with Tamil Nadu government to get in-principle approval for land allocation," the NLC chief said.

Also, 51 MW Wind power farm is being set up at Kaluneerkulam in Tirunelveli District and the bid process is on for a 10 MW Solar Power plant at Neyveli.

Several other projects like the 3 x 660 MW Ghathampur Thermal Power Project in Uttar Pradesh, and 1 x 250 MW Bithnok Thermal Power Project in Rajasthan are gaining momentum, he informed.

Source: Business Standard

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Chinese power firms in India under pressure due to rupee…

 

Chinese power generations companies which rapidly expanded operations in India in recent years are complaining of pressure due to depreciation of rupee and appreciation of China's currency RMB, saying it has eroded their profits.

Indian rupee devalued about 20 percent at one stage in 2013, while the RMB appreciated five percent, eroding 25 per cent of the gross profit margin, Xu Huadong, Chairman of Chinese machine and generator manufacturer Power HF said.

"We are forced to improve management efficiency and lower operation costs. But there is a limit. Our price advantage is diminishing, and we are considering opening production plants globally," he told state run Xinhua news agency.

Power HF, based at Weifang City in east China's Shandong Province, has exported 38,500 engines to India for use in telecom base stations across the country.

If those base stations break down, more than 100 million Indian mobile users will be affected.

The firm has also set up a network of 174 service stations employing more than 1,500 local people across India to provide 24-hour maintenance services.

Its business in India started in 2007, when the Reliance Group, one of the top three telecom companies in India, ordered the engines.

The Indian market now comprises more than 30 per cent of the total revenue of Power HF, which now has bigger plans.

"Currently we mainly provide maintenance services for the engines of the telecom base stations. In future, we hope to offer maintenance of air-conditioners, antennas and other equipment at the stations, based on our established network," Xu said.

The firm is eying other countries and regions, with Africa as the next key market.

"We want to copy the successful model in India, but adjustments must be made according to the situation in different countries," Xu says.

When Power HF entered India, the enterprise redesigned its products according to the hot and humid environment.

Since India has stricter noise restrictions, it also adjusted their engines to reduce noise.

"Now we are entering Egypt and we must take the heat, wind, sand and dust into consideration," says Xu, adding skilled workers were harder to find in Egypt than in India. So training maintenance workers will be given priority.

"The quality of Chinese machinery is already world level. But Chinese machinery manufacturers must focus on service if they want to go abroad," Xu said.

Source

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Peak power deficit in India rises to 4.2 per cent in December: CEA…

 

India's peak power shortage increased to 4.2 per cent, or 5,547 MW, in December from a month earlier due to lower hydroelectric and wind power production, according to official data.

Electricity demand in the country last month was 1,32,786 MW, of which 1,27,239 MW was met, data with the Central Electricity Authority (CEA) showed.

The peak power deficit, or shortfall in electricity supply when demand is at the maximum level, was 3.7 per cent, or 4,803 MW, in November, according to the CEA.

"The prime reasons for increased power shortage is decrease in hydel and wind generation and increase in load, mainly in north India, due to winters," a CEA official told PTI.

The northern states of Delhi, Haryana, Uttar Pradesh, Himachal Pradesh and Uttarakhand were the worst affected with a deficit of 7.1 per cent, or 2,912 MW. Electricity demand in the region was 40,812 MW and supply was 37,900 MW.

The northeastern region of Assam, Manipur, Meghalaya, Arunachal Pradesh, Tripura, Nagaland and Mizoram recorded a deficit of 5.9 per cent. The demand for power was 2,009 MW and supply 1,890 MW.

The eastern states were the least affected with a 1.5 per cent peak power shortage. The electricity requirement of states including West Bengal, Odisha, Bihar and Jharkhand in December was 13,814 MW and supply was 13,604 MW.

The western region, which includes Chhattisgarh, Gujarat, Madhya Pradesh, Maharashtra and Goa, reported a power shortage of 1,031 MW, or 2.5 per cent, on demand of 41,335 MW.

The peak power deficit in the south -- Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Lakshadweep and Puducherry -- was 3.7 per cent, or 1,275 MW, with demand at 34,816 MW.

Source

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Dec quarter likely to be weak for Power Utilities sector: Credit Suisse…

 

The third quarter ended December 2013 is likely to be weak one for the utilities sector in the country, according to outlook presented by Credit Suisse India Research.

Providing insight into the third quarter ahead of the corporate sector coming out with their earnings reports, Credit Suisse expects states, “We expect the third quarter of 2013 to be another weak quarter for most Indian utilities. While Adani Power, JPVL, KSK and Lanco are likely to report losses, NTPC and NHPC's profitability is expected to decline anywhere between 1-5 per cent year on year. And that of the Tata Power's profitability is expected to decline year on year.”

Adani Power is likely to report a loss as Mundra project Power purchase agreements (PPAs) have to be honoured status quo pending Central Electricity Regulatory Commission (CERC's) final decision on compensatory tariff. For Lanco, low plant load factor (PLF) and Griffin's continuing losses could result in loss in during third quarter.

With regards to NTPC, the analysts from Credit Suisse in their report state that the recurring profit after tax (PAT) to remain almost flat year on year. The status on captive coal production, imported coal supplies to Farakka/Kahalgaon projects, railway infrastructure issues at Mouda project along with any update on discussions with CERC on upcoming tariff regulations are key factors to watch.

In the case of Reliance Power’s Rosa project profitability is expected to remain robust but with Sasan ultra mega power project (UUMP's) units presently getting capitalised, recurring profit is expected to grow.

In the case of Tata Power, losses in Mundra UMPP's are expected to continue. Pending CERC's final decision and the profitability in the coal business is expected to decline due to correction in international coal prices.

Source

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Government to generate 9,000 MW of power in next 5-6 years in JK…

 

The Jammu and Kashmir government has conceived a well-planned and realistic power generation strategy and set a target to generate 9,000 MW electricity in next 5-6 years in the state, Industries and Commerce Minister Sajad Ahmed Kichloo said today.

"Chief Minister, Omar Abdullah has conceived a well- planned and realistic power generation strategy and set a target to generate 9,000 MWs of electricity in next 5 to 6 years in the state," Kichloo said while interacting with deputations of people from Chenab Valley at Civil Secretariat here this afternoon.

He said for the first time in the history of the state that coalition government, under the leadership of Chief Minister, has framed a well-planned policy to tap the huge Hydle Power Potential in the state.

Chenab Valley in particular is emerging as hub of power generation where about five hydro- electric power projects are coming up on the river Chenab, he said, adding the Chenab Valley is gifted by God with abounded hydro power potential which is being exploited optimally under the New Power Generation Policy of the government.

He said a separate agency Chenab Valley Power Projects Private Limited (CVPPP) has been constituted by the government to explore all the possibilities to tap maximum power potential.

Source

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Green shoots emerge in power sector: India Ratings

 

Indian government's policy measures are helping the power sector as green shoots have started to emerge, believes India Ratings. These policies are directed to solve the fuel risk and poor financial health of state power utilities in 2012-13 and 2013-14.

Two years before the reforms kicked in (2010-11 and 2011-12), were the worst years for the sector due to many reasons like low retail tariff hikes amongst others. “Power entities also suffered due to high debtors for players across the value chain, non-availability of fuel, high interest rates, foreign exchange losses and regulatory risk leading to low investor interest,” said the rating agency.

After two tough years came measures to ease coal availability, which include a Presidential directive issued to Coal India to sign fuel supply agreements with power producers, fast-track mine clearances and action on non-serious captive coal block developers.

India Ratings believes that fuel price risk is likely to be manageable with the formulation of a new standard bidding document with fuel costs passed through, compensatory tariff for select competitive bids and suitable modifications to allow pass-through of imported coal costs in Coal India linkage-based fuel supply agreements.

“The government is also working towards bringing greater transparency in the sector through the constitution of a coal regulator and formulation of a coal block auction mechanism,” the agency said, in a press release.

The state electricity boards have gradually increased tariffs, leading to a gradual recovery. The Cabinet Committee has also approved a financial restructuring package, which was adopted by the states of Haryana, Uttar Pradesh, Rajasthan and Tamil Nadu and Himachal Pradesh.

“This comes with certain pre-conditions like regular tariff rationalisation and a reduction in aggregate technical and commercial losses. India Ratings believes this will alleviate the risks posed by weak state power utilities over the long-term,” said India Ratings.

Source

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Odisha to sell surplus power to Karnataka…

 

The Odisha government has decided to sell surplus power to Karnataka.

The matter was discussed at a high-level meeting here on Monday, which was attended by chief secretaries of both states. Senior officials of the Odisha government’s Energy department were also present.

“Karnataka Chief Secretary Kaushik Mukherjee, who is in the State, had an official meeting with our Chief Secretary J K Mohapatra here on Monday, where a preliminary discussion on the power sale was held. Details will be worked out when officials of both states meet,” said sources in the Energy department.

At the meeting, the Karnataka chief secretary reportedly expressed his keenness to purchase power from a State-owned undertaking in Odisha rather than a private company.

If everything works out well, Karnataka will purchase power from the Grid Corporation of Odisha, a State-owned undertaking which purchases power from different sources, including private sector electricity generation companies in the State. It sells them to four power distribution utilities that supply power to consumers in four different zones in Odisha.

This will not be the first instance of Odisha, one of the very few power surplus states in the country, selling electricity to another state. It had earlier sold power to Rajasthan, Delhi and Haryana.

If sources in the Energy department are to be believed, the average power requirement in Odisha at present stands at around 2,700 MW. The State currently gets about 3,000 MW from different sources, including its own thermal and hydro power stations, besides electricity generating private sector companies. “We get around 300 MW of surplus power at the moment which can be sold to other states”, an official in the Energy department said.

Source

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Power deficit falls as slowdown trips companies' usage…

 

India's peak power deficit hit a record low of 4% for the quarter to December 2013 from 9% a year ago, according to an estimate by experts. They attribute the decline partly to the increase in generation capacity, but mainly to the worrying fall in industrial demand amid the economic slowdown.

The trend is likely to continue as manufacturers in auto, metals, and cement sectors may continue to run at low capacity due to poor demand, resulting in lower demand for power, experts said.

"Growth in energy consumption in the eight months to November 2013 has been less than 1%, as against an estimation of 7-8% for the 12th Plan period. This is unprecedented and reflects the severe slowdown in economic activities," said Debashish Mishra, senior director-consulting at Deloitte Touche Tohmatsu India.

Power deficit falls as slowdown trips companies' usage India's peak power deficit or the shortage of electricity supply when demand is maximum during the day, was as high as 13-14% during the 10th Plan period (2002-2007).

The figure came down to 10% as new power units started generation and stayed around this level over the past few years. But it has been consistently declining since May 2013, plunging to its lowest level of 2.9% in November.

Although, government officials attribute this to capacity addition and delayed winter, industry experts warn that the decline is mainly on account of slowdown in industrial demand.

This is corroborated by the data on industrial production, which contracted 2.1% in November compared with the year-ago period. The manufacturing sector reported a year-on-year decline of 3.5%, its worst since March 2012, triggering worries that the worst might not be over yet.

"The November data indicates the depth of the current macro slowdown. We expect that the production data will continue to be weak for another three months since we do not see any recovery in manufacturing," said Tirthankar Patnaik, director and India strategist and economist at Religare Capital Markets.

According to data from the Central Electricity Authority, India added 6,963 MW of power generation capacity during April-November 2013. The authority is yet to release the data for December but expert estimates indicate that demand for power may have declined in the quarter ended in December.

Brokerage Sharekhan estimates that India's power requirement during the quarter declined to 4% year-on-year to 239.4 billion units, while power availability is expected to have grown by 2% to 230 billion units.

"During this quarter, we also observed that the power demand has fallen sharply compared to the growth in power availability," Sharekhan said in a report. Experts also believe that demand for short-term power from power distribution companies would remain low as the loss-making units resort to load-shedding over buying expensive power.

Source

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To fulfil its promise, Rajasthan government to buy electricity from private companies...

 

To fulfil its poll promise of continuous electricity supply to the domestic consumers and over six hours supply to agricultural sector across the state, the Vasundhara Raje government has decided to purchase electricity from private companies for the first three months to provide uninterrupted power supply to people.

Sources inform that the ruling party doesn’t want to take chances in the upcoming general elections and hence, has decided to ensure proper supply of electricity to farmers during the Rabi season. It has therefore ordered all three discoms - Ajmer, Jaipur and Jodhpur to purchase electricity from private companies.  A total of 1,050 MW of power will be purchased in total in first three months.

The purchase is only for a short term, as another unit of Chhabbra Power Plant is expected to start generating power by April. Also, the government is expecting power supply from Kawai Power Station in the coming months.

On various occasions, energy minister of Rajasthan, Gajendra Singh Khinwsar has stressed on continuous electricity supply in rural areas and ordered officials to ensure the same.

However, as ironic as this may sound, but the ‘necessary’ supply will affect the cash-strained discoms.

“I can’t tell you about the availability and the quantum of the electricity purchased right now. I will be able to tell about it on Monday when I resume my office. And, all the information will be known to all soon,” said Arjun Singh, director of power trading cell of Jaipur Discom.

To manage the daily balance between demand and supply of electricity across the state, power trading cell usually adopts the bidding route and purchases electricity from power exchange depending on the anticipated electricity demand.

Since the day it took charge, the BJP has been focusing on the availability of electricity in the state especially to the farmers which may prove to be politically sensitive. Notably, other parties, especially AAP had come to power in Delhi on the basic issue of electricity only.

Source

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Power generation grows, but is it enough? Analysis

 

Electricity production in December grew 6.7% from a year ago, data from the Central Electricity Authority shows. Coming on the back of a 6.3% growth in November, it does look like the power supply has improved. For sure, the coal supply situation has improved and good rains, which have boosted hydel power production, have also helped.

However, that has to be weighed against anecdotal evidence of power shortages in the country. In HSBC’s latest Purchasing Managers’ Index survey, participants complained about “raw material shortages and power cuts.”

That’s because power demand in the country seems to be artificially suppressed. The “reported figures on power supply situation reflect distribution companies’ inability/unwillingness to buy enough power to meet the real demand and not ‘on the ground’ improvement in power availability for end users,” says a note from UBS Securities India Ltd.

Unless state electricity boards’s (SEB) financials improve, this situation is likely to persist. In the near term, the elections may provide some succour though as SEBs buy more due to political pressure.

Source

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NMDC scouts for new sites for UP power plant...

 

NMDC, which is in the process of setting up a 500-MW power plant in Gonda district in Uttar Pradesh, has decided to shift the location of the project in view of the objections raised by a committee under the ministry of environment and forests.

According to official sources, Mecon, consultant for the power project has come up with three alternative sites and the Expert Appraisal Committee has asked the miner to prepare a detailed plan with regard to the environmental issues on the site at Turkadih-Siswa.

The EAC earlier refused to clear the project saying that the place where the project is proposed is fertile agriculture land and suggested the company to find another site.

"Mecon has identified three alternate sites within and outside Gonda, with the help of Topo Sheets and Satellite imageries and extensive field survey. The EAC asked them to prepare Environmental Management Plan keeping Turkadih-Siswa site in mind," a source in the know of the development told PTI.

The source said an advertisement seeking land up to 500 acres in Gonda district was also released recently.

"We have not taken any investment decision yet. It depends on the DPR by Mecon. It will take some time for them to prepare the report," the source added.

Source

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Inadequate transmission network troubles power producers in Chhattisgarh...

 

Power project developers in Chhattisgarh fear lower profits because of a lack of adequate transmission network that limits their ability to sell surplus electricity out of the state.

Besides state utilities, private power producers such as KSK Energy, Jindal Steel & Power, RKM Powergen and Bhaskar Group are commissioning new projects in Chhattisgarh which will more than double the state's electricity generation capacity in the next couple of years from close to 9,500 mw now. Transmission network in the state, however, is not expanding at the same pace.

"We will soon face a situation where evacuating electricity out of the state will be a challenge as the state commissions more generation capacities," said Shivraj Singh, chairman of state-owned Chhattisgarh State Power Holding Company. "Today, state utilities are selling 400 mw of power to other states and this will ramp up to 900 mw soon. There will be challenges as private producers too add generation capacities."

According to him, Power Grid Corporation was to provide grid connectivity to power projects based in the state. "I am not sure about the status of transmission network projects initiated by Power Grid Corporation. Power producers will not be able to attract good tariff in the absence of adequate evacuation capacities," he said.

By March 2014, Chhattisgarh will add 3,200 mw, which will increase the state's total generation capacity to more than 12,500 mw, but the capacity of transmission networks in the state by then will be just about 9,000 mw. It is projected to have 21,500 mw of generation capacity by March 2015. The lack of adequate transmission network is already hurting the state's ability to sell power on the spot market to outside consumers. According to power-trading platform Indian Energy Exchange, Chhattisgarh witnessed power price going down to Rs 2.30 a unit in November from Rs 2.41 in October.

Commenting on the progress of transmission network, a top Power Grid Corporation official, requesting anonymity, said the company will be able to commission projects if it gets timely environmental clearances and land-usage permission. "We are not responsible for factors beyond our control."

The official said the company's projects in the state are "more or less" progressing as per schedule.

Jindal Steel & Power, which operates the country's first mega power project in the private sector near Raigarh in Chhattisgarh, is already facing limitations in selling power to other states. It is in the process of ramping up its generation capacity from 1,000 mw to 3,400 mw.

"There are new power-transmission lines under construction, which shall provide additional capacity of around 8,500 mw progressively by June 2015. It means Chhattisgarh will have transmission capacity of 16,500-17,500 mw against installed capacity of 21,500 mw in next two years," said a top executive at one of the private sector power producers in the state.

Source

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CCEA may take up Mega Power Policy proposal tomorrow...

 

The Cabinet Committee on Economic Affairs is expected to take up Thursday the Power Ministry's proposal to amend the Mega Power Policy.

The policy was introduced in November 1995 to provide impetus to the setting up of large power projects and derive benefits from economies of scale.

"The proposal for making changes to the Mega Power Policy may be taken up at tomorrow's (Cabinet) meeting," said a source without providing further details.

Thermal power projects of 1,000 MW and hydel plants of 500 MW are eligible for benefits under the policy.

These guidelines were modified in 1998, 2002 and 2006 to encourage power development in Jammu & Kashmir and the North Eastern region.

The projects can tie up electricity sales with distribution utilities through long-term power purchase agreements. They can also sell power outside these agreements, in accordance with the National Electricity Policy 2005 and the Tariff Policy 2006, as amended from time to time.

The benefits of policy also apply to energy-efficient supercritical projects that are awarded through international competitive bidding with the mandatory condition of setting up indigenous manufacturing facilities.

Source

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2014 wishlist: More power to electricity as India records surplus...

 

India became power surplus in the first quarter of 2014-15, heralding a new phase in its infrastructure development story.

According to data compiled by the Central Electricity Authority, total power availability was about a per cent more than the total demand from industrial, commercial and household sectors. This was a dramatic improvement over the average three per cent power deficit recorded in 2013-14.

Power ministry officials admitted that the improvement on the power availability front was expected because in the past few years the country has been witnessing an annual power capacity addition of more than 20,000 Mw. But they were surprised by the dramatic recovery which occurred in spite of a sharp uptick in economic growth in the same period.

Many states like West Bengal have, in the past, seen an improvement in power availability as a result of industrial stagnation. With lower demand for power from industries, such states have often seen an improvement in power availability or a drop in power deficit. However, in the first quarter of 2014-15, power became surplus in spite of an economic growth rate of seven per cent, which was possible largely because of a spike in the manufacturing sector’s performance.

Another reason that contributed to surplus power availability was the pace of tariff increases in the power distribution sector that saw a sharp reduction in subsidies, an improvement in the health of power utilities and a surge in fresh investments in the power sector.

All these developments, power sector experts said, would help sustain the healthy power availability situation reached in the first quarter of the current year.

Source: Business Standard

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Monthly review of Indian Power Sector for the month of November 2013...

 

During the month of November 2013, around 1635 MW of generating capacity has been installed under the Indian Power Sector reaching the total cumulative generating capacity at around 232.16 GW.

Further around 1226 Circuit Kms of transmission lines are also added.

 

Summary of the review of Indian Power Sector for the month of November 2013 is depicted below:

• Electricity Generation for the month was at 79.52 BUs
• Generating Capacity Addition for the month was 1635 MW
  • Dhariwal TPP U-1 (300 MW) in Maharashtra  by Dhariwal Infastructure (P) Ltd on 3/11/2013
  • Shre Sangaji TPP U-1 (600 MW) in Madhya Pradesh by MPPGCL on 18/11/2013
  • Barh STPS St-II, U-4 (660 MW) in Bihar by NTPC on 30/11/2013
  • Nimmo Bazgo HE Project U-1 (15 MW) in J&K by NHPC on 2/11/2013
  • Uri-II, U-2, (60 MW) in J&K by NHPC on 16/11/2013
• The all India installed capacity reaches at 232164.94 MW
• Transmission Lines for 1226 Circuit Kms installed during the month
• Transformation Capacity Addition during the month was 4580 MVA
• Average Power Supply deficit was around 4.1% during the month
  • Northern Region - 6.5%,
  • Western Region - 1.1%,
  • Southern Region - 5.9%,
  • Eastern Region - 1.5%,
  • North Eastern Region - 4.6%
• Peak Power Supply deficit was at 2.9%
  • Northern Region - 1.1%,
  • Western Region - 0.8%,
  • Southern Region - 6.8%,
  • Eastern Region - 1.4%,
  • North Eastern Region - 3.9%
• All India Plant Load Factor maintained was around 65.44%
  • Central Generating Plants -  77.12%,
  • State Generating Plants - 58.67%,
  • Private Generating Plants - 69.47%

Complete report can be downloaded from this link.

Source: CEA

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Power Sector Yet to Get its Act Together...

 

Like any other year, this calendar year also did not bring any good cheer for the power sector.

Fuel linkages be it coal, gas or other sources were the factors that held back the sector growth. While power plants from AP to Maharashtra stalled production as promised gas linkages from power plants from AP to Maharashtra continued to reel under acute fuel shortage as Reliance Industries’ eastern offshore KG-D6 fields failed to supply required gas because of a sharp drop in gas production from those fields.

With six power plants shutting down in states including AP and Maharashtra, power generation to the tune of 3000 MW was affected as Reliance failed to supply gas.

Similarly thermal power plants that are dependent on coal had minimal coal stocks throughout 2013 with most of them reporting 60-70 per cent plant load factor.

CIL despite interventions from the Prime Minister’s office failed to honour the FSAs made with different power plants. Following PMO intervention 157 of the 173 supply pacts were signed.

As far as generation capacity addition is concerned the overall conventional capacity addition has been about 50 GW against a target of 62 GW in this plan period.

The peak and energy deficits are down to 10.6% and 8.5%, respectively. The country aims to add over 100 GW in the 12th Plan, half of  which is to come from private  sector.

The silver lining however was government inviting bids for two ultra mega power plants, one each in Odisha and Tamil Nadu. To be built at an estimated cost of `25,000 crore each these plants could help ease India’s power deficit problems.

Source

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Analysis: Indian Power sector sees return of investors...

 

The Piramal Group led by Ajay Piramal is scouting for investment opportunities in the Indian power sector, in a move that is as much an indication of the intentions of a conglomerate with money to invest as it is of growing investor interest in the business.

“The Piramal Group is looking at investment options and is evaluating opportunities. It has the resources and the appetite,” said a Mumbai-based power sector analyst who spoke on condition of anonymity.

A Piramal Group spokesperson, in an emailed response, said: “We evaluate opportunities across sectors including conventional power,” and added: “As a matter of business policy, we do not comment on specific opportunities.”

The power sector analyst cited above said several transactions were in play and cited investments made or interest evinced by foreign entities such as JPMorgan Chase and Co.’s asset management unit, Sembcorp Industries Ltd of Singapore and France’s GDF Suez SA, among others.
JPMorgan Asset Management invested $150 million in the Bhaskar Group’s Diliigent Power Pvt. Ltd in May 2013; Nagarjuna Construction Co. Ltd has been reported to be in talks with Sembcorp to sell a stake in a power plant; and Meenakshi Energy and Infrastructure Holdings Pvt. Ltd has agreed to sell a 74% stake in a 1,000 megawatts (MW) coal-fired power project to GDF Suez.

The debt-laden Jaypee Group is close to selling two of its three operating hydroelectric projects to a consortium led by Abu Dhabi National Energy Co. PJSC, known as TAQA.

The analyst explained that reasonable valuations have played a part in reviving investor interest in the power sector, as has the rupee’s depreciation, which has sweetened such deals for foreign buyers. The rupee has depreciated 11% against the dollar this year, making Indian assets cheaper for foreign buyers to acquire.

To be sure, valuations have become reasonable because many Indian promoters are looking for investors (if not to sell out altogether). Their problems include the domestic economic slowdown, high borrowing costs, delays in land acquisition and environmental clearances, and fuel shortages.
The Piramal Group itself is flush with funds after a 2010 deal in which it sold its pharmaceutical business to US drug maker Abbot Laboratories for Rs.17,000 crore.

Piramal Capital, which has a structured investments business unit, has invested Rs.550 crore in Navayuga Road Projects Pvt. Ltd, the road development arm of Navayuga Engineering Co. Ltd, and another Rs.500 crore in infrastructure company Green Infra Ltd. Piramal Capital picked up about a 10% stake in the Chennai-based vehicle loan company Shriram Transport Finance Co. Ltd for Rs.1,652 crore in May.

Analysts and experts say the evidence on hand does suggest a return of investor interest in the power business.

“There are some transactions that are happening. There are distressed assets; with valuations being depressed, it make sense,” former power secretary Anil Razdan said. “For the sector to fully recover, more financial closures need to be done for which the fuel issues need to be resolved. The projects need to run on full capacity to earn revenue.”

Power plants have been operating below production capacity because of fuel shortages. Things seems to be improving with the utilities tying up fuel supply agreements for 157 units totalling 71,000MW till November.

“Also, with the elections approaching, the demand for power will go up and to that extent there will be more power procurement by the state governments with state resources being deployed for the same,” Razdan added.

Indeed, trading in electricity saw a spike as the five states of Madhya Pradesh, Rajasthan, Chhattisgarh, Delhi and Mizoram, fearful of political backlash, bought additional power to avoid outages (and consequent voter outrage) in the November-December state assembly elections.

“We have to also keep in mind the fact that these asset sales are happening in projects that are operational or will soon start commercial operation. This mitigates the risk of land acquisition, approvals, clearances and project development. This appeals to foreign investors,” the power sector analyst mentioned in the first instance said.

Sambitosh Mohapatra, an executive director at PricewaterhouseCoopers Pvt. Ltd, said: “India is witnessing a revival of interest in investments, especially of international operators and investors from the Middle East, Europe and Japan, especially in the areas of renewables, conventional power generation (with advanced construction stage or operational) and electrical equipment.”

“It’s on the back of a positive outlook on the changing contours of the economy and expectations of improved governance. It also marks a phase of consolidation with the entry of large strategic operators bringing in synergies buying out small local players more interested in the EPC (engineering, procurement and construction) play,” Mohapatra added.

India’s ambitious bailout plan for state government-owned distribution companies announced in September last year is also expected to help improve the finances of state electricity boards and hence their ability to procure power.

“The scheme has been successfully implemented in Tamil Nadu, UP (Uttar Pradesh), Rajasthan and Haryana. FRPs (financial restructuring plans) have also been finalized for the states of Bihar, Jharkhand and Andhra Pradesh. Rationalization of tariffs has already been carried out by 24 SERCs (state electricity regulatory commissions)/JERCs (joint electricity regulatory commissions),” the power ministry said in a statement on Monday.

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Year end review of Indian Power Sector for the year 2013 by Power Ministry...

 

Power Ministry has done an year end analysis of the progress made by the Indian Power Sector during the year 2013.

The same has been depicted below:

 

 

Major Achievements:

• Power generation capacity addition exceeds target in 2012-13
• Highest ever power generation capacity added in a year
• RGGVY reforms undertaken to benefit the poor
• Financial Restructuring Plan to strengthen the State- owned DISCOMs
• Grid security and grid discipline becomes priority
• Two more UMPPs reach bidding stage under revised bidding norms
• 6.5 million tons of oil equivalents saved in the PAT scheme within a year of its launch

Power is imperative to the overall development of a nation. Be it faring well on the healthcare index or ensuring that every child goes to school, availability of electricity is closely linked to these as well as other indicators of progress. Managing energy resources well not only ensures economic progress but also social development.
 
The year 2013 saw several important decisions and critical steps  being taken to speed up the languishing power projects, remove bottlenecks, and interact closely with all stakeholders whether state governments, ministries, or the private sector to make power generation a seamless process.
 
Installed Capacity/Capacity Addition and Power Generation:

The total installed capacity of the power sector stood at 2,29,252 MW by 31st October 2013 with the private sector contributing a significant 72,927 MW and including 12% from Renewable sources. The power sector saw a total capacity addition of 20,622.8 MW during 2012-13 which is the highest record of capacity addition in a year so far with a little less than half of it coming from the private sector and also exceeded the target of 17956 MW  for the year 2012-13. For the year 2013-14 a capacity addition target of 18,432 MW including 2000 MW of nuclear power has been set, with the highest contribution of 7859 MW expected from the private sector. A capacity addition of 7,008 MW has already been achieved till 10.12.2013.

24th May, 2013 was a historic day in for power generation in India with the highest ever generation of 128 GW in a day.

Power generation in India is still heavily reliant on coal and gas with thermal accounting for more than 80% of annual power generation. State owned NTPC emerged as the largest power producer in the country accounting for more than 28% of power produced in the country in 2012-13.

The total power generation of 912 Billion Units in 2012-13 from conventional sources fell only marginally short of the target. The power generation target for 2013-14 is 975 BU out of which 562 BU was already achieved by 31st October, 2013.

Power Supply position in the country has improved during the current year (2013-14). The energy and peak shortages in the country have reduced from 8.6% & 9.0% during April-2012 - Nov, 2012 to 4.5% & 4.2% respectively, during April- Nov, 2013.

Transmission

Inspite of bottlenecks , it was possible to add 17107 ckm of transmission lines during the year 2012-13 and it is proposed to lay 18674 ckm of transmission lines during 2013-14, out of which  7620 ckm is already achieved till November 2013.   Number of substations targeted for the period are 35363 MVA and achieved upto Nov 2013 are 26180 MVA. Purnea- Bihar Sharief transmission line which was commissioned this year  became the  first transmission line in the private sector .

Work is now on on transmission voltages of -+800kV HVDC & 1200kV 1200kV UHVAC after  Conserving Right-of-Way (RoW), minimizing impact on natural resources, coordinated development of cost effective transmission corridor, flexibility in upgradation of transfer capacity of lines matching with power transfer requirement became  major areas of concern in development of transmission network in the country.

The southern grid connectivity got fast-tracked in the current year and 60 per cent of the work got completed with the establishment of 315 towers.  The grid connectivity is likely to be completed by January, 2014.

R-APDRP (Restructured-Accelerated Power Development and Reforms Programme)

Under R-APDRP, government gives financial assistance for setting up automated systems of energy data collection and energy accounting and incentives by way of grants for reducing AT & C losses. Projects worth Rs. 37,189.82 cr are now under implementation.

RGGVY (Rajiv Gandhi Grameen Vidyutikaran Yojana)

The government has been able to surpass the targets set for the RGGVY under the Bharat Nirman programme. Since its inception, electrification works in 1.08 (96%) lakh un-electrified villages, 3.03 lakh (79%) partially electrified villages have been completed and free electricity connections to 2.13 crore (77%) BPL households have been released under RGGVY as on 15.11.2013. Reforms introduced in RGGVY this year are meant to ensure energisation of villages as compared to mere electrification.  Now, villages with just 100 people will also get access to electricity while there has been an increase in prescribed load for a BPL household to 250 watts (up from 40 watts)  and for an APL household to 500 watts (up from 250 watts).

Financial Restructuring of State DISCOMs

To rescue the state owned DISCOMs from their financial difficulties, the scheme of Financial Restructuring Plan was notified this year. The scheme provides for various measures to ensure financial and operational discipline for the state owned DISCOMs and support from the GOI in the form of Transitional Finance Mechanism.  The scheme has been successfully implemented in Tamil Nadu, UP, Rajasthan and Haryana. FRPs have also been finalised for states of Bihar, Jharkhand and Andhra Pradesh.
Rationalisation of tariffs has already been carried out by 24 SERCs/JERCs.
 
Grid Security & Grid Discipline

Managing the world’s third largest power transmission system grid is an increasingly complex task. India faced major grid failures in July 2012. To ensure grid security, islanding scheme for Delhi has been completed while that for UP, Punjab and Haryana under finalisation. Unscheduled drawals were strictly controlled during the peak season this year. Discoms were asked to ensure compliance within +/- 150 MW or 12% of their schedules irrespective of frequency. Feeder transmission lines were identified for disconnection in case of violation of overdrawal limits.  Installation of Syncro Phasor Management Units for real time network management at a cost of Rs 655 cr was also approved.
 
Further, the establishment of Power System Operation Corporation (POSOCO) as an independent wholly owned Government of India Company, under the administrative control of Ministry of Power, is under consideration of the Government of India.
 
Smart Grid

14 Smart Grid Pilot projects identified in 2012 were approved for 50% funding by Government of India in July 2013.

The Smart Grid Vision and Road map document for India was released during Power Minister’s Conference on 10th Sep’13. Activities for planning the launch of National Smart Grid Mission have been initiated.
 
Emphasis on clearances & removing bottlenecks

Large number of power projects have been held up for want of environment and forest and other clearances and due to fuel supply bottlenecks especially with regard to coal and gas. This year the emphasis has been to follow up on these aspects with a sense of extreme urgency. As a result, as many as nine important hydro electric projects received environmental, forest and wildlife clearances this year including Teesta- IV in Sikkim, Kol Dam in HP, Tawang-II in Arunachal Pradesh, Loktak in Manipur among others.
 
With the concerted efforts made by MOP, Power Unities have already signed fuel supply agreements for 157 Units totalling around 71,000 MW upto 27.11.2013 out of a total of 78,000MW.
 
To ensure good quality coal to power producers, the Ministry of Power (MoP) had taken up with Ministry of Coal (MoC) for introduction Third Party Sampling in supply of coal.  Coal India Ltd. has appointed an agency for Third Party Sampling.  Third Party Sampling became operational from October onwards.
 
Pass Through Mechanism was also introduced in the current year to allow power producers of competitively bid power projects to pass on the hike in fuel cost like imported coal into the tariff. Hike in fuel costs affect the viability of power projects whose tariff is not charged on cost plus basis.

Due to shortfall in production of domestic coal by 75 MT, Power Utilities have been advised to import 50 MT of imported coal as per the equivalent Gross Calorific Value (GCV) of the imported coal.
 
In a major victory for the power sector, the government decided that the total domestic gas supply to fertilizer sector be capped at their present level of 31.5 MMSCMD and all additional domestic gas from the year 2013-14, 2014-15 and 2015-16 will be allotted to power sector to help improve generation.
 
Ultra Mega Power Projects

The revised Standard Bidding Documents for Ultra Mega Power Projects (UMPPs) were introduced this year which include several features that are designed to boost investors’ confidence. On the basis of these revised Bidding Documents, two UMPPs have been brought to bidding stage ie  Odisha and Cheyyur (Tamil Nadu) UMPPs . These UMPPs will provide an investment opportunity of over Rs.40000 crore to private sector both domestic and overseas and would lead to a capacity addition of about 8000 MW.

4 UMPPs have so far been transferred to the selected developer namely (i) Mundra in Gujarat, (ii) Sasan in Madhya Pradesh, (iii) Krishnapatnam in Andhra Pradesh and (iv) Tilaiya in Jharkhand.All the five Units (5X 800 MW) of Mundra has been commissioned.
Sasan first Unit (1X 660 MW) commissioned in May, 2013.
 
Several other UMPPs are in the pipeline ie (i) Nayunipalli in Andhra Pradesh, (ii) Husainabad in Jharkhand, (iii) Bijoypatna in Bhadrak district for coastal location and Narla & Kasinga in Kalahandi district for inland location in Odisha, (iv) UMPP in Bihar and (v) sites in Tamil Nadu and Gujarat for second UMPPs (Site yet to be finalized).
 
Special Focus on Jammu & Kashmir and North-Easter Region (NER)

24 hours power supply was assured to distant Leh and Kargil areas by the full commissioning of the Nimu Bazgo and Chutak Hydro Projects in J&K this year. The Transmission line from Srinagar to Leh was approved which will provide the much needed electricity to the Ladakh region. In J & K, 14 projects (3 projects in 10th Plan and 11 projects in 11th Plan) have been sanctioned under RGGVY. Cumulatively, as on 15.11.2013, the electrification works in 192 UE villages and 3,018 PE villages have been completed and free electricity connections to 64,255 BPL households have been released.

Adequate funding will be made available to Arunachal Pradesh for their sub-transmission projects. The Northeast Agra link to transmit clean energy from the North-Eastern and Eastern region of India to the city of Agra across a distance of 1,728 kilometers has already been inaugurated. Foundation stone was laid for Bishwanath-Chairyali (6000 MW)  HVDC link for evacuation of power from Hydro projects in NER. Due to constant pursuance with DONER, EGOM has been set up for resolving issued concerning clearances and infrastructure requirements for Hydro Projects in the North-East.

Efforts on war footing being made for speedy clearances to hydro electric power projects in the J & K and NER like  Dibang Central (3000 MW) by NHPC in Arunachal Pradesh, Tipaimukh Central (1500 MW) by NHPC in Manipur, Pakal Dul (1000 MW) under Joint Venture in J&K, Subansiri in Assam among others.
 
Energy Efficiency & Energy Saving

The Perform, Achieve and Trade (PAT) scheme under the National Mission for Enhanced Energy Efficiency (NMEEE) has already helped to save 6.5 million tons of oil equivalent within a year of its launch last year.
 
Various Energy Efficiency Policies of Government of India have resulted in an Avoided Generation Capacity to the tune of 10,836 MW during 11th plan period.
 
The participating units of 2013 National Energy Conservations Awards programme have achieved an annual monetary savings of Rs. 4141 Crores. These units have also saved energy equivalent to the energy generated from a 711 MW Thermal Power Station.
 
It has been mandatory from this year onwards that all ministries/departments while procuring appliances will ensure that they show the threshold BEE star rating carried against them. This scheme of public procurement of energy efficient appliances will help to save 15-20% energy use of these offices equivalent to avoided installation of a 250 MW capacity thermal power plant.
 
Institutional Mechanism to address problems faced by the power sector

For the first time, two conferences of state power Ministers and Secretaries were held in a year. Also for the first time two meetings were held with heads of CERC/SERCs this year. Advisory group of industrialists, consultants and economists has been set up to come up with joint solutions to problems facing the power sector. The group meets very frequently. Frequent meetings of Parliament Consultative Committee are being held on critical issues facing the power sector.

In a nutshell this has been an action packed year for the power sector wherein all the stakeholders worked with a determination to take this sector to a new high.

Source: Power Ministry

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Arunachal Government imposes load restrictions on power supply...

 

In view of the onset of the lean hydro season and subsequent reduction in the state's power allocation, the Arunachal Pradesh government has imposed a load restriction on power supply as per allocation with immediate effect.

"As power availability and demand vary from time to time, the notice revision by various generating stations, the quantum of power allocated, duration of imposition and area to be covered may vary with time," an official order said here on Saturday.

All divisions and districts should strictly abide by all directives, the order issued by the State Level Distribution Centre (SLDC) added.

In the event of non-compliance by any division, the government has empowered the SLDC as per regulations of the Arunachal Pradesh State Electricity Regulatory Commission (APSERC) and the Central Electricity Regulatory Commission (CERC) to disconnect the entire division or district from the grid sub-station to protect the stability of the system, the order said.

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