NEW DELHI: In a big push to 31,000-MW of electricity generation plants stranded without fuel, the power ministry has proposed a Rs 5,700 crore subsidy to help operationalise idle gas-based capacity, a loan restructuring scheme for such plants and the supply of coal to projects that will be commissioned before March 2015.
The proposals will benefit 24,148 MW of gas-based projects and 7,230 MW of plants that run on coal, set up at a total investment of about Rs 1,50,000 crore.
An additional 10,930 MW of coal-based plants that will be commissioned before March are also likely to gain. The ministry will approach the Union cabinet with a proposal to pool prices of imported gas and coal with domestic fuels to help stranded thermal projects.
It seeks to pool imported and domestic gas for supply to about 10,000 MW of projects and subsidise the state distribution companies that buy power from them to keep electricity tariffs at Rs 5 per unit in this financial year and Rs 5.5 per unit in 2015-16, a senior power ministry official said.
Power ministry mulls Rs 5,700 crore subsidy for operationalising gas-based idle power capacity
“The estimated subsidy to be borne by the government would be about Rs 3,621 crore in 2014-15 and Rs 2,056 crore in 2015-16… The total subsidy during 2014-16 works out to be Rs 5,677 crore,” he said.
The imported gas price pooling was initially moved as a Rs 28,000 crore subsidy and financial restructuring scheme in October last year. The subsidy component was lowered to Rs 5,677 crore in February this year after the finance ministry shot down the earlier proposal.
Besides, a financial restructuring package seeking relaxation in raising foreign debt, extending the loan repayment period and waiver of interest for underutilised projects has been proposed for 19,000 MW of gasbased projects, including those dependent on supplies from the KG-D6 basin operated by Reliance Industries.
For projects dependent on KG-D6 gas, where output has declined, the ministry has sought priority in allocation of supplies from new finds. It wants plants that have not been allotted gas to be allowed to import gas and generate electricity for direct sale to customers.
In line with the budget announcement of providing coal to all plants getting commissioned by March 2015, the power ministry proposes to ensure 60% of the requirement for projects with a letter of assurance from Coal India and 50% for those that do not have the assurance letters.
The ministry said Coal India can meet the additional requirement through imports, the price of which can be pooled with domestic coal and supplied to new power plants without the long-term fuel supply agreements.
(Source: The Economic Times, July 28, 2014)
COMPENSATORY RATE REGIME UNDER CLOUD
NEW DELHI: On the issue of compensating power producers due to fuel price escalation, the Appellate Tribunal for Electricity (Aptel) might review the rate-setting powers of the Central Electricity Regulatory Commission (CERC).
On July 21, it had upheld the CERC decision of February which allowed the imported coal-based projects of Tata Power and Adani to charge a compensatory addition over the rate for sale of power from the utilities, on account of a rise in the cost of imported fuel.
However, it also questioned on several points whether CERC had any regulatory role in determining rates or any of its components, once a power purchase agreement (PPA) had been signed between a generator and procurer.
The interim order which sought to give financial relief to power producers, said about CERC, “The main question to be considered is whether the Central Commission has a regulatory role in tariff (rate) matters during the tenure of the PPA…also whether the Central Commission was correct in exercising its regulatory role…”
“Such statements are becoming a cause of worry for the sector. CERC has cited past orders of Aptel, saying PPAs are subservient to regulations. If Aptel would raise this issue yet again, it then becomes a chicken and egg scenario,” said a partner in a Delhi-based consultancy.
He said the CERC order also mentioned a Supreme Court (SC) ruling in a 2010 suit involving the Commission and Power Trading Corporation, which said if a regulator makes a new regulation, even older PPAs are supposed to come under its ambit.
If implemented, this would be the second instance in two years that a regulatory body would be stripped of its rights in this regard. In 2012, the Delhi High Court, in its ruling on Indraprastha Gas vs Petroleum and Natural Gas Regulatory Board, held the latter had no jurisdiction to fix market rates or regulate those of city gas distributors. An appeal in the matter is pending before the SC.
Under Section 79(1) (b) & (f) of the Electricity Act, 2003, CERC is entitled to regulate the rates of supply of generating companies either owned or controlled by the central government or one privately owned and having entered into a sale agreement for electricity with more than one state.
Tata’s 4,000-Mw ultra mega power plant at Mundra, Jutch, will sell the power generated to utilities in Gujarat, Haryana, Punjab and Maharashtra. Adani, for its 1,980 Mw Mundra-based project, has signed PPAs with two utilities each in Gujarat and Haryana.
Aptel will pronounce its views on the regulatory powers of CERC with the final decision on the matter of a compensatory rate. The next hearing is on August 19.
(Source: Business Standard, July 28, 2014)
INDIA, NEPAL MOVE AHEAD ON POWER TREATY
KATHMANDU: External affairs minister Sushma Swaraj on Sunday described her three-day visit to Nepal as “very successful” during which the two neighbours agreed to finalise the text of a power trade deal and “review and adjust” a crucial treaty of 1950 to reflect the current realities.
“I am highly satisfied with my visit to Nepal and the visit was more successful than expected,” Swaraj said talking briefly to media persons at the Tribhuvan International Airport here. “I had come here with high expectations and aspirations and the visit turned to be much more successful than I had expected earlier,” Swaraj said.
“I have already said that the visit would strengthen Nepal-India relations and we have prepared a full roadmap for the purpose,” she said. Swaraj said both sides removed hurdles and agreed to step up cooperation in a number of key areas.
During her visit, Swaraj met Nepal’s top leaders including president Ram Baran Yadav and prime minister Sushil Koirala.
Swaraj was in Nepal to co-chair the meeting of the Indo-Nepal Joint Commission (JC) which was held after a gap of 23 years and to prepare the ground for the two-day official visit of Prime Minister Narendra Modi.
(Source: The Financial Express, July 28, 2014)
INDIA EXPLORING MERGER OF STATE-OWNED HYDRO PSUs
New Delhi: In what may lead to a major overhaul of India’s hydropower sector, the National Democratic Alliance (NDA) government is exploring the possibility of a merger of all state-owned hydroelectric companies that include NHPC Ltd, THDC India Ltd, SJVN Ltd and North Eastern Electric Power Corp. Ltd (Neepco).
NHPC has been asked to examine the possible merger of all the four hydropower central public sector units (CPSUs) into one in an exercise aimed towards stemming the decreasing share of hydropower in the country’s energy mix. To be sure, there is no immediate proposal before the government.
“The issue was first raised at a presentation made to Piyush Goyal, minister in charge of power, coal, and new and renewable energy, earlier this month,” a government official said, requesting anonymity. “The minister has asked for a concept paper, which has been prepared. A committee has been formed for this ambitious exercise.”
There have been concerns raised about faltering hydropower generation in the country and delays in project execution. India has a power generation capacity of 249,488.31 megawatts (MW), of which 16.3% or 40,730.09MW is hydropower. Hydropower is the ideal solution for meeting peak demand as it is relatively easier to switch on and off, compared with thermal sources.
Goyal declined comment on the matter. Another government official confirmed the possible strategy. “The new government is looking at synergies and best practices across the PSUs (public-sector units) that can be leveraged,” the official said, declining to be named.
The strategy of having a single state-owned hydropower firm stems from the fact that India has been unable to tap its hydropower potential to the desired level. A single entity may help in a concerted effort for developing such generation in the country and will contribute towards developing the strategic projects in Arunachal Pradesh. The plan to be explored could be carried out in a phased manner.
A majority of India’s hydropower projects under construction have been delayed, hampering the government’s bid to increase power generation in order to meet demand and boost economic growth.
“Given that about 70% of all India hydro-based capacity is in north and southern region, utilities in states such as Uttarakhand, Odisha, Karnataka, Himachal Pradesh, Kerala and Meghalaya have a relatively higher dependence on hydropower sourcing, which varies between 20% to 80%,” rating firm Icra Ltd said in a 22 July report.
Hydropower projects bordering China have also acquired a strategic dimension. Of the eight river basins in Arunachal Pradesh, Subansiri, Lohit and Siang are of strategic importance as they are closer to the border with China. Any delay in executing these projects, particularly on the rivers originating in China, will affect India’s strategy of establishing a prior-use claim.
Under international law, a country’s right over natural resources it shares with other nations becomes stronger if it is already putting these resources to use. China has 36 projects on rivers upstream of the Brahmaputra, of which 30 have been completed.
The push for hydropower is also aimed at expanding the electricity user base in the country. India’s per capita power sector consumption, around 800 kilowatt hour, is among the lowest in the world, according to the World Bank. Around 600 million Indians do not have access to electricity and about 700 million Indians use biomass as their primary energy resource for cooking, according to the Planning Commission.
The Bharatiya Janata Party, which leads the new government, had made energy security a part of its poll plank. The Narendra Modi-led government’s energy security plans include harnessing renewable sources such as solar energy, biomass and wind power along with coal, gas, hydropower and nuclear power to bring about an “energy revolution” in the country.
Executing a hydropower project is a time-consuming and tedious process. It includes a thorough survey and investigation, detailed project report preparation, relocation and resettlement of the affected population and infrastructure development.
Developing hydropower will also help reduce dependence on coal, which is in short supply domestically, requiring imports of the mineral to fuel most of India’s power plants.
India, which is dependent on imports to meet its energy demand, has an energy import bill of around $150 billion. This is expected to reach $300 billion by 2030, requiring a $3.6 trillion payout by 2030.
(Source: Mint July 28, 2014)
NTPC BANGLADESH POWER JV TO BE OPERATIONAL BY FY18
KOLKATA: The USD 1.2-billion Indo-Bangla power joint venture is planning to award the contract for construction of the plant by April 2015 and expected to start commercial generation by FY18.
“We expect to award the contract next year. The company has recently appointed Fichtner Consulting Engineers and is in the process of finalising a consultant who will help in sourcing coal for the project,” NTPC Chairman & Managing Director Arup Roy Choudhury said.
The plant is likely to consume around 8 million tonnes of coal every year and the entire generation will be based on coal imported into Bangladesh, he said last evening.
Bangladesh India Friendship Power Company Ltd is a 50:50 joint venture between Bangladesh Power Development Board and NTPC. The first project of this venture is the 1,320 mw Maitree Project at Rampal in Bagerhat district under Khulna Division in Bangladesh.
At the ninth board meeting of the company, held in Kolkata for the first time with Bangladeshi power secretary yesterday, a few pending issues were ironed out before the tenders are invited for setting up the plant.
The land has been provided by Bangaldesh government and NTPC will set up two 660 mw units at the location. NTPC’s expertise will also be used in running the plant.
“Following successful implementation of the project, the joint venture may look into setting up additional projects in the country,” said Monowar Islam, secretary power of Bangladesh government.
At present, Bangladesh faces a total demand of about 7,500 mw. A total 500 mw is sourced from India of which 250 mw is from NTPC, he added.
(Source: The Economic Times, July 28, 2014)
BANGLADESH INDIA FRIENDSHIP POWER COMPANY LTD LIKELY TO AWARD CONSTRUCTION OF 1,320 MEGA WATT PLANT BY APRIL 2015
KOLKATA: The $1.2-billion India-Bangladesh power joint venture is expected to award the contract for construction of a 1,320 MW plant by April 2015 and start commercial generation by December 2018.
This was decided at the ninth board meeting of the Bangladesh India Friendship Power Company Ltd – a 50:50 joint venture between Bangladesh Power Development Board and India’s largest power producer, NTPC – held recently in Kolkata, officials said.
The board members ironed out a few pending issues at the first such meeting held in Kolkata, paving the way for inviting the tenders for setting up the plant, the officials added on condition of anonymity.
“The company has recently appointed Fichtner Consulting Engineers and is in the process of finalising a consultant that will help in sourcing coal for the project,” said NTPC chairman and managing director Arup Roy Choudhury.
(Source: The Economic Times, July 28, 2014)
BHEL SET TO ENTER RETROFIT BUSINESS FOR LACK OF NEW ORDERS
NEW DELHI: Lack of new orders and fall in earnings have pushed BHEL to look for new business opportunities. The PSU has decided to focus on servicing the vast pool of existing power plants using its equipment, rather than wait for new orders for main equipment. It is also expanding its footprint in the renewable energy space to de-risk domestic business operations that is currently dominated by the thermal sector.
“We are seeing the slowdown as an opportunity to strengthen internal processes and explore new avenues for growth. The retrofit market for power project is a ready business waiting to be tapped and we are actively looking at a larger share of this growing area,” said a BHEL senior official.
As per estimates, projects worth over Rs 20,000 crore are waiting to be tapped in the retrofit segment. Most of the 16,000 MW of capacity in the 200-210 MW segment that want renovation has been supplied by BHEL.
As part of the strategy, BHEL has started tapping state power utilities with offers to renovate, modernise and uprate their old and ageing power plants that have outlived their designated economic life of 25 years. The offer includes extending the life of these old plants by another 15-20 years at a less than half the price of putting up a new plant. The company has already completed renovation and uprating projects for Punjab State Power Corporation, and utilities in UP and Maharashtra and are now eying similar projects in other states.
As per estimates, about 70 sets of a total 150 of 200-210 MW rating old power plants in the country immediately need renovation and uprating. This presents a business opportunity to the tune of over Rs 20,000 crore in this category of projects alone. There is also a scope to further expand the business by carrying renovation projects for higher rated projects.
“Our renovation and retrofit services have not only extended the life of projects by two decades, but also uprated their capacity from 100 MW to 110 MW and from 200 MW to 216 MW. In the process, the projects are also upgraded to conform to present day emission norms,” the official quoted earlier said. Business potential for BHEL is huge here as several state utilities are facing financial crunch and are looking at cheapest option to continue generating power.
Apart from the opportunity offered by retrofit market, BHEL is also betting big on the renewable energy sector. The company has already formed a joint venture with Power Grid and Solar Energy Corporation to set up world’s largest 4,000 MW solar power project in Rajasthan and another plant of similar capacity in Gujarat. All the main power equipment for these projects would be supplied by BHEL besides, it is also getting into manufacture of solar wafers used in the manufacture of phovoltaic cells used in solar panels.
(Source: The Financial Express, July 28, 2014)
ANIL AMBANI PIPS GAUTAM ADANI IN RACE FOR JAYPEE’S HYDROELECTRIC PORTFOLIO
NEW DELHI: Anil Ambani-controlled Reliance Power plans to acquire the entire hydroelectricity portfolio of the Jaiprakash Group for about RS 12,000 crore and has signed an initial agreement for India’s biggest deal in the infrastructure sector other than telecom.
Anil Ambani quickly moved in for his first bigticket acquisition, pipping others such as the Adani Group and JSW, to sign an exclusive MoU for taking control of the country’s biggest private portfolio of hydro projects, 1,800 mw, after the Abu Dhabi National Energy Co (Taqa) pulled out of a $1.6-billion deal to buy two of the three hydroelectric power plants of Jaiprakash Power Ventures.
The Taqa deal was called off on Thursday, but stories about its demise had been doing the rounds a few weeks before the formal announcement. Reliance Power, which has so far focused on organic growth, plans to acquire all three plants through its wholly owned subsidiary Reliance CleanGen, which is implementing hydro projects.
Industry sources said that Reliance Power may hold 51% through its subsidiary, while the balance can be held by other investors as was proposed in the Taqa deal.
Anil Ambani pips Gautam Adani in race for Jaypee’s hydroelectric portfolio In the TAQA deal, 49% was split between IDFC, which has significant exposure to the projects, and a Canadian pension fund.
These sources said that SBI Caps would help raise up to Rs 9,000-10,000 crore of debt to fund the acquisition of the hydel power plants that already have a cash flow of about Rs 800 crore a year.
The equity requirement would be about Rs 2,500 crore, of which Reliance Power’s share would be about Rs 1,500 crore. A company source said the company had no plans to raise equity at the Reliance Power level. “If at all, the company may bring in private equity or financial investors at the Reliance CleanGen level, which is acquiring the assets. This (Reliance CleanGen) will own these three assets and has 5,000 Mw under development,” the source said.
The deal will help Reliance Power diversify its portfolio, which currently consists almost entirely of coal, and acquire expertise and experience in implementing its other hydroelectricity projects. It also brings in its fold large projects that are up and running and therefore do not have any implementation and execution risks.
“Reliance CleanGen (RCL), a 100% subsidiary of Reliance Power (part of the Anil Ambani-led Reliance Group), and Jaiprakash Power Ventures (JPVL), a subsidiary of Jaiprakash Associates ( JAL), today announced the signing of an exclusive memorandum of understanding (MOU), for the 100% acquisition by RCL of the entire hydroelectric power portfolio of JPVL,” a company statement said.
“JPVL’s hydroelectric power portfolio has an aggregate capacity of nearly 1,800 Mw, fully in operation, the largest in the private sector in India, and with an asset base of over Rs 10,000 crore. The portfolio comprises … three plants, with an asset life of over 50 years, each using run-of-the-river technology to convert natural water flow to electricity, eliminating the need for a large reservoir,” it said.
ET has reported on the various twists and turns of the Jaypee Group’s attempts to sell hydel power plants. This includes the original deal with TAQA in its edition dated September 9, 2013. We reported the collapse of the TAQA deal and the emergence of other bidders such as Adanis and JSW in our July 25 edition. But over the course of a dramatic weekend, the Anil Ambaniled Reliance Groups outbid the others unless there is yet another twist.
A top executive at one of the power producers that was also negotiating with Jaiprakash Associates for its hydropower assets said: “In view of the present scenario in the sector, one will prefer to play safe when it comes to capital intensive acquisition. Asset acquisition in a sector like power makes sense only if it brings in strategic value for the company. India has enough appetite for power and there will be many opportunities for acquisitions or commissioning greenfield generation projects in the future.”
Adani Power (8,620 Mw) and Tata Power (8,560) are the largest power producers in private sector while Reliance Power that operates power plants with a capacity of 4,525 mw will add one more 660 mw unit at its Sasan ultra mega power project soon. The acquisition of Jaiprakash Associates’ hydro power assets would make Reliance Power one of India’s largest private power companies with 7,800 mw operating capacity by end of current fiscal.
The proposed deal would also make Reliance Power the largest producer of hydroelectric power in the private sector in India. It will also help Jaiprakash Associates cut its debt. “JAL intends to utilise the entire proceeds of the proposed transaction to reduce its outstanding debt, and thereby deleverage its consolidated balance sheet,” the statement said.
(Source: The Economic Times, July 28, 2014)
HOW ANIL AMBANI PIPPED ADANI TO SEAL JAYPEE DEAL
Anil Ambani, who pipped Adani and others to bag the hydel power assets of the Jaypee Group, got into the act on Thursday after TAQA, the Abu-Dhabi based utility, announced it was pulling out.
Later that evening, senior officials of the group, led by Ambani’s trusted aide Amitabh Jhunjhunwala and son Jai Anmol, flew down to New Delhi and met the Jaypee top brass at the Taj Chambers to discuss a possible deal.
From that point, the Anil Ambani-led Reliance Group emerged as a serious contender. However, it was only over the weekend that the Anil Ambani-led Reliance group moved into pole position.
“Work went on well past midnight on Saturday as a lot of small details had to be thrashed out and an announcement had to be made at the earliest,” said a person aware of the discussions. SBI Caps, the investment banking arm of the country’s largest lender, was the advisor to the deal.
On Sunday, the negotiations continued in Mumbai with Gaur travelling to the financial capital. By late afternoon both parties agreed to shake hands and sign on the MoU documents, valid for the next eight weeks.
Gaur even met Ambani’s mother Kokilaben at her residence and sought blessings. Anil Ambani and Manoj Gaur met only on Sunday though they had talked on the phone a few times.
Interestingly, Ambani has been using JP’s chopper from Dehradun everytime he visits Kedarnath and Badrinath in the last ten years. A few months back when Reliance Group officials had sent feelers to Jaypee Group for a merger between RPower and Jaiprakash Power Ventures, the later had rebuffed the offer, said people directly involved in the negotiations.
A proposal by Sajjan Jindal for a similar merger was rebuffed as the Jaypee Group is in need of cash to deleverage its balance sheet and not stock. The Adanis were still having discussions with Gaur family, the promoters of the diversified Jaypee Group, as late as this Saturday, to acquire the same three hydro assets.
Sources say on Friday Gautam Adani met Manoj Gaur and discussed several aspects of the deal over two and a half hours. His son Karan too is believed to have been present. Another round of discussions between the two parties took place on Saturday.
So what went wrong for Adani in this dramatic thriller? For starters, the valuation. The Ambani offer at Rs 12,300 crore EV was a little better than Rs 11,700 crore that Adani had offered. One of the sources privy to the discussions said Adanis also had brought in some clauses — notably a Rs 700-crore break away fee if the deal does not materialise — which seems to have upset their negotiations. “The Adani discussions were continuing till Saturday.
It became touch and go over the weekend. Their insistence on the break- up fee did not go down well with the Gaurs,” said an official involved in the discussion. Also, say some people involved in the deal, the Adanis seemed to indicate that they wielded considerable influence in the new dispensation, which is said not to have gone down well with the Gaurs.
An Adani spokesperson was not available for comment.
(Source: The Economic Times, July 28, 2014)
DISCOMS TO CHALLENGE APTEL ORDER ON ADANI POWER, TATA POWER
NEW DELHI: Electricity distribution companies of states like Gujarat and Maharashtra are likely to appeal against sector tribunal’s order allowing power producers to recover increased imported fuel cost from March 2013.
State discoms of Gujarat, Haryana, Maharashtra, Punjab and Rajasthan are like to move the Supreme Court in next few days against the APTEL’s interim order of July 21, government and industry sources said.
Prior to APTEL, the CERC had allowed Tata Power and Adani Power to charge compensatory tariff from procurers with whom they have signed PPAs.
The Appellate Tribunal for Electricity (APTEL) had on July 21 allowed Tata Power and Adani Power to recover power dues from March 2013 on account of rise in imported fuel cost.
However, the Tribunal said the companies will not recover any pre-March 2013 arrears. The ruling would provide a cushion to the companies against escalation in cost of imported coal for the plant.
According to an estimate, pre-March, 2013 dues for Tata Power’s 4,000 megawatt Mundra Plant in Gujarat stand at Rs 330 crore, while the same for Adani’s 1,980-MW Mundra project in Gujarat is Rs 830 crore.
After March 2013, Tata Mundra UMPP will be awarded compensatory tariff at 52 paise per unit, which will fetch the company Rs 25,000 crore over the remaining life of the plant.
In the case of Adani’s Mundra project, the power company will get compensatory tariff at 41 paise unit, a move that will give it Rs 18,500 crore over the remaining life of the project.
These firms had sought relief on account of adverse impact of the unforeseen, uncontrollable and unprecedented escalation in the imported coal price.
In April last year, Central Electricity Regulatory Commission (CERC) said in its orders that Adani Power should be granted compensation packages for their projects.
Besides, the regulator, in a separate order, allowed Tata Power to increase tariff from its 4,000-MW ultra mega power project at Mundra.
The Commission had asked the states which buy electricity from Tata Power’s Mundra plant to form an expert panel to decide on compensating the firm for higher cost of coal imports from Indonesia.
Also, Reliance Power has filed petitions with CERC for compensatory tariff on various accounts for its three UMPPs — Sasan, Tilayia and Krishnapatnam.
(Source: The Economic Times, July 28, 2014)
RELIANCE POWER SUBMITS INFORMATION ON SASAN EXPANSION TO EAC
NEW DELHI: Reliance Power has submitted additional information on expansion of coal mining for its Sasan power project in Madhya Pradesh for obtaining environment clearance.
In its June 27 meeting to consider proposal for Moher and Moher Amlori coal mine capacity expansion, the Expert Appraisal Committee (EAC) had sought additional information from the company.
Reliance Power has submitted the requisite information sought by EAC, a source said.
EAC had sought additional information by July 2. A company source confirmed that the additional information sought by EAC has been submitted within the deadline by Reliance Power.
The proposal was for expansion of production capacity at Moher coal mine from 12 million tonnes per annum (MTPA) to 15 MTPA and that at Moher Amlori mine from 16 MTPA to 20 MTPA to feed the ultra-mega Sasan power project.
The EAC “after detailed deliberations, sought information for further consideration of the project,” minutes of the June 27 meeting stated.
It asked Reliance Power to submit details of land use pattern covering total project area; total mining lease area; total forest land; total forest clearance obtained and balance forest clearance awaited in a tabulated form.
Reliance Power had in September 2012 started mining for coal for the 4,000 MW Sasan project.
(Source: The Economic Times, July 28, 2014)
ANDHRA PRADESH CAN EMERGE AS A SOLAR HUB: PIYUSH GOYAL
HYDERABAD: Andhra Pradesh could emerge as a hub in solar power generation in the near future with the pro-active approach of the state government, Union Power Minister Piyush Goyal said here today.
“I think, on solar power generation in your state, some fresh thinking and new ideas have been brought to the table today. I am fairly confident and very soon in the days to come, Andhra Pradesh will become a solar hub.
“I am confident that with the pro-active approach that I have found with Chandrababu garu (Chief Minister N Chandrababu Naidu) over the last few months, I am quite sure that in very near future, I can see Andhra Pradesh becoming a power-surplus state,” Goyal told reporters here after emerging from a meeting he had with Naidu.
The TDP government in the state has been laying emphasis on the power sector to ensure uninterrupted power supply, especially domestic consumers. Replying to a query, Goyal said that a committee has been set up to go into the contentious issues between Telangana and Andhra Pradesh on power sharing.
“A committee has been constituted with representatives of both states. I am hoping to receive that report in 15 days. Once that report is with me, we will take appropriate action to resolve any disputes. I think both states should work together in a spirit of cooperation and co-existence. I see no dichotomy in satisfying the power needs of both the states,” he said.
(Source: The Economic Times, July 28, 2014)
CHENNAI ANGELS BACKS FOURTH PARTNER ENERGY
The Chennai Angels (TCA) last week announced an investment in Fourth Partner Energy, a Hyderabad-based company focused on distributed solar power. This round of investment was led by TCA investor members, Shankar V, Kayar Raghavan and Narayanan R. The details were not disclosed.
Fourth Partner Energy was founded in 2010 by Vivek Subramanian, Saif Dhorajiwala and Vikas Saluguti. The company has completed 300 solar installations across the country and provides end-to-end solutions including design, turnkey execution, servicing and financial structuring of captive solar assets. It aims to finance, build, develop and manage a large operating portfolio of de-centralised solar power assets in India by positioning itself as full-services renewable energy services company. “We are convinced that the distributed power segment will see explosive growth over the next few years. This disruptive application will call for financial engineering and execution skills, both of which 4PEL possesses in abundance,” said Narayanan.
US-based digital publishing company Scroll Media Inc, which runs a digital daily under the name Scroll.in, has raised an undisclosed amount from Omidyar Network, the philanthropic VC firm set up by eBay founder Pierre Omidyar, with participation from New York-based Media Development Investment Fund, reports VC Circle.
Bangalore and US-based app development startup Appdra Software Solutions has raised $1.5 million in a Series-A round of funding through US-based crowd-funding platform Becovillage, reports VCCircle. The investors who participated in this round include John Harris, founder of International Barter-Business, a consulting and intermediary firm that evaluates, analyses, models and restructures financial projects to raise capital for its clients.
(Source: Business Standard July 28, 2014)
GOVERNMENT REVIVES TALKS ON SURPLUS COAL POLICY THAT BARS EXCESS PRODUCTION BY CAPTIVE MINE OWNERS
NEW DELHI: The coal ministry has begun consultations with other wings of the government on a contentious policy that bars excess production by owners of captive mines, two-and-a-half years after the proposal was shelved by the office of then Prime Minister Manmohan Singh.
Coal Minister Piyush Goyal consented to circulate the draft of the surplus coal policy without any changes in the previous form, a ministry official said. The policy was approved by then Coal Minister Sriprakash Jaiswal in December 2011 and made public on the ministry’s website.
But it was put in abeyance by the PMO in January 2012 for further inter-ministerial consultations. The policy has been hanging in balance ever since despite the coal ministry’s efforts to get it through.
“We have not made any changes in the draft surplus-coal policy. The policy mandates that any excess production from captive mines due to unforeseen circumstances should be sold to Coal India Ltd at a price lower than production cost,” the coal ministry official said.
Power producers and the Planning Commission have been demanding the government to allow captive miners to sell excess production to Coal India at the price the state-run miner sells similar grades of the dry fuel.
This, according to the coal ministry, is illegal as the Coal Mines Nationalisation Act 1973 doesn’t permit sale of coal by captive miners. The PMO’s intervention in January 2012 followed a tussle between the coal and law ministries in the then Congress-led government over the notification of the policy that is silent on the diversion of excess coal from ultra-mega power projects – projects with at least 4,000 MW of generation capacity.
The law ministry had objected to the policy saying it was in contravention to the government’s stand in the Sasan ultramega power project where promoter Reliance Power was allowed to use excess coal from attached mines in another private project.
The law ministry had advised that the policy may land the government in an embarrassing situation and legal trouble.
The coal ministry, in its reply, had told the law ministry that the directive signed by Jaiswal was final and the latter should limit its advice to the issues raised.
(Source: The Economic Times, July 28, 2014)
ODISHA TO SURVEY IN 80,707 SQ KM AREA FOR TRACES OF GOLD, COAL, GEMSTONE
Bhubaneswar: The Steel and Mines department of the state government is mulling to undertake surveys in 80,707 square kilometer area of northwest and central Odisha to find traces of coal, gold and gemstone.
To carry out the exploration activities, it has sought the assistance of Odisha branch of Geological Survey of India, Steel and Mines minister, Prafull Kumar Mallick said in the assembly.The survey would include Madhupur and Manoharpur block of Jharsuguda district for coal reserves, Giringkela area of Sundergarh for gold traces, Dhenkanal, Kandhamal, Rayagada and Cuttack district for graphite and Kalahandi district for gemstone.
To bear the expenses of the survey, the state government has earmarked a sum of Rs 7.99 crore in the current fiscal, Mallick said.
Among other expenses, the state government would spend Rs 27 crore to strengthen the integrated mines and mineral management system (i3MS), the online service to track mineral movement in the state and improve output capacity of Odisha Mineral Corporation (OMC).
For Steel and Mines department, total budgetary expense has been approved at Rs 79.2 crore for 2014-15.
The state government has estimated a revenue of Rs 6,364 crore from mining sector in the current fiscal. Mining revenue includes royalty, surface rent and VAT charges and stamp duty collected at the time of lease renewal.
Though collection of mining revenue has been hit by frequent restrictions imposed by the state government and the courts, the state hopes to gain major amount from renewal of leases. The Supreme Court has ordered the Odisha government to take steps for renewal of at least 26 mining leases before November this year.
Mallick said, out of 49 companies which have signed agreements with the state government to set up steel plants, seven have gone into production with a combined capacity of 12 million tonne per year.
Total investment in steel sector so far has been Rs 80,000 crore, against the estimated investment of Rs 2,13,969 crore.
In a separate development, the state government informed the house that it would come up with a new Industrial Policy Resolution- IPR, 2014, by the end of this year.
The state government would also complete drafting of a state specific policy on Special Economic Zone and corporate social responsibility (CSR) during current fiscal, said Industries minister, Debi Prasad Mishra.
Besides, the state government would take steps to constantly monitor the progress of investments by private companies and jobs created out of it.
It would also take steps to set up 11 growth centres in different district and a special investment zone at Dhamra, he added.
(Source: Business Standard July 28, 2014)
CIL YET TO INK FUEL SUPPLY DEALS WITH 12 POWER UNITS
NEW DELHI: Coal India (CIL) is yet to enter into fuel supply pacts with 12 power units as issues like change in ownership and extension of coal supplies are still being examined by the government.
“Of the 78,000-MW capacity as on date, CIL has signed 160 FSAs (fuel supply agreements) for a capacity of 73,075 MW. In the remaining 12 cases, some issues related to change of ownership, extension of coal supplies, beyond the period admissible under Tapering Linkage Policy are involved,” said the minutes of meeting dated July 24 of Standing Linkage Committee on Power.
Tapering linkage is short-term fuel linkage provided to those consumers who have been allocated captive coal blocks but which could not be developed on time. The minutes, further said that such issues are being considered separately.
As many as 177 LoAs (letter of assurances) were issued by CIL and its subsidiaries for the power projects to be commissioned in the 11th and 12th Five-Year Plan.
“These LoAs cover a capacity of 1,08,000-MW projects. Of these, CCEA (Cabinet Committee on Economic Affairs) has directed for coal supplies in respect of projects with 78,000 MW capacity,” it said. Accordingly, a presidential directive was issued to CIL.
(Source: The Financial Express, July 28, 2014)
COAL INDIA UNDERMINED BY BASIC EQUIPMENT FLAWS
New Delhi: As Prime Minister Narendra Modi’s government looks to shape up Coal India Ltd for a potential major restructuring, the world’s biggest coal miner still faces basic problems: it does not have enough mechanical shovels, dumpers and explosives.
The new government, which has a 90% stake in the company whose total market value is about $40 billion, is exploring a break up and opening up the sector to foreign investment to boost output and cut imports, sources have said.
But the firm, which accounts for more than 80% of India’s production and employs 350,000, has not met its output target for years, ensuring the country remains the world’s third-largest coal importer despite sitting on huge reserves.
A failure to boost efficiency could threaten long-run plans to spin off some of the seven units of the coal miner, a vital part of the government’s reform strategy.
Two units produced less in the last fiscal year than a year ago, partly due to lack of basic equipment and ageing machinery, power and coal minister Piyush Goyal told parliament this week.
The minister did not provide data but according to a top official at one Coal India unit this issue could be cutting Coal India’s annual output by more than 10%. The official declined to be identified due to its policy on talking to media.
Coal India spokesman Vijay Sagar said it was difficult to assess how much production was affected due to shortages of equipment or explosives. The latter is in short supply mainly due to a restriction on moving chemicals such as ammonium nitrate to prevent it from being misused by extremists.
Nonetheless, resolving equipment issues may be easier to address than other problems such as difficulties pushing through land acquisition, delays in getting environmental clearances and lack of transport facilities.
Coal India produced 462 million tonnes in the last fiscal year, against a target of 482 million.
Experts said a shortage of mechanical shovels and dumpers, used in open cast mining, was partly due to Coal India’s procurement policy that forces it to issue a tender for every big purchase, even for spare parts.
“Shortages of critical spare parts, including dumper tyres, can halt machinery for months, “said Dipesh Dipu, a partner at Jenissi Management Consultants, which advises resource firms.
Coal India’s Sagar said though procurement of big equipment may take time things had improved in the past three years after the appointment of an external monitor to oversee purchases.
In late 2011, some Coal India officials were charged for corruption over equipment tenders, leading to heightened scrutiny of the procurement process.
Coal India’s productivity, in output-per-man each shift, was 4.92 tonnes in 2011-12, below a target of 5.54, according to the last available planning commission figures. The global average is about three times of that.
Productivity in underground mining is less than one tonne. About a tenth of India’s underground output is loaded by workers, according to the planning commission, which has asked for it to be fully mechanised by 2017.
In addition, the number of hours a shovel would run would be around 22 hours a day in the private sector, but just 15 hours in a public sector firm like Coal India, according to experts.
Minister Goyal said there was scope to improve mechanization in underground mining and that Coal India was looking at a consultancy’s recommendations on technology and modernising mines.
KPMG Advisory Services’ recommendations include more detailed planning for mines, using international benchmarking for equipment productivity, refuelling of machinery in the field and improved training of workers.
(Source: Mint July 28, 2014)
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