NEW DELHI: Eighty-eight infrastructure and industrial projects, involving investment of nearly Rs 3 lakh crore – which is more than the Centre’s budgeted income tax collections for the current financial year – have become operational over the past few months. This will help in adding jobs and easing pressure on banks, which had lent to the projects that got stuck due to lack of government clearances.
In all, investments worth Rs 2.88 lakh crore have gone on stream in sectors as diverse as power, steel, airports and oil and gas, data collated by the Project Monitoring Group (PMG) in the Cabinet secretariat showed. Power sector saw the maximum number of projects cleared. While PMG was constituted in July 2013, a majority of the projects started getting completed around June this year and the remaining are going to be ready over the next few months.
A dozen projects, involving investment of over Rs 47,500 crore, are expected to be up and running by December-end. Another nine with investment of close to Rs 33,000 crore will be ready in 90 days and another 11 worth close to Rs 67,000 crore will be working in 120 days, the sources said.
Over the past 15 months, the PMG has managed to get all ministries on board to resolve 386 issues related to 181 projects-with a majority dealing with environment and forest clearances and coal supply. Of these 88 are operational but the list does not include several cases such as the Delhi Aerocity, comprising a number of hotels, as the entire project has not gone on stream. There are four hotels, which are yet to be opened and the civil aviation ministry will only treat it as “completed” after that, said sources familiar with the development.
In several cases, the projects have been treated as commissioned if one of the units of, say, a power plant has started working. There are cases where a project had been commissioned in 1981 but the expansion work could not be completed in the absence of fresh approvals.
Operational infrastructure facilities will reduce shortage of electricity and add capacity at several ports and airports. In addition, it will create jobs, especially on the shop floor.
For a number of business groups, it also means better finances as the companies had deployed capital and borrowed from banks to build plants or road projects but were unable to repay the loans in the absence of any cash flow. It had also piled up pressure on banks. With the projects getting commissioned, some companies may tap the buoyant stock markets to raise resources and retire debt accessed from banks and financial institutions.
(Source: The Times of India, October 21, 2014)
DAMODAR VALLEY CORPORATION TO SHUT UNIT, 900 WILL LOSE JOBS
DURGAPUR: Central public sector undertaking Damodar Valley Corporation (DVC) has decided to shut down the ailing units of Durgapur Thermal Power Station (DTPS).
Chairman of DVC, Andrew WK Langstieh, directed the executive director (operations) of the firm on October 13 to prepare an action plan to shut down the DTPS-3 by January next year. He also decided to shut down Bokaro Thermal Power Station in Jharkhand. Sources said around 900 people work in the Durgapur unit.
The 140MW unit of DTPS was set up in December 1966 and the second unit of 210MW was set up in September 1982. “These units were incurring heavy operational costs and DVC finds them unviable as no modernization has taken place so far. Also, there has been a problem with coal supply,” said an official.
Recently, the Supreme Court cancelled the licences of 218 captive coal mines, including 40 operational mines, terming the allocations as illegal. The DVC has also taken a hit following the decision as it had captive coal blocks in Bankura and Birbhum.
If these coal mines stop production after March 2015, DVC will have to procure additional coal from the market at higher price which will lead to further losses in the DTPS and Bokaro Thermal Power Station.
Talking to the TOI on Monday, Gorachand Boot, general secretary of INTUC-affiliated DVC Kamgarh Sangha, said that on October 18 the central leadership of the union led by Madan Mohan Das and Pradip Banerjee met the chairman of DVC in Kolkata and protested against the decision.
“Though the 140 MWunit is old, it is still in production mode and should not be closed at any cost before setting up new units. About 900 people are directly employed in Durgapur and will lose their jobs. Besides, there are workers on contract also,” he added.
Piyush Sen, Citu general secretary of DTPS, said that the move would hit the economy of Durgapur. “We are concerned for the employees and Citu will not allow the shutdown,” he added.
If this unit shuts down, it will be the first closure of a central government factory in the state in the tenure of chief minister Mamata Banerjee.
(Source: The Times of India, October 21, 2014)
KUDANKULAM NUCLEAR POWER PLANT SHUT DOWN FOR 6 TO 8 WEEKS
CHENNAI: Kudankulam Nuclear Power plant’s first unit was today shut down for six to eight weeks after a “minor” problem was detected in its turbine generator which had a run for over 190 days.
An official of the Kudankulam Nuclear Power Project (KNPP), an Indo-Russian joint venture, said the problem was minor and the unit is expected to be back in operation in six to eight weeks.
KNPP Unit 1 turbine generator has operated for 4,701 hours so far and generated 282.5 crore units of power, which was supplied to the Southern grid since October 2013, KNPP Site Director R S Sundar said in a statement.
“The unit has been shut down to inspect the turbine and its associated components before putting it for commercial operation”, he said.
Sundar said a “minor” deficiency was found on the turbine during inspections. Some of the components needed replacement and officials are working on it, he later told PTI.
“Maintenance activities are in progress and we wanted some more time to put it back in service. That is why we have taken time”, he said.
Sundar said Unit 1 was expected to be back in service in six to eight weeks.
The Nuclear Power Corporation of India(NPCIL) had undertaken construction of two 1,000 MW units at KNPP jointly with Russia at Kudankulam in Tiruneveli district in Tamil Nadu.
Unit-1 attained criticality on July 13 last year after much delay following protests against KNPP by anti-nuclear activists in areas around the complex, citing safety reasons.
It was synchronized with the southern power grid on October 22, 2013.
(Source: The Financial Express, October 21, 2014)
ACCESS TO ELECTRICITY IN INDIA HAS NO IMPACT ON CLIMATE CHANGE
LONDON: Improving household electricity access in India over the last 30 years contributed only marginally to the country’s total carbon emissions growth during that time, according to a new study.
While increased energy access is widely agreed to be an important goal for development efforts, such as the UN Sustainable Energy for All Initiative, the climate impacts of increased access to electricity have been unclear.
The study is the first to examine the impact of electricity access on carbon dioxide emissions using two sources of retrospective data.
“This study shows that the climate impacts of expanding access are in fact very small,” said Shonali Pachauri, from the International Institute for Applied Systems Analysis ( IIASA) in Austria, who conducted the study.
However, she added, expanding low-carbon energy technologies in developing countries would bring many co-benefits beyond climate mitigation.
While India still lacks electricity access for much of its population – around 400 million people – the country has vastly increased access in the last 30 years, researchers said.
From 1981 to 2011, household electricity access in the country improved from around 25 per cent to between 67-74 per cent of the population, an increase of approximately 650 million people.
“India is at a similar stage to many other developing countries in terms of energy access, So we believe that these findings will be applicable on a broad scale to other developing countries,” said Pachauri.
Using two data sources, the study found that improved electricity access in India from 1981 to 2011 accounted for approximately 50 million tonnes of CO2, or 3-4 per cent of the rise in total national CO2 emissions.
Since electrification also tends to lead to increased wealth and participation in the economy, it can also lead to additional increases in emissions from indirect energy use through consumption.
Pachauri found that when she took these factors into account, household electricity use would account for 156 to 363 million tonnes CO2, or 11 to 25 per cent of emissions growth in the country.
However, even with increased electricity use, Indian households still use less electricity than Chinese households, and less than 10 per cent of households in the US.
Researchers said that even though the emissions growth from expanded energy access is small, low carbon energy sources have additional benefits for developing countries and should be encouraged.
“Energy access is fundamental to development: it brings improvements to all aspects of life, including education, communication, and health,” said Pachauri.
The study was published in the journal Nature Climate Change.
(Source: The Economic Times, October 21, 2014)
MODI SARKAR SHOWS MORE ENERGY WITH COAL REFORMS
NEW DELHI: The government has taken a significant but cautious step towards ending state monopoly on coal with an ordinance that enables commercial mining by private companies in future, without denting the operations of Coal India that was set up when the sector was nationalised four decades ago. In the first round, blocks would be auctioned to companies that will use the coal for firing power, steel and cement plants, said Coal, Power & Renewable Energy Minister Piyush Goyal. The government will offer different blocks to these sectors and expects companies that lost coal blocks would be able to acquire mines through a transparent e-auction in 3-4 months which Finance Minister Arun Jaitley said will “clean up the mess created by the UPA government since 2005”.
The decision marks the continued burst of big-ticket energy reforms that the Modi government has launched after elections in Maharashtra and Haryana. On Saturday, it decontrolled diesel prices and took the longawaited decision on the controversial issue of natural gas pricing. Officials are also working overtime to finalise steps to help stranded gas-fired power plants by pooling imported liquefied natural gas with cheaper domestic supply.
The decisions are expected to revive the distressed energy sector and help banks which faced the risk of a huge jump in non-performing assets. The government has also withdrawn the Bill introduced in 2000 in Rajya Sabha to allow commercial coal mining, and will introduce a fresh Bill.
SBI Chairman Arundhati Bhattacharya welcomed the announcements. “It is a positive news and we needed to clear this mess as quickly as possible. And the government has taken the bull by the horn. We expect investments to get back to the drawing board. We hope the timeline is maintained and the process is done as quickly as possible.”
“It is too early to say how it would affect our loan book, since it will depend on reserve price for the e-auction whether it matches our forecasts on cash flow,” SBI Chairman Arundhati Bhattacharya said. Coal India unions said they were comfortable with the announcements as of now, but would oppose the move tooth and nail if the government actually turns to the enabling provision and allows private commercial mining.
The government sought to understate that part of the ordinance, which will allow the private sector sell coal in the open market — a situation that is forbidden under the nationalisation laws in the sector. It said the ordinance did not amount to “denationalisation”. It also announced that all the proceeds of the auction will go to states such as Odisha, West Bengal, Jharkhand and Chhattisgarh, a provision that will give a lot of cash to these states and win their support.
“The proposals appear a cautious first step to a future, potentially bolder plan that denationalisation suggests. The limitation of end-use and keeping commercial mining rights for a future time suggest this,” said Kameswara Rao, leader at consulting firm PwC for energy, utilities and mining. He said transfer of proceeds to the states is a masterstroke and would incentivise state governments to expedite clearances and support the projects.
Analysts and industry officials broadly welcomed the decision, which can significantly boost coal output, fire stranded power stations and cut the embarrassingly high amount of coal imports for a country that has one of the biggest reserves in the world.
“There was a lot of uncertainty over how quickly it will be handled. But the transition appears speedy and the blocks will not be nationalised but be given out to private players, which will increase efficiency. It will help domestic supply positively and bring down the high cost of imports. The big problem was with the power sector as a lot of projects were coming on stream but there was a big question mark on the fuel supply. That the allocation will be made in a transparent manner through auctions is also a revenue-positive for the government,” said Abheek Barua, consultant at ICRIER.
“It is a very positive move for the economy. It is good to start on a clean slate and (in a) transparent manner and sorting out of the coal issue was very critical and will provide momentum to the reforms process and give a boost to country’s manufacturing,” said DK Joshi, chief economist, Crisil.
(Source: The Economic Times, October 21, 2014)
GOVERNMENT TO BRING ORDINANCE ON CANCELLED 214 COAL BLOCKS
NEW DELHI: Days after the Supreme Court cancelled allocation of 214 coal blocks, the government today moved to bring an Ordinance that will enable it to acquire the land of these mines along with plants for auction later.
The Ordinance has been finalised and will be notified after approval of the Union Cabinet, a source said.
The measure has been designed to deal with the implications of the Supreme Court’s order in the coal case.
After acquiring the land of these coal blocks, the government would auction these.
The apex court had last month quashed allocation of 214 out of 218 coal blocks allotted to various companies since 1993 terming the method as “fatally flawed”.
It had allowed the Centre to take over operation of 42 such blocks which are functional.
The Coal Ministry has drafted the Ordinance after extensive consultations with Attorney General Mukul Rohatgi.
The issues that need to be resolved by the government in the coal mine case include forfeiting of bank guarantees and title deeds of the land mines purchased by the companies, sources said.
Sources said successful bidders in the fresh auction of coal blocks along with the land and plant standing on it would be liable to pay the earlier allottees the cost of the land and the plant along with 12 per cent annual interest on the amount that was originally invested for purchasing the land and setting up plant.
Also, all allottees whose blocks were cancelled by the top Court would be eligible to participate in the fresh auction barring those convicted in coal related cases, sources added.
(Source: The Economic Times, October 21, 2014)
204 CANCELLED COAL MINES MAY NOT FIND AGGRESSIVE CORPORATE BIDS
NEW DELHI | MUMBAI: Companies are unlikely to submit aggressive bids for the coal blocks, even though the country faces a huge shortage of coal and most of the blocks on offer lie in difficult terrains, experts and industry executives said.
The government on Monday announced that it will award all 204 coal mines cancelled by the Supreme Court through auction to private companies and on nomination basis to government utilities.
Finance minister Arun Jaitely said there are 74 coal blocks including 37 operating mines which can be auctioned within two months. Association of Power Producers director general Ashok Khurana said, most mines may not find takers apart from the existing owners as developing infrastructure in the interior regions could turn out to be an uneconomical proposition.
Essar Energy director Sushil Maroo, said, “The fear of losing all the money invested on these mines have been somewhat relieved by the government committing to pay for the land acquisition. Our concern now is whether other expenses would be paid back as well. Government needs to move fast on bidding these mines to avoid more chaos in power sector. The bidding will only see serious power producers participating and there would not be unnecessary aggression in bidding.” Kameswara Rao, energy, utilities, and mining Leader, PwC, said, “Companies would factor in risks before putting in bids for the coal blocks. Bidding will depend on the mines that are put on auction.”
He said that the government should offer discount on the block, particularly for power companies, and auction such blocks that are of economic size and rich in geological data. The UPA government had offered 90 per cent discount on floor price to power companies. As per the policy, steel and cement companies that propose to pay the highest amount per each tonne of coal produced will bag the blocks.
The NDA government has scrapped the first round of coal blocks bidding that was initiated in the UPA regime and is reworking on the bidding mechanism. Sanjay Sagar, JSW Energy chief executive officer Sanjay Sagar said the company sees this as an opportunity to acquire mines.
“This will give a fair chance to genuine users of coal to acquire mines. The decision to make sure state governments get money from the auction is very wise as it will reduce the roadblocks that companies have to face in dealing with state authorities,” he said. According to sources, 37 operating blocks can be auctioned as soon as they are priced. Five coal blocks that were expected to begin operations this fiscal, will also be auctioned soon.
The blocks are Mandla North of Jaiprakash Associates, Sial Ghoghri of Prism Cement Ltd, Toksisud North of GVK Power, and Bicahrpur of Madhya Pradesh State Mining Corp and Kharga Joydev of Damodar Valley Corp. Another 32 blocks are expected to have made substantial progress by securing land, water environment and forest clearances.
(Source: The Economic Times, October 21, 2014)
COAL AUCTION RULES A POSITIVE: INDIA INC
MUMBAI: Companies reacted positively to the new coal auction rules announced by the Narendra Modi government on Monday.
They said it would help them to plan future investments properly and save those already made in the coal, power and cement sectors. Chief executive officers (CEOs) in the sectors concerned say a lot of uncertainty was created with the Supreme Court order cancelling coal block allotments made over the past 20 years. They say the new rules are fair to all and to the state governments, which will get royalties from the mines to be auctioned in future. The government has also decided to keep foreign companies out of the auction process, good news for Indian ones.
Among the big beneficiaries of the new rules will be the Adani Group, now the country’s largest power sector company. The Ahmedabad-based group’s coal mines for power projects in Maharashtra were cancelled by the SC.
Says Sushil Maroo, CEO of Essar Energy: “This was expected after the SC verdict. The best part is that the government came out with new norms so quickly. We have to still find out about the details of the blocks which will be put out for auction. This shows the government’s resolve to sort issues quickly.”
Essar and Hindalco had lost their Mahan coal block in Madhya Pradesh. Essar had already set up a 3,000 Mw power plant nearby. A Hindalco spokesperson declined to comment, saying they were waiting for the details but a group insider said they’d participate in the auction. A Tata Power spokesperson said they were studying the ordinance.
Giriraj Daga, senior analyst with Nirmal Bang, the equity trading brokerage, said the move was expected. “Though many are sceptical and feel it will take some more quarters for things to actually move, I think by March 2015, mines ready for production or already producing will get auctioned,” he said.
One of the biggest losers in the cancellation was Jindal Steel and Power. With Monday’s decision, it will be able to participate in the coal auction. However, the government has also said companies which are convicted will not be able to participate. So, a big question mark remains on what happens to companies which win a block in the auction to take place but get convicted on a later date.
CEOs say power companies will benefit from the decision but it will be a mixed bag for cement makers. On the brighter side, the move allows them to own a coal mine, providing energy security. On the downside, the decision to open bidding only for captive use will force them to invest in a mine. This will increase their capital cost, beside forcing them to divert resources into a non-core activity.
“It is certainly a better option than the current situation. The government is offering land along with the mining rights. This will greatly shorten the time taken to start a mine. Now, bidding will depend on the economics of owning a mine versus sourcing coal from the open market,” said M H Bangur, managing director of Shree Cement.
To make bidding financially attractive, he wants the government to consider allotting mines for merchant production and also open it for independent mining companies.
“Logistics is one of the biggest costs for us. You can’t expect a cement plant based in western or northern India to operate a mine in the east,” he added.
Though, he added, Shree Cement might consider bidding for a mine if the economics works out in their favour.
(Source: Business Standard, October 21, 2014)