NEW DELHI: Even as the Government tried to downplay National Thermal Power Corporation Ltd’s (NTPC) stout refusal to sign the Fuel Supply Agreement (FSA) document prepared by Coal India Ltd (CIL) owing to its controversial clauses, the dry fuel supply situation in the country remains grim as 29 out of the 89 thermal power plants are left with less than a week’s stock.
Coal Ministry, citing the latest Central Electricity Authority (CEA, which monitors coal stocks position on daily basis), has said that out of the 89 coal based thermal power stations in the country, as on May 8, 2012, 29 power stations had less than a week’s coal stocks.
Minister of State for Coal, Pratik Prakashbapu Patil informed Rajya Sabha on Monday that due to short term production constraints, unloading constraints at power plants, and movement constraints of Railways, have affected coal supply to power utilities.
He tried to convey that the situation was not as grim as it was in October 2011, when 47 thermal plants were left with less than a week’s coal supply, and said that there was a marked improvement in coal stocks of the plants since November last year, which has gone up to 14.19 million tonnes as on May 8, 2012, compared to 8.1 million tonnes on October 31, 2011.
The minister also said that they have not received any refusal from NTPC regarding its refusal to sign the FSA document.
Informing about this to the Upper House, Patil said that the 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.
He further said that NTPC has requested CIL to consider signing of the FSA on the same parameters as existing with earlier NTPC plants but with revised trigger point on disincentive as per the Government directives.
However the fact remains that NTPC and other thermal power entities have been opposing the FSA document mainly on the negligible 0.01 per cent penalty clause, which would effective only three years after the signing of the pact. Power entities feel that such clauses would only dilute their cause.
Earlier this year, facing a possible power crisis due to imbalance in coal supply to thermal stations (due to which 47 of them were left with less than a week’s supply of dry fuel in October 2011), the power producers had approached Prime Minister Manmohan Singh to resolve the issue, and subsequently after his intervention, the Government issued a Presidential Directive, ordering CIL to ink FSAs with power companies, assuring them of coal supply at an 80 per cent trigger level.
The newly elected CIL Chairman S Narsing Rao had earlier said that the main issue with NTPC is that it is not ready to accept the gross calorific value (GCV) formula and wants to go back to old useful heat value (UHV) system, for coal pricing.
It is to be noted that CIL had shifted to the internationally acceptable GCV formula for pricing of coal, which led to a substantial increase in the dry fuel’s prices, thus burning a hole in the power companies’ pockets.
This being another valid reason, power entities also feel that the FSA document’s clauses are heavily loaded in CIL’s favour and therefore they have been refusing to sign it, thus leading to an impasse, and forcing the Government to face pointed queries on the matter in Parliament.
COAL SUPPLIES: POWER MINISTRY SEEKS PMO’S INTERVENTION
NEW DELHI: With no end in sight to the continuing tussle between Coal India Limited (CIL) and power producers over the fuel supply issues, the Power Ministry has petitioned the Prime Minister’s Office (PMO) to intervene and settle the issue pertaining to signing of new fuel supply agreements (FSAs) and some controversial clauses in it.
The issue continues to hang fire despite the Prime Minister’s Principal Secretary, Pulok Chatterjee, having held a number of meetings to sort out the mess arising out of the failure of CIL to supply adequate coal to power plants and the leading power producers petitioning the government seeking a stable coal supply regime in place.
The issue is stuck for the last two months as majority of the power producers have reservations about certain clauses, including those related to penalty, in the revised fuel supply agreement put forward by CIL.
The ball is back in the PMO’s court to take a decision on the FSAs to be signed with leading power producers. Power Minister Sushil Kumar Shinde has written to the PMO seeking intervention on the issue. Mr. Shinde’s communication to the PMO comes after a hectic round of discussions the Central Electricity Authority (CEA) held with various power generators on May 9 to get their views on the problems faced in signing the FSAs. Officials in the Power Ministry said that Mr. Shinde had urged the PMO to direct the Coal Ministry and CIL to sign FSAs within a month based on the 2009 format.
RS 5,178 CRORE RELEASED FOR POWER SECTOR DEVELOPMENT IN 3 YEARS: SUSHILKUMAR SHINDE
NEW DELHI: The government today said a total of Rs 5,178 crore have been released to the states in the past three years (2009-12) for the development of the power sector.
“The government has released Rs 5,178 crore to 29 states/ union territories in the last three years (2009-12) under Restructured Accelerated Power Development and Reforms Programme (R-APDRP),” Power Minister Sushilkumar Shinde said in a written reply to the Rajya Sabha.
To a question on grant of incentives to increase power capacity in Andhra Pradesh, Shinde said: “For Andhra Pradesh Rs 199 crore has been released under R-APDRP during 2009-12”.
However, he said, there has been no release of funds under R-APDRP in the current financial year (2012-13) to any state so far.
“The related projects are at various stages of implementation and the funds released are being utilised by the state distribution companies,” he said.
Under the government’s rural electrification scheme, Rajiv Gandhi Grameen Vidyutikaran (RGGVY), the government has released Rs 12,237 crore to 27 states in the last three years (2009-12).
“Out of the Rs 12,237 crore, Rs 319 crore has been released to Andhra Pradesh during the same period,” he said.
There has been no release of funds, under RGGVY during the current fiscal, to any state so far.
As per current official data (till April 30, 2012), 1.04 lakh villages have been electrified as against the target of 1.10 lakh, under RGGVY, he said.
WILL SIGN FSA ONLY FOR CHANGE IN FUEL SUPPLY LEVEL: NTPC
NEW DELHI: Country’s largest power producer NTPC today said it would accept only the revised minimum fuel supply level and not other changes suggested for signing the new pact with CoalIndia.
NTPC is among the many power generators who have refused to ink the revised Fuel Supply Agreement (FSA) with CoalIndia.
“I will only sign the FSA with change in the trigger point, because that is the direction given by the government, why should I accept 10 or 15 more changes,” NTPC Chairman and Managing Director Arup Roy Choudhury told PTI.
“The situation is dynamic. I need coal,” he added. Against the backdrop of acute fuel scarcity hurting power generation, the government has directed CoalIndiato sign FSAs with power generators and the minimum supply level has now been fixed at 80 per cent.
Choudhury further said there are already many FSAs with CoalIndia.
“The second point is that I have a station with five or six generation units. FSAs are already there for five units and the six unit is getting fuel through MoU. Why should there be a separate FSA (for the sixth unit)? May be, the sixth unit can have a different trigger level,” he said.
When asked about the company’s discussions with CoalIndiaover fuel supply pacts, he said, “In my opinion, it has been solved.”
However, he did not divulge further details. With persisting uncertainty over FSA, Power Minister Sushilkumar Shinde had written to the Prime Minister’s Office (PMO) seeking intervention on the issue.
Shinde’s communication came after the Central Electricity Authority (CEA) held discussions with various power generators on May 9 to gather their views on the FSA problem.
The Power Minister has requested the PMO to instruct the Coal Ministry and CoalIndiato sign FSAs within a month based on the 2009 format.
BHEL BAGS RS 380 CRORE ORDER FOR GAS-BASED PLANT FROM RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM
Bharat Heavy Electricals has bagged a repeat order from Rajasthan Rajya Vidyut Utpadan Nigam (RRVUNL) worth Rs 380 crore, the state run power equipment major said Monday.
The order entails setting up of a combined cycle power plant for RRVUNL’s fourth phase of Ramgarh power plant in Jaisalmer district of Rajasthan. BHEL is also supplying equipment for the third phase of the project.
BHEL manufactures gas turbines of capacity up to 290 mw for gas-based combined cycle power plants. For thermal coal based power plants, BHEL offers equipment sets of up to 1,000 mw capacity.
ONE-FOURTH OF GURGAON, FARIDABAD TO GET 24-HOUR POWER
CHANDIGARH: One-fourths of Gurgaon andFaridabadtowns in Haryana, adjoining national capitalNew Delhi, will get 24-hours power supply, a senior officer of the Dakshin Haryana Bijli Vitran Nigam (DHBVN) said here Monday.
The 24-hours power will be given to specific areas based on low aggregate technical and commercial (AT&C) losses.
DHBVN managing director Amit Aggarwal said that consumers connected to 405 independent, industrial and urban electricity feeders with low AT&C losses would get 24-hour power supply.
He said that 24 feeders in Gurgaon and 23 feeders inFaridabadhave qualified for extra power supply under the newly launched scheme of giving extra power to the feeders having low AT&C losses.
He said that one urban feeder each in Hisar and Sirsa towns have also qualified for the 24-hour supply under the scheme.
He said that 37 rural domestic feeders will get four hours extra supply, against the schedule of 19 hours for industries, 20 hours for urban and 12 hours for rural domestic consumers, under the scheme.
According to the present schedule of supply, urban domestic consumers, industries, rural domestic consumers and tube wells get power supply for 20 hours, 19 hours, 12 hours and 8 hours daily respectively.
Under the reward-oriented power regulatory measures, the independent, industrial and urban domestic consumers can get supply up to 24 hours a day and rural domestic consumers can get power supply for 16 hours a day.
IT’S LIGHTS OUT FOR ADANI POWER
The Rs. 290 crore loss reported by Adani Power Ltd in the March quarter sent the stock down 3.6% to a new low on Monday. The problems of fuel scarcity and rising costs have been well-documented and even state-owned behemoth NTPC Ltd has suffered in recent times.
However, with Adani Power’s parent company holding stakes in overseas coal mines, analysts had fondly hoped it would source more fuel from group firms and report an improvement in the fourth quarter. That did not happen and fuel cost per unit rose from Rs. 0.89 in March 2011 to Rs. 2.18 in the fourth quarter of the last fiscal.
While the company sold 27.3% more electricity in Q4, it was able to grow its revenues only by 16.7%. That’s because realizations fell from Rs. 3.14 per unit in March 2011 to Rs. 2.87. Sure, falling merchant power rates contributed to the decline. But the more probable cause could have been that the company might have begun honouring its power purchase agreement with theGujaratstate utility from its Mundra facility at a previously fixed tariff of Rs. 2.35 a unit as compared to around Rs. 4 in the merchant power markets.
Thus, operating margins fell a huge 51 percentage points to 10%. The scenario is unlikely to change soon. The company currently sells more than two-thirds of the electricity it generates through fixed tariffs. With spot electricity prices struggling to remain above Rs. 4
per kilowatt, merchant sales would continue to add less to earnings. For the company to improve its margins it has to either re-negotiate the power purchasing agreements or source cheaper coal. That is easier said than done.
Adani is still aiming to double its generation capacity from 4,620 megawatt (MW) to 10,000 MW in one year. That, at a time when fuel problems remain. Capacity utilization levels are already dipping. Adani’s plant load factor fell from 89% in March 2011 to 62% in the just ended quarter. With the new capacities coming in, the company’s earnings and return ratios will continue to be influenced by the availability of black gold.
NPCIL TO INSURE NUCLEAR ASSETS
NEW DELHI: Nuclear Power Corporation of India Ltd (NPCIL) has proposed to insure its nuclear assets, including the ‘nuclear island’ that holds core reactors.
It has said so to the government. The idea has been prompted by the belief that reactor use would be more and more of a commercial nature, with the increasing demand for energy. Currently, reactors are insured only till the time they are not operational. As soon as the fission material is fired into the reactors, the insurance cover ends. NPCIL bears the responsibility of any damages.
One issue that prevented insurance was existing government guidelines that bar inspection or survey of nuclear facilities. SinceIndiais not a signatory to the non-proliferation treaty, it did not permit any inspection of its facilities. “The government would have to modify rules if it wants to insure assets,” said an official. When asked, officials of the department of atomic energy would not comment.
There also have been efforts by NPCIL to insure assets without the required survey for operational risks but insurance companies have not responded to this call, said an official.
Analysts also say, due to the very high liability in case of an accident, that insurance companies do not want to insure nuclear assets without due diligence. Also, due to the high risk involved, nuclear insurance pools have evolved internationally that collectively reinsure the nuclear assets. The concept of insuring nuclear assets is prevalent among countries where dependence on nuclear energy is considerable. Highly specialised nuclear risk underwriters inspect the facilities to ascertain the risks.
“Given the experiences from the tragedies atBhopal,ChernobylandFukushima, it is very clear that the exposure to liabilities is very high. To cover those and ensure proper and timely compensation, taking a protective cover is essential,” said Anuraag Sunder, principal consultant, PricewaterhouseCoopers.
InAmerica, there is a law enacted in 1957, known as the Price-Anderson Act. It was designed to ensure adequate funds would be available to satisfy the liability claims of members of the public for personal injury and property damage in the event of a nuclear accident. “The legislation helped encourage private investment in commercial nuclear power by putting a cap on the total amount of liability each holder of nuclear plant faced in the event of an accident. Today, the limit of liability for nuclear accident has increased the insurance pool to $12 billion,” he added.
Though NPCIL is the only nuclear operator in the country,Indiahas a target of 63,000 Mw of energy from nuclear sources by 2032, of which 4,000 Mw has been achieved. While only 2.5 per cent of the installed power capacity in the country is through nuclear sources, nuclear energy constitutes just one per cent of the country’s primary energy mix.
COAL MINISTRY ASKS CIL TO ADOPT NEW FSAS FOR UPCOMING PLANTS
KOLKATA: The coal ministry has asked CoalIndiato sign the new format fuel supply agreements with power units coming up between January 2012 and March 2015.
The directive came in response to a clarification sought by the miner on whether it should sign supply pacts with new thermal plants on the terms mentioned in the existing contracts or the new agreements, which significantly dilute the miner’s supply obligations.
“The ministry has asked us to sign the new FSAs for plants to be set up between January 2012 and March 2015,” CoalIndiachairman S Narsing Rao said. “We received the ministry’s clarification last week.”
CoalIndiahad approached the ministry as a presidential directive asked it to sign FSAs for plants that came up between April 2009 and December 2011, but it did not mention anything about plants commissioned after this period.
According to the ministry, about 40,000 MW of power generation capacities would be commissioned between January 2012 and March 2015.
Sector experts say this will increase pressure on the state-run miner, which is already struggling to meet the fuel demand of existing power units.
CoalIndiamissed its revised 2011-12 production target, achieving only 435.84 million tonne against the projected 447 mt.
“The new plants will require about 170 mt of additional coal a year,” a Coal India official said on condition of anonymity.
CoalIndiais also facing stiff resistance from power companies over the new FSAs, which these companies say are heavily loaded in favour of the miner.
CoalIndiahas not been able to convince power producers, including the country’s largest NTPC, to sign the new agreements even three weeks after the drafts were sent to them. Of the 50 FSAs it was supposed to sign, CoalIndiahas managed to sign only 13.
The decision to invite new units to sign the same FSAs is likely to irk power producers even more. Power producers want to sign the FSAs on the terms of the existing contracts, which stipulate that if Coal Indi fails to supply 80% of the contracted coal, it will pay 40% of the value of the shortfall as penalty. This penalty has been reduced to 0.01% in the new FSAs.
“There are some basic differences between the old set of FSA and the new FSA,” an executive with a power company said. “The new FSA includes a set of force majeure clause that shields CoalIndiafrom breakdown of machinery, non-supply of spares by its vendors or non availability of explosives.”
(Source: The Economic Times, May 15, 2012)
NOT RECEIVED REFUSAL FROM NTPC ON FUEL SUPPLY AGREEMENTS: COAL MINISTRY
NEW DELHI: The Coal Ministry has said it has not received any refusal from NTPC for signing of fuel supply pact with CoalIndia.
“The Ministry of Coal has not received any refusal from NTPC for signing of…FSA with CoalIndia,” Minister of State for Coal Pratik Prakashbapu Patil said in a written reply to the Rajya Sabha today.
The Minister said NTPC has requested CIL to “consider signing of the FSA on the same parameters as existing with earlier NTPC plants but with revised trigger point of disincentive as per the government’s directive”.
The fuel supply agreements (FSAs) to be signed by NTPC are mostly for additional units at the existing power stations for which pacts have already been entered, he said.
The development follows CIL stating that NTPC did not sign the FSA with the coal major as the power producer did not agree with the terms.
“The main issue is they are not agreeing to accept the gross calorific value (GCV) formula and want to go back to old useful heat value (UHV),” Coal India Chairman and Managing Director Narsing Rao had said.
“This is not only for new FSA but also for old contracts,” he had said.
CIL had shifted to a new pricing mechanism (based on GCV) from January 1. Under this system, prices are linked to the actual calorific value, or quality, of coal.
Till December 31, 2011, CIL used to follow a pricing mechanism based on UHV of coal, which deducted ash and moisture content from the standard formula.
Last month, the government had issued a directive asking CIL to ink FSAs with an assurance for minimum 80 per cent fuel supply to power plants.
However, power producers have said various conditions in the new FSA such as penalty are not acceptable.
CIL, LIMPOPO GOVERNMENT INK PACT TO DEVELOP COAL MINES IN SOUTH AFRICA
NEW DELHI: The government today said Coal India (CIL) has signed a pact with government ofLimpopo,South Africafor jointly identifying, exploring and developing coal mines.
“CIL has executed a Memorandum of Understanding… with organisations owned by provincial government of Limpopo, South Africa to engage in joint initiatives of identification, exploration and development of coal assets,” Minister of State for Coal Pratik Prakashbapu Patil said in a written reply to the Rajya Sabha.
The minister also said that in order to execute the pact, it would be required to set up a subsidiary of the PSU firm inSouth Africa.
Last year, the government of Limpopo, the northernmostprovinceofSouth Africa, had approached CIL, requesting the PSU to form a joint venture (JV) with one of its public sector firms for acquiring coal mines there, a top official in CIL had said.
The joint venture would be between the public firm ofLimpopoand a subsidiary of CIL, he had said.
“The Chief Minister of Limpopo Government had approached us… asking us to form JV with one of its public enterprises for exploring the coal assets. In this JV, CIL will have majority share while the public enterprise ofLimpopowill have at least 26 per cent stake,” he had said.
The PSU has put together a war-chest of Rs 6,000 crore for acquisition of mines overseas.
The world’s largest coal miner has zeroed in on three unlisted overseas coal assets for acquisition.
CIL, which accounts for more than 80 per cent of the domestic coal production, missed its revised 2011-12 production target as it achieved only 435.84 MT as against 447 MT.
The demand supply of fossil fuel was 161.5 million tonnes in the last fiscal.
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