Power sector needs over $250bn investments: Report

New Delhi: India needs investments of over $250 billion for development of the power sector in the next three years, says a report.

"Total investment of over $250 billion is required for development of the power system during the 12th plan," Integrated Research and Action for Development said in its report.

This will give an ample opportunity for investors, developers, power equipment manufacturers in developing power projects and associated transmission infrastructure, it said.

During the 12th plan period (2012-17), India plans to add 88,537 MW capacity, out of which 69,280 MW will come from coal.

The government has planned additional renewable energy capacity addition of around 30,000 MW (5,000 MW wind, 10,000 MW solar and 2,100 small hydro).

Currently, India's installed generation capacity, from all sources of energy, is close to 2,50,000 MW.

"It is estimated that around 25,000 MW capacity is being sub-optimally utilised because of inadequate availability of domestic coal," the report observed.

It said that the country is likely to suffer a coal shortfall of 200 million tonnes (MT) by the end of the 12th plan period.

"India is facing lot of difficulties in production of domestic coal due to various reasons. The scenario is likely to remain the same till the end of the 12th plan," it added.

Due to higher share of coal-based power generation, which has a high environmental impact owing to greenhouse gas emissions, India is emphasising on clean energy development, which includes the use of hydro, solar, biomass and so on.

Gujarat to add 9000 MW of power in next 3 yrs

Gujarat's total power generation capacity will be raised to 32000 MW, by adding 9000 MW of power in the next three years, said Saurabh Patel, state minister for energy and petrochemicals on Friday.

"Power will not be an issue in Gujarat. The state will take the lead in the country in the energy sector. We will be adding 9000 MW in the next three years to boost our existing power generation capacity of 23000 MW," said Patel while addressing the inaugural session of a pre-Vibrant Gujarat summit event held at Gandhinagar.

However, he did not clarify if the capacity addition will be done by state utilities or by private power producers. In Gujarat, private power producers currently hold about 60 percent of the power generation capacities, while the state utilities contributes only 26 percent.

In his speech, Patel also pointed out that the lack of gas from the KG basin and the higher prices of imported LNG has made gas-based power projects unviable. "Even in a state like Gujarat, we have a huge capacity of 4000 MW that is lying idle due to non--availability of gas," he said.

The state government is yet to revive the capacity lying idle in the gas-based power plants, even after BJP-led NDA government came to power at the Centre almost four months ago.

"As far as Gujarat is concerned, next six months, to one year, will be tough. The crucial decisions taken by the Centre are equally going to affect the state," he said adding the cost of power in the state could go up in wake of the higher cost of LNG.

Talking about the recent approval granted by the Centre to swap the source of coal supplies between the state-run Gujarat State Electricity Corporation Limited (GSECL) and National Thermal Power Corporation (NTPC), Patel said, "A formal agreement will be soon be made between GSECL and NTPC to swap 1 million tonnes of coal. This will save Rs 350 crore of freight cost that is spent in transporting coal for the state utilities from the Korba mines in Chattishgarh." NTPC, meanwhile, uses the imported coal that lands in Gujarat for its power plants in Chattisgarh.

The minister also said the state government has spent about Rs 10,000 crore in strengthening the transmission network in the state during the last five years. "We have been working hard on our transmission network. The cost of land is going up and in days to come, there could be a lot of resentment among farmers against any land acquisition," he added.

Nepal clears GMR plan for $1.4-bn hydroelectric Plant

    Nepal’s centre-left cabinet has cleared the way for Indian firm GMR to build a $1.4-billion hydroelectric plant in the northwest of the country, a cabinet minister said, the Himalayan republic's biggest foreign investment scheme. The Nepalese government agreed to allow GMR in 2008 to construct the 900-megawatt Upper Karnali hydroelectric power plant in the northwest. But the project was delayed as the nascent republic was mired in instability with six government changes in as many years. Political parties also demanded greater benefits for Nepal from the scheme that is mainly aimed at exporting electricity to power-hungry India. Law minister Narahari Acharya said a cabinet meeting had approved the draft of an agreement to be signed with the Indian company. "This approval will open the way for different foreign investment projects that are in the pipeline to move ahead," Acharya said after a cabinet meeting.

"Concerns shown by different parties about the benefits from the project have been addressed as far as possible," he said.

     Officials said GMR and another Indian firm, Satluj Vidyut Nigam, plan to construct other hydroelectric plants in Nepal with a potential to generate up to 42,000 megawatts of electricity. China’s Three Gorges International Corp, is also in talks with Investment Board Nepal to build a $1.6 billion dam to generate 750 megawatts of electricity on the West Seti River in the same area, as Beijing competes with New Delhi for influence in Nepal. The GMR plant, set for completion in 2021, will provide 12% energy free to Nepal to ease a crippling power shortage and help its economy emerge from a decade-long civil war that scared away investors and slowed infrastructure projects. Officials said Investment Board Nepal will now sign a project development agreement with GMR, which will construct transmission lines across the border to transmit the remaining electricity to India. The agreement was expected to be signed during PM Narendra Modi’s visit in August but was delayed because some political parties wanted to ensure that the supply of water to irrigation canals on the same river would remain unaffected by the dam, as well as other benefits to Nepal.

   The Indian firm will give a 27% stake in the plant to Nepal. GMR will build a separate power house to generate two megawatts of electricity to be supplied to villagers in Achham, Surkhet and Dailekh districts where the project will be located, officials said. A group of former Maoist rebels says benefits to Nepal were not adequate and has vowed to protest against the scheme. Nepal's economy is expected to grow 4.6% in 2014-15, against the government target of 5.2%, with the country facing up to 16 hours of daily power cuts during the dry season when its rivers flow slowly.

Coal to power cos may get costlier

Coal India may be allowed to trade-off its e-auction cut with a higher price in fuel supply deliveries

 

Forced to cut the volume of coal sold through electronic auction, government-owned Coal India Ltd (CIL) is likely to go for a rise in the notified price for sales under fuel supply agreements with power companies.

The company bought peace with the Union coal ministry by agreeing to almost halve its e-auction sales at 30 million tonnes this year, to make more coal available for the fuel-starved power sector. However, this would come at a cost, with a rationale for a rise in the price of what is sold to companies in the sector, says the coal ministry in a communication to the Prime Minister's Office (PMO).

Union coal and power minister Piyush Goyal had earlier directed CIL to cut its e-auctions by more than 50 per cent to 25 mt in 2014-15 from 58 mt last year. This had been initially opposed by CIL's board of directors.

The process of reducing these sales is on. The e-auction sales rose 30 per cent over a year before to 14.65 mt in the April-June quarter but sources say it dropped to three mt in the next two months, July and August.

Officials say CIL's loss of revenue due to lower e-auction sale would be around Rs 2,000 crore this year. Hence, the suggestion on compensation with a price rise was mooted by the coal ministry.

“The ministry has sent an impact assessment file, which clearly says there would be 'price rationalisation' of the coal sold under notified prices to neutralise the revenue loss,” a source said. CIL itself would not comment.

Amid differences between the coal ministry and CIL over the matter, the PMO had earlier asked the ministry to assess CIL’s concern before taking a decision. In its response to PMO, the ministry has suggested 'price rationalisation'.

In 2013-14, CIL earned Rs 12,767 crore from e-auction sales, with average realisation of Rs 2,196 a tonne. This was 14 per cent higher than the Rs 11,148 crore in 2012-13.

A rise in coal price is also likely to factor in a rise in mining cost due to the rise in price of diesel and in the clean energy cess, earlier announced in the Union Budget. The latter has been doubled to Rs 100 a tonne. it has been levied on coal, peat and lignite since 2010, to fund and promote promote cleaner energy initiatives. CIL is likely to pass this on to its consumers.

Officials say a coal price rise also made sense as the government plans to offload 10 per cent stake in Coal India. An apprehension of falling profitability on account of lower e-auction sales could affect the company's valuation and a decision on a coal price rise would offset this.

CIL's shares ended on Wednesday at Rs 344.90 on the BSE exchange, up 1.5 per cent from Tuesday. Over the past year, the stock has had a low of Rs 236.03 and a high of Rs 423.85.

Jobs in the power sector

The energy industry is going to be the largest sector in terms of investment, growth and employment. Skilled labor is the only aspect in which the industry lags behind. 

If you are a talented civil or electrical engineer and are looking for a lucrative industry to work in then the renewable energy sector provides some promising leads. Energy is an important factor of growth in any economy of the world. In India's 12th (2012-17) five year plan it is the key to propel the country to achieve 8-9 per cent GDP growth rate. However, there is a dearth of qualified and skilled professionals whose expertise in the domain can be applied to make this growth rate a reality.

Rahul Gupta, director, Rays Power Experts Pvt. Ltd., blames lack of awarness about the sector among youngsters and even academicians for the dearth of manpower in this robust industry. Also, the sector has developed at a much faster pace than expected making it difficult for people to catch up. "As compared to other industries, this sector is relatively new and hence people are not sure of the growth potential and availability of jobs. Moreover, most private companies working in this industry are start-ups which makes it more risky for job seekers to enter this sector,"says Gupta.

Experts point out that engineering graduates are likely to choose well-known brands as their employers. Start ups in this sector may be doing exceptionally well however, students may not aware of the same. This lack of knowledge has resulted in low percentage of engineers choosing this sector to make a career.

Industry professionals want educational institutes to develop graduates through rigorous educational course, research, projects with industries and through industry institute interface. Students should be trained to do rigorous projects on energy related issues. "The courses should be designed in such a way that it focuses on economics, finance, marketing in general, and energy economics, energy policy, renewable energy, tariff policy, energy efficiency and sustainable development etc in particular," mentions Shailesh Aggarwal, former deputy manager (Projects), Jindal India Thermal Power Ltd.

There are a few institutes in the country which offer courses on energy sector (SEE BOX). Management Development Institute (MDI), Gurgaon runs a School of Energy Management in collaboration with United States Agency for International Development (USAID), Ministry of Power, Government of India. They have introduced an energy management training programme for executives working in the power sector. "Students after completion of this course get large number of opportunities in different energy related industries such as consulting, project financing, project development, renewable energy such as solar, wind and hydro and hard core energy generating companies," says Atmanand , dean and professor, MDI Gurgaon. After telecom revolution the next revolution in India is the energy revolution. India’s growth will be determined by the growth of energy sector. The budding energy sector will provide ample employment opportunities to the students from different streams.

The booming sector can be broadly divided into oil and gas, coal, renewable energy, nuclear energy, carbon market, energy efficiency etc. It requires technical acumen as well as managerial expertise. "While civil or electrical engineering is a pre-requisite for hiring. For our business development profile and sales team recruitment, we look for graduates who have a combination of BTech and an MBA degree," explains Gupta. For example, to set up a power plant, one requires managers with domain knowledge of mechanical, electrical and civil field. Also, for power trading professionals, there is a requirement to have an understanding of the energy market, electricity act and policies of the government, power grid rules and regulations etc.

However, experts complain that currently the industry, is mainly dominated by people with technical acumen rather than those with managerial skill sets. Thus there is a huge demand of efficient managers in this sector."Having been part of power sector for more than five years in project management field, I feel a professional can perform well only if they have an in-depth knowledge and know-how of that domain," says Aggarwal.

According to Rajesh Kumar, former deputy manager, Voith Hydro Pvt Ltd., any person working in any one of the sub-sectors would require thorough knowledge of aspects like—Market analysis, government policies, foreign policies, environment, financial, operation management, business analytics and distribution. "In my five years in the industry I have been engaged in design of Hydro Power equipments (Large Hydro Generator) and I have observed that the hydro Power in India is still untapped to its full potential. There is huge gap between what we can generate and what we are generating and that too when Indian economy is under pressure for high rate of growth," explains Kumar. A well qualified professional employed in the middle management level can expect a remuneration anywhere between Rs 10 -15 lakh per annum, but it depends from person to person and also depends on nature of the job profile.