Independent Directors of CIL opposes the CEA’s proposal for import of coal…

The independent directors of Coal India Ltd (CIL) have suggested the Coal Ministry and CIL that the recent proposal of Central Electricity Authority (CEA) regarding the import of coal would benefit only the Independent Power Producers (IPPs) at the expenses of public money.

 

The independent directors have sent a note to CIL as well as Coal Ministry wherein the have asked the official directors to re-consider their stand in view of the grave legal, commercial, economic and ethical problems arising out of their supporting the CEA views.

 

The proposal of CEA was as below:

• CIL shall import around 20 million tonnes of coal in 2012-13 and supply the same at a subsidised price (nearly half of the cost price) to IPPs.
• This will result in a loss of Rs. 3,000 Crore annually to the company and over 20 years the same will be around Rs. 60,000 Crore.
• The above losses shall be made good by increasing the prices of indigenous coal to about Rs.100 a tonne for all power producers.
• The decisions of CIL in finalising the terms of the fuel supply agreements (FSAs), including the trigger point at 80 per cent of annual contracted quantity (ACQ) and the rate of penalty at 0.01 per cent taken on April 16, were a result of wide and deep deliberations carried out at several meetings of the CIL board this year in pursuance of the April 4 Presidential directive.
• These decisions have already been implemented in the case of 29 private power producers.
• It states that no arrangement has been made by the CIL management to protect the company or its directors against allegations and proceedings likely to come up by deviating from the Presidential directive. The note states that the new dispensations entail lowering the trigger points from 80 per cent of ACQ to 65 per cent but also seek to levy penalty ranging from 5 to 40 per cent of the quantity not delivered. This mechanism is sought to be justified on the ground of ensuring better performance of CIL.
• The management seems to agree with the premise that the qualitative changes for securing productivity can be obtained only by a threat of penalty of 40 per cent. To us, it looks like an arrangement to transfer thousands of crores of public money to the private power producers in the name of penalty over CIL.

 

---

More news on this topic:

http://www.thehindu.com/business/coal-india-board-split-on-cea-proposals/article3958525.ece

---

Read More...

Tussle between Power and Coal Ministry on coal shortfall…

Power Secretary P Uma Shankar has recently issued a letter to Coal India Ltd (CIL) to compensate for the losses of power companies due to failure of CIL to provide coal to the power firms.

 

This is sparked a confrontation between to prominent Ministries of India; Coal Ministry and Power Ministry.

 

Power Secretary blamed CIL for hurting power sector investments as financial institutions had been shaken by the coal shortages.

 

We believe that the move of CIL’s independent directors to block the import of coal and their sale at a discount to power producers as suggested by the Central Electricity Authority has triggered the Power Ministry to issue the said letter.

 

The views depicted in the letter by Mr. Shanakr were:

• Power producers had made investments after coal supplies were approved by the Coal Ministry and assurance letters issued by CIL, Shankar wrote in his letter.
• However, CIL has failed to honour its binding obligation, thus leaving such assets stranded, threatening not only their viability, but likely to make them non-performing assets.
• CIL board has also rejected the suggestion to import coal.

 

According to Mr. Shankar:

“CIL board and its director will do a great service to the nation if they do some soul searching on their responsibility and their commitment to increase production of domestic coal and ensure adequate supply of coal to help the growth of the country and not expose power and banking sectors to the risk of jeopardising all their investments, which is largely public money. In fact, as a responsible corporate entity, CIL should compensate the power producers for the loss suffered by them due to its failure in providing them the promised fuel to run their plants at a viable level. The PSU has obtained bank guarantees worth hundreds of crores from the power producers to bind them in an offtake agreement... CIL has failed to honour its commitments.

 

---

More news on this topic:

http://www.indianexpress.com/news/power-secy-to-coal-india-no-coal-pay-companies/1011143/

---

Read More...

Power Plants should be given at par priority for gas allocation with fertilizer plants…

Power India found that the MoP (Ministry of Power) has requested that the gas based power plants should be given the at par preferences for allocations of natural gas with that of fertilizer plants. According to MoP, this should be due to the fact that import of power is not possible as is the case with urea.

 

As with the current priorities are concerned with respect to allocation of natural gas to various industries, fertilizer plants get top most priority followed b LPG extraction units; gas based power plants comes third in the priority list.

 

Due to this reason, when RIL’s (Reliance Industries Limited) KG-D6 field production fall then the expected level, all the available gas was first utilized for the meeting the fertilizer plant’s requirements and thereafter the requirements of LPG plants was met. Only leftover gas was distributed among the power plants on a pro-rata basis, resulting in sharp dip in electricity generation.

 

Following statistics may enlighten the above:

• KG-D6 output dipping to 27.5 million standard cubic meters per day (mmscmd) instead of rising to projected 80 mmscmd,
• Entire 15.668 mmscmd allocations to 16 fertiliser plants were met first (from the anove 27.5 mmscmd.)
• LPG manufacturing plants got 2.6 mmscmd as required
• Balance 9.3 mmscmd distributed among 25 power plants (the actual allocations/requirement was 28.9 mmscmd)
• Hence, only 30% requirement of gas plants were met while 100% requirement of fertilizer and LPG manufacturing plants were met.

 

Due to the above cited reasons, the Hon’ble Power MInister M Veerappa Moil has told in an interview that "There is a need of re-prioritisation of gas. Fertiliser can be imported but power cannot be imported. An equal status for power plants can be considered as we give to fertilizer,"

 

---

More on this topic…

• http://www.moneycontrol.com/news/economy/give-power-stations-priority-for-gas-allocation-ministry_764246.html

---

Read More...

Coal Ministry to submit its report on ongoing coal block allocation issues by September 15…

The Coal Ministry is on track to meet the deadline of September 15 for deciding on the 29 coal blocks allotted to private firms whose review has been undertaken by an Inter-Ministerial Group (IMG).

 

Controller and Auditor General (CAG) has estimated that around Rs. 1.86 Crore undue benefits have been received by the private firms on account of allocation of coal blocks without auction. After that, the Coal Ministry has proposed to submit its report to IMG by September 15.

 

Out of the 58 coal allocations around 29 private firms who failed to develop the blocks as per schedule have given representations to the IMG are meeting again.

The meeting assumes significance as the Finance Ministry has reportedly voiced objections over de-allocations of mines.

Tata Steel, Reliance Power, JSW, Grasim Industries, Kesoram Industries, IST Steel & Power, SKS Ispat and Power, Bihar Sponge Iron, among others, had appeared before the panel.

As per sources, it may also decide the dates for assessing the performance of the blocks allotted to PSUs, without auction.

Around 30 coal blocks, of the 58 that have been issued showcause notices for delaying production, are with public sector firms, including MMTC, Chhattisgarh Mineral Development Corporation and Jharkhand State Mineral Development Corporation.

 

________________________________________________

More news on this topic

• http://economictimes.indiatimes.com/news/news-by-industry/indl-goods/svs/metals-mining/coal-ministry-hopeful-of-deciding-on-29-coal-blocks-by-sep-15/articleshow/16368638.cms

________________________________________________

Read More...

Revamped duty structure for imported power equipment…

Power India found that the Finance Ministry has recently notified a revamped duty structure prescribing an effective duty of over 22 per cent, including education cess.

 

However, as proposed by the MoF, the new duty is not going to be imposed on Ultra Mega Power Projects (UMPPs) and Mega Power Projects and expansion of existing mega projects which had received certificate of approval from the Power Ministry till July 19, 2012, the date on which the Cabinet took the decision.

 

With this as many as seven Ultra Mega Power Projects (UMPPs) and 106 Mega Power Projects will not have to pay higher duty for importing equipment's.

 

As said by Power Secretary P. Umashankar: “There is a list of projects given mega status or provisionally declared as a mega project. These will not be affected. But any other project beyond this list will have to pay duty as per Government notification.”

 

According to the leading power producers such as NTPC, Tata Power etc, the imposition of customs duty will increase the project cost which in turn will hinder the advancement of the sector.

 

 

________________________________________________

More news on this topic

• http://www.thehindubusinessline.com/industry-and-economy/article3882310.ece?ref=wl_opinion

________________________________________________

Read More...

Steps being initiated by GoI for the power sector…

Power India found that, Government of India (GoI) is considering to initiate several attempts in order to bridge the demand and supply gap of power sector.

• Close monitoring of capacity addition for the under construction projects
• Thrust on import of coal by utilities
• Development of ultra mega power projects
• Strengthening of inter-state and inter-regional transmission capacity to optimally utilise power and reduce the losses in transmission and distribution

 

As per GoI, Coal India is also planning to acquire coal resources abroad.

 

For that purpose, International Coal Ventures Ltd (ICVL), a special purpose vehicle set up by the GoI, would work for acquisition of foreign coal assets/mines/companies to meet the current and growing requirements of the country.

 

________________________________________________

More news on this topic

• http://business-standard.com/india/news/govt-taking-steps-to-bridge-demand-supply-gap-in-power-moily/185185/on

________________________________________________

Read More...

Tata Power want the Moser Baer to be debarred…

Tata Power Delhi Distribution Ltd (TPDDL), a Joint Venture of Tata Power and Delhi Government, asked to debar Moser Baer Photo Voltaic Ltd due to the poor performance of solar projects.

 

TPDDL has awarded three solar projects to Moser Baer Photo Voltaic Ltd, a unit of the Moser Baer group.

A letter has been issued by TPDDL to the Ministry of New & Renewable Energy (MNRE) which says:

 

• The performance of the solar plants installed by Moser Baer has not been up to the industry standards.
• The letter cites a number of failures, including failure to adhere to contractual timelines leading to “tremendous delay” in commissioning of the projects, poor engineering leading to “faulty design and frequent change in layouts”, quality of workmanship and high system losses leading to actual electricity generation being much less than the guaranteed generation.”
• The “poor response to client’s complaints for rectification of faults” and the “weak operations and maintenance support”.

 

As per the news reports, the said letter has been copied to around 87 industry people of Ministry of Power, Ministry of New & Renewable Energy and various State Electricity Regulatory Commissions.

 

AS said by TPDDL, “We had been following it up with them (Moser Baer) for over one year but there was no proper response. However, after the letter was issued (on May 7), there has been some action from Moser Baer side. If the action is satisfactory, we may withdraw the letter.”

 

---

More news on this topic…

• http://www.thehindubusinessline.com/companies/article3584112.ece

---

Read More...

Adani Power signed FSA with Coal India for its Mundra power plant…

Adani Power Ltd has signed a Fuel Supply Agreement with Coal India for supply of coal it its Mundra Power Plant in Gujarat.

 

The 4,620 MW coal-based Mundra thermal power project, which was commissioned in February 2012 is primarily linked to overseas and domestic captive sources.

 

With this almost all the private sector majors have entered FSA with CIL for projects commissioned between April 2009 and December last year.

 

Other private operators who entered the pact so far are: Kolkata-headquartered CESC Ltd; Reliance Power-controlled Uttar Pradesh-based Rosa Power; Lanco and the UP-based Bajaj Energy for a combined capacity of 2,530 MW.

 

The total number of supply pacts signed stands at 15 out of 48 identified projects.

 

While a couple of state utilities have also entered the pact, the Union Government-controlled NTPC Ltd is yet to join the bandwagon.

 

The public sector major has demanded roll back of the existing draft, cleared by CIL board.

 

---

More on this

• http://www.thehindubusinessline.com/companies/article3493887.ece
• http://industrymonitor.in/energy/2012/06/adani-power-inks-pact-coal-india/

---

Read More...

NTPC blames government over power sector crises…

According to the NTPC Chairman, the entire blame of chronic fuel shortages prevailing in power sector is on the Government which has exacerbated the country's energy crisis and put off steps to increase power generation as he repeated a warning NTPC would fall far short of its own target to up capacity.

Mr Arup Roy Choudhury chairman of state run NTPC said that a climate of fear following a spate of corruption scandals had frozen officials into inaction on environmental clearances, land acquisition and allotment of coal mines.

 

Mr Choudhury told Reuters in an interview that "Public sector companies like me are under tremendous pressure because of the environment of suspicion and mistrust.”

He told that "It becomes a game of snakes and ladders, where you overcome a few steps, and then suddenly you find yourself at the bottom of the heap, trying to work yourself through again."

Mr Choudhury reiterated that NTPC, which owns about a fifth of India's generation capacity, would miss its target of adding 25,000 MW to capacity by 2017 and was now aiming for just 14,500 MW.

India relies on coal for two thirds of its power generation, and will need even more for the additional capacity planned to tackle a power deficit that sometimes reaches as high as 13%, hampering industry and plunging millions into darkness.

 

 

---

More on this…

• http://in.reuters.com/article/2012/06/07/india-power-ntpc-idINDEE85609K20120607
• http://www.steelguru.com/indian_news/NTPC_lashes_government_over_power_crisis/267737.html

---

Read More...

Alstom got Rs. 55 Crs orders from NTPC…

Power equipment major, Alstom Ltd,  has recently secured two contracts for the execution of turnkey station control and instrumentation (C&I) for National Thermal Power Corporation (NTPC) projects.

 

In a release, the company said that it will be providing the C&I equipment for NTPC's 660-MW supercritical projects for Solapur II and Mouda II in Maharashtra. These contracts are worth around Rs 55.4 crore.

 

Alstom said that this is the biggest project for the company in the C&I segment in India and also the first contract provided to Alstom by NTPC in the C&I 660-MW segment.

 

 

---

More on this…

• http://www.epcworld.in/news/post/1035-AM-(Sat)-Alstom-bags-contract-worth-Rs55-cr-from-NTPC.aspx
• http://www.thehindubusinessline.com/companies/article3504548.ece

---

Read More...