NEW DELHI: A parliamentary panel has pulled up the coal ministry for cancelling allocations to power companies without trying to address the issues that led to delays in developing coal blocks. The ministry had been acting like a big brother, trying to intimidate power companies for reasons beyond their control, the panel noted.
“Mere de-allocation of a block is not a solution, owing to the possibility of new allottees finding it difficult to develop these,” the parliamentary Standing Committee on Energy, headed by Samajwadi Party chief Mulayam Singh Yadav, said in its report on the availability of coal and gas for the power sector.
The government has allocated 206 captive coal blocks, with combined reserves of about 40 billion tonnes to about 100 public and private sector companies since 1991. However, only 26 of these have commenced production, owing to delayed environmental clearances, land acquisition delays and law and order issues.
In a correction drive started two years earlier, the coal ministry had, last year, cancelled about a dozen blocks and issued showcause notices to others. This year, in the second round of the exercise, the ministry is issuing notices threatening cancelling allotments to 58 companies. In its previous report, the panel had noted blocks were allotted without analysing their use to companies. It had, therefore, asked the ministry to act as a facilitator to remove the bottlenecks in the development and award of blocks in a transparent manner.
The panel also pulled up the power ministry for ambiguity in its approach to deal with coal imports to address coal shortages. While the modalities for import are decided by power companies like NTPC, these hold CoalIndiaresponsible for imports, the panel noted.
SHINDE SEEKS PMO HELP IN FORCING CIL TO ENFORCE OLD FSA
NEW DELHI/KOLKATA: Power Minister Sushilkumar Shinde may seek the PMO’s intervention in forcing CoalIndiato quash the new fuel supply pacts, which relieve the state-run miner of most of its supply obligations.
A senior government official said that Shinde is likely to write to the prime minister’s principal secretary, Pulok Chatterjee, seeking directions to state-run CoalIndiato sign the old fuel supply agreements (FSAs) with a commitment to supply 80% of agreed quantity.
In February, the Prime Minister’s Office (PMO) had asked CoalIndiato sign 20-year FSAs with power plants that have inked long-term power purchase pacts with distribution companies and are ready to generate electricity by end-March. When CoalIndiafailed to do so, the order was enforced through a Presidential decree.
However, power companies are now refusing to sign the new FSAs, saying they are tilted in favour of the miner and absolve it of all commitments. So far, only 13 of the expected 50 power units have signed the pact.
“We will take up the issue with both the coal ministry and the PMO,” power secretary P Uma Shankar said on Wednesday. “We will write to the coal ministry after we receive a report from Central Electricity Authority (CEA), which is compiling presentations made by various companies,” he added.
On Wednesday, representatives of power companies including NTPC, Reliance Power, Lanco Infratech and Damodar Valley Corp met CEA chairperson AS Bakshi, who advised them to convey their concerns in writing.
Coal secretary Alok Perti said, “Till now, we have received letters from power companies saying they will not sign the FSAs. We will take up the issue once we have the views of power producers from the power ministry, following today’s meeting where CEA met a clutch of electricity generators.” The new FSA gives CoalIndiathe discretion to terminate the agreement unilaterally, creating uncertainty regarding the pact’s term. Clauses allowing the miner to decide on the cost of imported coal and relieving it from commitment in case of power cuts or equipment breakdown have not gone well with power producers. Power companies are also uncomfortable with CoalIndia’s decision to pay 0.01% penalty for short supply.
POWER SECRETARY TO DISCUSS DEVELOPERS’ CONCERNS OVER FSA WITH COAL MINISTRY
NEW DELHI: The power ministry plans to take up project developers’ concerns about the draft fuel supply agreement (FSA) with the coal ministry soon, a top government official said.
The move is aimed at breaking the prevailing logjam over the signing of the FSAs between power companies and public sector coal companies. Sources said power companies have told the ministry that the draft FSA was not acceptable to them in its present form. The message was communicated to the ministry through the Central Electricity Authority (CEA), which held a meeting with power companies on Wednesday.
“I’ll take up the matter with the coal secretary as early as possible,” power secretary P Uma Shankar told FE.
Wednesday’s meeting was called by the CEA after major power producers like NTPC raised serious objections over recent dilution of the key clauses of the draft FSA, such as those relating to penalty and force majeure conditions. Power companies also made it clear that they would not sign FSAs with CIL unless original provisions are restored.
Industry sources said power producers are miffed that provisions of the draft FSA are skewed in favour of CIL and do not inspire confidence about assured coal supply. It is because CIL has fairly diluted penalty clause in its favour.
The penalty that CIL would attract in case of short supply of coal to power producers is negligible. In case of shortfall in contracted coal supply, CIL would be liable to pay penalty at 0.01% of the simple average base price of short supply against 40% of weighted average base price earlier, sources said.
Under the new penalty system, CIL’s liability will fall down even lower than its commitment under the previous FSAs. For example, if CIL is able to supply just 3 million tonne (mt) of coal for a 1,000 mw power plant that requires annual supply of 5 mt of the fuel, it would be liable to pay only R10,000 as penalty under the new system against R47.5 crore it would have paid earlier. The penalty here is calculated on a 40% shortfall in contracted coal supply at a price of R1,000 per tonne.
As per the government decision, the trigger level for penalty is pegged at 80% of contracted coal quantity. This means CIL is bound to maintain supply to meet at least 80% of the total fuel requirement of a power project. But in the new FSA, CIL has retained the powers to unilaterally change the trigger level for payment of penalty. Besides, the coal suppliers will not be liable to pay penalty for short supply of coal in the first three years from the signing of the FSA, sources said.
CIL was directed by a presidential decree to sign FSAs by March 2012 for power projects commissioned by the end of 2011. FSAs for projects to be commissioned between January 2011 and March 2015 will be signed later.
STATE ELECTRICITY BOARD RECAST CAN SWITCH ON POWER COMPANIES
NEW DELHI: With power utilities acrossIndiain financial trouble, the Planning Commission believes a one-shot restructuring can turn the lights back on. But for restructuring to happen, all stakeholders will have to bear some pain, so the commission wants the prime minister’s office to push its agenda.
State electricity boards (SEBs) have loans of nearly Rs 80,000 crore. The proposal is to distribute the restructuring burden among state governments, banks that have lent to the state power boards and the Centre.
The plan, if implemented, will require the power ministry, the Reserve Bank of India (RBI), the finance ministry, state governments and banks to pull in the same direction.
“In isolation, every stakeholder will oppose the plan. That is why we have gone to the prime minister to get everyone to sit together and find a solution,” said a senior Planning Commission official.
The restructuring plan has also been sent to other stakeholders involved.
Under the plan formulated by a group under Planning Commission Member BK Chaturvedi, state governments will absorb 50% of the debt of power distribution companies and convert them into state government bonds.
Since this will compromise their borrowing ability, the finance ministry will have to provide some flexibility in the fiscal responsibility rules imposed on the state governments.
The other 50% will have to be restructured by commercial banks by extending the tenure for repayment and a possible moratorium on interest. “After such restructuring, loans to power companies will be classified as non-performing assets (NPAs). Therefore, banks will not be able to lend more to the sector,” added the official.
This is where the RBI, according to the plan, will have to step in and give concessions so that banks can continue to lend to the sector.
The states will also have to provide a mechanism to ensure tariffs are raised and the utilities are able to recover the costs after three years.
The losses of state electricity boards are expected to have risen sharply from over 42,000 crore at the end of 2009-10.
The increase in losses is because state utilities cannot charge many users for power or charge very low rates, but have to pay central utilities and other power generators much higher prices for electricity.
SEBs now owe nearly Rs 26,000 crore to central generation utilities.
“The problems after the restructuring are also immense. State governments will have to allow significant increases in power tariffs across the board and many might not be willing to do that,” said another Planning Commission official.
A finance ministry official confirmed to ET that his ministry had received an proposal from the Planning Commission and indicated the North Block is likely to support it.
“I do not know what the final decision will be, but I think allowing states to take up debt as bonds might be feasible,” the official added.
Independent experts agree that a comprehensive bailout involving all stakeholders is needed, but caution against the type of bailout the government sponsored a decade ago.
“The losses have grown bigger and spread across more states,” says Kameswara Rao, executive director (government & infrastructure), PwC. He suggests the bailout must include even the regulators and draw up a committed action plan on yearly rise in tariffs, reduction in subsidies and modernisation.
NTPC EXTENDS DEADLINE FOR COAL IMPORT TENDERS
NEW DELHI: NTPC has extended the deadline for its global tender for importing five million tonne of coal by another 15 days.
The techno-commercial bids were to be opened on May 9 and 10.
Official sources said the decision was taken to ensure better participation, after a request from vendors at a recent pre-bid meeting.
NTPC is looking for long-term contracts for sourcing coal to ensure that it has secure fuel supplies for projects, and to protect itself from volatility in pricing.
Earlier, coal was imported for NTPC through Central public sector undertakings like MMTC Ltd and STC Ltd. Since March 2012, the company has started procuring imported coal through international competitive bidding. For this, no service charge is paid to the private party.
Recently, NTPC had contracted Adani Group to source 4 million tonne of coal from overseas to meet its requirements for 2011-12.
On April 4, NTPC floated a tender for importing five million tonne of coal for its 14 stations. The stations include: Talcher Thermal & Talcher Kaniha Power Plants (1.25 million tonne), Farakka and Kahalgaon Power Plants (1.25 million tonne), as well as Simhadri and Ramagundam Power Plants (0.9 million tonne).
It is also seeking 0.9 million tonne for Dadri, Rihand, Singrauli, Tanda, Unchahar and Vidhyachal Power Plant, and 0.7 million tonne for Korba and Sipat Power Plants.
For 2011-12, NTPC’s coal requirement was about 164 million tonne. Of the total, about 114 million tonne come from CoalIndiaand about 16 million tonne from its subsidiaries, SCCL and ECL. NTPC meets the remaining 10-15 per cent of its needs through imported coal, which is also expensive.
However, with capacity addition, this requirement is expected to go up, official sources said.
Shortage in domestic fuel supply has affected NTPC’s generation productivity by 10-15 cent annually. The company, at present, has 15 coal-based, seven gas-based and six joint venture power stations and plans to be a 128,000 MW company by 2032.
NTPC EAST TOPS IN PLANT LOAD FACTOR
KOLKATA: The Eastern Region II of NTPC Ltd has topped the list of company’s seven regions in terms of Plant Load Factor (PLF) during the month of April, 2012. A plant load factor is a measure of the output of a power plant compared to the maximum output it is capable of producing. The two operating stations of the region together generated 2412.83 million units (MU) with a PLF of 96.85 per cent. While the Talcher Super Thermal Power Station generated 2127.58 MU with a PLF of 98.5 per cent, the Talcher Thermal Power station contributed 285.25 MU with a PLF of 86.13 per cent, said a press release from NTPC.
PGCIL TO RESTORE DAMAGED LINES RELATED TO NE REGION NEXT WEEK
NEW DELHI: State-run Power Grid Corporation (PGCIL) today said damaged towers of transmission lines that carry electricity to the North East region would be restored by next week.
Towers had collapsed at two locations near Alipurdwar inWest Bengalon 400 kV Binnaguri-Bongaigaon circuits due to heavy storm and inclement weather conditions on May 3, Power Grid said in a statement.
This line connect NER (North Eastern Regional) and ER (Eastern Regional) grids.
Power Grid said it expects to “restore this line by May 14/15 on permanent basis”.
According to the statement, the NER grid continued to be connected with the ER grid by two numbers of 220 kV circuits between Birpara (WB) – Salakati (Assam).
“The demand around 1,400 MW with daily energy content in the range of 23-25 million units (of electricity) were being met against typical day peak demand of 1,500 MW and energy around 24-26 million units,” it noted.
Power Grid is engaged in power transmission business with the mandate for planning, co-ordination, supervision and control over complete inter-state transmission system.
AT NTPC, EASTERN REGION II CLOCKS HIGHEST PLANT LOAD FACTOR AT 96.85%
KOLKATA: The Eastern Region II of NTPC Ltd has topped the list of company’s seven regions in terms of Plant Load Factor (PLF) during April 2012.
A plant load factor is a measure of the output of a power plant compared to the maximum output it is capable of producing.
The two operating stations of the region together generated 2412.83 million units (MU) with a PLF of 96.85 per cent. While the Talcher Super Thermal Power Station generated 2127.58 MU with a PLF of 98.5 per cent, the Talcher Thermal Power station contributed 285.25 MU with a PLF of 86.13 per cent, said a press release from NTPC.
The Eastern Region II of NTPC comprises two operating stations in Angul district of Odisha, with two more in the making in Sundargarh and Dhenkanal districts of the state, besides one under construction in Kokrajhar district of Assam.
A DOZEN ROADSHOWS ABROAD ON THE CARDS FOR NTPC
MUMBAI: National Thermal Power Corporation (NTPC) will organise a dozen roadshows abroad, nine in theUSand Europe and three inAsia, to woo foreign investors to its initial public offering (IPO).
The offer, which will mark the Congress-led government’s first reduction of shareholding in a company, is considered to be the largest from a power firm inAsiaover the last decade.
Priced within Rs 52-62, the 100 per cent book built issue will remain open from Oct 7 to 14. The company has yesterday filed the prospectus with the Registrar of Companies (RoC).
It received the permission from the market regulator, the Securities and Exchange Board of India (Sebi). The company will offer 865,830,000 equity shares of Rs 10 each, which will reduce the government’s stake to 89.5 per cent.
Sources said: ”The initial response from abroad is quite impressive. Two groups of company officials, along with representatives of the lead managers will visit New York, Washington, Boston, Denvar, San Fransisco, London, Edinbera, Frunkfurt, Australia, Singapore, Hong Kong and Japan.
The domestic road shows will be kicked off tomorrow.” They added the Japanese investors have expressed interest to subscribe to the issue.
The listing of the issue is expected to be in early November. NTPC is the only Navratna company not yet listed on the bourses. At the upper level of the price band, the company is the country’s third most valuable firm, after ONGC and Reliance, edging out Indian Oil.
Lead managers of the issue are ICICI Securities, Kotak Mahindra Capital and Enam Financial Consultants.
RELIANCE POWER IN FUEL SUPPLY PACT FOR U.P. PLANT
KOLKATA: In an apparent breakaway from the private power producers lobby, Reliance Power entered into fuel supply agreement (FSA) for three units of 300 MW each for Rosa Power in Uttar Pradesh.
Lanco was the other major private producer to have entered the pact in the past.
The private power producers lobby was demanding amendment of the clauses, allegedly biased in favour of the monopoly, in the draft FSA. Sources say that with the exclusion of two major producers, Adani Power is the only major private power producer yet to accept FSA terms.
The Ahmedabad-based company is reportedly in need of CIL supplies for 3-4 units.
Sources told Business Line that the private producers’ concern was apparently appreciated by the highest authorities in the Union Government. While anticipation is rife that the Government may suggest the coal major to relax some of the clauses especially the fore majeure conditions to make FSA more palatable to the power lobby, CIL sources did not confirm any move by the Government so far to override board decisions.
Also, some of the private power companies do not have the requisite power purchase agreements in place which is a pre-condition to enter the FSA and is therefore buying time.
Meanwhile, CIL continues supplying nearly 36 million tonnes coal to the power units under memorandum of understandings signed previously. “We (CIL) are not legally bound to continue such supplies once FSA is invited. However, we have decided to continue with the same for the time being,” a source said.
Among the recipients of such supplies are a number of NTPC units which are now expected to enter into firm supply pacts.
GVK POWER INCURS RS 20.58-CRORE LOSS
CHENNAI/HYDERABAD: GVK Power & Infrastructure Limited (GVKPIL) has posted a net loss of Rs 20.58 crore for the quarter ended March 2012. The loss is 43 per cent higher than the loss of Rs 14.5 crore it had incurred during the same period previous year.
The company’s income during the quarter stood at Rs 657.59 crore, as against Rs 744.55 crore in the fourth quarter of 2010-11.
For the year ended March 31, 2012, it posted a net profit of Rs 61.46 crore, a 60 per cent decline, as compared to the net profit of Rs 154.91 crore in the previous year.
The lower profits during the year have been attributed mainly to the restricted supply of gas for the power projects during certain times of the year, as a result of which the plants did not operate at full capacity, loss on account of foreign exchange fluctuations and higher interest cost.
GVKPIL’s director and chief financial officer, A Issac George, has attained superannuation.
He would, however, continue to be on the board as a non-executive and non-independent director. Besides, he is being appointed as the chief executive officer of GVK’s transport vertical, the company stated in a press release.
TOSHIBA GETS RS 1,690 CR ORDER FOR POWER PLANT IN UP
NEW DELHI: Japanese major Toshiba has bagged a $315 million (over Rs 1,690 crore) contract for supplying two units of 660 MW super critical steam turbines and generators package to Meja power plant in Uttar Pradesh.
“The equipment will be installed in the Meja thermal power plant in Uttar Pradesh. The value of the contract is about $315 million. The scope of the contract covers engineering, procurement, manufacturing, installation and testing of the steam turbine generator islands,” the company said in a release.
Meja plant has a capacity of 1,320 MW. Meja Urja Nigam is joint venture between NTPC and Uttar Pradesh Rajya Vidyut Utapatdan Nigam Ltd.
In 2008, Toshiba along with JSW set up the manufacturing joint venture Toshiba JSW Turbine and Generator Pvt Ltd in Chennai. The entity is 75 per cent-owned by Toshiba.
“Steam turbine and generator for the Meja thermal power plant will be manufactured at Toshiba JSW and at Toshiba’s Keihin Product Operations inJapan.
“Commercial operation of the first unit is scheduled in 48 months from the contract award and the second unit in 54 months,” the release said.
GREENHOUSE GAS EMISSIONS UP 4.2%
NEW DELHI:India’s greenhouse gas (GHG) emissions rose 4.2 % to 1301.21 million tonne in 2000 compared with 1994 levels and the GHG profile for the year 2007 is estimated to be of the order of 1771.66 million tonne carbon dioxide equivalent.
These are the findings of the second national communication to the United Nations Framework Convention on Climate Change (UNFCCC) prepared by the ministry of environment and forests, towards fulfillment of the reporting obligation under the convention. The first national communication was submitted to the UNFCCC Secretariat on June 22, 2004.
The report includes results of wide ranging national-level studies that provides details of climate change scenarios and its impacts on key sectors, such as water, agriculture, forestry, natural ecosystems, coastal regions, human health, energy, industry and human settlements.
The energy sector accounted for 67.4% of total GHG emissions, followed by agriculture at 23.3%, industrial processes at 6% and waste sector 3.4%.
The GHG Inventory has been reported as per the stipulated guidelines using prescribed methodologies by Intergovernmental Panel on Climate Change (IPCC).
“Indiais fully committed to its responsibilities towards global community. We have voluntarily reduced carbon emission,” said environment minister Jayanthi Natarajan while releasing the report.
The report noted that climate change will be an additional stress on Indian forests, especially in Upper Himalayan stretches, which are already subjected to multiple challenges including over-extraction, livestock grazing and human impact. The assessment of climate impacts showed that at the national level, 45% of forested grids are likely to undergo changes.
In the report, a digital forest map of the country was used to determine spatial location of all the forested areas. This map was based on a high-resolution mapping, wherein the entire area was divided into over 1.65 lakh grids. Out of these, 35,899 grids were marked as forest grids –along with the forest density and forest types.
The report says the sensitive grids are spread acrossIndia. However, their concentration is higher in upper Himalayan stretches, parts of Central India, northern western Ghats andEastern Ghats. On the other hand, north-eastern forests, southern Western Ghats and the forested region ofEastern Indiaare estimated to be the least vulnerable.
PRIVATE EQUITY INVESTORS LINE UP TO CASH IN ON WIND ENERGY SECTOR
BANGALORE: Trishe Energy, the Chennai-based wind power developer is currently in talks with a number of private equity firms to raise about $100 million, which it plans to re-invest in infrastructure, including land development and power allocation.
“We are seeing a lot of interest from private equity investors, and the fund raise should be done in three or four phases,” Bikramaditya Raha, president – projects, TrisheIndia, said without disclosing the names of potential investors.
Trishe, a pure-play engineering, procurement, construction (EPC) developer, handles turn-key projects for enterprises looking to set up wind farms.
The transaction, which, according to Raha, should close in less than six months, is the latest one in the country’s wind energy sector, which has been seeing a sudden infusion of risk capital, as private equity funds look to increase their exposure toIndia’s renewable energy sector.
“The potential for growth inIndiais very high, taking into account government policies and the gap between demand and supply,” Raha said.
Top 5 deals in the space:
1. IFC, the private sector investment arm of the World Bank, is currently in discussions to invest a possible $130 million in INOX Renewables. The deal is a debt and equity transaction, and is expected to close soon.
2. Chennai-based Trishe Energy is in talks with a number of undisclosed private equity firms, to raise $100 million. The deal, which will be done in three to four phases, is expected to close in less than 6 months time.
3. ReGen Powertech also raised Rs 152 crore from Mcap Fund Advisors, TVS Capital and IDFC Private Equity in April 2012.
4. NSL Renewable Power Pvt. Ltd, part of the Hyderbad-based NSL Group, raised $40 million from clean energy-focused PE fund FE Clean Energy Group in July 2011.
5. Mytrah Energy India Ltd, formerly known as Caparo Energy Ltd, raised close to $20 million in mezzanine funding from PTC India Financial Services. This was preceded by IDFC investing $33.5 million, also as mezzanine funding, in the company in August 2011.
Earlier in the month, ETwas the first to report wind turbine maker ReGenPowertech raising Rs 52 crore in a follow-on round from two marquee private equity firms, TVS Capital and MCap Fund Advisors. The deal valued the four-year company at Rs 1,850 crore.
“The wind energy sector inIndiawill continue to grow because it has achieved parity due to the rising coal and oil prices. The valuations are good, considering that we were valued at close to Rs 2,000 crore, which is quite good for a four-year old company,” R. Sundaresh, joint managing director, ReGenPowertech, pointed out.
Separately, International Finance Corp, the private sector investment arm of the World Bank, is currently in discussions with Noida-based wind farm developer INOX Renewables Ltd to invest a possible $130 million in a debt and equity transaction.
“The advantage which the wind energy sector has over others, is that it is very competitive, There are hardly any resource costs involved, while land acquisition and technology costs are one-time expenses,” Soumya Banerjee, senior investment officer, IFC, said.
The proposed investment by IFC involves taking an equity stake in INOX Renewables, and providing senior debt for construction of up to 400 MW of wind projects in Rajasthan andGujarat.
The company, which was incorporated in 2010, has stated plans of building 3000 MW of wind projects by 2017, most of which will be concentrated in the afore-mentioned states.
Asia’s third-largest economy has been struggling with massive power shortages, with state utilities unable to produce enough power to meet the growing demands of its industries.
Separately, the ongoing rise in global oil prices has also continued to be a drag on the country’s economic growth.
“The issues relating to coal and thermal have been talked about a lot. Aside from supply and pricing issues, it is about availability too. In fact, on a number of occasions, risk mitigation strategies are not being honoured. Investors are going to stay away,” Satish Chaluvadi, director, MCap Fund Advisors, said.
However, successive governments’ proactive renewable energy policies have encouraged a number of the world’s biggest private equity funds to invest in the sector.
“If you look at the renewable energy sector in totality, excluding dams, 70% of the total investments made inIndiahave been in the wind energy sector. Out of the 23,000 MW of renewable energy space, excluding large hydro projects, 16,000 MW is available for generation by the wind energy sector,” Akshay Dua, associate vice-president, IFCI Venture Capital Funds, said.
Dua also points to the government’s accelerated depreciation incentive that allowed projects to deduct up to 80% of value of wind power equipment during first year of project operation. Investors are given tax benefits up to 10 years.
“Every country is trying to ensure that they get their energy supplies within their borders. It’s the same forIndia, because CoalIndiahas not been able to meet demands. Our peak deficit is probably between 12% to 15% at the moment,” he pointed out.
Why investors see the sector as an attractive investment destination:
1. Proactive energy and regulatory policies such as accelerated depreciation, indirect tax benefits and the issuance of renewable energy certificates that bring greater liquidity.
2. With global commodity prices on the rise, policy makers have been championing the growth of the renewable energy sector inIndia.
3. Solar and bio-mass havent been able to scale as quickly as wind energy. Investors do not believe that the two sectors will be able to survive without the continued support of policy-makers. However, wind energy companies have been able to stand on their own even after the gradual withdrawal of subsidies.
4. Still seen as a niche sector by investors. Therefore, not too many complaints relating to valuations.
5. Lower infrastructure costs of setting up wind farms, as opposed to thermal and hydel plants. Power generation costs have already reached parity with thermal power.
The introduction of Renewable Energy Certificates (REC) have also been cheered by entrepreneurs and investors alike, as they are seen as a positive move towards greater monetisation, an bringing increased liquidity to the market.
But hurdles such as land acquisition and lack of grid infrastructure could see a slowdown in PE interest in the sector.
“Land acquisition inIndia, due to the existing land laws, continues to be a challenge. Governments and state utilities have to also invest a lot more and increase grid capacity to carry the power,” pointed out ReGenPowertech’s Sundaresh.
Valuations, for the moment, do not seem to be an issue.
“The valuation story hasn’t been too bad so far. ReGenhas grown simply on an equity base of Rs 150 crore. We are seeing efficient deployment of capital, high margins and return on equity. The sector is standing on its own now, unlike solar or bio-mass,” Chaluvadi of MCap Fund Advisor said.
FLEXENCLOSURE INKS JV WITH MUMBAI’S ARTHEON GROUP
KOLKATA: Flexenclosure, a global developer of environment-friendly energy solutions for telecom companies, has inked a 51:49 joint venture with Mumbai’s Artheon Group, and has named ex-Nokia Siemens Networks (NSN) business development head Mukesh Singh as CEO of its India arm. It has also roped in ex-Uninor COO Rohit Chandra into the leadership team, said a top company executive.
The Swedish firm has enteredIndiaat a time when tower companies are going green to cut diesel consumption and carbon emissions. Artheon Group has interests in telecoms, IT and re-newable energy.
One of the first tasks of the Swedish company would be to expand its partnership with Bharti Airtel beyondAfrica.India’s largest telecom company has deployed Flexenclosure’s green energy solution inGhanaandNigeria. “We are in talks with Bharti Airtel to deploy our green energy solution across its South Asian operations. We are also in talks with Airtel tower arm Bharti Infratel, andIndusTowers,” said Flexenclosure global CEO David King.
At present, there are nearly 4 lakh telecom towers, and according to AT Kearney estimates, the Indian tower industry spends a whopping 8,500 crore a year on diesel.
COAL MINISTRY SEEKS COMMENTS FOR EXCESS COAL USAGE POLICY
NEW DELHI: The Coal Ministry has sought comments from various ministries on usage of surplus coal from captive mines, following an inter-ministerial panel suggestion to formulate a policy on utilisation of excess fossil fuel.
“The Ministry is seeking comments on the draft policy from various ministries, including Power, Steel and Law,” a source in the know said.
The development follows Coal Minister Sriprakash Jaiswal stating a few days backs that a policy on the usage of incremental coal would be finalised in a month’s time.
The Empowered Group of Minsters (EGoM), headed by Finance Minister Pranab Mukherjee, last month asked the Coal Ministry to formulate a policy on the use of surplus coal, the source added.
After seeking comments from various ministries, the draft policy on usage of surplus coal would come up for deliberation in the meeting of Committee of Secretaries (CoS).
“Consequently, CoS will submit its report to EGoM, following that it (the draft policy) would go to Cabinet for approval,” another source said.
The draft policy says that the extra coal from captive mines should be given to Coal India (CIL).
In March, the EGoM had decided not to review the earlier decision allowing Reliance Power to use excess coal from the Sasan Ultra Mega Power Plant (UMPP) mines for its another project.
CABINET MAY CONSIDER COAL REGULATORY BILL DRAFT TODAY
NEW DELHI: The Cabinet is expected to consider on Thursday the draft bill for setting up coal sector regulator to ensure transparency in the allocation of coal blocks and to expedite the resolution of pricing disputes.
“The Cabinet may take up Coal Regulatory bill tomorrow (today),” coal minister Sriprakash Jaiswal told PTI.
About a fortnight ago, the Coal Ministry had said it will soon come out with the Coal Regulatory Bill, 2012.
“I have already signed the draft Bill and it has been sent to the Cabinet (for approval),” Jaiswal had said.
FIRMS IN NTPC COAL TENDER PREPARE FOR INDONESIA TAX HIKE
LONDON: Country’s National Thermal Power Corp (NTPC) has pushed back the closing date of its 5 million tonne thermal coal tender until 23 May, traders said.
Firms participating in the tender said they were considering various measures to take account of a potential increase in export taxes byIndonesia, which supplies the bulk ofIndia’s imported coal for power generation.
India’s biggest trader importers – Adani, Bhatia International, Coal & Oil, Visa and state entity MMTC – are expected to offer into the tender and to supply entirely or mostly Indonesian coal.
NTPC has relaxed its terms to promote greater transparency in the tender process and allow more firms to participate but any winning suppliers must still deliver coal to individual power plants and pay a hefty bond, which rules out some of the smaller players.
Of more concern has been how to handleIndonesia’s proposed leap in export taxes on coal and base metals.
Indonesiaplans to raise export taxes to 25% this year, leaping to 50% in 2013.
Few details have emerged of the government’s plans, which have been viewed sceptically by rival exporters and the big trading houses but there is mounting anxiety inIndia.
The Indian government plans to raise concerns withJakartaover the tax plans becauseIndonesiais a vital source of fuel to supply power-hungryIndia.
“Five million tonnes of coal is a half a billionUSdollars and 25% of that is a lot of money, everybody is taking precautions to allow extra costs due to tax to be passed on in some way,” one trader said.
Such a tax rise would be an economic risk and not qualify as a force majeure which would release parties from their contractual obligations so suppliers will have to find a way to cover their risk in their tender offers, traders said.
“Nobody can absorb that kind of export tax, some risk has to be taken into account,” said a source at another firm likely to bid.
NO CHANGES IN FUEL SUPPLY PACT CLAUSES: COAL INDIA
NEW DELHI: Power producers in queue to sign fuel supply agreements with CoalIndiaare in for a setback as the public sector miner is in no mood to tweak any agreement clauses.
The Coal India Chairman, Mr S. Narsing Rao, said that his company is not going to review any clauses of the draft FSA (fuel supply agreement) to be signed with the power producers who have commissioned units till December 2011.
“This is a generic FSA and approved by the Board. This cannot be changed again and again,” Mr Rao told Business Line.
Earlier this week, CoalIndiamanagement held discussions with power producers including NTPC on various issues.
“The discussions are on matters related to supply chain, quantity of coal etc. We are not discussing anything on FSAs (with power producers),” added Mr Rao.
Meanwhile, power producers have sought their nodal Ministry’s intervention to change few clauses in the FSA that are biased towards CoalIndia.
These companies want CoalIndiato increase penalty clause from 0.01 per cent in case of any supply shortfall and also change other conditions such as discretion to terminate fuel supply agreement, among others.
This has resulted in only few FSAs (about 13) being signed till Tuesday against 38 in line.
According to sources, the Prime Minister’s Office is believed to have backed CoalIndiaon the issue.
In February, the Prime Minister’s Office asked CoalIndiato sign fuel supply pacts at 80 per cent requirement for 20 years.
COAL CONTINUES TO TOP RAILWAYS’ FREIGHT LIST
KOLKATA: Coal continues to be the single largest item of freight traffic of the Indian Railways (IR), with its share in total freight traffic set to rise to more than 47 per cent in 2012-13 from around 47 per cent in 2011-12.
In the current fiscal, the coal throughput of IR is targeted at 485 million tonnes (mt) out of the total targeted freight traffic of 1,025 mt while the actual volumes handled in the last fiscal were 456 mt of coal out of a total of 969.78 mt.
Thus coal alone will be 29 mt out of the targeted incremental freight traffic of 55.22 mt in 2012-13.
After coal, comes cement with an incremental throughput target of 10.5 mt at 118 mt (107.5 mt), followed by foodgrains 4.1 mt at 49.75 mt ( 45.6 mt), the container traffic 3.4 mt at 42 mt (38.6 mt) and iron and steel 2.2 mt at 37 mt (34.8 mt).
The throughputs of raw materials ( other than iron ore) for steel plants will post a growth of 0.85 mt at 15.25 ( 14.4 mt) and other cargoes 0.6 mt at eight mt (7.4 mt). The iron ore traffic, it is estimated, will post a negative growth, marginally though. In 2012-13 IR is targeted to handle 104.65 mt of iron ore covering all segments such as exports, domestic and integrated steel plants as against 104.71 mt in 2011-12.
Zonewise, South East Central Railway, the largest freight-loading zone of IR, has been given a freight traffic target of 158 mt over last fiscal’s throughput of 150.73 mt.
The corresponding figures for other zonal railways are East Coast Railway 130 mt (120.77mt ), South Eastern Railway 118.3 mt (117.01 mt), South Central Railway 111.5 mt (103.17 mt) and East Central Railway 102 mt (94.68 mt). Thus, these five zonal railways together are to handle nearly 620 mt , or more than 60 per cent of the total targeted traffic.
Among other zonal railways, Western Railway has been given a target of 75.5 mt (70.64 mt), Eastern Railway 61 mt ( 57.75 mt), Central Railway 58 mt ( 55.61 mt), Northern Railway 50 mt (47.1 mt) and South Western Railway 34 mt ( 33.18 mt).
The highest incremental target, 9.27 mt, has been given to East Coast Railway, followed by South Central Railway, 8.33 mt. With coal import steadily rising, the zonal railways like East Coast and South Central, having exposure to both ports and inland collieries, will handle more traffic than others having no exposure to port related traffic.
On the other hand, Western Railway with hardly any colliery link handles only imported coal , particularly through Mundra, perhaps the country’s biggest coal importing port.
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