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NTPC FIRMING UP PLANS TO ENTER INTO POWER DISTRIBUTION BUSINESS

egKOLKATA: NTPC is firming up plans to enter power distribution, an area the state-run company has mostly stayed away from so far despite producing more than a quarter of India’s total electricity output.

 

It plans to bid for distribution rights in cities that may open up the segment to the private sector. Just a handful of Indian cities at present have private distributors, all in joint ventures with state utilities, a model that NTPC too is considering. “Many states are likely to open up distribution business for private or public participation to bring in efficiency in this sector. NTPC finds opportunity in entering into distribution business through participation in these bids,” a senior NTPC official told ET.

 

NTPC will venture into distribution through its wholly owned subsidiary, NTPC Electric Supply Co, which currently provides turnkey execution of transmission projects, project monitoring, third-party quality inspection and consultancy.

 

In fact, the company has some experience in distribution. It has an equally owned joint venture with the Kerala Industrial Infrastructure Development Corporation to supply power at the state agency’s industrial parks.To begin with, it plans to appoint experts and engage professionals who would advise the company on bidding processes that are currently on or are in the offing. The aim is to win circles that will be profitable. The distribution sector in the country is dominated by state-owned distribution companies or state electricity boards as distribution licensees.

 

But several states have now opened up the sector and are already inviting private companies to take up distribution in cities.

 

“The opportunities could be for input power based, incremental revenue sharing based, light capex model or any other model,” the NTPC official said.

 

The World Bank in a recent report said India’s power distribution sector needed sweeping reforms if it is to bring back the country to a high growth trajectory and meet its goal of expanding access to electricity to all by 2019. The study has identified electricity distribution to the end consumer as the weak link in the sector.

 

The report recommended freeing utilities and regulators from external interference, increasing accountability and enhancing competition in the sector to move it to a higher level of service delivery.

 

The power sector’s total accumulated losses were $25 billion in 2011. These losses are concentrated among distributors and bundled utilities — state electricity boards andstate power departments, the report said.

(Source: The Economic Times, October 16, 2014)

 

PRIVATE COMPANIES WALK OUT, NTPC SOLE BIDDER FOR 2 UMPPs

 

NEW DELHI: All private companies have walked out of the bidding process for two ultra-mega power projects in Odisha and Tamil Nadu, leaving state-run generation utility NTPC as the sole contender for the plants entailing an investment of about Rs 50,000 crore.

 

Adani Power, Jindal Power, Sterlite and GMR have written to PFC Consulting, the agency advising the government on the projects, saying they were pulling out of the bidding process as the terms were too stringent for viability.

 

These companies, along with NTPC, had bought RFP (request for proposal) required for submitting price bids, on the basis of which the winner is decided.

 

The two projects have been dogged by delays over the bidders’ reservations. Tata Power, Adani, JSW Energy, Jindal Power, Sterlite, CLP, L&T, NTPC and NHPC were among the pre-qualified firms for the Odisha project. For the Tamil Nadu plant, NTPC, Adani, CLP, GMR, Jindal, JSW Energy, Sterlite and L&T were pre-qualified.

 

TOI had first reported on June 18 that the Adani group, CLP, GMR group, Jindal Steel & Power, JSW Energy and Tata Power had expressed unwillingness to submit their price bids, seeking “comprehensive” review of the bid terms to make them more predictable and viable.

 

On July 16, TOI reported power minister Piyush Goyal meeting the promoters, who narrowed down the sticky points to three main areas. The main suggestion was to switch from DBFOT (design, build, finance, operate and transfer) to BOO (build, own, operate) model in the bidding document. On fuel costs, the companies proposed that for the captive mine-based Odisha project, fuel charge be paid at actual at a price determined by the coal regulator. In case of the imported coal-based Tamil Nadu unit, the idea was to link fuel price to a basket of indices approved by the central tariff regulator.

 

The latest development is expected to delay the projects further at a time when the government is pushing to ramp up generation capacity quickly. Unless, as some say, the government decides to go ahead with NTPC. But that could raise questions over legality.

(Source: The Times of India, October 16, 2014)

 

 

GOVERNMENT SEEKS INFORMATION ON CANCELLED COAL BLOCKS

 

NEW DELHI: Concerned over delay in response by miners to its request seeking information on captive coal blocks that have been cancelled by the Supreme Court, the government has asked them to immediately furnish details of the employees they have as well as on land ownership. In case there is no response to its latest request, it would be presumed that they have no information to provide, the government has said.

 

“…refer to this Ministry’s letter dated October 1 requesting therein to furnish the information regarding number of employees employed by your company/ organisation (except contractual employees employed by the Mine-Developer- cum-Operator) and the status of ownership of land by October 7,” the Coal Ministry said in a letter dated October 14 to allocatees of 96 coal blocks. \

 

“Since it is Supreme Court matter and no response has been received from your company, your are requested to furnish the information without delay. In case, no reply is received, it may be presumed that your company has no information to furnish,” the ministry said. The companies which have been asked to furnish details include Jindal Steel and Power Ltd, Abhijeet Infrastructure, Rashtriya Ispat Nigam Ltd, Adani Power and Usha Martin.

 

In a major blow to the corporate sector, the Supreme Court had last month quashed allocation of 214 out of 218 coal blocks alloted to various companies since 1993 terming it as “fatally flawed” and allowed the Centre to take over operation of 42 such blocks which are functional. The apex court said the beneficiaries of the illegal process “must suffer” the consequences and refused to show sympathy to private companies which submitted that Rs 2.87 lakh crores have been invested in 157 coal blocks and Rs 4 lakh crores in end-use plants.

 

It, however, saved from the “guillotine” four allocations one each to SAIL and NTPC and two blocks to Sasan Power Ltd owned by Anil Ambani’s Reliance Power and also gave a six months breathing time to rest of them to wind up their operations by March 31, 2015.

(Source: The Economic Times, October 16, 2014)

 

KPMG TO SUBMIT COAL RATIONALISATION REPORT TODAY

 

NEW DELHI: Global consulting firm KPMG will submit the draft report on coal rationalisation to the government today.

 

Coal linkage rationalisation, which is aimed at linking power plants to the nearest mines, is likely to bring financial benefit of about Rs 700 crore to the sector.

 

According to an official, the report will be submitted to the Power and Coal Minister Piyush Goyal today.

 

The move will also help in overcoming power shortages which are hampering generation at some thermal plants.

 

According to the latest data by Central Electricity Authority (CEA), 60 coal-based power plants have critical fuel stock position with less than seven days of raw material.

 

Also, as part of the government’s plan to modernise old power plants of about 32,000 MW capacity, coal linkages to these plants will be rationalised.

 

The government has also allowed automatic transfer of linkages from old and inefficient plants to ultra-modern supercritical plants in order to maximise power generation from the same amount of coal.

 

It has also allowed the Gujarat government to swap the quantity of coal it receives from coal mines in Chhattisgarh for its plants with NTPC’s imported coal.

 

State-run NTPC imports coal through Gujarat ports for its thermal plants in Chhattisgarh.

 

Meanwhile, public sector firm Coal India will spend Rs 5,000 crore to purchase 250 rail rakes for faster evacuation of coal from mines.

 

The proposed move will help the government in bringing about a transformative change in the power sector and ensure affordable 24×7 power for all homes, industrial and commercial establishments and adequate power for farms.

(Source: The Economic Times, October 16, 2014)

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