Power minister Piyush Goyal says government will act soon to resolve fuel scarcity issue

MUMBAI: India's fuel-starved power projects would be able to give a bonus 30,000 MW capacity to fuel the expected surge in electricity demand when the economy turns around, as power, coal and renewable energy minister Piyush Goyal's assurance of quick action has raised industry's hopes that policy action would kickstart stranded plants. 

Goyal, along with petroleum minister Dharmendra Pradhan, announced on Wednesday that the government will soon act to resolve fiscal difficulties and fuel scarcity of power plants based on coal or natural gas, so that people get affordable and uninterrupted supply. "The government will look at all possible options to avail fuel to the power projects with an aim to keep power tariff low for the utilities and end users," said Goyal. 

The acute scarcity of fuel has hit new capacity of 30,000 MW but the industrial slowdown and slackening of demand made sure that consumers did not feel the pinch. India's power deficit shrank to 4,000 MW this week. But the situation would be different once industrial growth accelerates after crawling, stagnating or declining for a long time. 

"Given the economic revival expected next year, power demand is going to shoot up from here. Fortunately for the country, we have enough installed capacity that can feed this demand provided the fuel side issues both in coal and gas are sorted out," said Debasish Mishra, senior director at Deloitte Touche Tohmatsu India Ltd. 

"Positive noises from government are making the investors hopeful. However, government should soon come out with a detailed action plan to achieve the 1 billion tonne coal production target as well as pooling or other solution for gas plants, else skepticism would kick in," he added. Apart from fuel issues, power producers were also under pressure from banks which have a huge exposure in the sector. Goyal had announced that banks were on board to discuss the possibilities of relaxing lending nor"Positive noises from government are making the investors hopeful. However, government should soon come out with a detailed action plan to achieve the 1 billion tonne coal production target as well as pooling or other solution for gas plants, else skepticism would kick in," he added. Apart from fuel issues, power producers were also under pressure from banks which have a huge exposure in the sector. Goyal had announced that banks were on board to discuss the possibilities of relaxing lending nor .. 

"Today's meeting was a precursor to final decisions which will be taken very fast," Goyal said. The government has already announced the auction of coal blocks and hopes to double the country's coal output to help meet the country's coal shortage. The power sector has suffered because Coal India, the state monopoly, could not keep pace with rising demand, while India's natural gas output was also inadequate. Industry expects good news for the gas-fired plants also after Goyal's announcement. 

"We took comprehensive review of variety of problems that the industry has been facing. We have looked at all possible options to address the problems of gas based power projects. We have already initiated the coal block auction on process and looking at natural gas based plants to utilise stranded capacity with an aim to keep the tariff low," Goyal said. 

While he has shown determination and speed to tackle the problems head-on, analysts said they are keenly watching the implementation of his ideas and policies. "These comments show that the government means business, but the proof of the pudding is in the execution, as the government must do a careful balancing act between consumer and corporate concerns, no doubt they are very well intentioned but the actual on ground implementation will make all the difference," said Harish HV, partner, GrantThornton. The power sector is also awaiting a financial package as companies are unable to repay loans because they don't get fuel to operate their plants. In some cases plant construction was stalled because banks are reluctant to lend to power projects.Apanel of experts has recommended measures to help the sector. The government is also working on measures to thermal and hydropower plants with a combined capacity of 1,30,000 MW that are facing cost and time overruns and do not have adequate funds .. 

Source:Economic times

Coal block cancellation: PSBs may lose over Rs. 96,000 cr

NEW DELHI, NOV 28:  

An Indian Supreme Court order scrapping most coal extraction permits given to companies would have a likely impact of Rs. 96,484 crore ($15.6 billion) on state-run lenders, the junior finance minister told parliament on Friday.

The government had deduced the impact of the cancellation of the so-called coal block allotments on banks due to likely stoppage of power production, Jayant Sinha said in a written reply to a lawmaker question on bad loans for state banks due to the verdict.

It was, however, not clear whether he was referring to an increase in bad loans or loan exposure of banks to affected companies.

Bankers and analysts have previously said it was difficult to quantify the increase in bad loans as the scrapped coal blocks will be returned after March and as all the loans to the affected companies may not turn sour.

Sinha said bad loans of state lenders were a provisional 5.32 per cent of total loans as of end-September, while that of private sector lenders was a provisional 2.04 per cent.

Bad loans of state banks in coal industry were 0.23 per cent as of end-September, while for private banks it was 0.22 per cent.

Source:Business line

Shortage of 81 mn tonnes of domestic coal for power sector

For the ongoing fiscal the country's coal demand has been assessed to be 787.03 mn tonnes

There is an overall shortfall of about 81 million tonnes of domestic coal that is needed for the power sector, the government said on Thursday.

"There is an overall shortage of approximately 81 million tonnes of indigenous coal for power sector," Coal Piyush Goyal said in a written reply to the Lok Sabha.

The coal requirement of plants designed on indigenous coal is 554 MT, while the total availability is only 473 MT, he said.

Goyal added that in order to ensure adequate availability of fuel to power utilities, Coal India Ltd has been asked to enhance production of domestic coal and the power utilities have also been advised to augment import of coal to meet the shortfall in domestic availability of coal.

He said that in the ongoing fiscal the country's coal demand has been assessed to be 787.03 MT, while the supplies from indigenous sources has been planned at 643.75 MT, leaving a gap of 143.28 MT to be met through imports.

With a view to monitoring coal supplies to the power sector, an inter-ministerial sub-group consisting of representatives from the ministries like power and coal has been formed.

"The sub-group takes various operational decisions for meeting any contingent situations relating to power sector, including critical coal stock position," Goyal said.

source:Business standard

APTEL upholds Tata Power's distribution licence in Mumbai

The tribunal said Tata Power has met conditions of credit worthiness and capital adequacy to supply power to the entire area

Residents of south Mumbai would now be able to choose from whom to buy power and can also expect fair prices.

Appellate Tribunal for Electricity (Aptel) dismissed the appeal of Brihanmumbai Electric Supply and Transport (BEST) — which supplies power to south Mumbai residents at present — challenging Maharashtra Electricity Regulatory Commission’s (MERC) order granting distribution licence to Tata Power till August 2039.

The Aptel passed this order on Tuesday. Tata Power will now be able to supply power to BEST areas between Colaba and Cuffe Parade on one hand and Sion and Mahim on the other.

In its judgment, the tribunal said Tata Power has met the conditions of credit worthiness and capital adequacy to supply power to the entire area. As regards the points raised to the merits, these will be considered separately in BEST’s appeal pending before it.

A Tata Power spokesperson said, “BEST had challenged the licence granted to us for distribution of power from August 16, for the next 25 years. Their appeal was dismissed by the Aptel.” No BEST official was available to comment.

An undertaking of Brihanmumbai Municipal Corporation, BEST is engaged in power supply and transport. In its appeal against the MERC order, it had argued that the licence could not have been granted by the regulatory commission as the previous performance of Tata Power was unssatisfactory.

Besides, BEST argued, MERC had erred in holding that network roll-out can be prescribed as a subsequent specific condition and has to be approved before the grant of licence.

During the public hearing conducted by the regulatory commission on Tata Power’s bid to get distribution licence, BEST had said the entry of the private player would endanger its existence and more than 47,000 of its employees could be rendered jobless.

It also claimed that in a bid to take control of the market, the private player could resort to “cherry-picking” and BEST would lose high-end industrial and commercial customers to Tata Power.

In its August 14 order, granting the licence, MERC directed Tata Power to submit a network roll-out plan in six weeks. The private player had already launched an investment plan of Rs 1,879 crore for a backbone network, spread across its entire licence area, between 2014-15 and 2018-19.

The company is creating capacity to serve more than 1.4 million consumers by FY 19. Out of 1.4 million potential consumer network capacity, more than 8,00,000 network capacity would be around the slum-dominated areas. BEST has a consumer base of 1.05 million while Tata Power supplies power to over 5,00,000 customers in its area of operation of about 475 sqkm in Mumbai. Reliance Infrastructure is the third major distributor with a consumer base of nearly 2.9 million. The state-run Maharashtra State Electricity Distribution Company has a small presence in northeastern suburbs of Mulund and Thane.

Source:Business standard

Environment regulator to be set up without penal powers

At present only courts have the authority to impose penalty on the basis of complaints filed by authorised officers; it has hardly ever led to action

The Union government has finally agreed to set up an environment regulator that will have powers to appraise industrial projects. But it will not have powers to penalise violators of green laws.

This development follows inter-ministerial and inter-state consultations over the months after a Supreme Court order to set up an autonomous body for appraising projects and authorising the body to penalise offenders.

"The Ministry of Environment, Forests and Climate Change had inter-ministerial consultations and consultations with states for setting up of a regulator/authority under Section 3(3) of the Environment (Protection) Act, 1986," said Union Environment Minister Prakash Javadekar in a written reply in the Lok Sabha on Wednesday.

THE MANDATES OF THE NEW REGULATOR

• The regulator will have powers to appraise industrial projects for environment clearance  
• It would oversee the process of accreditation of environment impact assessment (EIA)
• It would ensure enforcment of the conditions stated in the environment clearances
• The announcement is in contrast to the recommendations of the high-level committee constituted by the Union environment ministry under former Cabinet Secretary TSR Subramanian to review environment laws
• The committee had suggested an independent National Environment Management Authority and State Environment Management Authority to take the powers of the existing pollution control boards

Javadekar added the regulator would oversee the process of accreditation of environment impact assessment (EIA) consultants, improve the quality of EIA reports and appraisal, appraise projects for environment clearance, enforce conditions of project proponents seeking green nod and implementing the National Forest Policy (NFP).

However, Javadekar was silent on the proposed authority's penal powers. At present, only courts have the authority to impose penalty on the basis of complaints filed by authorised officers, a winding process that has hardly ever led to action. Handing over powers to officers of the government instead of the courts would require an amendment to the law.

It was not also clear whether the role of the state pollution control board (SPCB) and various regional offices of the ministry would be subsumed in the environment regulator or whether these would become an arm of the body. At the moment, the state pollution control boards and the regional offices of the ministry, which are severely short-staffed, oversee compliance. Javadekar's reply in the Lok Sabha said the regulator would be "enforcing the conditions stated in the environment clearances."

The announcement from Javadekar also stood in contrast to the recommendations of the high-level committee constituted by the Union environment ministry under former Cabinet Secretary TSR Subramanian to review environment laws.

It had suggested a new law under which an independent National Environment Management Authority (NEMA) and State Environment Management Authority (SEMA) at the Centre and state level would take the powers of the existing pollution control boards. Though the panel, too, had recommended that power should lie with the government to overrule the regulator.

Experts said without the power to prosecute offenders, the regulator will have no significance. "This will be a toothless body. Although this regulator may grant approvals it will fall short of taking authoritative action," said Ritwick Dutta, an environment lawyer.

Dutta said setting up a regulator could be done through a separate law. "Because that would mean that the EIA notification goes. The Centre can still do that by passing a new Act or new notifications under the Environment Protection Act not necessarily through Parliamentary legislation. However, to ensure that the body has the power to prosecute, it has to take the Parliament route," said Dutta.

Preparing an EIA report is a mandatory exercise to be conducted by highly polluting industries to examine the possible environmental impact of a project. The report also categorically states mitigation measures. For this, most industry players hire accredited consultants to prepare the report and this becomes a basis of the environmental clearance. At present, the Centre has formed expert appraisal committees (EACs) for various categories of projects to appraise environment clearance and stipulate conditions on project proponents while granting a green nod.

The Supreme Court had, on January 6, directed the government to appoint a national regulator under Section 3(3) of the Environment (Protection) Act, 1986. The court had suggested an independent body be set up for appraising projects, enforcing environmental clearance conditions and imposing penalties.

However, in April, the Union environment ministry had conveyed to the apex court that the regulator to be set up under the EPA could not be authorised to impose penalties without further legislation.

The Union Cabinet had formed an inter-ministerial panel in September to look into the feasibility of setting up a national green regulator based on the Supreme Court order. The members of the panel were Javadekar, Road Transport Minister Nitin Gadkari, Chemicals and Fertilisers Minister Ananth Kumar and Power and Coal Minister Piyush Goyal. The four-member panel will suggest the structure of the regulator and look into other measures. The idea of setting up an autonomous body for appraising projects was mooted by the United Progressive Alliance government in 2010.

The apex court ordered setting up such a body in a case related to stage-I forest clearance for the project of Lafarge Umiam Mining Private Ltd on July 6, 2011.

Source:Business standard

Rs 4,000 crore push for 25 solar parks

NEW DELHI: The renewable energy ministry has proposed a gross budgetary support of Rs 4,050 crore for setting up 25 solar parks of 500 mw each and ultra-mega solar power projects to add 20,000 mw green generation capacity in the next five years. 

The money is expected to be spent in phases, starting with Rs 500 crore in 2014-15 and rising to Rs 1,400 crore in 2018-19. Solar Energy Corporation of India under the ministry would be the nodal agency and manage the funding for a fee, equivalent to 1% of the grant disbursed. 

The parks would be developed in collaboration with state governments. Altogether 12 states have given their consent for setting up solar plants, renewable energy minister Piyush Goyal told Lok Sabha in a written reply on Thursday. He said the project developers would be selected through bidding as per norms set by the central tariff regulator. 

Broad contours of the scheme indicate measures to make the parks attractive for investors by offering readymade locations. Promoters usually have to spend a lot of time for getting approval for changing land use and other clearances from various state government bodies, including consent from state transmission utilities. 

Under the scheme, developers would be invited after all statutory approvals are in place. Besides, the land would also be levelled and the parks would come with additional infrastructure such as access to roads, water and communication facilities required for commissioning and operating the plants. 

These measures would save additional expenditure by developers and reduce project cost. Goyal pegged the project cost at Rs 0.95 crore per mw. 

Release of central funds would be graded according to milestones, starting with 1% on the date of issue of administrative approval. This would go up to 20% upon acquisition of 50% land. Another 20% would be released upon financial closure, which would rise to 25% upon construction of pooling substation, land development and other facilities. Another 20% fund would be linked to grid connectivity and final installment of 10% would be released upon completion of the project. 

States would be free to choose their agency for implementing, developing and maintaining the solar parks. Special purpose vehicles of state governments too would be eligible to develop and manage the parks, as would be 50:50 joint ventures between SECI and state government entities. 

The ministry is modelling the scheme after the 590 mw Charanka solar park in Gujarat. Such large solar parks are expected to reduce construction and operations costs owing to economy of scale. But smaller parks could also be considered under the scheme in Himalayan states where large tracts of contiguous land may be difficult to acquire.

Source:economic times

Fuji Electric to study smart energy grid for Andhra Pradesh

HYDERABAD: Japan's Fuji Electric will conduct a feasibility study on a smart energy grid for Andhra Pradesh to monitor the energy consumption and forecast the demand, an exercise aimed at developing a more efficient energy management system in the state. 

The company, which has already committed to a similar feasibility study for a smart grid project in Panipat in Haryana, agreed to the project following Andhra Pradesh Chief Minister N Chandrababu Naidu's request during his ongoing tour of Japan. 

The CM's office said in a statement on Wednesday that the company, while responding to Naidu's request when he visited Smart Grid Community at Kitakyushu City, has agreed to send its representatives to Andhra Pradesh in a month or two. 

Though Andhra Pradesh has an energy monitoring system, it does not have forecasting mechanisms in place, said Naidu. 

Source:Economic times

Steps soon to help coal, natural gas-based power plants: Piyush Goyal

NEW DELHI: The government will shortly take steps to address all fiscal and fuel hurdles faced by coal and natural gas based power plants so that people get affordable and uninterrupted supply, Power, Coal and Renewable Energy Minister Piyush Goyal told reporters in a hurriedly called news conference late on Wednesday which was also attended by Petroleum Minister Dharmendra Pradhan. 

"The government will look at all possible options to provide fuel to power projects with an aim to keep tariff low for the utilities and end users," said Goyal. He said banks are on board to discuss the possibilities of relaxing lending norms to power sector. 

"We are in discussions with banks to extend the term of payment for power plants to prevent them from turning non performing assets," said Goyal. The ministers held meetings with stakeholders in the power sector, who are facing an acute fuel shortage and are under pressure from banks to repay loans. "Today's meeting was a precursor to final decisions which will be taken very fast," he said. 

The government has already announced plan to auction coal blocks and hopes to double the country's coal output to meet the fuel shortage. Thousands of megawatts of new power generation capacity is idling or operating at suboptimal capacity because Coal India, the state monopoly, could not keep pace with rising demand. 

Goyal stated that the government will try to increase domestic gas and coal output for power projects. "We have looked at all possible options to address the problems of gas-based power projects. We have already initiated the coal block auction process and are looking at natural gas-based plants to utilise stranded capacity with an aim to keep the tariff low," Goyal said. 

The power sector is also waiting for a financial package as companies are unable to repay loans because they don't get fuel to operate their plants. In some cases, plant construction could not be completed because banks are reluctant to lend to power projects. A panel of experts has recommended a series of measures to help the sector. The government is working on big-ticket financial reforms for about 1,30,000 mw thermal and hydropower power plants worth over Rs 6,00,000 crore that are hit by severe funds crunch while continuing to face cost and time overruns.

Source;Economic times 

Coal block reallocation: MSTC to hold e-auctions; SBI Cap to be deal advisor

The govt started scouting for agencies from the start of this month to commence the auction by December 22-24

The Union ministry of coal has selected government-owned MSTC as the agency to conduct e-auction of the mines whose allocations had been cancelled earlier by the Supreme Court (SC).

SBI Capital Markets Ltd (SBI Cap) has been made the transaction advisor for the re-allocation process. Earlier, the ministry had been mulling on whether to issue a tender for selecting an agency to provide e-auction platform and a transaction advisor for taking care of the financial activities involved in the re-allocation.

"Due to paucity of time, we decided to select a suitable organisation through inter-departmental discussion and vetting, rather than going through the whole process of tender and selection," said a senior official.

The ministry had worked out a schedule for the reallotment and was to appoint a legal and transaction expert, beside selecting an e-auction platform, by November 25. It started scouting for agencies from the start of this month, to commence the auction by at least December 22-24.

MSTC was earlier known as Metal Scrap Trade Corporation Ltd. It is a public sector utility with a Mini Ratna status and conducts e-commerce in several industrial products and raw materials. Through its www.mstcecommerce.com portal, it conducts e-sale of mineral products such as iron ore, imported thermal coal, chrome and manganese ore. Also, of agricultural and forest products such as tobacco, tendu leaf and timber, plus supply of shredded scrap to various secondary steel industries.

SBI Cap is a wholly owned subsidiary of the country's largest bank, advising on investment and projects, beside consultancy on fund mobilisation. The company is to evaluate financial bids for the coal mines, compensation and other payments.

SBI Cap, with other consultancy entities such as PwC, Deloitte and CRISIL, had participated in a bid to be consultant for coal mine bids during the 2012 auction under the previous government.

The SC had on August 25 ruled the allotment process by government appointed Screening Committee for the 204 mines over the past two decades had been 'illegal', 'unconstitutional' and 'without application of mind'.

The current government has promulgated an ordinance to reallocate the cancelled coal mines by March 2015, a deadline given by the SC. It has also opened the sector for commercial mining by the private sector.

In the first phase, 42 working coal mines and 32 in line to start production will be offered to developers with notified end-use projects in the power, cement and steel sectors.

SHORT CUT

• Ministry selected organisations for e-auction via inter-departmental discussion, vetting
• Selection via tender done away with due to “paucity of time” 
• Ministry was to appoint a legal and transaction expert, besides selecting an e-auction platform, by November 25 
• SC had on August 25 ruled that the allotment process for the 204 mines over the past two decades was illegal 
• SBI Cap, PwC, Deloitte and CRISIL had participated in a bid to be consultant during the 2012 auction

Source:Business standard

Private power producers want more mines

Requirement of bidders should be priority while allocating coal blocks

Responding to the proposal of the government to comments to the draft rules for re-allocation of coal mines, the private power producers have suggested that requirement of the sector and bidders should be given preference while allocating the coal blocks. The coal mine allocation process earlier was based on parameters like coal quality and the sectorwise coal.

"However, these dynamics stand altered to a large extent today. If the previous sectorwise segregation was to be retained for the Schedule II mines, only five blocks would be available for Independent Power Producers (IPPs)," Association of Power Producers (APP), the representative body for private sector power producers, said in its comments on the draft rules of e-auction.

It has also asked if the mine awarded through auction is not sufficient to meet the end-use plant's requirement, the coal linkage should be provided for the balance coal requirement.

The government, in its draft rules, has said coal mines would be allotted to the state-owned companies and auctioned to the private players.

"Applicant may be allowed to bid for a coal block larger than its 100 per cent coal requirement. In such a case, the surplus coal could be given to the nation through Coal India Limited (CIL) at a transfer price."

"Large capacity mines would be in the interest of coal conservation and scientific mining," it said.

It has also asked for relaxation on the power purchase agreement (PPA) requirement.

"For power projects, coal blocks should be made available in auction without any precondition of long-term PPA. If the mine is taken and there is no PPA available then the developer will be stuck with coal and it will lead to capacity booking," APP said in its comments. The association also said price discovery through auction process should form benchmark for pricing mines through allotment route as well. This, APP believes would give the private players a level playing field with the government companies.

The bidding amount, which the government is yet to calculate, would be segregated into two parts - fixed and variable. While the fixed cost will constitute the cost of land and other assets associated with a particular mine, variable is the reserve price of coal, to be based on geological reserve of the mine. The ministry of coal is yet to formulate a methodology for deciding the reserve price of coal block auction. APP has suggested that reserve price and upfront payment should be based on actual mineable reserves (as assessed by CMPDIL) and not on the basis of geological reserves.

THE PRIVATE PARTY SUGGESTIONS

• Requirement of bidders should be priority while allocating coal blocks

• Should be allowed to bid for more than 100 per cent requirement

• Balance demand, ifany, should be met by necessary coal linkage

• Reserve price of bidding should be based on actual mineable reserves rather than geological reserve of mine

• Price discovery by auction should be benchmark price for all

• Parameters for the calculation of project cost should be applied uniformly for deciding the eligibility of all bidders

Source:Business standard

Karnataka among 12 states to get mega solar parks

The installed solar capacity has touched 3,000 mw in the country, according the latest ministry data, and the government aims to increase it to 100,000 Mw by 2022

A step ahead in the government's ambitious plan of setting up 25 solar parks, the Ministry of New and Renewable Energy (MNRE) has identified 12 locations in various states where such power projects can come up.

The scheme envisages setting up of 25 solar parks over the next five years with a total capacity of around 20,000 Mw, with each park housing a plant with a capacity ranging from 500-1,000 Mw. The installed solar capacity has touched 3,000 mw in the country, according the latest ministry data, and the government aims to increase it to 100,000 Mw by 2022.

"We have identified 12 locations so far and are in the process of finalising the draft proposal for the same," MNRE Joint Secretary Tarun Kapoor said. He said they will soon sent the draft to the Cabinet for approval post which the bidding process could be started. The locations identified are in Andhra Pradesh, Telangana, Madhya Pradesh, Karnataka, Rajasthan, Odisha and Punjab, Kapoor said adding that even Mizoram has expressed willingness to set up a park.

"Andhra Pradesh has proposed to have a 2,500 Mw park, Telangana 1,000 Mw, MP is keen to have two parks of 750 Mw each, Karnataka a 750 Mw park, Rajasthan has identified land to set up projects as big as 4,000-5,000 Mw and Odisha and Punjab to have around 3,000 Mw each," he said.

The ministry has cited parks in Gujarat and Rajasthan as models for the proposed solar parks.

"We already have two solar parks, with one each in Gujarat and Rajasthan as models for the parks to be constructed as part of the scheme. The new parks would be based on the similar model," Kapoor said. The solar parks would be developed in collaboration with state governments while Solar Energy Corporation of India would be the implementation agency on behalf of the Centre. "A solar park is a concentrated zone wherein the government will provide land and basic infrastructure for setting up the plant as well as evacuation of power.

Developers, on the other hand, will have to enter into power purchase agreements with distribution companies before setting up the plant," Kapoor added. The government has made an allocation of Rs 1,000 crore for the development of ultra large solar projects and parks, for this financial year.

Source:Business standard

Maharashtra needs clear policy on grid connectivity to solar power

Maharashtra needs a clear policy on allowing grid connectivity to roof top solar power generators in homes even as the Centre is taking steps to promote and popularise solar power across the country, according to clean energy activists here.

Activists of city-based Vidarbha Industries Association (VIA) say that using electricity generated from roof top generators at homes and offices could attract penal action as there is no clear policy on grid connectivity to such sets.

The Central government has been striving since five years to give a big push to solar power.

The Jawaharlal Nehru National Solar Mission (JNNSM) was established for this purpose and a target of generating 20,000 MW of solar power by year 2022 has been envisaged.

But the state government is not keen and has failed to issue a clear guideline or notification to allow setting up of roof top solar generators that are available and affordable to a vast chunk of urban consumers, said Sudhir Budhay, an energy activist.

In line with JNNSM, the Central Electricity Authority on September 30, 2013, came out with strict guidelines and has directed all states to provide legal support for allowing roof top solar power generators.

At least 13 states comprising Tamil Nadu, Andhra Pradesh, Karnataka, Kerala, Uttar Pradesh, Gujarat, Punjab, Delhi, Uttarakhand, Rajasthan, Goa and Orissa, and all Union territories, have laid down norms to provide grid connectivity to roof top sets that are being accepted as a non-conventional energy source.

But Maharashtra has failed to toe the line, sources said.

Also, Budhay said he has been fighting for this policy in the state but is facing stiff resistance from the state power distribution company which seems to harbour fears of heavy losses if its consumers shift to solar power.

While there is policy for solar power connectivity for units generating 1MW or more, there is no such clarity for smaller sets with less that 1MW or less than 33KV voltage level, he rued.

Source:Business standard

Aptel rules in favour of Reliance Infrastructure

Aptel upholds Maharashtra Electricity Regulatory Commission order allowing R-Infra to recover cross-subsidy surcharge from Tata Power consumers

Mumbai: The Appellate Tribunal for Electricity (Aptel) on Wednesday upheld the Maharashtra Electricity Regulatory Commission’s (MERC) order which allowed Reliance Infrastructure Ltd (R-Infra) to recover cross-subsidy surcharge (CSS) from Tata Power Co. Ltd’s consumers who migrated from R-Infra to Tata Power. 

Aptel also upheld MERC’s order of allowing R-Infra to recover regulatory asset charges from Tata Power consumers who migrated from R-Infra to Tata Power. In the power distribution sector, high consumption consumers such as industry and commercial establishments like shopping malls, multiplexes and commercial buildings are charged much higher tariff than the average cost of supply and this amount is used to subsidies tariff of poor consumers, farmers and residential consumers. This higher charging of few categories of consumers is called cross-subsidy. 

The deferred tariff hike is called regulator assets in an industry parlance. After making scrutiny of tariff proposal of the distributor, the regulator sometimes find its claim for tariff hike to be justified but allows such a hike in staggered manner over few years to avoid tariff shock to consumers. 

Interestingly, the order of the tribunal was not uploaded on its webstie but Tata Power issued a statement which says, “We are studying the order, particularly in line with the Tribunal’s direction for the need of uniformity in the treatment of regulatory assets (RA) by the two power distribution utilities. We understand that the Tribunal has accepted Tata Power’s methodology wherein RA is part of energy charges, and invalidated charging of RA as separate item in other utility’s invoicing.” R-Infra declined to comment. 

In 2008, the Supreme Court recognized Tata Power’s right to supply power to retail consumers also in suburban Mumbai, the area served by R-Infra exclusively till then. Subsequently in 2009, MERC issued a detailed protocol allowing R-Infra consumers to migrate to Tata Power. The MERC also allowed Tata Power to use R-Infra’s distribution network to supply power to its customer by paying what is called wheeling charge to R-Infra. 

However subsequently, R-Infra moved to MERC accusing Tata Power of doing cherry picking and only supplying power to high-end consumers, while refusing to supply power to consumers from slums and other disadvantaged sections of the society and demanded that CSS should be levied on high-end consumers who have migrated to Tata Power and also allow the recovery of RAs from such customers. In August 2012, finding merit in R-Infra’s charges, MERC permitted R-Infra to recover CSS and RAs from such consumers of Tata Power who had migrated from R-Infra but still served using R-Infra’s distribution network. This MERC order was challenged by Tata Power, Mumbai Grahak Panchayat and Indian Hotel and Restaurant Association, among others.

Source:livemint

Package to rescue 16,000 MW of gas-based power plants ready

The government today finalised details of a package to rescue 16,000 MW of gas-based power plants lying stranded as it looks to increase supplies by raising generation without burdening consumers 

NEW DELHI: The government today finalised details of a package to rescue 16,000 MW of gas-based power plants lying stranded as it looks to increase supplies by raising generation without burdening consumers. 

Power Minister Piyush Goyal met Oil Minister Dharmendra Pradhan to chalk out the rescue package that may involve rescheduling of loans to power companies as well as making available fuel at affordable price through means like pooling of average cheaper domestic gas price with costly imported LNG. 

The two ministers did not divulge details of the rescue package finalised today which may need the Cabinet approval. 

"Today's meeting was a precursor to final decisions which will be taken very fast," Goyal told reporters here after the meeting. 

"We are drawing up plans to increase the generation of power, to put national assets to good use and keep the energy cost affordable with a sustained policy framework," he added. 

Pradhan said the government is taking a comprehensive view of the variety of problems plaguing this industry for a long time. 

The issues of making power available to the people and addressing peak load shortages were also discussed in the meeting. 

When asked about the decision on gas price pooling, Goyal said, "We looked at all options including problems of gas-based plants...macro issues have been taken care of," he said without divulging further details on the subject. 

"We have decided to resolve all the problems, from bankers issues to fuel issues," Goyal said. 

Source:Economic times

Power ministry to move cabinet soon to revive stranded assets

The stranded assets include Rs 50,000 cr worth of gas-based projects, which are set to turn into non-performing assets

The power ministry is working on a proposal seeking to revive stranded power generation assets that will be put before the Union Cabinet soon for approval. A host of issues including lack of fuel supply and delayed environmental clearances have impacted power generation projects worth over Rs 6.2-lakh crore.

“The oil and power ministries had a discussion on stranded power assets. We may move the Cabinet on relief for gas-based power plants soon,” said power, coal and renewable energy minister Piyush Goyal. He added the two ministries looked at all available options, including financing and gas availability for projects. The meeting was in the wake of representations by the Association of Power Producers (APP), the representative body of private power producers, to the finance ministry on how 136,000 Mw of projects involving a capital outlay of Rs 6.2-lakh crore are affected due to various factors.

The finance ministry had set up a committee under India Infrastructure Finance Company chairman Santosh Nayar to look into the issues.

The stranded assets include Rs  50,000 crore worth of gas-based projects, which are set to turn into non-performing assets. Independent power producer, or IPP, projects of 13,000 Mw have been stranded for want of gas and incurring losses owing to low-efficiency factors and under recovery of fixed costs.

The Santosh Nayar committee has recommended that lenders re-examine the viability of these projects and take up the matter for a “special package” on a case-by-case basis.

According to Goyal, banks are expected to cooperate to ensure the assets are revived and generation picks up. He, however, clarified no “financial package” was in the works.

Goyal added that the government would look at various ways to improve fuel availability for plants, including gas pooling, but no bailout was being considered.

Ashok Khurana, director-general, APP, said it’s reassuring to hear that banks would be brought on board to revive the assets.

Goyal said that after the upcoming e-auction of coal blocks, the government would take steps to ensure generation goes up by 50 per cent and power tariffs are kept affordable for consumers.

Source:Business standard

ONGC’s Rs 10,000 crore power & gas project in Tripura set for launch

NEW DELHI: Prime Minister Narendra Modi will inaugurate ONGC's Rs 10,000-crore power and gas production project in Tripura, which is the company's biggest investment in a single location in northeastern India, and may sell electricity to neighbouring Bangladesh. 

Two power units of 726.6 MW capacity are ready and being synchronised to supply power to seven states in the northeast. After states' quota, about 98 MW electricity will be surplus and could be sold on commercial terms to any interested party including Bangladesh, Tripura government and industry officials said. 

The Tripura government, which is one of the promoters of ONGC Tripura Power Company Ltd (OTPC), is keen to involve Bangladesh in the project and is awaiting a nod from the Centre, officials said. 

The previous UPA government had in-principle agreed for sale of surplus electricity across the border and also considered offering Bangladesh a minority stake in the project. Company officials said Bangladesh government went out of the way to set up the power plant by allowing the company to use its territory to move 90 cargos of heavy equipment. "The proposals are awaiting approval of the power ministry, which is examining the technical feasibility of a commercial tie-up across the border,"an official said requesting anonymity. 

State-run exploration giant ONGC and IL&FS are other promoters of OTPC where ONGC holds 50% equity stake. IL&FS and the state government hold 26% and 0.5% stakes, respectively. Balance stakes could be offered to a strategic partner, officials said. 

ONGC invested in the power plant to consume natural gas produced from its field as this gas cannot be transported to industrial consumers in different parts of the country due to lack of infrastructure. ONGC's gas fields will supply about 3 million standard cubic meters per day (mmscmd) gas to run the plant, ONGC officials said. The state has enough gas to run the plant for over 20 years. 

"There will be about 2 mmscmd surplus gas from our fields that will be consumed by local industries because of lack of transmission facility," one ONGC official said. 

The project involved investments of about Rs 4,000 crore in power plants, Rs 2,000 crore in electricity transmission and Rs 4,000 crore in development and production of gas. "OTPC is India's biggest Clean Development Mechanism (CDM) project, which is registered with the United Nations Framework Convention for Climate Change (UNFCCC)," the official said. The first unit of 363.3 MW.plant at Palatana was dedicated to the nation President of India Pranab Mukherjee in June last year. 

The second unit has been commissioned recently. Assam, Meghalaya, Tripura, Arunachal Pradesh, Mizoram, Manipur, and Nagaland will benefit from this project 

Source:Economic times

SC to hear discoms’ payment of dues matter on 16 December

As on 30 June, BSES Yamuna has to make a payment of Rs161 crore to various electricity transmission and generating companies, according to a company spokesperson.

New Delhi: The Supreme Court will hear a case related to payment of dues by power distribution companies (discoms) BSES Yamuna Power Ltd and BSES Rajdhani Power Ltd on 16 December. 

A bench with justices J. Chelameswar and S.A. Bobde was told by BSES Yamuna and BSES Rajdhani that there were three issues that the court needed to decide on, including whether the tariff fixed was reflective of the actual cost being incurred by the two Anil Ambani-owned companies. 

The dispute pertains to outstanding dues of the companies towards power generating and transmission companies for the period between January and June. In July, a bench of then chief justice R.M. Lodha and justices Madan B. Lokur and Kurien Joseph had directed BSES Yamuna to pay its dues by 15 July. The court had not passed any orders regarding BSES Rajdhani since it was told that it had paid 94% of its dues. 

As on 30 June, BSES Yamuna has to make a payment of Rs.161 crore to various electricity transmission and generating companies, according to a company spokesperson.

Source:Livemint

Power supply deficit declines to one of the lowest levels this year

KOLKATA: With the onset of winter, just one ultra mega power plant at full capacity is sufficient to meet India's shortfall that has shrunk to less than 4,000 MW. Although total demand has increased by 5,000-6,000 MW in the past one year, new capacities coupled with better grid management have led to the decline in the supply deficit. 

On Friday last week, supply deficit declined to 3,277 MW, one of the lowest levels this year, compared to about 7,000 MW a year ago. This happened even as average coal stocks at all thermal power plants were down to six days, a critical level as per the norms of the Central Electricity Authority "With air-conditioners no more required to run at night as sweltering weather is making way for chilly winters in large parts of the country, demand from households has dwindled during the evening peak period, leading to low supply deficits," a senior power sector official told ET. 

According to the official, who did not wish to be identified, an additional generation capacity during the past one year also helped reduce demand mismatch during the peak periods. "In fact, heavy consuming states like Punjab, Haryana, Rajasthan and Delhi recorded near zero supply shortfall while demand-supply mismatch in East India is a small 100 MW and in the West it is about 300 MW," the official said.

Uttar Pradesh and states in south India continue to show large demand-supply gap specifically due to grid congestion. UP's grid system isn't good enough to meet the demand for the power the state requires.

Source:Economic times

Nepal gives Indian firm green light for $1 billion hydroelectric plant

KATHMANDU: Nepal has given an Indian company permission to build a 900 megawatt hydropower plant, government officials said on Monday, as the Himalayan state looks to ease chronic energy shortages by opening up its rivers to its larger neighbour. 

The two countries will sign an agreement for the $1.04 billion project, which provides Nepal with free electricity and India energy for its power-hungry economy, later this week when South Asian heads of state meet for a regional summit in Kathmandu, Nepal's Law Minister Narahari Acharya told Reuters 

"We have passed the Arun III agreement. It will be signed this week with the Indian company," said Acharya following a cabinet meeting where the project was approved. 

Indian firms are investing billions to develop Nepal's hydropower potential, encouraged by an electricity trading pact signed between the two countries last month and pushed by Indian Prime Minister Narendra Modi. 

Growing investment in Nepal's energy industry comes as New Delhi looks to grow its influence in its smaller neighbours, where China is increasingly active. 

The project, which will be built by Satluj Jal Vidyut Nigam (SJVN) Limited, was originally cleared in 2008 but never implemented after Kathmandu lobbied for greater benefits. 

Under the agreement SJVN BSE -1.87 % will develop the plant on the Arun River in the country's east, and supply a fifth of generated electricity to Nepal for free, said Ghanashyam Ojha, external affairs chief at the Investment Board Nepal. 

Nepal will earn $3.48 billion over 25 years in royalty, income and taxes from the plant, officials said, and will then take ownership of the project. 

Indian firms are negotiating with the government for power plants that would produce a total of 8,250 MWs, officials in Nepal said, and Kathmandu estimates $7 billion will be invested in its hydropower industry over the next 5 years. 

Nepal has the potential to generate 42,000 MW of hydropower but today produces 800 MW -- less than demand of 1,400 MW. 

Source:Economic times

Adani Power buys Avantha Group's Korba West Power Co. for Rs 4,200 crore

NEW DELHI: Adani Power, owned by billionaire Gautam Adani, said on Monday it purchased the Avantha Group's Korba West Power Co. (KWPCL) for Rs 4,200 crore. The wholly owned subsidiary of Avantha Power owns a 600 megawatt coal-fired plant in Chhattisgarh. KWPCL is building an additional 600 MW of capacity. An Avantha Group spokesperson confirmed the signing of the deal with Avantha Group, owned by billionaire Gautam Thapar. 

"This acquisition consolidates our pan-Indian presence and further re-affirms our belief in the reform processes underway in the power and coal mining sectors," Adani Group chairman Gautam Adani said. "The acquisition of KWPCL expands our footprint in India, particularly in the coal mining belt of India." 

ET was the first to report the deal on November 23. "This is a time for consolidation in the Indian power sector and as a leading private power producer Adani Power has taken the lead in acquiring power assets which are a strategic fit to the group's business and potentially at the lowest end of the cost curve," Adani said. "We are committed towards contributing towards India's growth and confident of achieving our target of generating 20,000 MW by 2020." 

Adani Power is India's largest private sector power developer with an operational capacity of 9,240 MW, comprising 4,620 MW at Mundra in Gujarat, 3,300 MW at Tiroda in Maharashtra and 1,320 MW at Kawai in Rajasthan. The installed capacity of Adani Power will increase to 11,040 MW with the acquisition of the soon-to-be-completed 1,200 MW Udupi plant and KWPCL. Cash-starved Avantha Group is set to exit from the power generation business. 

After the deal with Adani Power, Avantha group is likely to divest its second plant in Jhabua Power in Madhya Pradesh, which is building 1,260 MW thermal capacity in two phases of 600MW," a person familiar with the development told ET. Avantha Group, which has interests in electrical goods, engineering and paper, has been trying to reduce debt by selling assets. Earlier, Avantha demerged the consumer goods business of Crompton Greaves and sold its chemicals business to Aditya Birla Chemicals forRs 133 crore.

Source: Economic times

Coal India trade unions call off Monday strike

The labour unions of state-run Coal India have called off a strike planned for Monday in protest against a stake sale and opening up of the industry, setting the stage for Prime Minister Narendra Modi to press ahead with energy reforms.

Coal India holds a monopoly on commercial coal mining, accounting for more than 80 per cent of India's total production.

Union leaders met a senior coal ministry official on Saturday and the strike was postponed until a meeting with the power and coal minister, said S Q Zama, secretary general of the Indian National Mineworkers Federation.

The date of the meeting with the minister has not yet been fixed.

Even before Saturday's meeting, the government and Coal India officials were confident any strike would have little impact as one of the company's five unions, close to Modi's Bharatiya Janata Party, had promised not to join. The government's sale of a tenth of Coal India could fetch a third of its $9.5 billion annual divestment target. Asset sales are running behind schedule, pressuring a deficit target of 4.1 per cent of GDP for the financial year to March.

Emboldened by the biggest electoral mandate in 30 years, Modi has also taken steps to let private companies mine and sell coal in India, for the first time in more than four decades.

The unions had threatened to fight the measures tooth and nail, but calling off the strike without any concrete assurance from the government shows they may have been weakened by rifts with each other. Last year, they successfully thwarted a stake sale plan by the previous government.

Zama, however, said the unions would keep resisting any move that could undermine the position of Coal India. He said competition from private companies would make Coal India a "sick" company, risking the jobs of most of its 370,000 workers.

"The government might try to bulldoze us because of their strength in Parliament," Zama said. "But we will put up resistance to the extent possible."

Source:Business standard

New and renewable energy ministry takes cue from PM Narendra Modi, starts work on solar projects

NEW DELHI: Installing solar panels on the Pakistan border, using super-chilled LNG to build cold storage and warehousing facilities, and putting barcodes to stop illegal use of subsidised cooking gas — the Modi mantra is making its presence felt in the energy domain and forcing officials to sit up and think out of the box 

Officials say that during discussions about seemingly routine and uninspiring energy issues, Prime Minister Narendra Modi comes up with unusual ideas, which soon become tightly monitored instructions. The Cabinet Secretariat maintains a log of efforts made by departments responsible for implementing these ideas, sources said. 

The PM's vision is to harness cold temperatures at LNG terminals where gas in liquid form - at 160 degrees Celsius below freezing point - lands from cryogenic ships. At an LNG terminal, the super-cool liquid is gradually warmed up and gasified again in a process that can cool surrounding areas. 

"There is reasonable potential of using this low temperature to generate liquid industrial gas such as nitrogen, oxygen and argon. Integrated cold-storages do exist adjacent to such terminals in China and Japan," a source said. 

The Prime Minister's Office has shown keen interest in renewable energy, officials said. Modi recently advised the ministry of new and renewable energy to explore using barren land close to the country's borders to generate solar energy. Solar projects need a lot of land, which is scarce and costly outside arid regions such as the Rajasthan desert and the uninhabited border regions, where electricity supply is a problem. 

As per the PM's direction, we're soon going to put up two pilot projects of 5 MW each in Gujarat and Rajasthan on separate areas of 25 acres. Indo-Pak border is what we'll begin with as a lot of land is barren and available in the Rann of Kutch," a source at MNRE said. 

The PM is keen on reducing the oil subsidy burden on both the exchequer and state oil firms. While the finance minister recently hinted at denying subsidised cooking gas to the rich and affluent, under the direction of the PM, oil companies are trying to recover every drop of LPG left in more than 15 crore cylinders after they are used. 

Modi's focus is also on reducing India's petroleum import bill, which was over $155 billion last year, by raising domestic output with the use of new technology. As a result, state explorers Oil & Natural Gas Corporation and Oil India plan to revisit areas where success could not be achieved during earlier exploration campaigns. These areas include Upper Assam Belt, Naga Fold Thrust and the Himalayan region. Reviews using the latest Canadian technology have resulted in an oil and gas prospect in Jwalamukhi area of the Himalayan thrust fold belt, an industry source said. 

Similar prospects were reported from Geleki, Cachar and Mizoram, the source said. Officials said the proposal to use the low temperature of LNG for refrigeration has enormous potential. India already has four operational terminals at Dahej, Hazira, Dhabol and Kochi, totaling over 22 million tonnes per annum capacity. Terminals are coming up in Gangavaram and Kakinada. 

Source: Economic times

Government appoints firm to find ways to offset any spike in power production costs after e-auction of coal blocks

KOLKATA: The government has appointed a consultancy firm to find ways to cushion power companies against a rise in generation costs after they buy coal blocks through e-auctions, and look at the possibility of passing a part of it on to consumers, a senior official said. 

"There is a strong possibility that power generation costs are to rise once power producers have to buy the blocks through e-auctions," the power sector official said on condition of anonymity. "The consultancy firm, which is slated to submit its report in the next 10 days will look at both options of cushioning power companies from increased production cost and passing on a portion of the rise to consumers, although not at one go," the person said. The move comes despite the government's assurance that the upcoming auction of coal blocks will not lead to a hike in power tariffs. Any increase in consumer tariffs, if required, will be implemented in phases. 

"For power generation firms that set up plants on tariff-based biddings, increasing power tariff will also be legally difficult. Ways of factoring in this increased cost will be suggested by the consultant to the government," the official said. 

Some power generation companies had been allotted coal blocks on the basis of their plants. They have also signed power purchase agreements (PPAs) with power utilities to supply electricity at a mutually agreed pre-determined price. PPAs are legally binding documents and increasing this contracted power tariff will lead to violation of the contract. 

The ordinance to auction coal blocks follows the Supreme Court's order cancelling allocation of several coal blocks, after the Comptroller & Auditor General estimated that coal worth Rs 1.86 lakh crore was given away. At present, 42 producing blocks and 32 that are ready to start production will be offered — some through auctions and others through direct allocation to state utilities. 

The auction will commence on February 11 next year, and the winners will be informed by March 16. The government expects these 74 blocks to produce 210 million tonnes of coal a year. 

The auction will commence on February 11 next year, and the winners will be informed by March 16. The government expects these 74 blocks to produce 210 million tonnes of coal a year. 

Coal blocks will be auctioned on the basis of their net present value, which is the current value of future earning from the block. The floor price for bidding will be fixed at 90 per cent of the net present value. Winners need to pay 10 per cent of the bid amount upfront. A successful bidder or allottee may utilise coal mined from a particular coal mine in any of its other similar end-use plants by giving a prior intimation to the central government in writing and the government will be free to impose terms and conditions it deems necessary. 

State utilities would be allocated blocks depending on per-capita power availability in the states and future requirements. They will not be allowed to bring in private firms as joint venture partners in such blocks. 

Source:Economic times

India, Russia prepare to settle controversy over NTPC deal

New Delhi: India and Russia have set the stage for settling a controversy over a nine-year-old deal by signing a protocol that allows power producer NTPC Ltd to terminate a Rs.2,066 crore equipment order that it placed with the Russian state-owned firm JSC Technoprom Export (TPE) if a resolution is not found by 1 December. 

This comes ahead of a summit meeting that Prime Minister Narendra Modi and Russian President Vladimir Putin are to hold in early December.

“The issue has been raised by India’s ministry of external affairs (MEA) with the Russian government. A protocol has been signed between the two governments which states if the issue is not resolved by 1 December, NTPC is free to proceed with its course of action,” said a senior Indian government official on condition of anonymity. 

The protocol was signed during a meeting of the working group on outstanding issues under India-Russia Inter-Governmental Commission held in New Delhi between foreign secretary Sujatha Singh and the Russian Federation’s deputy minister of economic development Alexei Likhachev on 28 October. “This is a tricky issue given Russia’s sensitivities. NTPC is ready to proceed on its own,” said a person aware of the development, who didn’t wish to be identified. 

The TPE controversy dates back to February 2005 when the Russian firm won a contract to supply boilers to the NTPC’s 1,980 MW first phase of the Barh project in Bihar. Work on the project soon stalled, with TPE demanding more money for the equipment, citing higher steel prices. The Russian firm wanted an extension of time and removal of a 20% cap on price escalation. The project was also embroiled in a controversy after India’s Central Bureau of Investigation (CBI) concluded that TPE, a unit of the Russian conglomerate Rostec Corp., breached its contract to supply boilers for the three units of 660 MW by hiring an agent to facilitate the deal. TPE has now linked the completion of the project subject to financial support by the Russian government. 

The ill-fated Barh project has been compared with India’s delayed acquisition of the refurbished ex-Soviet aircraft carrier Admiral Gorshkov, rechristened INS Vikramaditya in November 2013. India took up the issue with Russia’s deputy prime minister Dmitry Olegovich Rogozin during his visit to India in February and with Russian deputy foreign minister Igor V. Morgulov in April. According to the protocol agreement reviewed by Mint, 

“The Indian side stated that if a satisfactory timetable for completion of work is not agreed between the two sides by December 1, 2014, NTPC will proceed according to the terms of the contract.” The contract, which has generated a fair share of controversy and diplomatic heartburn, allows NTPC to cancel it. NTPC has blamed mismanagement at TPE for the delay in supply of key equipment and has refuted the Russian company’s claim that there is a financing shortfall of $570 million. 

The government, in the interest of India’s relationship with Russia, had earlier brokered a compromise between NTPC and TPE. “The contract allows for cancellation. How long can it wait? With this protocol being signed, NTPC can go ahead if the issue doesn’t gets resolved by then,” added the person quoted above. Interestingly, NTPC’s board was ready to terminate the contract earlier, but a compromise was reached after Russian President Putin and Prime Minister Dmitry Medvedev had helped hammer out a deal with the Indian government. An NTPC spokesperson said in an emailed response, 

“The Indian side expressed concern about inordinate delay and non-fulfilment of contract obligations by TPE in respect of Barh project (stage-I) of NTPC. It has also been stated that if a satisfactory timetable for completion of work is not agreed between the two sides by Dec. 1, 2014, NTPC will proceed according to terms of the contract. NTPC is awaiting response of TPE on project completion schedule.

” Mint reported on 2 September about India’s largest power generation utility seeking approval from the government to terminate the contract, as the issue had the potential of becoming a diplomatic embarrassment that could test India’s commercial and diplomatic ties with Russia. The queries emailed to the spokespersons of India’s ministries of power and external affairs, TPE and the Russian Federation embassy in New Delhi on 18 November remained unanswered till press time. NTPC plans to build the 1,980 MW project on its own; it has already paid TPE about Rs.894 crore. 

Even after India’s largest power generation firm extracted revised deadlines in 2011 from TPE, work on the project stopped due to lack of supplies from the Russian vendor. The Barh project has a total planned capacity of 3,300 MW, with TPE constructing the first phase (1,980 MW capacity) and state-owned Bharat Heavy Electricals Ltd (BHEL) constructing the second phase (1,320 MW). The first unit of the second stage started commercial operations on 15 November.

Source:Livemint

Crompton Greaves, Adani Power gain post Avantha's Kobra plant deal

Shares of Crompton Greaves and Adani Power are trading higher by over 2% on National Stock Exchange (NSE) after the Adani Power signed memorandum of understanding to acquire Avantha group's Korba West Power.

“Avantha Power & Infrastructure Ltd (APIL), in which it holds an equity investment of about 23.14%, has signed a memorandum of understanding with Adani Power for 100% sale of APIL's Korba West Power Company Ltd (KWPCL),” Crompton Greaves said in a statement.

KWPCL, a special purpose vehicle of APIL, is commissioning a coal based thermal power plant of 600 MW. KWPCL is valued in excess of Rs 4,200 crore, it added.

Meanwhile, the Crompton Greaves said Avantha Holdings, the promoter group company, is likely to sell a portion of its shareholding in the resultant company – Crompton Greaves Consumer Products.

Crompton Greaves has gained 3.3% to Rs 202 on NSE. It hit high of Rs 204 and seen a combined 2.37 million shares changed hands on the counter till 1019 hours on NSE and BSE.

Adani Power was up 2% to Rs 46.35 on NSE. The stock opened at Rs 46.50 and touched a high of Rs 46.70 so far. A combined 1.65 million shares changed hands on the counter on NSE and BSE.

Source: Business standard

Losses for power distribution companies continue to pile up

New Delhi:The underlying imbalance in the power sector persists as policy initiatives by the National Democratic Alliance government have been restricted to sorting out supply-side issues. In the absence of moves to rationalise rates, the upward pressure on the cost of power as a consequence of higher coal and gas prices will lead to a further deterioration of the financial position of electricity distribution companies. ICRA estimates that at the all-India level, the subsidy dependence of state-owned distribution utilities in 2014-15 is likely to be around Rs 72,000 crore.

Of the 29 states, 19 have so far issued tariff orders for 2014-15. The tariff hikes in eight states have been a modest 4-10 per cent. According to Girish Kumar Kadam, vice-president, ICRA Ratings, "The extent of the average tariff hike based on tariff orders issued by SERCs (state electricity regulatory commissions) across the states has been subdued at 5 per cent during the current year so far as against the median hike of 7 per cent approved for 2013-14, which was also much lower as compared with the median tariff hike of 14 per cent allowed for 2012-13."

Regulators are yet to approve any revision in tariffs in Arunachal Pradesh, Bihar, Gujarat, Jammu and Kashmir, Odisha, Uttarakhand and Madhya Pradesh. Further, in Tamil Nadu and Rajasthan, the SERCs are yet to issue tariff orders, which violates the terms of the financial restructuring scheme, under which annual tariff balancing was a prerequisite.

Interestingly, according to the ICRA report, in "states where there has been no revision in tariffs, regulators seem to have assumed a revenue surplus by projecting lower loss levels and power purchase costs. These unrealistic assumptions have in the past meant large truing-up of costs in subsequent years".

Dhaval Patel, AGM at Care Ratings, argues that policy makers must "address the current policy of differential tariffs as rationalising of tariffs for different classes of users is crucial". As industrial and commercial users incur higher tariffs to cross-subsidise agricultural users, rationalising tariffs will require politically contentious hikes for agricultural consumers.

In the absence of hikes commensurate with the increase in costs, higher losses will affect distribution companies' capacity to buy power, implying either consumers will have to bear large tariff hikes or face more power cuts. But Vinayak Chatterjee, chairman of Feedback Infra, is sceptical that the problem can be solved simply by raising tariffs. Chatterjee argues that "even if you raise prices, the full impact of the move may not be felt. Hut by hut, mohalla by mohalla, meters have to be installed".

Various proposals such as the feeder separation schemes popularised by Gujarat are being advocated to solve the power crisis. According to Kadam, "an increased focus on segregation of feeders by utilities for rural supply remains important, particularly in states which have a higher level of agriculture consumption; which in turn would enable the utilities to improve reliability in power supply, as well as control on loss levels to some extent".

But the experience of eight states which have already implemented feeder lines has been mixed. High loss levels continue to exist in Haryana and Madhya Pradesh.

Sceptical that feeder lines are the solution, Chatterjee says, "Feeder lines are palliative at best. They do not address the fundamental problem." Arguing that the existing model is in tatters, Chatterjee proposes to bypass the distribution companies and introduce competition.

Recent reports suggest that the government may be warming up to the idea of introducing more competition in the sector. The Suresh Prabhu committee has proposed the idea of multiple suppliers in the loss-laden distribution side. Proposals have also been advocated for creating a forum of regulators-an association of all state and central level regulators-to constitute a committee to review the functioning of the SERCs and to report this to the central 

Source:Business standard

Government to auction 70 discovered hydrocarbon blocks

New Delhi: In an attempt to rekindle waning interest in India’s hydrocarbon sector, the government plans to auction around 70 blocks owned by public sector explorers such as Oil and Natural Gas Corp. Ltd (ONGC) and Oil India Ltd (OIL). These so-called marginal fields were awarded to the state-owned firms on a nomination basis but remained undeveloped because they lie in tough terrain or had low reserves. They are currently being identified by the firms. “The petroleum ministry has asked ONGC and OIL to draw up a list of the blocks,” said a person aware of the development, requesting anonymity. Sixty of these blocks belong to ONGC and the rest to OIL. 

The planned auction, reported by Mint on 14 August, comes at a time when the National Democratic Alliance (NDA) government is also working on offering exploration blocks under the tenth round of the New Exploration Licensing Policy (Nelp). The government is also debating the incentive regime for hydrocarbon exploration, swinging between two contentious options—the existing cost-recovery model and the alternative revenue-sharing model. Petroleum minister Dharmendra Pradhan confirmed the government plan, first proposed by the oil ministry in 2009. 

“We have asked Oil India and ONGC and a consultancy to evolve a transparent practice for bidding out these blocks,” he said in an interview. “No one should allege tomorrow that we picked and chose (their allocation). It should be investment-friendly, have a profit-making agenda... Through transparent bid mechanism, ownership will be provided to the company providing technology. It should have an incentive to make investments.

” India approved Nelp in 1997—it took effect in January 1999—to boost hydrocarbon exploration. Under Nelp, the government allocates rights to explore hydrocarbon blocks through a bidding process and has done so in nine phases so far for 360 blocks, involving an investment of around $21.3 billion. 

“Nelp-10 is for the new areas. These are for those blocks where discoveries have been made. For a company the size of ONGC, it is not viable. A small company may find it viable,” Pradhan added. While the government has revised the current price of natural gas to $5.6 per million British thermal unit (mmBtu) from $4.2 mmBtu, investor interest in the Indian hydrocarbon sector is dipping, with around 70% of basins remaining largely under-explored. The response to Nelp, too, has been tepid. A senior ONGC executive requesting anonymity confirmed the development and said, “These are small discoveries and the process of identification of the blocks to be auctioned is on.

” A senior executive at OIL who also didn’t want to be identified said, “We may be surrendering some blocks.” Queries emailed to spokespersons of ONGC and OIL on Monday remained unanswered. The government’s plan to kick-start hydrocarbon exploration stems from broader concerns that India’s energy import bill of around $150 billion is expected to balloon to $300 billion by 2030. State-run oil marketing firms bore an under-recovery of Rs.1.4 trillion last fiscal as they sold fuel below cost of production. The 2014-15 budget estimated India’s subsidy bill at Rs.2.6 trillion, or 2.03% of gross domestic product, with oil subsidies amounting to Rs.63,500 crore. The under-recoveries for the first quarter of fiscal 2015 has been Rs.51,110 crore. Analysts welcomed the auction plan. 

“In the mid-1990s, the government got a resounding response to its bids for development of medium- and small-sized fields—and got the investment and attention of international explorers. Now, to kick-start the investment cycle once again, the government should actively consider placing the blocks lying undeveloped for collaborative development,” said Gokul Chaudhri, a partner at BMR Advisors, a consulting firm. “You would not want just the larger companies for operating over here. You would want all kinds of players to make the industry really active enough. It has to become a much more broader industry, a much more deeper industry,” said Vikash Kumar Jain, an investment analyst at investment and brokerage firm CLSA India Ltd. “You can’t have a very selective environment for only very large companies in the deep water areas,” Jain added

Source:Livemint