Thursday 30 October 2014

Centre set to roll out power reforms soon to enhance transmission, distribution network






NEW DELHI: The Centre is set to roll out a clutch of power reforms over the next few months including measures to fulfil the ruling BJP's commitment to provide uninterrupted 
electricity supply in cooperation with state governments.
After dealing with the crucial ordinance for coal block e-auction, the government will start dealing with other long-pending issues to boost power sector, officials said, adding that power minister Piyush Goyal will start launching programmes for which the government has made budgetary allocations.

"Power ministry has availed most of the approvals from government departments concerned for strengthening transmission and distribution networks, separating feeders for agriculture and households in rural areas and promoting ultra mega solar power projects in four states. It is time for Goyal to bring state governments on board to engage them in Centre's initiatives," a power ministry official said.

The official, who did not wish to be named, added that the power ministry will start rolling out various initiatives within a month or two while work is also in progress for reforms in Electricity Act 2003.

The government has sought stakeholders' feedback for the proposed amendments in Electricity Act by mid-November, ahead of the winter session of Parliament. "Fuel supply was one of the most crucial challenges that the power sector was facing.

The government has come up with a road map for e-auction of coal blocks and price pooling for fuels to ensure adequate coal and natural gas supplies for the power plants. While fuel supplies will improve gradually, it is time for the government to reduce commercial losses in the areas of electricity transmission and distribution," said the official.

Finance minister Arun Jaitley had in July allocated Rs500 crore each for Deendayal Upadhyaya Gram Jyoti Yojana and ultra mega solar power projects besides Rs200 crore for strengthening Delhi's transmission network, among other programmes.

Goyal, who was busy campaigning for Maharashtra assembly polls, will shortly initiate dialogues with various state governments to ensure "power for all", officials said. Rajasthan, Andhra Pradesh and Delhi have already come on board for the programme while Goyal wants to cover as many states a possible before the next Union Budget, an official said.
Under the initiative, the Centre will provide financial assistance to improve power generation and strengthen transmission and distribution network besides funding energy saving systems.

Thursday 23 October 2014

India moves to reform troubled coal industry

India’s government has pledged to open up the coal mining industry to private players in the energy-starved country as Prime Minister Narendra Modi steps up promised reforms to revive the ailing economy.

Modi’s right-wing government approved an ordinance late Monday to allow auctions of coal mines to private companies for their own use, as well as permitting commercial mining at some point in the future.

The decree comes after the Supreme Court in September cancelled more than 200 permits for coal mines, after declaring the process of awarding them illegal, throwing the sector into turmoil.

“It was decided to issue an ordinance in the cabinet,” Finance Minister Arun Jaitley told reporters at a briefing on the issue.

“The entire coal sector was lying idle, it is an attempt to bring it to life once again,” Jaitley said after the cabinet meeting.

The ordinance – or executive order – takes initial steps towards ending a four-decade monopoly on mining and selling coal after the industry was nationalised in 1972 creating Coal India, one of the world’s biggest miners.

The coal industry, plagued by inefficiencies, poor infrastructure and government red-tape, has long struggled to increase production to meet electricity needs of India’s 1.25bn
population.

Modi stormed to victory in May elections on a pledge to revive the faltering economy, but some experts have been disappointed by a lack of early big-bang and much-needed reforms.

His government has introduced several initiatives in recent days and is likely to be spurred further after his party’s thumping weekend victory at two state elections.

It announced on Saturday it was freeing diesel prices from government control and increasing natural gas prices, in a bid to attract foreign investment and cut its subsidy bill.

India sits on some of the world’s biggest coal reserves, yet its power stations are starved of the fuel, with some idle and others running dangerously low on supplies.

Coal provides nearly 60% of India’s electricity generating needs, but the power sector relies heavily on imports of the fuel.

Blackouts are common across India, especially during peak summer months, amid surging demand including from a fast-rising middle class.

Economist DK Joshi welcomed the move, saying the power sector has long been operating at below capacity because of uncertainty over coal supplies.

“It (the government) is beginning to address the conditions holding back the economy and inefficiency of the sector was at the top of the heap,” Joshi, chief economist at local ratings agency Crisil, told AFP.

“It’s not a big-bang reform but it’s a good first start.”

Coal India accounts for more than 80% of the country’s total production but has missed its output targets in recent years.

Some private cement, power and steel companies are currently allowed to mine coal for their own use, but the ordinance includes a provision for firms to sell their coal at an unspecified time in the future.

Coal minister Piyush Goyal said legislation would need to amended to allow for such commercial mining, adding “this is only for the future”.

“This process would not in any way impact the structure of Coal India,” Goyal added on Monday, according to the Press Trust of India news agency.

The ordinance’s new auction system replaces the policy of allocating coal blocks based on recommendations from a panel of bureaucrats, that the court deemed was faulty.

The ordinance takes immediate effect but must eventually be passed as a bill by parliament or it will lapse.

Stocks for private firms already mining were trading higher on Tuesday, with Jindal Steel and Power surging 6.28% and Hindalco Industries up 3.08%.

Wednesday 22 October 2014

Wind power capacity nears China's development target



China saw robust development of wind power in the first half of this year while the European green sector struggled, according to data from an industrial expo on Wednesday.

More than 7 gigawatts of wind power generating capacity was connected to the state grid by the end of June 2014, representing an increase of 30.37 percent year on year, according to China Wind Power 2014, which opened in Beijing Wednesday.

The rapid growth brought the country's total wind power generating capacity close to 100 gigawatts, a goal policymakers hope to achieve by 2015.

After explosive growth in the past decade, global wind power faltered last year in installed capacity as European nations, the industry's main market, cut government subsidies to the sector in the wake of the European sovereign debt crisis.

In contrast, the Chinese government has increased its support to the green sector through subsidies and tax breaks in a bid to boost the use of non-fossil fuel to reduce pollution and address global climate change.

The wind power sector generated 134.9 billion kWh of electricity in China last year, making it the country's third-largest source of electricity, after thermal power and hydro power.

Li Junfeng, director of the National Center for Climate Change Strategy and International Cooperation, expected steady growth of Chinese wind power generators and turbine manufacturers thanks to the stable policy environment.

China aims to increase wind power installed capacity to 200 gigawatts by 2020.

The global wind power sector will be back on a fast track soon as the U.S. market recovers and emerging economies catch up to tap green energy, Li said.

Power sector stocks advance as Govt to auction 74 coal-mining licenses

October 21, 2014
After a sudden slide in early afternoon trade, key benchmark indices erased a lion's portion of intraday gains. The barometer index, the S&P BSE Sensex, was currently up 43.66 points or 0.17% at 26,473.51. The market breadth indicating the overall health of the market was positive. Asian stocks and US index futures fell after the latest data showed that China's gross domestic product (GDP) rose 7.3% year-over-year in Q3 September 2014, marking its slowest pace of growth in five years.

Meanwhile, the Narendra Modi government yesterday, 20 October 2014, announced that it will auction 74 coal-mining licenses to private companies in the next three to four months after the Supreme Court last month canceled 214 coal licenses issued to private and public companies since 1993. The move came after the government freed diesel from price controls and increased natural-gas tariffs over the weekend to curb subsidies and cut the fiscal deficit.

Meanwhile, investors are watching political developments in Maharashtra as the BJP is set to form the government in the state after the party emerged as the single largest party after assembly election in the state. The BJP won 122 seats in the 288-member assembly, falling few seats short of the 145 seats required for a simple majority. Its ally Rashtriya Samaj Paksha won one.

Shares of power companies rose after the government yesterday, 20 October 2014, announced that it will auction 74 coal-mining licenses to private companies in the next three to four months after the Supreme Court last month canceled 214 coal licenses issued to private and public companies since 1993. Power Finance Corporation and Rural Electrification Corporation edged higher as coal block auctions will reduce uncertainty regarding power generation companies that depend on the dry fuel. Coal India declined.

Earlier, key indices had extended initial gains in morning trade that took the Sensex and the 50-unit CNX Nifty to their highest level in almost two weeks.

In the foreign exchange market, the rupee edged higher against the dollar.

Brent crude prices edged higher after a mixed bag of Chinese economic data.

At 12:20 IST, the S&P BSE Sensex was up 43.66 points or 0.17% at 26,473.51. The index jumped 185.56 points at the day's high of 26,615.41 in morning trade, its highest level since 9 October 2014. The index rose 12.24 points at the day's low of 26,442.09 in early afternoon trade.

The CNX Nifty was up 19 points or 0.24% at 7,898.40. The index hit a high of 7,934.50 in intraday trade, its highest level since 9 October 2014. The index hit a low of 7,883.65 in intraday trade.

The BSE Mid-Cap index was up 76.19 points or 0.81% at 9,452.27. The BSE Small-Cap index was up 45.40 points or 0.44% at 10,408.85. Both theses indices outperformed the Sensex.

The market breadth indicating the overall health of the market was positive. On BSE, 1,379 shares rose while 994 shares declined. A total of 101 shares were unchanged.

Among the 30 Sensex shares, 19 rose and the remaining shares fell.

Shares of power companies rose after the government yesterday, 20 October 2014, announced that it will auction 74 coal-mining licenses to private companies in the next three to four months after the Supreme Court last month canceled 214 coal licenses issued to private and public companies since 1993. Adani Power (up 2.18%), Reliance Power (up 2.06%), Torrent Power (up 1.8%), NTPC (up 1.67%), NHPC (up 1.31%), Tata Power (up 1.27%) and JSW Energy (up 0.97%), edged higher.

The government is reallocating hundreds of mining licenses after the Supreme Court last month canceled 214 coal licenses issued to private and public companies since 1993, saying the way they were given out was nontransparent and arbitrary. The licenses will be auctioned to private-sector companies only for captive use. Finance Minister Arun Jaitley said yesterday, 20 October 2014, that allowing private-sector companies to mine coal to sell to others is something the government may consider in the future.

Shares of state-run Coal India were off 1.91% at Rs 353.80.

Power Finance Corporation and Rural Electrification Corporation edged higher as coal block auctions will reduce uncertainty regarding power generation companies that depend on the dry fuel. Power Finance Corporation was up 6.24% and Rural Electrification Corporation was up 5.58%.

M M Forgings jumped 5.58% after net profit surged 97.3% to Rs 13.14 crore on 25% rise in net sales to Rs 122.07 crore in Q2 September 2014 over Q2 September 2013. The result was announced after market hours yesterday, 20 October 2014.

BGR Energy Systems gained 4.22% after the company bagged orders worth Rs 250 crore in the electrical sub-stations segment of its electrical projects division. The announcement was made after market hours on Monday, 20 October 2014.

Meanwhile, provisional data released by the stock exchanges after trading hours yesterday, 20 October 2014, showed that foreign portfolio investors (FPIs) bought shares worth a net Rs 1040.08 crore on that day.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 61.3025, compared with its close of 61.365 during the previous trading session.

Brent crude prices edged higher after a mixed bag of Chinese economic data. Brent for December settlement was up 17 cents at $85.57 a barrel. The contract had lost 76 cents or 0.9% to settle at $85.40 a barrel yesterday, 20 October 2014.

Ashima Goyal, a member of the Reserve Bank of India's (RBI) technical advisory committee reportedly said yesterday, 20 October 2014, that the RBI may consider easing monetary policy as early as March after global crude prices fell to a four-year low this month. Real interest rates are becoming more and more positive, which would be severely disinflationary, and that means the RBI has to cut rates, Goyal said. The RBI's technical advisory committee makes policy recommendations to RBI Governor Raghuram Rajan.
Meanwhile, the Narendra Modi government yesterday, 20 October 2014, announced that it will auction 74 coal-mining licenses to private companies in the next three to four months after the Supreme Court last month canceled 214 coal licenses issued to private and public companies since 1993. The licenses will be auctioned to private-sector companies only for captive use. Finance Minister Arun Jaitley said allowing private-sector companies to mine coal to sell to others is something the government may consider in the future.
Mr. Jaitley said state-run, coal-consuming companies that want to mine for their own use won't have to compete against the private sector for coal licenses, especially in key industries such as power. The government will allocate government companies licenses without an auction.

Asian stocks edged lower today, 21 October 2014, after a mixed bag of Chinese economic data, including the slowest GDP growth in five years, and a drop in housing prices, but a better-than-expected gain for September industrial production. Key benchmark indices in China, Indonesia, Hong Kong, Taiwan, Japan and South Korea were off 0.10% to 2.03%. Singapore's Straits Times was up 0.22%.

China posted a 7.3% year-over-year quarterly growth rate, marking growth at its slowest pace in five years amid a slumping real-estate market and weak domestic demand and industrial production. Value-added industrial output in China rose by a larger-than-expected 8% in September from a year earlier, accelerating from a 6.9% year-over-year increase in August, the statistics bureau said. Industrial production also increased 0.91% in September from August, when it rose 0.2% from the preceding month, it said.

Trading in US index futures indicated that the Dow could fall 93 points at the opening bell today, 21 October 2014. US equity investors began the week on an optimistic, albeit cautious, note on Monday, 20 October 2014, with gains in broader markets led by defensive sectors such as consumer staples and utilities.

The Federal Open Market Committee (FOMC) next undertakes a monetary policy review at a two-day meeting on 28-29 October 2014.

Tuesday 21 October 2014

India and Nepal ink agreement on power trade

Ending months of speculation India and Nepal on Tuesdsay signed the Power Trade Agreement (PTA) to regulate electricity trade between the neighbouring nations.

The eight-point agreement effective for the next 25 years deals with power trade, cross-border transmission lines and grid connectivity.

Nepal’s energy secretary Rajendra Kishore Kshatri and his Indian counterpart Pradeep Kumar Sinha signed the document at a function held at Singha Darbar, the official seat of Nepal government.

“It is a historic moment. I am sure the PTA will throw up new vistas of cooperation in the power sector between India and Nepal,” Sinha told journalists after the signing ceremony.

As per the deal both sides agreed to set up permanent Joint Working Group and Joint Steering Committee headed by joint secretaries and secretaries respectively. Both committees will meet twice every year.

These two bodies will monitor all ongoing works in the power sector and explore new areas of cooperation.
“The PTA will help both countries go forward in our endeavour to supply power 24/7 to all consumers in our countries,” Sinha stated.
Terming the agreement as path breaking Nepal’s energy secretary Kshatri said it will create opportunities for power trade among all neighbouring countries in the South Asian region.
“To sell power Nepal needs a market. The deal will provide us non-discriminatory access to the Indian market. Till we generate surplus power, we will be able to import it to tide over our needs,” he said.

India assured financial and technical assistance in upgrading the transmission lines between both countries so that Nepal is able to tide over its crippling power crisis with more import of power beginning the end of next year.

At present Nepal imports nearly 200 MW from India, but the figure could increase after the Dhalkebar-Muzzafarpur transmission line is completed. Once Nepal starts generating surplus power within the next 6-7 years, the same transmission lines will be used to export power to India.

Monday 20 October 2014

Energy: The planning vs delivery gap




The recent Supreme Court judgment cancelling all coal block allocations from 1993 till 2010 has hit power companies hard. 

In an interview with Benny Antony, Tata Power Managing Director and Chief Executive Officer Anil Sardana discussed the impact of the ruling, the company’s expansion plans in power, including renewable energy, and the future of the Mundra power project.

The Indian power scene has changed rapidly over the last five years. How do you see it five years down the line?

Over the last five years, installed capacity of the Indian power sector has grown from 105 GW in 2007 to 223 GW by 2013. However, the road that lies ahead of us is flecked with innumerable challenges that result from the gaps that exist between what’s planned versus what the power sector has been able to deliver, including deteriorating coal supply at one end of the value chain and poor financial outlook of discoms. This is a matter of great concern, as the buyer of merchandise has to be solvent and efficient, failing which fiscal health of all associates down the value chain will be impacted, leading into a vicious and unviable circle of uncertainty. Going forward, a combination of tariff increases, distribution reforms, open access and enforcement of the ‘obligation to serve’ is required.

You are the country’s largest private power company so far. What are your plans to maintain your leadership as far as installed capacity is concerned?

Tata Power today has total operating generation capacity of 8,613 MW, and plans to have 18,000 MW of generation capacity, 4,000 MW of decentralised distribution generation & distribution, 25 million tonnes per annum of energy resources and 10-X growth in value-added businesses by 2022. Tata Power has a series of green field projects in the pipeline for the next few years, both in India and abroad. Some of the projects under development in India include the Dugar Hydroelectric JV Project, the 1,600 MW coastal Maharashtra project, the 1,320 MW Maithon Expansion Project, the 1,600 MW Mundra expansion project and the 1,980 MW Tiruldih Power Project in Jharkhand. 

If you have to suggest ways to the government to solve the energy crisis issue of the country. What would be your suggestion?
The need of the hour is to develop a comprehensive national energy security policy which takes into account requirements of all states/UTs. The Indian government would also do well to enter into partnerships with fuel rich countries to meet its long-term energy needs. Regulatory reforms also need to be undertaken to make the domestic coal industry more competitive. Power distribution segment needs significant reform-intervention and a combination of tariff increases and distribution reforms.  The commitment of states to support the developers in obtaining clearances, land free of encumbrances, etc is also important. 

The coal issue has disturbed the infrastructure industries growth at large. How will this impact the industry?

The domestic power sector has faced a coal shortage with production from Coal India being flat over the last 5-7 years. India needs to create an enabling policy framework wherein use of imported fuels would be dealt with properly specially in terms of its commercial dispensation. Further, the rise in imported coal fuel prices due to regulatory issues in global markets including Indonesia would also need to be dealt lest developers would not create downstream investments here in India to use imported coal.We believe that government should have a national energy security policy.  


Do you think that your overseas capacity is likely to exceed domestic capacity soon given the bottlenecks locally? What would be investments for the same and how are you going to finance all of it?

The company is setting up 2,600MW of capacity abroad. In line with the international strategy, we continue to evaluate investment opportunities in Africa, Turkey, Middle East, South East Asia and the SAARC region. 
For the next 3 years, the company has sketched out a capex of roughly Rs 2,500 crores per annum.  

By when do you expect compensatory tariff for Mundra UMPP to be approved? Would you contemplate exiting Mundra if compensatory tariff is not approved?
The Supreme Court has stayed payment of the compensatory tariff by procurers as was allowed as per APTEL’s interim order of July 22 and has further asked APTEL to expedite the case hearings and take a final decision on the subject matter quickly. As the case is already being heard by the APTEL, we await a quick resolution of this issue through the required judicial process. We are hopeful that the Honourable court will understand our plea and we look forward for a favourable judgment. 


The Mundra project has been delivering competitive power despite having under recovery on fuel charges. You have sold stake in one of your Indonesian coal mines and continue to hold stake in Kaltim Prime Coal. Given that the Mundra hike has not been approved, will you look at selling stake in Kaltim Prime Coal to finance your future plans?

Tata Power exited the PT Arutmin Indonesia stake in January this year. The option to sell 5 per cent in KPC and its related power company will provide us the flexibility to raise additional funds to meet current challenges. If this option is exercised, there will be no impact on coal supplies to our plants since we will stay invested in KPC mines to the extent of 25 per cent and our coal supply agreement will continue as it is. 

The Trombay plant has been facing technical issues on and off. By when do you expect the whole issue to be solved?

The peak load of Mumbai was 3,217 MW in 2013, as against the embedded generation capacity of 2,300 MW. The remaining power requirement gap is usually bridged by importing power to the city via Tata Power’s transmission network. Mumbai will always remain constrained on its transmission system and it is difficult to bring lines into Mumbai which will carry additional power, as it is landlocked. An integrated system needs to be at work to protect Mumbai from load shedding in future. The transmission system will remain constrained and therefore in order to meet the increasing demand of power, Mumbai must have its own source of generation.

What is your view on the recent court ruling on the cancellation of coal blocks by the Supreme Court? Two of your blocks have been cancelled as well.  The cancellation of the coal blocks is going to affect the power sector as far as domestic fuel availability is concerned. Now, the auctioning of the coal blocks may increase the fuel cost and, subsequently, increase perpetual unit cost of production. The current tariff mechanism provides fixed tariff and does not allow escalation to cover fuel cost, thus making the projects unviable.
Tata Power had two coal blocks jointly allocated to it, along with other co-allocatees. We understand that the Supreme Court by its order has cancelled all but four blocks. Tata Power is currently studying the order & will discuss the same with Board before having a view point. Tata Power would look forward to opportunities of having a new, legally enforceable framework by which coal blocks could be awarded, perhaps at an early time.

Sunday 19 October 2014

More power to the regulators


There's hope Despite regulatory concerns KK MUSTAFAH
Electricity regulators are under the thumb of State Governments. They are unable to revise tariffs periodically
The honeymoon period of the new government is over and it is evident that the focus has now shifted towards policies and programmes. Prime Minister Narendra Modi has spelt out the role the States have to play in the new paradigm of governance.
States can either be drivers of growth or can become “hurdles” in development. Pratap Bhanu Mehta in a recent article (Indian Express, August 29) rightly observes that a serious challenge to regulatory institutions comes from the States.
For instance, the power regulators, namely, the Central Electricity Regulatory Commission (CERC) and the State Electricity Regulatory Commissions (SERCs), have been overly influenced by the Centre and State Governments for more than a decade.
Despite protection of tenure and other safeguards in law, the state regulatory commissions have failed in their mandate of balancing the interest of consumers and producers, or in stimulating competition in the sector. Criticism from different corners, for not being effective as regulators, seems to have had little bearing on their functioning.

Ineffective agencies

Regulators have proved inept in discharging their legal duty of revising tariffs annually. The Appellate Tribunal for Electricity intervened and directed them to do so in 2011.
Perhaps, it was too naive to expect that these institutions, lacking in credibility and institutional strength, could function in a fair manner and effectively carry out their mandate. It is evident that states have not come to terms with regulatory institutions. Not just that, States do not let go of any opportunity to intervene to serve vested or political interests.
Equally, perhaps, the regulators were overwhelmed by the prospect of enforcing efficiencies and timely tariff revisions. No wonder, they preferred to accept the State Governments’ intervention in these matters, as it was the easier option.
Regulatory capture by the States has pushed the power sector into a dire crisis. Losses of the state power utilities (SPUs) touched ₹2 trillion in FY2011-12.
As a consequence of the regulatory mess, the power sector has run up a debt of ₹5,00,000 crore, to both public sector and private sector banks. These lenders are already grappling with the restructuring of debt of ₹200,000 crore to SPUs.
Financial institutions can’t escape their responsibility of becoming “revolving window” for short term loans and consequently building an “overhang” of huge debt which could turn into non-performing assets. Bailing out power utilities has not helped in the past (recall the financial package to them in 2001) and it is unlikely that financial health of the SPUs can be restored, given the current state of regulatory bodies — the fact that they have been reduced to handmaidens of the state governments.

Regulatory capture

The institutional integrity of the State regulatory commissions should be a matter of great concern. The Supreme Court rightly, in its September 16 order, underlined the danger of interference in the functioning of autonomous bodies in a case relating to the University Grants Commission (UGC). The apex court censured the “intrusive and unwarranted interference” by the government in the functioning of an autonomous body.
The loss of credibility of regulators has adversely affected the power sector. The State Governments do not realise that regulators are expected to deal with investments across the value chain in the industry.
Detailed processes involving tariffs and pricing of electricity are involved. The objective is to balance the interests of all stakeholders, a process that is meant to be driven by observing constitutional principles, fairness, transparency and equity. Unfortunately, States have instead treated the regulator’s job as a “sinecure” for loyal politicians or pliable and favoured officials. The bureaucratic-cum-political nexus has continued over the years and the ministry of power has helplessly watched the same.

Credibility crunch

Delays, and the absence of credibility, in the appointment of members and chairpersons to these institutions are now commonplace. In a recent report of Forum of Regulators it was revealed that in several States, positions of chairpersons and members are vacant since 2013 with a view to find the so-called “right” persons. In Haryana, the State Government was in a great hurry to select the chairperson of the power regulator, perhaps before the election code was to be enforced.
The incumbent chairman was made to resign a fortnight before his actual tenure was to end. The Ministry of Power was a party to this “administrative coup” in violation of transparency, fairness, equity and reasonableness.
The Modi government’s emphasis on performance will be judged by integrity and autonomy in the selection process.
The States’ tendency to harm to regulatory institutions would defeat the objective of promoting investments in infrastructure and power, from countries like Japan and China.
Will economic regulatory institutions be given genuine autonomy by the States? This is something that the new government has to ensure.

Tuesday 14 October 2014

Power crisis: Uttar Pradesh open to purchase from open market

LUCKNOW: Having taken sharp criticism from various quarters on the dismal power front, the Akhilesh Yadav government is all set to open its door to purchase of power from the open market. The UP Power Corporation Limited (UPPCL) would soon, for the first time, invite bids from open market to procure 700MW power to be wheeled into the state grid.

The move comes in the wake of low generation from Central as well as state-owned power plant, ostensibly because of the coal crisis. The crisis has been accentuated further by repeated snags in power plants that threaten to dip power generation significantly.

UPPCL managing director A P Mishra confirmed that the corporation would select most suitable bidder to supply power at the lowest rate. Mishra said power generation from Centrally owned units has dipped to over 2000MW because of coal shortage. This was besides the repeated tripping of power plants in the state sector. "The crisis has been rising alarmingly for the state and there appears no other option but to go in for buying power from open market," he said.

The state government, significantly, has also decided to turn to the open market route from October 2016, which is a month ahead of the next assembly elections due in 2017. Sources said the state government would be purchasing around 1500MW of power from the open market for a period of three years.

Mishra said the aim was to provide 18 hours power supply to rural areas and 24 hours to urban areas. Presently, rural areas are subjected to heavy rostering that often gets prolonged to over 20 hours. Likewise, major towns like Lucknow, Noida, Ghaziabad and Agra are also subjected to rostering in the wake of power shortage.

Purchase of power from open market comes close on the heels of heavy buying of power from the energy exchange. In fact, UPPCL has been buying around an average of 30 million units of power from the energy exchange for the past few days.

Stage set for reforms in coal sector



The Supreme Court this week scrapped the allocation of all but four of the 218 coal blocks awarded between 1993 and 2010. While the move gives the government an opportunity to make a fresh start and put in place a transparent rules-based regime in the allocation of coal, it also sets in motion attendant problems of unwinding investments and loans already made in some of these projects.


Further, this has disruptive potential for the power sector, as a tenth of the existing power capacity in the country comes from captive power. The verdict, an implicit indictment of the practice of crony capitalism, came a month after the apex court said the allocation of coal fields had been illegal and arbitrary and resulted in the “unfair distribution of national wealth”. In the 25 August ruling, the court had refrained from cancelling the allotments, choosing instead to assess the possible impact of such a move.


The bench, headed by chief justice of India R.M. Lodha who retires on 27 September after a short tenure of five months, said it intended to correct the “wrong” done by successive central governments. “These proceedings look to the future in that by highlighting the wrong, it is expected that the Government will not deal with the natural resources that belong to the country as if they belong to a few individuals who can fritter them away at their sweet will,” the bench observed.


The order is reminiscent of the apex court’s order in the 2G telecom spectrum allocation; in 2012, it annulled all 122 licences awarded to telecom companies in 2008 after finding fault with the ‘first come-first served’ allotment process. Cases like the coal field and spectrum cancellation served as a “great signalling mechanism”, said Rahul Singh, an assistant professor of law at National Law School of India University, Bangalore.


“The day the court comes to know that there has been such crony capitalism, it will cancel the same irrespective of whether it was 10 years or 20 years before. Earlier there were considerations when there were vested interests attached, and unsettling a lot of settled mechanism was avoided, but not so today.” Shares of metal and power companies that have invested heavily in the belief that they had secure fuel supply, and banks that have an estimated Rs.5 trillion of exposure to the power sector alone, plunged after the ruling, which opens the way for auctioning of the cancelled fields. The companies with operational coal blocks that were affected include Jindal Steel and Power Ltd (JSPL), Usha Martin Ltd, Jindal Power Ltd, Hindalco Industries Ltd, Tata Power Ltd, Monnet Ispat Energy Ltd, Sova Ispat Ltd and Jai Balaji Industries Ltd.


“The government should have an alternative (plan) as a lot has been invested…Hope to learn about the government’s action plan in the near future,” Aditya Birla Group chairman Kumar Mangalam Birla said. The group controls Hindalco. “Tata Power would study the order and discuss the same with Board before having a view point,” Tata Power said in a statement. “Tata Power would look forward to opportunities of having a new, legally enforceable framework by which coal blocks could be awarded, perhaps at an early time.” “It is going to impact the investments that have already made,” said Sushil Maroo, chief executive officer at Essar Energy Ltd.


“Now it is up to the central government to come up with a clear policy to mitigate the risk. Every single contract would need to be revisited post this decision.” The court allowed 42 blocks that are producing the mineral, or are ready to produce, time until 31 March 2015 to stop operating. The 42 coal blocks will be taken over by Coal India Ltd (CIL), which also has till March-end to “adjust to the changed situation and move forward”. photo As part of the ruling, the firms allowed to continue operating the 42 mines will have to pay a fine of 295 rupees ($4.80) for every tonne of coal extracted. The companies with the four ongoing contracts are exempt. Chintan J. Mehta, an analyst with Mumbai based Sunidhi Securities and Finance Ltd, said that out of the allottees of the 42 blocks, Hindalco and JSPL would have to suffer the highest penalties. Mehta said that as per his calculations, Hindalco may have to cough up Rs.600-800 crore and JSPL would have to pay Rs.1,800-2,000 crore.


The apex court spared two coal mines operated by Reliance Power Ltd, which won them through competitive bidding, and one each by state-owned NTPC Ltd and Steel Authority of India Ltd (SAIL), that had no joint venture partners. “The Central Government is confident, as submitted by the learned Attorney General, that the CIL can fill the void and take things forward,” the court said. Still, cancelling the allocations could potentially plunge the power sector into a crisis. Because of limited domestic coal supplies, companies have had to resort to imports. Half of India’s thermal power stations had less than a week’s supply of coal on hand as of Monday, the lowest since mid-2012 when 620 million people were cut off in one of the globe’s worst blackouts ever. Coal block allocations have been under the scanner since 2012, when the Comptroller and Auditor General of India (CAG) said the allotments had caused notional losses to the tune of Rs.1.76 trillion to the exchequer.


“The ruling is more severe than the industry was hoping but it sends a clear message about India taking a stand against the improper allocation of national resources and in favour of improving transparency and good governance,” said Sushil Jacob, a lawyer at London law firm Linklaters.


Legal hurdles may still persist, said Dipesh Dipu, an energy analyst and a partner at Jenissi Management Consultants. “This will be another round of nationalization. It can have legal challenges. The coal blocks may have been allocated unfairly, but what about surface rights and land mineral rights?” he said. Attorney General Mukul Rohatgi said over the phone that the government could consider an ordinance to overcome legal hurdles that may arise out of the apex court’s judgement. He said that the deallocated mines would revert to the government and would be put on the auction block in case of private companies or given to government companies.


To acquire the land from the allottees, one of the options the government could look at is bringing in an ordinance to take back allotted land from the companies and compensate them, he added. Rohatgi, however, said that he was not aware of the exact thinking of the government on this matter and that an ordinance was one of the options available to it.

Sunday 12 October 2014

GE to showcase the world's largest, most efficient turbine technology and upgrade solutions at POWER-GEN Middle East



Abu Dhabi, UAE; October 12, 2014:


As the Middle East region focuses on accelerating infrastructure investment to boost its power sector, is putting the spotlight on enhancing power sector efficiencies through its advanced portfolio of industry-leading technologies at POWER-GEN Middle East to be held from October 12 to 14, 2014 at the Abu Dhabi National Exhibition Center.


One of the highlights of GE 's participation at the event is the regional launch of the world's largest and most efficient gas turbines - the 9HA and 7HA for 50 and 60 hertz applications. GE 's latest air-cooled H-class technology operates at more than 61 percent combined cycle efficiency and leads the industry with cleaner, reliable and cost-effective conversion of natural gas to electricity. The 9HA also leads the industry in output, exceeding 470 megawatts (MW) per unit while using less gas per MW than any other turbine on the market. The HA turbines will help power plants in the region meet the growing demand for electricity, estimated to be increasing at 7 percent per annum over the next decade, according to research by the Economist Intelligence Unit.


Also in the spotlight is GE 's new 9EMax solution, a game-changing leap forward in 9E gas turbine performance that redefines how customers in the Middle East can quickly deliver more power, at lower costs. This breakthrough technology can further elevate the output and efficiency of existing GE 9E gas turbines while empowering power providers to rapidly and cost-effectively deploy the solution. The technology harnesses advanced hardware, software and data analytics from GE 's Predictivity solutions platform.


Mohammed Mohaisen, CEO, GE Power Generation Products & Services Sales, Middle East and North Africa (MENA), said: "The Middle East's power sector is witnessing a transformational shift towards cleaner resources in addition to a focus on increasing output by strengthening plant efficiency. This two-pronged approach, which supports the regional governments' goal for a sustainable energy future, is addressed by the advanced technologies that GE is showcasing at Power-Gen Middle East."



He continued: "The HA gas turbines lead the industry in total life cycle value and underline GE 's commitment to R&D and innovation to deliver cutting-edge solutions for our customers. The 9EMax solution can upgrade installed 9E gas turbines to produce additional power far quicker and at significantly lower costs than building new plants. Through our participation, we are also underlining our strong presence in the region, supporting nearly two-thirds of the total power generated using our advanced gas turbines."


GE 's technologies present an ideal fit for the Middle East region and other parts of the world that are increasingly emphasizing the diversification of their energy mix. The turbines and solutions to be displayed at the GE pavilion also reflect GE 's focus on providing technologies that are tailored to provide better outcomes to its customers and partners.



GE 's senior business leaders will also share their expertise on various topics related to power sector efficiency at the POWER-GEN Middle East 2014 Conference.


Visit GE 's pavilion, stand E2 at POWER-GEN Middle East 2014 at the Abu Dhabi National Exhibition Center (ADNEC).


For more information, please visit GE 's POWER-GEN Middle East event website at events.gepower.com/#/press-room. Follow GE Power & Water and GE Power Generation on Twitter @GE_PowerWater and @ge_powergen, and on LinkedIn.


About GE :
GE works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. www.ge.com.


About GE Power & Water:
GE Power & Water provides customers with a broad array of power generation, energy delivery and water process technologies to solve their challenges locally. Power & Water works in all areas of the energy industry including renewable resources such as wind and solar, biogas and alternative fuels; and coal, oil, natural gas and nuclear energy. The business also develops advanced technologies to help solve the world's most complex challenges related to water availability and quality. Power & Water's six business units include Distributed Power, Nuclear Energy, Power Generation Services, Renewable Energy, Thermal Products and Water & Process Technologies. Headquartered in Schenectady, N.Y., Power & Water is GE's largest industrial business.

Saturday 11 October 2014

Must-know: Exelon’s position in the power industry

Exelon Corporation (EXC) is one of the largest power companies in the U.S. Its operations include all aspects of the power business—like electricity generation, electricity sales, and the transmission and delivery of electricity to end consumers.
The company owns more than 35,000 megawatts (or MW) of power generation assets in 18 states in the U.S. and portions of Canada. In 2013, Exelon reported operating revenues of $24.9 billion. This was the highest among all the power companies based in the U.S.
Gen Cap
Brief history of the company
Exelon is based in Chicago. It was formed in 2000 as a result of a merger between PECO Energy and Unicom. Exelon separated its unregulated power generation business from its utility business in 2001. This was part of the corporate restructuring plan announced during the merger. Exelon sells generated electricity. It sells the electricity at competitive rates in the wholesale markets or to its retail customers.
Exelon’s position in the industry
Exelon’s operations are split into the power generation and utility network segments. All of the activities related to producing power are part of the power generation segment. The utility network business focuses on delivering power to the end consumer. This makes it hard to directly compare the company’s peers.
However, competitive power generation forms nearly 60% of Exelon’s revenue. Companies that operate in the unregulated markets in U.S. are considered to be competitive. They sell electricity at market prices—compared to the cost-based prices in regulated markets. Independent power producers (or IPP)—like NRG Energy (NRG), Calpine Corporation (CPN), and Public Service Enterprise Group Inc. (PEG)—are some of Exelon’s peers. Exelon is part of the Utilities Select Sector SPDR (XLU).

Friday 10 October 2014

Japan wades into Myanmar power sector

http://cdnph.upi.com/sv/em/upi/UPI-6501412941186/2014/1/f24c6a606b4944440541d45f0eef7db5/Japan-wades-into-Myanmar-power-sector.jpg
Japanese company proposes new coal-fired power plant for emerging Myanmar. UPI/Stephen Shaver
TOKYO, Oct. 10 (UPI)-
Japanese energy company Marubeni Corp. said Friday it signed a deal with Myanmar's government to advance what it says is a low-carbon coal-fired power plant.
The Japanese company said electricity demand in Myanmar is increasing because of recent economic growth.
"Marubeni believes it can contribute to the reliable power supply in Myanmar by materializing this project and thereby participating in large power generation projects in Myanmar," it said in a statement.
The company signed an agreement with the Ministry of Electric Power to carry out a feasibility study for a coal-fired power plant "utilizing environmentally friendly and highly efficient technology." The plant, if developed, could generate as much as 2,000 megawatts of electricity.
The project would include the construction of transmission lines from the power plant in southern Myanmar to central Thailand.
International companies started investing more in Myanmar after general elections ended a period of military rule in 2010. Human rights groups say economic pressure, not rewards, is needed to maintain the momentum of reforms.
The Myanmar government announced the pardon and release of 3,073 prisoners earlier this week.

Bhel bags Rs 7,800 cr contract for power project

State-run Bharat Heavy Electricals Ltd bagged a Rs 7,800 crore contract for setting up a 1,320 MW thermal power project in Tamil Nadu. 

Valued at around Rs 7,800 crore, it is an EPC contract (Engineering, Procurement and Construction) from Tamil Nadu Generation and Distribution Corporation Ltd (TANGEDCO), Bhel said in a statement. 
The order is for setting up a 2x660 MW coal-fired thermal power project at Ennore Special Economic Zone in Tamil Nadu. 

The power plant will be constructed on a reclaimed ash pond, calling for specialised civil design, utilising an otherwise barren land. Bhel's scope of work in the project includes design, engineering, manufacture, supply, construction, erection, testing and commissioning for the EPC Package. 

The equipment for the contract will be manufactured at Bhel's Trichy, Haridwar, Bhopal, Ranipet, Hyderabad, Bangalore and Jhansi plants, while the company's Power Sector - Southern Region will be responsible for civil works and erection or commissioning of the equipment. Bhel scrip closed at Rs 201.95, up 2.10 per cent, on the BSE.





Thursday 9 October 2014

Power Ministry to sell LEDs at Rs 10

New Delhi: A day after the Nobel Prize in physics was won by the scientists who invented blue light-emitting diodes (LEDs), the power ministry Wednesday launched a business model enabling the sale of LEDs to households at Rs.10 against the market price of Rs.400. 
"The Bureau of Energy Efficiency (BEE) together with the Energy Efficiency Services Limited (EESL), which is a joint venture of four central public sector undertakings in the power sector, have worked with electricity distribution companies (discoms) to develop a business model under which EESL procures LED bulbs in bulk and sells them to households at Rs.10," an official release here said.
"The discoms then repay EESL, over a period of five to eight years from the savings that accrue due to use of this energy efficient lighting technology," it added.
Under an MoU between EESL and the Andhra Pradesh government, EESL last week completed the procurement of two million LEDs, the statement said.
"Almost the entire lighting industry participated in the bid and the lowest quoted price was Rs.204 per LED bulb," it added.
Andhra Pradesh Chief Minister N. Chandrababu Naidu Thursday launched the Energy Conservation Mission’s Demand Side Efficient Lighting Programme (DELP) in the state, which promotes replacement of incandescent bulbs with energy-efficient LED bulbs. The DELP is covering 3.7 million households, who will be provided with two high quality LED bulbs each at a subsidized price of Rs.10.
The programme started in Guntur, to be followed by Anantapur, West Godavari and Srikakulam districts.
The union power ministry has already decided that all below-poverty line households at the time of electrification under the Rajiv Gandhi Grameen Vidyuthikaran Yojana (RGGVY) would be provided LED technology.
LEDs are emerging as the most energy-efficient source of lighting as they use one-tenth of the energy of a normal incandescent bulb and half as much energy as a Compact Fluorescent Lamp (CFL) to produce the same amount of light.
The first LED lamp made in India, in 2010, was sold for Rs.1,200, the ministry said.
EESL has already completed a number of projects to retrofit existing streetlights to LED streetlights as well as a 750,000 LED bulb replacement project for households in Pudhuchery, the statement said.
"Increase in domestic demand would further reduce cost of LED bulbs with larger production capacities getting created in India," it said.
All lighting manufacturers have established domestic manufacturing facilities for LED-based lighting system, and have started training programmes for engineers and demonstration programmes in various buildings to showcase this technology, it added. 

Wednesday 8 October 2014

Tata Power looks to expand global footprint

Anil Sardana


While the Union Government sets about revamping the policy framework for the infrastructure sector, Tata Power is setting its sights on business opportunities in Asian and north African countries.

“India continues to remain the primary focus but due to fuel shortages, land availability and other delays, we started making investments in projects in select international geographies to strengthen and diversify the portfolio,” says Tata Power MD and CEO Anil Sardana.

The company’s plan for the future includes a mix of conventional and clean energy. It intends following the same strategy in its overseas expansion. Tata Power has prioritised four regions — Africa, the Middle East, the immediate neighbourhood and South East Asia — for setting up 2,600 MW of capacity.

Mr. Sardana mentions two overseas breakthroughs in clean energy that will encourage it to target at least a quarter of its planned foreign generation capacity from this segment. A Tata Power subsidiary recently signed an agreement for developing hydro projects in Georgia for sale of power primarily to Turkey. The company has also achieved financial closure of its 230 MW wind project in South Africa.
On the Supreme Court verdict cancelling the coal block allotments, Mr. Sardana feels any effort to make good the shortfall in domestic fuel will adversely affect the economic cost of power as also the current account deficit.

He is of the view that the distribution reforms in the power sector should be an area of priority. India needs immediate distribution reforms and that too in a massive way, he says. “There is lack of political will in pursuing the reforms, and whatever is being done today is more to tick the box,” he observes.

While the power sector in India witnessed a few success stories in the last four to five years, the road ahead is challenging, he says. “There is the deteriorating coal supply situation and poor financial outlook of discoms, which is a matter of concern because the fiscal health of all associates in the value chain will get impacted. Going forward, a combination of tariff increases, distribution reforms, open access, and enforcement of the ‘obligation to serve’ is required,” says Mr. Sardana.