NEW DELHI: The Appellate Tribunal for Electricity (Aptel) delivered a technical knockout to 1,424 MW Adani Power over the weekend, quite similar to the one it delivered against 4,000 MW Coast Gujarat Power Limited (Tata Power) on September 15. The main case about giving compensatory tariffs to the two companies, however, continues in Aptel.
Given the 18-month delay in the case already, a quick resolution is not expected, putting further strain on both Tata Power and Adani Power. Tata Power’s consolidated losses in the three months to June, 2014 were R111 crore and the firm did not take into any compensatory tariff.
Adani Power reported a loss of R179.72 crore in Q1FY15, despite accounting for compensatory tariff, in its stand-alone accounts, of R260 crore during the quarter.
After the Indonesian government changed its rules on exporting coal by imposing a minimum export price in September 2010, both Adani and Tata approached the Central Electricity Regulatory Commission (CERC) asking for relief on grounds of ‘force majeure’ and ‘change of law’.
CERC, however, rejected both on April 4 last year, arguing that changes in Indonesian law cannot be considered ‘force majeure’.
It, however, ordered compensatory tariffs based on Section 61 and 79 of the Electricity Act. While Section 79 gives CERC the power to regulate, Section 61 says CERC has to safeguard the consumer interest while at the same time ensure ‘recovery of the cost of electricity in a reasonable manner’. The compensatory tariff, determined by a Deepak Parekh-led committee took into account the extra money earned by the companies from their mines in Indonesia as a result of the higher coal export price.
The discoms in Haryana, Rajasthan, Maharashtra and Gujarat, however, challenged the CERC ruling at Aptel which, while asking for current charges to be paid based on the new CERC formula, said it would take a call on past dues. Haryana challenged this in the Supreme Court which remanded the matter back to Aptel with instructions to hear the case afresh.
With the case in the Supreme Court, both Tata and Adani challenged the Central Electricity Regulatory Commission’s (CERC) rejection of ‘force majeure’ and ‘change of law’ in Aptel as a matter of caution — if Aptel rejected the CERC compensatory tariff, they must have reasoned, they could possibly resurrect their ‘force majeure’ petition.
With Aptel rejecting this part of the challenge against the CERC ruling, Tata has already appealed the matter in the Supreme Court and Adani Power will likely follow suit soon.
At the same time, the CERC ruling on compensatory tariff is currently being heard by Aptel and, whatever the ruling, that will end up in the Supreme Court as well.
(Source: The Financial Express, November 3, 2014)
INDIA FUNDED HYDEL PROJECT PROGRESS KEY IN PRESIDENT PRANAB MUKHERJEE’S BHUTAN TRIP
NEW DELHI: Pranab Mukherjee is scheduled to land in Bhutan on November 7 for a two-day visit in the first standalone visit of an Indian president since 1988, less than five months after Narendra Modi chose the neighbouring country for his first visit as prime minister.
“The presidential visit coming close on the heels of the PM’s trip reflects the significance that Delhi attaches to Thimphu. It also reflects a vibrant South Asia policy that the Modi government wishes to pursue,” a senior government official said.
One of the key goals of Mukherjee’s visit is to review progress of the work on India-funded hydel power projects in Bhutan, officials said.
Hydel power projects are the cornerstone of India-Bhutan ties, meeting some of India’s energy needs while contributing significantly to the economy of the Himalayan state. In June, Modi had laid the foundation stone of the 600 mw Kholongchu Hydropower Project.
Bhutan exports 1,416 mw of electricity to India annually. In 2008, the two governments had decided to produce 10,000 mw of electricity by 2020 through 10 projects. Work on these projects is at various stages of completion, officials said.
President Pratibha Patil had in 2008 visited Bhutan to attend coronation ceremony of the current King Jigme Khesar Namgyel Wangchuck.
(Source: The Economic Times, November 3, 2014)
ELECTRICITY APPELLATE TRIBUNAL REJECTS ADANI POWER PLEA ON CONDONING DELAY
NEW DELHI: The Electricity Appellate Tribunal has rejected Adani Power’s application seeking to condone the “481 days” delay in filing a plea against power regulator CERC’s ruling of April 2013 with regard to tariff issues at Mundra project.
The application was filed requesting that the tribunal condone the “delay of 481 days” in filing the appeal that challenges certain findings of an order passed by electricity watchdog CERC on April 2, 2013.
“We hold that the explanation offered by the applicant for inordinate delay of 481 days not only suffers from lack of bona fide but also suffers from the lack of diligence and lack of sufficient cause,” the Appellate Tribunal for Electricity said in its order.
CERC had ruled in April 2013 that Adani Power should be granted “compensation” package for its Mundra project which would provide a cushion against the escalation in cost of imported coal for the plant.
The company had approached the Central Electricity Regulatory Commission (CERC) last year, seeking revision in tariff from its 1,980-MW Mundra project in Gujarat saying increase in imported fuel cost.
However, CERC rejected Adani Power’s submission to consider tariff issues arising out of change in Indonesian coal pricing rules should be considered as ‘force majure or change in law’.
The tribunal’s latest order, dated October 31, observed that even though Adani Power was aggrieved by certain portions of last year’s CERC order it did not choose to exercise its right to file the appeal at that stage itself.
“This would clearly prove that the applicant duly accepted the impunged order and proceeded with this implementation without taking any steps to challenge the said order at the relevant time,” the tribunal noted.
Other respondents to the appeal are Uttar Haryana Bijli Vitran Nigam Ltd, Dakshin Haryana Bijli Vitran Nigam Ltd and Gujarat Urja Vikas Nigam Ltd. The first two are Haryana’s power distribution companies while the third one is of Gujarat.
The respondents raised serious objections for the condonation of delay, “mainly on the ground that the explanation offered by the applicant for this inordinate delay, was not satisfactory and not bona fide,” according to the tribunal’s order.
(Source: The Economic Times, November 3, 2014)
NHPC TO BUILD INDIA’S LARGEST HYDEL POWER PLANT IN ARUNACHAL PRADESH
NEW DELHI: NHPC is gearing up to build India’s biggest hydro plant, a 3,000 MW project that is equivalent to about half its current total capacity and three times the size of its biggest unit, even as it brushes off concerns over competition from the private sector.
State-owned NHPC recently received approvals from the Forest Advisory Committee for Dibang hydel project in Arunachal Pradesh and plans to approach the Cabinet Committee for a final nod within a year.
“We will execute the Dibang project in partnership with one of the PSUs and the state government at an investment of Rs 15,000-16,000 crore. Due to its large scale, the per-MW project cost will be much less than the average of Rs 7-8 crore,” NHPC Chairman and Managing Director RST Sai said. “Also, we will be able to execute the project faster as there are only a handful of families living at such high altitude and it will save time for their rehabilitation.”
NHPC, which operates 6,500 MW of hydro power generation capacity, expects to build more plants as the Narendra Modi government pushes for faster clearances for infrastructure projects in a bid to boost the economy. The share of hydro power in the country’s generation capacity has been declining as delayed environmental clearances and rehabilitation of displaced people stalled projects.
Sai said the private sector is in no position to challenge the state-owned company’s dominance in generating hydro power and cited the example of the Jaypee Group, which put its hydro projects on the block to reduce debt. Executives who left for highpaying jobs now want to come back as they see a future for hydro only in NHPC, he said.
Sai’s main concern is about delays in the 2,000 MW Subansiri project in Assam and Arunachal Pradesh, which is being opposed by a section of affected locals. He added that finance is not a challenge for NHPC since it has reserves to the tune of Rs 16,000 crore and the company enjoys access to low-cost funds. He is not looking at growth through the acquisition of private sector projects.
(Source: The Economic Times, November 3, 2014)
K K SHARMA TAKES OVER AS DIRECTOR OPERATIONS OF NTPC
NEW DELHI: State-owned power producer NTPC today said that K K Sharma has taken charge as Director (Operations) of the company.
A Mechanical Engineer and MBA in Finance, Sharma’s career spans over 39 years with contribution in the areas of Mega- Budget Thermal, Hydro Power and Coal Mining Projects as a Professional Manager, Strategic Planner and a Business Leader.
As a Director (Operations), he will be responsible for the activities relating to sustained operation including fuel management of all NTPC stations, the company said in a statement.
He has also served NTPC as Regional Executive Director in Hydro Region, Coal mining or Coal Washeries, Eastern Region, Project Planning & Monitoring and as CEO of NTPC-SAIL Power Company.
(Source: The Economic Times, November 3, 2014)
TBEA ENERGY TO FACILITATE FOR SETTING UP INDUSTRIAL PARK IN GUJARAT
AHMEDABAD: Setting the ball in motion to develop an industrial park for Chinese companies in Gujarat, senior state government officials point out that Chinese transformer maker TBEA Energy will act as a facilitator to help interested companies set up manufacturing base in the state.
According to multiple sources in the know, TBEA Energy India Ltd is going to act as a facilitator to help interested Chinese companies to set up base in the state, especially in Karjan near Vadodara, where the firm is already setting up a Rs 2,500 crore Green Energy Park.
As a part of the first phase of the project, the company has already set up a Rs 1,000 crore ultra-high voltage transformer plant at Karjan, that was formally inaugurated by the state chief minister Anandiben Patel in June this year.
“TBEA is the major Chinese company that has invested in the state, it has been decided that it would act as a sort of facilitator to help other Chinese companies who are interested in setting up manufacturing set ups in Gujarat. As such an industrial park is planned for Chinese companies near TBEA’s project at Karjan,” said a senior official in the state government involved in the process of developing the industrial park project. He further added that TBEA had acquired some additional land (to the tune of 80 to 100 acres) when it began the process of setting up its Green Energy Park, and interested companies can come up in the area, where TBEA would sort of act as an anchor investor.
“TBEA is an enterprise group which is accredited by Chinese government, to be engaged in foreign economic and technical cooperation and to undertake national external assistance projects in four industrial fields, transmission, transformation, new energy and advanced materials. TBEA is the core enterprise of China’s major electrical equipment manufacturing industry, and is the first listed transformer enterprise of China,” says the company’s website.
(Source: Business Standard, November 3, 2014)
EXPERTS TO DECIDE ROUTE OF POWER TRANSPORTATION TO BANGLADESH
AGARTALA: A meeting of technical experts from India and Bangladesh would be held here on November 3 for drawing the radial inter connection line for transportation of power to Bangladesh.
Stating this Tripura State Electricity Corporation Ltd (TSECL) Chairman and Managing Director S K Roy said today 100 mw power from the 726 mw thermal power project at Palatana in Gomati district would be transported to Bangladesh.
While it was decided by the two countries that the power would be transported from Suryamaninagar power sub-station here to Comilla district of Bangladesh, the meeting would decide about the route of transportation, he told reporters.
The newly constructed Suryamaninagar sub-station in West Tripura district was erected with installed capacities for international power trading, Roy said adding the cost of transportation of power would be borne by Power Grid Corporation of India Limited.
Meanwhile, ONGC sent natural gas to Palatana project during the day for power generation by the plant’s second unit, which is expected to become operational in the current year, V P Mahawar, General Manager of ONGC-Tripura Asset said.
The plant now generates 363 mg watt power, he added.
(Source: The Economic Times, November 2, 2014)
UNCLEAR ABOUT NUCLEAR?
India’s vast atomic energy infrastructure is the creation of Homi Bhabha with the full backing and participation of Jawaharlal Nehru. The Bhabha approach had its critics even in the 1950s with Meghnad Saha and D.D. Kosambi publicly voicing their differences. But there can be no doubt that this infrastructure has played a pioneering role in developing India’s scientific, engineering and technological capabilities across a wide spectrum.
It has, of course, made the country a nuclear weapons power. However, our performance on the nuclear power front has been disappointing, to say the least. No doubt, sanctions imposed after the first Pokhran explosion of May 1974 severely handicapped the expansion of our nuclear power programme. Even so, the fact remains that 45 years after the first nuclear power plant at Tarapur became operational, nuclear power still accounts for just about 3.5% of India’s electricity supply.
A nuclear power plant is less polluting than its coal-fired counterpart. It does not emit carbon dioxide that is responsible for global warming or sulphur dioxide that harms human health. Thus, with increasing environmental and climate change concerns, it is a pity that India’s nuclear power portfolio is still so small.
As of now, the total installed capacity is just about 4,780 megawatts (MW) and another 4,800 MW of capacity (that includes the two 1,000 MW plants at Koodankulam that are in an advanced stage of commissioning) is under various stages of construction. Other than this, everything else is still really only on paper. For instance, the Jaitapur nuclear power park that would host 9,600 MW of capacity with French technology got environmental clearance four years back, but is nowhere in sight. The landmark 2005 Indo-US nuclear agreement has not much to show for itself till now, except that India has been able to get natural uranium from other countries to increase the capacity factor of existing nuclear power plants. Five years ago, the capacity factor was an abysmal 50%, but is now up to around 82-83%.
But there is one extraordinary development amid this somewhat depressing scenario on nuclear power. And this has to do with India becoming the second country in the world to have a commercial scale fast breeder reactor running on a mix of plutonium and uranium oxides. India’s 500 MW prototype fast breeder reactor (PFBR), started 11 years ago at Kalpakkam near Chennai, is almost 97% complete and is likely to become fully operational by this time next year.
Russia is the only other country to have operating fast breeder reactors—it has two reactors with a total capacity of around 1,200MW. France used to have a 250 MW fast breeder which it operated smoothly for almost 35 years and then decommissioned it. A second 1,200 MW fast breeder reactor was commissioned in 1985 but was shut down following an accident involving leakage of molten sodium that is used as a coolant in the reactor. The UK and Japan both shut down their commercial scale fast breeders in the 1990s.
India’s logic for the fast breeder programme is fundamental and impeccable. Without such a programme that uses the spent fuel from natural uranium reactors, India will not be able to use its vast reserves of thorium. Thorium, unlike uranium, is not a fissile material. It cannot produce electricity by itself. It is a fertile material that can get converted into a fissile material like uranium-233.
Estimates vary quite widely, but it is generally accepted that India could well have some 25% of the world’s thorium reserves. The fast breeder route is the only way our abundant reserves of thorium can be used to produce electricity. The other benefit of a fast breeder is that by recycling the spent fuel, most of the long-lived radioactive waste is eliminated. Current plans are to install another two 500 MW fast breeder reactors at Kalpakkam itself that will come on stream sometime towards the later part of the next decade and another two such reactors elsewhere in the country. India, clearly, is a world leader in this area. The atomic energy establishment’s projections envisage a nuclear power generation capacity of some 63,000 MW by 2030. It is important to think big and act bold especially when we confront the challenge to move on to a low carbon growth path at the earliest. But in light of past performance and current realities, this target does appear very ambitious and unrealistic.
The Planning Commission’s low carbon strategy expert group had scaled it down to 40,000 megawatts which itself is a formidable goal. At this level of capacity in 2030, nuclear will account for around 8% of electricity supply roughly on par with solar and wind contributions.
To achieve even this lower figure will call for urgent steps to address the concerns of global companies on the unlimited liability imposed on them by the nuclear liability legislation passed by Parliament and that came into force in November 2011. Having said this, it is perhaps time to revisit assumptions related to the acquisition of imported reactors and have a much bolder strategy for the expansion of indigenous heavy water reactors themselves.
Finally, India also needs to put in place a truly independent regulator along the lines proposed in the legislation introduced in Parliament three years back. Such a regulator has to necessarily address public concerns on safety and other risks associated with nuclear technology.
Earlier this year, India had agreed to have a peer review of its nuclear regulatory system under the auspices of the International Atomic Energy Agency (IAEA) and hopefully, this review will commence in the next few months. This would be the first time such a formal review would be taking place and should help in generating greater public confidence in the plans of the atomic energy establishment.
(Source; Mint, November 3, 2014)
IPCC REPORT WARNS GOVERNMENTS ON FAILURE TO CHECK CLIMATE CHANGE
NEW DELHI: The message from the Intergovernmental Panel on Climate Change (IPCC) is loud and unequivocal: the window of opportunity for the world to stave off the severe, pervasive and irreversible impacts of global warming is limited. In a report, the IPCC said climate change, resulting from human action-induced global warming, is not a problem of the future and many of its adverse effects are already and increasingly evident.
The report released in Copenhagen on Sunday sends a clear message to governments that failure to check climate change by allowing the continued rise in emissions of greenhouse gases will have disastrous consequences.
“The scientific case for prioritising action on climate change is clearer than ever… Beyond a certain point, human society cannot cope with the change, and therefore, the IPCC has drawn up a very clear rationale for the society to deal with this problem,” IPCC Chairman RK Pachauri said.
The report, which distils and integrates the findings of the three working groups comprising the Fifth Assessment Report and two special reports brought out by the IPCC in 2011, stresses on the need to tackle climate change urgently through a combination of adaptation and mitigation.
“We have little time before the window of opportunity to stay within 2oC of warming closes. To keep a good chance of staying below 2oC, and at manageable costs, our emissions should drop by 40 to 70% globally between 2010 and 2050, falling to zero or below by 2100. We have that opportunity, and the choice is in our hands,” Pachauri said.
UN Secretary-General Ban Kimoon, who was present in Copenhagen, said, “Science has spoken. There is no ambiguity in their message. Leaders must act. Time is not on our side.”
The report, experts say, breaks new ground by addressing ways in which countries may address emission reduction by an integrated approach to policy making and focusing on co-benefits.
“The IPCC synthesis report suggests a way of thinking about climate change that is deeply relevant to India. There is a complex two-way relationship between sustainable development and climate change: climate policies should support, not undermine, sustainable development; but limiting the effects of climate change is necessary to achieve sustainable development. This suggests India has to increasingly internalise climate considerations into development planning,” said Navroz Dubash, lead author on national and sub-national policies for the IPCC report and senior fellow at the Centre for Policy Research.
The IPCC report states that the levels of three key greenhouse gases – carbon dioxide (CO2), methane and nitrous oxide – are the highest in 800,000 years and that the period between 1983 and 2012 were most likely to be the warmest 30-year period in the last 1,400 years. It also states that increased oceanic uptake of carbon dioxide has resulted in a 26% rise in acidity in oceans.
The report doesn’t shy away from the fact that there is a cost to ensuring that the global temperature increase is limited to under 2 degrees above pre-industrial levels by the end of the century. It stresses that this cost is both affordable—about 0.06% of GDP every year—especially as global GDP is set to grow by at least 300% in this period and that the cost of inaction is much higher than the cost of action.
The lag between science and policy is in part a reflection of the inability of the global community to resolve key political questions relating to responsibility for action, equity and the development imperative of countries. The IPCC is not unaware of this reality, given that the synthesis report itself is the product of intense negotiations.
Releasing the report, Pachauri made a plea to policymakers to heed the messages that science was sending as they worked towards the new global climate change regime. “The Synthesis Report provides critically important information for policymakers, who have the difficult task of finalising a global climate agreement next year in Paris.
I cannot predict the outcome of those negotiations. But I do know that it is critical for policymakers to allow their decisions to be informed by the science. I do not envy them. Their task is formidable,” the IPCC chairman said.
For negotiators and ministers headed to the UN sponsored Lima round of negotiations, the IPCC’s message is clear, the Cancun Pledges, where countries pledged climate change action on the basis of assessments undertaken domestically, is not enough to limit temperature increase to below 2°C. The Synthesis Report says that Cancun Pledges “are broadly consistent with cost-effective scenarios that are likely to limit temperature change to below 3°C relative to pre-industrial levels.”
(Source: The Economic Times, November 3, 2014)
WIND POWER INSTALLATION IN APRIL-SEPT FLAT, BUT INDUSTRY REMAINS HOPEFUL
CHENNAI: Wind power installations in the first six months of the current financial year totals 864.75 MW, not much higher than the 827 MW the country saw in the same period last year. However, wind turbine manufacturers say there is good demand from wind farm developers and companies that want to put up wind mills to save on tax.
Installations in the first half of the current financial year take the country’s total installed wind power capacity to 22,060 MW.
A notable feature of the first six months’ installations is the emergence of Karnataka, Madhya Pradesh and Rajasthan as favoured destinations, and a sharp drop in Maharashtra. Tamil Nadu’s numbers seem good, but industry leaders say that the installations in the State were projects which were planned earlier.
Madhusudhan Khemka, Chairman of the Indian Wind Turbine Manufacturers’ Association told BusinessLine that there is good demand from companies who wish to avail themselves of the tax-saving accelerated depreciation benefit and from independent power producers many of whom have received international equity funding in the recent past. Khemka, who is also the Chairman and Managing Director of wind turbine manufacturer, ReGen Powertech, feels that the current year could close with 3,000 MW, compared with 2,150 MW last year.
Industry experts note that it is not unusual that projects get executed in the last quarter and point out that in March this year alone, investors put up 800 MW of wind turbines.
(Source: Business Line, November 3, 2014)
CENTRE PUTS 90 OF COAL INDIA’S MINING PROJECTS WORTH RS 88K CRORE ON FAST TRACK
NEW DELHI: The government has put 90 of Coal India’s nearly 150 greenfield and brownfield mining projects on the fast track, entailing an investment of around Rs 88,000 crore, in a bid to augment domestic coal supply quickly and ensure uninterrupted power, despite the cancellation of coal block allocations by the apex court.
The coal ministry has sought faster clearances for Coal India Limited or CIL’s much-delayed projects, some of which have been on the drawing board for decades and could double its capacity once complete, as this would also allay the apprehensions of the firm’s trade unions about its future as the expansion plan would create hundreds of employment opportunities and ensure the behemoth retains its dominant market stature.
This move runs parallel to the proposed auction of coal blocks that the government intends to wrap up in the current financial year, for which an ordinance was promulgated on October 21. Coal India trade unions have announced a one-day strike on November 24, protesting against what they term as a move to allow private companies in commercial coal mining.
“While we are working on rolling out the coal block auctions soon, it is imperative to raise domestic output of coal as well, so we have decided to fast-forward all of Coal India’s outstanding projects by flagging them with the project monitoring group in the cabinet secretariat,” said a senior government official.
The group is responsible for steering bigticket projects caught up in red tape-induced delays, out of the woods.
Over the past week alone, the coal ministry has taken up 38 such mining projects with the cabinet secretariat involving an investment of close to Rs 65,000 crore, most of them awaiting green clearances and land acquisition. These are on top of 25 other mining projects that involve investments of Rs 19,000 crore by Coal India, whose problems have already been taken up for resolution with the concerned ministries and state governments.
Already, red tape hurdles such as forest and environmental clearances stalling 28 other coal mines spread across the country have been lifted, paving the way for additional coal production of over 90 million tonne (mt) from these mines over the next year or so.
“The government recognizes that the coal sector needs a fresh ‘mission-mode’ approach and believes that strengthening Coal India’s capacities is a critical part of the solution, whether you look at it from the perspective of keeping costs low for end-users or of restricting the current account deficit,” the official said. Together, these 90 projects, which include four dedicated railway lines to ferry the critical fuel source from rich coal belts in Jharkhand and Chhatisgarh with no connectivity, are expected to raise Coal India’s capacity by over 450 mt, according to ET’s calculations.
Though India is rich in coal reserves, said to be the third largest in the world, it imported 171 million tonne of coal for $16.41 billion in 2013-14, far higher than the 145 million tonne it imported in the year before that. Between April and September, the country has already imported around 110 mt of different varieties of coal. Coal India produced 462 million tonne of coal last year, missing its output target by 20 mt, and the government expects local supply to fall short of demand by over 180 million tonne in 2016-17.
(Source: The Economic Times, November 3, 2014)
STRIKE THREAT NOT ALARMING, TO INITIATE DIALOGUE SHORTLY: CIL
KOLKATA: Coal mining major Coal India today said the impact of the day-long strike call by four major trade unions on November 24 will not be “alarming”. “We will try that the strike does not takes place and will initiate a dialogue shortly. We think the impact will not be alarming. Mining through contractors will remain normal,” Coal India director R Mohan Das told PTI.
The CIL management was banking on the possibility that Bharatiya Mazdoor Sangh backed by the BJP would boycott the strike and its supporters might join work. Coal India sources said BMS has influence in South Eastern Coalfields, Western Coalfields and partially in the Central Coalfields.
Four other trade unions affiliated to INTUC, HMS, CITU and AITUC had served a notice for one-day token strike on November 24, demanding scraping of the enabling clause from the Coal Mines Ordinance-2014, which allows commercial mining by private companies and divestment of at least 10 per cent stake in public sector miner among others.
Other trade unions, however, remained optimistic that despite BMS not being a signatory to the notice, they would support the strike call. Coal India, which employs around 3.5 lakh people and accounts for 80 per cent of domestic coal production, had experienced labour trouble on several occasions, hindering its productivity.
The company was unable to meet its production target in the last few years. CIL’s average production is about 1.5 million tonnes a day and it missed the output target for the fifth consecutive month of the current fiscal producing 34.88 million tonnes of coal in September, against the targeted 36.17 million tonnes.
(Source: Business Standard, November 3, 2014)
SC COAL VERDICT TO COST ADANI RS 6,000 CRORE
MUMBAI: Billionaire businessman Gautam Adani-owned Adani Group, so far perceived to be a major beneficiary of the Supreme Court’s decision to cancel 214 coal mines, has actually emerged as one of the losers. It was widely believed that since companies would be forced to import coal following the cancellations, the Adani Group as, the country’s largest coal trader and importer, would have benefited.
However, what is coming out now is a little-known fact that the Ahmedabad-based group had forayed into the back-end job of mine development and operations (MDO) with its subsidiary Adani Mining Private Limited in 2007 and had since bagged four major MDO contracts from coal mine owners; making it India’s largest coal handler. With coal licences cancelled, the group will lose access to over three billion tonnes of coal reserves with a production capacity of 110 MTPA and investments of close to $1 billion (Rs 6,000 crore) spent in developing these coal mines.
Besides, it would also be a huge setback for the group’s 2500 MW power plant in Orissa, which was to be set up for $2 billion. That’s because the plant was based on the coal rejects from two of mines in the state, both of which got cancelled by the apex court.
The group’s website says it has a stated mission to achieve a mining capacity of 200 MTPA of coal by year 2020, making it one of the largest mining groups in the world. This development may, however, have put paid to those plans for now.
The MDO contracts include all activities beginning from exploration to commissioning of coal mine projects. It comprises undertaking exploration, preparation of geological report and mine plan, seeking various statutory clearances, development of infrastructure, acquisition of land and R&R and setting up of washeries.
While the government awarded the coal blocks to various government and private firms, including the state mining corporations, for meeting the coal requirements of end-use projects in steel, power and cement sector, the Adani Group was happier working at the back end as an MDO. Since coal mine operators had no prior experience in the development of coal block and mining, they followed the MDO route by seeking competitive bids. The Adani Group incidentally bagged most of these contracts.
An Adani spokesman declined to comment. Even a text message sent to Adani failed to evoke any response. Confirming the development, a source in the know of the development told TOI, “Adani’s MDO rights of Machakatta coal block and Chhendipada and Chendipada-II coal blocks in Orissa, Parsa block in Chhattisgarh, the Parsa East-Kente Basan mine in Chhattisgarh stand cancelled as these blocks were among 214 coal blocks cancelled by the apex court.”
In April 2013, Adani Enterprises had announced the launch of its integrated MDO operations with the start of coal production from the Parsa East-Kente Basan mine in Chhattisgarh. The coal mine has reserves in excess of 450 million tonnes and was expected to produce 15 million tonnes of coal each year. This mine alone was being developed at cost of Rs 3,000 crore ($500 million). The Adani Group had estimated capital outlay of $2.5 billion or Rs 15,000 crore in developing the four coal mines through MDO contracts. “With this development, Adani Enterprises is set to emerge as the largest private coal miner with access to produce coal of up to 90 million tonnes and reserves of over 3 billion tonnes over next 30 years, enough to produce about 18,000 MW of electricity by state electricity boards,” the Adani group had said in a statement in April last year.
The other three MDO blocks contracted to Adani Enterprises are – Parsa block in Chhattisgarh, owned by Chhattisgarh State Power Generation Co with reserves of 150 MT, Machakatta block in Orissa owned by MahaGuj Collieries with reserves of 1.2 BT tonnes and Chendipada block, also in Orissa, owned by UCM Coal Company with reserves of 1.5 BT. All these blocks now stand cancelled leading to a loss of around $1 billion investments made in them so far.
Shares of Adani Enterprises gained 3% to close at Rs 484 in a firm Mumbai market on Friday valuing the firm at Rs 53,230 crore while shares of it power unit gained 5% to close at Rs 48, valuing it at Rs 13,756 crore.
(Source: The Times of India, November 3, 2014)
