Sie sind auf Seite 1von 68

November 2015

Volume 4 | Issue 07 | `100

www.InfralinePlus.com

The Complete Energy Sector Magazine for Policy and Decision Makers

BHEL
Sapped by power
woes

LNG
Infrastructure to
receive renewed
push
Power sector
awaits new dawn
with project

UDAY
P Umashankar Sunil Wadhwa Prashant Modi Markus Steigenberger
Former Power Secretary MD, IL&FS Energy Development MD & CEO Deputy Executive Director
GOI Company Limited GEECL Agora Energiewende

With UDAY, visible Coal has witnessed CBM operations should Indian utilities can
changes in the financials significant be auctioned to bidders learn lessons from the
of discoms may be seen regulatory reforms who have the necessary German and European
in a few years in recent past know how experience
InfralinePlus
The Complete Energy Sector Magazine for Policy and Decision Makers
November 2015 | Volume 4 | Issue 07

Editors Letter Editorial


The month of November was an eventful one for the
energy sector. One of the biggest announcements Shashi Garg, Editor
that came about was the $7 billion bailout package
provided by the government to revive power
distribution companies (discoms) in the country. News Team
The new scheme, christened as Ujwal DISCOM Ravinder Nagar
Assurance Yojna (UDAY), provides for financial
turnaround and revival of discoms and seeks to
ensure a sustainable solution to the problems faced Analysts
by the distribution sector. Today, distribution is the Prabhat Ranjan
weakest link in the power value chain with discoms having accumulated Kalyan Verma
losses of around Rs. 3.8 lakh crore and outstanding debt of approximately Rs.
4.3 lakh crore as on March, 2015, with interest rates upto 14-15%. Financially
stressed discoms are not able to supply adequate power at affordable
rates, which hampers quality of life and the overall economic growth and
development of the country. The scheme rightly focuses on four major areas, Business Development
namely improving operational efficiencies of discoms; reduction of cost of
power; reduction in interest cost of discoms and enforcing financial discipline Manoj Narang, Director
on discoms through alignment with state finances. Tel.: 0120-6799106 / 100
Email: manoj.narang@infraline.com
The response from the states has been quite positive to UDAY and many are
already in the fray to join the scheme. Our cover story provides a detailed
analysis of the scheme and also brings out the challenges which lay ahead
of the government to make this initiative a success. Advertisement
Anshul Sharma
The disinvestment of one of the worlds largest coal producer, Coal India
Tel.: 0120-6799136
Limited, has been a focus area of the government. However, given the
Mobile: +91 9953848494
volatility in stock markets, it is widely believed that this is not the right time to
Email: advertising@infraline.com 1
go ahead with such a move. Infact, there is a strong case for the government
to reduce its disinvestment targets for the current fiscal due to the lukewarm
response from the market. We bring to you an analysis of the whole issue
and what should be the right strategy for the government in this regard. Circulation & Subscription

On the oil and gas front, falling oil prices and a global gas glut has meant Sneha Pandey
that buyers have started negotiating for better deals. Petronet, which has a Tel.: 0120 6799125
25-year contract with RasGas to annually buy 7.5 million tonnes of LNG, has Email: sneha.pandey@infraline.com
reduced purchases by about a third this year due to high prices even though
it will be required to pay a hefty penalty in case of lower off take. In this context,
our coverage focuses on the analysing the reasons behind falling LNG prices
and what should India do in terms of promoting LNG infrastructure.
The recent visit of the German Chancellor, Angela Merkel, to India provided Form IV
a major boost to Indias renewable energy sector with Germany agreeing to Periodicity of its Publication: Monthly
provide a loan of 125 million Euro to finance green projects in the country. Printers / Publishers /
Mrs Shashi Garg
The growing Indo-German ties in the field of renewable energy has also Editors / Owners
Nationality Indian
provided a window of opportunity for India to take a leaf out from the German
experience in executing solar and wind projects. In this regard, we bring to 14-D, Atmaram House, 1, Tolstoy Road
Address
New Delhi - 110001
you an article by Markus Steigenberger, deputy executive director of Agora
14-D, Atmaram House, 1, Tolstoy Road
Energiewende, on the same topic. Place of Publication
New Delhi - 110001
Printed at Sagar Offset Printer (I) Pvt. Ltd.
Plot No 518, Ecotech-III, Udhyog Kendra
Address
Extn-II, G. Noida, G.B. Nagar (U.P.) 201308
Name and address of individuals who own the newspaper and partners
or shareholders holding more than one percent of the total capital Owner:
M/s Infraline Technologies (India) Private Limited, 14-D, Atmaram House,
SHASHI GARG 1, Tolstoy Road, New Delhi - 110001
Managing Director and Editor Shareholders holding more than one percent of total Capital of the
InfralineEnergy Research and Information Services owner Company
1. Mrs Shashi Garg, 60, Siddhartha Enclave, New Delhi-110014
2. Abhav Garg, 60, Siddhartha Enclave, New Delhi-110014
Registered Office Branch Office
I Shashi Garg hereby declare that the Particulars given above are true to
14th Floor, Atmaram House, Noida the best of my knowledge and belief.
1, Tolstoy Road, New Delhi - 110001 A-31, Sector 3, Noida Sd
Email: business@infraline.com Tel.: 0120-6799100 Mrs Shashi Garg
Signature of the Publisher
November 2015
www.InfralinePlus.com

InfralinePlus

Contents
Editors Letter
1

Cover Story 36

36
Will power sector see a
new sunrise with UDAY?
Ujjwal Discom Assurance Yojana
is definitely an improvement
over the Financial Restructuring
Package brought by the previous
UPA government in 2012 to
bail out debt-ridden discoms.
It is also perhaps the best
possible package that the NDA
government could have cobbled
together under the prevailing
circumstances. UDAY is not
entirely banking on tariff hike
to improve financial health of
2 discoms.

Power Coal
4 24
News Briefs p4 News Briefs p24
In Conversation: P Umashankar, Former Secretary, In Conversation: Sunil Wadhwa, Managing Director,
Ministry of Power p7 IL&FS Energy Development Company Ltd p26
Expert Speak: R.K. Mediratta, Director, BD, and In Depth: Not the right time for CIL stake sale p30
Naveenta, Sr. Exec-R&D, IEX p10
Statistics p34
In Depth: Need to increase role of IT in power
distribution p13
In Depth: BHEL: Sapped by power woes p16
Financial Results p20
Statistics p22

Topics Covered Topics Covered


Power Distribution Coal Mining
Power Theft Fuel Supply
Information Technology
Coal Exploration
Power Procurement
November 2015
www.InfralinePlus.com

Oil and Gas Renewable


44 55
News Briefs p44 News Briefs p55
In Conversation: Prashant Modi, MD & CEO, Expert Speak: Markus Steigenberger, Deputy Executive
GEECL p46 Director, Agora Energiewende p58
Expert Speak: Sanjay Kaul, Managing Director, Financial Results
Sanmarg Projects Pvt. Ltd. p47 Statistics p62
Expert Speak: Prabhat Ranjan, Business Analyst,
Infraline Energy p50
Financial Results p52
Statistics p53

Topics Covered Topics Covered

LNG Prices Solar Power


3
Gas Infrastructure Loans and Financing

Coal Bed Methane Exploration Green Projects

Expert Speak
R.K. Mediratta
Director-BD, IEX

Sanjay Kaul
Managing Director, Sanmarg
Projects Pvt. Ltd.
November 2015
www.InfralinePlus.com

NewsBriefs | Power National


10,180 Mw of supercritical thermal power units to replace 5,228 Mw of old capacity Coal linkage lifeline for power projects

The fate of another set of units of 4,800


Mw capacity will be decided on the basis
of viability of repair and maintenance
projects. However, in case these units are
not considered feasible for such an overhaul,
they will either be retired or replaced with
supercritical units. Yet another set of units
of 5,860 Mw capacity will be retired in a
phased manner and some of these units will
Out of a total 32,800 Mw of installed thermal be replaced with supercritical ones. In a bid
power capacity thats 25 years old, the to conserve land, water and coal, the ministry
government has decided to replace 5,228 Mw of power has advised the Central Electricity
with 10,180 Mw of new supercritical units. It Authority to prepare a report on replacement The government has given a lifeline
will not replace 22,170 Mw now, since these of old and inefficient units with supercritical to over 21,000 mw of power projects
plants have either undergone renovation units and explore the possibility of replacing that are getting commissioned this
and modernisation or life-extension tweaks old and inefficient thermal generating units year but are without any firm coal
and can be operated for a few more years. with supercritical units. linkage. The decision is to offer them
fuel even though the projects got
Government likely to allow private power firms double capacity at existing plants delayed and have missed the March
31, 2015 deadline set by the Cabinet
The government is likely to allow private for getting assured coal supplies
power companies to double generation from Coal India (CIL). The move will
capacity at their existing plants, a move directly benefit 13,500 mw of power
aimed at reducing the time required to projects of companies such as NTPC,
4 boost electricity supplies and lowering the Adani, Lanco, GMR and Sterlite that are
cost of production. Currently, private power awaiting coal supplies from CIL under
producers can expand capacity at their long-term FSA. It could also allow coal
plants by up to 50%. Power Minister Piyush linkage advantage for projects adding
Goyal said the government is considering up to another 8,000 mw relating to
altering the national tariff policy to enable companies such as Lanco, provided they
100% expansion at existing plants. A are successful in squeezing deadline and
decision on the policy is expected to be tariffs. Most private power firms with big complete the projects on time. As per
made over the next six months. Industry land banks, including Reliance Power, Tata a recent survey by Central Electricity
experts hailed the move, saying it would Power and JSW Energy, could benefit Authority (CEA), these projects are set
help reduce cost and thereby electricity from this. to miss even the 2015-16 deadline.

India drastically lowers nuclear energy target

With little progress on ground since six nuclear power reactors with a total
the 2008 Indo-US nuclear agreement, capacity of 4,300 Mwe are under various
the government has drastically cut the stages of constructions, more indigenous
nuclear energy target from 63,000 Mwe by reactors are set to come up in Haryana,
2032 to just about 14,500 Mwe by 2024. Madhya Pradesh and Rajasthan. Russia,
Till August, the government informed too, has agreed to construct two more
Parliament that its nuclear energy target 1,000 Mwe reactors at Kudankulam. But
remains at 63,000 Mwe by 2032. The participation from French major Areva
same figure was also mentioned in Indias (Jaitapur) and US firms Westinghouse
intended nationally determined contribution (Chhaya Mithi Virdhi, Gujarat) and General
(INDC) document released in October. Electric (Kovadda, Andhra Pradesh) are
Though many government documents nowhere close to reality due to lack of
quote 63,000 Mwe as the target, officials clarity on issues arising from the Civil
at the Department of Atomic Energy Liability for Nuclear Damage
now claim it was only an expression Act, 2010.
of intention and never a target. While
November 2015
www.InfralinePlus.com

States
DAE may set up nuclear power plant if Odisha proposes Rajasthan government to sell Giral
power plant
interest and provides adequate land. As
per reports, Andhra Pradesh, Haryana
and Madhya Pradesh governments have
already offered land for nuclear power
plants. If Odisha comes up with such
proposal why can it not be considered if
there is no problem with the site. West
Bengal and Bihar are good sites for nuclear
power plants. Bihar has some issues with
seismic condition. Odisha is also suitable
depending on the sites to be offered. Indian The state government has started the
government is giving thrust on nuclear ground work to sell the crisis-ridden and
energy as it is clean energy. Signing nuclear loss-making 250 MW Giral Thermal Power
The Department of Atomic Energy will treaties with different countries will enable project situated at Thumbali in Barmer
consider establishing a nuclear power plant India to avail more uranium for its nuclear district. The Rs 1,600-crore power project
in Odisha if the State government evinces power plant. has already run into losses of more than
Rs 700 crore. The lignite coal used to fire
UPCL suffered losses due to lack of policy on transformers: CAG up the plant has high quantity of sulphur
leading to frequent maintenance of the
Uttarakhand Power Corporation Limited machinery. It is impossible to run this
(UPCL) has suffered losses running into power plant with lignite coal. Out of the
crores due to faulty procurement and lack two units of 125 MW each, the plant at
of maintenance policy, according to the Thumbali is lying closed permanently
latest report of the Comptroller and Auditor and requires at least Rs 50 crore to start
General tabled in the state assembly session it afresh. Since the government has 5
recently. The report reveals that the UPCL refused to infuse any capital to revive
has no documented policy for procedures to the plant, selling off the unit remains the
be adopted for assessing the requirement only possibility. Operational Energy Group
of transformers. The apex auditors have India Pvt Ltd, which had the contract to
stated that during 2011-2014, the discom operate the plant till October this year, has
had recorded that 13,319 transformers were in Kotdwar and Srinagar in the CAG report. already issued notice to its 350 employees
damaged. Of these cases, the damage was The CAG report also stated that the to terminate their services. Currently,
caused because a component, lightening UPCL has recorded transformer damage the company is engaged in talks with the
arresters, was not installed in the rate between 12.28% and 13.40%, government to renew the contract so that
transformers. Such damages were noticed observing that there is no scientific basis the employees dont face the harsh reality
for such high numbers.
Gujarat mulls upgrading old power plants

Despite enjoying surplus power generation Gujarat government. While the plant has
capacity, the Gujarat government is a power generation capacity of 1,470 Mw
consolidating its power plants running on in sub-critical technology, an additional
conventional technologies. The government 800-Mw capacity is being set up under
is planning to either upgrade plants with super-critical technology at a project cost
sub-critical technology or replace these of Rs 4,465 crore by the state government.
with new super-critical technology. The According to senior officials, the plan
move, though at a planning stage, is being to upgrade technology of some under-
made to not only reduce the cost of power performing power plants is in the proposal
generation but also enhance capacity stage. The plan is still on the drawing
utilisation of some of the old units at the board and proposals are being made. So
power plants. The plan to upgrade or far, no decision has been taken about which
replace technologies comes in the wake plants to be upgraded or altogether be
of the recent setting up of super-critical replaced with super-critical technology, a
technology at a coal-based thermal power senior official said.
plant at Wanakbori in Kheda district by the
November 2015
www.InfralinePlus.com

NewsBriefs | Power International


Obama tweaks $12.5 billion in nuclear power loans
The Obama administration will supplement
its $12.5 billion loan guarantee program
to build and license new nuclear reactors,
but very little new money is being made
available. The Energy Department will
be supplementing its existing solicitation
that makes up to $12.5 billion in loan
guarantees available to support innovative
nuclear energy projects. That means the
administration will allow nuclear plant
developers to use government loans to
cover the costs of more items related solicitation states that eligible projects can
to power plant development, including include construction of advanced nuclear
licensing costs, compared with the previous reactors, small modular reactors, uprates
policy that provided loan backing solely for and upgrades at existing facilities, and front-
the construction of the plant itself. The end nuclear facilities, the White House said.

Revolving blackouts loom in Indonesia as power shortages worsen

to further weaken, with supply from new


power plants failing to meet rising demand China plans power trading exchanges
and older plants reportedly being shut down. to free up electricity prices
According to data from the Energy and China is planning to set up two regional
Mineral Resources Ministrys directorate power trading exchanges as part of
6 general for electricity, the additional supply efforts to free up electricity prices, now
from plants newly built by state-owned set by the government. Chinas top
electricity firm PLN and independent power economic planning agency, the National
producers stood at 1,491 megawatts as of Development and Reform Commission
October this year, less than half of a target (NDRC), is currently in talks with power
to have additional 3,868 MW installed in the firms and the countrys two state grid
full year of 2015. Figures from the electricity firms to set up the two exchanges in
office as of Oct. 28 showed that of the total Beijing and Guangzhou. China aims
Rotating blackouts may continue affecting 23 power systems in the archipelago, 11 to break the power sales monopoly
parts of Indonesia in coming months, as systems produced lower than expected held by the two state grid firms, the
the nations electricity system is expected supply. State Grid Corporation of China and the
Southern Grid Corporation. It has already
China widens nuclear exports with $7.7 billion Romania plant launched pilot reform programmes in
seven provinces that allow generators
State-owned China General Nuclear Power to reach sales agreements directly with
Corp. made an agreement to build two consumers. The Southern Grid manages
reactors in Romania, continuing Chinas power transmission and distribution in
push to export nuclear technology abroad. five southern regions. The State Grid is
The MoU, signed on Nov. 9 with Romanias responsible for the rest of the country.
state-owned Societatea Nationala The government was drawing up further
Nuclearelectrica SA, covers construction plans to free up the power market in pilot
and operation of two Chinese-developed regions, which include the hydropower-
reactors at the nations Cernavoda rich southwestern provinces of Yunnan
nuclear power plant. The projects total and Guizhou as well as Inner Mongolia
investment will be about 7.2 billion euros and Ningxia in the coal-producing
($7.7 billion) and the two companies will west of the Black Sea. The nation has been northwest. Six new policy plans, to be
establish a venture, the statement said. seeking to expand capacity at the facility released soon, would establish rules
Romanias entire nuclear fleet consists for more than a decade. for power transmission and distribution,
of two reactors at the Cernavoda atomic setting power prices and organising and
station, about 48 kilometers (30 miles) operating the new exchanges.
November 2015
www.InfralinePlus.com

InConversation
Timely tariff increase key
to UDAYs success
P Umashankar, former Power Secretary, GOI, answers
a range of issues facing the power sector today and what
the government needs to do to make the UDAY scheme a
success. Excerpts.

What is your outlook on Indias discoms needs to be addressed and


power sector today with respect discoms will have to be mandated to
to the investment climate supply 24/7 reliable quality power and
considering that the sector has not resort to load shedding. With the
been plagued in the past by announcement of UDAY, visible
issues relating to fuel supply, changes in the financials of
land acquisition, and project discoms may be seen in
delays? a few years. With P Umashankar

Power sector in the country has been the joint ini-


With Former Power Secretary, GOI

UDAY, 7
plagued in the last few years by fuel tiative of GoI 2012 but with some improvements. In
supply and financial distress of dis- and States
visible FRP 2012, 50% of outstanding debt
tribution companies, leading to lower for 24/7
changes in the of discoms is to be taken over by
utilisation of commissioned power Power for
financials of states, while in UDAY, it is 75%. It
generating capacities and difficulties All, States/
discoms may be has also been made easier for States
in debt service. Fuel supply has been discoms may
seen in a few to take over the debt by providing
addressed to an extent in that domestic buy adequate
years relaxation in FRBM caps. Discoms are
coal production/supply has been look- power to meet the to issue state guaranteed bonds against
ing up and price of imported coal has needs of the consumers. These two the remaining debt of 25% , whereas in
been coming down substantially and together may change the sentiment in FRP 12 the remaining debt was to be
continually. However, all this is barely the sector in a few years paving the restructured/rescheduled. Both schemes
sufficient to feed existing capacities. way for greater investment. have similar trajectories for AT&C loss
Linkages for new capacities have not reduction and making the gap between
been given for the last 5 years and will The government recently Average Revenue Realization(ARR)
not be given, i expect, for some more launched Project UDAY, a com- and Average Cost of Supply(ACS) zero.
time. New generation capacities will prehensive package for power One important difference between
be planned only when new linkages sector reforms, to deal with the the two schemes is that GoI intends
are available. It is too early then to problems relating to discoms to monitor the targets/milestones
expect any investment in generation. who are reeling under a debt under UDAY monthly. The second is
But, transmission is doing fairly well burden of more than Rs 4 lakh the initiatives GoI intends to take to
and is likely to do so. Bids are likely to crore. What is your take on the reduce cost of power by rationalising
be called for a few lines estimated to scheme? What are the challeng- coal linkages, allowing swap of coal
cost about 12,000 crore. GoI is said to es involved in its implementation linkages so that distance coal travels
be planning an investment of Rs 1 lakh and what are your suggestions to is reduced and available coal is used
crore in transmission. make it work better? in the most efficient plant, ensuring
Besides, for investment sentiment UDAY is in many ways like the Finan- quality coal, ensuring supply of washed
to improve, the financial distress of cial Restructuring Plan announced in and crushed coal etc. These initiatives
November 2015
www.InfralinePlus.com

InConversation

super-critical technology for power


generation and discouraging small
less-efficient sub-critical plants have
been part of Indias strategy for some
years now. India also has plans to
develop Advanced Ultra Super Critical
Technology indigenously to further
increase efficiency of coal to power
conversion. Although ambitious plans
were earlier announced for providing
washed coal to power plants, not many
washeries were set up. Hopefully, the
recent initiatives to produce quality
coal, washed and crushed coal etc will
bear fruit. India has no option but to
pursue coal based technologies for
a few decades (alongside ambitious
plans for renewable energy) but a lot
of work remains to be done in making
coal clean and international communi-
ty will be keenly watching the efforts
are likely to lead to reduction in cost of of India in this direction. To the same
power which would make it easier for India has no option but end, India should redouble its efforts
8 discoms to reduce the ARR-ACS gap. to pursue coal based to reduce AT&C losses, which will sig-
It remains to be seen if discoms/states nificantly reduce the carbon foot print.
technologies for a few
will take the necessary steps to increase It is however disappointing that
tariffs from time to time to make this
decades but a lot of not much attention is being paid
happen and if they dont what GoI does work remains to be to tapping a clean energy source
to force/persuade discoms/states to do done in making coal which is available in plenty in India,
so. The success of UDAY will depend clean and international namely, hydropower. One does not see
on this. The proposed amendment to community will be announcement of any initiative in this
the National Tariff Policy to enable regard. With an assessed potential of
keenly watching the
quarterly revision in tariffs to adjust 150 GW, India has harnessed just 42
for increase fuel prices will help. The
efforts of India in this GW which is about 28%. And hydro-
proposed amendments to the Electricity direction powers proportion in Indias installed
Act 2003 envisage recovery of cost of power generation capacity is going
supply without revenue deficit, man- India balancing its thermal and down rapidly: from 46% in the sev-
datory application of tariff policy, pass renewable energy requirements enties it has come down to 15% now.
through for fuel and power purchase and what should be the right I would like to see a lot more efforts go
costs, quicker disposal of tariff peti- strategy as per you? into hydropower development.
tions and oversight of the performance India will continue to depend on coal
of regulatory commissions. That will for meeting its energy needs for a India has pledged to increase
be a significant event and will come few decades that cannot be avoided, share of non-fossil fuels in
as a great boost to efforts to make despite the huge push the GoI has electricity generation to 40% by
discoms viable. been giving to developing renewable 2030. Do you see a significant
energy. India has also been rightly role of nuclear sector in India in
There has been a lot of talk stressing on developing clean coal achieving the target? How can
on Indias energy strategy to technologies to reduce the negative India increase power generation
meet its growth needs in the impact of use of coal and energy ef- from nuclear?
context of the ongoing COP 21 ficiency to optimise energy consump- Nuclear has not been easy to develop
meet at Paris. How do you see tion. Encouraging and incentivising as it is and the difficulties have simply
November 2015
www.InfralinePlus.com

increased post Fukushima tragedy. regard the provider from whom he/she
Indias installed capacity of nuclear is wishes to take electricity. The pro-
a mere 5780 MW against the total in- posal to separate carriage from con-
stalled capacity of 280 W. It has taken tent is to move along this direction.
so long to achieve even this insignifi- Admittedly, a lot of work needs to
cant capacity. I dont think much can be done before this can be achieved.
be done by way of nuclear. We have to The work will also include address-
look at other options. ing some of the sector ailments. But
once achieved, it will provide choice
The Electricity (Amendment) to the consumer, generate competi-
Bill 2014 has generated lot of tion among the service providers and
controversy. It is claimed that lead to better quality of service, better
the amendments in electricity price etc. We can see what benefits
bill which seeks to segregate competition has brought to consumers
the power distribution network in other sectors.
from electricity supply business
is basically anti people and does The government has planned
not look at root cause of power an investment of more than Rs
sector ailments but only treat 1 lakh crore in the transmission
the symptoms of problems. What sector. How can issues relating
are your views? to transmission sector be
I dont think so. One of the funda- resolved in your view?
mental tenets of the Electricity Act A major issue in transmission is Right
2003 is to give consumer a choice as of Way. As major transmission lines 9

Indias installed capacity of nuclear is a mere


5780 MW against the total installed capacity of
280 W. It has taken so long to achieve even this
insignificant capacity. I dont think much can be
done by way of nuclear.

pass through more than one state, the


issue becomes more complex. Cooper-
ation of states will be needed to ensure
that these issues are resolved in time
and the construction of the lines is not
delayed for want of ROW. There a few
states where this issue is more acute.
GoI can reach out to these states to get
their cooperation.

For suggestions email at feedback@infraline.com


November 2015
www.InfralinePlus.com

ExpertSpeak
Power procurement strategy
for discoms
R.K. Mediratta, Director-BD, and
Naveenta, Sr. Exec-R&D, IEX,
share their views on what should
be the right strategy for power
distribution companies to optimize
costs.

We have just emerged from the periods


of shortages. Currently, our installed
capacity is 280 GW against peak
demand of 153 GW (as of Oct2015).
Despite various challenges like coal,
gas and transmission infrastructure
shortages, there are still enough
10 resources available to choose from to
optimize the costs for a distribution
R.K. Mediratta, Director-BD, IEX Naveenta, Sr. Exec-R&D, IEX
company. Earlier, it was common for
discoms to exhaust long and medium
term resources first and then use short- or Day-Ahead Markets (DAM) or While market price discovered in
term markets to fulfill residual demand. collective transactions. The average exchange DAM is now varies between
However, with sufficient resources power price at DAM of Indian Energy INR 2-4.5/kWh, long-term power
available in short-term market consti- Exchange (IEX) have been observed carries an average marginal cost
tuting hydro, newer efficient UMPP declining from INR 7.29/kWh to INR varying from INR 1- 6/kWh.
and merchant power plants with very 3.51/kWh over the past 7 years as the Coal based generation dominates
low energy charge (variable cost), its market is building up (as shown in the power generation with its share
seen that cheaper marginal cost genera- figure 1). in the total installed capacity is about
tion is available at energy exchanges
as compared to long-term power. It is Figure 1: Price Trend at IEX
therefore; now, time to strategise the 8 7.29
power procurement on the basis of
7
merit order stack according to which,
power with lower energy charge is 6
5.19
dispatched first. Today, low cost re- 5
INR/kWh

sources from short-term markets/power 4 3.56 3.54 3.49 3.51


exchanges come much higher in merit 2.80 2.85
3
order stack.
State discoms procures power from 2

generation station via long term and 1


medium term agreements (PPA) paying 0
fixed cost as per their existing PPAs
and energy charge as per the volume
scheduled. Residual demand is met
*up to Nov15
from short term markets via bilateral
November 2015
www.InfralinePlus.com

61 percent (as of Oct2015). Coal exceeding the energy charge above requisition from SGS/ISGS, and also
based generation has energy charge of INR 3/kWh can be substituted by pur- preparing bids on exchange, relevant
ranging from INR 3-7/kWh depending chasing power from IEX. technical and operational constraints
upon factors such as type of fuel and The discom can place bids in the need to be kept in mind.
technology. There are many generating day-ahead-market (DAM). In case, Area Clearing Price (ACP) varies
stations which have energy charge well there are other plants with energy significantly in different times of the
above INR 3.5/kWh. Some of such sta- charge of Rs 2.5/kWh, then another day, namely peak, day-time, night
tions are listed in table 1. price-quantity pair of bid can be added hours as shown in figure 2. During
This paper delineates an anomaly suitably. Such all step-bids can be the off-peak hours, prices at IEX are
that many discoms continue to buy very low. This gives an opportunity
costlier LT power despite cheaper to discoms in Southern and Western
Many discoms
power available in short-term/exchange region to benefit from the lower prices
based markets. Indian Electricity
continue to buy at Exchange in off-peak hours by
Grid Code (IEGC) specifies that power
costlier LT power displacing generation from coal based
procurement should be on the basis despite cheaper power plants with power available
of merit order dispatch. In view of the power available in from Exchange.
above, following mechanism can be short-term/exchange
adapted to optimise its power pro- based markets. Indian Illustration
curement without any major risks. Electricity Grid Code Assuming, the ACP at IEX is INR 3.45
Availability of capacities foreseen (IEGC) specifies that per kWh and during off peak hours it
for the next day is available with the power procurement is about INR 2.50/kWh. Assuming a
discoms on day-ahead basis. This should be on the discom with long-term power portfolio
gives sufficient window for discoms basis of merit order as shown in Figure 3 has few plants
to optimise its power procurement having must-run status (hydro and
dispatch 11
strategy. For instance, if landed price nuclear) and other thermal plants with
of IEX power for a Discom is INR different energy charges. The power
3/kWh in an hour/timeblock. This placed under the single bid option in plants with energy charge greater than
includes Area Clearing Price applicable several multiple price and quantity the prevailing ACP i.e. Plant F, G and
for bid area and all OA charges and pairs. H can be substituted by power from
losses applicable. Generating stations Portfolio bid can take 64 such com- IEX at INR 3.45/kWh (Assuming all
binations. And it ensures that discoms OA charges for both LT and PX trans-
Table 1: Energy Charge of Central
replace relevant LT power plants actions are same). Further, cost savings
and State Generating Stations
based on prices discovered for that can be achieved by substituting power
Power Station Energy Charge
(INR/kWh) timeblock. Once cleared bids status is from power plants with energy charge
Kayamkulam -Naptha 10.18 known, discoms can re-schedule its over INR 2.50/kWh during the off-peak
Badarpur TPS 4.29 purchases from Inter State Generating hours. Therefore, power from Plant D,
Bajaj Hindusthan 4.71 Stations (ISGS)/State Generating Sta- E, F, G and H can be replaced during
Pragati-I 4.45 tions (SGSs) with 1 hour notice. It the off-peak hours by placing bids at
Auraiya 4.36
is important to add that while revising IEX. A typical bid placed at IEX for a
Dadri Gas 4.17
Jhajjar 4.39 Figure 2: Northern Region Area Clearing Price Variation on a Typical
IGPCL Gas Turbine 5.05 Day (November 30, 2013)
NCTPP Dadri 4.15
KBUNL Stage 1 U-1 4.06 3.50 Off -peak 3.08 3.29 Off -peak
2.97 3.00 3.00 2.96
Barh STPS II 4.06 3.00
2.76 2.68
3.27
Rosa Power Project 4.33 2.97
MCP (INR/kWh)

2.50 2.89 2.95 2.08


2.77 2.75 2.72
Mauda 3.89 2.00 1.66
1.45 1.42 2.30
NCTPP Dadri-II 3.36 1.50 1.79 1.84
Tanda 3.63 1.55
1.00 1.31
SSTPS I TO VI 3.58 0.50
Panki 4.36 0.00
Anta 3.26
01-02
02-03
03-04
04-05
05-06
06-07
07-08
08-09
09-10
10-11
11-12
12-13
13-14
14-15
15-16
16-17
17-18
18-19
19-20
20-21

22-23
23-24
00-01

21-22

Source: Extracted from Annual Revenue Hour


Requirement Petition of various Discoms
November 2015
www.InfralinePlus.com

ExpertSpeak

Figure 3: Cost optimisation for discom


Type Dispatch Mode Capacity (MW) Energy Charge (INR/kWh)
Plant A Hydro Must Run 100 0.00
Plant B Hydro Must Run 150 0.00
Plant C Nuclear Must Run 500 2.80
Plant D Coal Merit 120 3.00
Plant E Coal Merit 120 3.20
Plant F Coal Merit 100 3.50
Plant G Coal Merit 90 3.80
Plant H Coal Merit 90 4.00
Merit Based Capacity (MW) 520
Assumptions: 12 number of hours are considered in off-peak hours

Substituted with power @ INR 2.50 during off peak hours from IEX
Substituted with power @ INR 3.45 from IEX

15-minutes time block is illustrated in the day by replacing long-term power


table 2. procurement with IEX as illustrated
The discom can place bid for 400 in figure 3. This estimated savings in
MW at price range of INR 3.00-3.45/ the given example is about INR 20.45
kWh to bring down its power pro- crores against total energy charges
curement cost. Furthermore, discom of INR 209.66 excluding fixed cost
can achieve maximize cost savings liability.
during the off-peak hours, where it can
12 place bids for 520 MW at price below Case Study
INR 3.00/kWh. Bihar discoms started replacing
The discom following this approach 10%-50% of power procurement
can optimise its power procurement for from two costliest power stations on

Table 2: A typical bid at IEX for a 15-minute time block


Price (INR/kWh) 0 3.00 3.20 3.50 3.51
Buy Bid (MW) 520 520 400 280 0
Sell Bid (MW) 0 0 0 0 0

Table 2: Cost Optimisation for Bihar-Savings Achieved


Delivery Month (A) Savings Achieved (B) Additional Savings (C) Total Saving (Rs
(Rs Crore) Potential (Rs Crore) Crore) C=A+B
Jun-15 9.3 9.2 18.6
Jul-15 7.7 8.1 15.8
Grand Total 17.0 17.3 34.4

daily basis. Though discoms replaced saving potential for small State like
very conservatively, savings achieved Bihar was at about 5%. For States way
were Rs 17.7 crore in 2 months. Table from pit-head stations like Rajasthan,
2 gives the account of actual savings Punjab, Gujarat, Maharashtra and UP,
and also the unexploited saving for the potential can be much higher at
the same term. close to 10%.
Additional potential saving was Rs.
17.3 crore. Average monthly power
purchase cost of two discoms for
thermal generation of the state is about The views in the article of the author are personal
Rs. 360 crore/month. Therefore, total For suggestions email at feedback@infraline.com
November 2015
www.InfralinePlus.com

InDepth
Need to increase role of IT in
power distribution

13

An efficient power distribution system can change the entire outlook of the Indian power sector
Challenges exist in integrating the existing manual system with the IT systems

By Kalyan Verma, Analyst Power & Coal, InfralineEnergy

Information Technology (IT) has over Development and Reforms use the softwares for the benefit of
the years helped transform the Business Programme (APDRP) scheme consumers.
Processes in different sectors in India and subsequently as Re-structured
ranging from Financial Institutions, APDRP and now as Integrated Power Need for IT
Retail Sector and Telecom Sector. IT Development Scheme (IPDS), IT is We have a huge stranded generating
has primarily been used to automate indeed bringing a change in the entire capacity either due to shortage of
the repetitive and manual processes landscape of the Power Distribution fuel or due to inability of Discoms to
thereby reducing the possibility of er- Sector. The biggest hurdle and purchase power owing to their poor
rors, improving efficiency and bringing challenge in the implementation of IT financial health. Our Transmission
in transparency in the system. projects in India has been in making System is robust with not much issue
Launched in India with the the Discom officials understand the of losses. It is our distribution system
Restructured Accelerated Power benefits and subsequently make them which is the weakest link in the
November 2015
www.InfralinePlus.com

InDepth

entire value chain. An efficient power


Objectives of the Information Technology Projects
distribution system using High End
technologies & analytical software can
change the entire outlook of the Indian Reduction of
AT&C Losses
power sector.

Current status of IT Projects Renewable


Energy
Load
RAPDRP Part-A Programme is near- Forecasting &
Integration with
DSM
ing completion in most of the states in the Grid

India. Though the pace of implementa-


tion has been very slow so far but the
learning acquired during this period
and the data captured by the Informa-
tion Technology Systems forms the
Enhanced Improved Power
foundation for the implementation of a Customer Quality &
robust Smart Grid Network Satisfaction Reliability

in India.
Reduction in
Future use of IT data Power Tariffs
Power distribution companies in
India are new to the concept of
Information Technology. IT has so and pay the bills would be soon very
far been very useful in processes Discom data is of common all over India. Applying new
14 such as billing, CRM where the high commercial connections & consumer complaints
process of accounting of consumer would also be easily made through
bills which was a mammoth manual
use which makes these applications. Thus the visible
task for the Discoms earlier, has been it mandatory to benefits of IT projects is already out
streamlined, made more consumer use advanced for everyone to see.
friendly, transparent and has thus data encryption
led to increase in revenue for the technologies Real time monitoring of
Discoms. Existing challenges shall be to protect the meter data
overcome soon. Mobile applications Metered data is collected mainly at
for the consumers to view, manage
consumer data. two points in a Distribution System.
Feeder input energy data through the
Top six states on the basis of profits (accrual basis) DCU (Distributed Control Unit) and
registered during the year 2013-14 (Rs. Crores)
the consumers billing data. The main
Maharashtra 1,534 objectives of IT projects which is the
Delhi 692 reduction in AT&C Losses works on
Punjab 642 identifying the feeders/DT regions in
Gujarat 583 real time where the energy balance
West Bengal 466 is at low levels and where corrective
Uttarakhand 339 actions in the form of inspection by
vigilance squads can help in bringing
Bottom six states on the basis of losses (accrual basis) about a change. Challenge also exists
registered during the year 2013-14 (Rs. Crores) in reducing the technical losses
Uttar Pradesh 17,678 below 10% and thus we are looking
Rajasthan 15,912 at AT&C losses of 10-15% in best
Tamil Nadu 12,677 possible scenario where we try to
Madhya Pradesh 6,941 achieve High Billing Efficiency &
Haryana 3,315 Collection Efficiency.
Jammu & Kashmir 2,219 Power purchase costs and demand
Source: www.apdrp.gov.in (Report on the Performance of State Power Utilities 2011-12 to 2013-14) side management are areas where most
November 2015
www.InfralinePlus.com

What a Robust, Smart Power Distribution System would to improve their financial health and
look like In future to improve the customer services.
For Example, Discoms prepare their
Data Collection (Feeder Meters, DT Meters, Consumers Meters at a own energy audit reports through a
Time Block of 15 Minutes interval through an Automated System manual, time consuming process. For
(using DCU, Modems) at a Centralised Data Centre
the Discoms to completely rely on
IT softwares for their core processes
such as billing, CRM & energy audit,
Sophisticated Analytical Tools & Softwares to process the Data
some more effort is required to be put
in. Challenges exist in integrating the
existing manual system with the IT
Identification of Feeders, DT with High Losses leading to Reduction systems. This would take some more
in AT&C Losses time to stabilise, in the same way as
we achieved it in Banking & Telecom
Sector.
Identification of Consumers Consumption Pattern at different
Time Intervals leading to TOD (Time of Day Tariff ) which will With advanced use of IT comes the
Discom to optimise Power Purchase Costs and Improve Quality of associated risk of hackers and data
Power Supply
theft. It is interesting to note that the
threats to the data can be both internal
of the Discoms in India are still not available to the consumers. With the as well as external. Discom data is of
able to make use of technology for the aid of such tools, Discoms can also high commercial use which makes
ultimate benefit of consumers. Discoms make use of short term power market it mandatory to use advanced data
are still making predictions and to trade the surplus power available encryption technologies to protect the
schedule power requirement in an ad with them, if any, and better grid dis- consumer data. 15
hoc basis without using any scientific cipline (i.e lesser dependence on short Also we need a robust & 24X7
techniques. If proper use of analytical term power market to purchase power) reliable communications system in
tools is made to study the consumers could be achieved. place for the success of IT projects.
consumption pattern at different days Once achieved, we are looking at a
and time in a year, then it will go a long Challenges and way forward revived power sector with improved
way in reducing the power purchase Currently most of the Discoms are yet balance sheet for the Discoms,
costs for the Discoms and making to analyse the vast amount of baseline uninterrupted cheap 24X7 power
24X7 green power at cheaper tariffs data as part of RAPDRP Part A project supply for the consumers and better
utilisation of power generation assets
which would put lesser burden on the
Integration of environment. Indian IT companies
the Current
Manual System recognized by developed countries
with the
Proposed all over the globe; will play a
Online System crucial role in reducing losses and
maintaining operational effectiveness
of power utilities in India. Their active
participation will usher in a new era
Smart Increase I.T
Awareness &
of power sector reforms in India and
Data Security &
Encryption Distribution Acceptance
among the
help meet the growing demands of our
Sector Discom Officials economy in a efficient way.

Reliiable 24*7
Communication
System

For suggestions email at feedback@infraline.com


November 2015
www.InfralinePlus.com

InDepth
BHEL: Sapped by power
woes

16

BHEL impacted most due to over reliance on orders in power sector


Emerging signs of turnaround in the power sector good news for BHEL

Team InfralinePlus

Bharat Heavy Electricals Ltd (BHEL), for power distribution companies an- wherever it wants. This may prove a
once a blue chip PSU, has seen a nounced by the government take hold. game changer for the power sector in
drastic erosion of market valuation in Meanwhile, the government is the long term.
recent years as power sectors woes also pursuing legislative changes to But in the short term, power sector
took their toll on the companys finan- pave the way for separating wire from remains in the doldrums and that is
cial performance. However, companys power supply business, which would the reason BHEL is facing headwinds.
fundamentals remain strong and it is in turn allow entry of multiple power While majority of companies operating
well positioned to benefit when the suppliers in the same circle. The idea in EPC space are impacted by
power sector turns around. Fortunately is to encourage market competition slowdown in the power sector, BHEL
for BHEL, analysts says that inves- through implementation of open access is especially hit hard as its reliance on
tor sentiments about the power sector provisions of the Electricity Act 2003 the sector is highest. The power sector
have already started improving as mega which allow a bulk consumer like contributes nearly 70-80 per cent of
investment plans for transmission and industry or commercial installation to BHELs revenue. BHEL saw an 80 per
distribution segments and debt recast meet its electricity requirement from cent fall in April-June 2015 earnings,
November 2015
www.InfralinePlus.com

followed by a net loss of Rs 204.9 ation improving in the wake of the coal during the Eleventh Five-year Plan.
crore in the succeeding quarter. Ratings block allocation. Due to faster environ- Earlier, the company was caught nap-
agency Crisil has recently downgraded mental clearances, many stuck projects ping in the Tenth Plan when demand
the rating outlook on the long-term have started moving. for electricity saw a sudden rise as eco-
bank facilities of the engineering firm The management also hopes that nomic growth picked up and it found
to negative from stable, citing slow employee costs could come down itself constrained to duly benefit from
project execution, stretched working on the back of retirement of 2,200 the capacity addition boom, paving the
capital and vulnerable profitability. employees next year and low fresh way for entry of Chinese rivals in the
BHELs continues to be weak employee additions. However, domestic market in a big way.
on the back of slowdown in the the seventh pay commission Later when it became clear in the
investment capex in the economy. recommendations could prove to be a Eleventh Five-year Plan that BHEL
However, analysts remain upbeat spoiler. Along with partners, BHEL is alone would not be able to shoulder the
on the medium to long term growth also bidding for building submarines, responsibility of driving Indias power
of BHELs earnings. It is because nuclear and solar projects. sector capacity addition programme,
the government is focusing to boost the government came out with the idea
domestic manufacturing, which augurs Why BHELs margins are of involving private players in power
well for the power sector and BHEL. going down equipment manufacturing. To lure
Analysts say that requirement of It is ironical that power sector saw private companies, the government
electricity would go up substantially in slowdown when BHEL expanded its envisaged bulk equipment supply
the medium to long term. They feel that manufacturing capacity to benefit from orders by central sector thermal power
BHEL, with cash reserve of Rs 8,169 the strong growth in the power sector generators like NTPC and Damodar
crore as at the end of September and Valley Corporation to those with
market leadership (75 per cent market indigenous manufacturing facilities. In
share) is well positioned to take the
BHELs continues to response, big names like L&T, Bharat
be weak on the back 17
benefits when the power sector picks Forge and JSW, along with respective
up. Besides, the companys continued of slowdown in the foreign technology partners, came
thrust on coming up with innovative investment capex in forward to participate in the bidding
products, rationalising costs and the economy. However, for bulk orders from central thermal
diversifying into solar, railways and analysts remain upbeat utilities.
transmission and distribution space International suppliers like Siemens,
is likely to benefit over the medium
on the medium to long Alstom, Mitshubishi, Toshiba, Hitachi
to longer term due to governments term growth of BHELs and Babcock & Wilcox, which
special focus on these areas. earnings. It is because had earlier been reluctant to set up
Further, with hurdles on coal block the government manufacturing facilities in India,
auctions, environmental clearances for is focusing to were forced to enter into technology
projects getting eased, analysts feel boost domestic collaboration agreements with Indian
that the order flow prospects for the players for setting up manufacturing
company are now looking up. Analysts
manufacturing which facilities here. BHEL too participated
also see strong margin expansion over augurs well for the in bidding for bulk tendering of NTPC
the next 6-8 quarters, though weakness power sector and and DVC. But it got strong competition
will remain in the short term. BHEL from private players. Finally, it bagged

BHEL remains optimistic


The BHEL management remains BHELs performance on key parameters (Figs in Rs crore)
optimistic about the business over the Parameter July-Sept 2015 April-June 2015
medium to long term. In interactions
with analysts, management has said Income from operations 6,193 4,500
that it sees improved activities at the Profit or loss (204) 33.9
ground level. BHEL management also
Power sector revenue 4,854 3,357
expects fresh equipment supply orders
for over 20,000 MW capacity in the Industry revenue 1,399 1,143
current financial year. BHEL sees situ- Source: BHEL
November 2015
www.InfralinePlus.com

InDepth

growth is recovering now, it remains


fragile. BHEL will remain vulnerable
unless it rationalises its dependence on
the power sector. Diversification is the
way forward for BHEL.
If there is any doubt, a comparison
of BHELs performance with that of
L&T in 2012 would dispel it. While
Larsen & Toubros diversification
worked well for it during the year when
the India economy started decelerating
and infra sector came to a grinding
halt, BHEL has been impacted because
its fortune is closely linked with the
power sector. This also reflected in
their share prices and performance for
orders for supply of just a few 800 MW the July-September 2012 quarter.
supercritical equipment under the bulk The private sector Both L&T and BHEL are known
tendering route -- a far cry from the which had fuelled for their strong execution capabilities.
days when BHEL had monopoly over demand for power However, the woes of the power sector
the domestic power equipment market. equipment is highly and slowing economy took their toll
Apart from competition, what on BHELs performance. Despite its
is driving down BHELs margins
leveraged today and huge order book, BHEL could hardly
is technological shift in the power sitting on unutilised convert these into revenues due to
18
industry. BHELs margins are under generation capacity. It developer side issues. Companys
pressure as new orders are increasingly is unlikely to resume revenue growth remained flat in four
for supercritical equipment where investment unless the quarters between October 2011 and
most customers insist on a Joint Deed existing generation September 2012. L&T, too, faced
of Undertaking from BHEL and its its share of problems, but it was still
technology collaborators (Alstom
capacity is fully in a better position because of its
for Boilers and Siemens for turbine- utilised diversified business portfolio. About a
generator) to guarantee the equipment. quarter of L&Ts orders came from the
BHEL earns lower margins on these Analysts do not expect that BHEL power sector as against about 80 per
orders since it has to buy 15-20 will get fresh orders of more than cent in the case of BHEL.
per cent of the order size from its 15,000 MW in 2016-17 which is far Besides, L&T had a better mix of
technology partners. Analysts say that lower than peak of 25,000 MW during public/private sector clients along
pressure on margins may continue 2008-11. Current valuations seem to with relatively higher proportion
since 45 per cent of BHELs order book be on the higher side as they build from the export markets. When power
is for super critical equipment, with in a return to high revenue growth ( sector was booming during Tenth
most orders having a JDU. more than 20 per cent), high operating and Eleventh Five-year Plan, BHEL
Another major factor impacting margin ( more than16 per cent) phase hardly ever delivered projects on time
BHELs margins is drying up of which market watchers feel is rather as its order book was bulging and it
orders from private players who led difficult given increased competition was overburdened. Its manufacturing
the power sector capacity addition from private players and reduced capacity too was inadequate to handle
programme in the Eleventh Five-year interest of private developers in the strong flow of fresh orders. But despite
Plan. The private sector which had power sector. all these constraints, the company
fuelled demand for power equipment The economic slowdown has also never admitted it was overburdened
is highly leveraged today and sitting added to BHELs woes by putting instead it always bid for projects.
on unutilised generation capacity. It is downward pressure on growth of But it was ironical that when private
unlikely to resume investment unless electricity demand. The Indian players entered power equipment
the existing generation capacity is fully economy has seen deceleration in manufacturing, orders dried up due
utilised. growth in since 2011-12. While the to adverse economic environment.
November 2015
www.InfralinePlus.com

The very reason for which private


players entered this new business was
swept away in the economic storm.
The government has withdrawn mega
power project facility which allowed
duty free procurement of equipment
for thermal projects with threshold
capacity of 1,000 MW. There is a
21 per cent duty on import of power
equipment, which will raise cost for
new projects which place order post
March 2012.
As they say a rising tide lifts all
boats. So long the tide was rising;
both domestic and foreign equipment
suppliers had good times. Now that
the tide has ebbed, everyone is feeling
the squeeze. But power sector may technology to generate, transmit and
turn around sooner rather than later, To restore financial distribute electricity efficiently.
with the NDA government determined health of power Making discoms viable by
to ensure 24X7 power to everyone by distribution getting state governments to accept
2018-19. a financially accountability is
companies, it has another challenge. Encouraging
Challenges ahead also unveiled a Rs market competition by ensuring 19
To achieve the goal of uninterrupted 4.43 lakh crore debt implementation of open access
power supply, the government has restructuring plan. The provisions in the true spirit of the
come out with mega investment plans scheme looks much Electricity Act 2003 also remains an
for transmission and distribution better than similar unfinished business.
sectors. To restore financial health of Accordingly, the Bill proposes to
power distribution companies, it has
financial packages create an Electricity Distribution Code
also unveiled a Rs 4.43 lakh crore debt arranged by the Centre which will provide for the recovery
restructuring plan. The scheme looks previously of electricity charges, intervals for
much better than similar financial pack- electricity billing and disconnection of
ages arranged by the Centre previously. to the grid dips. The draft legislation services on non-payment of bills.
The power ministry has moved will also address problems relating to The emerging signs of turnaround
the Electricity Act (Amendment) Bill integration of renewable energy which in the power sector are definitely good
2014, seeking legislative changes to is intermittent by nature, financial news for BHEL. However, the PSU
pave the way for separation of wore viability of distribution companies, cannot afford to be complacent if it
ownership from power supply business. setting up of peaking and reserve wants to overcome its vulnerability
The idea is to encourage competition power plants, scaling up of energy to economic downturns. BHEL will
in power distribution business. efficiency projects, improvement in be well advised to use good times to
That would enable state electricity reliability and quality of power supply. consolidate its position in areas where it
regulatory commission to issue The legislative exercise is also has entered recently and identify more
multiple licences for power supply in meant to define renewable energy. It areas where it can foray into to reduce
the same circle. India has envisaged provides for additional Renewable its dependence on the power sector. It
adding 1,75,000 MW generation Energy Policy. The Bill also proposes should also look at expanding its export
capacity by 2022. When this capacity to enhance the penalty ceiling for pie. That is the business model that the
becomes operational, it will pose non-compliance with directives issued company will need if it wants to deal
serious challenges to grid stability. This by regulatory commissions. The with similar negative demand shocks in
calls for setting up peak and reserve draft legislation also defines Smart the future with confidence.
power plants which can be switched on Grid as an electricity network that
instantly when renewable power supply uses information and communication For suggestions email at feedback@infraline.com
November 2015
www.InfralinePlus.com

FinancialResults | Power
NHPC net jumps 72.62%, in talks to buy projects in Arunachal Power Grid Q2 net rises 21% to Rs
1,448 crore

around Rs 146 crore as asset in the balance


sheet regarding lower Subansiri project.
The gross generation was up by 5 per cent
to 8,771 million units for July-September
quarter in comparison to the same period
of the previous fiscal. Besides, the plant
availability factor (PAF) has been reported
at 92.62 per cent as against previous year
State-run NHPC posted a 72.62 per cent corresponding figure of 86.64 per cent.
jump in its net profit in the September Total income was Rs 2,679.44 crore for the
quarter, even as the company announced quarter ended September 30, 2015 whereas
it is in talks with private firms to buy stake the same was at Rs 2,325.01 crore for the State-owned Power Grid Corporation of
in hydro-power projects in Arunachal quarter ended September 30, 2014. India Ltd (PGCIL) reported 20.54 per
Pradesh. The bottomline jumped in the cent rise in its standalone net profit at
second quarter on account of higher power Rs 1,448.04 crore for the quarter ended
generation and making adjustment of September 30 on higher income from
operations. The companys net profit in
Tata Power beats street estimates, reports Q2 at Rs 247 crore the year-ago period was Rs 1,201.27 crore.
Total income from operations during
Tata Power has turned profitable during the quarter was at Rs 4,918.02 crore,
July-September quarter. Its net stood registering an increase of 17.6 per cent.
at Rs 247 crore as compared to a loss of The companys income from operations
Rs 78 crore in year-ago period on strong in corresponding quarter was Rs 4,178.54
20 operational performance. Revenue increased crore. Central transmission utilitys
by 11 percent to Rs 9,541.2 crore in second revenue from transmission business
quarter of FY16 compared to Rs 8,584 increased to Rs 4,708.26 crore, against
crore in same quarter last fiscal. The surge Rs 4,029.81 crore in the year-ago quarter.
in revenue was led by power business Revenues from telecom segment stood at
which grew 10.4 percent to Rs 6,904 crore Rs 96.94 crore, compared with Rs 62.48
against Rs 6,255 crore but coal segment to strong operational performance in crore in the corresponding quarter of the
revenue dropped 13.4 percent to Rs 1,800 Mumbai operations and Mundra project. previous fiscal.
crore as compared to Rs 2,079 crore. Profit One time regulatory expenses for the Power Grid operates about 119,580
from operation was up 18.25% at Rs 1,367 quarter stood at Rs 499.5 crore on ckt km of transmission lines along with
crore as compared to Rs 1,156 crore in the consolidated basis against Rs 135.7 crore 197 sub-stations. It has transformation
corresponding quarter last year mainly due in corresponding quarter of last fiscal. capacity of about 240,954 MVA.

GVK Power net loss halves in Q2 to Rs 123 crore

GVK Power and Infrastructure Limited Rs 504.22 crore as compared with Rs


(GVK PIL) reported a consolidated net 266 crore in the corresponding previous
loss of Rs 123.50 crore for the quarter quarter. The three gas-based power
ended September, 2015 as compared projects in Andhra Pradesh totalling an
to Rs 235.56 crore in the corresponding installed capacity of 919 Mw and the
quarter last year. The fall in losses comes 330 Mw Alakananda hydro power project
in the back of a sharp rise in revenues in in Uttarakhand together contributed
compared to the year ago period. Total Rs 311.19 crore revenues in this quarter
income from operations grew 52.9 per as compared with Rs 32.08 crore in the
cent at Rs 1,068.32 crore for the quarter corresponding previous quarter. Yet,
under review as compared with Rs the losses for the quarter attributable
698.76 crore in the year ago period. The mainly to the restricted supply of gas for
growth in revenues was primarily driven Jegurupadu phase 1 and nil supply to
by the power division. The EBITDA at a the other two plants and higher
consolidated level for the year stood at interest costs.
November 2015
www.InfralinePlus.com

BHEL posts Q2 loss Rs 205 crore, revenue beats estimates Jaiprakash Power Posts Rs 134 Crore
Profit in Q2

against profit of Rs 124.84 crore in


corresponding quarter of last fiscal. Lower
revenue and weak operational performance
hit bottomline but other income and tax
write back limited losses. Revenue declined
3.35 percent to Rs 5,938 crore during the Jaiprakash Power Ventures Ltd reported
quarter compared to Rs 6,144 crore in a standalone net profit of Rs 133.69 crore
same quarter last fiscal. Other income shot for the quarter ended September 30, 2015
up 90.5 percent to Rs 373.3 crore in quarter whereas the same was at Rs 299.81 crore
ended September 2015 compared to Rs for the quarter ended September 30, 2014.
196 crore in year-ago period. The company It said that in view of certain transactions
has received tax refund of Rs 125.3 crore or sale of assets, the figures of the quarter
State-run power equipment maker Bharat for the quarter against expenses of Rs ended September 30, 2015 were not
Heavy Electricals (BHEL) posted a loss of 83.99 crore in corresponding quarter of comparable with the corresponding three-
Rs 205 crore in July-September quarter previous fiscal. month period a year ago. The company
has concluded the sale of Himachal Baspa
Adani Power posts net loss of Rs 369 crore in Q2FY16 Power Company Ltd (HBPCL) to JSW En-
ergy Ltd at an enterprise value of Rs 9,700
Adani Power Ltd said the companys crores reduced by mutually agreed adjust-
consolidated net loss in the second quarter ments, including inter-alia Rs 300 crores
of 2015-16, ended September 30, stood at which is payable upon receipt of certain
Rs. 369 crore as compared to Rs 799 crore additional consents and approvals related
in the corresponding quarter the previous to the Karcham Wangtoo hydroelectric proj-
fiscal. APLs consolidated total income in the ect. The project debt of Baspa hydroelectric 21
said quarter increased by 39 per cent to Rs plant and Karcham Wangtoo hydroelectric
5,784 crore (Rs 4,175 crore). The company plant has been transferred to HBPCL. The
sold 15.10 billion units in Q2FY16 as against proceeds from sale were utilized for reduc-
10.49 billion units in Q2FY15. Consolidated ing companys debts including retirement
EBIDTA for the quarter increased by 47 of $75 million to FCCB (foreign currency
per cent to Rs 1,824 crore (Rs 1,243 crore) convertible bonds) holders. Further, the
in corresponding prior year quarter. The Adani, Chairman, said. Improvement in company has also paid a compensation
EBIDTA impact of demerger of transmission operational performance and focused efforts of Rs 150 crore to HBPCL. Profit and loss
business was more than compensated has contributed significantly to the financial from these plants shall accrue to HBPCL
by lower cost and improved operational performance of the quarter. from September 1, 2015, it added.
efficiencies achieved at all plants, Gautam

Reliance Power Q2 profit rises 36.6% to Rs 345.63 crore

Anil Ambani-led Reliance Power Ltd The companys five plants are operating at
reported a 36.6% rise in net profit for the plant load factor (PLF) of between 83-97%
quarter ended 30 September, helped by and generated total power of 11,153 million
higher performance across the companys units during the quarter. Total expenditure
plants and continued benefit of increased in the quarter rose 37.2% to Rs.1,809.44
production at its Sasan power project crore. As of 30 September, the company
in Madhya Pradesh. Net profit stood at had consolidated long term borrowing
Rs.345.63 crore as against Rs.253.07 crore of Rs.28,691.86 crore and short-term
in the year ago period but fell short of the borrowing of Rs.2,746.36 crore. Last month,
Streets expectations. Total consolidated Reliance Power appointed Venugopala Rao
net income rose 55.1% to Rs.2,766 crore as chief executive officer (CEO). Rao was
from Rs.1,783.24 crore a year earlier. most recently the CEO of Sasan Power,
Reliance Power operates nearly 6,000MW which has developed the Sasan UMPP in
of power capacity across its projects based Madhya Pradesh.
on coal, gas, hydro and renewable energy.
November 2015
www.InfralinePlus.com

StatisticsPower
Station-wise details of thermal power plants likely / proposed to be set up in the
country during 12th Plan
Project Name State Developer Fuel Type Capacity (MW)
Talwandi Sabo TPP U3 Punjab Vedanta Coal 660
Anpara-D TPP U2 UP UPRVUNL Coal 500
Bara TPP U1 UP Prayagraj Power Gen. Co. Ltd (Jaypee Group) Coal 660
Bara TPP U2 UP Prayagraj Power Gen. Co. Ltd (Jaypee Group) Coal 660
Bara TPP U3 UP Prayagraj Power Gen. Co. Ltd (Jaypee Group) Coal 660
Marwah TPP U2 Chhattisgarh CSEB Coal 500
Uchpinda TPP U2 Chhattisgarh R.K.M. PowerGen Pvt Ltd Coal 360
Uchpinda TPP U3 Chhattisgarh R.K.M. PowerGen Pvt Ltd Coal 360
Vinjkote (Darrampura) TPP U1 Chhattisgarh SKS Ispat and Power Ltd. Coal 300
Vinjkote (Darrampura) TPP U2 Chhattisgarh SKS Ispat and Power Ltd. Coal 300
Vandana Vidyut TPP U2 Chhattisgarh Vandana Vidyut Coal 135
Balco TPP U2 Chhattisgarh Bharat Aluminium Co. Ltd Coal 300
Athena Singhtarai TPP U1 Chhattisgarh Athena Chhattisgarh Power Ltd. Coal 600
TRN Energy TPP U1 Chhattisgarh TRN Energy Coal 300
TRN Energy TPP U2 Chhattisgarh TRN Energy Coal 300
Parli TPP U3 Maharashtra MAHGENCO Coal 250
India Bulls - Nasik TPP Ph-I, U2 Maharashtra India Bulls Realtech Limited Coal 270
Annupur TPP Ph-I U2 MP MB Power (Madhya Pradesh) Ltd. Coal 600
Jhabua TPP U1 MP Jhabua Power Ltd Coal 600
Thamminapatnam TPP U3 A.P. Meenakshi Energy Pvt. Ltd., Coal 350
Nagarjuna Construction Company Ltd Ph-I U1 A.P. Ngarjuna Construction Company Ltd Coal 660
Bhavanapaddu TPP U1 A.P. East Coast Energy Coal 660
Hinduja TPP, U1 A.P. Hinduja Coal 525
Hinduja TPP, U2 A.P. Hinduja Coal 525
Muzaffarpur (Kanti) TPP U4 Bihar NTPC JV Coal 195
Nabinagar TPP U1 Bihar NTPC JV Coal 250
22
Nabinagar TPP U2 Bihar NTPC JV Coal 250
Bokaro TPP A Exp U1 Jharkhand DVC Coal 500
Ind Barath Energy Pvt. Ltd. TPP U1 Orissa Ind. Barath power (Utkal) Ltd. Coal 350
Ind Barath Energy Pvt. Ltd. TPP U2 Orissa Ind. Barath power (Utkal) Ltd. Coal 350
Raghunathpur TPP U2 WB DVC Coal 600
Bongaigaon TPP U2 Assam NTPC Coal 250
Namrup CCGT Assam APGCL Gas 100
Monarchak CCGT Tripura NEEPCO Gas 35.6
Lara TPP U1 Chhattisgarh NTPC Coal 800
Kudgi STPP Ph-I , U-1 Karnataka NTPC Coal 800
Mouda STPP Ph-II U3 Maharashtra NTPC Coal 660
Agartala CCPP ST-1 Tripura NEEPCO Gas 25.5
Barauni TPS Extn U1 Bihar BSEB Coal 250
Bhavnagar CFBC TPP, U-1 Gujarat Bhavnagar Energy Lignite 250
Bhavnagar CFBC TPP, U-2 Gujarat Bhavnagar Energy Lignite 250
Bellary TPP St-III, U-3 Karnataka KPCL Coal 700
Yermarus TPP, U-1 Karnataka KPCL Coal 800
Yermarus TPP, U-2 Karnataka KPCL Coal 800
Chandrapur TPS, U-9 Maharashtra MSPGCL Coal 500
Koradi TPS Expn., U-9 Maharashtra MSPGCL Coal 660
Koradi TPS Expn., U-10 Maharashtra MSPGCL Coal 660
Kakatiya TPS Extn., U-1 Telangana TGENCO Coal 600
Singareni TPP, U-1 Telangana Singareni Collieries Co. Ltd Coal 600
Singareni TPP, U-2 Telangana Singareni Collieries Co. Ltd Coal 600
Sagardighi TPS-II, U-3 WB WBPDCL Coal 500
Sagardighi TPS-II, U-4 WB WBPDCL Coal 500
Raikheda TPP, U-1 Chhattisgarh GMR Coal 685
Singhitarai TPP, U-2 Chhattisgarh Athena Chhattisgarh Power Ltd. Coal 600
Uchpinda TPP, U-4 Chhattisgarh RKM Powergen Pvt. Ltd Coal 360
Mahan TPP, U-2 MP Essar Power MP Ltd Coal 600
Malibrahmani TPP U1 Odisha MPCL Coal 525
Melamaruthur TPP, U-2 TN Coastal Energen Coal 600
Lalitpur TPP, U-1 UP Lalitpur power Generation Co. Ltd Coal 660
Lalitpur TPP, U-2 UP Lalitpur power Generation Co. Ltd Coal 660
Lalitpur TPP, U-3 UP Lalitpur power Generation Co. Ltd Coal 660
November 2015
www.InfralinePlus.com

Power projects commissioned in the Financial year 2015-16

Month Project name/Unit Fuel Promoter Capacity Location


Type (MW)
Apr-15 Anuppur TPP,I U-1 Thermal M/s M B POWER 600 Madhya Pradesh
Koldam HEP U-III Hydro NTPC 200 Himachal Pradesh
Srinagar TPP, U -1 Hydro AHPCL 82.5 Uttarakhand
Srinagar TPP, U-3 Hydro AHPCL 82.5 Uttarakhand
Jun-15 Anpara D TPP U-6 Thermal RVUNL 600 Rajasthan
BALCO TPP U-1 Thermal UPRVUNL 500 Uttar Pradesh
Kalisindh TPP U-2 Thermal BALCO 300 Chattishgarh
Bongaigaon TPP U-1 Thermal NTPC 250 Assam
Bandhaghar TPP U-1 Thermal M/S Maruti Power Ltd 300 Chattishgarh
Srinagar HEP, U-4 Hydro AHPC 82.5 Uttarakhand
Koldam HEP, U-4 Hydro AHPC 82.5 Himachal Pradesh
Srinagar HEP, U-2 Hydro NTPC 200 Uttarakhand
Jul-15 Tuticorin TPP U-2 Thermal NLC 500 Tamil Nadu
Aug-15 Vindhyachal STPP St-V U-13 Thermal NTPC 500 Madhya Pradesh
Lanco Kondapali St-III, U-I Thermal Lanco Kondapalli Power Ltd. 371 Andhra Pradesh
Sep-15 Lanco Kondapalli Stg-III U-2 Thermal Lanco Kondapalli Power Ltd. 371 Andhra Pradesh
Painampuram TPP U-II Thermal Thermal Powertech Corporation (India) Limited 660 Andhra Pradesh
GMR Rajahmundry energy Ltd. Thermal GMR 384 Andhra Pradesh
Sikka TPS Extn U-4 Thermal Gujarat State Electricity Corporation Ltd. (GESCL) 250 Gujarat
Jorethang Loop U-I Hydro DANS Energy Pvt.Ltd. 48 Sikkim
Jorethang Loop U-II Hydro DANS Energy Pvt.Ltd. 48 Sikkim
23
Baghlihar Stage-II Hydro Jammu & Kashmir Power Development Depart- 150 Jammu & Kashmir
ment (JKPDD)
Lower Jurala U-2 Hydro Telangana State Power Generation Corporation 40 Andhra Pradesh
Limited (TSGENCO)
Oct-15 Uchpinda TPP U-I Thermal RKM Powergen Private Limited 660 Chhattisgarh
Talwandi Sabo U-2 Thermal Talwandi Sabo Power Ltd. (Sterlite Energy) 360 Punjab
GMR Rajahmundry Energy Ltd Thermal GMR Group 384 Andhra Pradesh
Lower Jurala U-1 Hydro Telangana State Power Generation Corporation 40 Andhra Pradesh
Limited
Baghlihar St-II U-2 Hydro Jammu & Kashmir State Power Devp. Corpn. Ltd. 150 Jammu & Kashmir
Total Capacity Addition in 2015-16 8196
November 2015
www.InfralinePlus.com

NewsBriefs | Coal National


Coal India Q2 net profit rises 16% to Rs 2,540 crore Fuel supply contracts of steel and
cement companies to continue

boost production. Net income climbed


to Rs 2,540 crore ($385 million) in the
three months ended 30 September
from Rs 2,190 crore a year earlier. Sales
rose 8% to Rs 16,960 crore from Rs
15,680 crore. Coal Indias shipments
in the quarter rose 10% to 122 million
metric tons, while production rose 5.6%
to 108.2 million tons, according to
company data. The state-run miner is
under pressure from the government to
double its output in the next five years
Coal India Ltd.s quarterly profit rose and is pushing for record production In a big relief to steel and cement
16% as government support helped and shipments this year. companies, the fuel supply contracts
the worlds biggest miner of the fuel with Coal India Ltd (CIL) will not
be discontinued for auction. The
Government justifies cancellation of Chhatrasal block to Sasan project government had earlier announced that
all the coal supply agreements between
Government has justified cancellation Coal India and non-power firms will end
of one of three coal blocks allocated in June next year.
to Reliance Powers Sasan Ultra Mega The government will wait for the
Power Project (UMPP) saying the units contracts to end and then auction them.
coal requirement could be met by the This is a change from the governments
24 other two. Defending its decision, the earlier stance to discontinue the
Coal Ministry told Delhi High Court that agreements and auction them afresh
Reliance had on several occasions next year. Most fuel supply contracts
represented that its Sasan unit required of Coal India are set to lapse in 2017.
only 16 million tonnes per annum (MTPA) The government is expected to auction
which could be easily met by the Moher about 28 million tonne of coal supply
and Moher- Amlohri extension coal pacts to unregulated sectors next year.
blocks in Madhya Pradesh. The ministry deallocated. It said the company also The coal ministry has finalised
has said that since the two blocks could did not fulfill the allocation condition the policy for auction of Coal India
meet the requirements of the project, of developing the Chhatrasal block, in contracts to unregulated sectors like
the third block - Chhatrasal - was Madhya Pradesh. steel and cement.

Coal India allowed to mine CBM but under strict timelines

In order to speed up gas production up simultaneous exploration of both the


from coal bed methane (CBM) blocks, natural resources. Within 24 months of
the petroleum ministry has allowed grant of CBM mining lease, Coal India
Coal India to mine the hydrocarbon needs to submit field development
and set specific timelines for the same. plan (FDP) to the Directorate General
However, the permission comes with a of Hydrocarbons (DGH). The time for
rider that Coal India cannot involve a submission of FDP may be extended by
private third party for CBM exploitation. 12 months by the ministry on a case-to-
It can only give out equity participation case basis.
to a central or state PSU with For delay in submission of appraisal
experience in CBM exploration, while plan and FDP beyond 36 months, Coal
the majority stake would remain with India would have to pay a penalty of Rs
Coal India. Coal India would utilise its 1 lakh per month.
mine in a way that it extracts CBM prior
to coal mining operations or it may take
November 2015
www.InfralinePlus.com

NewsBriefs
| Coal National International
Philippines coal demand to grow by up to 15 mt a year

Annual coal consumption in the


Philippines, one of the worlds fastest
growing economies, could rise by more
than two-thirds to as much as 35 million
tonnes over the next two decades. That
could be good news for the countrys
main coal supplier, Indonesia, and could
also stimulate investment to develop
local coal mines. The Southeast Asian
nations coal consumption soared to
a record 20 million tonnes in 2014,
while imports jumped to an all-time the drawing board to boost electricity
high of 15.2 million tonnes. The country supply and support an economy growing
is counting on dozens of coal-fired between 5 and 7 percent annually.
power plants under construction or on

Rich nations assess plan to slash billions from coal investment

billions of dollars of support they pour


into coal power plants worldwide. As
per reports, US has struck a deal with
Japan that would rein in export credit China should stop adding new coal-
agency financing for coal, a leading fired power plants
source of the greenhouse gas emissions 25
responsible for climate change. In a sign China should slow down its expansion
of the difficulties of securing agreement, plans for coal-fired power plants to
Australia and South Korea, both home take account of an expected decline
to large coal companies, have produced in demand from energy-intensive
alternative proposals that would not go industries such as steel and cement,
as far as the US-Japan plan. said researchers at government-
It is estimated that agencies from OECD backed think tanks. The worlds
The embattled coal industry is facing countries channelled $34bn to coal biggest coal consumer has seen a
a fresh onslaught as rich nations power plants between 2007 and 2014, boom in construction of coal-fired
consider a bold plan to scale back the making these bodies a prominent target. plants, increasing new capacity by
55 percent in the first six months
compared with the same period last
Japans offtake from PWCS Australian coal terminals hits 10-month high
year. It also approved 200 gigawatts
of new plants in the first half of 2015,
Australian thermal and metallurgical coal exceeding the total approvals in
shipments from the two Port Waratah the previous three years. Expected
Coal Services terminals at Newcastle production cuts by industry could
port to Japan touched a 10-month high mean a severe oversupply of coal-
in October at 5.04 million mt. Octobers fired power. Chinas steel sector
shipments to Japan from the PWCS currently has 300 million tonnes of
terminals represented a month-on-month surplus capacity. Coal consumption
increase of 5.2% from 4.79 million mt by cement makers and steel firms will
in September, and last month was the see coal use peak by 2016, according
previous high since 5.22 million mt was to the think tanks. Coal consumption
shipped to Japan in December 2014. period. Analysts at National Australia by power stations will likely peak by
Japans offtake from the PWCS coal Banks economics unit said that the 2020, their research found.
terminals in the year-to-date period is outlook for Japans thermal coal import
44.7 million mt, and has risen from 40.8 demand for electricity generation remains
million mt in the January-October 2014 uncertain.
November 2015
www.InfralinePlus.com

InConversation
Thermal to remain dominant source
of power generation in India
IL&FS Energy Development Company Limiteds (IEDCL)
generation portfolio includes projects both in conventional
and renewable energy space with an operational capacity of
2,200 MW, 900 MW of near operational projects and 13,600
MW projects under development. The companys Managing
Director, Sunil Wadhwa, talks to InfralinePlus about
the issues facing the power sector, his outlook on the coal
sector and the expansion avenues being considered by the
company in future. Excerpts.

What is your outlook on the and to provide power to all Sunil Wadhwa, Managing Director, IL&FS Energy
26 power sector in India today? IL&FS Energy Development Development Company Limited (IEDCL)
Please specify your present Company Ltd (IEDCL)
area of operation and future is the energy vertical There North East Region of India (in Joint
targets in power generation and of IL&FS. The is an Venture with ONGC, PowerGrid
transmission segments Company has urgent need and NER States) and a 47 km
India has made significant efforts to ad- established capa- to fast forward transmission line in Southern
dress its electricity deficit. The installed bilities in con- the much needed India. IEDCL is also con-
capacity has increased more than 4 ceptualisation, Distribution structing a 130 km 400 kV D/C
times from 64 GW in 1990s to 280 GW implementation, Sector Indo Nepal Transmission line
in October 2015. The power supply commissioning reforms along with Indian & Nepalese
deficit improved from 11% in FY 2009 and operations across Public Sector Undertakings
to 8.5% in FY 2012 and to 3.6% in FY a diversified energy port-
2015. However the per capita power folio including thermal power plants What are the chief issues facing
consumption of about 1,000 kWh is (coal-fired as well as natural gas-fired), power sector in India, especially
still amongst the lowest in the world. renewable energy power plants (wind, relating to fuel supply and
In comparison, China has a per capita solar, waste-to-energy, biomass and financing? What is the way out?
consumption of 4,000 kWh and other bagasse) and transmission lines. The The major issue facing the power sec-
developed nations consume on an aver- Companys operational power gen- tor is the poor financial health of the
age 15,000 kWh per capita. In India eration capacity is around 2,200 MW distribution companies. There is an
around 300 million people (22%) still (out of which around 40% is renewable urgent need to fast forward the much
do not have access to electricity, sug- capacity) and around 900 MW capac- needed Distribution Sector reforms
gesting a large unmet/latent demand in ities are targeted for commissioning through private sector participation for
the country. The new Government has during FY 2016. Another 13,600 MW (a) AT&C loss reduction from current
undertaken a slew of steps to provide of generation capacities are under ~ 30% to ~ 10%, (b) improved network
the necessary impetus to the power various stages of development. In the condition and power supply situation
sector to be able to support the targeted area of power transmission, the assets and (c) improved customer service. In
growth trajectory of 7% - 8% of the In- include a fully operational 400 kV order that the financial restructuring
dian economy over the next few years D/C transmission line of 663 km in the scheme such as UDAY is effective, it is
November 2015
www.InfralinePlus.com

important that Discom operations are process of allocation of coal blocks for The government has planned an
made self sustaining so that revenue captive use by power plants and other investment of Rs one lakh crore
deficits dont again balloon up over users has been streamlined. The current in the transmission sector. What
time. Pro-active transmission planning Government is targeting to increase the are your plans in this segment?
to remove mismatches in timelines for domestic coal production to 900 MT Are you planning to bid for any
capacity addition and development by 2020 from the current 550 MT. This upcoming projects?
of evacuation infrastructure is also would require a concerted action to As mentioned above, in the area of
becoming critical translate policy intent into action. power transmission, the 400 kV D/C
On the financing front there has The dwindling domestic gas supply transmission line of 663 km in the
always been a challenge for banks to had starved the gas based power plants North East Region of India and the 47
fund long-gestation projects due to the (~ capacity of 24 GW as on October km transmission line in Southern India
asset-liability mismatches and have 2015). Some of the stranded plants are associated transmission lines that
therefore restricted their finances to a have been revived using Re-gasified connect the Companys power plants
maximum of 12-15 years. While the Liquefied Natural Gas (RLNG) through to the national grid. Presently, in the
PPAs are long term (upto 25 years) various incentive structures. These transmission space the Company is fo-
the bank financing is available only plants are however still working on cussed on providing last mile connec-
for half the duration. There is a need low PLFs. Internationally, with falling tivity to its own power plants. IEDCLs
to have bank financing available on crude prices there is availability of investment in 130 km 400 kV D/C
a format that the lenders can extend cheaper LNG in the market and this Indo Nepal Transmission line along
longer amortization period to projects is an opportune time to scout for long with Indian & Nepalese Public Sector
in the infrastructure and core industries term gas supply contracts to further Undertakings is a strategic one
sector, based on the economic life or improve the PLFs
concession period of the project. The government recently
The thermal power generation announced the phasing out tax 27
sources (coal, gas, oil) accounted for Coal has in the recent exemptions and deductions
around 70% of total electricity gen- past, witnessed extended to companies ahead
eration capacity in October 2015, with significant regulatory of its plan to cut the headline
coal contributing the bulk. Thermal reforms, Government corporate tax from 30 per cent
power is expected to remain the to 25 per cent. How do you see
has passed coal and
dominant source of power generation the move impacting the power
in the country. Coal has in the recent
mining legislations in sector?
past, witnessed significant regulatory
the Parliament, allowing Reduction in headline corporate tax
reforms, Government has passed coal private and foreign from 30% to 25% should lead to reduc-
and mining legislations in the Par- companies to mine and tion in electricity tariff and improve
liament, allowing private and foreign sell coal profitability of the projects; however as
companies to mine and sell coal. The the exemptions are also proposed to be
phased out the final outcome may be
neutral at best. The two most common
exemptions availed by the Power Sec-
tor Companies include accelerated de-
preciation and the 10 year tax holiday.
The withdrawal of these exemptions is
likely to more than offset the reduction
in the headline corporate tax rate

There has been a lot of emphasis


on Renewable Energy (RE) in
India and the government is
betting big on adding 175 GW of
capacity by 2022. Infact, India
has also pledged to increase
November 2015
www.InfralinePlus.com

InConversation

share of non-fossil fuels in


electricity generation to 40%
by 2030. The country has
also committed to reduce its
emissions intensity per unit GDP
by 33 to 35 percent below 2005
by 2030. Being a power sector
player, how do you view this
policy shift? What are the key
issues in achieving the same?
The Central Government is taking
several steps to accelerate deployment
of renewables, particularly solar, in the
country. Given the current installed RE
capacity of ~ 39 GW, target of reaching
175 GW implies an annual run-rate of
~ 20 GW for the next 7 years. For solar, Even if we fall short of the targets, the renewable
given the current installed capacity of ~ sector is expected to see a lot of action over the
4GW, the target of 100 GW implies an next few years
annual run rate of ~14GW. The target
looks very stiff. However, even if we these states will necessarily have d. Integration of the targeted 160 GW
fall short of the targets, the renewable to be designed for inter-state of variable RE capacity (wind and
sector is expected to see a lot of action sale of power. CERC has already solar) into the grid would increase
28 over the next few years. Some of the exempt solar power from inter-state the share of variable RE to over
key issues related to the RE sector go- transmission charges and losses 35% in capacity terms by 2022.
ing forward are as follows: for projects commissioned before Such RE penetration would be
a Given the current financial health June 30, 2017 for the useful life of abnormally high and unsustainable
of the distribution companies, the these projects. However, the end from the perspective of grid stability
purchasing power of the discoms is consumers who wish to buy green unless energy storage solutions are
limited. Success of the distribution power are not connected to the CTU integrated with the induction of such
reforms is critical for achieving the and hence have to use the STU and volumes of variable power
ramp-up targeted in the RE capac- Discoms network and pay the asso- Regulators/Grid Operators could
ities. ciated charges potentially decide to mandate storage
b. There is also a need to develop an Certain policy enablements have solutions, which would trigger large
alternate market for RE. With solar been made by SERCs for bilateral scale deployment of storage solutions
and wind power reaching socket sale/ captive consumption of driving down its cost (just as it
parity (i.e. solar and wind power price solar power in many states like happened in Solar PV modules)
on a kWh basis is at par with the Karnataka, Andhra Pradesh,
retail price of electricity paid by the Maharashtra, Madhya Pradesh, The government recently
industrial and commercial customers Tamil Nadu, etc. However, these announced the UDAY scheme for
in many states) and many large corpo- enablers are currently limited to revival of Discoms. According
rates aspiring to switch to direct pur- solar projects installed within the to you, how is the scheme
chase of green power for their energy respective states. If socket parity different from other financial
needs, tremendous potential exists based market has to grow, these restructuring packages
in the socket parity based market for enablements and concessions need announced in the past? Do you
quick capacity additions to be extended for solar power think it will work? What are the
c. Most of the resource rich states imported from other states as well. issues that need to be resolved
like Rajasthan, Madhya Pradesh These policy enablements & conces- to make the scheme a success?
and Gujarat have already fulfilled sions are in the form of wheeling The UDAY scheme is an inclusive
their RPO targets and any further & banking and non-applicability of scheme for distribution reforms and not
development of RE projects in cross subsidy surcharge just a financial restructuring package.
November 2015
www.InfralinePlus.com

Hence we cannot compare it with the Post APTELs judgment in 2011 next few months which will complete
earlier FRP schemes. To begin with, the (directing that the tariff petition to be the first phase of 1,200 MW. The
financial restructuring process under the filed in time by Discoms and upon remaining capacity shall be imple-
UDAY scheme is very different from failure by the Discom to file in time, mented in subsequent phases based on
the earlier FRP schemes wherein this the State Commission to suo-motu the demand in the Region
time the states shall take over 75% of initiate proceedings for determination/ We are also developing a 3,960 MW
the Discom debt and issue SDL (State revision of tariff), yearly tariff revi- coal based project in Kutch district of
Development Loan) bonds with maturity sions have been happening in most Gujarat. The Project is being developed
period of 10-15 years and a moratorium states. Most states have been main- as part of a multi-product SEZ / Free
on principal up to 5 years. The remaining taining tariff increase trajectory with Trade and Warehousing Zone being
25% debt will be serviced through ef- average annual increase in last five developed by IL&FS Group and most
ficiency improvement and tariff increase. years at 8%. of the clearances are in place
In the last FRP, state governments were However, while regular tariff revi- In the renewable space, we have
to take over half the outstanding loans sions are a positive development for an operational portfolio of 735 MW
of State Discoms and the remaining debt the sector, Regulators must ensure that wind projects spread across 7 states
was to be restructured by banks the Discoms do not pass on their inef- with diversified PPA arrangements
Under the UDAY scheme, to enable ficiencies to consumers (FIT/APPC+REC/third party) which
states to take over the debt, the states will increase to 775 MW in the next
have given necessary relaxation in their Please highlight your future few months. We are evaluating new
Fiscal Responsibility and Budget Man- expansion plans sites located in states with financially
agement (FRBM) limit i.e. the Centre IEDCLs strategic approach has been to stable Discoms and reasonable offtake
will disregard the principal debt taken develop projects with diversified fuel prices for further expansion of the wind
on by the states when calculating their portfolio
fiscal deficit for allocation of funds Tariffs should be cost- In the solar space, our strategy is 29
from the central exchequer reflective and should be twofold first to utilise our project
On one hand the scheme provides infrastructure development experience
reviewed and (if required)
for a quarterly tariff adjustment and in solar park development, and second
allocation of cheap power from Central
revised timely. The tariff- as a project developer create a well
sector generating stations to reduce
setting process should diversified portfolio of solar projects
debt burden and interest costs for the be free from government similar to our wind portfolio. We
Discoms and on the other hand man- control by giving the commissioned our first solar project of
dates achievement of milestones for regulators autonomy 40 MW capacity in Madhya Pradesh
operational efficiencies by Discoms. in deciding tariffs and implemented under the JNNSM VGF
States accepting the scheme and per- undertaking activities to Scheme in May 2015. We are actively
forming as per operational milestones reduce AT&C losses pursuing solar projects for direct sale of
will be given additional / priority power to large credit worthy industrial
funding through DDUGJY, IPDS, and commercial customers in states
PSDF or other such schemes of MoP sources and geographical footprint. Our with conducive regulatory framework
and MNRE and will also be supported generation portfolio includes projects for the socket-parity based market
with additional coal at notified prices both in conventional and renewable IEDCL has entered into a joint
energy space with an operational ca- venture with Govt. of Rajasthan for
Do you feel that timely tariff hike pacity of 2,200 MW, 900 MW of near development of 5,000 MW multi-
is a must for discom health? operational projects and 13,600 MW location solar parks in the state. The
We feel that tariffs should be cost- projects under development JVC Saurya Urja Company of Rajasthan
reflective and should be reviewed We recently commissioned the is implementing the first solar park in
and (if required) revised timely. The first unit (600 MW) of our 3,840 MW Bhadla, Jodhpur for 1,000 MW solar
tariff-setting process should be free imported coal based Cuddalore Power projects. The land has been allotted to
from government control by giving the Project in September 2015 and started the JVC for this Solar Park.
regulators autonomy in deciding tariffs supply of power to TANGEDCO under
and undertaking activities to reduce the long term PPA. The second unit is
AT&C losses also expected to be commissioned in
For suggestions email at feedback@infraline.com
November 2015
www.InfralinePlus.com

InDepth
Not the right time for CIL
stake sale

30

Timing of sale matters more than that of purchase, says experts


Government needs to scale down disinvestment target

Team InfralinePlus

The Union Cabinet has granted ap- Corporation -- against its disinvest- meanwhile, it is struggling to stick to
proval to the governments proposal to ment target of Rs 69,500 crore some its fiscal deficit target of 3.9 per cent
go ahead with 10 per cent stake sale in 41,000 crore minority stake sale and for this year due to a likely shortfall in
Coal India Ltd (CIL) despite the PSU the balance from strategic sell-off -- in direct tax collections. CPSEs constitute
share not doing well in the stock mar- the current fiscal. 11.99 per cent and 12.2 per cent of the
ket. CIL stock closed at Rs 335.05 on The Budget reflects considerable total market capitalisation of companies
the BSE on December 4, much lower scaling up of disinvestment figures. listed at BSE and NSE respectively (as
than its one-year high of Rs 447.25. This will include both disinvestment in on 30 November 2015). The CPSE with
The government has so far raised just loss making units and some strategic the highest market capitalisation is CIL
Rs 12,600 crore from stake sale in four disinvestment, Finance Minister Arun at Rs 2,08,882 crore on BSE and Rs.
PSUs IOC, PFC, REC and Dredging Jaitley said in his budget speech. But 2,08,787 crore on NSE.
November 2015
www.InfralinePlus.com

Market experts say when it comes to in ONGC and metal companies due Market capitalisation of
investing, timing of sale matters more to the erosion of their stock market major PSUs as at the end of
than that of purchase. The mantra of valuations. Jaitley recently defended November (Rs lakh crore)
successful traders has been that you the governments decision not to PSUs Market capitalisation
hold on to your winners for as long as sell shares of metal PSUs like Steel CIL 2.08
you can and cut your losses as soon as Authority and RINL which are facing ONGC 2
you can. But many retail investors do external headwinds due to overcapacity NTPC 1.08
the exact opposite in holding on to their in the global metal industry. Jaitley IOC 1.02
Power Grid 0.71
losses and selling their winners too said there are few stocks, especially
BPCL 0.65
early. Experts say that the government metal stocks, which are down globally
GAIL 0.46
is behaving like retail investors it and, therefore, in such circumstances, BHEL 0.42
is going ahead with sell-off despite it would not be appropriate to sells NMDC 0.37
knowing it would not get best such stocks in the market. We will BEL 0.30
valuations. sell such stocks after market condition Source: Stock Exchanges
The government expects to raise improves, he said.
over Rs 21,000 crore from proposed In the light of Jaitleys argument, in some productive assets, a move
sale of 63.16 crore shares CIL, which the economic logic of the government that can hardly be called prudent from
will be half of the revenue targeted going ahead with planned stake sale the perspective of economic logic.
from stake. It mopped up nearly the in CIL whose case is similar is not Globally, CIL remains one of the few
same amount through stake sale in understandable. It is clear that the profit-making coal companies at the
CIL in January. Significantly, the government is out to sell family silver moment.
government has deferred stake sale to cut its fiscal deficit rather than invest
Global scenario
Worlds largest coal producer CIL has been Recently, the fourth largest coal com- 31
pany in the US, Alpha Natural Re-
able to stay profitable on the back of rising sources, filed for bankruptcy. Analysts
coal demand in the domestic market and expect the two largest coal companies
its low cost of operation. Since the new Peabody Energy and Arch Coal
government has taken over at the Centre, could also file for bankruptcy. Falling
CILs production performance has improved coal prices forced Europes largest coal
significantly. After anaemic growth in output company, Kompani Weglova, to shut
down four mines to avoid bankruptcy.
in recent years, it reported 7 per cent growth Worlds largest coal producer CIL
in production in 2014-15 has been able to stay profitable on
the back of rising coal demand in the
domestic market and its low cost of
operation. Since the new government
has taken over at the Centre, CILs
production performance has improved
significantly. After anaemic growth
in output in recent years, it reported
7 per cent growth in production in
2014-15. This year it is expected to do
even better. In fact, the coal producers
management, along with the coal
ministry, has drawn up ambitious plan
to double the companys production by
2019-20.
But if CIL is to double its output, it
must invest over 1 lakh crore in mining
projects over next few years. Although
the company has cash surplus of over
November 2015
www.InfralinePlus.com

InDepth

Rs 50,000 crore, it will still have to a 4.51 per cent stake, in the CIL stake PSUs and raising money to bridge its
mobilise financial resources even after sale. State-owned insurers stake in the budget deficits by using LIC, but this
utilising future cash flows. The entire countrys biggest coal producer now is not the best route for disinvestment
proceeds from the proposed 10 per stands at 7.24 per cent, up from 2.73 as it is government money going from
stake sale would go to the government per cent. The government sold 63.16 one pocket to another in the absence
and the company would not get crore shares, or a 10 per cent stake, in of private investors participation. This
anything out of that. With nearly Rs the public sector coal producer through approach obviously needs a relook.
50,000 crore worth of shares coming in an Offer for Sale on January 30. The
the market within a year (the last stake share sale generated Rs 22,558 crore Issues involved
sale was in January 2015), it would be for the government. There are always three types of disin-
difficult for the company to find new Calculated at the floor price of Rs vestment issues those where LIC
investors in the short term. 358 apiece, LIC bought shares worth did not get anything at all as its bids
When the company needs money an estimated Rs 10,200 crore in the were very low; where it was a regular
for its growth, it will find it difficult CIL disinvestment. CIL was the biggest investor; and where it was called on
to raise required resources from the to invest, say market watchers. The
market. Rather than waiting to benefit Parliamentary Standing Committee on
from the growth prospect of the
When the company Finance has raised the issue and called
company, the government wants to needs money for its for a rational disinvestment policy,
cash out leaving the company to fend growth, it will find which is not solely focused on revenue
for itself when it needs money later. it difficult to raise generation, as has been the case so far.
The government is just mopping required resources For about Rs 8,000 crore, LIC
up revenue from sell-off programme from the market. bought 20.87 crore of the 24.28
without bothering to introduce crore shares on offer in Indian Oil
long-pending public sector reforms
Rather than waiting Corporation this year. The government
32
recommended by the Roongta to benefit from the raised Rs 9,379 crore from the
committee. growth prospect of disinvestment, which was the highest
the company, the amount raised so far this fiscal from
A cautious approach government wants to a stake sale in a single company this
required cash out leaving the year. The public sector insurer also
The government is determined to go invested about Rs 11,426 crore in the
ahead with CIL stake sale despite its
company to fend for 4.91 per cent stake sale in ONGC in the
bad experience earlier this year with itself when it needs FY 12, which amounted to nearly 90
Offer for Sales for Indian Oil Corpora- money later per cent of the Rs 12,750 crore raised
tion and Power Finance Corporation, by the government through the issue.
both of which faced rough weather due share sale by any private or public LIC also subscribed to shares worth
to poor response from private inves- sector company in India and exceeded over 70 per cent of the 5.82 per cent
tors and state-owned insurer LIC had the previous record of over Rs 15,000 stake sale by the government in Steel
to step in to bail both the issues. In crore made by the coal monopoly itself Authority in FY13. The government
the face of lukewarm response from in 2010. The state-owned insurer is raised Rs 1,514 crore through
private investors, LIC has been prop- always called by the Finance Ministry dilution of its shareholding in SAIL.
ping up the government disinvestment to bail out the governments PSU Confident of meeting the ambitious
programme. LIC has bought shares stake sale issues was the main buyer disinvestment target of Rs 69,000
worth over Rs 36,686 crore in various of shares in a number of stake sales crore this fiscal, Finance Minister Arun
PSUs under the programme in the last over the years, including the 10 per Jaitley said the government has moved
six years, which amounts to nearly 37 cent disinvestment in IOC in August. fast so far and all routes are open on
per cent of the governments receipts of The state-owned insurers investments this front, including strategic sale of
97,620 crore from stake sales in public are based on the shares bought during hotels. Despite empirical evidence,
sector enterprises. the stake sales multiplied by the floor the government has dismissed the
LIC picked up almost half of the price of the public offers, according to suggestion that LIC was bailing out
shares on offer in CIL Rs 22,558- market experts. its disinvestment programme. For
crore disinvestment in January 2015. The government may have example, Jaitley would have us believe
It bought over 28.47 crore shares, or succeeded in making stake sales in that state-run insurer invests in public
November 2015
www.InfralinePlus.com

sector issues just as it does in case of


public offers from the private sector.
Jaitley echoed the view that being
the largest mover of the Indian stock
market, LIC will have an edge. LIC is
not a body which invests only to bail
out the government in disinvestment.
In the issues by private companies, LIC
also participates. It stocks the shares as
part of its investments and then sells
them at an appropriate time, Jaitley
is quoted as saying recently. But this
is not to say that all stake sales were
propped up by LIC. For example, many
disinvestment issues, including 10 the volatility in stock markets, the
per cent stake sales in OIL in 2012-13 The government has Department of Disinvestment has
and Engineers India Ltd in 2013-14, never fully achieved suggested halving the disinvestment
elicited good response from private annual disinvestment target for the current year to Rs 30,000
investors. crore.
Government has lined up about
target during the The DoD may have a point given
20 PSUs for partial stake sales in the last six year. It could that domestic markets crashed by over
current FY16 and has already secured mobilise about Rs 1,600 points on the day IndianOil OFS
Cabinet approval to go ahead. The 25,000 crore in the was launched. The Sensex fell by over
pipeline includes OIL, Nalco, NMDC, FY15 against the 550 points on the day of PFC share 33
and 5 per cent each in NTPC, ONGC target of Rs 58,425 sale. In 2014-15, the government
and BHEL. However, volatile market raised Rs 25,000 crore against the
conditions have dented the prospects of
crore. So it is not target of Rs 58,425 crore. The Rs
a stake sale. The government has never clear on what basis 58,425-crore target included Rs 43,425
fully achieved annual disinvestment the government set crore from minority stake sale and Rs
target during the last six year. For disinvestment target 15,000 crore from residual stake sale
example, it could mobilise about Rs for the current year, in erstwhile PSUs. The government
25,000 crore in the FY15 against the has been missing disinvestment target
target of Rs 58,425 crore. So it is not economic growth. The government for last five years. The government
clear on what basis the government received over Rs 1 lakh crore in raised Rs 22,144 crore and Rs 13,894
set disinvestment target for the current dividend from PSUs in 2014-15. PSU crore through disinvestment in 2010-11
year, which is 180 per cent higher than also invested over Rs 2.40 lakh crore and 2011-12 respectively, against the
the total receipts from PSU share sales in projects during the same period. It budget target of Rs 40,000 crore for
in the previous fiscal. is strange that at a time when PSUs each year.
At a time when private companies are shouldering the disproportionate In 2012-13, the government mopped
are holding back on fresh investment responsibility of reviving the growth up Rs 23,956 crore as against the
due to weak market demand, the momentum, the government wants target of Rs 30,000 crore. In 2013-14
government is banking on public to sell family silver just to cut its it raised Rs 16,027 crore against a
investment to revive the sagging budget deficits. Sources said the given target of Rs 40,000 crore. In 2014-15,
the government raised Rs 24,277 crore
Disinvestment target vs achievement in recent years (Rs crore)
against the target of Rs 58,425 crore.
Year Target Achievement
The government will be well-advised
FY11 40,000 24,144
to follow the DoDs suggestion and
FY12 40,000 13,894
FY13 30,000 23,956
scale down the disinvestment target.
FY14 40,000 15,819 There is no point in selling CIL shares
FY15 58,425 24,277 cheap.
FY16 (up to Nov ) 69,000 12,701
Source: Department of Disinvestment For suggestions email at feedback@infraline.com
November 2015
www.InfralinePlus.com

StatisticsCoal
List of Coal Mines for fourth tranche coal auction
S. No Name of the State End-Use Sector Status of Geological Peak Rated Current Status
Coal Mine Exploration Reserves (MT) Capacity (MTPA)
Schedule - III
1 Suliyari Madhya Pradesh Iron & Steel, Cement and Partially 150 6.0 De-Allocated
Captive Power Plants Explored
2 Brahampuri Madhya Pradesh Iron & Steel, Cement and Explored 108 0.4 De-Allocated
Captive Power Plants
3 Bundu Jharkhand Iron & Steel, Cement and Explored 102 1.0 De-Allocated
Captive Power Plants
4 Gondulpara Jharkhand Iron & Steel, Cement and Explored 166 4.0 De-Allocated
Captive Power Plants
5 Gondkhari Maharashtra Iron & Steel, Cement and Explored 98 1.0 De-Allocated
Captive Power Plants
6 Khappa & Maharashra Iron & Steel, Cement and Explored 89 0.3 De-Allocated
Extn. Captive Power Plants
7 Jaganathpur A West Bengal Iron & Steel, Cement and Explored 267 0.6 De-Allocated
Captive Power Plants
8 Jaganathpur B West Bengal Iron & Steel, Cement and Explored 176 0.8 De-Allocated
Captive Power Plants
Total 1156 14.06

Schedule of tender process for 4th tranche of auction (Schedule III Coal Mines)
34 S. No. Event Description Estimated Date & Time
1 Registration and Publication of notice inviting tender in one English and T0 Friday, 20 November 2015
Hindi national newspaper
2 Commencement of sale of Tender Document at the website of MSTC. T0 Friday, 20 November 2015
3 Last date of receiving requests for Site Visit/Land Document Inspection. T0 + 20 1700 hours on Thursday, 10 December
2015
4 Pre-bid meeting. T0 + 14 Friday, 04 December 2015
5 Last date of receiving queries from Bidders. T0 + 17 1700 hours on Monday, 07 December
2015
6 Last date for responses to queries by the Nominated Authority T0 + 21 Friday, 11 December 2015
7 Last date for registration of Bidder at the website of MSTC. T0 + 35 Friday, 25 December 2015
8 Last date for sale of Tender Document at the website of MSTC. T0 + 38 Monday, 28 December 2015
9 Bid Due Date. T0 + 41 1400 hours on Thursday, 31 December
2015
10 Opening of the Technical Bid(s). T0 + 45 Monday, 04 January 2016
11 Start date for examination of the Technical Bid(s). T0 + 46 Tuesday, 05 January 2016
12 Announcement of the Technically Qualified Bidders. T0 + 54 Wednesday, 13 January 2016
13 Start of electronic auction (Financial Bid) for the Qualified Bidders. T0 + 59 Monday, 18 January 2016
14 End of electronic auction (Financial Bid) for the Qualified Bidders. T0 + 63 Friday, 22 January 2016
15 Recommendation by the Nominated Authority to the Central T0 + 68 Wednesday, 27 January 2016
Government for selection of Successful Bidder.
16 Intimation to the Successful Bidder (subject to receipt of instruction T0 + 73 Monday, 01 February 2016
from the Central Government).
17 Execution of the Agreement between the Successful Bidder and T0 + 77 Friday, 05 February 2016
Nominated Authority.
18 Last date for furnishing of Performance Security and payment of Fixed T0 + 108 1700 hours on Monday, 07 March 2016
and Upfront Amount by the Successful Bidder
19 Issuance of Vesting Order by Nominated Authority T0 + 111 Thursday, 10 March 2016
November 2015
www.InfralinePlus.com

Company-wise and State-wise production of coal in the country Fy13-FY16*


Coal Production (Mte)
State 2012-13 2013-14 2014-15 2015-16
Company
Actual Actual Actual April-Sept 2015 (Prov)
West Bengal 17.59 18.88 20.61 8.22
ECL Jharkhand 16.32 17.17 19.4 6.83
Total 33.91 36.05 40.01 15.05
West Bengal 0.07 1.55 1.05 1.28
BCCL Jharkhand 31.14 31.07 33.46 15.43
Total 31.21 32.61 34.51 16.71
Jharkhand 48.06 50.02 55.65 24.75
CCL
Total 48.06 50.02 55.65 24.75
Uttar Pradesh 16.09 14.72 14.96 6.16
NCL Madhya Pradesh 53.93 53.92 57.53 29.08
Total 70.02 68.64 72.48 35.24
Madhya Pradesh 6.31 5.55 5.79 2.96
WCL Maharashtra 35.98 34.18 35.36 15.41
Total 42.29 39.73 41.15 18.37
Madhya Pradesh 15.18 14.12 13.08 6.22
SECL Chhattisgarh 103.04 110.14 115.19 53.07
Total 118.22 124.26 128.28 59.29
MCL Odisha 107.89 110.44 121.38 60.03
NEC Assam 0.6 0.66 0.78 0.09 35
Total CIL Total 452.21 462.42 494.24 229.55
SCCL Andhra Pradesh 53.19 50.47 52.54 27.2
Others Total 51 52.88 65.66 18.54
Total 556.4 565.77 612.44 275.29
*Provisional figures for FY16 - (Apr-Sep)
November 2015
www.InfralinePlus.com

CoverStory
Will power sector see a new
sunrise with UDAY?

36

Operational efficiency improvements remain key focus


States line up to join the bailout scheme

Infraline Bureau

Keeping up to its commitment towards debt-ridden discoms. It is also perhaps However, a billion-dollar question
plugging gaps in the power distribu- the best possible package that the is, will UDAY, which means dawn in
tion sector, the NDA government NDA government could have cobbled English, lead to the final resolution of
recently approved the UDAY (Ujjwal together under the prevailing circum- state power sector woes as the gov-
Discom Assurance Yojana) for reviv- stances. What is even more important ernment would have us to believe,
ing the power distribution companies is that unlike previous bail-out pack- or will it prove another false dawn?
(discoms), hoping the scheme would ages, UDAY is not entirely banking on Because the fact remains that the
resolve key problems plaguing state tariff hike to improve financial health Centre cannot force states to reform
power sector once and for all. UDAY of discoms but also envisions plans power sector. Reforms can be driven
is definitely an improvement over for cost savings through innovative by states themselves. That means a
the Financial Restructuring Pack- measures like reduction in power cost paradigm shift in mindset of state poli-
age (FRP) brought by the previous and cut in interest rates of discoms ticians who see free or subsidised elec-
UPA government in 2012 to bail out outstanding loans. tricity as a means to appease political
November 2015
www.InfralinePlus.com

constituencies. For evidence, we do


not have to go far but just check if the
implementation of the FRP made any
lasting difference to discoms finances.
The then UPA government sanc-
tioned FRP in 2012 with the promise
that it would be the last bail-out of
discoms. The first one was arranged to
discoms in 2003. States were to take
over half of the discoms debts under
the package and there was a three-year
moratorium on repayment by discoms
on the balance loans, which ended in
March this year. But see how discoms
again slipped into financial mess
in just three years, forcing the new
government to come up with bail-out
package for them. The outstanding of the view that there is nothing much
debts of discoms surged to Rs 4.43 The NDA government that Govt of India can do in regard
lakh crore in 2014-15 from Rs 2.40 has promised to ensure to reform of discoms, at best GoI can
lakh crore in 2011-12. The situation 24X7 electricity to act as a catalyst. But the catalyst can
was so bad that the Reserve Bank of work only if there is initiative at the
India (RBI) had to raise concern over
every household in the state level. However, in the given
signs of financial stress in the state country by 2019. It has circumstances GoI couldnt have 37
power sector. unveiled ambitious done anything better, Thakur told
investment plans for Infraline Plus.
UDAY a step towards transmission sector Kameswara Rao, Partner, PWC,
achieving 24x7 electricity which has remained a said, State utilities have improved on
In a bold move, the NDA government financial performance over last two
has promised to ensure 24X7 electric-
hurdle to ensuring free years, but still suffer cash loss of 14
ity to every household in the country flow of electricity across per cent on cost of each kWh supplied
by 2019. It has unveiled ambitious the country. However, even after including subsidy received.
investment plans for transmission the fulfilment of the For the sector to truly turn around, we
sector which has remained a hurdle to promise hinges on need, besides financial structuring,
ensuring free flow of electricity across success of the UDAY for interventions to improve regulatory
the country. However, the fulfilment certainty and operational improve-
of the promise hinges on success of
the simple reason that ments. He added, the schemes
the UDAY for the simple reason that financially-constrained proposed incentive to lower bulk cost
financially-constrained discoms cannot discoms cannot buy applies on marginal demand, and so the
buy adequate electricity to ensure un- adequate electricity to initial impact is very small although
interrupted power supply. As we know, ensure uninterrupted grows over time as the discoms sales
discoms have stayed away from the power supply increase.
spot market despite low prices. Debasish Mishra, partner, Deloitte
Power Minister Piyush Goyal has success of the scheme. But only time Touche, shares Thakurs views.
said that discoms will make annual will tell how seriously states pursue UDAY is the most comprehensive
savings of Rs 1.8 lakh crore and the reforms stipulated in UDAY. scheme for distribution reforms; it
entire losses of the power distribution For example, Tantra Narayan goes beyond mere debt restructuring.
sector will get wiped out by 2019 if Thakur, an independent consultant The key to its success, however, lies in
UDAY is implemented properly by and a former chairman and managing proper implementation and continuous
states. Goyal may have strong argu- director to PTC India, welcomes monitoring, Mishra said. Goyal has
ments to back his assertion but even he UDAY but adds the ball is very much pinned hopes on savings that would
relies on state governments to make a in states court. I have been strongly accrue to discoms from reduction in
November 2015
www.InfralinePlus.com

CoverStory

interest rates on outstanding loans


(from current 14-15 per cent to 7-8 per
UDAY assures the rise of vibrant and efficient
cent), cut in commercial losses and discoms through a permanent resolution of past
lower power costs due to decline in as well as potential future issues of the sector.
fuel transportation charges from ratio- It empowers them with the opportunity to break
nalisation of fuel linkages. even in the next 2-3 years through implementation
of initiatives aimed at improving operational
Onus lies on states
But UDAY is an optional scheme and
efficiencies, reducing cost of power, lowering
its success depends on how well it is interest cost and enforcing financial discipline
implemented by states that sign up
for it. Salil Garg, a senior consultant rate as high as 14-15 per cent even as The balance debt will be converted
with India Ratings, said: Financially states borrow at 8 per cent interest by the banks and financial institutions
stressed discoms need to come forward rate. Regulators do not allow pass into loans or bonds with interest rate
to accept the revival plan under UDAY through of interest on past losses in not more than the banks base rate plus
as the participation in the UDAY tariff. That is why surgical intervention 0.1 per cent. Alternately, this debt may
scheme is optional. was needed to rationalise discoms be fully or partly issued by discom as
UDAY assures the rise of vibrant outstanding debt. On signing up for state guaranteed- bonds at the pre-
and efficient discoms through a per- UDAY, states will have to take over 75 vailing market rates which will be
manent resolution of past as well as per cent of their discoms debt as at the equal to or less than bank base rate plus
potential future issues of the sector. It end of September 2015 over two years 0.1 per cent.
empowers them with the opportunity 50 per cent in current fiscal and 25 The package also stipulates mea-
to break even in the next 2-3 years per cent in 2016-17. sures to reduce power theft, align
38 through implementation of initia- The Centre will not include the consumer tariff with generation cost
tives aimed at improving operational debt taken over by the states as per and promote energy efficiency. Opera-
efficiencies, reducing cost of power, the above scheme in the calculation of tional efficiency improvements like
lowering interest cost and enforcing fiscal deficit of respective states in the compulsory smart metering, upgrade
financial discipline through alignment financial years 2015-16 and 2016-17. of transformers, meters; and energy
with state finances. States will issue non-statutory liquidity efficiency measures like efficient
The NDA government has justified ratio (SLR) including state devel- LED bulbs, agricultural pumps, fans
its move to bring UDAY by arguing opment loan (SDL) bonds in the market and air-conditioners will reduce the
that discoms are caught in debt trap or directly to the respective banks and average AT&C loss from around 22
as they are paying average interest financial institutions. per cent to 15 per cent and eliminate
the gap between revenue and cost of
supply by 2018-19. The package aims
at reduction in cost of power through
measures such as increased supply of
cheaper domestic coal, coal linkage
rationalization, liberal coal swaps from
inefficient to efficient plants, coal price
rationalization based on GCV (Gross
Calorific Value), supply of washed and
crushed coal, and faster completion of
transmission lines.
NTPC alone is expected to save 35
paise per unit through higher supply of
domestic coal and rationalization and
swapping of coal which will be passed
on to discoms and in turn to con-
sumers. As much as Rs 57,523 crore of
cost savings is targeted from reduction
in discoms commercial losses, Rs
November 2015
www.InfralinePlus.com

27,000 crore from takeover of discoms Potential cost savings to major power-consuming states
debts by state governments, Rs 17,000 from targeted reduction in AT&C losses
crore from reduction in interest rates
payable by discoms and Rs 66,100 States Potential savings if AT&C losses brought down to 15 per
crore from introduction of demand cent by FY19 (Rs crore)
side management measures like shift Haryana 5,391
to LED bulbs, energy-efficient water UP 5,227
pumps and Rs 36,000 crore from Rajasthan 4,654
increased usage of domestic coal and MP 4,486
coal linkage swapping. Tamil Nadu 3,986
Source: Power Ministry

Scheme finds ready ments will be incentivised by allowing discoms in Haryana, Andhra Pradesh
acceptance them to borrow more through the bond and Telangana by fiscal 2018. For
In an interaction with investors in market, according to financial ana- discoms in Tamil Nadu, Rajasthan,
Mumbai, the Power Minister ex- lysts. Public sector banks will benefit Uttar Pradesh, Bihar and Jharkhand,
pressed confidence that UDAY will from a one-time provisioning write losses will reduce, but total elimination
find pan-India acceptance. Almost back of around Rs 5,000 crore on can happen only by achieving mile-
all the state power ministers heartily restructured discom loans converted stones on operational efficiencies lest
welcomed the new initiative during into bonds, financial experts said. they regress into the debt trap.
the conference held in Kochi last States which sign up for UDAY,
week he told the meet which was their discoms will have to comply with
attended by Foreign Institutional Ratings agency Crisil the Renewable Purchase Obligation
Investors (FIIs), Private Equity Funds, said if the scheme (RPO) outstanding since April, 2012,
Sovereign Wealth funds, Insurance is implemented for within a period to be decided in consul- 39
companies, rating agencies, analysts the eight financial tation with the Power Ministry.
and Mutual funds among others. States that perform as per opera-
Goyal further said it is a bottom-
restructuring package tional milestones will be given
up approach, not a top-down approach. (FRP) states, it could additional or priority funding through
The states will be assisted and hand wipe out losses of Deendayal Upadhyaya Gram Jyoti
held to bring down the cost of power discoms in Haryana, Yojana, Integrated Power Development
by improving their distribution, trans- Andhra Pradesh and Scheme , Power Sector Development
mission and sub transmission network, Telangana by fiscal Fund or other such schemes of the
reducing the cost of power through coal Power Ministry and Ministry of New
rationalization and also bringing down
2018 and Renewable Energy.
the interest cost substantially. Goyal As per the carrot-and-stick
asserted that tariff increase was no If the latest central government approach of UDAY, such states will
substitute for efficiency improvement scheme is successful, it could reinitiate also get additional coal at notified
and added regulators cannot pass on signing of long-term power-purchase prices and, in case of availability
inefficiency of discoms to consumers. agreements (PPAs) by discoms, leading through higher capacity utilization,
He said the National Domestic to the addition of around Rs 10,000 mw cheaper power from NTPC and other
LED Programme alone, when fully to the power grid which were stuck due central sector power generators. On
implemented will lead to reduction of to non-availability of long-term PPAs, the other hand, states which do not
consumer bills to the tune of Rs 40,000 said power sector experts. UDAY will meet operational milestones will be
crore, besides reducing peak load by focus on both liquidity improvement liable to forfeit their claim on IPDS
20,000 MW. and a sharp reduction in losses by and DDUGJY grants.
Financial analysts have also heaped lowering the interest burden. This will States will be required to take over
praise on the new debt recast scheme. provide discoms an opportunity to start losses of their discoms from 2017-18 in
UDA will not only improve the ability afresh, experts added. a graded manner and fund losses.
of distribution companies to procure Ratings agency Crisil said if the States will be required to bear 5 per cent
power but will also lead to a capital scheme is implemented for the eight of reported loss of their discom in 2016-
savings of around Rs 12,000 crore for financial restructuring package (FRP) 17 in FY18, 10 per cent in FY19, 25 per
public sector banks. State govern- states, it could wipe out losses of cent in FY20 and 50 per cent FY21.
November 2015
www.InfralinePlus.com

CoverStory

Potential cost savings to major power-consuming states from targeted reduction in AT&C losses
Year 2017-18 2018-19 2019-20 2020-21
Previous years loss 5 per cent loss from 10 per cent loss of 25 per cent loss of 50 per cent loss of
of discom to be taken 2016-17 2017-18 2018-19 2019-20
over by states
Source: Power Ministry

Background to UDAY Not allowing their discoms to hike The Shunglu committee also found
The then UPA government had in 2012 tariff to recover costs of power supply, that state electricity regulatory com-
extended a similar lifeline to discoms states like UP resorted to creation of reg- missions were not performing their
based on recommendations of a panel ulatory assets in a big way. Other states assigned duties and were in cahoots
led by BK Chaturvedi, member, energy like Andhra Pradesh and Karnataka with state governments. To reform the
in the erstwhile Planning Commission. had shown losses as receivables. Their electricity regulatory commissions,
The UP government in 2010 had set up accounting jugglery came to the fore the panel suggested key changes in the
a committee under the chairmanship of when these states found that they were way appointments are made to senior
VK Shunglu, a retired judge, to exam- not eligible to avail the FRP benefits as posts in these commissions, including
ine factors impacting financial health of they had not reported any loss. Later, the involving chairman of the Central
discoms. The panel was asked to assess Centre was forced to extend the cut-off Electricity Regulatory Commission
the financial position of discoms as at date by one year to March 2013 to allow and chief justice of the concerned high
the end of March 2010 or earlier if data the two states to access the debt recast court in the appointment committee.
was not available. It found that discoms facility. However, only Andhra Pradesh The panel also suggested measures to
did not have updated accounts and also later signed up for the FRP. States like bar those bureaucrats who have worked
there was much vagueness about the Jharkhand and Bihar also got the benefit closely with state government from
40 way their accounts were prepared. of the extended cut-off date. seeking appointment in concerned elec-
tricity regulatory commission.
The committee had outlined a
The then UPA government had in 2012
roadmap for tariff hikes and reduction
extended a similar lifeline to discoms based on in AT&C losses to ensure that losses
recommendations of a panel led by BK Chaturvedi. of discoms get wiped out by 2017.
The UP government in 2010 had set up a However, that did not happen as states
committee under the chairmanship of VK Shunglu, found conditions too stringent, though
a retired judge, to examine factors impacting lenders had to take a haircut. The FRP
contained various measures required
financial health of discoms
to be taken by discoms and state gov-
ernments for achieving the financial
turnaround of the discoms by restruc-
turing their debt with support through
a transitional finance mechanism by
the Centre.
States had to securitise half of
their discoms short-term liabilities
as at the end of March 2012 while the
balance debt was to be restructured.
After a moratorium of three years,
utilities were required to repay the
recast debts along with interest. The
restructuring or rescheduling of loan
was to be accompanied by concrete
and measurable action by the discoms
and states to improve the operational
performance of the distribution
utilities. For monitoring the progress
November 2015
www.InfralinePlus.com

Coal Indias annual production targets (million tonnes)


Year 2015-16 2016-17 2017-18 2018-19 2019-20
Output 550 600 663 775 908
Source: Power Ministry

of the turnaround plan, two committees The scheme was a follow-up on the Further, if SEBs opened and main-
at state and central levels respectively Montek Singh Ahluwalia Committee tained Letters of Credit till the end of
were to be formed. recommendations and covered the out- December 2002, CPSUs were to pay
The Centre had committed to standing dues payable by the SEBs to them a one-time cash incentive equal
provide incentive in the form of grant NTPC, NHPC, North Eastern Electric to 2 per cent of the value of bonds. In
equal to the value of the additional Power Corporation, Damodar Valley addition, states undertaking reforms
energy saved by way of accelerated Corporation, Power Grid Corporation were also to be assisted through
AT&C loss reduction beyond the loss of India, Coal India Ltd and its sub- Accelerated Power Development and
trajectory specified under RAPDRP sidiaries, Neyveli Lignite Corporation, Reform Programme (APRDP) grants
and capital reimbursement support of Nuclear Power Corporation and the and Power Ministrys discretionary
25 percent of principal repayment by Railways. allocations.
the state governments on the liability The Modi government has targeted
taken over by them under the scheme. to ensure uninterrupted power supply
UDAY is the third bail-out of
UDAY is the third to all households by 2018-19. Since
discoms by the Centre. The first one bail-out of discoms the new government has taken over,
came in 2003 when the Centre and by the Centre. The coal supply has improved significantly
Reserve Bank signed a tripartite first one came in 2003 to the power sector. The coal ministry
agreement with states for a one-time when the Centre and has targeted to increase in Coal India
settlement of state electricity boards Reserve Bank signed production to 908 million tonnes by 41
(SEB) dues in March 2003. A total of 24 2019-20.
states signed the tripartite agreement.
a tripartite agreement CILs targets look achievable
The signing of tripartite agreement with states for a given the 7 per cent increase in output
led to securtitisation of Rs 37,000 one-time settlement achieved by the company 2014-15. The
crore owed by erstwhile state elec- of state electricity government has also taken the ini-
tricity boards (SEBs) to central sector boards (SEB) dues in tiative to restart gas-based generation
power companies like NTPC and March 2003. A total of capacities which were lying idle earlier.
NHPC.
The bail-out package led to waiver
24 states signed the Urgent need to reduce
of Rs 83,00 crore in interest and tripartite agreement AT&C losses
surcharge payable by SEBs. The net However, if the government is serious
outstanding was converted into tax-free In addition, states were also offered about fulfilling its promise of unin-
SLR Bonds with interest rate of 8.5 incentives for complying with the terrupted power supply to everyone
per cent per annum, repayable over scheme. For example, if SEBs or their from 2018-19, it must push states on
15 years with a five-year moratorium. successor entities (other than the ones cutting AT&C losses which at 27 per
States got incentives of Rs6,100 crore not owned by the State Government) cent remain uncomfortably high. In
over a period of 4 years. did not default on their current dues comparison, AT&C losses are below 10
Discoms agreed to make full and adhered to the performance mile- per cent in developed countries. So it
payment of current bills through stones, central public sector enter- is clear that a fifth of power generated
Letters of Credit states agreed to prises were to pay them, during the in the country is pilfered and does not
undertake reforms based on perfor- first year commencing from November generate any revenue for power distri-
mance milestones. This one-time 2001, bi-annual cash incentives equal bution companies. That is the reason
settlement was meant to nudge states to 3 per cent of the value of bonds discoms find bridging the gap between
towards power sector reforms and in the first year, 2.5 per cent in the revenue and cost so difficult through
make their SEBs financially viable. second year and 2 per cent in the third tariff revisions alone and that also tells
However, in less than decade, SEBs hit and fourth years. why tariff hike is so unpopular.
the financial wall, forcing the Centre to The incentives would add up to 19 For, if utilities want to recover
come out with FRP in 2012. per cent of the total value of the bonds. cost-reflective price for electricity
November 2015
www.InfralinePlus.com

CoverStory

supply, they will have to charge extra the national level to fight the deep- scheme can also be implemented to
from honest consumers to make up for entrenched culture of power theft. check power theft in urban areas.
the revenue leakage in power theft. Stamping out power pilferage is also The Centre is pursuing legislative
The quantum of power pilfered at 20 a moral imperative as it is honest change to pave the way for separation
per cent of total electricity procured consumers who have to pay for illicitly of wire and power supply business
by discoms is just too high to allow consumed electricity. in order to encourage competition in
any such manoeuvring by utilities. The importance of fighting power power distribution through implemen-
That is the reason discoms revenue- theft from the perspective of systemic tation of open access provisions of the
cost gap is yawning despite prodding stability cannot be overstated. As we Electricity Act 2003. The idea is to
by the Centre to ensure cost reflective all know, power distribution is the encourage competition in the market
tariff. If this leakage is plugged, it only point where revenue is generated through entry of multiple suppliers and
will narrow the revenue-cost gap and for the entire industry. If distribution enable consumers to source their elec-
defuse pressure on utilities to seek reforms are not implemented on an tricity supply from wherever they want.
steep tariff hikes. urgent basis, investments into gen- The move can prove a game changer
Checking the leakage is crucial eration and transmission could also dry in power distribution business which
to fulfilling the Modi Governments up creating power shortages that would remains a monopoly of state-owned
goal of uninterrupted supply for all by choke our economic growth. utilities. However, for the scheme to be
2018-19. The roadmap prepared by the The Centre can follow a carrot- successful, power theft must be curbed
Centre for universal and uninterrupted and-stick policy to prod States to fight instead of relying solely on tariff hikes
power supply assumes commercial power theft which threatens to nullify to help discoms recover their cost of
losses at the much lower level of 17.5 all efforts to reform the power distri- power supply.
per cent, compared to the current level bution business. Even UDAY has accepted that
of 27 per cent. That means overall The Centres flaghsip DeenDayal tariff increase cannot be substitute
42 power sector losses must be brought Upadhyaya Gram Jyoti Yojana for for efficiency improvement and that
down by about 10 per cent to realise separation of agriculture and household regulators cannot pass on discoms
the dream of uninterrupted power feeders is a step in the right direction to inefficiency to consumers. It is also
supply even if envisaged capacity curb power theft in rural areas. A similar categorical that states with 30-40 per
target is achieved.
Such a move will also commensu-
rately reduce requirement of capital The roadmap prepared by the Centre for
investment in power generation. universal and uninterrupted power supply
For example, at least Rs 5-6 crore is assumes commercial losses at the much lower
required for putting up 1 MW capacity. level of 17.5 per cent, compared to the current
If power leakage is checked, it make level of 27 per cent
available additional quantum of elec-
tricity in the grid, reducing pressure
on the front of capacity addition to
overcome power shortages.

Power theft needs to go


Significantly, as the economic growth
picks up, demand for electricity will
also increase. If the Indian economy
shifts back to the 9-10 per cent growth
trajectory, as expected, demand for
electricity would see a sharp rise due to
the close correlation between economic
growth and electricity demand.
The rot runs deep as most of power
theft cases happen in connivance
with utility staff. So there is a need to
build a strong political consensus at
November 2015
www.InfralinePlus.com

cent losses cannot expect consumers to ments cannot be made by just putting ready to take the next step. It may be
pay for their inefficiency. in more capital or technology. Discoms noted that Rajasthan is facing a huge
The power ministry has come to this must privatize, or strengthen the orga- accumulated debt of Rs 85,000 crore,
conclusion after its analysis showed nization by fresh recruitment, investing the most in the country.
that average tariff most of the states in new skills, and upgrading systems Rajasthan is staring at a dead end and
during last five years just at 8 per cent. and processes, Rao said. He added a has no option but to accept the scheme
few discoms have started to reinvent as central bank RBI has put the state,
Huge investments required themselves with good results, but along with Uttar Pradesh, Haryana
Under UDAY, a memorandum of most still remain in a world lulled into and Tamil Nadu, on notice, asking
understanding will be signed between complacency by their own false data on them to cut these losses or banks will
the Power Ministry, state and discoms AT&C losses or quality of supply. stop supporting them. The Rajasthan
to clearly identify responsibilities of After enhanced devolution of government is allowed to issue ordinary
each of the three parties, outline details divisible pool of taxes to states fol- bonds to fund this debt. Rajasthan will
of specific operational activities to be lowing the 14th Finance Commis- also have to rationalise the tariff, and cut
undertaken in the state, set out circle sions recommendations, the fiscal the aggregate technical and commercial
level targets of loss reduction with re- space has considerably shrunk for the (AT&C) losses.
sponsibilities, resources and timelines Power minister Piyush Goyal
and fix MoU targets to be reviewed on has committed priority allocation of
a monthly basis by the Power Ministry. Power distribution coal for Rajasthans power plants,
The Power Ministry has outlined network in the country and funds of Deen Dayal Upadhyay
benefits of UDAY achievement of remains in bad Grameen Jyoti Yojna and Integrated
24X7 Power for All, power to 5 shape due to lack of Power Development scheme. The
crore households without electricity, scheme also allowed relaxation for
speedy achievement of electrification
investment by discoms states as neither debt nor interest 43
of remaining 18,500 villages, energy which struggle to stay will accumulate in the fiscal deficit
security through coal and renewable afloat due to recurring reporting under FRBM act.
and reduction in Current Account losses It may be noted that all these states
Deficit (CAD) from higher annual are on the verge of bankruptcy. The
diesel import estimated at Rs. 50,000 Centre. So if the power sector faces other states including UP, Bihar,
crore and revival of investments in financial crisis again similar to the Telangana too are in bad shape. States
power sector to create jobs. The Min- one it encountered in 2012, the Centre like Punjab and Madhya Pradesh are
istry says it will also bring down cost may not have the necessary resources undergoing reforms on their own, but
of power-- typical 3,000 MW NTPC to bail it out. Under the prevailing to speed up the process, they too are
plant running at 60 per cent Plant scenario, states will have to accept contemplating joining this scheme.
Load Factor (PLF) has a fixed cost of financial accountability for their All they would need is discipline and
Rs 2.67 per unit against Rs 1.80 per power sector. political will to cut AT&C losses and
unit at 90 per cent PLF. It will lead to Response of states improve recovery of tariff. The distri-
enhanced competitiveness of the Indian The states have so far shown a bution reforms are critical, even for
industry in international market. positive response to UDAY. The the solar expansion Vasundhara Rajes
However, power distribution Jharkhand government has communi- government is looking for. The state
network in the country remains in bad cated its interest to be part of the debt- is in process of setting up 4 GW solar
shape due to lack of investment by recast scheme. The Centre is expected power units and parks.
discoms which struggle to stay afloat to negotiate with the state the targets It will be interesting to see the
due to recurring losses. To meet the and timelines for reducing financial response of two critical states, Uttar
target of 24X7 power supply, discoms and transmission losses. Once the state Pradesh and Tamil Nadu, which
need to step up investment in distri- and the power ministry agree upon the are heading for elections, and the
bution network to improve the last mile terms, an MoU will be signed. political leadership in these states
connectivity. Otherwise, investment If reports are the believed, Raja- may not be that inclined to increase
in generation and transmission could sthan is also likely to be a part of the the tariff.
prove futile. electricity distribution sector reform
In distribution, unlike in generation scheme UDAY. It is learnt that the state
or transmission, operational improve- has carried out the calculations and is For suggestions email at feedback@infraline.com
November 2015
www.InfralinePlus.com

NewsBriefs | Oil & Gas National


Centre does a rethink on LPG transportation reforms Govt to raise PSUs to world standards

Gas has suspended from November 1, the


recently introduced system under which
the Petroleum Planning and Analysis Cell
(PPAC) decided on transport optimisation
and distribution of fuel for state-owned oil
refining-cum-marketing companies. An
initiative of Petroleum Minister, Dharmendra
Pradhan, the system helped the integrated
entities save almost Rs 25 crore per month,
since its implementation on August 1. An
industry explanation for the suspension is
that the PPAC and some industry members In a bid to improve the efficiency
Three months after it introduced reforms had formed a committee for a common and profits of state-owned firms, the
in transporting liquefied petroleum gas pool of LPG supply to implement this government is working an ambitious
(LPG), the Centre has done a rethink on the scheme, but met with little success. plan to benchmark their performance
same. The Ministry for Petroleum & Natural with global standards. According to
the plan, the Department of Public
Pradhan pushes for better hydrocarbon ties with Africa Enterprises (DPE) will specify new
efficiency and performance targets for
India, which imports nearly 18% of its crude each of the 13 sectors that public sector
oil requirement from African producers, units are classified in .The move is also
is working towards further expanding ties expected to increase the attractiveness
with the energy-rich nations from Africa. of these firms for investors, as part of the
44 Petroleum minister Dharmendra Pradhan governments disinvestment drive. For
stressed upon intensifying hydrocarbon instance, the proposed stake sale in Coal
cooperation with the African countries on India Ltd has faced trouble with merchant
upstream, midstream and downstream bankers questioning its sustainability
areas. At present, India imports about 33 plan while disinvestment in state-owned
million tonne (MT) crude oil from Africa. oil companies is usually dogged by
Indian PSU oil and gas companies have concerns over subsidy and profitability.
invested about $8 billion in oil and gas ministry and heads of PSUs IOC, OIL, The process has already been initiated
assets in Mozambique, Sudan and South EIL and OVL, conveyed to the leadership for the oil and gas sector as well as the
Sudan. EIL has been associated with of the African countries that India is keen to thermal and hydro power sector and
refining sector in several countries as well. graduate to a stronger energy partnership consultants are being appointed to
Pradhan, along with top officials from his with the African nations. conduct studies for both the sectors.

Extra price punch for deep-sea gas

Gas discovered in deep-water and ultra the output from the KG-D5 block off the
deep-sea blocks, where production has eastern coast a premium over the domestic
not started, is likely to get a premium over price as the price was too low to make the
and above the approved price. The move project viable. The block has capacity to
will benefit state-run ONGC and Gujarat produce 14.5 million standard cubic metres
State Petroleum Corporation (GSPC). The per day for 15 years. The PSU has said it
government had earlier said it would offer will need $6-7.15 per mBtu to break even.
premium only to new discoveries from GSPCs KG-8, or Deen Dayal West block,
difficult fields. ONGC and GSPC have feels is estimated to hold 1.8 tcf (trillion cubic
that the current prices are too low and feet) of reserves, and the company had
unviable for commercial production. The discovered an arms length price of at least
Centre had cut natural gas prices by 18 $8.5 per mBtu.
per cent to $3.82 per million British thermal
units (mBtu) for October to March 2016.
ONGC has asked the government to give
November 2015
www.InfralinePlus.com

NewsBriefs | Oil & Gas International


TransCanada wins contract for natural gas pipeline in Mexico
TransCanada has won a contract to build,
own and operate a $500 million US natural
gas pipeline for Mexicos state-owned
power company. The Tuxpan-Tula Pipeline
will help meet Mexicos increasing demand
for natural gas as the country shifts to the
cleaner-burning fuel. The pipeline should
be completed by late 2017 and it has a
25-year contract with the Comision Federal
de Electricidad to operate the line. The
250-kilometre pipeline will run from the state
of Veracruz to natural gas power plants
in central and western Mexico, supplying systems in Mexico and is working to
up to 886 million cubic feet of gas a day. complete the Topolobampo and Mazatlan
TransCanada already owns and operates pipelines.
the Tamazunchale and Guadalajara pipeline

Peru to cut oil, gas royalties to 5% to counter price slump

encourage exploration amid slumping


prices. The smaller take should help Peru
boost interest in new oil contracts that
will come up for bidding soon. Peru has
repeatedly pushed back auctioning on
more than two dozen oil blocks because 45
of a lack of interest in recent years.Peru
is a net oil importer and now produces
about 58,000 barrels per day. State
energy firm Petroperu will likely take
control of the countrys biggest oil block
after Pacific Exploration and Production
Corps two-year service contract expires
Peru is reducing royalties on oil and gas in 2017. Russia to maintain oil production
production to about 5 percent on average volumes in 2016
from the current 20 percent in order to
Russian oil producers have no plans on
reducing oil production next year despite
China, Middle East to be new gas-guzzlers by 2035
weaker prices and being shut out from
Western capital markets. Energy Minister
China and the Middle East, spurred by Alexander Novak said Russias total
lower prices and ample supply, will drive production next year will be at least
global natural gas demand growth in the 525 million tons, or around 3.8 billion
next 25 years as consumption in Europe barrels of oil and gas. According to the
fails to recover to peak levels seen in 2010, federal budget documents published
according to the International Energy in October, the volume of oil production
Agency (IEA). Both regions will become in Russia was expected to surpass the
larger gas users than Europe by 2035, the 2014 figure by 0.8% this year to around
Paris-based IEA said in its World Energy 531 million tons produced, which is a
Outlook 2015. Global demand for gas, a bit more than Novaks 2016 forecast.
cleaner-burning fuel for power generation growth to 5.38 trillion cubic metres in last Russia produced around 3.4 billion
than coal, will rise 1.4% a year to 5.16 years World Energy Outlook. Gas will barrels of oil in 2010. The country is a
trillion cubic metres (182 trillion cubic feet) account for 24% of power generation by big natural gas producer and has be
in 2040, making it the fastest-growing fossil 2040, up from 21% in 2013, as the share of steadily increasing volumes over the last
fuel. The agency forecast 1.6% annual dirtier coal falls to 30% from 41%. five years.
November 2015
www.InfralinePlus.com

InConversation
Pricing and marketing freedom
a must for CBM industry
GEECL is the first commercial producer of Coal Bed
Methane (CBM) in India. The company currently has
one operating asset in Raniganj, West Bengal. GEECLs
Managing Director and Chief Executive Officer, Prashant
Modi, shares his views on some of the issues being faced by
CBM operations in India. Excerpts

The government has recently currently being produced and


announced a spate of reforms what are the future targets?
in the oil and gas sector such We have already drilled 156 wells
as market freedom for new gas which are continuing Prashant Modi, Managing Director
fields, uniform licensing policy, to be dewatered Lack and Chief Executive Officer, GEECL
pricing freedom for small and and further of
46 marginal fields, and replacing PSC optimised. infrastructure GEECL has already invested over
with open acreage licensing. Being The block has facilities Rs. 1500 crore in its Raniganj
an oil and gas operator, how do 2.62 tcf of and timely block.
you see these decisions impacting gas in place. clearances are
the investment climate in India? To exploit the hindering The government recently
New policies announced are welcome. potential, we growth allowed Coal India to mine
Pricing and marketing freedom are keys have to drill a total CBM gas in order to speed up
to attracting investment. What is needed of 300 wells. We have production. However, CIL is not
is implementation of the same at the the plan to drill another 144 wells in our allowed to involve a third party
earliest as that will attract investment. Raniganj (South) Block. for CBM exploitation. What are
your views on the same?
What are your suggestions to What is the update on CBM operations should be auctioned to
resolve issues facing the CBM Mannargudi block? When is bidders who have the necessary know
sector? production likely to commence how and experience.
CBM industry has a large potential in from the block?
India. However, lack of infrastructure Mannargudi block covers an area of Please specify your future plans
facilities and timely clearances are 667 sq. km and 0.98 TCF Gas-in- and areas of expansion.
hindering growth. More importantly, Place. The Company has received We are continuing to make strong
for new CBM blocks to come on line, Environment Clearance and approval progress with our strategic goals of
pricing and marketing freedom is a is awaited from the State Government further optimising well production. We
must. Clearances by various agencies of of Tamil Nadu. The current minimum plan to drill another 144 wells in our
the government should be given before work programme consists of 30 Raniganj (South) Block. Our underlying
any areas are allotted to operators. pilot production wells and 50 core performance in the past gives us
holes. The block is currently under confidence for the future. We further
Please update on your Arbitration with the Government. look forward to an early resolution with
production scenario with respect regard to our Mannargudi block.
to the Raniganj (South) CBM How much has GEECL invested
block. How much of CBM is so far in the CBM sector? For suggestions email at feedback@infraline.com
November 2015
www.InfralinePlus.com

ExpertSpeak
Time to push LNG infra
development
With crude oil prices falling to a record low, Sanjay Kaul,
Founder President of University of Petroleum and Energy
Studies (UPES) and currently the Managing Director of
Sanmarg Projects Pvt Ltd, feels that the time is ripe for the
government to push growth of LNG infrastructure in India.
Infrastructure, distribution and common carrier frameworks
and market driven pricing mechanism specific to imported
gas are urgently required to strengthen LNG potential in
India as per Kaul.

In 2013 India became the third largest through balancing of spot and long
importer of Oil after China and US. term prices can make this commodity
While at that time LNG was being pro- serve as a virtual strategic reserve
jected as the bridge to Indias Energy without a physical facility. Sanjay Kaul, Founder President, University
47
of Petroleum and Energy Studies (UPES) and
security, the possibility of Oil falling However in order Managing Director, Sanmarg Projects Pvt. Ltd.
LNGs
below $50-60 per barrel was not fac- to fulfil this role easy acces-
tored. Prices projections, both term and the Country sibility through bal- newer oil sources but have also
spot contracts, and upcoming or recent must have ancing of spot and long rendered several of the newer
global developments for LNG and Gas adequate and term prices can make assets unviable in the resulting
related recent developments in India well developed this commodity serve price war. The impact of correc-
has now validated LNGs promising infrastructure as a virtual strategic tion is significant because of the
future for the country. When one com- in all three reserve size of Chinese Oil imports at 1.2
pares the role of natural gas (8% out of areas Terminals, million bpd were thrice as com-
which almost 50 % is imported) among distribution and pared to India in 2014. Fortunately
Indias primary energy mix (oil is 30 marketing and dual or for some and unfortunately for others,
%) one is painfully reminded of its gas based fuel facility at users. Before there would be several such correc-
huge swing value in terms of energy moving to details of LNG prospects in tions in Chinese economy and spo-
security, environmental relevance and India, lets scratch beneath the surface radic attempts by legacy oil players to
the relentless pursuit which is required of the largest price drop in history of oil. control respective market shares.
to tap all sources including LNG.
Much analysts doubt whether the Gear up for sporadic periods Market dynamics suggest
current low oil prices are actually a of sharp oil price movement lower spot & term prices for
political east v/s west phenomenon or The last decade has been dominated LNG in Asia
an economic cyclical trend. However, by major capacity expansions and new Apart from the 24 Bcf per day global
the consensus seems to be there that exploration projects for crude produc- LNG market which is governed by oil
the real band lies somewhere around tion essentially driven by exports ca- indexed term contracts for Asia and
80 plus and north. How much near or tering to or hoping to serve projected is hence under price pressure, Spot
far we are from the band is yet another demand in Asia. Economic activity prices for LNG in Asia are down 60
speculation. LNG is not a cheap fuel and growth correction in Chinas per cent since 2014 and were $8 per
but an available and accessible one. managed economic activities has MMBtu, reflecting the dampened
In other words its easy accessibility only put demand side pressure on such demand and pressure of upcom-
November 2015
www.InfralinePlus.com

ExpertSpeak

ing supply additions. While Chinas June for 2015 compared to same period attractive, given the large anchor load
demand stumbled from a double digit a year ago. and high affordability.
growth to three per cent contraction in Although steps towards mitigating
2015 and Japan reduces consumption Regasification and FSRUs supply constraint, reflected in 50
by 12 per cent or 1.85 Bcf per day by can overcome gas supply per cent utilization of 300 mmscmd
2017 as worlds largest consumer of constraint pipeline grid capacity, have been
LNG restarts Nuclear power plants, Even as domestic supply is looking taken with10 Regasification terminals
US, having 40Bcf per day capacity weak, Gas makes economic and envi- functioning or coming up across
under various stages of development, ronment sense, when placed against the coasts, onshore terminals need a
starts production before end of 2015 competing fuels, for most of the sec- gestation period of 5-7 years of which
and Australia triples its Liquefaction tors. Industrial and commercial CGD 3-4 years are spent in approval and
capacity over next 3-4 years. segments, comprising around 60 per licences.
cent of total CGD volumes, are most
Low prices for spot LNG FSRUs may be just what
directly & indirectly support India needs
Indian LNG prospects Since the difference Onshore regasification terminal cost
Since the difference between deliv- between delivery price significantly, with 5-MMTPA peak
ery price for spot LNG and domestic for spot LNG and capacity terminal costing around
gas would remain around $3-5 per domestic gas would $1000-700 million. Whereas FSRU
MMBtu, attractive price for which costing around $260 million (Construc-
remain around $3-5
LNG shipments are available in Asia tion). They can also be either chartered
currently will not only directly encour- per MMBtu, attractive or ordered-made-delivered in 3 years
age LNG imports but will indirectly price for which LNG compared to 5-7 years for onshore set
48 squeeze profits and cap scope of capital shipments are available up. The land cost of new FSRU with 5
investments for domestic Natural Gas in Asia currently will not MMTPA Regas facility is around $320
producers such as ONGC, RIL and only directly encourage Mn. including duties etc. Additional
Essar. The new domestic gas pric- Storage capacity in the form of FSUs
LNG imports but will
ing formulae, which tries to capture are also needed to accommodate full
global trends, will drive prices down indirectly squeeze ship load of LNG Carriers as well as
by around 14 per cent in governments profits and cap scope for operational Flexibility.
forthcoming scheduled half yearly of capital investments Further to optimize cost, retiring
review. Reduction in investments will for domestic Natural LNG vessels can be converted into
further reduce domestic production - Gas producers such as FSRU. These would be economical
Output from Reliances KG-D6 block at around $ 160 million, and would
ONGC, RIL and Essar
fell 13 per cent to 37 Bcf in April to be ready in 14-15 months. However
FSRUs can also be chartered for
long/short term to expedite delivery
of RLNG if the port facilities are
available.
While FSRUs may be faster way
to implement Regas capacity in India,
the existing Port Facilities do not offer
sufficient space and infrastructure like
Gas Pipelines for berthing FSRUs.
Hence new construction/modification
of the existing Port Facilities are
needed which adds on to the cost of
these Projects.
While the on-shore facilities come
up, FSRUs /RLNGs may be used
to supply gas. This would enhance
November 2015
www.InfralinePlus.com

gas availability and lead to higher Govt. and Central Govt. policy mecha-
pipeline capacity utilization. Number LNG prospects would nism need to converge on the need to
of FSRUs may be ramped up as the remain bright because support projects in LNG infrastructure
demand surges. despite the 60 MMTPA in a investment promotion mode.
Low hanging fruits would be to
or 200 mmscmd
New import avenues for LNG track and support all floating and
The country in the last 12 month has
LNG regasification, land based terminals under project
49

witnessed capacity expansion plans functional or planned, promotion/ implementation, actively


for two of the four functional re- capacity the expected promote Floating storage and Regas
gasification terminals namely Dahej gap between demand Units (FSRUs get implemented much
and Hazira, formal approval one at and supply, after faster), find ways for non-monopolistic
Ganagvaram, stake buy-in by Shell in distribution and marketing and getting
considering domestic
first FSRU at Kakinada, resumption strategically and commercially engaged
of Kochi terminal evacuation pipe-
gas, would be more with more obvious sources like Russia,
line that had been stuck for past three than 580 mmscmd Iran, Qatar, Australia.
years and initiation of dialogue with by 2030 Govt. approval for imported gas
at-least three new source countries to be used for fertilizers and power
including Canada, Kazakhstan and year for completion, LNG prospects production is a positive step including
Russia. Even as capacity expan- would remain bright because despite NITI Aayogs announcement to
sion work at PLLs Dahej terminal the 60 MMTPA or 200 mmscmd LNG present an integrated energy policy
is scheduled to be completed in Nov regasification, functional or planned, (2nd edition) to bring out a road map
2016, the company in early 2015 ap- capacity the expected gap between for developing energy security and a
proved further capacity enhancement demand and supply, after considering right pricing mechanism to promote
to 17.5 MMTPA. Hazira LNG import domestic gas, would be more than 580 competition and quality standards.
terminal is reportedly planning to mmscmd by 2030! However specific infrastructure,
raise its capacity by 50 percent to 7.5 distribution & common carrier
MMTPA by 2016-17. Future issues frameworks and market driven pricing
Although Iran, the largest holder of The keys to LNG future perhaps lie mechanism specific to imported gas
gas reserves in the OPEC struggling to in recognizing its unique position as are urgently required with a focus to
regain its share in crude export market, an important and standalone bridging strengthen LNG potential.
is ready to sign an agreement with and hedging option for Indias Energy
an Indian consortium for underwater security. For this purpose Regulatory
The views in the article of the author are personal.
gas pipeline which would take 3-4 regime, Central and respective state For suggestions email at feedback@infraline.com
November 2015
www.InfralinePlus.com

ExpertSpeak
Why LNG prices are falling?
Prabhat Ranjan, Business Analyst (Oil and Gas), Infraline
Energy, feels that the rapid drop in oil prices and continuing
geopolitical and economic uncertainty are pummeling both the
energy industry and many countries, and will continue to have
a significant impact on the world economy.
The pattern of falling oil and gas prices. In Europe, gas demand
prices has clearly showcased What remains weak due to effects of
difference a year can make. As 2014 financial crisis while coupling the
started, Asian spot LNG prices were growing inclination to renewable
hovering around 20 $/MMBtu, buyers sources of energy. While the demand
were looking for both short and long in Asia will further weaken as Japans
term portfolios to hedge against risks. nuclear plants are coming online and
There was a strong market consensus switching towards coal to replace
that this period of tightness (demand the costly LNG imports. Chinas
Prabhat Ranjan, Business Analyst (Oil and Gas),
- supply gap) would continue at recent deals with Infraline Energy
least for the later part of this decade, Russia will reduce Low
50 when large volumes of new supply the Chinese oil prices LNG volumes at an average of
from USA, Canada, East Africa and demand for putting pressure 6.4% per year. Papa New Guinea
Australia are due. From April 2014 LNG to a on large projects due is the latest addition in the list of
onwards, the lower oil prices had a di- point that only to difficulty in entering LNG suppliers; also the expected
rect impact on LNG prices, with Asian one in twenty firm supply contracts , completion of seven Australian
spot prices for LNG declining to 6-8 proposed limited funding and LNG terminals by 2018 would
$/MMBtu even in the absence of large LNG projects low profitability add 62 mtpa of new capacity.
volumes of new supply expected from targeting 2020 The falling LNG prices would
Australia and US. will be required. impact the economic viability
There are several factors Another significant factor for of new LNG projects, US LNG
contributing to the falling LNG falling prices is the LNG growth of exporters would need European
price of 9 $/MMBtu and an Asian
Regional Gas Prices 2008-15 price of 10.65 $/MMBtu to sustain.
Australian projects would require
12-14 $/MMBtu to break even, while
Mozambique needs 11.50 $/MMBtu
and Tanzania need 13 $/MMBtu
prices for their LNG to breakeven
the cost of infrastructure incurred to
develop these resources.
Low oil prices putting pressure
on large projects due to difficulty in
entering firm supply contracts, limited
funding and low profitability.
The glut of oil amid lagging
world demand is altering trade flows
and raising concerns for traditional
suppliers. A bright side of lower
Sources: Platts, EIA, Argus, CME
prices is that they could bring new
November 2015
www.InfralinePlus.com

LNG Terminal Projects Delayed Due to Low Price Environment

Source: Deloitte

customers to the LNG market. Oil- are in process to revise their contract
indexed contracts in recent years in such a way that its a win-win
have simply proved too expensive situation for both the countries.
for many aspiring buyers. Now Petronet LNG has already deferred 51
producers can offer the same oil- from buying 30% of 7.5 mmtpa the
indexed contracts as before, but annual contracted quantity. RasGas
with lower oil prices, they will in has agreed in-principal to postpone
effect be offering customers lower collecting take-or-pay charges on
prices for LNG. Primary targets its long-term LNG agreement with
include Bangladesh, Egypt, Jamaica, Petronet LNG.
Pakistan, Philippines, Panama, South
For suggestions email at feedback@infraline.com
Africa and Vietnam, as well as upside
in the existing market of India
Buyers of LNG are demanding World LNG Estimated October 2015 Landed Prices
more say in negotiations with their
suppliers. The national oil companies
of importing countries like China,
India, Japan and Thailand will have
an opportunity to acquire and develop
LNG for their domestic market at
attractive terms.
Apart from renegotiating existing
deals, buyers are also hesitating to
commit to new long-term contracts,
cutting off a crucial source of funding
for the development of planned
projects from the U.S. to Australia.
LNG prices could fall to $4 by 2017
in exports from Australia to North
America.
As per Indian perspective,
Source: Waterborne Energy, Inc.
Petronet LNG and Qatars RasGas
November 2015
www.InfralinePlus.com

FinancialResults | Oil & Gas


GAIL Q2 profit nosedives 66% to Rs 441 crore
State gas utility GAIL India reported a
66.19 per cent plunge in second quarter
net profit on lower LPG and petrochemical
prices. Net profit in July-September at Rs
440.51 crore was lower than Rs 1,302.90
crore in the same period a year ago.
The decrease in profit was mainly due
to lower price realisation of LPG, other
liquid hydrocarbons and petrochemicals
products, increased interest and
depreciation charges after commissioning
of petrochemical expansion plant. Turnover
was almost flat at Rs 14,088 crore. The in the corresponding period of previous
gross margin stood at Rs 1,146 crore year. During July-September, the revenue
in the second quarter of the current from natural gas transmission business
financial year as against Rs 2,311 crore increased by 38 per cent to Rs 1,060 crore.
BPCL Q2 net more than doubles to Rs
ONGC Q2 profit down 11% to Rs 4842 crore 1,018 crore

by lower revenue and weak operational State-owned Bharat Petroleum Corp


performance. Revenue slipped 9.4 Ltd (BPCL) reported more than
percent to Rs 20,679 crore during the doubling of its September quarter
quarter compared to Rs 22,825 crore net profit on back of higher refining
in preceding quarter. Profit was ahead margins. Net profit in July-September
52 of estimates but EBITDA disappointed was at Rs 1,018.04 crore compared
street. Operating profit (EBITDA) with Rs 464.2 crore net profit in the
dropped 17 percent quarter-on-quarter same period a year ago. Turnover,
to Rs 8,775 crore and margin contracted however, fell to Rs 47,160.05 crore in
by 400 basis points to 42.4 percent in the second quarter from Rs 62,280.28
quarter gone by. ONGC has declared an crore as oil prices fell. The company
interim dividend of Rs 4.50 per share, earned $3.87 on turning every barrel
amounting to Rs 3,850 crore for the of crude oil into fuel as opposed to
Oil and Natural Gas Corporations quarter. $1.48 in the corresponding quarter
(ONGC) net profit declined 11.3 of last fiscal. Profits also got a boost
percent sequentially to Rs 4,842 crore from other incomes rose to Rs 686.5
in July-September quarter, impacted crore in the second quarter from Rs
330 crore while tax expenses were
Indian Oil reports Q2 loss of Rs 329 crore down 57.5 per cent to Rs 476 crore.
The company processed 5.96 million
Indian Oil Corporation reported net loss tonne of crude during the quarter as
of Rs 329 crore in the September quarter compared to 6.09 million tonne in year-
on account of huge inventory and foreign ago period. BPCL said average gross
exchange losses as well as low refining refining margin during April-September
margins. IOC has made net loss of Rs 329.17 period of 2015 was USD 6.2 a barrel
crore in the July-September quarter of the against USD 2.36 a barrel in same
current fiscal, compared to net loss of Rs period last fiscal. Net under-recovery
898.46 crore in the same period a year ago. absorbed by the company was nil
The company lost Rs 5,137 crore on inventory during six months period ended
as it bought crude at one price but sold at loss of Rs 1,100 crore in the second quarter September 2015 against Rs 503.42
lower rates as prices had fallen during the of 2015-16 as opposed to Rs 672 crore loss crore in a year-ago period.
period oil was transported, processed and in the same period of 2014-15. IOC earned
turned into fuel. This compares to Rs 4,272 just 90 cents on turning every barrel of crude
crore inventory loss in the same period a oil into fuel as compared to a negative gross
year ago. Also, there was a foreign exchange refining margin of $1.95 per barrel.
November 2015
www.InfralinePlus.com

StatisticsOil & Gas


Crude oil processed by refineries
(000 Metric Tonnes)
Oil Companies Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15
Indian Oil Corporation Ltd.(Iocl)
Iocl-Koyali, Gujarat 604 1204 1176 1256 1191 1066 1264
Iocl-Mathura, Uttar Pradesh 675 699 733 757 703 696 776
Iocl-Panipat, Haryana 1293 1366 1212 1191 1087 1269 1264
Iocl-Haldia, West Bengal 647 663 667 663 667 491 534
Iocl-Barauni, Bihar 474 527 541 534 566 527 559
Iocl-Guwahati, Assam 94 95 93 85 79 72 77
Iocl-Digboi, Assam 29 55 51 49 53 45 48
Iocl-Bongaigaon, Assam 236 231 200 213 212 210 183
IOCL Total 4052 4841 4675 4749 4558 4375 4706

Hindustan Petroleum Corporation Ltd.(HPCL)


Hpcl-Mumbai, Maharashtra 551 420 654 690 693 697 697
Hpcl-Visakh, Andhra Pradesh 739 807 588 466 858 802 826
Hmel-Ggsr, Bathinda, Punjab 896 925 897 922 937 907 932
HPCL-Total 2186 2153 2139 2078 2489 2406 2455

Bharat Petroleum Corporation Ltd (BPCL)


Bpcl-Mumbai, Maharashtra 1137 1164 1056 1099 1095 997 1126
Bpcl-Kochi, Kerala 894 928 903 928 938 901 656
Nrl-Numaligarh, Assam 1 151 261 253 252.9 248 233.0
Borl-Bina 2 571 601 631 620.2 620 612.9
BPCL-Total 2033 2814 2821 2911 2906 2766 2628

Chennai Petroleum Corporation Ltd (CPCL)


Cpcl-Manali, Tamilnadu 901 907 904 705 508 691 618
Cpcl-Narimanam,Tamilnadu 39 43 48 49 48 46 41
CPCL-Total 940 950 952 754 557 737 659

Oil & Natural Gas Corporation Ltd.(ONGC)


Ongc-Tatipaka,Andhra Pradesh 4 4 5 5 3 5 5 53
Mrpl-Mangalore,Karnataka 1111 1336 1463 1107 1349 976 972
ONGC Total 1115 1340 1469 1112 1352 981 977

Reliance Industries Ltd. (Ril)


Ril,Jamnagar,Gujarat 2024 2740 2714 2816 2788 2731 2815
Ril-(Sez), Jamnagar,Gujarat 3020 3104 3023 2490 3211 3098 3255
RIL Total 5044 5844 5737 5306 5999 5829 6070

Essar Oil Ltd.,Vadinar,Gujarat 1719 1764 1690 1755 1759 954 764

GRAND Total 17090 19706 19483 18666 19619 18049 18258

Production of petroleum products by refineries & fractionators


(000 Metric Tonnes)
PRODUCTS Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15
LPG 778 842 810 814 932 823 808
Naphtha 1390 1542 1422 1369 1498 1397 1278
MS-III 881 935 970 947 1013 979 1025
MS-IV 395 446 496 547 531 485 520
MS Others 973 1464 1422 1468 1512 1369 1479
ATF 618 789 924 950 1103 1045 828
SKO 539 562 648 690 621 675 636
HSD-III 3383 4237 3977 3466 3619 3355 3572
HSD-IV 1153 1411 1591 1476 1425 1306 1303
HSD Others 2561 3020 2824 2970 3322 2748 2930
LDO 36 27 42 35 37 31 36
Lubes 83 89 82 82 85 82 76
FO 744 916 690 1014 932 922 906
LSHS 43 73 47 52 44 3 18
Bitumen 490 514 434 298 230 247 367
RPC/Petcoke 825 1044 1070 1037 1085 905 926
Others 1535 1570 1686 1964 1557 1581 1714
Total 16426 19483 19136 19179 19548 17952 18421

Refineries 16150 19198 18873 18947 19243 17652 18106

Fractionators 276 286 263 233 304 300 315


16426 19483 19136 19179 19548 17952 18421
November 2015
www.InfralinePlus.com

StatisticsOil & Gas


Import/export of crude oil and petroleum products
(000 Metric Tonnes)
Import/Export Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15
Import*
Crude Oil 15535 17454 15619 17732 17235 15646 15568
Products
LPG 683 809 645 708 992 657 708
MS/ Petrol 120 163 174 138 40 53 145
Naphtha 80 364 212 233 275 240 269
SKO/ Kerosene 35 0 6 0 0 0 0
HSD/ Diesel 10 0 5 5 6 6 5
LOBS/ Lube oil 132 149 141 141 160 160 159
Fuel Oil/LSHS 21 135 263 76 65 108 100
Bitumen 64 77 70 70 65 65 59
Others 755 944 881 883 850 849 879
Product Import 1902 2643 2397 2254 2453 2139 2323
Total Import 17437 20097 18017 19986 19687 17784 17891
Product Export
LPG 24 19 20 22 19 13 6
MS/ Petrol 935 1341 1286 1357 1537 1331 1509
Naphtha 576 492 614 683 657 552 358
Aviation Turbine Fuel 153 260 377 501 589 669 300
HSD/ Diesel 1366 1495 1809 2181 2432 2129 1779
SKO/ Kerosene 1 1 1 1 1 1 0
LDO 0 0 0 0 0 0 0
LOBS/ Lube Oil 4 1 3 1 1 0 1
Fuel Oil/LSHS 363 498 130 162 285 288 133
Bitumen 8 10 8 4 14 9 15
Others 313 424 274 319 388 247 330
TOTAL PRODUCT EXPORT 3743 4542 4524 5229 5922 5239 4432
NET IMPORT 13693 15555 13493 14756 13765 12545 13459
54
Note:
Source: Oil Companies. All figures are Provisional.
POL imports by private parties taken from raw data of DGCI&S which is with a 2 month lag period.
IOCL: Nepal sales taken in exports of IOCL. For Nepal exports , average US$ exchange rate considered
BPCL: For Nepal and Bhutan exports , average US$ exchange rate considered
*LNG import not included

Consumption of petroleum products


(000 Metric Tonnes)
PRODUCT Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15
(A) Sensitive Products
LPG 1480 1497 1484 1576 1546 1614 1687
SKO 568 577 567 576 573 563 576
Sub total 2048 2074 2051 2152 2118 2177 2263
(B) Major Decontrolled Products
MS 1784 1834 1769 1672 1768 1879 1850
HSD 6487 6440 6299 5705 5442 5886 6343
Naptha 942 1240 1026 1174 1134 1151 1047
ATF 494 501 488 500 494 494 530
LDO 26 25 41 35 31 37 36
Lubricants & Greases 272 235 288 261 254 263 256
FO & LSHS 485 535 508 535 549 590 547
Bitumen 548 574 451 280 269 331 482
Sub total 11037 11383 10870 10161 9941 10631 11090
(C ) Other Minor Decontrolled Products
Petroleum coke 1126 1554 1263 1554 1410 1371 1324
Others 504 521 558 485 574 520 543
Sub total 1630 2076 1821 2039 1984 1891 1867
All Products total 14715 15532 14741 14351 14044 14699 15220
NOTE :
i) All figures are provisional
ii) The source of information includes Oil Companies, DGCIS & Major consumers.
iii) The consumption estimates represent market demand and is aggregate of :
(a) sales by oil Companies in domestic market , and
(b) consumption through direct imports by private parties.
While data for company sales are actual, that of private direct import are estimated, which may undergo change on receipt of actual data.
November 2015
www.InfralinePlus.com

NewsBriefs | Renewable International National


Government may turn to financial institutions to restart stalled biomass projects Environment Ministry launches new
website of NCDMA
developers of such plants. A number of
biomass power projects are stuck due to
multiple hurdles, including high costs and
regulatory issues. Revival of such plants
would give a fillip to the governments
ambitious plan of 175 gw of clean energy
generation by 2022. The government is
implementing a project assisted by the
Ministry of New and Renewable Energy
(MNRE)-UNDP/GEF on Removal of barriers
to biomass power generation in India. MNRE Environment Ministry has launched a new
plans to use the funds from MNRE-UNDP/ website of National Clean Development
Seeking to revive stalled biomass power GEF Biomass Power Project for refinancing Mechanism Authority (NCDMA) for
projects, the government is looking to rope of their loans outstanding at concessional streamlining the approval process of
in financial institutions to extend funds to interest rates. Clean Development Mechanism (CDM)
projects. The new website of NCDMA,
which gives approval for CDM projects
India, Indonesia ink pacts on new and renewable energy
like energy efficiency and solid waste
management, will help capture the
India and Indonesia have signed two entire life cycle of projects. It will enable
agreements on new and renewable monitoring of the projects at different
sources of energy and cultural exchange. stages. The web-based application will
Describing Indonesia as a strategic partner, promote transparency in operation and
Vice President M. Hamid Ansari said both monitor activities relating to the CDM 55
countries are embarking upon a phase of projects in the country. It will be the first
rapid economic progress. The MoU on New such web-based application developed
and Renewable Energy sector was signed globally in this direction. Till April this year,
between Indonesian Water Resources and NCDMA has accorded HCA to 2,941
Mineral Minister and Indian ambassador to projects facilitating possible investment of
Indonesia Gurjit Singh. The cooperation is about Rs 5,79,306 crores in the country.
important as both India and Indonesia have
committed themselves to reduce carbon LED bulbs prices plunge 75% via govt
emissions by 35 percent and 29 percent programme: EESL
respectively by 2030, Ansari said.

SoftBank debuts in Indian solar market

first bid - for a 500-Mw solar park project in


Andhra Pradesh. SoftBank had in June tied
up with Foxconn and Bharti Enterprises to
invest in the Indian solar energy sector. This
was its first bid for any power project through
its joint venture, SBG Cleantech. The bids
were called under the flagship Jawaharlal DELP programme of Energy Efficiency
Nehru National Solar Mission (JNNSM) for Services Limited (EESL) has achieved
a solar power project in Andhra Pradesh. a rapid decline in LED prices. EESL has
SBG Cleantech has bid for 500 Mw at an been able to slash LED bulb prices from
estimated tariff of Rs 5.6-5.75 per Mw. The Rs 310 in February last year to Rs 73 in
lowest indicative tariff received was around Rs June 2015, a reduction of over 75 per
Japans SoftBank, which had announced its 5.2 a unit by a Chinese company. The name cent. The target of the programme is to
entry into the Indian solar power market with of the company was not disclosed. replace all the 77 crore incandescent
an investment of $20 billion, has made its bulbs sold in India by LEDs.
November 2015
www.InfralinePlus.com

NewsBriefs | Renewable States


Delhi Solar policy may soon get nod
CIC pulls up Environment Ministry
soon. The government had received several over clearance given to Karnataka
solar park
comments and suggestions from various
departments and also that consultations with
the Delhi Electricity Regulatory Commission
(DERC) and other stakeholders were on
for at least a month. The policy has been
cleared by the environment department and
is currently with the power department. The
chapter on virtual metering was the most
debated and discussed of all. The virtual net
metering clause in the draft policy is expected
to enable every resident in Delhi with a shared
After its draft was released in September, the rooftop to produce solar energy. The policy
Delhi government is now ready with the final shall mandate deployment of solar plants on
report on the solar policy of the city. The Solar all government-owned rooftops in the next The Central Information Commission
Policy is likely to be approved by the Cabinet five years. has directed the Environment Ministry
to explain whether it is revisiting
Solar power to electrify all police stations in UP environmental clearance given to a solar
park in the habitat of Indian Bustard in
In a first in the country, all 1,517 police Karnataka as per directions of National
stations in Uttar Pradesh will be made self- Green Tribunal. The Commission has
reliant for electricity through solar power by directed the Ministry to publish the policy
March 2016. In the first phase, funds have along with reasons in permitting Solar
been sanctioned for 250 police stations which Thermal projects, including that Sagitaur
56 will be equipped with 5 KV and 10KV power Ventures India Pvt. limited as mentioned
generation units. Rooftop solar panels will in this application, without Environmental
be installed at all police stations depending Clearance, in spite of stand taken by
on the number of police personnel deployed the Ministry that it was a breach of
at the particular police station which will also Environment Protection Act. Information
reflect the size of the building in which the Commissioner Sridhar Acharyulu directed
police station exists and thereby give an the Ministry, to explain reasons for
estimate of its power consumption. Out of proposal says. As per the plan, the solar this non-publication of policy-related
the total, there are more than 1,350 police power will initially be used as backup option information about Solar Thermal projects
stations which have strength of 50 or more at police stations in case of power failure from as mandated by Section 4(1) of RTI Act.
policemen, hence will have to be equipped the wired supply being provided by the local he said.
with 10KV solar power units, the government sub station.

Katra solar project to save Rs 1 crore energy bill for Railways

Pitching for green power, the Railways have by the plant, only 1,700 to 1,800 units are
set up 1 megawatt solar power plant at utilized by Shri Mata Vaishno Devi Katra
Katra station, a move that can save up to Railway Station, whereas 3,200 to 3,300
Rs 1 crore annually on energy bills and also units are exported to Power Development
significant reduction of carbon dioxide at Department of Jammu and Kashmir
rail premises. In keeping with the motto of government. The 1 MW solar power plant
reduce, reuse and recycle for sustainable consists of 300 KW installed on platform
development and as a significant way 2/3, 550 KW on platform 1, 100 KW on
to thwart climate change impact, the rooftop of the station building and 50 KW
Railways have been undertaking several on pathway shelter. The accrued benefit
green initiatives including the installation envisaged was reduction of 10,000 tons of
of the 1 megawatt solar power plant carbon dioxide per annum and a saving of
at Katra station. The solar project was Rs 1 crore per annum on energy bills to the
commissioned in March this year and Railways.
presently, out of 5,000 units produced daily
November 2015
www.InfralinePlus.com

NewsBriefs | Renewable InternationalInternational


Renewable energy investment predicted to surge

Between the tropics and probably as far as


the 33rd parallel, the sun could soon be a
major source of energy for households and
businesses alike. Countries such as Mexico
and Indonesia, long dependent on cheap
home-produced oil and coal, are realising
that a solar panel on every roof can reduce
poverty by lowering energy costs as well
as minimising the destabilising weather
effects from higher CO2 emissions. As the
International Energy Agency (IEA) says in its
World Energy Outlook 2015, the tumbling $7.4trn global investment in renewable
cost of installing photovoltaics, as much as energy by 2040. Indonesia has forged ahead
a commitment to limiting climate change, by limiting investment subsidies that have
is persuading these populous countries to underpinned coal, oil and gas production for
switch to renewables. It predicts a cumulative decades. .

Brazil government approves 1.5 GW of new solar and wind power

MW of wind farms as part of a $1.7 billion


push to upgrade Brazils energy system.
The construction of 53 new solar and wind
farms has been approved by the Brazilian Costa Rica to double wind power
government in a clean energy push that will generation in coming years
add around 1.5 GW of renewable power 57
capacity to the nations energy mix over the Costa Rica is on track to double the
next few years. Hamstrung for more than amount of wind power it generates
a decade by a weak and unreliable power in the coming years. The launch of
system one that has been bedeviled by operations in October of the Orosi
below-average rains depleting its hydropower power plant and the upcoming
resources and embroiled in an ongoing inauguration of the Vientos del Oeste
economic crisis, Brazils government appears project will supply Costa Ricas
Contracts have been granted by the to be turning favorably towards solar and electrical grid with an additional 59
government for the development of 930 wind power to solve its energy crisis. megawatts from wind power in the
MW of solar PV capacity and almost 550 near future. That will add to the 20
MW provided by the Tilawind plant in
Guanacaste province, which began
Chinas Tongwei Group plans worlds biggest solar-cell plant
operations in March. The three plants
will more than double the countrys
Tongwei Group Co. is planning to build current wind power generation, from
the worlds biggest plant to make solar 194 MW in early 2015 to 393 MW in
cells in Chinas southwestern province of 2017. ICE estimates that wind power
Sichuan at a possible cost of about $1 will increase as a percentage of
billion. The facility is expected to have total electricity generated in Costa
capacity of 5 gigawatts of high-efficiency Rica from 7 percent currently to 10.5
solar cells annually. The plant in Shuangliu percent in 2017. According to a report
county will triple Tongweis total solar-cell from ICE, 98.8 percent of Costa Ricas
capacity, which is estimated to reach 2.4 electricity generation this year has
gigawatts by the end of this year. The plan come from renewable sources, mainly
underscores Chengdu-based Tongweis about 20 cents a watt, could be part of a hydro, but also wind, geothermal, solar
efforts to expand capacity after agreeing medium-term plan. Tongwei said it also and biomass.
to buy a 10 percent stake in Taiwanese plans to build 10 gigawatts of photovoltaic
solar-cell producer Gintech Energy Corp. power projects in the next three years to
in July. The factory, which could cost five years.
November 2015
www.InfralinePlus.com

ExpertSpeak
Indian utilities need to
adapt to green transition
Markus Steigenberger is deputy this development. In fact, renewable
executive director of Agora electricity is starting to change power
Energiewende, a Berlin-based systems around the world. How can
philanthropic think tank focusing traditional utilities participate and pros-
on energy policy. In this article, per in this future energy world?
Markus provides insights into the
German experience in energy The future is flexible
transition from conventional to Before considering the role of utilities,
renewable energy and how other we should take a closer look into the
countries, especially India, can developments we witness already today
take valuable lessons from it. in countries like Germany, Denmark
or parts of the USA and that we will
For the last 20 years, growth of renew- quite likely see in many places in the
ables was mainly happening in Europe, future. What is most important to
58 and it was policy driven, on the ground notice: When talking about growth
Markus Steigenberger, Deputy Executive
of concerns for climate change, fuel of renewables, we Director, Agora Energiewende
import dependency and health issues. primarily mean
This is changing. Since shortly, rapidly wind and solar Renewable (in Europe, it is around 80%). Now,
falling costs make wind and solar ener- photovoltaics. electricity this provides us with a challenge:
gy attractive. Emerging economies are These two is starting to As both technologies have some
launching large renewable programmes technologies change power very specific characteristics, this
India alone is planning for 175 GW have basically systems around development implies a paradigm
in just 7 years and investments in won the cost the world shift in how power systems work.
renewable energy are outmatching race, and While the old system was based
investments in conventional genera- consequentially on large centralised power plants that
tion sources globally (figure 1). Future make up 2/3rd of newly provided electricity at very stable and
projections foresee an acceleration of installed capacity globally predictable conditions, the new system
will be quite the opposite. Three
Figure 1: Renewables Share of Global Capacity Additions, 2001-2014 features have to be taken into account:
By definition, wind power and solar
PV produce electricity dependent
on weather conditions. Strong wind
and sunny days bring about plenty
of kilowatt hours, while lesser
wind and darkness naturally limit
the output. Thus, power generation
by wind and solar PV cannot be
adjusted to neither demand nor
price signals at the market.
Wind power and solar PV installa-
tions are almost entirely determined
by capital expenditures. As costs for
Sources: IRENA database operation and maintenance are very
November 2015
www.InfralinePlus.com

low and fuel costs are non-existent, Some customers and regions might four utilities in Germany E.ON,
wind power and solar PV have even opt for off-grid solutions. RWE, ENBW and Vattenfall held
marginal cost close to zero. Thus, Traditionally, incumbent market a market share of >80% and were
the initial capital investment pays actors find it difficult to adjust to considered strong and healthy compa-
for almost the entire electricity pro- rapidly changing market environments. nies. Today, all four are either fighting
duction for the next 20 to 30 years. This is especially true in the energy for survival or pulling out of Ger-
Although some wind power and sector with its very long planning many. Their economic power has been
solar PV parks can be as large as cycles. The story of German utilities dramatically reduced. German market
several hundred megawatts, by and how they coped with the energy leader E.ON is now worth only 18
nature wind power and solar PV are transition so far gives a striking billion euros, compared to 92 billion in
decentralised technologies. Millions example. 2007. RWEs value dropped from 53.5
of installations roof top solar PV billion to 7 billion and EnBW is worth
and individual wind power tur- Until just a few years just 6 billion. Their market share was
bines will be scattered all over the ago, the big four reduced to 50% within just three years,
land and produce electricity that is and it is expected to decline further.
mainly fed into the distribution grid.
utilities in Germany What happened?
E.ON, RWE, ENBW In essence, German utilities made
Utilities in transition and Vattenfall held a two fundamental strategic mistakes.
Under the new flexibility paradigm, market share of >80% Firstly, they did not take the political
the residual power system has to be and were considered decisions of the year 2000 to phase
able to very flexibly respond to vari- strong and healthy out nuclear energy and to significantly
able electricity generation from wind companies. Today, all increase the share of renewables seri-
and solar sources. Fast ramping rates, four are either fighting ously. On the contrary, throughout the
times with massive electricity supply first decade of the millennium, German
and times with very little wind and
for survival or pulling utilities launched a large investment
59

solar generation at windless and cloudy out of Germany. Their programme into conventional gener-
days will become determining factors. economic power has ation capacity, mainly coal-fired power
From a utilities perspective, this brings been dramatically plants. This investment programme
about several challenges, e.g.: reduced was and this was the second false
With higher shares of variable assumption built on the expectation
renewables, conventional power The example of German of lasting high electricity prices.
plants will run less and less hours. utilities: How not to do it However, reality is merciless: The
Reduced full load hours will change Until just a few years ago, the big decision to phase out nuclear by end
the profitability, as fixed costs have
to be covered by fewer running Figure 2 Wholesale electricity prices in Germany
hours.
The ability of large baseload plants
to change its output according to
variable renewable generation is
limited. Retrofits can increase the
flexibility, but only to a certain
extent. Furthermore, the need to
ramp up and down more often will
abrade power plants much quicker
than hitherto.
Small scale distributed power gen-
eration does not only provide fertile
ground for new market entrants,
but also offers the opportunity for
customers and smaller regions
to become prosumers, i.e. both
consume and produce electricity.
November 2015
www.InfralinePlus.com

ExpertSpeak

of 2022 is not disputed anymore, and Figure 3 Renewable share in Germany hold by utilities
renewable energy grew from 5% in
2000 to around 33% as of today. At the
same time, power prices dwindled
partly triggered by growth of renew-
ables, partly by excess capacity and
low fuel prices (see graph 2).
As the big four hardly invested
in renewables, their overall share
of the newly developed renewables
market remains small (see graph 3).
In a desperate attempt to catch up, all
four are now fundamentally rethinking
their strategies. The example of E.On
is most prominent: Germanys largest
utility will split in two after a radical
restructuring, selling its conventional
power stations to focus on grids,
Source: trend: research/Leuphana (2013)
renewables and energy services. State-
owned ENBW focusses on offshore
wind, grids and flexible gas. RWE is
expected to decide about its future The fate of German
strategy soon, and Vattenfall is selling utilities has been
60 its assets in Germany almost entirely. observed carefully
This year, the German cartel office by other European
announced that for the first time the utilities. And, as
big four do not possess a dominant Europe is foreseeing
position in the German power market a surge of renewable
anymore.
energy as well, some
Learning from German did learn from the
utilities German experience.
The fate of German utilities has been Several have declared
observed carefully by other European fundamentally changing
utilities. And, as Europe is foresee- their business
ing a surge of renewable energy as strategies
well, some did learn from the German
experience. Several have declared but its name, too (now called Engie). Europe. Still, technologies, cost devel-
fundamentally changing their business Others that took similar decisions are opments, fundamental operational
strategies. The most recent example: Dong (Denmark) and ScottishPower. functions, and economic principles are
In November 2015 Francesco Starace, ENELs Starace believes that in the the same or similar everywhere. And
CEO of Italian ENEL, declared never next 12 months you will see most of India is embarking on a renewable
to build a coal plant again and to focus the companies more or less go the same pathway. Bloomberg New Energy
ENELs future strategy on renewables, way. Finance forecasts a share of at least 32
grids and smart customer solutions. And India? Are there lessons Indian % wind and solar energy in the Indian
There is a huge tide flowing and you utilities can learn from the German power system in 2040. This clearly
can decide in which direction you want and European experience? Obviously, implies that Indian utilities should
to swim, he told the British Guardian one cannot simply copy the European take a very close look to European
in an interview. The tide is not in our experience one-to-one to India. And, counterparts. The transition in India is
control - it is the evolution of technolo- in fact, a system with growing demand just to start.
gy. A few months earlier, French GDF will react differently to a system with The views in the article of the author are personal.
Suez did not only change its strategy, declining demand as it is the case in For suggestions email at feedback@infraline.com
Magazine SubScription forM
The CompleTe energy SeCTor magazine for poliCy and deCiSion makerS

Subscribe to infralineplus Magazine!


Stay updated with the current industry trends and scenario though widely read interviews, articles and points of view by the industry stalwarts, policy and decision makers in
the energy and infrastructure sector.

Subscribe Now! pleaSe TiCk SCheme of your ChoiCe


hard Copy SuBSCripTion SofT Copy SuBSCripTion
Term One subscripTiOn 5 subscripTiOns Term cOver price YOu paY
(Years) cOver price YOu paY (delhi ncr) YOu paY (OTher ciTies) cOver price YOu paY (delhi ncr) YOu paY (OTher ciTies) (Years)
cOver price One subscripTiOn mulTi subscripTiOns
1 Year `1200 `1080 `1440 `6000 `5250 `5850 1 Year `1200 `1080 `3240
2 Years `2400 `2100 `2820 `12000 `10200 `11400 2 Years `2400 `2100 `6300
3 Years `3600 `3060 `4140 `18000 `14400 `16200 3 Years `3600 `3060 `9180

paymenT opTionS
please charge my credit card making payment through nefT By Cheque/dd/po
Account Name: Infraline Technologies (India) Pvt. Ltd. Kindly Draw the cheque/DD/PO in favor of Infraline Technologies (India)
Account No.: 503011022657 Private Limited. (Please add `20/- extra for cheques from outside
Card No. ............................................................. Bank: ING Vysya Bank Ltd. Delhi/NCR)
Card Expiry date.................................................
Bank Branch: Connaught Palace, New Delhi - 110001 Cheque/DD no .........................................................................................
Name (as appears on card) ...............................
............................................................................ IFSC Code Dated ........................................................................................................
Date .................................................................... (for RTGS): VYSA0005030 Bank .........................................................................................................
Signature ............................................................ NEFT Code: 110064003 Branch ......................................................................................................

provide your deTailS (in CapiTal leTTerS)


Mr/Ms............................................................................... Organization ....................................................... Designation ................................................................. Address .............................................................................................................................................................
........................................................................................................................................... City..................................................................... State............................................................................... Pin Code ............................... Email .................................................................
Mobile ....................................................................................................... Phone (Off) ................................................................................................. Phone (Resi) ........................................................................... Date of Birth ...........................................................................

Terms and Conditions: please allow us 4-5 weeks for processing your magazine subscription request. copies will be sent by ordinary
post/courier. (`30/month for courier charges to be added for subscription out side Delhi/NCR) infraline will not be responsible for
postal delay, transit losses or mutilation of copies. no cancellation will be entertained after payment has been received & no refund shall
be paid. please mention your name and address on the reverse of your dd/cheque. all disputes are subject to the exclusive jurisdiction of
courts in new delhi only.

date:
place: co. seal & signature
To Subscribe: please fill in all the details mentioned in the order form and mail it to us at the below mentioned address. You can also fax us the
order form if purchased through credit card/net banking on +91 120 6799101

Infraline Technologies (India) Private Limited


Infraline Knowledge Tower, A-31, Sector 3, Noida-201301
Tel: +91-120-679 9136 (D); +91 120 6799100 (B); Fax: +91 120 679 9101, Email: anshul.sharma@infraline.com
61
November 2015
www.InfralinePlus.com

FinancialResults | Renewable
REC Q2 net profit grows 8 per cent to Rs 1,619 crore

The state-owned Rural Electrification


Corporation announced a 7.64 per cent
growth in September quarter net profit at
Rs 1,619.19 crore on account of increase
in interest income. The interest income of
the company rose to Rs 5,827.05 crore in
the quarter under review, compared with
Rs 4,986.19 crore a year ago. Total income
was up at Rs 5,924.73 crore for the said
IREDA profit up 9% at Rs 147 crore in
quarter, from Rs 5,066.27 crore a year earlier.
H1FY16
A public financial institution in the power The central government holds 60.64 per cent
infrastructure space, REC is into financing in the company as on September 30, 2015.
and promotion of transmission, distribution The company is one of the only 17 Indian Indian Renewable Energy Development
and generation of power, including renewable PSUs to have been granted the navratna Agency (IREDA) posted a 9 per cent
energy, throughout India and plays a key role status by virtue of its operational efficiency increase in profit to Rs 147.12 crore
for growth of the Indian power sector. and financial strength. for the first half of the fiscal ended
September 30. The company had
Aditya Birla Nuvo Q2 net down 8 per cent at Rs 414 crore recorded a standalone net profit of Rs
134.66 crore in the same period a year
crore clocked in same period last year. ago. Interest income increased to Rs
According to the company, the decline 561.74 crore in the six-month period
was mainly due to lower profitability in the ended September 30 from Rs 511.61
life insurance business. Revenue for the crore in the same period last year.
quarter upped by 10% at Rs 7,285 crore IREDA promotes and extends financial
62 and EBIDTA rose by 13% to Rs 1712 crore, assistance for renewable energy and
when compared to same period last year. In energy efficiency or conservation
FY 16, the company plans to invest Rs 250 projects.
crore towards the capital expenditure plan
of its divisions. The company also plans to
fund the growth capital requirements of the
Financial Services businesses to the tune of
Rs 600 crore and the equity requirements
Aditya Birla Nuvo reported an 8 percent of the Solar Power business to bid for
drop in its net profit at Rs 414 crore in upcoming projects.
its second quarter, compared to Rs 452

Indosolar reports Q2 loss at Rs 48 crore

Indosolar Ltd reported a standalone loss Jain Irrigation Q2 net loss to Rs 29.5
of Rs 48.17 crore for the second quarter crore
ended September 30. The company
had posted a standalone loss of Rs Jain Irrigation has reported a net loss
37.19 crore in the corresponding quarter of Rs 29.5 crore in the September
last fiscal. Net sales or income of the quarter against that of Rs 23.6 crore
company came down to Rs 27.21 crore in the year-ago period. Net revenue
in the quarter under review from Rs 40.24 during the quarter under review rose to
crore in the same period a year ago. Rs 1,345.3 crore from Rs 1,293.6 crore
Indosolar is the manufacturer of solar in the year-ago period. Jain Irrigation
photovoltaic cells. Its manufacturing is engaged in manufacturing of micro-
capacity stands at 450 MWp. irrigation systems, PVC pipes, HDPE
pipes, plastic sheets, agro processed
products, renewable energy solutions,
tissue culture plants, financial services
and other agricultural inputs.
November 2015
www.InfralinePlus.com

StatisticsRenewableEnergy
Programme/ scheme wise physical progress in 2015-16 (as on october 31, 2015)
Sector FY- 2015-16 Cumulative, Achievements
(as on 31.10.2015)
Target Achievement
I. Grid-Interactive Power (Capacities in MW)
Wind Power 2400.00 1234.11 24677.72
Solar Power 1400.00 827.22 4579.24
Small Hydro Power 250.00 106.55 4161.90
Bio-Power (Biomass & Gasification and 400.00 132.00 4550.55
Bagasse Cogeneration)
Waste to Power 10.00 12.00 127.08
Total 4460.00 2311.88 38096.49
Ii. Off-Grid/ Captive Power (Capacities In Mweq)
Waste to Energy 10.00 0.50 146.51
Biomass (non-bagasse) Cogeneration 60.00 10.50 602.37
Biomass Gasifiers 2.00 0.20 18.15
- Rural 6.00 8.67 160.72
- Industrial
Aero-Genrators/Hybrid systems 0.50 0.13 2.67
SPV Systems 50.00 46.50 280.85
Water mills/micro hydel 2.00 0.00 17.21
Total 130.50 66.50 1228.48
Iii. Other Renewable Energy Systems
Family Biogas Plants (numbers in lakh) 1.10 0.15 48.28
Solar Water Heating Coll. Areas(million m2) - 0.00 8.90
Source: MNRE
63

State wise installed capacity of grid connected solar power projects


(As on November 30, 2015)

Sr. State/UT Total commissioned capacity (MW)


No.
1 Andhra Pradesh 283.74
2 Arunachal Pradesh 0.265
3 Chhattisgarh 73.18
4 Gujarat 1024.15
5 Haryana 12.8
6 Jharkhand 16
7 Karnataka 104.22
8 Kerala 12.025
9 Madhya Pradesh 673.58
10 Maharashtra 378.7
11 Orissa 56.92
12 Punjab 200.32
13 Rajasthan 1256.7
14 Tamil Nadu 385.87
15 Telangana 91.45
16 Tripura 5
17 Uttar Pradesh 71.26
18 Uttarakhand 5
19 West Bengal 7.21
20 Andaman & Nicobar 5.1
21 Delhi
22 Lakshadweep 0.75
23 Puducherry 0.025
24 Chandigarh 5.041
25 Daman & Diu 4
26 Others 0.79
TOTAL 4680.808
Source : MNRE
November 2015
www.InfralinePlus.com

StatisticsRenewableEnergy
List of Projects Commissioned under JNNSM Phase II Batch I (As on October 28, 2015)
S. SPD Name Project Project Project Location VGF eligibility (INR) VGF Disbursement eligibility for
No. Category Capacity (MW) FY 2015-16 (50% of total VGF)
1 Fortum Finnsurya Energy Pvt. Ltd. Part-B 10 Madhya Pradesh 9,69,90,000 4,84,95,000
2 Gujarat State Electricity Corporation Ltd. Part-B 10 Gujarat 10,40,00,000 5,20,00,000
3 Gujarat Power Corporation Ltd. Part-B 10 Gujarat 1,75,00,000 87,50,000
4 SEI Sitara Pvt. Ltd. Part-A 30 Madhya Pradesh 56,09,10,000 28,04,55,000
5 SEI L'Volta Pvt. Ltd. Part-B 20 Madhya Pradesh 14,65,80,000 7,32,90,000
6 Rishabh Renergy Pvt. Ltd. Part-B 10 Rajasthan 8,50,00,000 4,25,00,000
7 SEI Suryalabh Pvt. Ltd. Part-B 30 Rajasthan 26,18,54,820 13,09,27,410
8 RDA Energy Pvt. Ltd. Part-A 10 Rajasthan 21,20,00,000 10,60,00,000
9 Palimarwar Solar Project Pvt Ltd. Part-A 10 Rajasthan 21,64,00,000 10,82,00,000
10 Clean Solar Power (Dhar) Pvt. Ltd. Part-A 10 Madhya Pradesh 23,90,00,000 11,95,00,000
11 Clean Solar Power (Dhar) Pvt. Ltd. Part-B 10 Madhya Pradesh 12,20,00,000 6,10,00,000
12 Clean Solar Power (Dhar) Pvt. Ltd. Part-B 10 Madhya Pradesh 13,10,00,000 6,55,00,000
13 Welspun Solar UP Pvt. Ltd. Part-A 5 Rajasthan 12,28,00,000 6,14,00,000
14 Azure Clean Energy Pvt. Ltd. Part-B 40 Rajasthan 52,00,00,000 26,00,00,000
15 Suryauday Solaire Prakash Pvt. Ltd. Part-A 10 Rajasthan 22,90,00,000 11,45,00,000
16 IL&FS Energy Development Company Ltd. Part-A 20 Madhya Pradesh 47,99,80,000 23,99,90,000
17 IL&FS Energy Development Company Ltd. Part-A 20 Madhya Pradesh 48,20,00,000 24,10,00,000
18 Azure Sunshine Pvt. Ltd. Part-A 20 Rajasthan 46,00,00,000 23,00,00,000
19 Azure Green Tech Pvt. Ltd. Part-A 40 Rajasthan 88,00,00,000 44,00,00,000
20 Northern Solaire Prakash Pvt. Ltd. Part-A 20 Rajasthan 43,80,00,000 21,90,00,000
21 Vishwaj Energy Pvt. Ltd. Part-B 10 Maharashtra 13,00,00,000 6,50,00,000
22 Ranji Solar Energy Pvt. Ltd. Part-A 20 Rajasthan 48,99,97,440 24,49,98,720
23 ACME Mumbai Power Pvt. Ltd. Part-B 20 Rajasthan 22,79,97,680 11,39,98,840
24 ACME Gurgaon Power Pvt. Ltd. Part-B 20 Rajasthan 25,99,98,860 12,99,99,430
25 Medha Energy Pvt. Ltd. Part-B 20 Rajasthan 19,55,88,780 9,77,94,390
26 ACME Rajdhani Power Pvt. Ltd. Part-B 20 Rajasthan 23,79,77,940 11,89,88,970
64 27 Sharda Construction & Corporation Ltd. Part-A 10 Maharashtra 13,95,00,000 6,97,50,000
28 Focal Photovoltaic India Pvt. Ltd. Part-B 10 Madhya Pradesh 9,98,90,000 4,99,45,000
29 Focal Renewable Energy Two India Pvt. Ltd. Part-B 10 Madhya Pradesh 11,99,90,000 5,99,95,000
30 Focal Energy Solar One India India Pvt. Ltd. Part-B 20 Madhya Pradesh 26,36,00,000 13,18,00,000
31 Waaneep Solar Pvt. Ltd. Part-A 50 Madhya Pradesh 1,17,50,00,000 58,75,00,000
32 Karnataka Power Corporation Ltd. Part-A 10 Karnataka 22,50,00,000 11,25,00,000
33 Sunil Hitech Solar (Dhule) Pvt. Ltd. Part-B 5 Maharashtra 6,75,00,000 3,37,50,000
34 Swelect Energy Systems Ltd. Part-A 10 Tamil Nadu 13,50,00,000 6,75,00,000
35 Backbone Enterprises Ltd. Part-B 10 Gujarat 9,90,00,000 4,95,00,000
36 Enersan Power Pvt. Ltd. Part-B 10 Gujarat 10,80,00,000 5,40,00,000
37 Laxmi Diamond Pvt. Ltd. Part-A 10 Rajasthan 20,20,00,000 10,10,00,000
38 Today Green Energy Pvt. Ltd. Part-A 10 Rajasthan 14,45,00,000 7,22,50,000
39 Today Green Energy Pvt. Ltd. Part-A 10 Rajasthan 16,95,00,000 8,47,50,000
40 Today Green Energy Pvt. Ltd. Part-B 10 Rajasthan 9,95,00,000 4,97,50,000
41 Today Green Energy Pvt. Ltd. Part-B 10 Rajasthan 11,95,00,000 5,97,50,000
Total 650 10,51,40,55,520 5,25,70,27,760

REC trading volume and price at IEX


Though IEX
REC Type Buy Bid (REC) Sell Bid (REC) Total Volume Traded Equlibrium Price No. of Participants Date of Auction
(REC) (INR/REC)
Solar 11,945 22,21,069 11,945 3,500 331 October'15
Non Solar 68,663 73,25,684 68,663 1,500 702
Solar 41102 1976072 41102 3500 350 November'15
Non Solar 89107 6176983 89107 1500 706
Source : IEX

Though PXIL
REC Type Buy Bid (No. of Sell Bid (No. of MCP (INR/ MCV (No. of certificate)Qty (MWH) Date of Auction
certificates) certificates) Certificate)
Solar 1906 577054 3500 142779 October'15
Non Solar 142779 6363552 1500 1906
Solar 46665 938422 3500 46665 November'15
Non Solar 142438 7603829 1500 142438
Source : PXIL
Power Knowledgebase
Addressing to The Demands in Power Sector

Freel
Tria ble
la
Avai

Information Coverage
v Sector Overview: Detailed overview of the Indian
power sector, including its evolution, latest
status, recent happenings, policy changes, and
a glimpse of key statistics related to the sector
v Data & Statistics: Information on demand-sup-
ply, installed capacity, plant wise power
generation, power supply position. Other data
covered like PLF/generation, monthly transmis-
sion etc.
v Generation: Year-wise capacity addition and
installed capacity segregated into central, state
and private sector and targets & achievements
Membership Deliverables and much more!
Daily Morning Newsletter v Power Projects: More than 2000+ project
Daily International Bulletin profiles with updated status on project cost and
Power Exchange Transaction Report expenditure, fuel availability, finances and ppa,
and much more!
Weekly KB Snippets
v Power Trading: Daily, monthly and yearly
coverage of electricity traded through short
term market for both the power exchanges and
much more!

For any further information, kindly contact us on the below mentioned coordinates:
Manoj Narang, (Director Business Development)
Ph.: 0120-6799106, Mob.: 91-9560626589,
Email: manoj.narang@infraline.com
RNI No: DELENG/2012/45441

Das könnte Ihnen auch gefallen