Tata Power's Mundra UMPP comes under ADB panel scanner…

 

Finding prima facie instances of non- compliance with its norms, ADB's review panel has decided to carry out a compliance review of Tata Power's 4,000-MW ultra mega power project in Gujarat.

Asian Development Bank's (ADB) Compliance Review Committee has said the company failed in consulting most of the affected communities before the project started.

In its report, the panel said there is "prima facie evidence of non-compliance with ADB policies and procedures and prima facie evidence that this noncompliance with ADB policies has led to harm or is likely to lead to future harm".

"Given the evidence of non-compliance... the CRP concludes that the non-compliance is serious enough to warrant a full compliance review," it said.

Meanwhile, Tata Power in a statement said Mundra UMPP strictly abides by stipulated norms for its operations, including environment, community engagement and ecological impact.

"We are happy to cooperate with ADB on any information/ support that may be required while conducting the review," the firm said.

CGPL would always be open to any constructive and transparent process to establish its credentials, it added.

The ADB panel's report follows a complaint filed by Bharat Patel, General Secretary of Machimar Adhikar Sangharsh Sangathan and two other members of the association.

ADB has committed a loan of USD 450 million from its ordinary capital resources without government guarantee to CGPL, of which USD 200 million is syndicated to Export-Import Bank of Korea (KEXIM) through a risk participation agreement.

Mundra project is being implemented by Coastal Gujarat Power Ltd (CGPL).

Source

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Nod to 4000 MW Banka Ultra Mega Power Project in Bihar…

 

The Centre has cleared the proposal for a 4,000MW ultra mega-power project (UMPP) in Banka, a project designed to take care of Bihar’s energy requirements by the end of this decade.

The project is expected to be commissioned by 2019-20. The state would get 2,000MW from the plant as the Centre has allocated 50 per cent share from the plant to itself.

“We received a letter today (Wednesday) from the ministry of power giving its nod to set up a ultra mega-power project at Banka. We are happy that the Centre has acceded to our long-pending demand as the state would get 2,000MW power from this plant,” energy minister Bijendra Prasad Yadav told The Telegraph.

Any power project with an installed capacity to generate 4,000MW or more is deemed as an ultra mega-power project.

The state government had, on November 23, 2013, written to the power ministry seeking early approval of the project.

The state government said it would press the Centre to provide coal linkage to the project at the earliest.

“The state government is responsible for providing land and water for the project. We have made that available and accordingly informed the ministry of power. Now, the Centre has to provide coal linkage to the plant,” Yadav said.

Bihar at present gets around 1,500-1,600MW against the total scheduled allocation of around 2,000MW from the central sector.

The state also purchases 400MW from the open market besides getting 110MW from its own source from Muzaffarpur Thermal Power Station. The state government has set a target of providing at least 3,000MW in the coming summer and 4,000 MW by the end of the year.

The central decision on power comes close on the heels of the cabinet clearance to two railway projects in Bihar — at Madhepura and Marhowra — that had been gathering dust for a long time.

Central Electricity Authority (CEA), a nodal agency under the ministry of power which advises the government on energy issues, had in March 2013 approved the setting up of the ultra mega-power project at Kakwara in Banka district.

A team from CEA and Power Finance Corporation (PFC), along with state government officials, visited two sites to assess the project’s feasibility.

The team went to Kakwara in Banka and Rajauli in Nawada. The Kakwara site, about 260km from Patna, prima facie, appeared to be suitable for setting up the project, sources said, adding that there are no environmental issues related to it.

The project would require 2,500 acres of land and 120 cusecs of water.

Sources said the site at Kakwara in Banka fulfils all parameters such as easy availability of land, water and coal linkage. They said coal for the project could be transported easily by rail from neighbouring Jharkhand.

The site is also 65km away from Sultanganj from where the plant could draw 120 cusecs of water from the Ganga for power generation.

The clearance of the project is a big boost to the Nitish Kumar government which claims to have drastically improved the power situation in the state.

Source

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Tata Power Mundra UMPP partners with FishMarc…

 

Tata Power, through its wholly-owned subsidiary, Coastal Gujarat Power (CGPL) striven towards the betterment of the communities in and around its Mundra plant.

In line with this, Tata Power has undertaken numerous projects and initiatives to bring a positive change amongst the fishermen community.

The fishing community in Kutch district lacked infrastructure, access to quality healthcare, sanitation and clean drinking water. The community had a low annual income and was under debt on account of their inability to earn good price for their produce.

Recognising the needs of the community and in order to ensure sustainability of livelihood, Tata Power partnered with Fisheries Management Resource Centre (FishMarc) an organization of experts in co-operative institution building amongst fishermen and fishing related activities.

Shares of the company declined Rs 0.5, or 0.65%, to trade at Rs 76.45. The total volume of shares traded was 173,403 at the BSE (2.29 p.m., Wednesday).

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Final price bids for Odisha, Tamil Nadu UMPPs to open on 26 February…

 

The final price bids for the two ultra mega power projects (UMPP)—Odisha and Tamil Nadu—will open on 26 February, power minister Jyotiraditya Scindia said on Thursday.

The minister said that the projects will be awarded to the successful bidders post opening of the financial bids.

All the nine applicants for Odisha UMPP and eight applicants for Cheyyur UMPP (Tamil Nadu) who have applied for request for qualification (RFQ) have been shortlisted for issuance of request for proposal (RFP), or the final price bids.

Power Finance Corporation (PFC) is the nodal agency for UMPPs in the country. UMPP is coal-based thermal power project that have 4,000 megawatt (MW) of generation capacity.

The apex evaluation committees cleared all the technical bids in the first round. Both the committees are headed by V.K. Shunglu, ex-CAG.

NTPC, Tata Power, NHPC, Adani Power, JSW Energy, Jindal Power (an arm of Jindal Steel and Power), Sterlite Infraventures, CLP India and Larsen & Toubro (L&T) had submitted applications for the Odisha project.

NTPC, Adani Power, CLP India, GMR Energy, Jindal Power, JSW Energy, L&T and Sterlite Infraventures had submitted bids for the Cheyyur UMPP in Tamil Nadu.

Odisha UMPP is a pit-head power project. Based on domestic coal to be sourced from allocated captive coal blocks, it is expected to cost around Rs25,000 crore.

The Cheyyur UMPP is a coastal power project, based on imported coal, with an expected investment of about Rs24,200 crore.

So far, four UMPPs have been awarded, of which Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaiya (Jharkhand)—have been bagged by Reliance Power. Tata Power is operating the Mundra UMPP in Gujarat.

Source

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Reliance Power's Jharkhand UMPP proposal gets CCI nod…

 

Cabinet Committee on Investment has cleared Reliance Power's Tilaiya ultra mega power project in Jharkhand, sources said.

RPower, according to them, may not have to provide non-forest land to compensate for the loss of forest land acquired for the proposed plant.

Sources said the company's 4,000 MW Tilaiya plant is now expected to be treated on a par with the other public sector projects and therefore would be exempted from providing compensatory afforestation for the loss of forest land.

At present, only central government or public sector undertakings have exemption from the obligation to provide non-forest land.

Tilaiya power plant is to be executed by a Special Purpose Vehicle (SPV), Jharkhand Integrated Power Ltd, which was handed over to Reliance Power in January 2009 by Power Finance Corporation -- the nodal agency for UMPPs.

Tilaiya would be the fourth UMPP to be awarded to a developer. Earlier, two UMPPs bagged by Reliance Power are those of Sasan (Madhya Pradesh) and Krishnapatnam (Andhra Pradesh). Tata Power is operating the Mundra UMPP in Gujarat.

UMPP is a big-size coal-based power plant with at least 4,000 MW capacity and is built at an approximate cost of Rs 25,000 crore.

CCI, headed by Prime Minister Manmohan Singh, aims to fast-track major projects and help boost investor sentiment.

Source

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Reliance Power commissions boiler at Sasan plant…

 

Reliance Power  has announced that the equipment for the third 660 MW unit at the 3,960 MW Sasan Ultra Mega Power Project in Madhya Pradesh has started functioning.

"The boiler, for its third 660 MW unit at the 3,960 MW Sasan Ultra Mega Power Project, has been commissioned," the company said in a statement. The first 660 MW unit of the Sasan UMPP had been commissioned in March 2013 while the second unit was synchronised to the grid in December 2013.

Meanwhile, coal production has already commenced from the 20 million tonnes per annum capacity Moher and Moher-Amlohri coal mines, allotted for the Sasan plant. Shares of the company were trading at Rs 67.50, up 1.43 per cent on the BSE. Reliance Power stock price On January 13, 2014, Reliance Power closed at Rs 67.35, up Rs 0.80, or 1.20 percent.

The 52-week high of the share was Rs 98.50 and the 52-week low was Rs 58.55. The company's trailing 12-month (TTM) EPS was at Rs 1.75 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 38.49. The latest book value of the company is Rs 59.98 per share. At current value, the price-to-book value of the company is 1.12.

Source

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Kirloskar Brothers constructed world's largest water pumping system at Tata Power's Mundra UMPP...

 

Kirloskar Brothers Limited (KBL) has done India proud. The leading global fluid management company has collaborated with Tata Power and installed the world’s largest water pumping system for Tata Power’s Mundra UMPP (Ultra Mega Power Plant).

A mammoth 10.5 million litres of water is circulated with the help of KBL’s 10 sets of Concrete Volute Pumps every minute. The Coastal Gujarat Power Limited (CGPL), Tata Power’s wholly-owned subsidiary, which has implemented the 4000 MW (800 MW x 5 units) UMPP requires an enormous amount of water to condense the heat generated in the production of power.

On a turn-key basis, KBL created an open loop type of circulating water system for Tata Power’s subsidiary, wherein sea water from the Arabian Sea is used as heat sink to condense the steam in the condenser. Cold water from the sea is pumped by KBL’s unique circulating water pumps through the condenser going back to sea through an outfall structure. All of 10.5 million litres in 60 seconds!

Ravindra Ulangwar, Associate Vice President & Head - Power Sector, KBL said: “The World’s largest water pumping system is a salute to Indian engineering. The Mundra UMPP is India’s first and most energy efficient 800 MW unit coal-based thermal power plant, using supercritical technology to create lower greenhouse gas emissions. Its main power generation equipment is sourced from Japan and Korea. And thus came about Indian technology to create a water pumping system that rubs shoulders with world leaders.”

He added: “The layout of the pumping system is designed in such a way that large fluctuation in the water level due to tidal variation in the Arabian Sea is taken care of. The motors are installed above the high tide level, where as pumps are installed in such a way that enough submergence is possible during low tide levels. To accommodate this, the motors are connected with a pump shaft with specially designed cardon shaft. The length of the cardon shaft with universal coupling is 12 meters long, making it one of the longest pump shaft. The size of the entire pumping system is so large that it has become the largest circulating water system in the world.”

In order to ensure a perfect flow pattern for smooth operation of the pump, KBL also conducted Computational Fluid Dynamics (CFD) analysis followed by a physical model study for fore-bay and sump at Hydraulic Research Centre at Kirloskarvadi factory. A prototype physical model was built with 1:12 scale ratio. KBL also conducted the pump model study to establish the Hydraulic Performance of the Concrete Volute pumps.

As reported earlier, the Mundra UMPP will meet 2% of India’s power needs and 16 million domestic, industrial and agricultural consumers in power starved Gujarat, Rajasthan, Maharashtra, Haryana and Punjab.

Source

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Tripping Up On Mega Dreams - A tale of Mundra Power Plants...

 

Inside the bridge of the MV Hero, a 300-metre cargo ship berthed at the coal handling port in Mundra, Gujarat, the captain is relaxed even though he has just completed a long voyage from Indonesia. Lighting up a cigarette and sipping his coffee, he talks about braving rough weather in the Indian Ocean, waiting for two days to berth at Singapore port, and again on the outskirts of Mundra port.

“But this is a fantastic facility,” says the Ukranian, who has called on many a port across the world. As he talks, three giant mechanised cranes are at work. Each shovel attached to a crane scoops up about a tonne of coal from the ship’s hull and deposits it on a conveyor belt that’s 13 km long and delivers the cargo directly to the furnaces of Tata Power’s subsidiary, Coastal Gujarat Power (CGPL), India’s first ultra mega power plant (UMPP).

Coal from another ship berthed nearby is being unloaded in a similar fashion onto a conveyor belt that runs up to Adani Power’s plant, located next to CGPL. A third conveyor is feeding coal to trucks and rail wagons; it takes 1-2 minutes to load a truck.

Today, the tale of the upcoming city of Mundra is also the tale of these two power plants. Thanks to Tata Power’s 4,000 MW UMPP and Adani Power’s 4,620 MW plant, Mundra has come to earn the distinction of being home to the largest coal-fired power plants at a single location. The two plants account for 13 per cent of India’s coal-based installed thermal power capacity of 120,100 MW.  Also, Mundra is cited as a shining example of cooperation between corporate houses to develop infrastructure.

But, with policy issues and the higher cost of imported coal rendering the future of the two power plants uncertain, Mundra’s future has come under a cloud.

See more at: http://www.businessworld.in/news/business/energy-and-power/tripping-up-on-mega-dreams/1207810/page-1.html#sthash.DwaBo0qk.dpuf

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CCI may consider land compensation exemption for RPower plant...

 

The Cabinet Committee on Investment may decide tomorrow whether Reliance Power's ultra mega power project at Tilaiya in Jharkhand should be exempted from providing non-forest land to compensate for the loss of forest land to be acquired for the project.

At present, only the central government or public sector undertakings are exempted from the obligation to provide non-forest land.

"This issue is expected to be taken up in tomorrow's CCI meeting," sources said.

Reliance Power has won contracts to set up two other ultra mega power projects (UMPPs) - at Sasan in Madhya Pradesh and at Krishnapatnam in Andhra Pradesh.

A UMPP is coal-based power plant with a capacity of about 4,000 MW built at an approximate cost of Rs 20,000 crore.

Source: Business Standard

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Clearances of Odisha power project coal blocks may be de-linked: Report

 

The government may de-link forest clearance of coal blocks for 4,000-MW Odisha ultra-mega power project (UMPP) with the environmental clearance accorded to the entire plant, so that delay in development of mines does not affect the construction of the thermal station, according to a source close to the development.

This development comes after the Coal Ministry last week issued show-cause notice to Power Finance Corporation seeking explanation for delay in commencement of production from the allocated mines.

"MoEF (Ministry of Environment and Forests) is likely to de-link forest clearance of coal blocks for 4,000 MW Odisha UMPP with the environmental clearance accorded to the entire plant so that delay in development of mines does not affect the construction of the thermal station," the source said.

The Coal Ministry has also said that if these firms fail to give reasons for the delays it would be presumed that it has no explanation to offer and appropriate action will be taken against the company.

As many as nine companies have qualified the first bidding round for the Odisha UMPP and are likely to participate in the second and final round also.

NTPC, Tata Power, NHPC, Adani Power, JSW Energy, Jindal Power, an arm of Jindal Steel & Power, Sterlite

Infraventures, CLP India and Larsen & Toubro had submitted applications for the Odisha project.

Odisha UMPP is a pit-head power project. Based on domestic coal, to be sourced from allocated captive coal blocks, it is expected to cost around Rs. 25,000 crore.

Source

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OIPL drafting PPA for Odisha UMPP...

 

The Odisha Integrated Power Ltd (OIPL), a fully owned subsidiary of Power Finance Corporation (PFC) is in the process of preparing the draft power purchase agreement (PPA) for the first ultra mega power plant (UMPP) in the state.

The maiden UMPP with a capacity of 4,000 Mw is coming up at Bhedabahal in Sundargarh district. OIPL is a special purpose vehicle formed for implementing the UMPP. Odisha would get 1,300 Mw as state share from this power project. The project will be implemented as per the terms and conditions of the PPA.

The selection of bidder is being done as per the tariff based competitive bidding guidelines issued by the Central government on design, build, finance, own and transfer (DBFOT) basis.

The Request for Qualification (RFQ) for the UMPP was issued on September 25. OIPL has received applications from nine prospective developers — Adani Power Ltd, CLP India Ltd, Jindal Power Ltd, JSW Energy Ltd, Larsen & Toubro Ltd (L&T), National Hydro Power Corporation Ltd (NHPC), NTPC Ltd, Sterlite Infraventures Ltd and Tata Power Ltd.

The award under Section 11 (of Land Acquisition Act) for private land measuring 2,733.54 acres was issued by the Sundargarh collector from August 8-10 this year in all affected villages- Kandabahal, Kirei, Rupidihi, Kopsingha, Lankahuda and Bhedabahal.

OIPL had deposited the land compensation amounting to Rs 634.92 crore with the Odisha Industrial Infrastructure Development Corporation (Idco) on June 21 this year. Idco, in turn, deposited the same with the Sundargarh district administration in August 2013.

Till December 19, compensation of Rs 125 crore has been disbursed.

The district administration, meanwhile, is processing 36 cases of alienation of non-forest, government land measuring 512.43 acres. The UMPP needs 3,100 acres of land in all.

Three coal blocks — Meenakshi, Meenakshi B and dip side of Meenakshi with combined deposit of 838 million tonne have been allocated for the UMPP. Presently, Central Mine Planning & Design Institute (CMPDI) is demarcating the coal blocks. Notification under Section 11 of Coal Bearing Areas (Acquisition and Development) CBA Act has been issued for the Meenakshi coal block.

OIPL has submitted a revised proposal for environment clearance in October 2013 . The proposal is under consideration of the Union ministry of environment & forests (MoEF).

Two more UMPPs are set to come up in Odisha. It has been decided to set up the second UMPP at Bijoypatna in Chandbali tehsil of Bhadrak district and third UMPP at Narla under Kesinga sub-division in Kalahandi district. The sites have been selected after field visits by PFC. Two subsidiaries — Sakhigopal Integrated Power Company Ltd and Ghogarpalli Integrated Power Company Ltd have been formed by PFC for executing these two UMPPs. The second and third UMPPs would contribute 2,000 Mw each to the state grid.

Source: Business Standard

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Reliance Power up 3% as CBI likely to close enquiry in Sasan project...

 

Shares of Reliance Power today rose by nearly 3 per cent on the possibility of CBI closing its preliminary enquiry to probe coal block allocation to a power project in Sasan in Madhya Pradesh run by Anil Ambani's firm.

Reacting to this, Reliance Power's scrip went up by 2.89 per cent to Rs 74.7 on the BSE.

On the NSE, the stock rose by 2.89 per cent to Rs 74.70. The CBI is of the view that the allocation is a policy decision vetted by group of ministers.

CBI sources said it has come to light that use of surplus coal from the Sasan UMPP was approved on two separate occasions by two EGoMs. They said since it was a policy decision, CBI was not likely to question it.

However, they added that any final decision has not been taken over the closure and any such decision can only be taken after taking into consideration the views of the Supreme Court.

The sources said they have informed the Supreme Court about the preliminary enquiry in their status report and agency would proceed according to further directions of the apex court.

After the registration of the preliminary enquiry, ADAG spokesperson had said in a statement that "we welcome the independent time-bound enquiries by the CBI, monitored by the Supreme Court, which will clearly establish our bonafides".

It will "once and for all prove beyond doubt that we have been the unfortunate victims of a mischievous campaign of calumny and vilification conducted at the behest of our unscrupulous corporate rivals over the past 5 years," the statement said.

The allocation of coal mines to the Sasan project was done to a 100 percent government-owned company in the year 2006 when Reliance Power had not even won the project, it said adding the government disinvested its shares to Reliance pursuant to a global tender in the year 2007.

The preliminary enquiry was registered on the directions of the Supreme Court that had asked the CBI to probe 14 issues including supply of low floor buses by Tata motors to Tamil Nadu government, grant of spectrum and alleged market manipulations and hammering of stocks by Unitech.

Source

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CERC to hear Sasan commissioning case tomorrow...

 

Electricity regulator CERC, will tomorrow, hear Western Region Load Despatch Centre's petition challenging Reliance Power's claim of commissioning the first unit of its Sasan ultra mega power project, in Madhya Pradesh.

CERC (Central Electricity Regulatory Commission) will hear issues related to commercial operation of Sasan plant, according to information available on the regulator's website.

The Western Regional Load Despatch Centre (WRLDC), which operates the power grid in the region, had questioned the start date of commercial operations at the Sasan plant, where the first 660-MW unit was commissioned in March.

Based on a petition filed by the WRLDC, the CERC had set aside a certificate issued by the independent engineer for declaration of commercial operations at the Sasan plant.

Reliance Power filed an appeal with the Appellate Tribunal for Electricity (APTEL) on the grounds that CERC's order is violative of principles of natural justice and is not tenable in law.

APTEL set aside CERC's order on August 13 and directed it to decide afresh on the matter of commercial operation date.

While referring to the judgement of APTEL, WRLDC in its petition with the CERC said that since the issue of maintainability is linked with the main issue on merits, the commission can consider all issues and then come to a conclusion.

Sasan Power Ltd (SPL) is the wholly owned subsidiary of Reliance Power which is executing the 4,000 ultra mega power project. The first unit started producing power on March 30, Reliance Power said in a BSE filing on April 4.

The company is executing UMPPs in Sasan, Krishnapatnam (Andhra Pradesh) and Tilaiya (Jharkhand).

Source: Business Standard

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All initial RFQs qualify to submit price bids for TN and Odisha UMPPs...

 

All the companies that submitted initial bids (request for qualification or RFQ) for 4,000 mw each ultra mega power project (UMPP) at Bhedabahal in Odisha and Cheyyur in Tamil Nadu have been asked to give price bids (Request For Proposal or RFP).

The price quotes for these two projects have to be submitted within 45 days. Power developers generating electricity at the cheapest rate would emerge the winner. The project is likely to be awarded by the end of the current fiscal.

For the Rs 25,000 crore Odisha power project, nine companies – NTPC, Tata Power, NHPC, Adani Power, JSW Energy, Jindal Power, Sterlite Infraventures, CLP India and Larsen & Toubro – have submitted bids.

Excepting Tata Power, all these companies also put their bids for Rs 24,200 crore imported coal based UMPP in Tamil Nadu.

The initial bids were evaluated by an Apex Evaluation Committee headed by V K Shunglu, former Comptroller and Auditor General (CAG).

While the Odisha project will be based on domestic coal, the Tamil Nadu project would be fired from imported fuel.

According to Minister of State (Independent Charge) for Power Jyotiraditya M Scindia, the Government is offering investment-friendly parameters for these projects and claims to have cleared the major regulatory hurdles required for the setting up of mega power projects.

In August, the revised standard bidding documents were given the go-ahead by an Empowered Group of Ministers.

At present, India has awarded four ultra mega power projects — one to Tata Power and three to Reliance Power. So far, only Tata Power’s project at Mundra in Gujarat is fully operational.

Source

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Government working on policy to fast-track clearances for the power projects...

 

The power and environment ministries are working together on a policy to fast-track project clearances by which clearances would be considered as deemed in case central and state governments failed to clear them within a specific deadline.

"The power and environment ministries are working together for a policy to allow clearances within a time period. A lot of time is now being consumed on environment and forestry clearances at state and centre levels for power projects. Now, if you won't get those clearances within a timeline, the clearances would be considered as deemed and the company can start its work, Power Minister Jyotiraditya Scindia said here Saturday at an interactive session during the 86th Annual General Meeting of the Federation of Indian Chambers of Commerce and Industry.

The Cabinet Committee on Investments (CCI) has put in motion a process to bring 255 stalled projects involving an investment of Rs 10 lakh crore for speedy clearance. On Friday it queried the power ministry regarding land acquisition for ultra mega power projects (UMPP).

Scindia also said the power ministry will circulate two cabinet notes within a month proposing changes in the Tariff Policy and Electricity Act 2003.

There would be two separate cabinet notes and I am speaking to various stakeholders and it is set to come up within a month's time," Scindia said.

The various stakeholders in this case are the Central Electricity Authority (CEA), Central Electricity Regulatory Commission (CERC), principal secretaries of all state governments and the power generation, transmission and distribution utilities. -

Source

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Bidding strategies for UMPPs and other Power Projects moving ahead...

 

Guest Article by Mr. Nirav Dadhania

Indian power sector is going through precarious phase since some time. It is one of the few sectors where the companies don’t have product differentiation, operation is regulated and the end product happens to be full of vote bank politics.

The sector is facing multitude of problems like fuel sourcing, land acquisition, environment and government clearances, regulatory issues, timely payment from utilities, high interest rates, etc. Fortunately government has realized this and has initiated efforts like putting the clearances in fast track, Coal India signing fuel supply agreements for 71,500 MW, restructuring of state electricity boards, increase in tariff, etc.

Many Indian power producers have already started looking for opportunities in international market. TATA Power, which has already few projects under implementation abroad, is now concentrating on Africa, Southeast Asia, the Middle East and the SAARC (South Asian Association for Regional Co-operation).

The report card of existing four UMPPs (at Mundra to TATA Power and Sasan, Tilaiya and Krishnapatnam to Reliance Power) is not commendable. And now the government has started the bidding process of two new UMPPs: one each at Bedabahal in Odisha and Cheyyur in Tamil Nadu. The estimated cost Bedabahal UMPP is Rs 25,200 crore and of Cheyyur UMPP is Rs 24,200 crore. Assuming a debt / equity ratio of 3, the required debt comes around 35,000 crores. This would be a humungous task for developers to raise such a huge amount.

Bidding for UMPPs...
Bidding for power projects is no big trade secret as all the project parameters are out in open and most of the companies can reasonably estimate the cost of project. Considering that in the past, project developers have had aggressively bid to win the projects and have had burned their fingers in the process, it is expected that this time the developers will not discount the unexpected contingencies. Moreover, this time fuel cost is not the bidding parameter and the companies will bid the tariff for the 1st year only rather than levelised tariff structure.

Changing role of EPC players and financing…
Traditionally, EPC players have played the role of mere contractors providing the services/equipments. But considering the huge amount of investments required and fierce competition to bid the project, EPC companies will now play an important role as project stakeholder and would include joint ownership, providing strategic and business advisory to develop the project. One of the bidding strategies for power developer would be on how well they synchronize with their EPC partners.

EPC partners will not only bring technical competencies but can also bring in cheap funds. In past Reliance Power was able tie up $1.1 billion from three Chinese lenders. This was to support import of Boiler-Turbine Generator (BTG) from Shanghai Electric Group Company Ltd. Recently China

Development Bank Corp had agreed to lend $3 billion for 2,500 MW to Global Wind a venture between Ming Yang and Reliance Capital.

Import of Chinese power equipments and their performance has remained a controversial topic with domestic firms strongly opposing the imports. The Central Electrical Authority has submitted a report to the Union Power Ministry mentioning below par performance of Chinese equipments. Chinese units based on imported coal have, however, done better than BHEL on some parameters.
The developers will however, need to understand that success of project will depend on how much External Commercial Borrowing (ECB) they are able to get. Indian banking system has already reached its power sector lending limit. Also, their risk appetite of domestic lenders has waned considering the increase in risk profile of power projects. SBI chairperson Arundhati Bhattacharya in a letter to Power Secretary has pointed out that Dhabol power project is on verge of becoming NPA.

Considering the present situation, it would be difficult for developers to compete with someone having strong EPC partner with cheap ECB funding.

Increased responsibility of finance managers in EPC contracting…
Traditionally EPC contracting has largely remained purview of technical / commercial team with finance function playing limited role of budgeting. With EPC players playing a more integrated role, finance managers need to take a more collaborative approach with technical and EPC partners. They need to work out different payment/ownership structures so as to calculate different IRRs for both, the company and EPC partners. Manager need to create various scenarios in their financial models of various permutations combinations of payments vs stake sale mechanism.

Also, more innovation is required in terms of funding structures like repayment structuring, integrated financing solution across power value chain, hedging and risk mitigation.

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About the Author: Mr. Nirav Dadhania is a finance professional with techno commercial expertise. He has worked with various reputed power companies in India. He can be contacted at

His LinkedIn profile is www.linkedin.com/in/dnirav.

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The information and views expressed in this blog post are solely those of the author and not necessarily those of Power India. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.

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R-Power starts generation from Sasan UMPP second unit...

 

Reliance Power today said it has started electricity generation from the second 660 MW unit of the 3,960 MW Sasan ultra mega power project in Madhya Pradesh.

With the commissioning of the Sasan UMPP second unit, the company's overall generation capacity has crossed 3,200 MW.

The second unit of the project has commenced power generation in shortest time of just about a month from boiler light up, Reliance Power said in a statement.

Source

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Government exempts UMPPs from compensatory afforestation clause...

 

The government has granted exemption to ultra mega power projects from a key provision of the Forests Act 1980 that requires developers to identify non-forest land for compensatory afforestation.

The decision will benefit companies like Reliance Power that is implementing 3 ultra mega power projects and developers of future such projects.

The Cabinet Committee on Infrastructure has approved 'central government' status for ultra mega power projects for the purpose of forestland acquisition.

Unlike private projects, central government projects are neither required to identify non-forest land for compensatory afforestation nor pay any money for the purpose. The developers of ultra mega power projects however will be asked to pay for the afforestation while the host state government will identify the non forestland.

Compensatory afforestation rule is one of the most important conditions stipulated by the central government under the forest conservation act while diverting forestland and requires companies to identify equal area of non-forest land in the same state.

"We had approached the Cabinet Committee on Infrastructure for tweaking the compensatory afforestation norms for the Tilaiya ultra mega power project in Jharkhand. Since approved, the change would benefit both existing and future ultra mega power projects," a senior power ministry official said.

Reliance Power bagged the 3,960 mw ultra mega power project at Tilaiya in 2009 and planned to commission the first unit by May 2015. The company has not been able to start work, as the state government has not handed over land to the company. The company has received final forest clearance for 1220 acres of forest land but is still awaiting final handover from state government.

Nearly 80% of the land required for the project and the attached coal mines falls under forest area.

Reliance Power had ordered the main plant equipment for the Tilaiya project on Shanghai Electric, China but is still in discussions with domestic and international banks for financial closure.

The proposal would also benefit developers of future ultra mega power projects. The government has called bids for two such projects at Bedhabahal in Orissa and Cheyyur in Tamil Nadu.

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Tata Power completes restoration work at Mundra plant...

 

Tata Power today said the restoration work at its Mundra plant, which was impacted by fire, has been completed and the insurance claim is being processed.

“Restoration of the impact of fire on conveyor was achieved on November 20, 2013 and the company has processed the insurance claim as per coverage,” Tata Power said in a regulatory filing to the stock exchanges.

Tata Power’s 4,000-MW ultra mega power project at Mundra in Gujarat caught fire on November 18 last month, partly affecting coal feeding conveyors.

According to sources, the procurer states will suffer loss of availability of electricity to the extent of 433 million units (Gujarat), 182 million units (Maharashtra), 91 million units each (Haryana and Rajasthan) and 114 million units (Punjab). The share of these states is 47.5 per cent, 20 per cent, 10 per cent, 10 per cent and 15 per cent, respectively.

The power tariff of this plant is Rs 2.26 per unit.

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CERC order on tariff relief for Tata's Mundra UMPP by month-end...

 

Tata Power Wednesday said the Central Electricity Regulatory Commission's (CERC) order of compensatory tariff for its Mundra (Gujarat) project is likely to come by December-end.

"I am hoping that by end of December we could hope for the order," Tata Power Managing Director Anil Sardana told a television news channel here.

"CERC has finished the hearings, and Maharashtra Electricity Regulatory Commission has just submitted their affidavit a few days back on November 26 and now they have given time for us to file an affidavit to give our rejoinder on that affidavit. After that perhaps they will take another two-three weeks," Sardana said.

A Tata Power subsidiary, Coastal Gujarat Power (CGPL), had petitioned CERC seeking relief owing to the massive rise in cost of coal being imported from abroad.

The company has an agreement with the Maharashtra government for sale of power.

The CERC had, in April, allowed Adani Power to raise tariff from its 4,620-MW Mundra ultra mega power project, to compensate for the unexpected increase in the fuel price.

Both projects have a huge component of imported coal and had filed petitions with the CERC for tariff revision.

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