Govt needs to work on power sector: Chandrabhan

TNN Dec 8, 2012, 02.53AM IST

Tags: Vasundhara Raje government| Vasundhara Raje| Gehlot government| Congress| Ashok Gehlot government| Ashok Gehlot

JAIPUR: The Ashok Gehlot government has been unable to meet the power sector demands in the past four years, stated Congress state president Chandrabhan on Friday. The ruling party chief, a former power minister, said the government needs to take measures to bridge the electricity demand-supply gap in the state, especially in the rural areas. The Congress president was speaking to reporters on the party's preparations on completing four years in Rajasthan on December 13. The organisation has planned talks and discussions on December 12 at its district-level units to highlight the government's developmental works. "It is right that there has been a difference between demand and supply in the power sector. The government needs to take measures to fill this gap," Chandrabhan said in response to reporters' query. He held both the Centre and the state governments responsible for the failure in generating adequate power in Rajasthan. "Once the bidding process got delayed and the other time coal supply was affected due to Centre's policies," Chandrabhan reasoned. "But the Chhabra power plant will soon be functional which will be a big relief for the people," he added. Soon after coming into power in December 2008, the Gehlot government accorded highest priority to the energy sector in the state's annual plans to make Rajasthan selfreliant. It even announced some ambitious projects, especially the three Super Critical Power Projects in government and private sectors. However, not a single project out of the three has been commissioned in past four years. The previous Vasundhara Raje government's five power plants - Suratgarh's sixth unit, Giral, Kota and two units of Chhabra power plant - were commissioned during the rule of Gehlot government. Eom Jaipur: The Ashok Gehlot government has been unable to meet the power sector demands in the past four years, Congress state president Chandrabhan said on Friday. The ruling party chief, who is also a former power minister, said the government needed to take measures to fill the electricity demand-supply gap in the state, especially in the rural areas. The Congress president was speaking to reporters on the party's preparations for marking the Gehlot-government's completion of four years in power in Rajasthan on

December 13. The organisation has planned talks and discussions at its district-level units to highlight the government's development works on December 12. "It is right that there has been a difference between demand and supply in the power sector. The government needs to take measures in filling this gap," Chandrabhan said in response to reporters' query. He held the Centre and the state governments, both, responsible for the failure in generating adequate power in Rajasthan. "Sometimes the bidding processes got delayed and at times the coal supply got affected due to Centre's policies," Chandrabhan reasoned. "But the Chhabra power plant will soon be functional and it will be a big relief for the people," he added. Soon after coming to power in December 2008, the Gehlot government accorded highest priority to the energy sector in the state's annual plans to make Rajasthan selfreliant. It even announced some ambitious projects, specially the three Super Critical Power Projects in government and private sectors. However, not a single of the three has been commissioned in past four years. The previous Vasundhara Raje government's five power plants-Suratgarh's 6th unit, Giral, Kota and two units of Chhabra-got commissioned during the present Gehlot government's tenure.

Ills of India's power sector in spotlight after blackout (2012 in Retrospect)

New Delhi, Dec 28 (IANS) The ills of India's power sector came under sharper focus in 2012 due to the worst electricity blackouts for hours on end in July-August, which halted train and Metro services, forced temporary closure of factories, disrupted life in 20 out of India's 28 states and affected some 600 million people. The outage, which made global headlines and became a matter of embarrassment for an emerging economy, focussed attention on issues such as fuel shortage, caused by faulty policies on coal mining, the problems on transmission and distribution and the manner in which some states were overdrawing their quota of electricity with impunity to create extreme overloading on the transmission infrastructure. The inquiries on the blackout provoked suggestions that Regional Load Despatch Centres (there are five of them in India which carry electricity from producers to the users on what are called grids) be given legal powers to be able to protect their infrastructure. The outage also drew attention to India's power distribution firms having accumulated losses worth a whopping $40 billion, and needing staggered hikes in tariff to ensure their sustainability. Such large losses arose mainly from what distribution companies term as aggregate technical and commercial losses, which is more of a euphemism for theft. Currently cumulative distribution losses amount to Rs.200,000 crore ($36 billion). "This was a telling commentary on the situation of the power sector in the country," said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII). "Losses to business have been in thousands of crores, which pale into insignificance when compared to the difficulty that the people of the country have had to face." As relief to the power sector, the government in September approved the proposal to restructure state electricity companies' (Discoms) debt worth nearly Rs.200,000 crore ($36 billion). As part of a scheme for the financial turnaround of Discoms, state governments were to take over 50 percent of Discoms' short-term liabilities by way of special securities, repayment and interest payments. The balance 50 percent short-term loans were to be restructured with a moratorium on principal at the best possible terms of interest. India has a total installed capacity of 209,276 megawatt, with states contributing 41 percent, the central power utilities having a share of 30 percent and the remaining 29 percent accounted for by the private sector. In terms of fuel used, the total thermal capacity is 140,206 megawatt, of which coal accounts for 120,103 megawatt, gas for 18,903 megawatt, and oil for 1,199 megawatt. This apart, hydro power contributes 39,291 megawatt, nuclear around 4,780 megawatt and reneable energy 24,998 megawatt.

The supply shortfall varies across the country, which becomes acute in states like Uttar Pradesh, while some others like Gujarat enjoy a surplus and export to other states. The government estimates the fund requirement of $256.14 billion in the power sector over the next five years to bridge the existing gap and to meet the growing demand. According to experts, the basic problem for the power sector is acute fuel (read coal) shortage, affecting electricity generation in the country. It was also the year when state miner Coal India came under intense scrutiny for its production and off-take. "Availability of coal and gas is a pre-requisite for spurring investments in the power sector. Reforms that would help make coal and gas available as per the nation's requirements must no longer be held back," said the Federation of Indian Chambers of Commerce and Industry. The state-run Coal India declared it cannot meet the complete coal demand from indigenous sources till the 13th Five Year Plan beginning 2017. During the 11th Plan, there was a production gap of 140 mt. The coal sector provoked major political controversy following the national auditor's report on how allocation of captive coal blocks to private companies had led to the latter making windfall profits. The Comptroller and Auditor General (CAG) estimated a notional loss of Rs.186,000 crore ($33.67 billion) to the exchequer on account of not auctioning coal blocks allocated to private allottees. Tabled in parliament, the report named 25 companies including Essar Power, Hindalco, Tata Power and Jindal Steel and Power, which got blocks in various states. In July, the government formed an inter-ministerial group (IMG) to review progress of coal blocks allocated to firms for captive use, but which had failed to develop mines within the stipulated timeframe. The IMG, after its scrutiny, recommended de-allocation of 11 mines to public sector units, 13 blocks to private firms, and deduction of bank guarantees of 14 allottees. A total of 58 mines were issued show-cause notices for their failure to develop blocks within the stipulated timeline. Coal India agreed to pay a penalty of 1.5 percent to 40 percent on failing to supply the committed quantity of coal to power utilities, following protests from major companies over its decision to go for a paltry penalty of 0.01 percent. The state miner has to meet 80 percent of contracted supply to avoid triggering off penalty. The new year awaits a pooling formula on prices by combining rates of imported and domestic coal to offset high import costs. Also awaited are reforms that can improve the supply of coal for thermal power plants, rationalise tariffs and improve the financials of state distribution utilities. (Biswajit Choudhury can be contacted at biswajit.c@ians.in)

Ills of India's power sector in spotlight after blackout (2012 in Retrospect)

New Delhi, Dec 28 (IANS) The ills of India's power sector came under sharper focus in 2012 due to the worst electricity blackouts for hours on end in July-August, which halted train and Metro services, forced temporary closure of factories, disrupted life in 20 out of India's 28 states and affected some 600 million people. The outage, which made global headlines and became a matter of embarrassment for an emerging economy, focussed attention on issues such as fuel shortage, caused by faulty policies on coal mining, the problems on transmission and distribution and the manner in which some states were overdrawing their quota of electricity with impunity to create extreme overloading on the transmission infrastructure. The inquiries on the blackout provoked suggestions that Regional Load Despatch Centres (there are five of them in India which carry electricity from producers to the users on what are called grids) be given legal powers to be able to protect their infrastructure. The outage also drew attention to India's power distribution firms having accumulated losses worth a whopping $40 billion, and needing staggered hikes in tariff to ensure their sustainability. Such large losses arose mainly from what distribution companies term as aggregate technical and commercial losses, which is more of a euphemism for theft. Currently cumulative distribution losses amount to Rs.200,000 crore ($36 billion). "This was a telling commentary on the situation of the power sector in the country," said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII). "Losses to business have been in thousands of crores, which pale into insignificance when compared to the difficulty that the people of the country have had to face." As relief to the power sector, the government in September approved the proposal to restructure state electricity companies' (Discoms) debt worth nearly Rs.200,000 crore ($36 billion). As part of a scheme for the financial turnaround of Discoms, state governments were to take over 50 percent of Discoms' short-term liabilities by way of special securities, repayment and interest payments. The balance 50 percent shortterm loans were to be restructured with a moratorium on principal at the best possible terms of interest. India has a total installed capacity of 209,276 megawatt, with states contributing 41 percent, the central power utilities having a share of 30 percent and the remaining 29 percent accounted for by the private sector. In terms of fuel used, the total thermal capacity is 140,206 megawatt, of which coal accounts for 120,103 megawatt, gas for 18,903 megawatt, and oil for 1,199 megawatt. This apart, hydro power contributes 39,291 megawatt, nuclear around 4,780 megawatt and reneable energy 24,998 megawatt. The supply shortfall varies across the country, which becomes acute in states like Uttar Pradesh, while some others like Gujarat enjoy a surplus and export to other states. The government estimates the fund requirement of $256.14 billion in the

power sector over the next five years to bridge the existing gap and to meet the growing demand. According to experts, the basic problem for the power sector is acute fuel (read coal) shortage, affecting electricity generation in the country. It was also the year when state miner Coal India came under intense scrutiny for its production and off-take. "Availability of coal and gas is a pre-requisite for spurring investments in the power sector. Reforms that would help make coal and gas available as per the nation's requirements must no longer be held back," said the Federation of Indian Chambers of Commerce and Industry. The state-run Coal India declared it cannot meet the complete coal demand from indigenous sources till the 13th Five Year Plan beginning 2017. During the 11th Plan, there was a production gap of 140 mt. The coal sector provoked major political controversy following the national auditor's report on how allocation of captive coal blocks to private companies had led to the latter making windfall profits. The Comptroller and Auditor General (CAG) estimated a notional loss of Rs.186,000 crore ($33.67 billion) to the exchequer on account of not auctioning coal blocks allocated to private allottees. Tabled in parliament, the report named 25 companies including Essar Power, Hindalco, Tata Power and Jindal Steel and Power, which got blocks in various states. In July, the government formed an inter-ministerial group (IMG) to review progress of coal blocks allocated to firms for captive use, but which had failed to develop mines within the stipulated timeframe. The IMG, after its scrutiny, recommended deallocation of 11 mines to public sector units, 13 blocks to private firms, and deduction of bank guarantees of 14 allottees. A total of 58 mines were issued show-cause notices for their failure to develop blocks within the stipulated timeline. Coal India agreed to pay a penalty of 1.5 percent to 40 percent on failing to supply the committed quantity of coal to power utilities, following protests from major companies over its decision to go for a paltry penalty of 0.01 percent. The state miner has to meet 80 percent of contracted supply to avoid triggering off penalty. The new year awaits a pooling formula on prices by combining rates of imported and domestic coal to offset high import costs. Also awaited are reforms that can improve the supply of coal for thermal power plants, rationalise tariffs and improve the financials of state distribution utilities. (Biswajit Choudhury can be contacted at biswajit.c@ians.in)

India has the world's best, largest power grid

he new power minister, M Veerappa Moily in an interview with Kavita

Chowdhury, talks about the challenges before him and how he intends to address those. Edited excerpts: You have taken charge of the power ministry at a time when the country has seen the worst power crises in recent times. What are the immediate challenges before you? Power is a very crucial sector, as it fuels growth; one per cent increase in power generation leads to one per cent increase in gross domestic product. For an inclusive economy like India, the power sector needs to keep pace with the industry's growing demand. What happened yesterday was the first such case since 2001. As soon I took over, I promised power supply would be restored at the earliest.

And, now the power situation has stabilised 100 per cent. After all, we the
world's best and largest power grid. A committee has been constituted to probe the breakdown, and it would give its report in 15 days. Today, I held a meeting with this committee; it is looking into the causes and remedies. It would also ensure the stabilisation is sustained. With complete confidence, I state such things will not recur.

The secretary in the power ministry would also hold a meeting with power
secretaries of respective states on the same date. The purpose of the meetings would be to ensure this type of a crisis doesn't recur. The state governments and the Centre have to take steps to ensure this. The system has to work complementarily; this kind of debate - state versus state or Centre versus state - should not be encouraged.

India Power Awards 2012 confers Anil Sardana, managing director, Tata Power with Leading Energy Personality award
Company also conferred Best Fast Track Completed Power Transmission Projects award Delhi/Mumbai: Anil Sardana, managing director, Tata Power was awarded the Leading Energy Personality award in the power generation category in the fifth India Power Awards 2012 ceremony held at India Habitat Centre, New Delhi. The annual India Power Awards are envisaged as a systematic and methodical approach to recognise excellence in various activities for power and energy development. Given the everchanging and challenging situation that the energy sector faces today, it becomes imperative to honour those who have excelled in their own capacities. The Council of Power Utilities (CPU) instituted the India Power Awards in 2008 for the purpose of identifying and recognising the very best in the energy Sector. This is the fifth year in succession that CPU has identified the very best. Every year, CPU and a sixmember jury confer these awards to individuals and organisations for their exemplary contribution to the energy sector. The jury comprised the following renowned dignitaries from the power and energy sector:

Harbans Lal Bajaj, member, Appellate Tribunal for Electricity P Abraham, former secretary, ministry of power V Raghuraman, former senior advisor- energy, Confederation of Indian Industry CR Prasad, former CMD, GAIL HR Sharma, chief technical principal at Hydro Tasmania Consulting India Pvt. Ltd. CVJ Varma, President, Council of Power Utilities

This year, the jury unanimously decided to confer the Leading Energy Personality (power generation) award to Mr Sardana for his outstanding contribution to the sector. He was presented the award by the chief guest, Prof MR Srinivasan, member, Atomic Energy Commission. The award consists of a certificate, citation, memento and a shawl. Tata Power also won the Best Fast Track Completed Power

Transmission Projects award (timely completion of two transmission projects). The award was in recognition of installation and commissioning of the 250MVA transformer at Dharavi and the 90 MVA transformer at Borivali. - See more at: http://www.tata.com/article.aspx?artid=xUKaNbrpfPY=#sthash.7f6t2Zce.dpuf

Investments in Indian power sector rising

Private firms invest US$61 billion over four fiscal years. Private sector investments in the power sector have not narrowed down in the past few years, said Power Minister Jyotiraditya Scindia. "The projected investments by the private sector during the current fiscal stand at Rs 85,578 crore (US$16 billion)," he said. Government data show private sector investments of US$10 billion during fiscal 2009-10, US$16 billion in while in fiscal 2010-11; US$19 billion in 2011-12 and US$16 billion in 2012-13. India allows up to 100% foreign direct investments in the power sector under the automatic route for generation, transmission and distribution. It also permits the issue of tax-free bonds to finance infrastructure projects. External commercial borrowings (ECBs) to partly finance rupee debt of existing power projects are also allowed. The government has reduced the withholding tax on interest payments on ECBs from 20% to 5% for three years to provide low cost funds to infrastructure sectors, including power. - See more at: http://asian-power.com/power-utility/news/investments-inindian-power-sector-rising#sthash.PS0M7RG0.dpuf

Large thermo-power plants told to use local equipment

VietNamNet Bridge Ten local mechanical companies will design and manufacture supplementary equipment for three large-scale thermal power plants namely Quang Trach 1, Song Hau 1 and Quynh Lap 1 under the Governments policy.

The Government on November 29 issued the mechanism for pilot of design and production of thermoelectric equipment at home in the period from 2012 to 2025. Under the policy, locally-manufactured equipment for Quang Trach 1 and Song Hau 1 plants will make up over half of the total value of the supplementary equipment supplied by mechanical engineering companies, while the percentage will be more than 70% for Quynh Lap 1. Apart from major equipment such as boilers, turbines and generators, supplementary equipment such as the coal and oil feeding systems, ash and smoke elimination, desulphurization, wastewater treatment and fire control equipment will be produced at home. Equipment producers include the National Research Institute of Mechanical Engineering, Vietnam Machine Installation Corporation, Machines and Industrial Equipment Corporation, Vietnam Industrial Construction Corporation, Construction Machinery Corporation, and Dong Anh Electrical Equipment Manufacturing Joint Stock Company. Others in the list of equipment suppliers also include Agriculture and Irrigation Mechanization Electrification Construction Corporation, PetroVietnam Construction Joint Stock Corporation, PetroVietnam Technical Services Corporation, and Doosan

Heavy Industry Vietnam. In addition, enterprises in cooperation with technology universities in Hanoi, Danang and HCMC and the universities with appropriate specialties are encouraged to design and manufacture supplementary equipment for the aforesaid thermal power plants. The pilot of domestic design and production of thermoelectric equipment is aimed to help mechanical manufacturing firms improve their capacity, moving towards technological independence, and promote development of the local mechanical engineering industry. Speaking to the Daily, Do Huu Hao, chairman of the Vietnam Federation of Mechanical Engineering Associations, said local mechanical enterprises so far had been playing the role of a subcontractor, processing equipment for thermal power projects at home. If they joined forces, they could produce 60% of the supplementary equipment that local thermal power plants needed, reducing the dependence on imported equipment, he said. Equipment cost makes up around 70% of the total investment in a thermal power project. Raising the localization rate of equipment will offer chances for domestic mechanical manufacturers as Vietnam will have 60 more thermal power plants worth nearly US$100 billion from now to 2030. Quang Trach 1 thermal power plant with a capacity of 1,200MW is developed by Vietnam National Oil and Gas Group (PVN). It will start generating electricity in June 2015. Song Hau 1 thermal power plant is also a project of PVN. It has a capacity of 5,200MW and is now under construction. Meanwhile, Quynh Lap 1 thermal power plant is designed with a capacity of 600MW. Its owner is Vietnam National Coal and Mineral Industries Group. Source: SGT

Monsoon 30% below: What government should do

Last updated on: July 4, 2012 11:50 IST

massive 30 per cent deficiency in the monsoon rainfall in June, coupled with an

anticipated low precipitation in September, may add to the government's difficulties in achieving its growth and fiscal deficit targets. Agriculture may not be the only victim of poor rainfall. Its contribution to gross domestic product may have dipped to mere 15 per cent but it still sustains the livelihood of over half of India's population. Rural income has, in recent years, been seen to impact the demand for two-wheelers and numerous other white goods, which contribute revenue to the exchequer.

On top of that, if the government has to increase its spending on job creation and other
drought-relief measures, which seems quite likely, the fiscal deficit will further worsen. Equally worrisome are the prospects of further food inflation, which is already in double digits. Of course, it is perhaps premature to view the first month's dismal performance of the monsoon as a harbinger of a full-blown drought -- for which July rainfall would really be a deciding factor -- but its possibility in some areas cannot be ruled out. Most weather prediction models used by global weather-watch agencies foresee normal rainfall only in north-eastern India and, to some extent, in parts of southern India, especially along the western coast.

The rest of the country, including northern, central and western India, is projected to
receive below-normal rainfall, the likely worst affected being Rajasthan and Gujarat. Predictably, the India Meteorological Department does not fully endorse this prognosis. Nevertheless, it concedes that September rainfall could be hit because of the likely emergence of the east Pacific Ocean temperature anomaly, popularly called El Nino, and that the north-western region may get below-par rainfall. Crop output there might not suffer much, as the grain belt is heavily irrigated. But the increased use of diesel to run pump sets in the absence of regular power supply in this region and elsewhere in the country is bound to swell the overall diesel subsidy bill.

Worse, it will further lower the already rapidly receding water table in most states.

Equally worrisome is the likelihood of inadequate refilling of the country's 80-odd major water reservoirs, where the current water stock is reckoned at just 16 per cent of the capacity against 27 per cent at this time last year. This can adversely hit the production of hydropower and water flows in irrigation canals. This apart, the anticipated water stress in central and western India is likely to jeopardise the production of coarse cereals, such as maize, bajra and jowar; oilseeds like soybean and groundnut; and pulses, notably tur or arhar; and cotton. Most of these commodities are key contributors to high food inflation.

Thus, the government can ill-afford to be complacent and hope that the IMD's
projection of overall normal rainfall (96 per cent of the long-term average) would turn out to be true, normalising the situation. Though the agriculture ministry claims to have put in place elaborate contingency plans for saving crops, action on this front alone may not suffice. Prior planning is also necessary to ward off the impact of low rainfall on other sectors. Otherwise, India's much-needed economic rebound may remain elusive. Image: A man holds his umbrella as he crosses a road during rains in New Delhi. A file photo. Photographs: Mukesh Gupta/Reuters
Related News: IMD , India

MP sets new milestones in the power sector

TNN Dec 28, 2012, 05.49PM IST

BHOPAL: A number of successes have been achieved in the power sector of the state during the last 9 years, a government spokesman said here on Thursday. A new record of power supply has also been created. Besides increase in transmission system capacity, losses have also been brought down to a large extent. A number of schemes have been launched to facilitate farmers. SMS-based service has been started for replacing burnt- up or defective transformers. The spokesman said that call centers have been set up in cities of the state for registering complaints round-the-clock for the convenience of the residents. Online bill payment facility and Any Time Payment Machines have also been introduced. A new record of power generation was created on December 20, 2012 in the history of Madhya Pradesh when 1,813.12 lakh units of power was supplied. Earlier, 1,755.57 lakh units were supplied during Diwali on November 13, 2012 which was 16% more than the 1,519 lakh units supplied last year and 28% more than the 1,371 lakh units supplied in 2010-11 during the same festival. The installed power generation capacity of the state has increased to 6069 megawatts. It is 104% more than the 2991 MW installed capacity of the year 2003. Installed capacity including the central sector and other sources was 4884 MW in the year 2003-04, which has increased to 9548 MW as on March 2012. This increase is about 96%.

Power loans worth over Rs 1,40,000 cr to see debt recast: ICRA The total exposure to power sector, including discoms, was about of Rs 3,80,000 cr Power Generators Get Quality Sourcing From China w/ Verified Suppliers. Visit Us Now!GlobalSources.com/Power_Generators Ads by Google A deal to restructure loans to financially-troubled power distribution companies (discoms) brought some relief, albeit temporary, to banks in India. But, with delays in execution and high interest burden, lenders may bear more burden of debt recast for power projects. Vibha Batra, co-head financial sector rating at ICRA, said 40-50% of banking sector exposure to the power sector may need to be restructured. The total exposure to power sector, including discoms, was about of Rs 3,60,000- 3,80,000 crore. The estimates of power recast of over Rs 1,40,000 crore includes loans to discoms. The loans to discoms will have loans lions share in debt recast, power generation projects facing delays and high interest burden will have substantial share in it. ICRA said a sizeable chunk of the banking credit to the infrastructure sector (including power) is vulnerable due to factors like delays in and sometimes even cancellations regulatory clearances and licences. The structurally weak contracts, fuel unavailability concerns, weak counterparties or stretched payments from state governments and government-owned entities also contributed to problems leading to restructuring of loans. Some of the highly leveraged business groups are under stress and could approach banks for loan restructuring. In the current uncertain economic and business environment, the risks of restructuring loans becoming bad loans were high. ICRA said gross non-performing assets (NPAs) for industry segment were only 2%. However, share of industry in restructured advances are 8%. Some of these restructured accounts could slip into the NPA category. Credit profile of borrowers (power units) may weaken in FY13 * Project implementation related delays * Reduced profitability of new projects * Higher interest rates * Structurally weak contracts and concerns over fuel linkages * Lacklustre capital markets may constrain access to

equity * Moderation/slowdown in demand conditions

The NPA percentage in the infrastructure sector (accounts for around 14% of domestic credit as of June 2012) is only 0.6% as of March 31, 2012. The tally of standard restructured advances (of system) could move up to Rs 3,70,000 4,20,000 crore (6.5-7.5% of advances) by March 31, 2013 from Rs 2,30,000 crore as on March 31, 2012.

power sector's shine

Agencies | New Delhi | Updated: Dec 21 2011, 13:54 IST

Discoms presented a dismal picture, with projected losses of Rs 70,000 crore last fiscal. (Reuters) SUMMARYFuel

scarcity, regulatory inefficiency and funds paucity hurt discoms and sector at large.
Saddled with shortages, the power sector lost its promised sheen this year as fuel scarcity, regulatory inefficiency and funds paucity ushered in developmental gloom. With a forgettable 12 months coming to a close, what remains are hopes of "reforms and restructuring" in the power sector in 2012. From delays in the flagship Mundra UMPP and other projects to bleeding power distribution companies (discoms) hurting lenders, a persisting uncertainty has also hurt investment flows into the sector. Besides fuel shortages, political and business sensitivity on the issue of tariff hikes as well as the proposal to impose duty on imported power equipment, especially from China, contributed to the uncertainty. Nevertheless, 2011 began on a relatively positive note, with Power Finance Corp's stake sale mopping up over Rs 1,145 crore. But then, a raft of negative news began to trickle in, including pricey fuel posing the proposition of a Rs 500 crore annual loss for the Mundra UMPP in the first year of operations. Discoms presented a dismal picture, with projected losses of Rs 70,000 crore last fiscal. The high-level Shunglu Committee has

come out with a slew of suggestions to absorb their losses, such as creation of a Special Purpose Vehicle (SPV). All these factors have hurt overall investment flows into the power sector, especially in the second half of 2011, according to experts. "This was the year when all the risks, mainly coal shortages, surfaced, affecting many projects. There were regulatory, policy and investment hurdles, among others. The power sector seems to have almost hit the bottom in 2011," said Salil Garg, the Director of ratings agency Fitch's Asia-Pacific Utilities team. "Next year, we expect to see restructuring and reforms happening in the power sector," he added. Eyeing 9 per cent economic growth, the country is well short of meeting its power capacity addition plans. The target of 17,601 MW for the current fiscal, ending March next year, is unlikely to be achieved, thanks to slippages and shortages. Depending mostly on thermal plants for energy, inadequate availability of coal has been a recurring theme in the Indian power sector. The problem has been accentuated by environmental hurdles

Pvt investment in power sector estimated at Rs85,578cr in FY13

Agencies : New Delhi, Thu Dec 13 2012, 18:31 hrs

Private sector investment in the power sector is estimated at Rs 85,578 crore in this fiscal, Power Minister Jyotiraditya Scindia has said. As per official figures, Rs 56,476 crore worth of funds were pumped in by the private sector during 2009-10, while in 2010-11, Rs 86,646 crore were invested by private companies. The investment was Rs 1,06,975 crore in 2011-12. "Private sector investment in the power sector has not narrowed down in the last few years," Scindia said in a written reply to the Lok Sabha today. "The projected investments by the private sector during the current fiscal stand at Rs 85,578 crore," he said. Up to 100 per cent foreign direct investment (FDI) is permitted in the power sector under the automatic route for generation, transmission and distribution, he added. "The government has allowed issue of tax-free bonds for Rs 60,000 crore to finance infrastructure projects, which include Rs 10,000 crore for Indian Railway Finance Corporation, India Infrastructure Company and power sector," he added. External commercial borrowings to part finance rupee debt of existing power projects is also allowed. The government has reduced the rate of withholding tax on interest payments on ECBs from 20 per cent to 5 per cent for three years to provide low cost funds to infrastructure sectors including power.

Scarcities dim power sector's shine

Agencies | New Delhi | Updated: Dec 21 2011, 13:54 IST

Discoms presented a dismal picture, with projected losses of Rs 70,000 crore last fiscal. (Reuters) SUMMARYFuel

scarcity, regulatory inefficiency and funds paucity hurt discoms and sector at large.
Saddled with shortages, the power sector lost its promised sheen this year as fuel scarcity, regulatory inefficiency and funds paucity ushered in developmental gloom. With a forgettable 12 months coming to a close, what remains are hopes of "reforms and restructuring" in the power sector in 2012. From delays in the flagship Mundra UMPP and other projects to bleeding power distribution companies (discoms) hurting lenders, a persisting uncertainty has also hurt investment flows into the sector. Besides fuel shortages, political and business sensitivity on the issue of tariff hikes as well as the proposal to impose duty on imported power equipment, especially from China, contributed to the uncertainty. Nevertheless, 2011 began on a relatively positive note, with Power Finance Corp's stake sale mopping up over Rs 1,145 crore. But then, a raft of negative news began to trickle in, including pricey fuel posing the proposition of a Rs 500 crore annual loss for the Mundra UMPP in the first year of operations. Discoms presented a dismal picture, with projected losses of Rs 70,000 crore last fiscal. The high-level Shunglu Committee has

come out with a slew of suggestions to absorb their losses, such as creation of a Special Purpose Vehicle (SPV). All these factors have hurt overall investment flows into the power sector, especially in the second half of 2011, according to experts. "This was the year when all the risks, mainly coal shortages, surfaced, affecting many projects. There were regulatory, policy and investment hurdles, among others. The power sector seems to have almost hit the bottom in 2011," said Salil Garg, the Director of ratings agency Fitch's Asia-Pacific Utilities team. "Next year, we expect to see restructuring and reforms happening in the power sector," he added. Eyeing 9 per cent economic growth, the country is well short of meeting its power capacity addition plans. The target of 17,601 MW for the current fiscal, ending March next year, is unlikely to be achieved, thanks to slippages and shortages. Depending mostly on thermal plants for energy, inadequate availability of coal has been a recurring theme in the Indian power sector. The problem has been accentuated by environmental hurdles and soaring international fuel prices. A combination of inclement weather and the Telangana agitation in the latter part of this year resulted in a steep fall in coal production that even snapped power supply to some states. Going by Central Electricity Authority data till December 11, as many as 46 thermal power stations nationwide have only seven days of coal supply stocks. Despite multiple ministerial panels and high-level panels looking into various issue concerning the sector, the regulatory regime virtually hampered progress, as visible in the inordinate delay in the launch of the second round of bidding for the 4,000-MW Bedabahal Ultra Mega Power Project (UMPP) in Orissa. The standard document for bids is being reworked, mainly to have better clarity on tariffs against the backdrop of soaring coal prices. In addition, two of the already awarded UMPPs -- Mundra, in Gujarat, and Krishnapatnam, in Andhra Pradesh -- are faced with

the prospect of higher fuel prices making them commercially unviable at the moment. Even though, private power producers including Reliance and the Tatas -- are pitching for higher electricity tariffs for their upcoming projects to balance pricier fuel, an immediate solution is not in sight. In addition, the UMPPs also came under the scrutiny of the CAG, which found certain discrepancies in the award of these projects, especially the Sasan project in Madhya Pradesh. The project drew flak from the CAG over diversion of surplus coal from the plant's captive mine to another same-size plant in the state. An Empowered Group of Ministers suggested seeking the Attorney General's opinion on the issue. Power Finance Corporation, which is the nodal agency for UMPPs, had prepared the bid documents for this project, which was awarded in 2007. The CAG reportedly said the excess coal from the mines allotted to the Sasan project cannot be used for another project. Adding to the woes, many discoms were short of cash to pay for power purchased from entities such as state-run NTPC. At least twice this year, the country's largest power producer NTPC had served notices to Delhi discoms -- BSES Rajdhani and BSES Yamuna -- for non-payment of dues. of the discoms stood at a staggering Rs 1,79,000 crore before subsidy during the 2006-10 period. The poor financial health of the discoms also set off alarm bells in the banking sector, with reports suggesting that many financial institutions have become extremely cautious in lending to the power sector. Official data revealed that public sector banks had extended loans of more than Rs 2.97 lakh crore to the power sector at the end of September quarter. Estimates showed that the losses of power entities in the states of Rajasthan, Tamil Nadu, Madhya Pradesh, Uttar Pradesh and Bihar alone accounted for over 70 per cent of the overall loss incurred by state power utilities in the 2010 financial year.

While the delays and financial headaches play out, a tussle is intensifying between the government and private power producers over the proposal to slap 14 per cent duty on imported equipment. As the 14-member Association of Power Producers put it, "The power sector in the country is passing through a very challenging phase with significant headwinds..." Entering 2012, there are hopes that the sector sees less turbulent times.

States pvt cos beat CPSUs on power generation

Noor Mohammad | New Delhi | Updated: Jan 04 2011, 04:21 IST

SUMMARYThe

central sector, conventionally the leader in Indias power generation drive, has been outdone by the states and the private sector by a wide margin in the 11th Five Year Plan so far, an analysis by FE shows.
The central sector, conventionally the leader in Indias power generation drive, has been outdone by the states and the private sector by a wide margin in the 11th Five Year Plan so far, an analysis by FE shows. While central utilities like NTPC, Damodar Valley Corporation and NHPC have performed badly on capacity addition in the current five year plan, state and private sector have not only commissioned a large number of projects but have also announced a series of new projects aimed at rapidly adding capacity to make the most of present deficit situation in the Indian power market. As of November 15, the central sector had added just 7,905 MW capacity or 26% of its initial target of 36,874 MW. During the same period, state utilities commissioned 12,511 MW capacity (46%) against the plan target of 26,783 MW set for them by the Planning Commission. The private sector added 8,945 MW (59%) capacity against its plan target of 15,043 MW. In the 10th Plan, the central sector had added 13,005 MW capacity against the target of 22,832 MW (57%). In comparison, state utilities commissioned 6,244 MW against the 11,157 MW target while private players added 1,930 MW only against the plan target of 7,121 MW. Going forward, the private sector will become a dominant player in the Indian power sector, said Kuljit Singh, partner in global consulting firm Ernst & Young. The largest central power generator NTPC, which was once known for its excellent project management skills, has been forced to revise its plan target from 22,000 MW to 9,920 MW. The PSU capacity addition programme went haywire because of different factors. For example, the central sector generator could not start implementation work at 2,600 MW capacity expansion projects at Kawas and Gandhar in Gujarat because of nonavailability of natural gas, while 1,980 MW North Karanpura and 600 MW Loahrinag Pala projects were scrapped. Commercial dispute with a Russian contractor led to slippage in commissioning of the 1,980 MW Barh-1 project in Bihar, which in turn impacted commissioning schedule of the 1,320