POWER PRODUCERS NOT IMPORTING COAL EVEN AT DECADE-LOW PRICES

NEW DELHI: Power plants in India are not importing coal despite global prices of the fuel slumping to decade-low levels. Power generating companies are rather operating at lower capacity on domestic coal that is short in supply, as distribution companies (discoms) are not willing to pay for costly power fuelled by imports.

A Mumbai-based trader, who did not wish to be identified, said global prices had fallen to a 10-year low due to weak demand from China that is reducing dependence on imports by encouraging production from own mines.

He said prices of 4,200 kcal/kg thermal coal in international markets were hovering around $36.50 per million tonne as against $52 per million tonne two years ago.

“The demand from Indian buyers is not in proportion to the low prices.

Though there have been tenders seeking imported coal supply, but that have been floated by the regular companies. Ironically, there is no substantial rise in demand even as the coal prices are at almost 10-year low,” the trader said.

Private power producers are abstaining from blending imported coal in their projects as that makes power costlier and is not purchased by cash-strapped discoms.

Last year, the government allowed power producers to recover cost of imported coal from consumers but most state utilities are against buying expensive power.

Power and coal minister Piyush Goyal told Lok Sabha that of the 54 million tonnes coal expected to be imported this year, power firms imported only 17 million tonnes as imports are costlier and are not bought by consumers. Indian power plants can accommodate only up to 15% of imported coal that has to be blended with domestic coal.

Association of Power Producers director general Ashok Khurana said state power discoms are not purchasing power as there is no demand from the high-paying consumers like industrial and commercial units.

“Blending imported coal makes power costlier, especially in northern and central regions that are away from the coasts. Indian thermal power plants are operating at 65% of their capacity since there is low demand from industries that subsidise low-cost supply to agriculture and retail consumers,” he said.

Another coal trader said Indian buyers were not signing any coalsupply deals as most of them are expecting further drop in prices of thermal coal. Demand for coal is also low due to favorable weather conditions that reduce demand for electricity, he said.

Only state-run power companies are floating tenders seeking imported coal supply. NTPC has just floated a six million tonne tender of its import target of 14 million tonnes for this year. Power generating utilities of Tamil Nadu and Maharashtra have sought around 4 million tonnes each.

(Source: The Economic Times, July 25, 2014)

GOVT MAY RETAIN BAWANA SHARE

NEW DELHI: Delhi Electricity Regulatory Commission’s (DERC) proposal to surrender Delhi’s share from the 1,500-MW Pragati Phase III power plant in Bawana is not likely to be favoured by the government. According to sources, during initial discussions in Delhi government’s power department, the proposal made by the regulator was shot down. DERC had suggested surrendering this power to other states as the capital was currently self-sufficient in power supply and Bawana was too expensive for the discoms.

Sources said there was a strong view in the department of power than surrendering Delhi’s share would go against the interests of the city. “Because the Bawana plant is situated within Delhi, connectivity to the capital’s transformer lines and grid stations would be much better than that of the NTPC plants. It would always be in Delhi’s control. One can switch the plant on and off as per our needs and requirement, unlike a central sector plant for which Delhi would have to send a request and wait for action,” said a senior official.

Probably, the most important factor that the Delhi government needs to consider before consenting to surrender Bawana’s power is the capital’s islanding scheme. The scheme was put into effect last year after two instances of Grid collapse in July 2012. Initially, Delhi’s critical requirement of 930MW will be islanded if there is another such incident; further, the islanding will be extended to 3,400MW.

Four islands have been created in the scheme: Dadri-Jajjhar-Pragati (part); Bawana; Badarpur plant-Pragati and Rithala. “The Bawana plant is critical for Delhi’s islanding. Without it, the scheme might not be able to take off. So this factor has to be considered before any view is taken on surrendering power from Bawana,” said a senior official.

The department is also worried that the rate at which Delhi’s power demand is growing, the city might need power from Bawana next year or thereafter. There have instances in the past where states have surrendered power from designated power plants only to have an acute electricity shortage the following year. “In some instances, the states which have gained the surrendered power refused to give it back,” said a source.

Officials said currently the city had sufficient power but there was no knowing what the future had in store. The Centre recently agreed to a proposal to surrender Delhi’s 50% share from the 1,500MW Aravalli super thermal power plant but officials said it was only for a year. “Had the surrender been for more than a year, the department of power might not have agreed,” said the source.

(Source: The Times of India, July 25, 2014)

NAVABHARAT POWER SOLD WITHOUT ATTRIBUTING VALUE TO COAL BLOCK: CBI

HYDERABAD: The CBI chargesheet stated allocation of coal blocks had enhanced the share value of NPPL and its promoters got a windfall gain of more than Rs 200 crore when the company was sold to Essar Power

Hyderabad-based listed company Nava Bharat Ventures Limited (NBVL) on Thursday stated Navabharat Power Private Limited (NPPL) was sold to Essar Power Limited (EPL) for a consideration of Rs 169 crore “without attributing any value to the shared coal block.”

Nava Bharat Projects Limited, a subsidiary of NBVL, had held 50 per cent equity stake in NPPL , a joint venture (JV) coal company, along with Malaxmi group, another Hyderabad-based company.

The Central Bureau of Investigation (CBI) had chargesheeted NPPL and its directors P Trivikrama Rao and Y Harish Chandra Prasad for allegedly entering “into a conspiracy with unknown officials of ministry and got allocated coal blocks.” The chargesheet stated that allocation of coal blocks had enhanced the share value of NPPL and its promoters got a windfall gain of more than Rs 200 crore when the company was sold to EPL.

On Wednesday, the ED, which also probed the case, provisionally attached properties worth Rs 186.11 crore belonging to NPPL and its promoters.

Following this, NBVL stated on Thursday that “no material progress could be achieved as the coal block was fraught with intractable legal issues like over lapped mine area, forestry clearance etc and even prospecting licence was not made available. No economic value could thus accrue on this coal block.”

The company stated in a press release that it had to exit from NPPL “owing to certain corporate differences and owing to the JV partner entering into prior financing and controlling understanding with Essar Power Limited for its share.”

According to NBVL, its subsidiary’s 50 per cent equity stake of power project under development “with several key milestones was agreed to be sold to EPL for a consideration of Rs 169 crore without attributing any value to the shared coal block.”

The company said its subsidiaries, the properties of which were attach by the Enforcement Directorate (ED), “are confident of obtaining appropriate reliefs from the competent authorities and courts and be exonerated of all the alleged offences soon.”

(Source: Business Standard, July 25, 2014)

HC ADJOURNS HEARING ON NTPC-CERC TARIFF NORM DISPUTE TO AUGUST 28

The Delhi High Court on Thursday adjourned the plea filed by NTPC challenging the new tariff regulations issued by the Central Electricity Regulatory Commission (CERC) for FY15-19 to August 28. Meanwhile, both parties have been directed to complete their replies before the court.

Recently on July 14, the Central Electricity Regulatory Commission (CERC) delivered a setback to NTPC by refusing to make any changes in the newly promulgated tariff regulations. While retaining the base return on equity (RoE) at 15.5% and the additional RoE at 0.5% for timely completion of projects, CERC had shifted the basis for incentives from the plant load factor (PLF) to the plant availability factor (PAF).

In March this year, the state-owned power generating company approached the Delhi High Court asking for the rules to be altered since it believed they would hurt its financials and the HC had, in turn, asked CERC to re-examine the tariff norms.

CERC’s view is understood to be that NTPC’s profit margin compared to the previous tariff regulations may be reduced, adding that this could be made up by operating plants efficiently.

(Source: The Financial Express, July 25, 2014)

POWER PROJECTS WORTH RS 36,000 CR LEFT STRANDED

NEW DELHI: Power projects worth over Rs 36,000 crore and having total generation capacity of 7,230 MW are stranded due to shortage of coal, the government said on Thursday.

Efforts are being made for supplying adequate coal to power projects, the government also said.

‘As far as coal-based thermal power plants are concerned, a capacity of 7,230 MW is already commissioned but have no coal supply.’

‘Considering an indicative cost of Rs 5 crore per MW, an investment of about Rs 36,150 crore has been made in the execution of these projects,’ Minister of State for Power Piyush Goyal said in the Lok Sabha.

The 7,230 MW capacity is spread across 12 projects. In a written reply, Goyal, who also holds the portfolios of Coal as well as New and Renewable Energy, said generation capacity of 42,480 MW commissioned after 2009 is presently entitled to only 65 per cent of their letter of assurance (LoA) commitment. With regard to gas-based capacity, about 5,349 MW is ready for commissioning and is awaiting gas allocation.

‘An installed and commissioned capacity of 24,149 MW is running at a very low average of 23 per cent PLF (plant load factor),’ the minister said. To address the issue of coal shortages, the Power Ministry has initiated certain steps including issuance of advisory to import the fuel.

As per the advisory, the cost of imported coal would be made a pass through on case to case basis by regulators to the extent of shortfall in the quantity indicated in the LoA or fuel supply agreement (FSA). Goyal said the government is ‘making efforts to make adequate fuel available for power generation through coal companies’. To another query, Goyal admitted that gas-based power plants have been generating only 50 per cent of their installed capacity during the last few years.

‘The main reasons for low generation is insufficient gas availability from Krishna Godavari Dhirubhai-6 (KG D-6) basin.

‘Gas-based generating station can also run on regasified liquefied natural gas (RLNG). However, the imported cost of RLNG would render the final cost of power generated so high that it will be difficult to schedule the same for sale,’ the minister said.

To increase gas availability for power plants, the Ministry of Petroleum and Natural Gas has taken various steps. The steps include issuing guidelines on ‘clubbing/ diversion of gas between power plants of same owner with the intent to serve the largest public interest so that the available gas can be used more efficiently in order to improve the PLF with corresponding increase in electricity generation’.

(Source: Millennium Post, July 25, 2014)

BHEL MODERNISES UNIT 4 OF GURU NANAK DEV PLANT

NEW DELHI: Bharat Heavy Electricals Ltd (Bhel ) has achieved a landmark in its After-Market-Service business by successfully renovating, modernising and uprating its 110 MW unit-4 at Guru Nanak Dev Thermal Plant of Punjab State Power Corporation Ltd (PSPCL) at Bathinda. After being successfully run for over 33 years, the unit, originally supplied and commissioned by Bhel itself, was undertaken for renovation & modernization (R&M).

The working life of the machine has been extended by 15-20 years and its capacity uprated to 120 mw from the 110 mw. The unit achieved the uprated capacity of 120 MW on July 23, 2014.

(Source: Millennium Post, July 25, 2014)

JAYPEE POWER PLANTS BIDDING: ADANI SEEN AHEAD OF JSW

MUMBAI: Two domestic majors, the Adani Group and JSW, have emerged as potential bidders for power plants owned by the Delhi-based Jaypee Group, with the former having its nose in front. Multiple sources aware of the discussions said both Gautam Adani and Sajjan Jindal, the promoters of Adani and JSW, respectively, have met the Jaypee Group’s top brass led by Manoj Gaur. Adani is believed to have offered to buy Jaypee’s hydel business in a bid to diversify his portfolio which currently consists almost entirely of thermal plants.

The people cited above said the Adani-Jaypee talks around the hydro projects seem to have progressed more. One of the sources mentioned above added that Adani may make an advance payment as early as Friday to signal his seriousness. An MoU may be signed with the Adani Group for the entire hydro business unit for an enterprise value of Rs11,500-12,000 crore. Adani Power already has 8,580 mw of operational capacity, all of it fired by coal and solar energy.

While the talks with the Indian business groups have been on for a while, they are likely to gather momentum after the Abu Dhabi National Energy Co (Taqa) on Thursday pulled out of a Rs10,500-crore ($1.6-billion) deal to buy two hydro power plants of Jaypee.

merger between the two groups’ power businesses — JSW Energy and Jaiprakash Power Ventures — to create a company with 5,340 mw of operational assets.

If successful, these dialogues could lead to the largest consolidation in India’s power sector, and, depending on how the chips fall, will catapult either the Adani Group or JSW into the position of India’s largest private sector power generator.

Jaypee power plants bidding: Adani seen ahead of JSW”Taqa’s exit has been sudden and unexpected. But in the past 8-10 weeks, several people have approached us for strategic discussions as India Inc is once again feeling upbeat about an economic turnaround. You will acknowledge that all our assets are best-in-class. We are working on a plan B, which we shall announce in the coming days. We are committed to these projects but at the same time we are firm on reducing our group debt from the current levels,” Manoj Gaur, executive chairman of the Jaypee Group, told ET.

Gaur added that he may be open to selling either the hydro or thermal business. “We are willing to engage for either thermal or hydro portfolio, but not for both. All our hydro assets are operating. So the focus will be to improve efficiencies and bring down the debt to Rs 45,000 crore this fiscal.” The group had a net debt of over Rs 60,000 crore as on March 31, 2014. Jaypee Power has Rs 29,000 crore of debt, largely on account of its new capacities in UP and Madhya Pradesh which are due to go onstream soon.

The discussions with JSW are still preliminary and therefore more fluid in nature. If a merger of the entire Jaypee power portfolio becomes unwieldy, then JSW may negotiate for three thermal units of Jaypee Power.

Simultaneously, JSW is also in final discussions to buy Lanco’s Udupi power plant. A detailed mail sent to the JSW Group spokesperson did not elicit any response. Top company executives ET reached out to on Thursday declined to respond to what they said were “rumours”. The Adani Group spokesperson was not available for comment.

JSW Energy has a capacity of 3,140 mw with aspirations to scale it up to close to 12,000 mw. Sources said the Sajjan Jindal-led company may find it easier to take over the thermal power projects of Jaiprakash Power as it will help the group add capacity by way of projects with secure fuel supplies. JSW Energy is strategically moving from a merchant power model, where power rates are set on a daily basis, to an electricity supplier that has long-term pacts. By acquiring projects like that of Jaiprakash’s, it will reduce exposure to the shortterm market.

Gaur, however, refused to comment on any specific discussions with either Adani or JSW Group. Power sector analysts say by selling the hydro assets, the Jaypee Group can reduce its net debt by Rs 12,200 crore. But selling the entire power portfolio can bring down the group’s debt by Rs 30,000-32,000 crore in one go.

Jaiprakash Power Ventures (JPVL) — Jaypee’s listed power arm — is currently the country’s largest private sector hydro power producer with 1,700 mw of operational capacity.

In March this year, Taqa signed a pact to acquire Jaypee’s 300 mw Baspa II and 1,000 mw Karcham Wangtoo projects, both on river Sutlej, for Rs 10,500 crore. The deal, which was hailed as the largest FDI in the power sector, came at a time the industry was going through its worst period. Taqa’s sudden pullout comes on the back of reports that the Himachal Pradesh government had raised several objections to the deal. There has also been speculation about Taqa not receiving security clearance.

The Jaypee Group, however, denied any state-level objections. In a filing with BSE, Jaiprakash Power said Taqa was citing a change in its business strategy, and the Abu Dhabi company is liable to pay a break-up fee as per the deal agreement. The JPVL stock reacted sharply following the news and ended the day down 7% at Rs 19.20 per share on BSE, its biggest drop since July 8. The shares have gained 1.3% this year.

“We were to hive off the assets through a court-approved demerger. Whatever commitments we have with the states regarding power purchase agreements and other matters would have got transferred without the slightest change,” Gaur told ET.

FDI up to 100% is allowed in the power sector. In fact, Taqa already has a presence in Himachal Pradesh where it holds a majority stake in a power plant of NCC Ltd. It also operates a 250 mw lignitebased power plant in Tamil Nadu’s Neyveli region and wants to scale it up to 500 mw.

Taqa is 72.5% owned by the Abu Dhabi government and its various agencies. It operates in 11 countries across four continents, including India. Taqa officials, when contacted, declined comment on the reasons for scrapping the deal. Other than these two hydro projects, Jaypee has a 400 mw project in Vishnuprayag, Uttaranchal, which resumed operations in April after being shut down in June last year following flash floods.

The total project cost of the three Jaypee hydro projects is Rs 10,500 crore, which includes Rs 3,100 crore of equity. Interestingly, Taqa had agreed on an enterprise valuation of Rs 10,500 crore, or 1.2 times the book value, for just two of the three projects. JPVL also has a 500 mw operational thermal power unit in Bina built at an estimated cost of Rs 3,200 crore and is adding two more coal-fired units.

(Source: The Economic Times, July 25, 2014)

JSW ENERGY CLOSE TO BUYING LANCO’S UDUPI PLANT

NEW DELHI: JSW Energy is close to acquiring Lanco Infratech’s 1,200 Mw Udupi power plant in a deal worth nearly Rs 6,000 crore, industry sources said. The acquisition would help the Sajjan Jindal-led firm in realising its ambitious expansion plan of having 11,770 Mw power generation capacity against 3,140 Mw at present.

The deal, which is at advanced stages of negotiation, would involve JSW Energy taking over more than Rs 4,000 crore debt associated with the imported coal-fired Udupi plant, they said. When contacted, a JSW Energy spokesperson said, “The company as a policy does not respond to speculative reports or market rumours.”

Lanco Infrateach declined to comment. Faced with challenging business conditions, Lanco has been looking to sell some of its assets including Udupi plant.

The diversified group has started shedding some of its non-core assets. Among others, last year it sold some wind energy assets in Tamil Nadu.

The 2×600 Mw Udupi plant requires around 4 million tonnes imported coal a year and it uses sea water to meet the condenser cooling and other water requirements. The power generated from Udupi Power Plant is evacuated through a dedicated 400 kV transmission line.

(Source: Business Standard, July 25, 2014)

JINDAL POWER SEEKS TO SELL ENTIRE STAKE IN ARUNACHAL HYDRO PROJECT

NEW DELHI: Jindal Power Ltd, a subsidiary of Jindal Steel and Power Ltd (JSPL), is looking to sell its entire stake in the 1,800-MW Kamala hydro electric power project in Arunachal Pradesh.

The company has not officially commented on the exact percentage of equity stake it plans to sell, but resolutions passed by its board – a copy which has been reviewed by BusinessLine – state that the board of directors has approved the sale of its “entire equity share” in the Kamala project.

JSPL has equity interests in three hydroelectric projects, including the Kamala project in Arunachal Pradesh through Jindal Power. The other two are the 3,097-MW Etalin project and the 680-MW Attunli project.

These three ventures, with a combined projected capacity of 6,100 MW, were to be developed by Jindal Power through three separate 74:26 joint ventures with Hydro Power Development Corporation of Arunachal Pradesh Ltd (HPDCAPL).

Earlier, the Arunachal Pradesh Government had decided to scrap a deal that gave JSPL a 49 per cent stake in HPDCAPL. “With respect to the 1,800-MW Kamala project, we have submitted expression of interest to Satluj Jal Vidyut Nigam Ltd (SJVNL),” a JSPL spokesperson told BusinessLine .

SJVNL had sought expressions of interest in April from hydro power developers in Arunachal Pradesh for a partnership or a complete stake sale.

Since it has not heard from SJVNL yet, it has started speaking to other developers to “unlock shareholder value”, the spokesperson added. People close to the development indicated that the valuation of Jindal Power’s stake in the Kamala project won’t be too high as the plant has not been developed yet.

According to the latest annual balance sheet, the company has total borrowings of Rs. 1,307.88 crore as on March 31, 2013.

JSPL had won the Kamala hydro power project in 2009. However, the detailed project report was cleared by the Central Electricity Authority only in December 2013.

Project implementation was further delayed as HPDCAPL could not come up with its share of funding. In all, JSPL had earmarked Rs. 50,000 crore for the three hydro projects in the State.

(Source: Business Line, July 25, 2014)

ABU DHABI’S TAQA PULLS THE PLUG ON $1.6-BILLION JP POWER DEAL

MUMBAI: While Indian companies are drawing up ambitious plans to monetise assets to pare debt on their books at a time foreign investors are keenly eyeing India, not all of these may eventually materialise. In the first casualty to corporate India’s plans to de-leverage itself, the biggest foreign direct investment deal by value announced in 2014 so far has fallen through. The acquisition of Jaiprakash Power Ventures’ two hydropower plants by Abu Dhabi National Energy (TAQA) in March has fallen through.

The deal was expected to fetch Rs 9,689 crore (enterprise value) with which the Jaypee Group intended to reduce debt of around Rs 58,000 crore across the books of its companies. Had the deal gone through, it would have led to a cash inflow of around Rs 3,820 crore into the Jaypee Group and helped bring down debt by Rs 5,869 crore, according to a June 2014 group investor presentation.

“They (TAQA) have… stated that they have been constrained to take the said decision as a result of a change in the business strategy and priorities of the group,” JP Power said in a statement to the bourses on Thursday.

“We may add here that such withdrawal makes TAQA liable to payment of break fee in terms of the said acquisition agreement,” the statement added.

The agreement followed the signing of the UAE-India Bilateral Investment Promotion and Protection Agreement in December 2013 and a commitment made by the UAE to invest $2 billion in India’s infrastructure space.

An email sent to TAQA’s spokesman in Abu Dhabi on Thursday didn’t elicit any response till the time of going to press. He didn’t answer phone calls and messages either.

Jaiprakash Power’s share slumped 7.02% on the BSE on Thursday to close at Rs 19.20. Jaiprakash Associates lost 6.06% to close at Rs 62 per share on the BSE. The bourse’s benchmark Sensex gained 0.48% to close at 26,271.85 points.

In a separate statement issued after market hours, Jaypee Group chairman Manoj Gaur said that TAQA’s decision to withdraw from the deal would not impact his group’s commitment to pare debt to Rs 45,000 crore by March 2015. “We have created valuable assets and we are confident to get investors to help us raise funds in the near future,” Gaur said.

It had been reported in June that the state government of Himachal Pradesh, where both the hydropower assets that were on the block are situated, had some reservations regarding the assets in question and consequently to the proposed deal with TAQA itself. Jaypee’s statement termed TAQA’s decision as unfortunate. “The agreement in March was signed after detailed due diligence by them,” the statement said. “Yet, for some reasons known to them, they have decided to undo the agreement.”

The Jaypee Group has been on an asset-selling spree to improve its cash flows and bring down debt. In September 2013, it sold two of its cement facilities in Gujarat to the Aditya Birla Group’s UltraTech Cement for an enterprise value of Rs 3,800 crore. In May 2013, it sold a 300-acre land parcel in Noida to realty firm Gaursons India for Rs 1,500 crore. In March, it sold a controlling interest in another of its cement plants in Bokaro to the Dalmia Bharat Group for R851 crore.

At the end of FY14, Jaiprakash Associated, the flagship holding company of the Jaypee Group, had a consolidated net debt of around R58,911 crore, excluding proceeds from sale of its cement plans in Gujarat and two hydropower projects.

Jaiprakash Associates’ debt servicing capability would be impacted further with this deal falling through. The company’s Ebit (earnings before interest and tax) to interest ratio deteriorated from 1.2 in FY13 to 0.79 in FY14.

Jaiprakash Associates’ draft offer prospectus for its proposed qualified institutional placement (QIP) of shares through which it aims to raise R1,500 crore also stated under the subhead of risk factors that the firm was currently not compliant with certain financial covenants of its loan agreements. The prospectus was dated July 7.

“The total outstanding principal amount of the loans under which our company is not currently in compliance with all covenants and ratios amounted to R10,079 crore, which constitutes 35.77% of our company’s total principal amount of standalone indebtedness of R28,164 crore,” the prospectus said.

“There is a risk that our lenders may take action to declare us in default of our agreements and accelerate our debt.”

A sector analyst with a Mumbai-based brokerage stated that JP Power may consider alternative avenues to raise funds like a private placement of equity or a QIP to raise funds and repay debt. He declined to be identified as he is not authorised to speak to the media. “It may not be the end of the road for the company as they have generating assets on the ground,” he said.

(Source: The Financial Express, July 25, 2014)

MINISTRY READIES ROAD MAP TO PHASE OUT E-AUCTIONS BY CIL

NEW DELHI: The coal ministry has prepared a road map for phasing out of the lucrative e-auction route for Coal India (CIL), a move that is likely to adversely impact the company’s bottomline and its valuation ahead of a proposed stake sale.

Sources said that CIL has already been directed to reduce quantity of e-auction coal to a mere 26 million tonne in 2014-15, a fall of over 55% from 58 mt it sold under the route last year. The company may need to keep the e-auction of coal at 5% of its total production in subsequent years. Depending on the fuel availability situation, the company could be told to further reduce this quantity with possibility of completing eliminating e-auction of coal once domestic prices are aligned with international prices.

“The intention is that fuel needs of maximum number of power projects are met first before any other route is explored to sell coal,” said an official.

The situation on fuel availability for power projects has already reached critical stage this year. Of the 100 coal-based power plants monitored by Central Electricity Authority (CEA), about 44 plants are currently having critical coal stock of less than seven days, of which 25 power plants are having super critical coal stock of less than four days requirement.

The decision (to reduce CIL e-auction) could result in loss of earnings to the tune of R2,000 crore for CIL in 2014-15.

Depending on the decisions taken in subsequent years, the earnings could see a further fall. Already CIL’s financials are under stress with the company’s witnessing a drop in the last fiscal profit, the first such fall since the global financial crisis of 2008-09.

The move is expected to affect government’s disinvestment programme as a 10% divestment of the government equity in the company is expected to fetch close to R24,000 crore or more than one-third of R63,425 crore pegged from the disinvestment proceeds in this years Budget. With expectation of falling profitability, the company’s valuations can take a hit impacting the share sale issue.

CIL sold close to 58 million tonnes of coal, or 12.5% of its total production of 462 million tonnes, through spot e-auctions in 2013-14.

This helped the company earn revenues to the tune of about R13,000 crore. If the fuel was sold at notified prices, the earnings from the same amount of coal would have been lower by R4,000 crore.

The average price of coal being sold by CIL at notified prices is currently at R1,600 a tonne. While average realisation of e-auction in 2013-14 remained at R2,200 per tonne. The price of e-auction coal last year actually fell from a level of R2,600 per tonne in the previous year.

(Source: The Financial Express, July 25, 2014)

COAL INDIA SUFFERED 50 MT OUPUT LOSS ON DELAYS IN GREEN NOD: GOYAL

NEW DELHI: At a time when country is facing severe coal shortages at its power plants and efforts are on to improve the availability of fuel, India’s largest coal producer Coal India (CIL) has suffered a production loss of 50 million tonne (mt) of coal due to delays in environment clearance and land acquisition.

“A total of 20 coal projects (each) costing R20 crore and above could not be started due to constraints of land acquisition and environmental clearance in CIL /its subsidiary companies,” coal and power minister Piyush Goyal informed the Lok Sabha.

These projects, if implemented, could augment CIL’s annual output by 52 million tonnes, Goyal said.

The projects pertain to various Coal India arms, including CCL, WCL, SECL and ECL. Eight of these stranded projects are in Chattisgarh while seven are in Maharashtra. Three Coal India projects awaiting regulatory clearances are in Jharkhand while one each are housed in West Bengal and Odisha.

CIL is already under pressure to raise production to meet the growing needs of the power sector. The company has missed its output target of 482 million tonnes for 2013-14, reaching a production of 462 million tonnes during the period.

In 2012-13, the company produced 452.5 million tonnes of coal, short of the 464-million-tonne target. CIL’s production target for 2014-15 has been set at 507 million tonnes.

(Source: The Financial Express, July 25, 2014)

CBI FILES FIRS AGAINST TWO MORE FIRMS IN COAL ALLOCATION CASE

NEW DELHI: The Central Bureau of Investigation (CBI) on Thursday filed two more first information reports (FIRs) in the case related to the irregular allocation of coal mines. It filed cases against Vandana Vidhyut Ltd and Domco Smokeless Fuels Pvt. Ltd. While Vandana Vidhyut was allocated the Fatehpur East coal block located in the Mand Raigarh coalfield in the Raigarh district of Chhattisgarh, Domco was allocated the Lalgarh North coal block in Jharkhand. Along with Vandana Vidyut, the FIR also names officials of the 35th screening panel of the government that cleared the allocation, a CBI official said. “The CBI had questioned us 8-10 months back and we had given all the details,” R.V. Mathe, vice-president, commercial, Vandana Vidyut, said over phone from Raipur in Chhattisgarh. Mathe said the firm is developing a 540 megawatts (MW) power plant in the Korba district of the state. Along with Vandana Vidyut, the Fatehpur East block was also allocated to JLD Yavatmal Energy Ltd, R.K.M. Powergen Pvt. Ltd, Visa Power Ltd and Athena Infraprojects Pvt. Ltd (formerly Green infrastructure Pvt. Ltd). In September 2012, CBI registered an FIR against JLD Yavatmal; soon after, it booked Athena Infraprojects. On 21 April this year, the agency closed the case against JLD Yavatmal. “Domco’s directors fraudulently claimed that the company had 142 acres of land to set up a pig iron plant. They misrepresented facts,” the CBI official cited above said. After getting the block, the company’s directors sold some shares at a premium to Electrosteel Castings Ltd, a Kolkata-based company, the official added. Electrosteel Castings has not been named in the FIR. A spokesperson for the company could not be immediately reached for comment. Domco was allocated the Lalgarh North block in July 2005. On 13 September 2012, the coal ministry took back the block from the company. Mint could not reach a company representative for comment. With the latest FIRs, the total number so far filed by the CBI stands at 22. The latest FIRs have been filed on the recommendation of the Central Vigilance Commission (CVC), which has suggested that the CBI file 12 more cases in the matter. On 29 March this year, the Supreme Court (SC), which is monitoring the investigation in the coal block allocation scam, asked the CBI to share the investigation files with CVC. The apex court asked CBI to share with CVC files related to all such cases where there was a difference of opinion between the investigating officer and senior CBI officials on filing a chargesheet or a closure report. CBI is probing allocation of captive coal fields between 1993 and 2010 as part of a court-monitored probe. Coalfield allocations came under the scanner in August 2012 when the Comptroller and Auditor General of India (CAG) submitted a report alleging a notional loss of Rs.1.86 trillion due to wrongful allotments. It also alleged the blocks were awarded in an opaque manner. In a separate development, the CBI official said that last month, the agency initiated a preliminary enquiry against Adani Power Maharashtra Ltd, Adani Power Rajasthan Ltd and Maharashtra Eastern Grid Power Transmission Co. Ltd on a reference from the Directorate of Revenue Intelligence (DRI) for alleged over-invoicing of imports by the three Adani group companies, the official said. “The companies availed various credit facilities for the purpose of procurement of power generation and power transmission equipment, machines for which were imported from South Korea and China,” the official said. The machines were imported via Electrogen Infra FZE, a United Arab Emirates-based company, the official said. An Adani group spokesperson declined to comment. Electrogen Infra officials could not be reached for comment despite repeated attempts. Loans were taken from various public sector banks including State Bank of India, Punjab National Bank, State Bank of Maharashtra, Canara Bank, Oriental Bank of Commerce and Vijaya Bank. The CBI official said, requesting anonymity, that according to DRI, the total over-invoicing between 2011 and 2013 was to the tune of Rs.2,300 crore. The official added that this money was allegedly “siphoned off” abroad. A preliminary enquiry is conducted to find out whether there is merit in registering a case and investigating the matter.

(Source: Mint, July 25, 2014)

COAL INDIA FACES 10 MT PRODUCTION LOSS AS AGITATION CONTINUES

NEW DELHI: Coal India (CIL) faces a production loss of 10 million tonnes of coal in the current financial year as 122 of its employees sacked for indiscipline in Odisha are persisting with their agitation, threatening the closure of some crucial mines.

The agitation, said to have political support, hasn’t ended despite the company’s offer on Monday to reinstate the employees sacked in May for indiscipline. The terminated employees have threatened to go on indefinite protests starting July 25.

The workers were sacked for not vacating land in lieu of which they had been given jobs in Mahanadi Coalfields Ltd (MCL), a subsidiary that contributes about a quarter of Coal India’s production.

“Despite having agreed to disburse more than in hand, Mahanadi Coalfields Ltd (MCL) feels helpless with villagers of Hensmul at Talcher coalfields in Angul district of Odisha threatening to go on indefinite dharna at its two mega projects – Bhubaneswari and Ananta — from July 25,” an official statement said.

Delays in shifting the villagers may result in a loss of around 10 million tonnes of coal in the current financial year from the Bhubaneswari opencast mine, which may result in a loss of about Rs 100 crore in royalty to Odisha, it said.

MCL announced a recall of the employees late on Monday as a “goodwill gesture”. Officials in the coal ministry said the company was under pressure from local politicians and trade unions to take back the employees and end the agitation that was impacting production.

But the workers are now demanding alternate plots before vacating the land they occupy, which could take at least six months according to MCL.

While reinstating the employees, the company has exempted them from submitting affidavits stating that they would vacate the land by October 31. The affidavits had been a pre-condition for reinstating the employees as agreed during tripartite meetings involving MCL management, employees and the district administration.

Acoal ministry official said a written agreement from workers was required to prevent them from backtracking.

The employees were recruited at the Talcher coalfield between 1995 and 2009 and as per the terms of appointment they were supposed to vacate their land within five months of joining the company.

(Source: The Economic Times, July 25, 2014)

EASIER NORMS MAY LIFT CAPACITY IN 2 YEARS

KOLKATA: CIL hopes to increase its production capacity by 20-25 million tonnes in about two years after norms on expanding some mines were relaxed. MoEF said in a recent circular that CIL will be able to raise capacities of mines producing between 8 and 15 million tonnes a year by 50% without a special hearing, a procedure that used to delay the expansion process by more than a year.

MoEF allowed CIL to expand mines with capacities up to 8 million tonnes by 50% last year and this was later extended to mines producing up to 16 million tonnes.

“Following the new circular, we have identified additional mines and if we receive all the clearances soon, our production capacity can be increased by 20-25 million tonnes within a year or two,” a senior CIL director told ET.

(Source: The Economic Times, July 25, 2014)

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