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HomeIndia TakesPOWER SHORTFALL IN INDIA COMPARATIVELY LOWER DESPITE PAUCITY OF COAL

POWER SHORTFALL IN INDIA COMPARATIVELY LOWER DESPITE PAUCITY OF COAL

egKOLKATA: Power shortage in India remained lower last week than during the corresponding period in previous years even as six out of 10 thermal power plants were running with coal stocks adequate for less than a week. Officials said this must have happened as utilities did not properly report demand or the plants generated additional power only during the peak period when the demand surged.

 

According to data provided by the National Load Despatch Centre, peak power shortage hovered between 3,000 mw and 4,500 mw last week, lower than in previous years, when coal stocks in 60 power plants were not sufficient for even seven days while 30 had stocks that would not last more than four days. Power plants had coal stocks to last just six days on average.

 

Yet, as many as 23 states reported near zero power supply shortfall. The only state that reported substantial shortfall was Uttar Pradesh, which witnessed a shortage of 2,570 mw on Saturday. Total shortfall on that day was 4,434 mw in the state.

 

Officials of NTPC, India’s largest power producer, said they were forced to reduce capacity utilisation of a large number of generating units even as some of the units were shut due to unavailability of coal.

 

According to a senior official involved in managing power flow in the country, the data which is reported is provided by the power utilities that supply electricity to consumers in their licensed areas. On paper, the evening peak period is the time between 8 pm and 8.30 pm when demand touches its highest during a day.

 

However, according to the official, the peak period really starts around 6.30-7 pm and continues till midnight every day, the time during which consumers turn their air-conditioners on after returning from work.

 

Another senior official from Delhi power department said supply shortage is difficult to measure and added that the data showing no supply shortage during peak period could be due to two reasons.

 

“The utilities may be buying extra power to meet the entire demand just during the official peak period of 8 pm to 8.30 pm. Alternatively, they may have decided not to meet a certain volume of demand entirely.

 

This volume, which is not being met, is therefore not being considered demand during the peak period although consumers are forced to live in dark,” said the official, requesting anonymity.

 

A third official from a power utility explained that measuring power demand can be highly subjective. During a heavy storm, power demand theoretically dwindles simply because the consumers are not in a position to draw the power. At the plant, however, demand may be less because utilities in many states did not buy sufficient power to meet the demand.

(Source: The Economic Times, November 4, 2014)

 

UP, TN DISCOMS WORST IN INDIA: CARE STUDY

 

NEW DELHI: Consumers in states like Uttar Pradesh and Tamil Nadu are likely to either see large tariff hikes over the next few years or more power cuts as the electricity sector gets more precarious. For the country as a whole, as a just-concluded study by ratings firm CARE points out, things could get worse once electricity demand picks up along with economic growth.

 

Though the headline numbers show power losses falling from R93,900 crore in FY12 to R71,270 crore in FY14, this does not include large regulatory assets, or dues to power sector companies that the regulator hopes to pay over the next few years by hiking consumer tariffs.

 

According to CARE, these are R 12,450 crore in Uttar Pradesh, R3,940 crore in Haryana and R20,000 crore in Tamil Nadu. In Delhi, not covered by CARE, regulatory assets are over R15,000 crore.

 

CARE rates the power distribution company (discom) in Uttar Pradesh the worst in the country, with the state’s DVVNL (Dakshinanchal Vidyut Vitran Nigam) scoring the lowest at 3.28, and Gujarat’s DJVCL top-scoring at 7.63. Tamil Nadu’s TANGEDCO, also among the worst in the country, does marginally better than DVVNL with 3.79.

 

Madhya Pradesh, the new rising star, finds its discom scoring 5.59 thanks to its biggest reform — like that of Maharashtra and Gujarat — of separating feeders for rural domestic and agricultural customers. As a result, the aggregate technical and commercial (ATC) losses in MP fell from about 50% in FY09 to about 25% in FY13. It helps that the power procurement costs in the state are among the lowest in the country.

 

In contrast, despite more than a decade of reform, the progress in UP is limited, with ATC losses at over 40%, well above the all-India average of 26%. A 40% ATC loss means customers need to be charged 67% more than the cost of purchase, which in UP is already among the highest in the country at around R6 per unit of electricity.

 

What makes this worse is the high level of cross-subsidy — essentially the extra amount charged to industrial and commercial consumers as a proportion of that charged to agricultural users.

 

With this at around 64% for the state (it is as high as 83.5% for UP Power Corporation subsidiary Pashicmanchal Vidyut Vitran Nigam), this means tariffs for lower-paying customers have to be increased brutally, making it politically unviable. The acceptable cross-subsidy level, according to CARE, is 20%. What makes this worse is that in UP, it takes discoms close to a year to recover their dues. Also, as CARE points out, the ATC losses could also be an underestimate due to the high number of unmetered customers. This has gone up from 4.4 million in FY09 to 5.4 million in FY13. In Gujarat, to put this in perspective, the number came down from 6.3 lakh to 4.9 lakh in the same period.

 

For Tamil Nadu, the second-worst state according to CARE, the level of cross subsidy is 77.1%. Despite the Rs 20,000 crore of unpaid dues to discoms, as CARE points out, TANGEDCO did not even ask the state regulatory commission for a tariff hike in FY15, and the commission had to do a suo motu hike. In the last three years, the state’s ATC losses have actually gone up.

(Source: The Financial Express, November 4, 2014)

 

MAKING POWER PROJECTS UNVIABLE

 

On the private players withdrawing from the second stage of auctions for the two upcoming ultra mega power projects (UMPPs) of 4,000 MW in Odisha and Tamil Nadu worth R25,000 crore each, Union power minister Piyush Goyal reportedly said, “It is their choice. I do not dictate what companies do. Bidding is an open forum for everybody to choose.” This has left the public sector company, NTPC, alone in the race. What are the implications of this development?

 

In prior communications with the power ministry, the Association of Power Producers (APP) had raised concerns over the design-build-finance-operate-transfer (DBFOT) model for the UMPPs and warned investments might not be forthcoming.

 

They argued in a recent letter to the minister that the DBFOT model “relegates the developer to the status of a BOT contractor after he has brought in finance, technology and other inputs.” While the intent of the bidding documents was to ensure that the volatility in fuel prices is passed on to the consumer, this has not been implemented in practice owing to the way the norms are formulated. The contracts, they said, attempted to predetermine the fuel pricing trajectory over the full project cycle through price caps.

 

Two years ago the Central Electricity Regulatory Commission (CERC) in its statutory advice to the power ministry had stated that the DBFOT model is suited more for natural monopoly businesses such as road, transport, transmission and distribution of electricity and not for de-licensed businesses such as generation. It was felt that the DBFOT model may not inspire the developer to adopt prudent maintenance towards the end of concession period leading to high degree of deterioration of the plant. This model may also create uncertainty in terms of financing because of the unsecured nature of the assets in the absence of a clear title/ownership of such assets with the bidder. The CERC, therefore, suggested that the document should be designed based on the build-own-operate (BOO) model instead of the DBFOT model, as in the existing standard bidding document.

 

The CERC also observed that in bidding document the concept of an independent engineer has been introduced at various stages of the project. The provision of the appointment of an independent engineer by the “utility”, with such elaborate roles and functions of overseeing/certifying inter alia, the technical parameters of the plant would be tantamount to creating an independent authority not envisaged under the Electricity Act 2003. This may lead to disputes and should ideally be dispensed with. For greater acceptability, it is desirable that both the parties should be jointly involved to undertake measurement and monitoring issues.

 

But going beyond all these details of competitive bidding, what is at stake is the ultimate goal of securing electricity at affordable prices for the consumers. In June and September 2010, the CERC conveyed its advice to the central government that the deadline of January 2011 for completing the transition to procurement of power through tariff-based competitive bidding even from state/central government-owned entities should not be extended except in case of large-sized multi-purpose storage hydro projects and peaking stations. Procurement from private players was already through competitive route.

 

The CERC had undertaken a detailed exercise to verify the finding that the tariffs being discovered through competitive bidding are lower than the cost-plus tariffs. The study has concluded that the computed prices under cost-plus methodology (even after computing the same conservatively) are higher than the levelised tariffs discovered under competitive bidding in respect of 12 out of 14 projects. The differences in the prices, too, are significant.

 

The study drew attention to the fact that the capital cost of the project in cost-plus tariff route is open-ended as there are numerous subsequent “additional capitalisation” which keep on expanding the equity base for allowing return on equity. Further, subsequent unforeseen increase in tariffs in case of cost-plus tariffs is fully passed on to the consumers whereas a sizeable portion of such subsequent increase in tariffs is borne by the suppliers in case of tariff-based competitive bidding because the seller often quotes non-escalable components both in capacity charges and energy charges.

 

The above advice of the CERC came under severe scrutiny when it allowed “compensatory tariff” to two large projects at Mundra. What had changed was acute shortage of coal in a monopolistic domestic market and uncertainty in pricing of “captive” imported coal. It is against this background that new bidding documents had to be introduced to ensure that the volatility in fuel prices is passed on to the consumer to an extent.

 

However, what has happened is that instead of amending the original standard bidding documents to take care of fuel shortage and price volatility, they have been modelled on the line of public-private partnership model for highways. If we persist with such an approach, no investment from private players will take place in power generation in the future. The NTPC will be the only public sector player “successfully bidding” for all projects. It cannot suddenly expand its organisation to construct more than 15,000 MW projects in the next five years. This will defeat the purpose of a national tariff policy to secure power at competitive rates for the consumers.

The author is former chairman, CERC

(Source: The Financial Express, November 4, 2014)

 

POWER SECTOR LOOKS AT SAVING RS 6,000 CRORE IN COAL TRANSPORTATION

 

NEW DELHI: The power sector is heading for a $1 billion, or Rs 6,000 crore, saving in coal transportation cost and earnings of another Rs 3,600 crore by additional generation as the government plans to tweak fuel supply arrangements to ensure that coal from each mine or port is shipped to closest plant.

 

Currently, a lot of imported coal travels deep inside the country while some domestic output is transported to plants on the coast, which inflates the price of electricity.

 

Further, many power companies get fuel from a mine far away even if coal is produced much closer to the plant. The proposed changes would affect nearly half of India’s total power generation capacity. In some cases two plants will simply swap the coal suppliers, while in other cases the supply adjustments would involve many plants.

 

The government had appointed KPMG to assess the benefits of reorganising fuel tie-ups. The global consulting firm has estimated savings in the range of Rs 4,500 crore to Rs 6,000 crore in logistics as the distance between the supplying coal mine and the plant would come down by 27%. It has also estimated that this would lead to additional generation from 3,500-mw of capacity with potential benefit of Rs 3,500 crore, government sources said.

 

The rejig of fuel supply pacts would come as a blessing for the power sector, which is reeling under acute fuel shortage and reluctance of main buyers, the state distribution companies, to buy power that it finds costly. The government has already issued an ordinance to auction coal blocks and has plans to ensure better fuel supply for gas-fired and coal-based plants by blending imported and locally produced fuel. Government officials said increase coal supply is on top of their agenda.

 

Power, Coal and Renewable Energy Minister Piyush Goyal has said in the past that the fact that different companies supplying coal are subsidiaries of Coal India, would help restructure the supply pacts, and this was a reason why the state-run giant was not being split.

 

The KPMG report, submitted to the power ministry, said that the exercise will also decongest the railway network as the average distance travelled by coal will come down to 429 km per tonne from 589 km per tonne and hedge coastal power projects against any interruptions in supply in future.

 

Power companies are incurring huge costs on importing coal and transporting it to plants in hinterlands, while projects on the coast get coal from far-off states. The consultancy has advised the power ministry to bilaterally swap coal supplies of 32 power projects of 45,000-mw capacity while multilateral swaps have been recommended for 95 power stations of 74,000-mw capacity.

 

The proposal would require nod from power companies including private firms, states of Gujarat, Tamil Nadu, Maharashtra, Punjab, Haryana and Rajasthan and electricity regulators.

 

The report points out that most plants of Tamil Nadu’s state electricity utility are close to the coast and even domestic coal is supplied to them by sea route. The consultancy suggested that NTPC can swap its coal imports with domestic tie-ups of the state utility.

 

Similarly, the report observed that power stations of Gujarat State Electricity Corp Ltd (GSECL) receive coal from Coal India despite their proximity to 10 major ports.

 

NTPC can swap the fuel tie-ups with its imports made to meet demand from plants in hinterland due to lower availability of domestic coal.

(Source: The Economic Times, November 4, 2014)

 

THAPAR GROUP MULLS SELLING AVANTHA POWER ASSETS TO REDUCE DEBTS

 

MUMBAI|NEW DELHI: A joint venture between Tata Power, India’s second-biggest private power producer, and ICICI Venture has begun talks to buy out some power assets of Avantha Power as the cashstrapped Thapar Group considers asset sale to reduce its debt.

 

Two people with direct knowledge of the matter said officials from both sides have met to discuss the issue and that the deal is likely to involve the sale of operational power plants.

 

“We had several meetings with the Thapar Group officials for the purchase of the power assets,” one of the two persons quoted above said. “It’s a good asset. But we are yet to sign any term sheet to start due diligence as talks are in early stages,” the person added.

 

Billionaire Gautam Thapar, who has interest in electrical goods, engineering and paper, owns 75% stake in Avantha Power through a privately held family firm Avantha Holding Ltd (AHL). AHL owns 42.4% in listed power equipment company Crompton Greaves and close to 75% in Avantha Power, held directly and through Crompton Greaves.

 

The buyer will have to pay anywhere between Rs 6,000 crore and Rs 7,000 crore to acquire the company with an operational capacity of 1260 mw. Avantha Power has another 1320 mw under various stages of construction.

 

The group has been trying to reduce its debt by selling some assets. Earlier, it hived off the consumer goods business of Crompton Greaves and sold its chemical business to Aditya Birla Chemicals for Rs 133 crore.

 

A Tata Power spokesperson said the company does not have any new information to share. “The company has been on record to say that it continuously looks at various opportunities to maximise shareholder value,” Shalini Singh, head of corporate communication at Tata Power, said in an email.

 

“Avantha group does not comment on market rumours and speculations,” Shravani Dang, vice president & head of corporate communications, Avantha Group, said in an email.

 

Tata Power, which has been seeking to expand capacity through acquisition, has been in talks to team up with ICICI Venture to take over troubled power plants that have been short circuited by regulatory uncertainties, fuel supply disruptions, low demand and high debt, ET had reported on October 10. The plan is to have ICICI Venture responsible for organising both debt and equity funding for these acquisitions while Tata Power will handle the operation and maintenance of these plants.

 

Tata Power, which is present in generation, transmission as well as distribution, will use its expertise to resuscitate troubled power assets Analysts tracking the power sector say the Tata group company has enough financial resources to buy Avantha Power and can reduce risks. “Though Tata Power’s debt-equity ratio is above 2, it still has the ability to acquire a good asset as the Tatas have the wherewithal to raise funds,” says Sanjeev Zarbade, research analyst at Kotak Securities, a local brokerage.

 

“Acquiring a ready-made plant will help company minimise risks. With the power sector poised for a rapid growth, capacity additions will be a good long-term strategy,” he added.

 

The latest development comes after Avantha Power dropped plans to launch an initial public offer to raise funds. The company was originally planning to raise Rs 1000-1500 crore through a public offer, but slowdown and market volatility pushed them to scrap the plan.

 

Big power companies are rushing to snap up assets after a slowdown in infrastructure, heavy debt and regulatory uncertainty resulted in a pile-up of incomplete power plants with inadequate fuel linkages. Banks have refused to lend more money and investors are wary of pumping in more money. Hence, the companies failed to take advantage of a recent bull run in equity markets.

 

On September 25, JSW Energy, owned by billionaire Sajjan Jindal, agreed to purchase three hydropower units of debt-ridden Jaiprakash Power Ventures (JPVL) at an estimated enterprise value of Rs 12,000 crore. The Jaiprakash group owes Rs 65,000 crore to lenders.

 

In August, Adani Power, controlled by billionaire entrepreneur Gautam Adani, acquired Lanco Infratech’s 1,200 MW Udupi power plant in Karnataka for Rs 6,000 crore.

(Source: The Economic Times, November 4, 2014)

 

POWER FIRMS SHOULD WORK FOR AMICABLE SOLUTION: APTEL

 

NEW DELHI: The Appellate Tribunal for Electricity (Aptel) said on Friday that while it will continue hearing the matter related to compensatory tariffs, which involves Tata Power, Adani Power and their procurers, the parties should work on negotiating an amicable solution.

 

State utilities of Gujarat, Haryana, Maharashtra, Punjab and Rajasthan have long-term power purchase agreements with the two producers.

 

They moved Supreme Court against the tribunal’s interim order that partly upheld central electricity regulatory order allowing developers to recover higher cost of fuel from the procurers.

 

The tribunal said that it was hearing the appeal on a day-to-day basis as per the SC’s direction but also suggested the the parties should find an amicable solution. “…The parties namely, Generators and Procurers, in deference to the suggestion of this tribunal expressed their readiness to have the settlement talks to find out the solution without prejudice and to their rights and contentions”, it said. “The parties may report about the progress of the settlement talks within 10 days.”

(Source: The Financial Express, November 4, 2014)

 

JAIPRAKASH POWER SEEKS TARIFF REVISION FOR MORE THAN APPROVED CAPACITY

 

NEW DELHI: In the face of a show-cause notice from the Central Electricity Authority (CEA) over running the Karcham Wangtoo hydel project at more than the approved capacity, Jaiprakash Power Venture (JPVL) has filed a final tariff petition in the Central Electricity Regulatory Commssion (CERC) mentioning the capacity as 1,200 MW while the approved capacity was only 1,000 MW for the project.

 

The CEA had decided to send a show-cause notice to JPVL for violating techno-economic clearance conditions in the Karcham Wangtoo project as the project was running at 20% higher capacity than was approved. CEA is under the process of determining the actual capacity of the concerned hydro project.

 

The petition filed by JPVL for 2014-19 mentions the cost of the project at R6,764 crore. Sources privy to the information told FE that if the CEA pegs the project’s capacity at 1,000 MW, CERC will have to reduce the project cost proportionately by nearly R1,100 crore leading to a lower tariff.

 

The tariff for the Karcham Wangtoo project is determined by CERC on cost-plus basis as it was awarded to JPVL without competitive bidding.

 

Earlier, JSW Energy agreed to buy three operating hydro power plants from JVPL, including the Karcham Wangtoo project, after Jaiprakash Power said its deal to sell its business to Reliance Power had collapsed.

 

In September, CERC had directed JPVL to file a petition for approval of final tariff as per revcised CERC regulation as the producer withdrew its application for fixing provisional tariff for the Himachal Pradesh-based project.

(Source: The Financial Express, November 4, 2014)

 

HINDUJA LIKELY TO DELAY VIZAG POWER PLANT OPERATIONS

 

VISAKHAPATNAM: Hinduja National Power Corporation (HNPC) is likely to delay trial power production from its plant at Palavalasa village near Visakhapatnam by 45-60 days due to the devastation caused by Hudhud cyclone last month, according to a senior company official.

 

The company had planned for trial power production by the end of November, but the cyclone had damaged some of its sheds and properties. As a result, it may reschedule trial operations to January, he told Business Standard.

 

The plant has pooled up large quantities of coal and was ready to start the first unit of 520 Mw on a trial basis. However, now the company was looking for sufficient power supply from the state grid to initiate operations.

 

The plant has a production capacity of 1,040 (520×2) Mw. Once the first unit is commissioned, the second would take another 2-3 months to start production, the official said. According to the power purchase agreement, the entire power is to be supplied for state requirements.

(Source: Business Standard, November 4, 2014)

 

WIND ENERGY SECTOR IN INDIA EXPECTED TO ATTRACT RS 20,000 CRORE OF INVESTMENTS

 

NEW DELHI: India’s sluggish wind energy market is set for a revival following the restoration of a depreciation incentive, which is expected to attract about Rs 20,000 crore of investments next year as companies across sectors add 3,000 MW of capacity powered by this renewable source of energy.

 

The reintroduction of accelerated depreciation (AD), which was withdrawn in 2012, is poised to support equipment manufacturers, including Suzlon Energy Ltd, the country’s largest wind turbine maker, which received 150 MW of orders soon after the benefit was brought back.

 

“Investment of Rs 20,000 crore is expected in the next fiscal year, with 70% coming as debt. Rs 5,000-6,000 crore can come from equity. Keeping the potential of wind energy in mind, it’s still not big money,” Chintan Shah, President (Strategic Business Development) at Suzlon, told ET.

 

Accelerated depreciation allows a higher level of an asset’s value to be written off in the first few years, reducing taxable income. The government proposed reintroducing the benefit in July. Wind power accounts for the biggest chunk of India’s renewable energy capacity. Reinstatement of AD makes wind energy attractive for captive use by companies and some even want to hive it off as a separate business unit due to stable long-term returns.

 

“We’ve been investing in wind energy since 2006 and stopped during 2013-14 when AD was withdrawn. Back in 2006, investment in wind was a taxsaving tool but that’s no more the case. We’re hiving it off into a separate business vertical,” said Sharad Saluja, Director, Sterling Agro Industries, the maker of Nova dairy products.

 

The company, which has plants in Haryana, Madhya Pradesh and Uttar Pradesh, plans to add 20-30 mw each year until 2017, investing about Rs 300 crore, with 13 megawatts already under commissioning, Saluja said. Ayurvedic pharmaceutical firm Shree Baidyanath Ayurved Bhawan is setting up an independent power unit to harness wind power. “We’re investing close to Rs 450 crore towards the addition of 75 MW of wind energy this year. In the long term, we’d like to scale it up to 500 MW,” Baidyanath MD Pranav Sharma told ET. Global consultancy firm KPMG is advising the company for the setting up of Baidyanath Private Power Ltd.

 

Cement behemoth Holcim Group, which owns ACC and Ambuja Cements, plans to invest Rs 120 crore to add 20 MW of wind power to its existing 26.5 MW, which is the combined capacity of both units. Small and medium enterprises, Surat-based zari exporter Sumilon Industries, like are equally enthused and hope to become more efficient by using cheaper clean power.

 

Surat-based zari exporter Sumilon Industries, which meets half of its energy needs through wind power, plans to add 4.2 MW over the next two years to its existing 7.4 MW capacity.

 

“We plan to be a green company in the next five years. Since windmills are expensive, without AD, wind energy is not viable,” said Sumilon Industries Director Nikunj Jariwala.

(Source: The Economic Times, November 4, 2014)

 

CENTRE PLANS 5000 MW SOLAR POWER PRODUCTION IN ODISHA

 

BHUBANESWAR: The Union ministry of new and renewable energy plans to set up 5000 Mw solar power production capacity in Odisha in next three years.

 

“Our focus is now on those states which have not done very well in solar projects. We will be planning for 5000 Mw solar power generation in Odisha in next three years”, said Praveen Saxena, advisor to Union ministry of new and renewable energy on the side-lines of an event here.

 

States like Rajasthan and Gujarat have gone far ahead in developing solar projects.

 

He said, the central government will organize a business meet in February to attract investments worth USD 100 billion to the sector.

 

With prime minister, Narendra Modi taking keen interest in solar projects, India is about to witness a massive scaling up of solar power capacity to 100,000 Mw in next five years. The total installed capacity of solar plants in the country, at present, is pegged at 2780 mw.

 

Saxena said, Odisha would be setting up small hydro projects with combined capacity of 700 to 750 Mw.

 

Under the proposed Small Hydro Power policy, the Union ministry aims to renovate old small hydro projects, bring in private investments and identify new potential for power generation.

 

“We are ready with the technology to produce hydro power from water flowing in the canals”, he added.

(Source: Business Standard, November 4, 2014)

 

GOVT MAY PICK VIVEK BHARDWAJ TO CONDUCT COAL AUCTION

 

KOLKATA: The Union Government may appoint Vivek Bhardwaj, a Joint Secretary in the ministry of coal, as the designated authority for conducting the auction of coal assets.

 

While efforts to contact Bhardwaj remained unsuccessful, sources told BusinessLine that all the correspondences on the preparation for auction are emanating from Bhardwaj’s office.

 

The name of the nominated authority is yet to be finalised. The initial proposal is to create a mini-replica of the Directorate General of Hydrocarbons that will work in close coordination with the Coal Controller’s Organisation and the Directorate General of Mine Safety (DGMS).

 

The Coal Controller reports to the Coal Ministry. It primarily looks into standardisation of coal grades, sampling of coal and acts as dispute redressal authority between the consumer and the producer on grade and size of coal. DGMS, on the other hand, is under the ministry of labour. It is the apex authority in clearing the mine plan and the equipment to be used in such mines. DGMS should also ensure safety in oil and gas fields.

 

Meanwhile, Bhardwaj’s office has started preparation for appointment of a consultant for the auction.

 

The consultant will report directly to the designated authority.

 

The Central Mine Planning and Design Institute will assist both the designated authority as well as the consultant with technical assessment and the intrinsic value of the 74 assets, to be redistributed.

 

The institute is the drilling and mine planning arm of Coal India. The company organised the first ever auction of coal assets early this year. The auction could not be completed due to lukewarm response.

(Source: Business Line, November 4, 2014)

 

CENTRE URGES STATES TO CLEAR MINING APPLICATION BACKLOG

 

BHUBANESWAR: The Centre, urging states to clear the backlog of mining applications, has asked them to grant leases only in notified areas where the first-come-first-serve practice is not applicable. The move is aimed at increasing transparency.

 

Citing the Supreme Court’s views on how natural resources should be allocated—judgments concerning coal blocks, distribution of 2G spectrum and the landmark Sandur Manganese case—the mines ministry wants prior notification to be “the normal or default condition” for mineral bearing areas, whether virgin or previously leased to any party, being granted on lease.

 

Guidelines to granting lease were issued and made effective on October 30, requiring state action “to be unbiased, without favoritism or nepotism, and to be in pursuit of promotion of healthy competition and equitable treatment…” Legal experts welcomed the move.

 

“In all fairness, some state governments have signed MoU’s with companies promising grant of leases, projects have been set up and banks have financed these projects. This should allow the state to open areas and let the best company apply for them,” said Supreme Court advocate Ashok Parija.

 

Senior Supreme Court advocate DLN Rao described applicants to a non-notified area as stand in a vertical queue, whereas for a notified area they stand side by side, allowing for a more transparent decision.

 

Mining or prospecting applications for non-notified areas, or virgin lands, are considered under a firstcome-first-serve basis, under which someone can enjoy a prior, but not necessarily preferential right. “Section 11(5) empowers the state government to grant it to a better candidate by a reasoned order, taking into consideration mining experience and obtaining a prior approval from the central government,” Rao said.

 

When an area is notified, it is open to applicants for a window of 30 days during which all applications made are considered at par. “Notifying the area is definitely a more transparent process, since lease can be granted to the best suited applicant based on parameters mentioned in Sec11(3) of MMDR ACT such as, financial capability, end use and ability to employ technical expertise,” he said.

 

If and when state governments choose not to notify an area before granting it out, they must justify it with “strong and compelling reasons”.

 

Under new guidelines, when areas are reserved in favour of a public sector unit for a joint venture, as Odisha has opted to do for bauxite and hopes to extend it to iron ore, the joint venture partner is to also be selected through a transparent and competitive basis. The mines ministry is also believed to be considering amendments to the MMDR Act to introduce auction of leases of bulk minerals like iron ore and bauxite.

(Source: The Economic Times, November 4, 2014)

 

 

CIL EXCEEDS TARGET 1ST TIME IN 7 MONTHS IN OCT; OUTPUT 40.2 MT

 

NEW DELHI: Coal India Ltd, the world’s largest producer of the fuel, produced 40.20 million tonnes of coal in October, beating its target for the first time in seven months.

 

Coal India, which has been under intense scrutiny for missing output targets during the last few years, had set the target of 39.74 million tonnes for October. It, however, fell short of its production target of 259.85 million tonnes for April-October by 8.9 million tonnes, the company said in a filing to stock exchanges.

 

No reason was given by Coal India Ltd (CIL) for missing the target for April-October period. Coal India has a target of supplying 408 million tonnes of coal to power firms this fiscal. The company’s offtake in October stood at 39.11 million tonnes, against the target of 40.94 million tonnes. Coal India had missed its output target for the fifth consecutive month in September, producing 34.88 million tonnes of coal against the targeted 36.17 million tonnes (MT). In August, the output was 34.54 MT against the target of 35.13 MT.

 

In July, it achieved a production of 33.01 MT (35.86) and in June it was 34.54 MT (36.84). In May, the output was 36.27 MT against 38.46 MT target. Production was 37.51 MT against 37.61 MT in April. Coal and Power Minister Piyush Goyal had earlier asked Coal India to ramp up production from its existing mines. CIL, which accounts for 80 per cent of domestic coal production, missed its output target of 482 million tonnes for 2013-14, producing 462 million tonnes during the period.

 

Production had fallen short of target because of various reasons, including lack of environment clearance to coal mining projects. In 2012-13, the company had produced 452.5 million tonnes of coal, falling short of the 464 MT target.

(Source: Business Standard, November 4, 2014)

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