Palatana 726.6 MW Gas project to be delayed due to delay in evacuation facility…

 

Power India found that, delay in getting forest clearance for setting up transmission facility is likely to delay power evacuation from 726.6 MW Gas Based Combined Cycle Power Project at Palatana in Tripura.

 

The status report of the transmission project has observed that not getting forest clearance from Assam and Meghalaya has become "very-very critical".

Sudhir Basudeva, CMD, ONGC, who reviewed the progress of work recently in Tripura said that first unit of the project will start generation by June this year.

 

Transmission system associated with 726.6 MW is being implemented through joint venture route by North East Transmission Company Ltd and the cost of the project is around Rs 2057 crores.

This project is implemented by North Eastern Transmission Company Ltd ( NETCL) which is promoted jointly by Powergrid (26%), ONGC Tripura Power Company (OTPC) (a Joint between ONGC, Infrastructure Leasing and Financial services (IL&FS)and Government of Tripura) (30%), Government of Tripura (10%), Government of Assam (13%), Government of Mizoram (10%), Government of Manipur (6%) and Government of Meghalaya (5%).

The 400 kilo volt (KV) double circuit transmission Line will connect the power plant site with the PowerGrid Pooling stations at Silchar and Bongaigaon in Assam.

According to the status report of the project delay in obtaining forest Clearance for Tripura, Assam and Meghalaya has adversely affected the project schedules since the last two working seasons from October to May could not be effectively utilized for construction of foundations and erection of towers for more than 300 locations passing through total forest area of 130 Km in Tripura, Assam and Meghalaya.

The second stage clearance for starting the work in forest has been obtained for Tripura. The second stage forest clearance is still awaited for the states of Assam and Meghalaya despite exchange of various communications between Ministry of Forest and Environment (MoEF) and state Government of Assam and Meghalaya during the last one year. This has become very-very critical.

According to report some portion of line passes through insurgency area and therefore there is need for the support of local police.

 

 

 

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CIL to set deadlines for signing FSAs for coal supply with power producers..

Power India found that Coal India plans to take an aggressive stand against power producers and set a deadline after which it will not sign fuel supply agreements (FSAs) with the companies, as the state monopoly fights back after being arm-twisted to commit long-term fuel supply. Coal India's board has already decided to impose negligible penalties if it defaults on FSAs and has asked companies to accept its price if CIL needs to import coal.

 

CIL is concerned about slow growth in output and blames delays in environmental clearances for the coal shortage. However power companies accuse the state-run firm of abusing its monopoly and offering FSAs from which it can easily back out.

 

Most power producers have not come forward to sign the FSAs, making Coal India officials impatient. "Depending on the final response (from power companies) we will take a decision next week. We also intend to ask for the ministry's view on the same," Coal India chairman S Narsing Rao.

 

Another official said the company can't wait forever. "We are planning to introduce a cut-off date for signing the agreements because we cannot keep on waiting indefinitely for all the firms to come and enter into contracts," a senior Coal India official explained.

 

Coal India's board agreed to sign FSAs after top industrialists jointly approached Prime Minister Manmohan Singh and sought his intervention to help power projects that had not fuel to burn. Subsequently, the company was directed to sign supply pacts.

 

Power companies say they are discouraged by the draft FSA prepared by Coal India. NTPC and Damodar Valley Corporation along with a number of large private sector companies are viewing the draft of the fuel supply contract as heavily biased towards the coal company.

 

About 50 firms are expected to sign the contracts but only about 10 has approached Coal India so far. Almost all biggies who would be consuming bulk of the additional coal have not yet approached the company.

 

NTPC does not intend to sign separate fuel supply agreements for new units and old units at the same power station as is now required by Coal India. It intends to sign the same set of contracts - the one it has already signed for some its units. It will be consuming almost 50% of the incremental coal that will be supplied by CIL under the new draft agreement.

 

"We have already written to Coal India expressing our intention because it is not practically possible to sign two sets of fuel supply agreements for different generating units of a single power station. We would like to sign the same old set of for the new units as well," NTPC chairman Arup Roy Choudhury.

 

Following a presidential directive, CIL has prepared a new draft of fuel supply agreement that it wants to sign for units which have come up between April 1, 2009 and December 31, 2011. This draft is different from the ones that NTPC has signed for units installed prior to April 2009.

 

The new draft contract has fixed the penalties in case of supply falling below 80% of the committed amount to 0.01% which will be effective after three years. While the penalties for existing agreements are 10%.

 

 

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Karnataka power line to be swapped for wildlife corridor

Power India found that the Karnataka government is going to dismantle a 25 km long power transmission line passing through Kudremukh National Park to compensate for the loss of an 8.3km long wildlife corridor in Chikamaglur district caused by another line.

 

The Forest Advisory Committee (FAC) of the Ministry of Environment and Forests (MoEF) and the Karnataka Forest Department initiated this swap to restore the wildlife corridor disrupted by a 220 KVA power transmission line in Kudremukh. The line originally supported the mining operations of the Kudremukh Iron Ore Company (KIOCL) which was shut down by the Supreme Court in response to litigation by conservation groups. The move was initiated after an ecological analysis by experts.

 

It’s being described as a “conservation swap”.

 

MC Vinay Kumar, assistant director (conservation support and outreach), Wildlife Conservation Society-India (WCS-India), said that the Karnataka government had sought forest clearance from the FAC in early 2010 for permitting a power line to carry power from the Udupi Power Corporation’s Thermal Power Plant in Nandikur.

 

Since the proposed 400 KVA power line cut through an 8.3 km stretch of critical evergreen forest corridor in the Balur forests in Chikmagalur district, a field inspection of its ecological impacts was conducted by an FAC expert committee comprising Dr K Ullas Karanth, director of WCS-India and FAC member, and Dr AJT John Singh, former dean of the Dehradun-based Wildlife Institute of India (WII).

 

Due to delays caused by KIOCL, the recommendation was not followed initially. This was protested by wildlife groups, Wild Cat-C and Bhadra Wildlife Conservation Trust, who sough the FAC’s intervention. The latter intervened and took the violations seriously.

 

“Thanks to a proactive role played by the Karnataka Chief Secretary SV Ranganath and Forest Principal Secretary Kaushik Mukherjee, a senior forest officer rushed with an undertaking letter to the FAC meeting on October 12, 2011. The state government provided an undertaking saying that the existing line through Kudremukh would be dismantled before the other transmission line was commissioned,” said Vinay Kumar.

 

The dismantling of the Kemmar-Kudremukh line began on April 17 this year after alternative power was provided to a few affected villages on the eastern edge of the park.

 

 

 

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EGoM to discusse the coal diversion issue of RPower’s Sasan UMPP…

Power India found that an Empowered Group of Ministers (EGoM) is going to discuss today the issue of diversion, with government permission, of surplus coal by Reliance Power Ltd (R-Power), meant for its 4,000-Mw Ultra Mega Power Project (UMPP) at Sasan in Madhya Pradesh, to another project being developed by it, Chitrangi, in the same state.

 

A recent draft report of the Comptroller and Auditor General of India (CAG) had alleged the government's decision to allow the coal diversion had caused a Rs 15,849 crore financial benefit to the company, part of the Anil Dhirubhai Ambani Group.

 

In a letter to Prime Minister Manmohan Singh the same day, the CAG had downplayed the draft report, saying “The details being brought out were observations under discussion at a very preliminary stage and do not even constitute our pre-final draft and, hence, are exceedingly misleading.”

 

The EGoM, in its earlier meeting in December, had decided to seek legal opinion from Attorney General (AG) Goolam E Vahanavati on the matter. The AG had reportedly felt if the government wanted to revoke permission for the diversion, it would have to show the company violated the norms which allowed it to use incremental coal.

 

CAG’s audit report had said the government permission for R-Power to use excess coal from mines allotted for Sasan, subsequent to execution of contract agreements, vitiated the sanctity of the bidding process for the project.

 

R-Power had contested the allegation. “The government’s right to grant permission is built in to the coal block allocation letter of Sasan that were made available to all bidders prior to bid submission. Hence, there is no change in commercial conditions after award of UMPP. So, the issue of undue benefit does not arise at all,” it had said in a presentation made to the CAG this February.

 

The company also said there was a strong legal basis for the award of incremental coal, citing the Colliery Control Rules, 2004, empowering the government to provide approval for utilisation of surplus coal. An EGoM had in 2008 approved the diversion, subject to conditions. These included providing Sasan priority in use of coal from the allotted blocks — Moher, Moher Amlori Extn and Chhatrasal — and sale of power generated from surplus coal only through bidding.

 

The company also said there was no rationale behind CAG’s methodology for arriving at the ‘undue benefit’ figure of Rs 40,000 crore. CAG had quantified the difference between Reliance Power’s cost of production and notified sale price of Coal India, extending it over 28 years for arriving at the loss figure.

 

 

 

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Tribunal to hear plea against nod to Jindal’s power plant…

The National Green Tribunal today agreed to hear a plea challenging the environmental clearance granted to Jindal Power Ltd on November 4, 2011, for increasing the capacity of its 1,200 MW coal-based thermal power plant in Raigarh district of Chhattisgarh to 2,400 MW.

 

The Tribunal, however, refused to entertain the plea assailing the Ministry of Environment and Forest’s (MoEF) decision to grant environment clearance on March 18, 2011, for the first phase of the project on the ground that it was time- barred.

 

A bench headed by Tribunal’s acting Chairperson A S Naidu sought replies from MoEF, Chhattisgarh Environment Conservation Board and Jindal Power Ltd on a plea filed by NGO, Mehnatkash Mazdoor Kishan Ekta Sangathan.

 

“The cause of action for challenging the order dated March 18, 2011, has became grossly barred by afflux of time and thus has attained finality,” the bench, also comprising Professor R Nagendran, said.

 

“We hold that this appeal shall be confined to environment clearance granted by the MoEF by order dated November 4, 2011,” it said while seeking replies on the same by May 10.

 

The MoEF had on March 18, 2011, granted environment clearance for establishing a 2400MW coal-based thermal power plant but due to non-availability of coal Jindal Power Ltd established a plant for 1200MW (2×600 MW) and commenced production.

 

Jindal Power Ltd, however, managed to import more coal and filed another application seeking clearance for additional 2×600 MW coal based thermal power plant.

 

Jindal’s application was allowed and the MoEF by order dated November 4, 2011, granted clearance for the same.

 

Both the clearances were assailed in the plea on which the Tribunal held that the March 18, 2011 clearance could not be heard due to lapse of time allowed for challenging the clearances and agreed to hear the plea against the November 4, 2011 clearance.

 

 

 

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Nuclear Energy to be counted as clean energy source according to Planning Commission…

Nuclear energy should be considered a clean energy source, Mr Montek Singh Ahluwalia, Deputy Chairman Planning Commission, said that at the end of the 23-Government Clean Energy Ministerial meeting that took place in London this week.

 

Mr Ahluwalia, who represented India at the third CEM conference, said that nuclear energy was “one part of a move towards a low carbon energy” future.

 

India is set to host the fourth CEM meeting in next April. The London meeting brought together representative of governments from across the world, including China, Brazil, Australia and the US, and is meant to be an annual forum for some of the world’s biggest emitters of greenhouse gases to work together on policies to increase their use of renewable energy.

 

Among the initiatives launched were a joint project by Italy and the US to provide off grid lighting to two million homes in India, as part of a global energy access partnership.

 

Speaking at a press conference, alongside the US Energy Secretary, Mr Steven Chu; the British Minister of Energy, Mr Edward Davy; and Mr Kandeh Yumkella, Director of the UN Industrial Development Organisation, Mr Ahluwalia warned that if the world continued to develop renewable energy at the rate it currently was, “we are not going to achieve what we need to achieve”.

 

ENERGY EFFICIENCY

He said that it was quite clear that India wanted to make “major improvements in energy efficiency and use and the cleanliness of the energy mix.” “The solution to climate change has to be a combination of improvement of energy use and improvements in emissions.” However, at the moment the switch to renewable energy was “not something that can be done without bearing the costs…the good news is that the additional cost is falling.”

 

Asked about to what extent India’s energy future would incorporate new, and controversial, technologies such as fracking, and how this would affect the future of renewables development, Mr Ahluwalia said that India didn’t currently have a programme for going into fracking “in a big way”. “We are watching experiences elsewhere.”

 

 

 

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Madurai Corporation to take green route for power generation…

Power India found that with the state reeling under a severe power crunch, the Madurai Corporation has started focusing on energy generation from alternate measures such as solar and bio-ethanol. During the council meeting held on Wednesday, a resolution was passed to call tenders from eligible companies to set up solar projects in the corporation under the Public Private Partnership (PPP).

 

The resolution stated that power supply for corporation needs like pumping stations and taxation centres had significantly gone up after the corporation limits were expanded from 72 wards to 100 wards. With growing energy requirements, the corporation has resolved to select eligible players for solar power projects. After getting government approval, they will go ahead with calling for the tenders through PPP.

 

A senior official from TANGEDCO said that the current demand of the city can be estimated to 160 MW to 180 MW per day for 4.16 lakh connections in the city. “The total demand can be estimated somewhere between 160 to 180 MW based on the power consumption. However, the supply will depend on the generation factors like power plants and southern grid. Hence, supply cannot be ascertained like the demand,” he said. City engineer, A Mathuram said that the corporation has proposed solar projects to meet the increased power needs on corporation facilities. “We will register in PPP cell with the government and call for the express of interest. The eligible players will then be shortlisted for the project,” he said.

 

Madurai Corporation also passed another important resolution on green energy to produce bio-ethanol and e-diesel by utilising the additional 250 tonnes of garbage generated from the newly annexed areas of the corporation. The resolution also included producing electricity from the bio-ethanol. Passing the resolution, mayor, Rajan Chellappa said that through JnNURM, the corporation had executed bio-compost plants to process 350 tonnes of garbage that was generated from the earlier 72 wards. With another 250 tonnes of garbage generated from newly annexed areas, the corporation will seek out eligible players to work on producing bio-ethanol and e-diesel from which electricity will be produced, he said. Commenting on the project, Mathuram said that producing bio-ethanol from garbage was a successful model abroad and the technology is a viable one.

 

Corporation sources said that these are big projects which will take considerable time to materialise but they will greatly aid to substantiate the power needs of the corporation.

 

 

 

 

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India invokes special powers under Electricity Act to enable open access…

The government has invoked special powers under the Electricity Act and directed the central and state regulators to implement a long-pending reform to allow industrial consumers to buy cheaper power from the open market.

 

The move will help 15,000 large consumers particularly the sick textile, cement and steel industrial units in states like Punjab and Tamil Nadu by ensuring regular supply of electricity at competitive rates and boost business of power bourses and 52 power traders including NTPC, PTC India, Tata Power, Reliance Infrastructure, Jindal Steel, Essar Power, JSW Energy, GMR Energy and Indiabulls.

 

Power secretary P Uma Shankar said the decision was taken because similar directives in the past were taken lightly by regulators. “The ministry has issued letters to regulators to prepare regulations in line with communications sent earlier,” he told ET.

 

“…the ministry of power, govt of India, in exercise of powers under section 107 of the Electricity Act 2003 hereby issues direction to the central commission to take all necessary steps, including framing of appropriate regulations to implement the provisions of open access…,” the power ministry said in a directive issued on Monday.

 

Section 107 authorises the government to issue final and binding policy directives to central electricity commission in public interest. Central Electricity Regulatory Commission chairperson Pramod Deo said regulations were already there for inter-state transfer of power.

 

Traders and large consumers lauded the move but said issues remained with state machinery that have been impeding implementation of the ‘open access’ reform, introduced in Electricity Act 2003 as a powerful tool to induce competition in power sector.

 

Open access refers to enabling buyers an option to choose source of electricity and giving them right on transmission and distribution system for transfer of power. Distribution companies that fear losing their high paying industrial consumers are impeding implementation of the reform despite directives from power and law ministries asking regulators and distribution companies to set free large industries consuming more than a megawatt of power.

 

Tariffs for industrial consumers in India are among highest in the world while supply to sectors like agriculture remains highly subsidised. Many states impose huge charges like cross subsidy, transmission, transmission losses, wheeling, wheeling losses charges on open access consumers to discourage industrial consumers buy from elsewhere. An IIT-Delhi study shows distribution companies will earn 10% more revenue if they prudently exclude a portion of large consumers.

 

NTPC Vidyut Vyapar Nigam, power-trading arm of the company, said it was a good beginning to ensure reliable power to industries provided they have the requisite infrastructure.

 

Country’s largest power trading platform India Energy Exchange’s managing director and chief executive officer Jayant Deo said it was a welcome move. Manikaran Power Ltd executive director Amit Ailawadi said, “The opinion is a welcome step but needs to be implemented properly at the distribution companies’ level which are opposing it tooth and nail.”

 

 

 

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Power Ministry asked PFC and REC to lend more to power projects…

The power ministry has written to the Cabinet Committee on Infrastructure to mandate a uniform 50% risk weight to bank loans for state-owned Power Finance Corporation (PFC) and Rural Electrification Corporation (REC), a move which could lead to banks doubling their exposure to these companies if it finds favour with the Reserve Bank of India (RBI).

The power ministry has proposed a uniform risk weight of 50% for these two infrastructure financing companies (IFCs).

 

At present, banks assign low risk weight only to top-rated IFCs, while others attract 100% risk weight. The proposal also seeks to raise the overall exposure limit of banks to PFC and REC to 25% of their capital funds. As per existing norms, bank exposure limit to non-banking finance companies in infrastructure is set at 20% of the total capital fund (capital and reserves).

 

Risk weight is the proportion of loans which is counted towards total assets against which banks have to maintain statutory reserves. A high risk weight discourages lending by increasing the capital requirement for lenders. Under current norms, banks are allowed to assign risk weight as per their own internal assessment.

 

“The note to CCI addresses the key issue of increasing funds for the power sector to narrow the widening energy deficit in the country. Once the committee takes a decision, it will be for the RBI to notify the new norms,” said a power ministry official asking not to be named.

 

In the proposal, the power ministry has said that banks could be advised to consider only 50% of their total funding to PFC and REC as power sector exposure while determining the industry exposure decided by each bank. This could be done by lowering the risk weight on loans extended these two IFCs. By doing so, banks could either double their exposure in PFC and REC or use the released capital to increase their overall funding to the power sector while staying within specified industry exposure norms.

 

“We attract 100% risk weight by banks and its lowering would definitely help to mobilise more funds for the sector,” said an REC official.

 

As per RBI data, public sector banks have a total exposure of over Rs 3 lakh crore to the power sector at the end of last financial year. The exposure of India’s largest bank State Bank of India to the sector is over Rs 32,000 crore. The demand for funds, however, is rising sharply with estimates suggesting the power sector may require over Rs 11 lakh crore during the 12th Plan period to commission projects crucial to bridge the country’s widening energy deficit.

 

“We feel that banks lending to IFCs like us should carry a lower risk weight as it qualifies as indirect risk for the lender with a portion of the risk being taken by specialised institutions like us. This would also help increase fund flows to the sector,” PFC chairman and managing director Satnam Singh said.

 

Under current norms, banks are allowed to assign risk weight as per their own internal assessment. “If the new norms are accepted, banks will be able to lend more and the interest rates may also go down,” said an official of a public sector bank.

 

India has a power generation capacity of about 200,000 MW and plans to add close to 100,000 MW during the 12th Plan period. For meeting this capacity addition huge fund is required. While power companies have bee given permission to raise money through ECB route to meet part of funding requirement, larger exposure of domestic banks is also considered important to boost the sector.

 

 

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Suzlon to raise $500 million through bond sale…

Power India found that Suzlon Energy Ltd. (SEL) plans to raise as much as $500 million, including through a bond sale, to meet debt payments in June, its finance chief said.

 

India’s biggest wind turbine maker began talks with “large, international banks” four weeks ago about selling high-yield bonds, Chief Financial Officer Kirti Vagadia said today in a phone interview.

 

“All our overseas subsidiaries are practically unleveraged,” said Vagadia, who replaced former CFO Robin Banerjee last month. “We want to raise funds against those international assets.”

 

Suzlon owns Hamburg-based Repower Systems SE. Re-balancing debt across the group would help reduce interest payments, Vagadia said. In June, $358 million in foreign-currency convertible bonds mature. Suzlon isn’t renegotiating those with bondholders, he said.

 

The Pune, India-based company expects to complete the fresh fund-raising and to sell “non-critical assets” to meet obligations by June, Vagadia said. It also expects to see strong cash flows by then as 65 percent of orders tend to come in the first half of the year, he said.

 

Vagadia, when asked, said selling Repower or listing a stake wasn’t an option.

 

“I’ve said we want to sell non-critical assets,” Vagadia said. “By definition, Repower is our most critical asset. I think that answers the question.”

 

Suzlon shares reversed some of its earlier losses before closing down 4.3 percent at 21.35 rupees.

 

Suzlon completed its buyout of Repower in October 2011 after gradually increasing its stake over four years. Re-listing it makes no sense at this point, Vagadia said.

 

 

 

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