Power News Letter – 23rd June 09
| Finance |
| · NTPC Ltd said on Monday (June 22) it was buying a 44.6 per cent stake in Transformers and Electricals Kerala Ltd (TELK), from the Kerala Government. The power producer said the stake was valued at Rs 31.34 crore ($6.4 million), although the final price was subject to valuation of assets as on end-March 2009. Transformers and Electricals Kerala makes and repairs heavy duty transformers. |
| · BGR Energy Systems Ltd has reported a net profit of Rs 47 crore for the January-March quarter of 2008-09, compared with Rs 40 crore for the corresponding quarter of the previous year, a rise of 17.5 per cent. For the full year 2008-09, it made a profit of Rs 115 crore, against Rs 84 crore for 2007-08. Earnings per share stood at Rs 15.98 against Rs 12.64. The board has recommended a dividend of Rs 3 a share (30 per cent). BGR Energy said in a press release that it had orders on hand worth Rs 9,523 crore. |
| · The power ministry is mooting a venture fund to underwrite investments in new clean energy projects, as it looks to invite fresh players into the sector. About 50% of its kitty will come from the government directly and the rest from domestic as well as global financial institutions such as IFC, Indian Renewable Energy Development Agency and private equity firms, according to a ministry official. The proposal has been sent to the finance ministry for approval, the official said on condition of anonymity. With backing from a government-operated fund, these firms will find it easier to raise bank loans even in the absence of a strong balance sheet or large initial investments from promoters. · “It is extremely important to have such a venture fund in the country. Such a fund would cover the risk of energy services companies and give a big boost to the sector,” The Energy and Resources Institute (Teri) executive director Leena Srivastava said. According to Bureau of Energy Efficiency (BEE) director-general Ajay Mathur, banks often refuse such projects since they find it difficult to understand the business models of energy-efficient projects, which often don’t reveal income projections. “In such cases, the fund will act as a partial risk guarantee fund and help companies get loans from banks,” he said. · Clean technology projects are mostly based on savings, and hence the risk element is high. “You may either underestimate or overestimate the saving and hence the risk,” Mrs Srivastava said. According to a recent report of the United Nation Environment Programme (UNEP) on ‘Global Trends in Sustainable Energy Investment 2009’, $155 billion was invested in 2008 in clean energy companies and projects worldwide. Countries such as China, India, Brazil and Africa contributed almost one-third of it. While China led investments in Asia with an 18% increase over 2007 to $15.6 billion, green energy investments in India grew 12% to $4.1 billion in 2008. |
| General |
| · The National Thermal Power Corporation (NTPC) will be providing technical know-how to Madhya Pradesh Power Generating Company Limited (MPPGCL) to improve the Plant Load Factor (PLF) in its thermal power stations. The development assumes significance as Madhya Pradesh was facing severe power crisis, and MPPGCL was making efforts to increase its electricity availability. · “The NTPC will provide technical know-how to us, after studying our three thermal power stations in Madhya Pradesh for six months,'' MPPGCL Chairman cum Managing Director(CMD) Mr R B Agarwal said. He said that NTPC's teams will shortly reach MPPGCL thermal stations and camp there to study the problem areas coming in the way of increasing PLF. · Mr Agarwal said that MPPGCL will pay Rs 80 lakh to NTPC for the job. The CMD said that NTPC was helping some other states too in improving PLF, adding that NTPC thermal power stations' PLF was very high. “MPPGCL had sought help from NTPC as its PLF had dipped to 68 per cent in the last financial year from 70 per cent. The MPPGCL's average PLF was between 65 to 70 per cent,'' sources said. |
| Assam State Electricity Board approaches Centre for power from the national grid to ease the crisis |
| · Faced by a severe power crunch due to the acute heat and no rains, the Assam State Electricity Board (ASEB) has approached the Centre for power from the national grid to ease the crisis. "The board through the state power department has approached the Central government to allot additional power from the power grid or from the National Thermal Power Corporation (NTPC) to help ease the severe crisis," A K Sachan, ASEB chairman, said. "We have also approached them to purchase power from certain captive power plants from Western states, including Rajasthan", the chairman added. · Admitting that unusual hot and dry condition has badly affected power generation of the hydro-power projects in the region, Sachan said the situation had worsened due to drastic reduction of inflows in the rivers. The generation of Ranganadi hydro project has been 193 million units during March and May 2009 as compared to 282 million units during the same period last year, he said. With the situation further worsening this month, he said, only three million units per day was generated as against seven million units in the same period last year. |
| · The CESC’s Budge Budge unit-1 tripped again on Monday (June 22) morning bringing back fear of power cuts the people suffered in the city very recently, but officials said it was only a minor problem which would be fixed in an hour. A CESC spokesperson said the 250-MW Budge Budge unit-I tripped at 10.20 a.m. triggering immediate power cuts across the city. The CESC Executive Director, Mr Dilip Sen, said they were already engaged in repairing the snag. Both the two units of the Budge Budge plant had shut down for a week after they tripped a fortnight ago. |
| · The Union Power Ministry has called a meeting of State Power Ministers on Tuesday (June 23) to discuss issues related to the progress on the 78,700 MW capacity addition programme under execution during the current plan period (2007-12). Convened by the Power Minister, Mr Sushilkumar Shinde, here, the meeting will also examine issues concerning rural electrification, strengthening of sub-transmission and distribution system through the Accelerated Power Development and Reforms Programme (APDRP) and rural electrification through the Rajiv Gandhi Grameen Vidyutikaran Yojana. · About 200 delegates including the Power Ministers and Power Secretaries of various States and Union Territories and representatives of Central and State Power Utilities are expected to participate in the meeting. The day-long discussions will be divided into two sessions. The first session is to focus on generation and open access while the agenda for the second session would be rural electrification and APDRP. |
| · Neyveli Lignite Corporation on Monday (June 22) reported a consolidated net profit of Rs 821.09 crore for the year ended March 31, 2009. The total income stood at Rs 4,019.89 crore for the year ended March 31, 2009, Neyveli Lignite said in a filing to the Bombay Stock Exchange. The company for the first time reported its consolidated net profit, hence the comparable figures for the year-ago period were not available. · Besides, it has recommended a dividend of Rs two per share for the financial year ended March 31, 2009, subject to approval of board members. On the standalone basis, Neyveli Lignite posted a 25 per cent decline in its net profit at Rs 821.09 crore for the year ended March 31, 2009, as against Rs 1,101.57 last fiscal. The company registered a total income of Rs 4,019.89 crore in FY'09, while it had a total income of Rs 3,638.07 crore in the previous fiscal. |
| Orissa facing acute shortage of power, cuts 50percent supply to industries |
| · Orissa, which has of late had emerged as power surplus state, is passing through power crisis forcing the authorities to restrict load restriction on industrial users by 50% among other measure to tackle the crisis. “As on date we are facing shortage of powr by 300 MW on an average and 450 to 500 MW at peak time. The delayed monsoon has made things worse while the breakdown in the coal fired power plants operating in the state has led to such a crisis. We are trying our best to mobilize additional power from captive power plants and other sources to come out of crisis”, Grid Corportion of Orissa CMD, C J Venugopal on Monday (June 22) said. · As a first step, the state government has directed the State Load Despatch Centre (SLDC) to effect 50% load restriction on industrial users, Mr Venugopal said adding that the state energy department has come out with the required notification in this regard which will remain effective till the situation improves. The notification enforces curbs on power supply to high tension (HT) and extra high tension (EHT) industrial consumers. · With no rains or sporadic rains in the last nine months, the hydro power generation has come down drastically from an installed capacity of 2000 MW to only 300 MW. “We have been cautious from October onwards and prepared ourselves well to mitigate such a crisis. We have not supplied power to both our urban and rural consumers”, the Gridco CMD remarked. He however admitted that the consumers are facing low voltage problem. · The problem has further been compounded due to the breakdown of one unit of 500 MW at NTPC’s super thermal power plant at Kaniha, one unit of 210 MW at Ib Valley thermal unit in the Orissa Power Generation Corporation’s and one unit of 119 MW at Talcher Thermal Power Station (TTPS). · The state government has already issued orders under section 11 of the Electricity Act, 2003 to all the captive generating plants (CGPs) for maximising power generation and inject power to the state grid. Besides, it has also canceled the open access allowed to Naba Bharat Ventures Ltd. (NBVL) located at Meramundali in Dhenkanal district for wheeling 40 Mw power. Jindal Stainless Ltd is supplying 100 KW of power from its captive power plant (CPP) located at Kalinganagar. In toto, the CPPs as on Monday (June 22) had supplied 380 MW of power to Gridco. But the worried Gridco officials are eagerly waiting for the arrival of monsoon to rescue them from acute power crisis. |
| · Severe power shortage in Punjab has crippled the state's industry, forcing steel units to cut prices and exporters to seek more time for delivering the orders. Punjab State Electricity Board has imposed three-day power cuts on induction and arc furnaces and two-day shut down on other industrial sectors to ensure eight-hour electricity supply to the agriculture sector for paddy sowing. · The power utility has been able to supply only 1,460 lakh units per day against a demand for 1,804 lakh units per day, facing a massive shortfall of 364 lakh units, said a PSEB official. Power shortage has hit work in industrial units across the state badly and production has come to a halt in several units. This has resulted in a delay in completion of orders. "We are persuading our buyers to extend the delivery period by at least ten days in wake of power shortage," said a Ludhiana-based knitting maker, Ajit Lakra. · Steel prices have also softened by Rs 3,600 per metric tonne in the past few days due to lack of demand. "Due to lack of sufficient availability of power, we are losing export orders of bicycle and bicycle parts as the industry is unable to complete the orders in time," United Cycle Parts and Manufacturers' Association president Charanjit Singh said on Monday (June 22). The power crunch has also forced industrial units to run on generator sets, which has further raised the energy costs by 50%. |
| · Haryana chief minister Bhupinder Singh Hooda said on Monday (June 22) that farmers in the state would get eight hours power supply from July 1 to ensure adequate irrigation water for kharif crops. He said it has also been decided to provide smart cards from the same day to those living below the poverty line to enable them to get rice and atta at a rate of Rs 3 per kg. Speaking to mediapersons in Rohtak, he said the state government has procured electricity from other sources for the agricultural sector, adding that after completion of the new power plants in the state, Haryana would be self-sufficient when it comes to power. |
| · Energy demand in Asia to reach 6,325 million tonne of oil equivalent (mtoe) by 2030 from 3,227 mtoe in 2006, projected recently released energy policy of Asian Development Bank (ADB). It also said China and India will account major shares. Rapid economic and population growth will drive much of the increase in energy demand. Industrialisation, urbanisation, and the replacement of noncommercial biomass fuels by commercial fuels will also contribute to increase demand. · According to the policy note, other factors which will be responsible for increase in demand are increased economic activities, higher living standards, and greater consumption by households. While higher demand for energy from developing Asia has prompted concerns about energy security, long-term cooperative options need to be explored internationally to ensure production and use of energy at reasonable costs and in a sustainable manner. · The 2009 energy policy is congruent with strategy 2020, enabling energy operations to be aligned with ADB’s overall strategy emphassing energy security, facilitating a transition to a low-carbon economy, universal access to energy, and for achieving ADB's vision of a region free of poverty. The objective of the policy is to help developing member countries (DMCs) provide reliable, adequate, and affordable energy for inclusive growth in a socially, economically, and environmentally sustainable way. It will emphasise energy efficiency and renewable energy; access to energy for all; and energy sector reforms, capacity building, and governance. |
| · ABB, the leading power and automation group, has received an order of Rs 55 crore to provide the electrical infrastructure for modernisation of Kolkata airport. The order provides complete power supply package for the airport from Italian- Thai Development Public Company Ltd (ITD) and ITD Cementation, the contractors for the modernisation project. The new integrated passenger terminal, which is being built over 180,000 sq. metres, will handle approximately 20 million passengers every year – four times the current capacity. After modernisation, both the runways will be suitable for Airbus A380. |
| Projects/Project Finance |
| · State-owned Bharat Heavy Electricals Ltd (BHEL) on Monday (June 22) said it has bagged a Rs 105-crore order from Indian Oil Corporation for setting up a captive power plant at the latter’s Barauni Refinery Complex. The order envisages providing Steam Turbine Generator package with gas-fired boiler for the power plant, a statement from BHEL said. BHEL’s scope of work includes design, engineering, manufacturing, supplying, erection and commissioning of the plant. The equipment would be supplied by the company’s plant at Hyderabad, Trichy, Ranipet, Bhopal and electronics division Bangalore. |
| · Power Grid Corp. of India Ltd (PGCIL), India’s leading power transmission company, plans to raise around Rs3,000 crore through a public offering. The money will go to the company and not to a special investment fund set up by the government in 2007 to receive money raised through disinvestments in public sector companies. · Three-fourths of the interest earned on money in the National Investment Fund (NIF) has to be used to finance select social sector schemes, while the rest is to fund the capital requirements of public sector undertakings that are either profitable or turnaround candidates. This is because PGCIL will be going in for a follow-on public offering (FPO). “We plan to come up with an FPO by the end of this financial year. If that is not possible, then by early next financial year,” said a top PGCIL executive, who did not want to be identified. The Union government had earlier divested its 5% stake in PGCIL, piggybacking on a similar fresh equity offering by the company. · Through the sale of 382 million shares to the public in September 2007, PGCIL raised Rs2,984 crore. Of this, Rs1,989 crore accrued to the company, with the balance Rs995 crore going to NIF. After the share sale, the government has a 86.36% stake in the company. “We will be offering 13.5% of equity in the FPO. This will be (a) fresh issue of shares and not divestment,” another PGCIL official, who also did not want to be identified, added. · Unlike PGCIL’s first public issue in 2007, the government will not sell part of its shareholding. Therefore, the proceeds of the entire FPO will accrue to PGCIL. However, the expansion in the company’s equity will automatically dilute the government’s shareholding, bringing it down to 76.35% of the expanded equity. “PGCIL has a large expansion plan. With the proposed national grid requiring a lot of money, this equity will easily help in raising a debt of around Rs9,000 crore,” said Anish De, chief executive of Mercados EMI Asia, an energy consulting firm. · The government proposes to spend Rs1.4 trillion to build a national power transmission grid that will more than double the transmission capacity in the country to 38,650MW by 2012 from the current 19,750MW. Of this, Rs75,000 crore is needed for regional and national grids. PGCIL owns and operates 70,100 circuit km of transmission lines and transmits around 45% of the power generated in India. It envisaged a capital expenditure plan of Rs55,000 crore during the 11th Plan (2007-12) and plans to operate networks in countries in Africa, Central Asia and West Asia. |
| · Lanco Infratech Ltd has informed the BSE that Baner-III (5 MW) small hydro project in Dharmshala (Himachal Pradesh) was successfully commissioned by Vamshi Hydro Energies Pvt Ltd, a subsidiary of the company, and it has started commercial generation. |
| Tariffs |
| · The Central Electricity Regulatory Commission has allowed NTPC to hike tariff of electricity generated from the Kayamkulan plant in Kerala. The power regulator, CERC, approved the state-run firm's proposal to include charges for maintaining s witchyard, a point from where electricity is handedover to Power Grid Corporation for transmission. The CERC in its order has approved the revised capacity charges of Rajiv Gandhi Combined Cycle Power Project (RGCCPP) in Kayamkulam after accounting for the capital cost of switchyard transferred to NTPC from PowrGrid Corp. · For the effective control and maintenance of the project, the switchyard of every NTPC project is maintained by the company itself, hence the switchyard of the Kayamkulam project which was looked after by the central transmission utility PowerGrid Corp e ver since the inception of the project, was transferred to the power generator by the government in the year 2000. The maintenance cost of the switchyard is borne by the company maintaining it and is included in the electricity tariff by the firm. |
| · The Gujarat Electricity Regulatory Commission (GERC) has proposed a hike in tariff for wind energy. In a recent draft order, the power regulator has proposed a tariff of Rs 3.55 per kWh from the Rs 3.37 per kWh fixed three years ago. However, this rate will be applicable to only those wind energy generators, who commission new wind energy plants and equipment. · The draft order would be finalised after taking into account the suggestions of stakeholders. GERC also intends to make the final tariff effective from 1 July 2009. As on December 2008, Gujarat’s installed capacity for wind power generation stood at 1,447.7 Mw. The state has a potential to produce wind power up to 10,645 Mw. It added 194.8 Mw of new capacity in 2008-09 and stood second after Tamil Nadu in capacity addition in the country. |
| Fuel Issues |
| · NTPC Ltd is close to signing a deal with Reliance Industries Ltd (RIL) for gas from the D6 block at $4.2/mBtu at the landfall point. The deal covers all of the public sector power major’s gas stations, except Kawas and Gandhar, supplies to which are currently under litigation. “The final details are being thrashed out. The draft gas supply and purchase agreement (GSPA) has already been dispatched to RIL from our side. Discussions on the finer aspects of the agreement may require one more meeting. We should be able to do it by the end of this month,” a senior NTPC official said.He, however, declined to comment on specifics, including marketing margins and liability issues. According to gas utilisation and allocation policy, an empowered group of ministers (EGoM) had approved allocation of 16.66 mscmd of gas from RIL’s D6 block for the power sector. Of this, NTPC was allocated 2.67 mscmd. While other power companies, including Ratnagiri Gas & Power Pvt Ltd (RGPPL), have already signed a GSPA with RIL, NTPC was the only power utility left to ink the agreement. · NTPC, it seems, had been waiting for the outcome of its ongoing case with RIL on gas supplies under an earlier deal for its Kawas and Gandhar expansion projects. Under the disputed deal, RIL was awarded a contract after it emerged as the lowest bidder ($2.34/mbtu) to supply 12 mscmd of gas to NTPC for 17 years. The case is currently being heard by the Bombay High Court. · The EGoM while prioritising the sectors for receiving the initial output of 40 mscmd from D6 had earmarked 14.97 mscmd for fertiliser plants and 16.66 mscmd for power. Currently, RIL is producing 26-28 mscmd of gas. While 11.16 mscmd is being supplied to other power companies, allocation of 2.7 mscmd has been made for RGPPL (Dabhol) to be delivered when the stations are fully operational. |
| What Went Before ... |
| · State-owned power utility NTPC Ltd has appealed against a request of Reliance Industries Ltd (RIL) at the Bombay high court to amend its plea in a litigation involving the sale of natural gas. Mukesh Ambani-owned RIL wants to amend the plea to argue that following the government’s policy on pricing and allocation of gas from the Krishna-Godavari basin off India’s east coast, the RIL-NTPC contract stands “frustrated”. · “We have already appealed against any amendment to their plea. When a case is on for so long, why should someone amend their plea now?” asked an NTPC executive. The official declined to be named because the matter was in court. NTPC, India’s largest generator of electricity, and RIL, the country’s biggest company by market value, are fighting a lawsuit in the Bombay high court over the price at which the latter will supply 12 million standard cu. m a day (mscmd) of gas for 17 years. NTPC claims the two companies agreed to a price of $2.34 per million British thermal units (mBtu). RIL wants to sell it at the $4.20 per mBtu price set by the government. · RIL is also fighting a separate case with Anil Ambani-owned Reliance Natural Resources Ltd (RNRL), in which the court has directed RIL to forge a suitable arrangement within a month to sell natural gas to RNRL at a price 44% lower than the government-stipulated price. RIL wants to amend its petition to bring in a Central government’s earlier affidavit in the Bombay high court in its lawsuit with RNRL. The affidavit had stated the decision of a group of ministers on pricing and allocation of gas from the Krishna-Godavari basin. · The Bombay high court passed an interim order on 30 January, allowing gas to be sold to government-nominated buyers at $4.20 per mBtu. The court had then said the gas sale agreements should be entered into with the provision that they were subject to a final ruling. While an RIL spokesperson declined comment, Milind Sathe, RIL’s counsel in both the lawsuits, said that the original plea (in the NTPC lawsuit) was that there was no concluded contract between RIL and NTPC. “Now, we want to add to the plea that as long as the government policy stands, this contract is frustrated anyway,” Sathe said, explaining that RIL was only adding weight to its arguments. · In a 15 June note, domestic brokerage First Global Ltd, commenting on the RIL-RNRL ruling, had said the “greater concern is that the RIL-RNRL pricing formula may have set a precedent for the case that NTPC is fighting with RIL for the supply of gas to its Kawas and Gandhar plants in Gujarat. Here, too, RIL had backtracked on its commitment to supply 12mscmd to NTPC at a price of $2.34 per mBtu citing the ‘unlimited liability’ clause in its contract with the power company.” |
| · The power generation of Maharashtra State Electricity Generation Company (Mahagenco) is likely to suffer this week as coal supply to its Koradi and Khaperkheda plants would be interrupted due to the mega rail block between Bhilai and Bilaspur, official sources said. The South East Central Railway has decided to go for a mega block (between Bhilai and Bilaspur) for three days from June 22 to 25 for some routine maintenance of over head electrical system (OHE) which will affect the movement of coal supply to these tw o plants situated in the Nagpur district. · The Koradi Thermal Power Station (KTPS) and Khaperkheda station receive 90 per cent and 62 per cent coal respectively from Mahanadi Coalfields Limited (MCL) and South East Coalfields Limited (SECL) and this coal rake runs via Sambalpur- Raipur-Bhilai-Dur g route to Nagpur. Earlier, Director (operations) of Mahagenco, Mr Madhukar Shelar met the Divisional Railway Manager, Nagpur division of South East Central Railway, Mr S C Jethi for placement of rakes for Koradi and Khaperkheda power plants in sufficent number to thawrt a ny coal crisis at the plants, sources added. · The coal stock at Koradi and Khaperkheda was minimum and as part of contingency, the Mahagenco officials have urged the city based coal compnay, Western Coalfields Limited (WCL) to supply additional coal to overcome the crisis. WCL can supply coal from Saoner, Dumbri Khurd mines. Though all efforts are made to ensure adequate stock of coal at power plants for power generation, it can be interrupted, sources added. |
| Renewable Energy |
| · Soon, there will be an energy efficiency company - the first of its kind - under the aegis of the Union government. Called the Energy Efficiency Service Ltd (EESL), the company will have equity participation from four government power companies - NTPC, PowerGrid Corporation, Power Finance Corporation and Rural Electrification Corporation. · Sources said the company was likely to be incorporated with the four government companies holding equity in proportion to their profits, implying that the bigger the profit size, the larger their holding. The combined holding is likely to be in the range of Rs 325 crore. “The ministry of power has asked the four partners to finalise the business plan for the new entity by July 15,” said an official. · The company would function as the implementation arm of the National Mission for Enhanced Energy Efficiency (NMEEE). The ministry of power would be approaching the Union Cabinet to get a clearance for the mission. Though EESL has been conceptualized by the Bureau of Energy Efficiency (BEE) that works under the ministry of power, it will have no link with the bureau that acts as the monitoring agency and policy body for energy efficiency programmes of the government. · “The purpose of setting up a separate corporate entity is to develop an energy efficiency market that is virtually nonexistent in the country,” said the official. It has been envisaged that the business profile of the new company may require a total investment of Rs 644 crore over a five-year period. · The initial programme would include taking up energy efficiency planning and appliances in buildings and industrial sites, implementing Bachat Lamp Yojana (a scheme for promotion of low power consuming CFL lamps) and consultancy. This would necessitate taking debt of about Rs 320 crore. Officials said PFC had initially shown reluctance to be part of the company through equity, since it would have restricted capability to finance its debt, but the ministry had overruled its reservatio |
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