Hindujas to renew its power foray with Vizag 1040 MW project…

The Hinduja Group plans to renew its thrust into India's power sector with the much delayed Vizag project in India expected to be fully operational by September 2013.

The Vizag project picked up steam in 2008, a decade after it was proposed, but was hampered by regulatory issues since.

The 1040 MW project, being executed by the group's power sector vehicle, Hinduja National Power Corp, is part of a plan to produce 10,000 MW for power hungry India over 5 to 6 years.

Mr Ashok Puri MD at Hinduja National Power told reporters that the first phase of the USD 1.2 billion project comprising one unit of 520 MW will be commissioned by June 2013.

The group has already invested 14 billion rupees in the project which sources coal from Mahanadi Coalfields in the neighbouring Orissa state, a unit of Coal India Ltd.

Mr Puri said that the firm is looking for sites in Maharashtra, Karnataka, Gujarat and Orissa For new projects where it can get requisite fuel linkages.

Mr Abin Das group director said that the Hinduja Group, which has interests across banking, media, power and automobiles in India, remains committed to its INR 500 billion investment for the country, bulk of which would be power focused.

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Reliance, Tata Face Energy Caps in $3 Billion Efficiency Market in India…

According to reports, India has set targets for companies including Reliance Industries Ltd. (RIL) and Tata Steel Ltd. (TATA) on energy consumption reductions in preparation for a $3 billion-a-year market for trading efficiency credits.

Companies have been notified of their targets and audits of their energy consumption have started, said Ajay Mathur, director of the Bureau of Energy Efficiency.

“By mid-2012, we should be able to start issuing tradable certificates,” Mathur said in an interview this week. The government may disclose the individual targets assigned to 563 facilities, including oil refineries, steel plants and paper mills in its official gazette as early as next month, he said.

The program aims to lower fossil fuel use in the world’s third-largest energy consumer by forcing eight industries to reduce their power needs. Companies that save more power than required earn credits which they can trade on power exchanges to others seeking to meet their targets.

Other companies with facilities falling under the program include NTPC Ltd. (NATP), Hindalco Industries Ltd. (HNDL), Essar Steel Ltd., JSW Steel Ltd. (JSTL) and Reliance Power Ltd. (RPWR), according to a list from the bureau.

By using energy more efficiently and reducing losses, India may avoid building 10,000 megawatts of new power capacity, saving 1 trillion rupees ($19 billion), according to the power ministry. That’s the equivalent of about 9 new nuclear reactors.

Over three years, the energy-efficiency program should reduce power consumption across the eight industries by about 5 percent, Mathur said. India became the world’s third-largest energy consumer after topping Russia in 2009, the International Energy Agency said in its annual outlook this month.

Trading of the credits may create a market worth $3 billion annually, according to Baman K. Mehta, chief executive of Darashaw & Company Pvt., a Mumbai-based investment bank. Within five years, that could climb to $16 billion, Mathur has estimated.

India’s trade in international carbon credits could be affected because of an impasse over the renewal of the Kyoto Protocol, the world’s only climate treaty that created the carbon market.

Annual climate negotiations begin next week in Durban, South Africa. Japan, Canada and Russia are expected to refuse an extension of the treaty requiring industrialized nations to cut emissions through 2012.

With the future of a global emissions trading market at risk, India is pressing ahead with domestic environmental trading programs to slow emissions and promote clean energy.

In April, trading began in India’s renewable energy market that requires power distributors and large energy consumers to buy a certain amount of their electricity from clean sources like wind farms and hydropower plants.

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Power Finance Corp sets up monitoring cell to keep watch on loan-book…

In the wake up difficulties being faced by the energy sector, state-run Power Finance Corp (PFC) has set up a project monitoring cell to keep an eye on the stressed loan portfolio, a top official said today.

"Though the idea of monitoring cell was conceived in 2009, we have recently set up a separate cell for this to better check the progress of the projects to which we have lent money,"

Monitoring of the projects would be in a broader sense to see the debt servicing capacity of borrowers, he said. "We will do monitoring in financial terms, which will be different from a typical project monitoring unit that emphasises on execution. We will keep an eye on the critical milestones set by the company and see whether they are met or not."

Currently, financial institutions are worried about the advances extended to electricity boards of Tamil Nadu, UP, Rajasthan, Bihar, Haryana, Madhya Pradesh and Punjab, which according to rating agency Crisil, are the most vulnerable.

As per Crisil, losses of discoms rose 24 per cent to Rs 27,500 crore between 2006-07 and 2009-10, which could have risen to Rs 35,000-Rs 40,000 crore last fiscal, mainly because of problems in utilities, which are not free to revise the already low tariffs. Also, many green-field projects are stuck due to land issues and coal linkage problems.

"Many of the green-field projects are stuck due to coal linkage and land acquisition related issues. Though we don't have any control over these issues, we will try to minimise the risk by diversifying our portfolio," he said.

PFC posted net profit of Rs 419 crore in the second quarter, down 40 per cent from 700.8 crore in the year-ago quarter on the back of forex losses, despite 24 per cent rise in income to Rs 3,142 crore from Rs 2,531 crore.

Gross NPA rose 0.22 per cent in the first half of this fiscal from 0.02 per cent in the same period last year. Net NPA rose to 0.19 per cent during the period from 0.01 per cent a year ago.

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Delayed Indian Solar Projects May Lose Contracts, Official Says…

According to reports, two of India’s first solar projects under a state program offering favorable tariffs to build 20,000 megawatts of capacity suffered delays, a ministry official said, adding developers may lose contracts if deadlines are missed.

“Two of the projects are behind schedule,” said Tarun Kapoor, who is responsible for overseeing the program as joint secretary at the Ministry of New and Renewable Energy.

Entegra Ltd. (EIL), whose majority shareholder is MW Corp Pvt., hasn’t yet begun building a 10-megawatt solar-thermal plant in Rajasthan, Kapoor said in an interview in New Delhi yesterday.

Enterprise Business Solutions was also given a two-month extension after being fined for missing an October deadline to build a 5-megawatt photovoltaic plant in Punjab, he said, adding that construction at the site has since begun.

Entegra Chairman Mukul S. Kasliwal said the company faced problems raising financing for its 2 billion rupee ($38 million) development because of “unreasonable” government restrictions on using a so-called special-purpose vehicle for the project. The company expects to resolve the issue and complete the plant by its 2013 deadline, he said, declining to give a timetable.

“We haven’t started because we’re not going to do something that doesn’t make sense financially,” Kasliwal said in a phone interview today. “Had we been allowed to function as an SPV, then we would’ve finished financing long ago.”

The bar on the vehicles, which allow companies to isolate risks from funding large projects, means Entegra is limited to raising smaller loans backed by its balance sheet, he said.

The company, which at the same time is building a 400- megawatt hydropower plant in Madhya Pradesh state, has already invested 100 million rupees in the solar project and is in talks over alternative funding, Kasliwal said, declining to elaborate.

Neither Kapoor nor A.K. Maggu, general manager of state-run power trader NTPC Vidyut Vyapar Nigam Ltd., was able to provide contact details for Enterprise Business Solutions. The trader signed power contracts with the developers. Bloomberg was unable to find a website or contact for EBS in an Internet search.

Both projects are part of the “migration” program to build a first round of plants under the national Solar Mission and boost solar capacity by the equivalent of about 18 nuclear power plants by 2022. Under the migration plan, projects get deals to sell power for as much as 17.91 rupees a kilowatt-hour. That’s about four times the average wholesale fee for coal power and above the average 12.16 rupees for more than 600 megawatts of projects awarded in India’s first solar auction last year.

Developers will lose their preferential tariffs if they fail to complete their projects on time, Kapoor said.

The central government plans to award more solar permits next year to meet its target of adding at least 3,000 megawatts of capacity in the five years from 2013, he said. Officials at the finance, power and renewable energy ministries are in talks over how much capacity should be auctioned in 2012, Kapoor said. “In a few months, we should have a clear picture,” he said.

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India to Cooperate with Germany on Energy Sector…

India and Germany have discussed bilateral cooperation in the fields of renewable energy, energy efficiency, solar energy, clean coal technology and carbon capture and sequestration. Some countries are reviewing their nuclear power programmes. Reports indicate that the Governments of Germany and Switzerland plan to phase out nuclear power by 2022 and 2034 respectively. Italy has decided not to reintroduce nuclear power. The demand for growth in power generation in these countries can be met by renewable energy sources. This appears to be the reason to be the reason for their distancing from harnessing nuclear energy.

In view of India’s vast and growing energy needs, nuclear energy is an important clean energy option and will be pursued with full regard to safety, environment and livelihood of the people in the neighbouring areas along with other energy sources, including solar energy, as no single energy source would be adequate to meet India’s energy requirements, said  the Minister of State in the Prime Minister’s office Sh V Narayanasamy.

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Renewable energy ministry of India seeks 10-fold increase in fund outlay…

According to reports, the renewable energy ministry has sought a 10-fold increase in fund outlay for the next five years. The ministry estimates requirement of Rs 40,000 crore to ramp up its capacity to 30,000 mw by 2017.

An outlay of Rs 4,000 crore was earmarked for development of renewable energy in the 11plan period of 2007-12. India’s present renewable energy capacity is over 20,000 mw of which wind farms alone generate 14,000 mw while the rest is shared between biomass, small hydro and urban-industrial waste. Solar energy capacity currently stands at 35 mw.

“The progress in the renewable energy sector is happening at a fast pace but it’s not so impressive. Road-map for the next five years is very crucial for its growth,” renewable secretary GB Pradhan said at 11th Sustainable Energy Summit on Wedenesday.

The ministry also has plans to achieve grid parity in the solar energy sector by 2017, which means that electricity generated by solar plants would be sold at the same rate as conventional electricity. Along side, it will also increase the quantum of grid connected solar power aiming at 20,000 mw.

“To achieve it, we need a strong domestic manufacturing base which can absorb technology advancement,” said Pradhan. In just two years, capacity of grid connected solar power has increased from 2 mw to 35 mw in 2011. By the end of 11th plan, ministry hopes it will reach 300 mw.

The government is also encouraging solar power with its Jawaharlal Nehru National Solar Mission, which aims to tap solar power in India, estimated to be around 5,000 trillion kWh per year energy.

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Moser Baer emerges as 1st solar PV manufacturing company globally to be accredited with ‘Green Leaf Mark’ certification…

Moser Baer Solar (MBSL), a subsidiary of Moser Baer India has been awarded ‘Green leaf’ Mark by Intertek AB Semco, Germany for its latest Max Series ‘Lead free’ solar PV modules. Intertek’s Green Leaf Mark certifies that this product has been independently tested and found to conform to the multiple existing environmental regulations, such as RoHS laws, REACH and Eco Design.

With this MBSL has been accorded the rights to display the prestigious ‘Green Leaf’ mark on product packaging, at point of purchase in displays, product advertising and literature to highlight its superior environmental credentials.

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Karnataka Renewable Energy receives 22 bids for setting up solar projects…

• Karnataka Renewable Energy Development Ltd (KREDL) has received 22 bids for setting up solar power projects under the ‘Karnataka solar policy’. Today was the last day for submitting the bids. Mr N S Prasanna Kumar, Managing Director, KREDL, said. As part of its 350 MW programme, KREDL had floated a tender inviting bids for setting up projects that total to 80 MW. The projects would be allocated under ‘reverse bidding’ process. They will be allocated to bidders who have quoted the steepest discounts to the tariff fixed by KREDL (Rs 14.50).

• Mr Kumar however declined to comment on the other details such as the total capacity of all the bids submitted and the prices offered. “We cannot check the technical details of the bids till the RFP (request for proposals) for bidders under the Phase I Batch II of the National Solar Mission is closed,” Mr Kumar pointed out. (The last date for submission of bids under the Batch II of NSM is December 2. Disclosing the winning tariffs in Karnataka would influence the bidding process under NSM.) The allocation of projects with respect to these tenders would start soon, he said. The government has identified land to set up the 80 MW of solar plants, which would be allotted for a period of 30 years of lease, Mr Kumar said.

• However, it is learnt from sources that only two bids, totalling 20 MW, have been received for ‘solar thermal’ projects. KREDL had invited bids for 30 MW of solar thermal and 50 MW of photo voltaic. While the ‘thermal’ part of it has been under-bid, the PV portion has received bids for substantially more than 50 MW. Apar t from the projects under the solar policy, Mr Kumar had recently said that projects with a total capacity of 200 MW would be taken up under the REC scheme of the Ministry of New and Renewable Energy (MNRE). “Some companies have already applied for projects under REC mechanism and we will allot the ‘REC mechanism projects’ very shortly,” Mr Kumar said. For these, however, there is no deadline as it is a “continuous process”.

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Petroleum Ministry may block domestic gas supply for merchant power plants

• The Petroleum Ministry has proposed that domestically produced natural gas should not be supplied to power plants that do not sell electricity to state-run power utilities at regulated rates. “There is no proposal before the government to ban gas supply to merchant power plants,” the Oil Minister, Mr S. Jaipal Reddy, said in a written reply to a question in Lok Sabha. “However, there is a proposal in which domestic gas will be available only to those power plants that supply electricity to state power utilities under a Power Purchase Agreement (PPA) at regulated rates,” he said. Domestic natural gas is available at one-third the price of imported LNG.

• Against the demand of 230 million cubic meters per day, domestic production amounts to 142 mmcmd, including about 42 mmcmd from Reliance Industries’ eastern offshore KG-D6 fields. KG-D6 gas and other domestically produced gas is priced at $4.20 per million British thermal units, while imported gas in its liquid form (called liquefied natural gas, or LNG) costs upward of $13-14 per mmBtu. “In view of the scarcity of domestic gas, the current and future allocations of domestic gas will be subject to the condition that the entire electricity produced from this gas shall be sold under long-term Power Purchase Agreements to the grid/distribution companies at regulated tariffs approved by the regulator(s),” an Oil Ministry official said.

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NTPC gets approval to exit International Coal Ventures consortium…

• The power ministry has approved NTPC Ltd’s proposed exit from International Coal Ventures Pvt. Ltd (ICVL), in a move that could hurt India’s efforts to acquire overseas coal assets. ICVL was promoted by five state-owned firms two years ago to buy coal mines overseas. While Steel Authority of India Ltd (SAIL) and Coal India Ltd own 28% each of ICVL, NTPC, Rashtriya Ispat Nigam Ltd and NMDC Ltd own 14% each. The 14% share of India’s largest power generation utility in the consortium, which hasn’t managed to close a single purchase, is expected be split proportionately among the remaining partners.

• The exit will end the acrimony among the partners that surfaced last year when then steel minister Virbhadra Singh had said that NTPC and Coal India could exit the consortium if they wished to. ICVL was floated on the coal ministry’s initiative and has an initial equity capital of Rs.3,500 crore and authorized capital of Rs.10,000 crore. An NTPC spokesperson confirmed that the exit is taking place and that the details will be worked out after “requisite due diligence”. Coal India continues to be part of the consortium. A top power ministry official, who spoke on the condition of anonymity, said earlier that it had informed the steel ministry “that NTPC would like to opt out”.

• Mint reported on 21 September that ICVL seemed headed for a split with NTPC wanting to exit. NTPC subsequently made a presentation to its parent ministry elaborating on the reasons for this. According to NTPC, while the power producer needs thermal coal to fuel its power projects back home, ICVL’s o ther stakeholders are largely interested in metallurgical coal reserves to feed their steel mills. And the thermal coal offered to it does not meet the utility’s technical requirements. “Our controlling ministry has given its assent to our proposal. We have already received a letter in this regard. Now, only the process part is left. Our share will be proportionately acquired by the remaining partners,” said a senior NTPC executive aware of the development who didn’t want to be identified.

• The exit could actually work to the benefit of NTPC, said an expert. “For NTPC, the development may mean a focused approach in the pursuit of coal resources,” said Dipesh Dipu, director, consulting (mining), at Deloitte Touche Tohmatsu India Pvt. Ltd. “Chasing opportunities on its own and simultaneously being part of a consortium may have led to strategic ambiguity.” Still, the breakup will pose a challenge to “the efforts of the government to create a sovereign fund like arrangement and create a unified acquisition resource pool in the form of ICVL,” he said.

• NTPC’s decision comes at a time when the country is facing its worst coal shortage. India faces a shortage of both metallurgical and thermal coal. A top ICVL executive who didn’t want to be identified said the company “had received a copy of the (power ministry’s) letter”. This person said the company would discuss what needs to be done with the power utility’s stake. While private Indian firms have been successful in securing coal resources overseas, government-owned entities such as ICVL and NTPC have not been able to do so. The split in ICVL only highlights the challenges involved, Dipu said.

• “While government-owned firms have been in the race too it seems the compliance requirement (for) procedures and lack of tolerance to risk-taking has caused them to be slow. Alignment of individual corporate objectives may hav e been yet another reason for the same,” he added. NTPC, which generates 8 megawatts (MW) of every 10MW it produces by burning coal, is looking to increase installed capacity from 34,854MW now to 75,000MW by 2017 and 128,000MW by 2032. It needs 160 million tonnes (mt) of coal in fiscal 2012, of which around 16 mt has to be imported. The utility has already placed orders for importing 12 mt of coal and placed a tender on Monday to import another 4 mt.

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