New Delhi: State-owned NTPC Ltd’s concerns over the revised electricity tariff norms came home to roost with India’s largest power generation utility posting a 17% decline in its second quarter profit.
NTPC posted a net profit of `2,071.63 crore for the quarter ended 30 September, compared with `2,492.90 crore a year earlier. Also, revenue increased by only 1% to `17,267.32 crore compared with a year ago.
“The decline in Profit After Tax is mainly on account of changes in Tariff Regulations, 2014,” the utility said in a statement on Friday.
The apex power sector regulator Central Electricity Regulatory Commission (CERC) had rejected NTPC’s representation to revisit electricity tariff norms applicable during fiscal years 2014-15 and 2018-19. CERC’s earlier order said incentives would be based on the plant load factor (PLF) metric and not plant availability factor (PAF), as before. PLF is based on the actual power that is generated by a plant, whereas PAF measures the generation capacity that is available.
Effectively, CERC linked future financial incentives with the purchase of power by distribution companies (discoms). Since these utilities are strapped for funds, PLF is often lower than PAF—implying that NTPC would be entitled to fewer financial incentives.
NTPC’s core business is generation and sale of electricity to state electricity boards (SEBs). Weak financials of the state government-owned discoms because of low tariff increases, slow progress in reducing losses, higher electricity purchase costs and crippling debt have assumed alarming proportions. SEBs with debt of `3.04 trillion and losses of `2.52 trillion are on the brink of financial collapse. Lower demand for power translates to a lower PLF.
NTPC’s PLF, a measure of average capacity utilization, was 81.5% in 2013-14 compared with 83.08% in 2012-13 for coal-fuelled projects.
The issue assumes significance because of the country’s low per capita electricity consumption. India’s per capita power consumption, at around 940 kilowatt-hour (kWh), is among the lowest in the world. In comparison, China has a per capita consumption of 4,000 kWh, with the developed countries averaging around 15,000 kWh of per capita consumption. Also, India faces distribution losses and previous governments have been unable to bring this down to desire levels.
“Icra estimates average all India AT&C (aggregate transmission and commercial) loss levels in the range of 27% for FY 2013. This is significantly higher than what is targeted and points to a considerable scope for reduction in loss levels,” said a 29 October Icra report.
NTPC’s performance comes at a time when the ruling Bharatiya Janata Party-led National Democratic Alliance government has made energy security one of its top priorities. The government has launched a scheme aimed at ensuring around eight hours of quality power supply to agricultural consumers and 24-hour electricity to households.
Of India’s current capacity of 254,049.49 megawatts (MW), NTPC has a 17.28% share, with an installed generation capacity of 43,128MW. The utility plans to add 14,038MW during the 12th Plan (2012-17) and has budgeted an ambitious capital expenditure target of `1.5 trillion. It has set itself the target of becoming a 128,000MW power producer by 2032. NTPC had also earmarked `10,000 crore for inorganic growth.
Mint reported on 29 July that the utility had been advised by its audit committee to scale back its planned capacity addition targets due to muted demand, even as per capita electricity consumption in India remains low. In addition, the committee asked NTPC to “revisit” its inorganic growth plans. The audit committee said the utility’s profit has not increased in proportion to its capacity addition due to low demand from states.
Of NTPC’s capex plan of `1,52,341 crore spread over 2012-17, the utility has achieved `41,631 crore (till 2013-14) with the balance `1,10,710 crore left to be achieved, which has been termed as “challenging”.
On Friday, the NTPC stock rose 1.9% to `149.95 on BSE. The benchmark Sensex gained 1.9% to close at a record 27,865.83 points.
(Source: Mint November 1, 2014)
CBI LIKELY TO QUIZ JAYANTHI FOR MINING NOD TO JSPL, JSW STEEL
New Delhi: The CBI’s initial investigation into the alleged irregularities in granting environment clearances and mining rights in Jharkhand forests to Jindal Steel and Power Ltd (JSPL) and JSW Steel has thrown up enough evidence to call the then environment minister Jayanthi Natarajan for questioning, top sources in the agency claimed.
Sources said Natarajan will be soon asked to join the probe as her decision was opposed by her Cabinet col league Jairam Ramesh and environment activists.
Giving details of the preliminary enquiry against JSPL, a source said that forest advisory committee of the environment ministry , which comes under the minister, ignored the fact that there was no wildlife management plan in place from the state government.“There is evidence in documents which shows that the FAC had earlier deferred the decision without a wildlife management plan for Saranda forest,“ added the officer.
The CBI says that diversion of Saranda forest land between 2007-13 to JSPL was done in an area which was ec ologically sensitive. Sources said there were glaring irregularities in the allocation process as the environment ministry changed its position a number of times before going ahead with the allocation in 2013.
Similiarly, in JSW’s matter, the CBI says it has primary evidence which suggests that the clearance for the project for mining in Ankua reserve forest given to the company in 2013 was contrary to the previous objections on transfer of land.“There is evidence here also to suggest that proposal was cleared in favour of JSW without receipt of a report from the state government and a report of the expert committee which would have examined the plan for safeguarding of wildlife in the area,“ said an officer.
Sources say the CBI has also examined several files of the environment ministry as part of its secret probe, which were held back by Natarajan. The M B Shah Commission report had also criticized the decisions taken by Natarajan. The agency will first question senior officials of ministry, two private companies and Jharkhand government to get more leads in the inquiries.
(Source: Times of India November 1, 2014)
POWER SITUATION REMAINS GRIM AS DEMAND OUTSTRIPS SUPPLY
Kochi: Increasing demand for power without a corresponding growth in generation is likely to perpetuate the grim scenario prevailing in the power sector in the State.
The current storage levels in the reservoirs are at the 10-year average level, senior KSEB sources said. The annual requirement two years ago used to be between 17,400–17,500 million units, while it is over 20,000 million units now. Even full reservoir capacity is not enough to meet the growing demand, they said.
Supply from the Central grid has been reduced to around 23 million units daily as against over 25 million units following shutdown of three units in Neyveli power plant. Meanwhile, a snag at the Koodamkulam plant has stopped the supply of 130 MW from there. The plant is expected to resume supply only in January, they said.
“We have an agreement to purchase 300 MW of power (10 million units daily) from Karnataka but we are not in a position to lift it for want of transmission lines,” an official said.
Laying of transmission lines was stopped because of objection from farmers in the Coorg region.
Absence of transmission corridor has also become a major hurdle, the sources said. The inter-State lines to evacuate power from other States are needed at the peak demand period. The peak demand is about 3,000 MW, but the capacity of inter-State feeder lines is only 1,000 MW, they added.
Violation of purchase agreement by a private supplier in Chhattisgarh has also deprived the State of 100 MW of power. The issue is still with the CERC, they said.
According to the officials, there is a discrepancy of 1.5 million units daily.
The current daily demand of 60 millions units is met by generating 24 mus from the hydel projects ; 23 mus from the central grid, purchase of 3.7 mus from the NTPC Kayamkulam thermal plat at around Rs13 a unit; 2.5 mus from north India (temporary share) and purchase of some share from the open market.
(Source: Business Line November 1, 2014)
JSW ENERGY NET NEARLY DOUBLES TO RS 319 CRORE
Mumbai: JSW Energy reported second-quarter profit that trumped numbers posted in the previous fiscal as it booked highest quarterly net generation of 5,236 million units for the quarter ended September with a plant load factor of 87%.
“During the second-quarter, a modest uptick in activity levels, delayed monsoon and elections related demand primarily led to all India demand for power improving by 10.9% year-on-year,” the company said in a statement. The Sajjan Jindal-led company reported a profit that nearly doubled year-on-year to R319 crore. It had posted net profit of R162.59 crore for the corresponding quarter of 2013-14. Net sales jumped 11% to R2,216.05 crore.
(Source: Financial Express November 1, 2014)
BETTER MARKET MIX HELPS SUZLON NARROW Q2 LOSS TO RS656 CRORE
Mumbai: Wind turbine maker Suzlon Energy Ltd’s net loss narrowed to `656.21 crore for the quarter ended 30 September, from `782.37 crore a year ago, because of a better operational performance and market mix.
Sales grew by 11.85% to `5,378.89 crore in the quarter from `4,808.90 crore for the year-earlier quarter.
In a statement, Suzlon Energy said it had posted its third consecutive quarter of positive earnings before interest, depreciation, taxes and amortization (Ebitda) at a consolidated level.
Ebitda for the reporting quarter was at `114 crore against an operating loss of `31 crore for the corresponding quarter last year.
Kirti Vagadia, group head of finance, said the company had achieved a positive Ebitda in the first half of the fiscal year, which is historically lower than the second half.
“We have improved our gross margin by 500 basis points in the first half of FY15, primarily due to better product and market mix. We continue to optimize our working capital to improve our operational performance,” Vagadia said. One basis point is one-hundredth of a percentage point.
Suzlon’s order book stood at 4.6 GigaWatt, valued at $6.3 billion.
The company’s creditors on 24 January 2013 approved a `9,500 crore debt restructuring plan, agreeing to enhance working capital facilities by `1,800 crore and backed a 10-year back-ended repayment plan.
Early in May, Suzlon, the world’s fifth largest wind turbine maker, announced a cash-less restructuring of its existing foreign currency convertible bonds (FCCBs) worth $485 million for five years, after nearly one-and-half years of complex negotiations with bondholders.
The Pune-based company has four different series of FCCBs issued to investors. Suzlon failed to repay $209 million of debt on 11 October 2012 after bondholders rejected its request for a four-month extension. The default was the biggest on convertible bonds by an Indian company.
As a part of the restructuring, Suzlon will issue about $485 million of new bonds that will have a maturity period of five years and one day from the date of issuance.
Shares of Suzlon Energy gained 1.97% to close at `13.45 on Friday on BSE, while the benchmark Sensex rose 1.9% to close at a record 27,865.83 points. The power index gained 1.94% to close at 2,166.41 points.
(Source: Mint November 1, 2014)
GOVT TO SET UP PANEL FOR VALUATION OF 42 RUNNING BLOCKS
New Delhi: The coal ministry has decided to constitute a six-member panel for valuation and assessment of the 42 running coal blocks which were deallocated by the Supreme Court.
“In pursuance to Supreme Court’s judgement…wherein 204 coal blocks allocated to various companies, since 1993 to 2009 was quashed. Out of these 204 coal blocks 42 (37+5) are running coal mines,” an official said.
“In order to assess the value of the assets to be paid for acquisition of these 42 running mines, the competent authority has decided to constitute a valuation committee,” the official added.
The panel under the chairmanship of Pratiyush Sinha, the retired IAS Officer, will have representative from the ministries of power, finance, law, coal and CMPDIL, the official said.
The committee will carry out assessment of the liabilities associated with the operations of the mine, the official added. The official said that proposed terms of reference of the committee includes, “valuation of assets of each of the coal blocks (37+5)…land demarcated for afforestation and land for rehabilitation and re-settlement of persons affected by coal mining operations under the relevant law.” The panel shall recommend the value of the assets to be paid for acquisition and give its recommendations by 10 November, the official said.
The committee may engage expert/consultants for the purpose of valuation of analysis of coal mines. The committee may consider selecting such experts from the approved panels of public sector banks/insurance companies.
In a major blow to the corporate sector, the Supreme Court had in September quashed allocation of 204 out of 218 coal blocks which were allotted to various companies since 1993.
(Source: Mint November 1, 2014)
COMPANIES FILE REVIEW PLEAS IN SC OVER COAL BLOCK CANCELLATION
NEW DELHI: At least 18 companies including a bank have filed petitions before the Supreme Court seeking a review of its decision to cancel coal blocks allocated to private firms between 1993 and 2011 and levy penalties on coal extracted.
“We have requested the Supreme Court to review block cancellation and levy of Rs 295 per tonne. The Comptroller and Auditor General appropriated this amount as a loss to the exchequer but it cannot be used as a yardstick to penalise the coal block allottees,” said an executive with one of the firms that have filed a petition.
The petitioners want to know the outcome of their appeal at the earliest as the government has already issued an ordinance to initiate the auction of the coal blocks, added the executive, requesting anonymity.
Companies that were awarded coal blocks before 2004 also argued that cancellation is not desirable since the government did not have a competitive bidding system in place for block allocation at the time.
The companies were supposed to file their review petitions within a month from the order dated September 24. However, the Supreme Court extended the time limit to October 27 due to festive season. The court order last month had resulted in cancellation of more than 200 coal blocks awarded to private firms.
Jindal Steel & Power, Monnet Ispat, Usha Martin and Essar are among the worst affected firms that made sizeable investments in power, steel and cement projects to be fuelled by coal from their respective blocks.
Among the lenders, State Bank of India, Uco Bank, IDBI and Punjab National Bank are fearing challenges in recovering loans given to project developers that are facing uncertainties following cancellation of blocks.
It could not be confirmed whether central and state public sector units have also filed the review petition. Utilities of Karnataka, West Bengal and Punjab, besides central PSU Damodar Valley Corporation were producing coal from their respective blocks and the Supreme Court judgment to levy production based penalty is expected to take its toll on their finances.
(Source: Economic Times November 1, 2014)
COAL UNIONS CALL ONE-DAY STRIKE ON NOV 24
Central trade unions in the Coal industry, including CIL, have called one-day token strike on November 24, demanding scraping of the enabling clause for commercial mining in the Ordinance.
The charter of demands includes stopping further stake sale in Coal India Ltd (CIL) and its restructuring plans. The e-auction of coal blocks for private companies was approved through an Ordinance promulgated recently. It came in the backdrop of the Supreme Court order quashing 214 coal blocks to companies since 1993.
The steering committee of the central trade unions met at Ranchi and served a joint notice today for the day-long token strike in the coal industry including Coal India and Singareni Collieries, S Q Zama, secretary-general, Indian National Mine Workers’ Federation told PTI.
Among the 12 demands by the unions, which include INTUC, HMS, AITUC and CITU, were no further disinvestment of CIL, restoring sale of coal from e-auction and others. Later, the four coal unions in a notice to the Coal Ministry said: “The member of steering committee comprising of CTUs (Central Trade Unions) of coal industry through its meeting held on October 31, unanimously resolved to go for one-day token strike in the coal industry CIL (Coal India)…on November 24 to secure the demands.”
At a time when Coal India was trying hard to increase production, a strike would adversely impact the state owned miner in meeting its coal production target with the CIL suffering a daily production loss between 1.5-2 million tonnes, sources said.
CIL missed the output target for the fifth consecutive month producing 34.88 million tonnes of coal in September, against the targeted 36.17 million tonnes. CIL, which accounts for 80 per cent of domestic coal production, missed its output target of 482 million tonnes for 2013-14, producing 462 million tonnes during the period. Stoppage of one day’s work will lead to a production loss of over one million tonnes, at a time when the country is facing fuel shortages, according to industry analysts.
(Source: Business Standard November 1, 2014)