NEW DELHI: The government is working on big-ticket financial package for about 1,30,000-mw thermal and hydro power plants worth over Rs 6,00,000 crore that are hit by severe funds crunch while continuing to face cost and time overruns.
Officials said the Department of Financial Services will shortly recommend a series of steps to the Reserve Bank of India.
These include lenders providing additional debt to distressed projects without the condition of bringing fresh equity from the developers, lowering interest rates, restructuring loans without classifying them as non-performing assets and extending the project construction period and loan repayment period to match cash flows of the projects. The recommendations are based on a report prepared by a committee led by India Infrastructure Finance Company Ltd chief Santosh Nayyar on debt restructuring and moratorium scheme for stranded power plants. The committee was set up after power companies met bankers and senior officials of the department of financial services on October 17 on issues related to loans given to stalled power plants.
The power plants are facing challenges like gas and coal shortage, delay in obtaining regulatory clearances, low offtake by distribution companies, transmission bottlenecks, high interest rates and rupee depreciation.
Suitable packages might be recommended for power plants facing time and cost overruns, idling without adequate fuel supplies, without power purchase contracts and delayed hydropower plants, including those affected by floods in Uttarakhand. Banks’ exposure to these projects is expected to be over Rs 4,00,000 crore.
The department is likely to recommend to the RBI to provide additional debt to the projects that are facing time and cost overruns. The debt can be replaced by equity within a specified time from the developers once the project is operational or finds strategic investors.
Large thermal power capacity is either delayed by about two years or halted since one year due to regulatory issues, funding constraints, rupee depreciation and increase in interest rates.
The recommendations may also include shifting project completion timeline by banks. Restructuring the loans without classifying them as non-performing assets is also likely to be recommended. The government may also ask RBI to allow deferring interest payment by capitalising it and collecting it after a few years and reducing the interest rate to SBI’s base rate till plants are operational.
The government has been working overtime to address the problems of the sector. Leading private companies have invested huge sums to set up power projects in recent years but Coal India has not been able to raise production commensurately. Many gas-fired projects are also idling because the country’s gas supply is inadequate.
To ease the shortage of coal, the Power, Coal and Renewable Energy Minister Piyush Goyal is determined to make sure that state-run Coal India Ltd doubles its production to more than 1 billion tonnes a year. This will help stranded power plants to run at optimum capacity.
The auction of coal blocks is also expected to increase supply of coal. Apart from captive mines that were operational, many others that had not been developed are expected to contribute significantly to domestic supply. The government is also hopeful that the railway network would be expanded to reach certain coal-rich zones that have the potential to produce 200 million tonnes a year.
(Source: The Economic Times, November 20, 2014)
POWER MINISTRY APPROACHES DoD TO DEFER NHPC STAKE SALE
NEW DELHI: As the government gets ready to kick-off this year’s disinvestment drive, the Power Ministry wants to ‘wait’ and ‘watch’ on sale of stake in state-run hydel producer NHPC.
The ministry is believed to have approached the Department of Disinvestment to wait for some more time before selling stake in the firm.
The ministry is of the view that in the absence of a permanent Chairman and Managing Director and delays in execution of some of its projects, shares of the company may not get a good valuation, sources said.
The sources said Power Ministry feels that once these issues are resolved, they would give a boost to the company’s proposed stake sale.
At present, R S T Sai is the acting Chairman and Managing Director of the company. Before Sai, the post was held by G Sai Prasad, who was working in the capacity of Joint Secretary in the Ministry of Power.
Some of the projects of the public sector firm are running behind schedule which includes the proposed 2,000 MW Subansiri hydro power project in Arunachal Pradesh.
Subansiri Lower project has been stalled since December 2011, after the local people raised issues related to its safety and downstream impact.
The original sanctioned cost of the plant was Rs 6,285.33 crore which was revised to Rs 10,667.09 crore and is now likely to touch Rs 12,000 crore.
The other projects which have run into cost overruns are — Teesta Low Dam IV (West Bengal), Parbati II (Himachal Pradesh), Nimmo Bazgo and Uri II (Jammu & Kashmir). These projects have a combined capacity of 1,345 MW.
They are in various stages of construction and have exceeded the amount that was initially sanctioned.
Ministry of Finance, which plans to garner over Rs 58,000 crore through disinvestment during the current financial year, has lined up PSUs including Coal India, ONGC and NHPC for stake sale.
(Source: The Economic Times, November 20, 2014)
INDIA READIES PROPOSAL TO DOUBLE POWER TO NEPAL
NEW DELHI: Marking a significant step in its nascent electricity diplomacy efforts, India has agreed to provide 150 MW of power to Nepal in addition to the 120-140 MW of power that it exports currently.
The move will effectively double the export of power to Nepal and significantly mitigate the Himalayan nation’s power shortage, which turns acute during the winter months.
Nepal has a generating capacity of 600 MW but the hydroelectric output is severely reduced during winter, when the demand peaks.
In order to facilitate this additional flow of power, the Indian government has allocated 150 MW power from its unallocated quota from the Dadri thermal power station to Bihar.
The power will be exported from the international boundary with Bihar, where the load of Nepal is concentrated. This would be done through two new 132 kV lines — the 15 km, 132 kV Raxaul-Parwanipur line and the 17 km Katayia-Kusaha line. The two lines will be constructed shortly at a total estimated cost of Rs 20 crore, government officials involved in the exercise said.
The proposal is expected to be taken up at the meeting of the Indo-Nepal joint working group and joint steering committee to be held on November 20 as a follow up of the India-Nepal power trade agreement signed in September 2014. Prime Minister Narendra Modi is slated to travel to Nepal in the third week of November for the 18th SAARC summit, where he is likely to oversee the inking of a pact that would pave the way for the setting up of a 900 MW hydropower project in that country.
The project development agreement (PDA) for the 900 MW Arun III hydroelectric power project was finalised late last month as a precursor to Modi’s visit to Kathmandu for the SAARC summit.
The signing of the PDA for the Rs 5,139 crore project (2010 price levels), to be developed by state owned SJVN Ltd, is being seen as a defining step in the consolidation of the power sector cooperation between the two countries.
(Source: The Indian Express, November 20, 2014)
NTPC TO JOIN OTPCL TO SET UP A 2400 MW THERMAL POWER IN ODISHA
BHUBANESWAR: Power major NTPC today agreed to jointly develop a 2,400 MW thermal power plant in Dhenkanal district with state-owned Odisha Thermal Power Corporation.
NTPC CMD Arun Roy Choudhury, who met Chief Minister Naveen Patnaik during the day, said Odisha was important for NTPC. “We are expanding projects in the state. The chief minister has suggested that we take up some projects.”
The NTPC CMD said “We have been mandated to set up solar power projects of 3,000 MW across the state … As Odisha is important state, we are keen for that too.”
The company, he said, has already agreed to set up a 1,000 MW solar power station in Andhra Pradesh, a 750 MW one in Madhya Pradesh and also in Rajasthan and Telangana.
During the meeting it was also decided that NTPC would be a partner in OTPCL’s proposed 2400 (3×800) MW coal fired power plant to be set up at an investment of Rs 10,000. The proposed unit would be set up at Kamakshyanagar in Dhenkanal distict, a release from the chief minister’s office said.
“We expect a joint venture between OTPCL and NTPC soon,” said a senior official of the Odisha energy department, ho was present at the meeting.
OTPCL, a 50:50 joint venture between state owned Odisha Mining Corporation (OMC) and Odisha Hydro Power Corporation (OHPC), has hit a roadblock as both companies lack expertise to implement the project prompting the government to look for a strategic partner.
NTPC was therefore urged for partcipation in the project and it agreed today, the official said adding the state government has decided to adopt the ultra mega power plant (UMPP) model and induct a strategic partner through competitive tariff bidding for 25 years.
OTPCL’s proposed project required 1969.78 acres of which 987.77 acre is government land, 83.94 acre forest land and 982.015 acre private land. The state government has already accorded administrative approval for acquisition of 982.01 acres of private land at the project site.
OTPCL has already got water allocation from the department of water resources, he said.
(Source: The Economic Times, November 20, 2014)
DAMODAR VALLEY CORPORATION FAILS TO CLEAR STRATEGIC INVESTOR PLAN FOR PURULIA PROJECT
KOLKATA: The Damodar Valley Corporation board has failed to invite Expression of Interest for a strategic investor in the proposed 2,500-MW Raghunathpur power plant at Purulia.
“The board could not clear the agenda to invite EoI after West Bengal power secretary Gopal Krishna objected to it and left the meeting,” sources privy to the development told PTI.
West Bengal is a shareholder in the power-cum-irrigation utility along with Jharkhand and the Centre.
Facing acute funds crunch, the DVC was planning to bring in equity partners for the 2X600 mw phase-I and 2X660 MW Phase-II (Raghunathpur Thermal Power Project).
According to sources, the agenda in the board meeting included inviting EoI including from PSUs and private, state government to allow carrying out of due-diligence by new prospective bidders.
A DVC spokesperson declined to comment on the board meeting.
Sources said that today’s board meting was held with about two dozen CISF commandos guarding the venue.
Officials indicated that the DVC’s funds crunch was the result of outstanding dues of Rs 11,122 crore from different consumers including the Jharkhand State Electricity Board which alone owes the the public undertaking Rs 8,511 crore.
The DVC also failed to get the Centre’s nod for a capital infusion of Rs 3,900 crore to come out of the dire financial mess.
The total debt burden of the DVC stands at Rs 30,000 crore.
(Source: The Economic Times, November 20, 2014)
TATA POWER GEARS UP TO KEEP CAPITAL WELL-LIT DURING WINTERS
NEW DELHI: To keep the streets of national capital well lit this winter season, power discom Tata Power is installing new streetlights and making the existing ones functional.
Tata Power Delhi Distribution Limited (TPDDL), the nodal agency in charge of streetlights in north and northwest Delhi, is identifying unlit areas by referring to reports prepared by its night patrolling staff apart from looking up inputs provided by the PCR vans of Delhi Police.
To prevent waste of electricity, the discom has switched to LED-based street lights apart from using advanced gadgets for accurate switching on and off of lights.
“TPDDL is deploying ‘Astro Timers’ for accurate switching on and switching off the lights thereby preventing wastage of electricity apart from installing LED lights for better luminescence, power savings and maintenance activities,” the company said in a release.
The discom also claims to have put in place an efficient outage management system for speedy redressal of consumer complaints.
“The system provides a transparent and effective method for immediate recording of complaints from consumers, monitoring by the official till resolution and finally the complaint closure on the system, resulting in faster redressal of complaints ,” the company added.
(Source: The Economic Times, November 20, 2014)
IREDA TO RAISE LENDING TO SOLAR POWER PROJECTS IN NEXT 3 YEARS
MUMBAI: Ireda, an agency under Union New and Renewable Energy Ministry, expects to disburse nearly Rs 12,500 crore in the next three years and to raise the share of total lending for solar-related projects to over 60 per cent, a top official said here today.
The Indian Renewable Energy Development Agency (Ireda) disbursed around Rs 2,471 crore in FY14 out of which lending to solar projects was nearly 11 per cent or Rs 266.61 crore. The agency has forwarded its proposal to the government for sanctioning of loans.
“We want to disburse nearly Rs 12,500 crore in the next three years out of which lending towards solar projects would be more than 60 per cent,” Ireda chief general manager (technology) B Venkateswara Rao told on the sidelines of the Intersolar India summit here today.
“The new government has laid emphasis on promoting solar power generation which provides huge business opportunities to us. Therefore, we have decided to increase our exposure to this sector,” he added.
This year, the agency has already increased its lending for solar projects, and expects the trend to continue in the future, Rao said.
The Narendra Modi government has set a target of 100 GW (1 lakh megawatts) of solar power by 2022.
The FY15 Budget has proposed setting up of mega solar power projects in Rajasthan, Gujarat, Tamil Nadu and J&K with a funds allocation of Rs 500 crore.
The government has also announced a scheme for solar power driven agricultural pump sets and water pumping stations, for which Rs 400 crore has been earmarked in the fiscal plan.
(Source: The Economic Times, November 20, 2014)
INDIA’S SOLAR GENERATION CAPACITY CROSSES 3,000 MW: REPORT
NEW DELHI: India’s solar power generation capacity has crossed 3,000 MW even as overall capacity addition this year is expected to be lower at about 800 MW than seen in 2013, according to a report.
Mercom Capital today said the country has seen installation of 734 MW solar power capacity so far this year, taking the overall installed capacity to more than 3,000 MW.
“However, 2014 will be a disappointment with calendar year installations forecast at about 800 MW, a 20 per cent drop year-over-year.
“Land acquisition delays due to elections and uncertainty caused by the anti-dumping case contributed to a slowdown in installations,” it said in a statement.
Last year, capacity addition was little over 1,000 MW. In 2015, however, the solar capacity addition is projected to more than double to 1,800 MW, it added.
Mercom Capital is a global clean energy communications and consulting firm.
“The Indian solar industry is visibly upbeat since the elections and especially after getting past the anti-dumping case,” Mercom Capital Group CEO and Co-Founder Raj Prabhu said.
According to him, recent cancellations of coal mining licences by the Supreme Court amid rising coal imports and increasing costs, and continuing power shortages have all contributed to the positive momentum in the solar sector.
The government is making efforts to increase power generation from renewable sources, especially solar energy.
(Source: The Economic Times, November 20, 2014)
INDIA’S SOLAR POWER CAPACITY ADDITION TO PICK UP AFTER DISMAL 2014: STUDY
KOLKATA: India is expected to add solar power capacity at more than twice the speed of this year in 2015, after a disappointing 2014 when installations of photovoltaic cells have fallen short of previous year’s levels, a solar consultancy firm said.
India’s total solar installations have crossed the 3 gigawatt capacity mark with addition of 734 megawatt so far this year, and the country is expected to end the year with total additions of 800 MW, as much as 20% less than in 2013. Land acquisition delays due to elections and uncertainty caused by an anti-dumping issue contributed to the slowdown in installations.
In its quarterly update on the Indian solar market, Mercom Capital Group forecast 2015 installations to reach about 1,800 MW.
India earlier this year dropped plans to impose anti-dumping duty on solar panel imports. The duty, aimed at protecting local manufacturers, would have increased the import cost of local project developers who rely mostly on countries like the US, China and Taiwan for the photovoltaic cells.
“The Indian solar industry is visibly upbeat since the elections and especially after getting past the anti-dumping case,” commented Raj Prabhu, chief executive and co-founder of Mercom Capital. “Recent cancellations of coal mining licenses by the Supreme Court (citing irregularities in the allotment process) amid rising coal imports and increasing costs, and continuing power shortages have all contributed to the positive momentum in the solar sector.”
The Ministry of New and Renewable Energy’s (MNRE) new target is to increase solar installations by fivefold to 15 GW by 2019 via solar parks – large areas and infrastructure set aside by states to accommodate installations of 500-1,000 MW.
“There have been other announcements in a short period of time; a new program aimed at ‘ultra-mega solar projects’ with a goal of installing 20 GW by establishing solar parks was announced recently,” the study said. The ministry has also asked public sector units to set up large solar projects to meet their obligations on using renewable energy. At the request of the Prime Minister’s office, the ministry is also working on a plan to increase the installation goal under the Jawaharlal Nehru National Solar Mission to 100 GW, it said.
Prabhu is sceptical of the plan of setting up large projects.
“In most major solar markets, with a drop in costs, the market has shifted from large-scale projects to residential and commercial rooftop projects – closer to the end-user,” he said. “With transmission and distribution losses estimated at about 25%, and considering the country is severely challenged when it comes to land availability and grid infrastructure, this (large projects) may not be a sound long-term strategy.”
According to the report, since the inception of the solar mission in 2010, there has never been a shortage of big goals and announcements. Two primary challenges to the plans have been execution and uncertainty, due to the lack of long-term market visibility, it said.
A renewed government focus to address these challenges would give confidence to the market, and help attract foreign investments. That said, prospects for the Indian solar sector have never looked better and the new government’s strong commitment towards solar has percolated to states, evidenced by the sense of urgency and seriousness being shown by state administrations towards solar.
(Source: The Economic Times, November 20, 2014)
NTPC TO INVEST IN ODISHA’S SOLAR ENERGY SECTOR
BHUBANESWAR: The state-run National Thermal Power Corporation (NTPC) has decided to invest in Odisha’s solar energy sector, an official said Wednesday.
“We have been mandated to generate 3,000 MW solar power in the country. The Odisha government has suggested we invest in the state and we are ok with the proposal,” NTPC chairman and managing director (CMD) Arup Roy Choudhury said Wednesday.
The PSU has signed MoUs with the Andhra Pradesh government for generation of 1,000 MW solar energy and with Madhya Pradesh for 750 MW, Choudhury said.
He said Telangana and Rajasthan were also looking at NTPC for investments in the solar energy sector.
NTPC is building a 1,600 MW power plant at Gajamara in Dhenkanal district. It will set up a power engineering institute at Dhenkanal which is linked to its Gajamara plant.
It is also setting up a 1,600 MW super thermal power project at Darlipalli in the state’s Sundargarh district which is expected to be commissioned by 2018.
NTPC has also committed itself to establishing a medical college near Sundargarh at a cost of Rs.350 crore.
“A very high class hospital will be built at Sundargarh. Mumbai-based Hafeez Contractor will make a presentation before the chief minister about the architectural design,” Choudhury said.
(Source: The Economic Times, November 20, 2014)
TATA POWER RENEWABLE ENERGY TO INVEST IN WIND ENERGY FIRMS
MUMBAI: The Tata group’s renewable energy arm is in talks to invest in a wind energy firm, revving up deal activity in a sector that has lured General Electric, Goldman Sachs and the Asian Development Bank, as the company seeks to achieve its goal of adding as much as 300 MW to its portfolio annually.
“We are currently speaking to three wind power companies based in Tamil Nadu, Karnataka and Maharashtra…We hope to close a deal soon as we have a target of adding 200-300 MW of green energy projects into our portfolio this year, which can be done both organically and inorganically,” said Rahul Shah, Chief Executive Officer of Tata Power Renewable Energy (TPREL).
“All these companies that we are speaking to own operating projects that have very competitive tariffs.” Shah didn’t say how much the company would spend on the acquisition or who owns the target companies. TPREL, a wholly owned subsidiary of Tata Power, was incorporated in 2007 to house the company’s renewable energy assets. India’s renewable energy sector has drawn investors, especially after Prime Minister Narendra Modi said clean energy will play a key role in the government’s goal of providing electricity to all 400 million Indian homes that are currently without power.
In April, GE Energy Financial Services invested $24 million in a 151 MW solar photovoltaic power project put up by Welspun Renewables in Madhya Pradesh. In July, Goldman Sachs, ADB and the South Asia Clean Energy Fund pumped in $140 million into wind and solar energy firm ReNew Power, promoted by former Suzlon Energy CEO Sumant Sinha. India’s national action plan on climate change recommends that the country generate 10% of its power from solar, wind, hydropower and other renewable sources by 2015 and 15% by 2020. India had an installed power generation capacity of 254,049 MW at the end of September, of which 31,692 MW, or about 12%, is from renewable sources, according to data on the Central Electricity Authority website.
Tata Power had earlier told ET that all the new capacity it plans to add over the next two years — almost 800 MW – would comprise of projects in the wind, hydro, solar and wastegas space. The company has an installed generation capacity of 8,615 MW, of which more than 1,200 MW is from renewable sources. On whether renewable energy can compete with thermal power in India, Shah said, “The cost of operating a thermal power plant will escalate, unlike a renewable project where the costs are static for, say, the next 25 years. Also, unlike before, now the costs of setting up renewable energy plants have rationalised and tariffs are almost at grid parity.”
TPREL is currently developing two wind projects in Maharashtra, a 126 MW hydro project in Bhutan in a venture with the Government of Bhutan that is close to being commissioned, 185 MW of hydro power projects in Georgia and wind projects in South Africa.
(Source: The Economic Times, November 20, 2014)
KASHMIR’S SOLAR POTENTIAL HIGHEST IN INDIA
BANGALORE: Which is a better place for locating a solar power plant? Hot and sunny Rajasthan or snow-clad Kashmir? If your answer is Rajasthan, you are wrong.
A recent study by Indian researchers has identified the eastern parts of Jammu and Kashmir and the eastern part of Uttarakhand — in the chilly shadows of the Himalayas — as areas “with the highest potential for solar energy generation in India”.
Traditionally energy that can be generated from sunlight is estimated solely on the basis of the amount of solar radiation incident in a particular place.
But a new study says other parameters like ambient temperature, altitude, wind velocity and weather conditions tend to influence the energy generation to a great deal and therefore these factors must also be taken into account before selecting a place for setting up a solar plant.
The study by Tirumalachetty Harinarayana, director of the Gujarat Energy Research and Management Institute in Gandhinagar, and Jaya Kashyap of the Malla Reddy Engineering College in Hyderabad is published Nov 17 in “Smart Grid and Renewable Energy,” an international journal.
“The combination of high altitude and low ambient temperature plays a crucial role in the efficient performance of the photovoltaic (PV) modules while wind velocity is a deciding factor in the energy generation process from the view point of heat transfer,” Harinarayana told IANS.
“Therefore, what the developers really require for choosing the best place for locating a solar plant is a map of solar energy ‘generation potential’ and not just the solar radiation map.”
The researchers have for the first time produced such a map for India by simulating the various conditions in a computer and have identified 286 locations with high energy generation potential in different regions of the country.
A more detailed map prepared for three states has identified 266 locations in Gujarat, 231 in Andhra Pradesh and 165 in Telangana.
The researchers have computed the month-wise solar energy generation potential — and also the total energy that could be generated for the whole year — at each of these locations.
“The methodology followed in our study is through modelling using standard software programmes,” Harinarayana said.
According to their report, most of India has substantial solar energy potential ranging from 680,000 -730,000 kilo-watt hours (KWH) per acre of land, except in Arunachal Pradesh and the eastern part of Assam that have the least potential.
The highest annual solar energy generation (750,000-800,000 KWH per acre) potential has been identified in the eastern parts of Jammu and Kashmir and the eastern part of Uttarakhand.
“Although the incident solar radiation in these regions is low when compared to the rest of the country, the energy generation potential is high due to the ideal combination of solar radiation, ambient temperature and wind velocity,” the authors explain.
In the case of Gujarat, most of the region has the potential to generate from 700,000-730,000 KWH of solar energy while the maximum (800,000 KWH) is limited to a small area in the district of Junagarh.
The annual solar energy generation map of Andhra Pradesh shows a variation from 670,000 to 740,000 KWH. The eastern part of Kurnool, the northern part of Kadapa, and major portions of Ongole and Guntur districts have the least potential and the maximum energy potential (730,000-740,000 KWH) is limited to the western part of Anantapur district.
In the newly formed Telangana state, the northern part of Adilabad and southern part of Mahboobnagar districts have the least energy generation potential (670,000-690,000 KWH) while Khammam and the western parts of Medak district have the highest range (715,000-725,000 KWH).
The authors say the new map they have produced will hopefully help solar developers to correctly estimate the energy generation and therefore the economics of a solar photovoltaic power plant in any place in India before setting it up.
This will help the country achieve the 20,000 MW target of the Jawaharlal Nehru Solar Mission by 2022.
(Source: The Economic Times, November 20, 2014)
SUNEDISON ENTERS WIND POWER SPACE
NEW DELHI: New York Stock Exchange-listed SunEdison, a globally known developer of solar farms, has signalled its entry into the wind power business. It has taken the acquisition route to enter the wind power field.
SunEdison and its 64 per cent owned publicly-traded power plant subsidiary TerraForm Power have said that they would acquire First Wind, a leading developer and operator of wind farms in the U.S.
The total cost of acquisition is estimated at $2.4 billion. It comprises two components. There will be an upfront payment of $1.9 billion. And, the reminder $510 million will be in the form of ‘earn out’, that is, it will be paid if First Wind completes projects in its backlog.
SunEdison’s portion of the consideration will be $1.5 billion, comprising an upfront payment and the ‘earn out’. SunEdison said it had secured $1.5 billion of non-recourse capital from six global banking institutions.
SunEdison said the acquisition of First Wind would make it a leading renewable energy development company in the world.
The deal, according to a release, would increase the generating capacity of the renewable power plants SunEdison was capable of completing in 2015 to about 2.1 to 2.2 gigawatts, from the current roughly 1.6 to 1.7 gigawatts.
In a statement, SunEdison President and Chief Executive Ahmad Chatila said the acquisition of First Wind would help the company “capitalise on the significant growth opportunities in the global wind power markets.’’
Boston-based First Wind is operating or building renewable energy projects in the Northeast, the West and Hawaii. According to the release, its projects had a combined capacity of nearly 1,300 MW, which were enough to supply more than 425,000 homes each year.
SunEdison has a significant presence in India. It recently won a bid to build 150 MW of solar projects in Karnataka. The company will build and own the five projects for the Karnataka Renewable Energy Development Ltd. It also recently inked a memorandum of understanding with Rajasthan to build 5 gigawatts of projects in that State.
With its entry into the wind power space following the latest acquisition, SunEdison’s play field in India could considerably widen.
(Source: The Hindu, November 20, 2014)
COAL AUCTION NORMS TO CAP TARIFFS, TATA POWER AND ADANI WILL BE ALLOWED TO BID
NEW DELHI: The government will ensure the auction of coal blocks doesn’t lead to a hike in power tariffs, prevents bidders from grabbing too many mines and allows bids by companies such as Tata Power and the Adani Group, whose plants use imported fuel, Coal Secretary Anil Swarup said.
“The bottom line is that tariffs should not rise. It is not a revenue-maximising approach, it is essential to keep a lid on tariff,” Swarup said, while announcing draft rules for the ordinance on coal block auctions. For this, the government will have a separate set of rules for the auction of mines to power, steel and cement companies as the entire burden of tariff hike cannot be passed on to consumers.
The proposed rules also have eligibility criteria that will give comfort to firms with operating plants attached to mines that have been cancelled. The rules say eligibility “shall be dependent on the status of preparedness of their end-use plant” and investment made in such plants. The government will finalise the rules after considering comments on the draft by November 24.
The auction and the ordinance to facilitate it follows the Supreme Court’s decision to cancel the allocation of coal blocks, which the Comptroller & Auditor General had criticised. CAG had estimated that coal worth Rs 1.86 lakh crore was given away. Swarup said 42 producing blocks mentioned in Schedule 2 of the ordinance and 32 that are ready to start production (Schedule 3) will be offered. Some of these would be auctioned and others would be allocated to state firms. The auction will commence on February 11 next year, and the winners of coal blocks will be informed by March 16.
The government expects these 74 blocks to produce 210 million tonnes of coal a year. This will contribute to Power, Coal and Renewable Energy Minister Piyush Goyal’s target of doubling India’s coal output to more than 1 billion tonnes a year and end fuel scarcity. The rules also allow the use of surplus coal in other plants of a company.
“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 central government may impose such terms and conditions as may be found 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.
However, these PSUs or their joint ventures with private firms can participate in the auction to get more blocks. He said some states had already written to the coal ministry seeking allocation of coal blocks for power generation. Association of Power Producers Director-General Ashok Khurana said the industry was waiting for more details about the auction.
“The government has laid down a broad road map to ensure that new firms start mining soon and there is no disruption in the supply. A clear picture will emerge once the authorities concerned come up with specific rules and floor price, among others.”
“The ultimate objective is to bring about a balance between consumer interest by ensuring lower electricity tariffs and efficient valuation of coal blocks. We are looking at keeping tariff rational and not maximising government revenues. We are also taking steps to see that the problem of coal shortage will be addressed, in the near future as well in long term,” said Swarup, who hoped the output of the 74 blocks will replace large-scale imports of coal. The draft rules will be modified after feedback from stakeholders such as likely bidders, industry groupings and state governments.
In the draft rules, the coal ministry has allowed developers to swap coal produced from different mines for projects with the same end-use. The rules provide for a ‘nominated authority’ for the auction process. Swarup said it would be headed by a joint secretary in the coal ministry, Vivek Bhardwaj. The authority will identify eligible bidders for participation in coal block auctions and frame rules for penalties that can be imposed on coal block owners failing to meet milestones in a specified time frame.
It will also design the tender document with specific weightage for technical and financial bids for determining successful bidders. The authority will prepare a ‘mine dossier’ with details of geographical area, coal reserves, mine infrastructure, approvals and permits for each block. Swarup said companies such as Tata Power and Adani Power, which depend on imported coal for their plants, can bid for blocks. Tata Power’s 4,000 mw ultra mega power project at Mundra is running at a loss because costs jumped unexpectedly following changes in Indonesian laws. Adani’s 4,620 mw project, also at Mundra, faces a similar problem.
(Source: The Economic Times, November 20, 2014)
