NEW DELHI: The Centre has prepared a detailed roadmap in consultation with states to make India “diesel generator and inverter free” in the next five years, and fulfill the Narendra Modi government’s promise to provide 24×7 power to every home, factory and farm and put the country back on the high-growth trajectory.
Power, coal and renewable energy minister Piyush Goyal recently held meetings with ministers of states and Union Territories. The states were told that generating power alone was not enough.http://www.hindustantimes.com/Images/popup/2014/11/05_11_14-metro15.gif
“Development of power generation sector alone cannot ensure 24×7 power supply without matching development of transmission and distribution (T&D) sectors,” a government official said. “For this involvement of the states is vital… states were urged to develop the T&D in partnership mode to keep pace with power generation.”
Losses in transmission are the bane of the power sector in India. Up to 40% of power generated is lost in distribution. State-specific measures agreed at the meeting included bringing down transmission and distribution losses to 15% at the national level. Targets have been set for each state to bring down T&D losses, and over-achievement would be rewarded, the official said.
Faster clearances for coal and power projects on land and environment, expeditious allotment of hydro projects, putting in place state-specific solar power policy besides correcting imbalances in state transmission and distribution systems were also discussed, said the official.
Power generation has also been given state-specific strategy. For instance, Andhra Pradesh, Odisha, Karnataka, Rajasthan and Gujarat among others were asked to focus on solar power, while Arunachal Pradesh and Uttrakhand were asked to exploit the available hydro potential.
The Centre has roped in international funding agencies and banks such as the World Bank for help; the thrust is on bringing down distribution losses and improving infrastructure, apart from focusing on solar power.
World Bank help has been sought for a state-wise turnaround plan for the key states that together account for about 80% of the country’s $20 billion (`1.2 lakh crore) annual power distribution losses.
“The World Bank will help the states to undertake the required, difficult turnaround actions and will evaluate and implement state-specific programmes by providing international financial resources through long term Re bonds or credit enhancement products,” a government official said.
India’s total installed power generation capacity in all modes stands at 250,000 MW. Of this, only about 140,000 MW is actually available because of coal and gas shortages and sub-optimal capacity utilisation.
Solar power capacity is just 2,750 MW, which the Modi government is hoping to increase to 100,000 MW in the next five years.
(Source: Hindustan Times, November 5, 2014)
FMC-CERC TURF WAR HITS POWER FUTURES TRADING
NEW DELHI: A regulatory vacuum created by a long-drawn turf war between the Forward Markets Commission (FMC) and Central Electricity Regulatory Commission (CERC) has hit India’s fledgling power-trading market badly by thwarting the futures segment. While state electricity boards and open-access bulk buyers of electricity are keen to clinch forward contracts to hedge against volatility of supply and price in the free (not governed by power purchase agreements) market, the FMC and CERC can’t decide who between them will regulate futures trade in electricity and under what terms.
While the Supreme Court is hearing the dispute, the trading volume under whatever forward contracts that are now allowed has dipped sharply. In FY14, just 345 million units of power was traded in the term-ahead market (TAM), 62% less than the TAM volume in FY11, as per data from Indian Energy Exchange (IEX), which accounts for 96% of exchange-traded electricity market in the country.
The decline in TAM trade is when the day-ahead market (DAM) volume has seen a significant increase, 145% between FY11 and FY14.
TAM, pertinently, offers only a semblance of futures trade given that the physical transaction has to take place in a maximum of seven days from the signing of the contract, whereas participants would want to clinch deals for much longer terms in advance to reduce the risk of price volatility and factoring in their demand projections.
Untied power — free-market power outside the power purchase agreements — accounts for only 12% of the total power consumed in the country and within the free market, barely 40% of the deals are done through power exchanges, with the remaining being bilateral deals.
“TAM, in comparison to the day-ahead market, does not have liquidity that it had the potentially to have, had there been no such limitation in duration of contracts (of a maximum of 11 days). We believe there is big potential for growth if there are enabling provisions to allow the power trade to offer monthly, quarterly, yearly or even longer duration contracts,” said Shruti Bhatia, vice-president, policy, Indian Energy Exchange.
Power exchanges were barred from trading electricity beyond 11 days as the turf war between FMC and CERC erupted in 2009 over who should regulate exchanges trading electricity in long-term future contracts. Under Section 14A of the Forward Contracts Regulation Act (FCRA), any contract for delivery beyond 11 days needs certification of registration from the FMC. The ministry of consumer affairs brought electricity under the purview of the FCRA by issuing a notification in 2006. While the CERC is mandated to regulate the electricity market under the Electricity Act, 2003, the power to supervise long-term future contracts in commodity trading lies with the FMC. Sources said while the FMC is undecided on whether to allow futures trade in the power sector, the CERC says that futures contracts of longer durations could be introduced with the condition that actual delivery must take place.
Experts believe that apart from reducing volatility and bringing depth, introduction of non-transferable instruments will also provide better pricing signals for market participants. Both power generators and distribution companies should benefit from delivery-based futures contracts.
“Hedging leads to cash flow certainty and reduces the cost of debt for companies. The central government should de-notify electricity under Section 15 of the FCRA so that the electricity market is regulated with a unified and calibrated approach solely by a sector regulator,” the CERC had earlier told the power ministry.
“For the lack of a long-term visibility and price-risk management, buyers and sellers today do not find TAM as an attractive option,” Bhatia added. The CERC-FMC dispute is pending with the apex court since July 2011.
DAM is a physical electricity trading market for deliveries for 15-minute time blocks in 24 hours of the next day starting midnight. TAM provides a range of products allowing participants to buy or sell electricity for contracts beyond the day-ahead market, besides intra-day contracts and practically, the deals can’t be signed more than a week in advance.
(Source: The Financial Express, November 5, 2014)
FAST-TRACK POWER SECTOR REFORMS
The Modi government needs to fast-forward power sector reforms by purposefully putting paid to mounting distribution losses of state utilities pan-India with clearcut policy initiatives and follow-through action. The poor performance of electricity distribution companies (discoms) in states like Uttar Pradesh and Tamil Nadu poses systemic risks, hampers quality supply and jacks up the power infrastructure deficit. And the Centre needs to invoke specific sections in the Electricity Act, 2003 to speedily transform the situation on the ground. Reports say that the Centre is seeking instead to amend the Electricity Act, by demerging `carriage from content’ so as to have separate licences for the wire business and the actual supply of electricity , to bring about greater transparency in the whole process.
However, the marginal utility of the legislative changes now proposed is questionable. The fact of the matter is that several state governments have done well, using extant provisions in the 2003 Act to over haul power utility finances, including by separating feeders for agricultural and domestic supply in rural areas.
The Act also empowers the Centre, or specifically the Central Electricity Authority , to direct and advise state power utilities to rationalise cross subsidies and follow norms as per the national tariff policy. Besides, sustainable utility bottomlines would incentivise “open-access“ and reform the market for power, with multiple suppliers competing for custom, with adequate line capacity in place. The fact remains that open ended subsidies, giveaways and moribund utility finances really make no sense.
Ratings by CARE show discoms in UP as the worst-performing, with those in TN close behind. Aggregate technical and commercial (ATC) losses, euphemism for plain theft of power, are a massive 40% in UP . Predictably, the cross-subsidy levels there are sky-high. Reckless populism is perverse incentive to steal and overdraw power. Instead, states need to strive to deliver quality power at competitive rates to shore up industry and services.
(Source: The Economic Times, November 5, 2014)
POWER CRISIS WORSENS: CARE REPORT POINTS TO HOW PRECARIOUS THINGS ARE
Though the headline numbers suggest the power sector is looking up—annual losses, a Planning Commission study says, are down from R93,000 crore in FY12 to R71,270 crore in FY14—the reality is far more daunting. For one, the losses don’t take into account the amounts owed to power companies such as those in Delhi—regulatory assets in Delhi are upwards of R15,000 crore and according to a study by ratings agency CARE, these are R20,000 crore in Tamil Nadu and around R12,450 crore in Uttar Pradesh. Apart from the fact that the gap between power costs and consumer tariffs is increasing each year, what complicates matters is that there are huge cross-subsidies that are upwards of 80% in some areas in UP and just under that in Tamil Nadu. Since the cross-subsidy is essentially a measure of how much some consumers (industrial and commercial users mainly) are being overcharged to subsidise others, this means rationalisation of subsidies will require a politically unacceptable hike in power tariffs for the majority of users. This is not to say charges must not be raised, but that raising rates alone is not a viable strategy.
All of which means the central and state governments need to act on various fronts immediately. While states have to work on ensuring regulators try to correct this distortion with larger hikes for the low-paying customers, both the Centre and the states have to work on reducing transmission and distribution losses which are at an unconscionable 26%, thanks to over-40% levels in states such as UP. To put this in perspective, if a supplier produces 100 units of power at R1 each, he needs to bill consumers at R1 in a zero transmission and distribution-loss scenario; if these losses are 50%, then the break-even tariff required is double, or R2 per unit. One way to reduce these losses, as states from Maharashtra to Gujarat and Madhya Pradesh have shown, is to have separate feeder lines for agriculture consumers—so, any centrally-sponsored electricity reform scheme has to focus on this.
Augmenting of fuel supplies, from coal to gas, is an equally important part of a reforms strategy since the low capacity utilisation that this has resulted in has, in turn, meant buyers end up paying higher capacity charges for the power they buy—in this context, the plan to do coal- and gas-price pooling is a sensible one. The plan to separate carriage from content in the new draft being circulated of the Electricity Act is also a good one since competition is the only way to reduce tariffs.
For now, however, the real issues centre around reducing transmission and distribution losses and to ensure power suppliers get their dues—the fact that private players have not expressed interest in bidding for the latest set of ultra mega power plants is a very worrying sign.
(Source: The Financial Express, November 5, 2014)
INCREASED GENERATION, REALISATION IMPROVE SALES OF POWER FIRMS: REPORT
NEW DELHI: An increase in power generation and better realisation by power companies have helped them improve balance sheets, with sales rising 10.6 per cent in FY14, over and above a 9.9 per cent growth in the preceding year.
According to a Dun & Bradstreet India study, India’s Leading Infrastructure Companies 2014, based on 18 companies in the power sector with a standalone income of about Rs 100 crore in FY14, the rise in sales can be attributed to higher realisations and higher power generation.
“During the first half of the year, some of the large companies performed poorly on the revenue front due to a decline in power generation, which in turn can be attributed to an array of reasons like low off-take by state distribution utilities, coal shortage at certain plants, and planned maintenance shutdowns at certain units,” the report noted.
In the second half of FY14, however, the sector was able to bounce back thanks to double-digit growth in sales by most companies. The report also highlighted the fact that after FY11, opening up of inter-state power transmission for private players has proved beneficial for the sector.
The report mentions that in the past five years, electricity generation capacity has consistently increased by about seven per cent, with 11-15 per cent increase being recorded in FY12 and FY13. India has also been able to bridge the demand-supply gap in electricity. In FY05, the energy deficit stood at 7.3 per cent, which was pared to 4.2 per cent by FY14.
(Source: Business Standard, November 5, 2014)
RUSSIAN FIRM RAISES FRESH DEMAND OF $248M FROM NTPC
NEW DELHI: The government finds itself in a bind as Russian engineering, procurement and construction company TPE (Technopromexport) continues to give state-run generation utility NTPC a runaround, raising the prospect of further delaying the 1,980 mw Barh power project in Bihar.
After overshooting the completion schedule by more than three years and receiving $190 million in 2010, TPE has now raised a demand for an additional $248 million for completing the remaining work.
TPE has raised the demand even after Sberbank Rossii, Russia’s biggest bank, extended a $328 million line of credit to help the government-run engineering firm complete its contract for supplying boilers for the Barh project.
But NTPC has refused to entertain the demand since the amount demanded by TPE is “beyond” the terms of the contract. Peeved with the demand, NTPC has also drawn the government’s attention towards TPE constantly shifting commissioning dates.
Government sources said TPE kept shifting the dates even during a meeting its director-general S A Topor-Gilka had in Delhi with NTPC executives in September. “In September, TPE gave November 2016, May 2016 and November 2017 as commissioning dates for Units 1, 2 and 3 respectively. In October, they changed the dates to December 2015, June 2016 and January 2017,” an official said.
To break the logjam, NTPC even issued notices for a meeting with executives from TPE and two other companies – TKZ and ZEP – on whose credentials the Russian engineering firm was qualified. This notice too has not evoked any response. An email query sent to TPE did not evoke any response. NTPC wants to complete the job on its own after scrapping TPE’s contract and encashing its bank guarantee of $174 million. According to the contract, NTPC can pay $169 million for supplies and erection and $71 million for price variation. It would then appear that TPE has the money to complete the remaining work, which would require $580 million. Of this, TPE has $328 million from Sberbank.
(Source: The Times of India, November 5, 2014)
NTPC’S FIRST ‘GLOBAL ENERGY TECHNOLOGY SUMMIT’ TO BE HELD ON NOVEMBER 7
NEW DELHI: With emergence of new technologies in power sector, state-run NTPC plans to organise an annual international technical summit – Global Energy Technology Summit – this year onwards.
The first event will be held here on November 7-8, 2014, NTPC said in a statement.
The company said, “The complex business challenges that are being faced by the power sector can prominently be resolved by aggressively adopting the best technologies available today while giving due priority to the emerging technologies leading to their maturity and commercial viability at the soonest.”
The conference will focus on emerging new technologies for facing the future challenges of power industry, ways to tackle scarcity of fossil fuels, water resources, land, environmental challenges and rapid capacity additions.
About 75 international experts actively engaged in technology development from all over the world shall be interacting with about 700 Indian experts and policy makers during the summit, the statement said.
(Source: The Economic Times, November 5, 2014)
TATA POWER INSTALLS 36 BIO-GAS PLANTS IN MUNDRA
AHMEDABAD: As part of its CSR activity, Coastal Gujarat Power Ltd (CGPL), a wholly-owned subsidiary of Tata Power, has installed 36 bio-gas plants across eight villages in Mundra and Mandvi talukas of Kutch district, the company said.
CGPL, which has its Ultra Mega Power Project(UMPP) in Mundra, has undertaken the installation of bio-gas plants under project ‘Annapurna’ in association with Tata Power Community Development Trust ( TPCDT), it said.
Through this initiative, Tata Power aims to promote the use of household bio-gas using cow dung. Being considerably cheaper than the conventional energy sources, the daily input in each Bio-Gas plant is nearly 40 KG which enables cooking for a family of 5 to 6 people.
The total cost of each plant is Rs 26,200, of which Rs 18,000 was invested by Tata Power with Rs 8,200 contributed by the community. Each bio-gas unit has also resulted in monthly savings of nearly Rs 300, which was earlier spent on wood and kerosene, the release said.
The company also claims that these units will assist in protection of the environment as well as health of the villagers as it avoids pollution caused by burning wood. This reduction in pollution further protects the families from future ailments such as asthmatic problems, cataract etc.
Speaking on the initiative, K K Sharma, CEO and ED of CGPL said, “These bio-gas plants equip us with a bouquet of benefits while utilising readily available natural resources, which protects villagers from chronic diseases arising out of burning wood and coal.”
(Source: The Economic Times, November 5, 2014)
SPAIN TO WORK WITH PUNJAB ON RENEWABLE ENERGY, WASTE MANAGEMENT
Spanish Ambassador Gustavo De Aristegui has offered to Punjab in the fields of water treatment, agro and food processing, bio-waste management and renewable energy.
The envoy called on Punjab Chief Minister Sukhbir Singh Badal, offering to seek partnership with the state government on key areas of strategic development through sharing latest technological advancements and expertise especially in the areas of water treatment and renewable energy, an official release said here today.
Aristegui informed Badal that he would lead a high powered delegation of leading players in the fields to have detailed discussions with the top brass of the state government.
The state-of-art solid waste management prevalent in the Spanish towns of Barcelona and Madrid, might be replicated in the major towns of the state, the release said.
Aristegui also offered to render expertise in food technology and agro processing sector to ensure remunerative returns to the farmers for their produce after its value addition.
Deputy Chief Minister Sukhbir Singh Badal is expected to lead a delegation to Barcelona later this month for attending the smart city expo 2014.
Responding to the offer being put forward by Spain, the Chief Minister has sought to work out an inbuilt mechanism between both the places so that the discussions are implemented at the earliest.
Principal Secretary S K Sandhu has been deputed to chalk out the details of the meetings to be held with the visiting delegation of the industrialists from Spain in the mid of December.
(Source: The Economic Times, November 5, 2014)
IPCC’S REPORT ON CLIMATE CHANGE BRINGS AN OPPORTUNITY AND CHALLENGE FOR INDIA
NEW DELHI: India’s quest for high growth and efforts to ensure development and access to energy for its people has found recognition in the latest report of the United Nations-backed Intergovernmental Panel on Climate Change, or IPCC.
The synthesis report of IPCC’s fifth assessment report (AR5) released on Sunday stresses that every effort to ensure that global temperatures do not rise by dangerous levels of 3oC-4oC would require “substantial emission reductions over the next few decades and near zero emissions of carbon dioxide and other long-lived greenhouse gases by the end of the century”.
The report also makes it clear that simply adapting to climate change is not enough; more needs to be done globally to reduce emissions. “There are certain limits that adaptation can cope with” said Purnamita Dasgupta, coordinating lead author of the AR5 Working Group II, adding that “emissions are driven by population size, economic activity, lifestyle, energy use, land-use patterns, and technology and climate policy. There are multiple ways in which adaptation and mitigation responses can be designed to improve climate resilience for sustainable development.”
The synthesis report, which distils and integrates the three Working Group reports, and two special reports of the IPCC, highlights that there are measures and opportunities that link emission reduction, adapting to climate change and sustainable development. “Humans have been dealing with and adapting to climate issues in past with traditional methods.
The important thing to remember is while you can build on that experience that is not going to be adequate, because, the extent of climate change and its impacts are progressively becoming more serious and what we have come up with as the roadmap of future involves taking an adaptation measure as part of development strategy,” IPCC chairman RK Pachauri said.
For India, which like many other developing countries, has consistently maintained that its development imperatives determine its climate policies, the report provides a solution that allows it to meet its development goals in a manner that is not inimical addressing climate change. It presents India with both an opportunity and a challenge.
“The IPCC synthesis report suggests a way of thinking about climate change that is deeply relevant to India,” said Navroz Dubash, a lead author of AR5. “There is a complex two-way relationship between sustainable development and climate change: climate policies should support sustainable development. India has to increasingly internalise climate considerations into development planning,” he said.
(Source: The Economic Times, November 5, 2014)
COAL BLOCK AUCTIONING TO START WITHOUT REGULATOR
NEW DELHI: As the government plans to expedite coal block reallocation to the private sector through auctioning, it appears in no hurry to set up a regulator for the sector. Not only does the Coal Mines (Special Provisions) Ordinance skip the issue, government officials say for 74 producing blocks that would be put up for e–auction by December, a regulator is not required.
“The coal blocks which would be put for e-auction are all for end-usage in power, cement and iron production. It is the commercial mining by private companies that needs to be put under vigilance and that would be done later, after the first batch of auction commences,” said a senior official.
Valuation of coal reserves and assets in these 74 blocks would be done by a committee under Pratyush Sinha, former chief vigilance commissioner .
The Supreme Court had cancelled 204 coal blocks saying their allocation was “illegal” and “unconstitutional”. The government has thereafter promulgated an ordinance for the reauction. The transparent process in December would start with a pool of 42 operational mines and 32 nearing production, for end-use in the power, cement and iron and steel sectors. Through the ordinance, the government has added enabling provisions in the Coal Mines (Nationalisation) (CMN) Act, 1973, and the Mines and Minerals (Development and Regulation) Act, 1957, for allowing commercial mining.
While the previous UPA government through a gazette notification in February 2014 did notify setting up of a coal regulator, no further follow up was done in the matter.
The role of the regulatory body under the Coal Regulatory Authority (CRA) Bill of 2013 was to look into pricing of coal on a cost—plus basis. Officials said it’s unlikely that the CRA Bill would be placed in the winter session of Parliament. “The priority is to make available coal to the sectors in want of fuel. Undoubtedly, once the sector opens up, a regulator would be needed,” said a government official.
The UPA government had through an executive order notified setting up of a coal regulator earlier this year but the new body remains un-operational with not even appointments to it being made.
(Source: Business Standard, November 5, 2014)
JSPL SEEKS COAL ORDER REVIEW, CLARITY ON FINES
NEW DELHI: Jindal Steel and Power (JSPL) on Tuesday said it has filed a review petition in the Supreme Court against the coal block cancellation order and added the petition also seeks clarity on the penalty of Rs 295 per metric tonne levied on miners.
JSPL has not adjusted the penalty levied by the Supreme Court in the Q2 results as it could not ascertain the amount and will do so after a decision on its review petition. The court in its order had directed the companies to pay for the coal extracted from their mines.
“The Supreme Court order on penalty is subject to interpretation and we don’t know if it’s based on coal extracted or coal used,” said JSPL Group CFO K Rajagopal, adding the company believes the amount payable as penalty will be less than Rs 3,000 crore suggested by analysts based on amount of coal mined from blocks allocated to the firm.
Brushing aside reservation on the absence of right of first refusal (RoFR) in the Ordinance promulgated recently by the government, Rajagopal said that bidding companies are not likely to bid for mines previously owned by others and added it does not see a situation where bids would be exorbitantly high due to competition among bidders for a particular mine.
The company also sees the Ordinance allowing companies to swap coal from different mines as an enabling provision but said the practical implementation will have to be ascertained on case-to-case basis. The Naveen Jindal-owned steel and power company also said it would wait for detailed auction rules and a decision on its review petition by the Supreme Court before arriving at an estimate on resources needed to participate in the coal block auction process.
(Source: The Financial Express, November 5, 2014)
