NEW DELHI: The Coal Minister, Mr Sriprakash Jaiswal, is in no mood to make any controversial statement. He is clear that whatever be the decision of the high-level ministerial panel dealing with some ticklish issues concerning his Ministry, he will stand by it.
In an interview with Business Line, the Minister reiterated that there was no immediate move to raise coal prices and if there is an increase, it will keep in view the concerns of all stakeholders.
For power plants set up before 2015, it is CoalIndia’s responsibility to supply coal to them at 80 per cent of requirement. Since differences on FSA continue, we have directed them to supply coal based on MoUs. (Of the 48 FSAs to be signed, only 14 have been inked till now.)
However, once the companies have 100 per cent power purchase agreements with State distribution companies, they will sign the FSA. We are in constant discussions with the Power Ministry.
Penalty is something which, at present, has been left to CoalIndia. But we are aware of the concerns expressed.
We want to put in place an authority which will look at more optimal development and conservation of coal resources, more effective regulation of price and quality, adoption of best mining practices, better coal distribution and creation of a level playing field for new entrants in the sector.
There are several members in the Cabinet. Many of them have concerns, like the Labour Ministry, so it has been sent to a Group of Ministers. (There were also concerns on whether the issue of pricing should fall under the regulator’s purview.)
The Coal Ministry would go with the GoM decision. The Ministry wants to have more transparency in the system, which is ably monitored.
In line with the best international coal trading practices, pricing was switched over to the Gross Calorific Value (GCV) against Useful Heat Value (UHV) based grading.
However, there was an error in assessment. When we adopted GCV, there were some mistakes in the price calculation. So, the price of some categories shot up. We received complaints. The matter was looked into and revised.
Our motive was not to increase prices. When we want to increase prices, we will do it directly and will not take shelter under any pricing mechanism. We wanted an international mechanism to be in place to prevent complaints on prices and quantity by buyers.
At present, we have not received any final CAG report. Our officials have responded to the queries sought by CAG.
Till 2009-10, a total of 165 coal blocks have been allocated. Currently, 29 blocks are operational.
The motive is to mine more domestic coal and not depend on imports. If somebody, sees this in a different perspective, that is his/her view. I want to add one more thing that all blocks were awarded after consent from States. The Chief Secretaries of States are members of the screening committee.
We have started reviewing why only 29 blocks of the 165 could become operational till date. Strict action would be taken against companies that are deliberately not mining coal.
The Ministry has de-allocated 25 coal blocks till now. Show cause notices for de-allocation have been issued to 54 companies, advisory notices have been sent to 32 companies, and caution notices to another 28 companies.
These companies have been asked to reply within 45 days. The replies would be monitored by the screening committee and if the committee is not satisfied, the blocks would be recommended for de-allocation.
COAL MINISTRY IN NO MOOD TO REDRAFT FSA
NEW DELHI: Despite strong objections by power entities to certain clauses of the FSA document, mainly the 0.01 per cent penalty clause applicable on CIL in case it fails to supply the dry fuel to thermal plants at 80 per cent trigger level, the Coal Ministry seems to be in no mood to soften its stand and redraft the pact template, even as 29 out of the 89 stations are left with just a week’s supply of coal.
Official sources say that even as NTPC and other thermal power companies have stoutly refused to sign the FSA document alleging that its clauses were heavily loaded in CIL’s favour, the Coal Ministry does not seem to be in any mood to relent on the penalty clause, which apart from being abysmally low, would become effective only three years after signing the pact.
According to sources in the know, the ministry does not have any plans to increase the penalty clause, something which the Power Ministry has been demanding. The official sources denied any change in the Coal Ministry’s stance on the issue.
Last week the Power Ministry, while seeking Prime Minister’s Office’s intervention, had urged that the penalty clauses of the FSA should be brought back to the 2009 levels. As per the 2009 FSA document, the trigger level was set at 90 per cent and if CIL supplied coal between 90 per cent to 80 per cent levels, then the penalty levied on it was 10 per cent. It was 20 per cent for supplying coal at trigger levels varying between 80 per cent to 70 per cent, while it was a whopping 40 per cent if CIL gave the dry fuel to thermal plants at less than 40 per cent trigger level.
Coal Ministry officials say that while NTPC and other entities may oppose certain clauses of the FSA document, none of them have refused to sign it. “There is a fine line between refusal to sign the FSA and objection to its clauses,” an official quipped.
Sources also denied that any meeting between Coal Minister Sriprakash Jaiswal and Power Minister Sushil Kumar Shinde is proposed to resolve the stalemate, because if Coal Ministry mandarins are to be believed, then there does not seem to be any controversy related to the FSA document at all.
This was evident from MoS Coal Pratik Prakashbapu Patil’s comments in Rajya Sabha on Monday, when he said that FSAs to be signed by NTPC are mostly for additional units at the existing power stations, for which pacts have already been inked with it.
COAL INDIA TOO WILL HAVE TO PAY RESERVE PRICE FOR NEW BLOCKS
NEW DELHI: CoalIndiawill henceforth have to pay the reserve price, as any other bidder, for acquiring blocks in fresh auction rounds. This will be so even for blocks offered to the public sector entity on nomination basis.
A reserve price will be derived by the Coal Ministry for a block. Companies proposing to acquire the asset will have to pay this amount to the respective State Governments for undertaking mining activities. In case of CoalIndia, it was till now not paying any reserve price. However, as a first step for creating a certain level playing field, the Ministry now proposes that even CoalIndiawill have to pay this price.
The Ministry is in the process of finalising auction norms that would be similar to the licensing rounds of oil and gas blocks.
“The new transparent mechanism for coal block auction would be in place in the next three months,” the Coal Minister, Mr Sriprakash Jaiswal, told Business Line.
The Ministry has sought expressions of interest (EoI) from consultants to suggest mechanisms for finalising bid documents, deriving a formula to determine reserve price, and agreement to be signed between the contractor and the Government. Those shortlisted include SBI Caps and PwC. Fifty-four coal blocks with total geological reserves of about 18.22 billion tonne have been identified for allocation.
Of these, 16 blocks with 7.27 billion tonne reserves for Government companies and another 16 blocks with 8.16 billion tonnes for power sector companies have been selected through tariff based bidding. Twenty-two blocks with 2.79 billion tonnes for companies selected through auction have been earmarked for allocation including to steel and cement sectors.
These coal blocks are located in Andhra Pradesh, Chhattisgarh, Odisha, Jharkhand, West Bengal, Madhya Pradesh andMaharashtra. The blocks offered on auction henceforth would be continuously monitored by Coal Ministry.
CIL ASKED TO SIGN MORE FSAs; BUT POWER FIRMS ARE WARY
NEW DELHI: The coal ministry has directed Coal India Ltd (CIL) to sign more fuel supply agreements (FSAs) with power companies even when a mere 14 from the previous batch of 48 have been signed till date.
Power companies such as NTPC have been protesting about the low penalty clause which CIL has incorporated in these agreements and have sought help from the power ministry and the PM’s office on the matter. These companies are among those power producers who commissioned their plants by December 2011. But the fresh ministry directive asks CIL to sign agreements with power companies who will commission plants till March 2015. This means coal supplies for an additional 40,000 mw of power.
CIL Chairman S Narsing Rao told Firstpost on Tuesday that of the first batch of 48 FSAs only 14 had been signed and not a single company, with whom FSAs have not been signed, had written to CIL explaining its stand on the matter. NTPC, Damodar Valley Corporation and other large power public sector companies are holding out and so are a majority of the others, including some private power suppliers. They all want the penalty clause to be more stringent on supply shortfalls and coal supplies to be made to plant sites instead of ports.
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.
Narsing Rao also made it clear that the penalty clause – 0.01 percent at present – cannot be altered since it has been endorsed by the company’s board of directors. Also, 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, Rao said.
So what’s the way out?. Rao says in case coal supplies fall short of demand, CIL subsidiaries could check with customers (power companies) and import the requisite quantity of coal. “The FSAs anyway provide for imports in case of supply shortfalls. In case the customer wants, we could fulfil the demand through coal imports. But as of now, we don’t have estimates of how much coal will need to be imported. It will be worked out in due time”.
So if the import option exists, why are power companies playing truant? The answer is simple: prices of imported coal are multiple times the price at which CIL will supply its own coal so that power companies are justifiably wary of such a move.
Rao said his company was thinking over whether to set a deadline for the remaining power companies to sign FSAs. It is already known that Coal India will need incremental production of at least 64 million tonnes this fiscal to fulfil its obligations under the 48 FSAs to be signed in FY13. 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 FY12, the target of 64 million tonnes in a single year certainly looks ambitious. Also, this target for FY13 has been arrived at after taking the 80 percent trigger level into account (i.e. no penalty has to be paid by CIL if it supplies 80 percent of contracted quantity).
PAWAN HANS, NMDC, MMTC AMONG 21 PSUs SANS FULL-TIME CMDs: GOVT
NEW DELHI: As many as 21 public sector companies including Pawan Hans, National Fertilizer Ltd, NMDC and MMTC are without a full-time Chairman and Managing Director, the Rajya Sabha was informed today.
State-owned companies not having a full-time chief executive includes National Hydro-electric Power Corp (NHPC), National Mineral Development Corp (NMDC), Brahmaputra Valley Fertilizer Corp, RITES Ltd, Hindustan Cables Ltd, Chennai Petroleum Corp Ltd (CPCL) and Heavy Engineering Corp Ltd.
Heavy Industries and Public Enterprises Minister Praful Patel said during Question Hour that bulk of the companies having top-level vacancies are “not in good (financial) health … And (the government) was finding difficulty in appointing suitable persons to head these companies.”
Board-level appointments are done through interviews conducted by Public Enterprise Selection Board. Vigilance clearance of the shortlisted candidate is then taken and the name then forwarded to the Cabinet Committee on Appointments, the final appointing authority.
“There are some delays due to CVC clearance… (which is) beyond control of administrative ministries,” he said, adding the process of selection is initiated one year before the vacancy actually arises.
“Of the 21 vacant posts, the recommendations of PESB are already available in respect of 11 posts and are awaiting vigilance clearance/approval of competent authority. The selection progress has already been initiated for filling up remaining 10 posts,” he said.
When Rajiv Pratap Rudy (BJP) asked why the government chose to appoint Air India head through a search committee rather than going through PESB, Patel said even candidates selected by search committee have to go through ACC.
Patel, who was the Civil Aviation Minister when AirIndiahead was appointed through a selection committee in 2007, said his predecessor Rudy too had made appointments through the search committee route. “What was done in the past was also followed by this government,” he said.
SEVERAL NEW POWER PROJECTS ON THE ANVIL
CHENNAI; Power-starved Tamil Nadu is expected to get an additional 4,887 Mw of power from state and Central projects, as well as joint ventures before the end of 2013. The state government is confident that by June this year, power cuts — which vary from two to four hours a day in various parts of the state — will be withdrawn. The state government also envisions investments of some Rs 4.50 lakh crore as part of its Vision 2023 for the energy sector.
Chief Minister J Jayalalithaa has alleged the Centre, “irrespective of the number of pleas”, has made “no allocation of funds or additional electricity, even as people are groping in the dark. The Centre’s actions are aimed at ensuring that Tamil Nadu does not grow.” She said her government was betting big on renewable energy, which will bring down its dependence on the Centre for coal allocations.
The state government has set a target of adding 3,000 Mw through solar energy as part of it solar mission programme and is planning to announce a new policy for solar energy. Similarly, it is also focusing on wind energy, where it has envisaged investments to the tune of Rs 25,000 crore for generating capacity of 10,000 Mw.
Recently, the chief minister also said that since the Centre is not providing enough coal for the state’s thermal power plants, the state government will look at alternate sources like liquefied natural gas (LNG). On May 10, her government signed a MoU with GAIL. As part of the MoU a 500-Mw gas-based power plant will be set up with an investment of around Rs 2,500 crore.
According to the chief minister, LNG power plants can be built in a shorter time compared to coal. According to ratings agency Crisil, agreenfieldLNG-based power plant can be set up in 28-30 months, whereas other conventional sources have gestation periods ranging from 48 to 84 months.
Meanwhile, at present, projects with a total generating capacity of 2,042 Mw are being implemented by the state sector with an investment of Rs 9,989 crore. Projects with a total generating capacity of 1,428 Mw are being implemented with joint venture partners at an investment of Rs 13,354 crore.
Besides, projects worth Rs 49,038 crore are at different stages of planning and approval. These projects will have a combined generating capacity of 8,360 Mw.
Recently, the chief minister urged the Centre to provide the entire power produced from the Kudankulam nuclear plant to the state. She also terminated the contract given to BHEL to set up a power plant at Tuticorin — stating that the company was delaying the project — and announced the government would build the Rs 8,000 crore project on its own.
Tamil Nadu Electricity Board Chairman Rajeev Ranjan added, “We are planning to invest around Rs 10,000 crore over the years to strengthen the infrastructure for transmitting and distributing the power. We are looking at raising capital from various sources.” The Japan International Cooperation Agency had approved financial assistance of Rs 3,000 crore to set up transmission and distribution infrastructure, he said.
NTPC-KANIHA STICKS TO POLLUTION CONTROL NORMS
KOLKATA/ANGUL: The 3,000MW NTPC-Kaniha power station which consumes about 55,000 tonne of coal per day has introduced various environment friendly steps to control both water and air pollution strictly as per the norms of state pollution control board.
According to the plant authorities, this ultra modern plant is equipped with electro static precipitator having efficiency of more than 99% for controlling air pollution. The details of emission and environment related data of the plant are scrutinized by government authorities from time to time.
In the ash dyke, ample steps like earth cover and water sprinkling have been provided on dry portion of ash dyke to control fugitive dust emission and rotational discharge principle is followed to keep the dyke wet. Following the advice of Odisha State Pollution Control Board, the company has procured the most modern cast basalt pipes for replacement of existing MS pipes for the first time in Odisha.
NTPC sources said, a pilot project for use of ash in agriculture was taken up in Kamarei and Tumugula villages where it was demonstrated that use of ash increases yield and improves water absorption capacity. Some amount of imported coal is also consumed to reduce specific coal consumption.
BHEL MOVES OVERSIZED CARGO VIA ENNORE PORT
CHENNAI: It took BHEL nearly five months to move it, but the PSU finally transported a 310-tonne ‘stator,’ a key piece of equipment to generate power for the North Chennai Thermal Power Station, from Haridwar through the Ennore port.
Ennore Port Ltd on its part had to create a separate platform near its iron ore terminal to accommodate the barge that carried the stator, which is a key part of a power generation plant.
As the existing road could not be used due to the stator’s huge size, the port had to create a separate route to help the oversized cargo trailer truck pass through.
The equipment was flagged off from BHEL’s Haridwar plant on January 23. The equipment was brought to Mundra port by road and from there, it was transported through a barge, which reached Ennore on May 11.
It was a complicated logistical exercise as in September, the trailer truck carrying the stator fell in to theKualaRivernear Binapur village, Madhya Pradesh. Later, BHEL decided to move it through a combination of road and sea.
In fact, BHEL and Ennore port were earlier engaged in a face-off on the handling of the consignment at the port.
Ennore port feared the cargo, if brought in a barge, might damage the wharf, which was recently built to handle large volumes of cars. The port wanted BHEL to move the cargo through a specialised project cargo ship that would have a self loader. In fact, Mr S. Velumani, Chairman, Ennore Port Ltd, had earlier told Business Line that port authorities were not against the BHEL generator being brought into the port per se, but not on a barge. The berth was, in fact, built keeping in mind the heavy-cargo requirements of Toshiba, which has its turbine-generator plant near the port. However, finally, it was decided that a special platform would be created to handle the stator, said an official of the port. The equipment is likely to reach the station on Wednesday.
PRIVATE POWER PRODUCERS LINE UP TO INK FUEL SUPPLY PACTS WITH COAL INDIA
KOLKATA: Private power producers are queuing up to sign fuel supply pacts with Coal India Ltd despite criticism that the agreements are skewed in favour of the coal major. The Kolkata-based CESC Ltd is the latest to join the fray.
According to a CIL official, CESC signed a fuel supply agreement with Bharat Coking Coal Ltd, a Coal India subsidiary, and is awaiting response from Eastern Coalfields, another Coal India unit. The two agreements will assure coal supply to the company’s 250 MW unit at Budge Budge inWest Bengal.
Earlier, the Reliance Power-controlled Rosa Power in Uttar Pradesh signed a fuel supply deal for three units of 300 MW each. Lanco signed agreements with the Singrauli-headquartered Northern Coalfields Ltd (NCL) for its 2 X 600 MW Anpara thermal power station, also in Uttar Pradesh.
Bajaj Energy, a relatively smaller private player, has also signed a deal with the Ranchi-headquartered Central Coalfields Ltd for its 4 X 45 MW power plant in UP.
Adani Power is the only major private power producer that has yet to enter into a fuel supply pact with CoalIndia. The Ahmedabad-based company is reportedly in need of coal supply for 3-4 units.
In the public sector, NTPC is still negotiating the terms of the agreement with CoalIndia. The company, however, gets assured supply from CoalIndiathrough existing agreements.
R POWER’S SASAN PLANT TAKES ANOTHER KEY STEP TO GENERATION
MUMBAI: Reliance Power has completed the hydrostatic test for its first unit of 660 MW at the 3,960-MW Sasan plant in Madhya Pradesh. The test is an important milestone in boiler construction and last of the tests conducted to ensure completion, compliance and safety before the boiler produces steam. The first generation unit will be commissioned by December this year, according to a senior R Power official. The subsequent units of the 6 x 660 MW plant will be commissioned in phases thereafter at three month intervals. The estimated cost of the project is Rs 19,500 crore.
ELECTROTHERM CHALLENGES HC ORDER FOR SHUTDOWN IN SC
MUMBAI/AHMEDABAD: The Electrotherm (India) Ltd has approached Supreme Court challenging Gujarat High Court’s recent order to shut down its steel and pipe manufacturing plant in Bhachau block ofKutchdistrict.
Last week the Gujarat High Court had ordered shut down of the plant with 360,000 TPA capacity for producing structural steel, alloy steel and stainless steel, for lack of proper environment clearance mandatory under Environment Impact Assessment (EIA) Notification, 2006. “We have approached the Supreme Court against the High Court order,” Electrotherm joint managing director Avinash Bhandari said. “We have challenged the HC order to shut down the steel plant inKutch,” he said.
On May 11, a Gujarat High court division bench of acting Chief Justice Bhaskar Bhattacharya and Justice J B Pardiwala had held that the environmental clearance given for the plant was illegal as there was no public consultation before it was set up. The Court cancelled the environment clearance granted in January 2010 and asked the company to shut down production in the plant with immediate effect.
The court had given 10-day time to the company to close down its steel, engineering, DI pipe and electric vehicles plant atKutch. The court was acting on a petition filed by Kutch-based RTI activist Vipulkumar Patel in 2010, who had alleged that the power plant was being operated without proper environmental clearance.
According to case details, Electrotherm had applied for environment clearance, while it was expanding capacity of the unit. It got the clearance, but without holding a public hearing. It was argued on part of the petitioner that the 2009 amendment in EIA Notification made it compulsory for a company to have clearance with public hearing, if production capacity is increased by 50 per cent. But in this case, the capacity was increased three times.
Besides, the company had obtained environment clearance for expansion; but it turned out the they did not have clearance for the main project. This led the court to hold that the environment clearance accorded by the company was illegal and it cannot continue with production.
EMMVEE SOLAR TO ENTER DOMESTIC PHOTOVOLTAIC MARKET
BANGALORE: Emmvee Solar, the makers of Solarizer water heaters, will get into solar photovoltaic (PV) power project development inIndiaby the end of this year.
The company has set up two solar projects of about 14 MW inEurope, and is looking at projects of over 5 MW capacity here, Mr D. V. Manjunatha, Managing Director of the company, told Business Line.
Currently, the company is into manufacturing and retailing of solar water heaters and manufacturing solar crystalline PV modules.
Over the last few years, it has also started providing ‘solar solutions’ across segments. It provides engineering-procurement-construction (EPC) services for power projects, installs solar systems for industrial applications such as telecom towers, railways or installing rooftop solar systems for commercial and residential buildings.
The company hitherto got most of its revenues from exports but is increasingly seeing growth in the domestic market, according to Mr Manjunatha. “Till last year, about 90 per cent of our revenues came from exports. This year we expect it to be 50 per cent and it could probably go down to 30 per cent in the next two years,” he said.
While most module manufacturers inIndiasuch as Tata BP Solar and Indosolar are in the red, Emmvee is seeing good business.
When asked how the company has managed this, Mr Manjunatha pointed out that it doesn’t restrict itself to manufacturing of modules or providing EPC services, but works for “providing solar solutions” such as installing solar power systems for captive use for residential and commercial buildings.
The company is planning to add capacity to its existing 135 MW manufacturing line inBangalore.
It will invest “about Rs 40 crore and add 100 employees for expansion, by the end of this year or early next year,” he said, adding that the company hadn’t yet decided on other details.
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