NEW DELHI: Armed with the attorney-general\’s opinion that the Electricity Act makes it obligatory for power distribution companies (discoms) and bulk consumers to sign agreements for electricity purchase, the Centre has directed all states to institute mandatory open access regimes in distribution. The toughening of stand comes after similar missives to state electricity regulatory commissions last November fell on deaf ears.
Official sources said the Union power ministry recently wrote to state governments, asking them to issue directives to respective state regulators to frame regulations to ensure bulk consumers (those with load of above 1 MW ) meet their electricity requirement through the open access route only. “When the attorney-general has given a legal opinion, no regulator can says its interpretation is different,” Union power secretary P Uma Shankar told FE.
Open access is seen as a prerequisite for promoting free market and competition in power retailing. It means a discom should allow consumers access to its distribution network for wheeling power from outside. The Electricity Act 2003 stipulates that discoms must allow open access to such bulk power consumers from January 2009. However, the attorney general clarified last November that open access is not optional but mandatory for bulk power.
According to the attorney general, all consumers with loads above 1 MW should be deemed as open access customers. They must procure their power through bilateral contracts alone as regulators have no authority to determine tariffs in such cases. However, they can decide wheeling charges, charges for standby power supply and cross-subsidisation charges. However, mandatory open access has run into serious opposition in states.
While discoms fear loss of their creamy bulk customers, customers worry they will end up paying more for securing power on their own. Regulators in Rajasthan andPunjabhave put mandatory open access on hold after customers complained of arm-twisting by discoms in tariff negotiations.West Bengalhas asked its regulator to ignore the Centre\’s guidelines on mandatory open access, sources said.
“While nobody is disputing the power ministry\’s interpretation of open access provisions, what creates confusion is its directive to regulators not to determine tariff for all consumers with 1 MW and above load,” said Shubhranshu Patnaik, senior director, energy consulting, Deloitte India.
The power ministry has sought intervention from state governments after it found in a review that stand taken by some state regulators is a major hurdle to implementing mandatory open access. The power ministry has also sought help of the central electricity regulatory commission (CERC). But the CERC expressed its helplessness to intervene in the matter, saying it has no jurisdiction over state regulatory commissions.
PATEL BATS FOR BHEL, WANTS RAIL UNITS PLAN SCRAPPED
NEW DELHI: Heavy industries minister Praful Patel wants the Prime Minister to stop the railways from building two electrical equipment factories on concern the units will curb the transporter’s purchases from state-owned Bharat Heavy Electricals Ltd (Bhel).
He has written to Prime Minister Manmohan Singh and railway minister MukulRoyasking that the proposed factories at Vidisha in Madhya Pradesh and Shyam Nagar inWest Bengalbe scrapped. Mint has a copy of the letters. Bhel falls under the remit of Patel’s ministry.
“While there has already been a considerable reduction in sourcing of electrics from Bhel due to the technological changes at Indian Railways, with the setting up of above facilities, there would be practically no sourcing of electrics from Bhel, which may result in huge dedicated facilities becoming idle,” Patel said in the 19 April letter to Roy.
Repeated phone calls to Patel did not elicit any response. Bhel declined to offer any comment.
“Since Bhel has already made considerable investments for the dedicated facilities for railways and also holds domain knowledge to manufacture these electrics, I request you to consider sourcing of the electrics from Bhel rather than going in for duplication of facilities,” Patel wrote toRoy. “This would be in the mutual interest of both Indian Railways and Bhel.”
Both railway projects have been formally approved by Parliament.
The rail ministry is in the process of preparing a reply to Patel, said a top official directly involved with the matter.
“We believe that the new facilities will not impact Bhel’s assured offtake and that is what we will convey to DHI (department of heavy industries) through our letter,” said the official on condition of anonymity. “The new units will cater to the incremental demands of the railways and not existing demands.”
The rail ministry is likely to send its reply within a week, said this official.
With the railways moving to alternating current (AC) technology from direct current (DC) technology, the product mix has undergone a considerable change. Most of the AC equipment is being purchased from original equipment manufacturers (OEMs).
“This has resulted in under utilization of the dedicated facilities created by Bhel,” Patel wrote in the letter.
Patel’s move comes after Bhel chairman B.P. Rao said the drying up of equipment orders from power projects is forcing the company to tap new growth avenues such as rail, oil and gas and defence, as Mint reported on 3 April.
The power equipment maker’s order book fell to Rs.22,096 crore last year from Rs.60,000 crore in the previous fiscal because of sluggish power sector demand.
In the March rail budget, then minister Dinesh Trivedi announced a unit to make parts for high-horse power diesel locomotives at Vidisha and another to make next-generation propulsion systems in high-power electric locomotives at Shyam Nagar. Bhel has dedicated facilities for such supplies at itsBhopal,JhansiandBangaloreplants.
Patel said in his letter to Singh that there hasn’t been much progress on Bhel’s earlier approach to the railways regarding an offer of partnership in other railway units.
The rail ministry had indicated its interest in considering such a partnership in a 30 August, 2011 letter.
This pertained to factories at Kanchrapara, for an electric multiple unit (EMU) plant, and Dankuni, for an electric locomotive assembly unit.
Both Kanchrapara and Dankuni are inWest Bengal.
“Bhel, in return, conveyed its in-principle acceptance,” Patel said in the letter. “However, the matter has not moved forward since then.”
POWER COMPANIES TO MEET COAL INDIA ON FSA, BUT DEADLOCK MAY PERSIST
KOLKATA: The push by power companies for better fuel supply agreements (FSAs) with CoalIndiaseems pointless.
Not only is Coal India (CIL) bound by the conditions in the FSAs since these were approved by its board after a presidential decree, the world’s largest coal company also has a virtual monopoly over coal supplies within the country.
Ever since CIL’s board cleared FSAs with clauses such as a mere 0.01 percent penalty in case of supply shortfalls, power companies have been resisting. Of 48 FSAs that were to be signed – for power plants that were commissioned till December 2011 – only seven or eight have been signed until now.
NTPC,DamodarValleyand other large power public sector undertakings (PSUs) are holding out and so are a majority of the others, including some private-sector power suppliers. They all want the penalty clause to be more stringent on supply shortfalls and coal supplies to plant sites instead of ports and coal. NTPC also wants coal to be supplied according to the older useful heat value (UHV) norm, instead of the gross calorific value (GCV) method CIL has adopted now.
CIL’s newly appointed chairman and MD S Narsing Rao told Firstpost that a team from NTPC would arrive in Kolkata over the next few days for detailed negotiations.
He also made it clear that while CIL would be willing to listen to NTPC’s concerns, it was virtually impossible for the coal company to alter conditions set in FSAs by its board of directors. “How can the penalty clause be altered? It has been approved by our board,” said Rao. “Also, the insistence on UHV instead of GCV cannot be addressed. The government issued a statutory notification on GCV, how can we defy that? Besides, following GCV norms is ultimately in the interest of NTPC only.”
Despite several attempts by Firstpost, NTPC’s chairman and MD, Arup Roy Choudhury, was unavailable for comments.
Rao explained that earlier, there was less incentive for coal companies to improve the coal quality because there were eight large bands, but now 17 bands have been created, which would mean NTPC gets access to better quality of coal.
Meanwhile, a report in today’s Economic Times says that the chairman of the Central Electricity Authority (CEA) has called a meeting of CoalIndiaofficials, power companies and officials from the coal and power ministries to break the deadlock over fuel supply agreements (FSAs). The meeting, scheduled next week, will be chaired by CEA chairman Arvinder Singh Bakshi.
The ET report quoted a seniorDamodarValleyofficial saying that “the new fuel supply agreement is heavily skewed in favour of CoalIndiato the extent that the 80 percent trigger level considers 85 percent capacity utilisation. This means the actual coal that would be supplied will be 68 percent of the total coal required for running any plant at 100 percent capacity utilisation.”
But a coal industry veteran pointed out that the issue power suppliers have with penalties on supply shortfall is less practical and more symbolic. “What would NTPC rather have — some token penalty like Rs 100 per tonne or more coal to fuel its plants?
“The two stakeholders, CIL and power companies, need to ensure fuel supplies instead of harping on penalties. Besides, CIL is a virtual monopoly so where is the question of benefiting by penalties?”
The ET report also quoted a senior NTPC official saying that the seller also has the authority to terminate FSA in case of disputes. “This is grossly in favour of CoalIndia. It should have been normally, through an arbitration process.”
Meanwhile, Rao said his company was thinking over whether to set a deadline for the remaining power companies to sign FSAs with CIL. CIL’s board is already seeking answers to questions like how to draft FSAs for power plants that were commissioned after December 2011 since there is no mention of these plants in the presidential order issued early April. CIL has sought clarity on the matter from the Coal Ministry.
It is already known that Coal India will need incremental production of at least 64 million tonnes this fiscal to fulfill its obligations under the 48 FSAs to be signed 2012-2013. As per a presidential directive, CIL has to sign FSAs with those power producers whose plants were commissioned between March 2009 and December 2011.
But since CIL managed only 24 million tonnes of incremental production in the financial year ending March 2012, the target of 64 million tonnes in a single year certainly looks ambitious. Also, the target for the current financial year has been arrived at after taking the 80 percent trigger level into account (i.e., if no penalty has to be paid by CIL if it supplies 80 percent of contracted quantity).
TELK SETS MANUFACTURING TARGET
KOCHI: Transformers & Electricals Kerala Ltd (TELK) has set a manufacturing target of 6,400 MVA for 2012-13 against the installed capacity of 4,500 MVA.
The company, a joint venture of Kerala government and NTPC Ltd, had notched up its highest ever production of 5,806 MVA in 2011-12, registering a significant growth of 12 per cent over the previous year.
The achievement has been significant at a time when many transformer manufacturers have reported operating losses during 2011-12, Mr Arun Kumar Gupta, managing director, TELK, said in a statement.
The manufacturing target for 2012-13 has been set despite stagnation in the power sectors and intense competitive pressure from other domestic and international manufacturers. All trade unions have supported to achieve the target with minimum costs and highest productivity in the current year 2012-13, he said.
TELK, he said, had completed yet another successful year 2011-12, in the backdrop of difficult market condition adversely affecting the transformer industry.
He pointed out that the company reported an increase of 8.25 per cent in its profit after tax touching Rs 13.21 crore and 8.61 per cent in its net worth. The net worth today stands at Rs 116.24 crore.
The Board of Directors recommended dividend for third consecutive year and also approved the annual account for the FY 2011-12. Thus, TELK has achieved yet another distinction of being the first PSU for second time to have completed the finalisation of annual account in the State, he added.
BHEL-ISG BAGS NTPC ORDER
BANGALORE: Bharat Heavy Electricals Ltd (BHEL)’s Industrial Systems Group (ISG) has won an order worth Rs 312 crore from NTPC for its Meja Thermal Power Project.
The ISG will supply the coal handling plant package. BHEL-ISG specialises in system integration of bulk material handling such as cal and ash handling systems for thermal power plants, raw material handling for industry, balance of plant equipment for hydro projects.
ISG also specialises in drives, controls & automation of iron making, steel making, rolling mills & finishing lines for steel industry on Engineering, Procurement & Construction (EPC) basis.
MUNDRA UMPP NEXT UNIT TO BEGIN OPERATIONS IN AUGUST: TATA POWER
NEW DELHI: Tata Power on Friday said it expects to commission the second 800-mw unit of its Mundra ultra mega power project (UMPP) inGujaratin August this year. The company will import about 15 million tonnes of imported coal to run the Mundra and Trombay power plants.
First unit of the 4,000-mw Mundra plant, country’s first UMPP, was commissioned in March this year, Tata Power managing director Anil Sardana said on the sidelines of a CII conference here.
The Mundra project has been successful in blending 50% poor grade coal with normal grade coal to lower costs, he said.
Tata Power bagged the Mundra project in 2007 on the basis of a tariff bid of Rs 2.26 a unit, but a change in the coal pricing policy inIndonesiahas upset the cost structure of the project. The company owns coalmines inIndonesia. It imported about 5.5 million tonnes coal in 2011-12 for the Trombay project.
He said the company would look at acquiring fuel assets abroad. “Government needs to facilitate bilateral government to government deals on energy resources in overseas nations,” he said.
Sardana said his company has challenged a government decision to allow diversion of coal from mines attached to Sasan UMPP. “”We have challenged cross-subsidisation of tariff from Sasan UMPP by another project. Had we known this earlier, we would have also bid low,”” he said.
The government recently decided against reviewing its decision to let Reliance Power use nine million tonne surplus coal from blocks attached to Sasan UMPP for another group project.
An Empowered Group of Ministers had in August 2008 given approval to Reliance Power to divert surplus coal from three blocks linked to Sasan UMPP in Madhya Pradesh to another 4,000-mw project at Chitrangi in the same state.
TATA POWER’S COAL IMPORTS TO TRIPLE; FOCUS ON NEW UNITS
NEW DELHI: Tata Power Company Ltd expects a three-fold increase in its coal imports during the current fiscal. The company is looking at imports of 15 million tonnes as it commissions new units, said Managing Director, Mr Anil Sardana.
The company had imported 5.5 million tonnes of coal in 2011-12. Mr Sardana was speaking to reporters on the sidelines of CII event on overseas coal acquisition.
Mr Sardana said the company expects to commission the second unit of 800 MW at Mundra inGujaratby August. Tata Power, which is setting up the country’s first ultra mega power plant (UMPP) at Mundra, recently synchronised its first 800 megawatt super critical unit. The Mundra project will have a total generation capacity of 4,000 megawatt when all the five units become fully operational.
In the December quarter earnings call, Tata Power had said that work had progressed on the remaining three units of Mundra UMPP and that it was committed to commission them with a time gap of four to five months between the units.
Tata Power, Mr Sardana said, plans to mix some high-grade imported coal with some low-grade variety imported fromIndonesiato reduce costs. The company is also considering acquiring coal blocks overseas to meet its rising fuel requirements, without divulging details.
However, Mr Sardana said that the Government needs to facilitate bilateral deals at the government-to-government level to secure energy assets overseas.
Shortage of domestic coal due to a stagnant production is prompting power producers to import fuel or look at acquiring overseas assets.
Tata Power will announce its results for the financial year 2011-12 on May 2
The shares of Tata Power ended marginally lower at Rs 100.20 on the BSE on Friday.
INDIA VIOLATING WTO NORMS, SAYS US SOLAR INDUSTRY
WASHINGTON: TheUSsolar industry is pushing the government to dragIndiato the World Trade Organisation, alleging that the recent Indian regulation that certain things in solar panels be manufactured in the country is in violation of the WTO rules.
“It seems to us at SEIA (Solar Energy Industries Association) that that’s a fairly clear violation ofIndia’s WTO obligations,” said Mr John P Smirnow of King and Spalding on behalf of SEAI at a teleconference. It was organised by the International Trade Administration’s Renewable Energy and Energy Efficiency Advisory Committee.
“We know that theUSgovernment has had a lot of high level discussions with the Indian government. And the Indian government — my understanding the response has been, you know, this — what we’re doing is not a violation of the World Trade Organisation obligations,” he said.
“So, one of the responses that theUScould take in that context is to challenge that formally. And increased enforcement activities with respect to local content we think is important,” Mr Smirnow said.
Under the National Solar Mission, India requires that crystalline cells be manufactured inIndia.
“That’s being expanded, or has been expanded to now require that the cells and modules be manufactured inIndia. And that effectively has blocked US or will block US crystalline cell and module manufacturers from participating in the Indian market,” he alleged.
Mr Smirnow said the first recommendation of the American solar mission is that theUSincrease its local content related enforcement activities, for example, formally challengeIndia’s local content requirements.
“One of the things I understand that the Indian government has said, we want to help grow our industry. It is basically taking a start-up industry and expanding it, but doing so in a climate of severe global competition,” he said.
“So, how do we provide the necessary government support to help grow our local industries? What are the mechanisms we can do that? The Indian response is the local content provision is the best way to do it,” Mr Smirnow observed.
MNRE DRAFT GUIDELINES ON OFFSHORE WIND LIKELY IN A MONTH
CHENNAI: The Ministry of New and Renewable Energy (MNRE) is likely to come out with draft guidelines for offshore wind energy in the next one month, a top official told ET.
“The consensus is that the draft guidelines should be framed within a month,” said Gomathi Nayagam, executive director of the Centre for Wind Energy Technology and chairman of the technical committee for offshore wind.
Experts have bet big especially on Tamil Nadu’s offshore wind potential. A pilot project off the coast ofDhanushkodi, in Tamil Nadu’s southern tip, is set to come up. Offshore is said to be three times to five times costlier than wind onshore. At the same time, it’s twice as efficient as onshore wind.
Some of the issues being discussed by the panel include how to make seabeds available to private offshore wind players as also how to simplify the process of clearances, given that there are at least a dozen approvals required.
ELECTRICITY REGULATORY BODY NOTIFIES SLDC AS RENEWABLE POWER AGENCY
HYDERABAD: The Andhra Pradesh Electricity Regulatory Commission (APERC) has notified the State Load Dispatch Centre (SLDC) of APTRANSCO as state agency for Renewable Power Purchase Obligation (RPPO).
SLDC has also been noticed as state agency for accreditation of Renewable Energy (RE) generators for Renewable Energy certificate mechanism.
APERC has further notified the fees and charges to be collected from RE Generators for Renewable Energy Mechanism. It has prescribed the RPPO obligation at minimum 5 per cent of total purchases from renewable energy sources. This includes 0.25 per cent from solar power and balance from non-solar RE source.