Power Sector thread

State-run hydro power generation company NHPC would invest around Rs 15,000 crore for developing two projects in the neighbouring country Myanmar.

"NHPC is preparing detailed project report (DPR) for 1,200 MW Htamanthi and 660 MW Shwezaye Hydro Power Projects on Chindwin River in Myanmar," the company said in a statement.

The cost incurred for producing one megawatt of hydro power is about Rs 8 crore.
Currently, NHPC has 14 operational power stations with a total installed capacity of 5,295 MW. NHPC has commissioned the 14.1 MW Devighat Project in Nepal and 60 MW Kurichu Project in Bhutan on turnkey basis.

The company is providing its technical expertise in the area of hydro power development in countries like Myanmar, Bhutan and Tajikistan.

It is expanding its international operations and is harnessing the hydropower potential available abroad.

The company is also preparing DPRs for the 670 MW Chamkarchhu-I and 1,800 MW Kuri-Gongri HE projects in Bhutan.

NHPC has resigned signed a Memorandum of Understanding (MOU) with Orissa Hydro Power (OHPC) and Government of Orissa for formation of a Joint Venture Company (JVC) with OHPC to develop three Hydro-electric Projects with a total capacity of 320 MW in the state.

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As many as 20 power generating companies, including Tatas, Adani, Essar group and NTPC have put in their initial bids for executing the 4,000-MW ultra mega power project (UMPP) in Orissa.

"Twenty companies have shown interest in setting up the 4,000 Mw UMPP at Bedabahal in Orissa," according to the first round of bid which was opened today, sources in the know said.

The other companies which have submitted bids are L&T, JSW Energy, Nalco, Welspun Energy, AES India, Torrent Power, Jindal Power, GVK Energy Ventures, Lanco Hydro Power Ventures, GMR Energy, Senator Energy, Jaiprakash Power Ventures, Gujarat Paguthan Energy Corporation, CESC, Jindal Power, Sterlite Energy, Essar Group firm Vadinar Power Company and Aditya Birla Power Venture.

The UMPP at Orissa is the fifth in the series. So far, four UMPPs have been awarded, with Reliance Power bagging three-- Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaiya (Jharkhand)--and Tata Power executing the fourth one at Mundra in Gujarat.

The Power Ministry plans to set up 16 UMPPs over a period of time to tide over the electricity shortage in the country.

Coal blocks for the Orissa UMPP were cleared recently after delay of over an year due to enviornmental hurdles. These blocks were stuck in the policy of 'Go, No-go' regime.

The three coal blocks allotted to the project are -- Meenakshi-A, Meenakshi-B and Meenakshi Dipside.

The preliminary bids would be evaluated and the bidding companies which qualify the criteria set by PFC Consulting -- the wholly-owned subsidiary of Power Finance Corp and also the nodal agency for this UMPP -- would be asked to submit the final bids.

"It can take anywhere between two to three months for the evaluation of these initials bids and the qualifying companies would be asked to bid during the final round," sources added.

Once the initial bid evaluation is complete, the qualified parties would be mandated to submit the technical and financial bids for the project, based on which the project would be finally awarded to the winner.

The next project for which the initial bids would be invited is likely to be the Sarguja plant in Chhattisgarh. The bids may be invited by the next month-end.

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On July 21, Sajjan Jindal-promoted JSW Energy said it had put its Ratnagiri expansion plans on hold due to costly imported coal. High cost of imported coal had already dented its profit. The company believes it would be wiser to defer the plan until there is some clarity on the issue of imported coal.

JSW is not the only company which has put its project on a pause mode. Reliance Power’s imported coal-based ultra mega power project (UMPP) at Krishnapatnam in Andhra Pradesh is yet to make any drawdowns from the Rs 13,125-crore loan which was tied up last year.

The company, like JSW, is looking for some solution to the imported coal issue, and has not responded to queries regarding the same.
In fact, many power projects have fallen victim to fuel troubles from domestic sources since Coal India, the monopoly producer, is unable to meet demands from the power sector. Captive coal blocks too had their own share of problems with the environment ministry putting sanctions on hold. Mixed with traditional land acquisition problems, loans to the power sector have become a recipe for disaster for many bankers.

M V Nair, the chairman of public sector Union Bank of India, indicated strain and slippages in funds lent to the infrastructure sector. While he said there was no big trouble yet, he did admit that many projects, including some power plants, have overshot execution milestones due to problems in fuel linkages and clearances. “This could turn some of them into non-performing assets,” he said.

The viability of imported coal-based projects, like the Krishnapatnam UMPP, has especially changed drastically after the Indonesian government decided to benchmark exported coal to international prices, making coal costlier. A Reliance Power spokesperson did not respond to an e-mail query on the steps being taken by the company to address lenders’ concerns.

Another imported coal-based UMPP in Mundra, Gujarat, has been able to tide over the lender concerns. Tata Power’s 800-Mw capacity is to be commissioned next month. “There may be changes in regulations but not in contracts in the next few months. These (increase in the price of Indonesian coal) are matters under discussion for more clarity in the coming months,” Tata Power MD Anil Sardana had told Business Standard earlier.

In case of other projects, while loans that had been drawn are yet to cross the red line, some more loans, sanctioned but not drawn, are hanging in the air. “In fact, a lot of power companies have not made any withdrawal from the loans sanctioned to them since last year. As much as 50 per cent of the loans sanctioned are still lying around without any drawdowns. Some of these might even expire very soon,” estimated a private sector banker.

Central Bank of India, another public sector lender, has an exposure of Rs 26,000 crore to the infrastructure sector and half of it is in power projects. “We are conducting a thorough review of our power sector exposure and we are halfway through. A clear picture about risks will emerge in 10 days,” said V R Iyer, executive director of the bank.

Many bankers lament that this has clogged money for banks which have already hit sectoral lending limits. Sources say some of the bigger banks like State Bank of India have even started charging a fee in addition to the commitment fee, to maintain the credit lines.

NEW LOANS BECOME TOUGHER

Debasish Mishra, senior director, Deloitte Touche Tomatsu, said a drawout of loans in many power projects is not according to schedule because a number of projects are running behind schedule.

“Because of several implementation risks with power projects and banks nearing their sector exposure limits, it’s getting tougher for new projects to have financial closure,” he said. Agrees Iyer, “We are becoming very choosy in extending new loans plus our scrutiny has become very stringent,” she said.

Banks which have already tightened their grip on the sector are putting in place more stringent lending measures for the capital-intensive industry. One of these is to seek promoter guarantees for financing projects. Until now, the project finance debt, which is lent to a special purpose vehicle, does not have any recourse to the parent company. But this might change, they say, as more bankers will rely on the parent companies’ guarantee.

To tackle problems related to fuel, banks are now asking companies to tie up for fuel a year before the commercial operation. Earlier, the popular practice was to allow them time till six months before commissioning. A top official from IDBI admitted that they have become jittery about lending to new projects.

The bank which syndicates a number of infrastructure loans, in addition to being a major lender to the sector, is also worried about loans in which drawdowns have happened. “We are keeping a close eye on them for future developments,” he said.

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Lanco Infratech today said it will invest over Rs 13,000 crore in setting up a 2,000-MW power plant and developing a coal block, which it has won through bidding from Maha Tamil Collieries, at Raigarh in Chhattishgarh.

"We have emerged as successful bidder and are selected as the Mine Developer and Operator (MDO) of Gare Pelma II coal block of Maha Tamil Collieries. We will set up a 2,000 power project using coal from the mine," Lanco Chief Executive Officer (Business Development) Nagaprasad Kandimalla said.

"We will invest Rs 12,000 crore in the power project and over Rs 1,000 crore in development of the mine. It might take four years for the projects to go on stream," he said.
Eight major companies, including GMR, GVK, Jindal Power, L&T, Reliance Coal and Sterlite, have participated in the bidding called by MTCL in July 2010.

"With this win and together with our existing coal assets of Griffin in Australia and Rampia block in India, Lanco group’s presence in resource sector has increased substantially to over 2 billion tonne," Lanco Executive Chairman L Madhusudan Rao said.

Kandimalla said that as per the agreement, Chhattishgarh, being the base state for the project would have the right to offtake 30% of the power generated from the project.

"The remaining half would be connected to the Tamil Nadu grid and the rest, we will sell on commercial basis," he said.

Maha Tamil Collieries is a joint venture between Tamil Nadu Electricity Board and MSMC, a government of Maharashtra enterprise.

Maharashtra may not get any power from the project. In stead, it has sought 23% coal produced from the mine, which has an 768 million tonne reserve of the fossil fuel.

The Coal Ministry allocated Gare Pelma Sector II Coal Block to Maha Tamil Collieries, which had in July last year invited expression of ingterest from interested parties to expedite the development of the mine.

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A high-level committee has approved 1,320 acre land for the proposed thermal power project by Jindal Steel and Power (JSPL) in Jharkhand's Godda district, a government official said here today.

"The state land acquisition committee headed by development commissioner has approved 1,320 acre land to JSPL for its proposed 1,200 MW [super critical] thermal power station in Godda," Special Secretary (Land and Revenue Department) AK Rastogi said.

The press conference was addressed by Land and Revenue Minister Mathura Prasad Mahato.

Rastogi, who was assisting the minister in replying to media queries, said the committee has also approved 326 acre land for the proposed 600 MW thermal power by Kolkata Sub-urban Electrical Supply Company at Ramgarh in Dumka district.

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The country's largest power producer, NTPC, today said it would invest about Rs 1 lakh crore in setting up of a nearly 9,500 MW hydro project in Arunachal Pradesh.

"We are talking to the Arunachal Pradesh government for setting up 9,500 MW project in the state," NTPC Chairman and Managing Director Arup Roy Choudhury told reporters here.

The company is preparing a detailed project report for the same.
NTPC also plans to commission its 800 MW Koldam project in Himachal Pradesh, next year.

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Engineering major Bharat Heavy Electricals (BHEL) is contemplating setting up a manufacturing facility in Latur in Maharashtra, a senior company official said today.

"The Maharashtra government has evinced interest to offer adequate land for the project. The product would be something allied to thermal power generation," Executive Director of BHEL (Tiruchy complex) AV Krishnan said.

He said BHEL board was yet to decide on the exact product range, size and investment for the new project, which he indicated would come under the jurisdiction of BHEL here.

BHEL complex here comprises of high pressure boiler plant and seamless steel tube plant in Tiruchirappalli, piping centre in Chennai and industrial valve plant at Goindwal in Punjab.

Besides the manufacturing facility in Maharashtra, discussions were on with Maharashtra Power Generation Corporation to install a 660 MW thermal power station in the state, Krishnan added.

BHEL is also planning to set up a 2 MW solar power generating plant in its complex here at a cost of Rs 17 crore, he said.

"A detailed project report had been submitted to the BHEL board for the formal approval," he said, adding it would become operational in 11 months once the board gave its nod.

On the long-pending joint venture power project with Tamil Nadu government at Uthangudi in Ramanathapuram District, he said only recently BHEL had been informed about the change in coal linkage to the unit and it is working on preparing a new design of the project.

The design drawings would be ready within two months, he added.

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Out of the total 19,796.5 MW planned for capacity addition in private sector for the 11th Plan, 13,761 MW has been commissioned till the last month.

In a written reply to a question in Rajya Sabha today, Minister of State for Power Shri K.C. Venugopal informed that mega power certificates are being issued to all power projects including private sector which meet the conditions laid down in the Mega Power Policy of Ministry of Power. It will enable the projects to avail zero custom duty on import of equipment.

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146 hydroelectric projects having total installed capacity of 40918.5 MW have been allotted to private sector by the State Governments. These projects are yet to be taken up for construction.

In reply to a written question Minister of State for Power Shri K.C. Venugopal said in Rajya Sabha today that the NHPC has been allotted 19 new projects by State Governments, which are in various stages of acquiring clearances, preparation of feasibility reports and detailed project reports. The Minister informed that the total hydro power potential in terms of installed capacity in the country is estimated at 1,48,701 MW.

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The electrification works in 98,174 villages have been completed and free electricity connections to 167 lakh Below Poverty Line households have been provided under Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) as on 15.07.2011.

In a written reply to a question in Lok Sabha today, Minister of State for Power Shri K. C. Venugopal said that though there have been delays in execution of the projects in some states, a number of steps have been taken for effective implementation of the RGGVY as follows:

i) The Government has set up an inter-Ministerial Monitoring Committee which periodically meets to sanction projects and reviews progress of implementation.

ii) States have been advised to set up district committees to monitor the progress of rural electrification works. All the states have notified formation of district committees.

iii) The States have also been requested by the Ministry of Power to hold monthly meetings under the Chairmanship of Chief Secretary to resolve the bottlenecks in implementation of RGGVY.

iv) The Ministry of Power as well as Rural Electrification Corporation, the nodal agency for RGGVY, conduct frequent review meetings with all the stakeholders, the concerned State Governments, state power utilities and implementing agencies for expeditious implementation of the scheme as per the agreed schedules.

v) For speedier and effective implementation of projects, execution of project has been taken up on turnkey basis.

vi) To ensure qualitative execution of rural electrification works, a three tier quality control mechanism has been enforced under RGGVY.

vii) Grant amount of BPL connection has been enhanced to Rs.2200/- in XI Plan from Rs.1500/- in X Plan.

viii) Benchmark, cost norms for village electrification has been revised upward

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As per the new definition, a village would be declared as electrified, if :

1) Basic infrastructure such as Distribution Transformer and Distribution lines are provided in the inhabited locality as well as the Dalit Basti hamlet where it exists.

2) Electricity is provided to public places like Schools,Panchayat Office,Health Centers,Dispensaries,Community centers etc.

3) The number of households electrified should be at least 10% of the total number of households in the village.

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NEW DELHI: , Amid a raging debate over the quality of power equipment from BHEL and Chinese companies, the government on Thursday said Chinese gears are of lesser efficiency compared to those supplied by the PSU.

"Power plants set up with Chinese equipment have not shown better performance than those using equipment supplied by Bharat Heavy Electricals Ltd (BHEL)," Minister of Heavy Industries and Public Enterprises Praful Patel said in a written reply to Lok Sabha.

He was responding to a question on whether power plants running on Chinese gear have shown better performance than those using BHEL equipment.

"In fact, Chinese supplied equipment have inferior heat rates (efficiencies) and the auxiliaries consume more power than that of BHEL. Secondary fuel oil consumption is also more."

"The time taken for synchronisation to commercial operation is much more than BHEL equipment," Patel said.

According to him, the average Plant Load Factor (PLF) for the last three years of Chinese units is as low as 68 per cent as compared to BHEL's 79 per cent.

PLF is an indicator of generation efficiency. Operational Availability of Chinese units has also been low as compared to BHEL units, he noted.

"These facts have been substantiated in the report of visit of CEA/NTPC team to China in March 2009, independent reports by JM Financials and CLSA Asia-Pacific Markets as well as records available with CEA," Patel pointed out.

In recent times, many private players such as Reliance Power have ordered Chinese equipment for their projects, including Ultra Mega Power Projects (UMPPs).

The debate over BHEL and Chinese sets comes at a time when the Indian power sector is projected to see an ambitious capacity addition of over 80,000 MW in the 12th five-year plan (2012-17).

State-owned BHEL synchronised 9,442 MW of generating equipment last fiscal.

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India Rejects Two Solar Projects; Solar Thermal Plants Pass​

India rejected two of 37 solar projects awarded in its first national auction, which aims to generate 20,000 megawatts of sun-powered capacity by 2022.

NTPC Vidyut Vyapar Nigam Ltd., or NVVN, the state-run power trader that will buy electricity from the plants, accepted 35 projects that were able to submit evidence they had arranged funding, the government said in a news release.

All seven solar-thermal projects, which account for 470 megawatts of capacity or 75 percent of what was awarded in the December auction, made the cut, Deepak Gupta, secretary of the New and Renewable Energy ministry, said today in New Delhi.

Companies building the larger thermal projects include billionaire Anil Ambani’s Reliance Power Ltd. (RPWR) and Lanco Infratech Ltd. (LANCI), one of India’s largest non-state power producers. They had faced forfeiting as much as 1.89 billion rupees ($42 million) in bank guarantees if not accepted.

Gupta declined to identify the two projects that were rejected except to say in a phone interview that each held a license to build a 5-megawatt photovoltaic plant.

Solar thermal plants use sunlight to heat liquids that produce steam for generators; photovoltaic plants use panels to turn sunlight directly into power.

The projects face no further deadlines before commissioning, Gupta said. The 140 megawatts of photovoltaic projects that have been accepted need to be completed by January. The solar thermal projects have until 2013.

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Sahara India Power Corp today said the company along with South Korean entity Korea East-West Power Co would set up power plants with a total capacity of 6,000 MW in the country.

Sahara India Power is part of the diversified Sahara group.

Both Sahara India Power and Korea East-West Power have entered into a pact for developing power plants, with a total capacity of 6,000 MW.
They would jointly participate in tariff-based bidding for Ultra Mega Power Projects (UMPPs) and also look at other opportunities in India.

The proposed 6,000-MW plants would include setting up of a 1,320 MW power Plant in Titlagarh, Orissa. This plant, based on supercritical technology, would be developed with an investment of about Rs 8,000 crore, Sahara India Power said in a statement.

"We are delighted to partner with Korea East-West Power Co, in setting up 6,000 MW power projects in India. The association will bring in world class high end technological advancements in power generation...," Sahara India Power CEO Ashok Bhargava said.

Korea East-West Power Co President and CEO Lee Gil-Gu said the company is happy to associate with Sahara India Power and would also bring its international expertise in power generation.

The entity is one of the five power producers spun off from Korea Electric Power Corp (KEPCO).

Indian power sector is expected to see a capacity addition of over 80,000 MW during the 12th plan period (2012-17), with significant contribution from private players.

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State-run power producer NTPC is exploring opportunities for retail distribution of power in upcoming mega industrial parks and special economic zones (SEZs). It will do this through its wholly-owned subsidiary, NTPC Electric Supply Company Ltd (NESCL).

It has a joint venture (JV) with the Kerala Industrial Infrastructure Development Corporation for retail distribution of power in industrial parks developed by the latter, SEZs and other industrial areas. The JV, KINESCO Power & Utilities Pvt Ltd, started its operations in February last year.

However, NTPC has not earmarked any investment for this. “The investment proposal will be made according to the available business opportunities. This move will help NTPC in forward integration in the energy chain,” NTPC chairman and managing director Arup Roy Choudhury said.
Set up in 2002, NESCL provides turnkey execution of substations and lines of sub transmission systems and consultancy for project management to utilities. It sets up a network for supply of electricity in a 5 km area around central power generating stations of NTPC.

NTPC had been planning to enter the power distribution business for some time now. It had earlier proposed to set up distribution networks in Kanpur, Patna and Mangalore, among others, but the plan could not fructify.

It produces more than 34,000 Mw. It plans to add 5,000 Mw by the end of this financial year. For the 12th five-year plan, it has plans to add 25,000-35,000 Mw. It has already signed power purchase agreements for about 100,000 Mw.

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