MUMBAI: The power ministry has proposed a slew of amendments to the Electricity Act, 2003, in a bid to remove anomalies in its implementation. The ministry has proposed amendments to Section 11 to curb its alleged misuse by state governments and prohibit the sale of surplus power from generating units to entities outside a state.
It has proposed an appropriate government may specify that a generating company shall, in extraordinary circumstances, operate and maintain any generating station in accordance with the direction of that government.
The ministry said, “For Section 11, ‘extraordinary circumstances’ mean those arising out of threat to the security of a state, a public order or a natural calamity, or other circumstances arising in public interest, except for the implementation of open access, as envisaged in the Act.”
The ministry’s proposal has secured support from the Forum of Regulators, an apex body of power regulators. The forum said, “The Act may be amended to provide greater clarity on the meaning of the ‘extraordinary circumstances’ mentioned in Section 11.”
A power ministry official told Business Standard, “The proposed amendments would be looked into by a committee appointed recently.”
Pramod Deo, chairman of the Forum of Regulators and the Central Electricity Regulatory Commission, said the forum had discussed these amendments.
The ministry’s move is crucial, given several states were resorting to invoking Section 11, citing rising power shortages. These were asking all power generating stations to operate at their full capacity and supply power within the state. Recently, states like Andhra Pradesh, Karnataka and Tamil Nadu had exercised their powers, invoking Section 11.
While the ministry has also proposed an amendment to Section 61(1), the Forum of Regulators said amendments in Sections 62 and 63 would introduce more clarity. However, it said determining generation tariff should be based on competition.
VALLUR THERMAL PLANT’S FIRST UNIT TO GO ON STREAM BY JUNE-END
CHENNAI: The first unit of NTPC-TANGEDCO joint venture project at Vallur will go on stream by June end and that of North Chennai Thermal Power Station (NCTPS)-stage II by July 2012, according to an official release issued on Wednesday.
An assurance to this effect was made by BHEL Chairman Managing Director B.P. Rao and NTPC Chairman and Managing Director Arup Roy Choudhury at a joint inspection and at the review meeting conducted by the Chief Secretary Debendranth Sarangi.
Mr. Choudhury said the first unit of NTPC-TANGEDCO would start functioning with full load from June end onwards. The second unit would be commissioned by September 12.
According to Mr. Rao, the first unit of NCTPS would be commissioned by July and it will attain full load operation by August. The second unit of NCTPS would be commissioned by October 2012. When it is fully operational, the State would get the entire load of 1200 MW of power.
Mr. Sarangi reviewed the work in progress of 3 x 500 MW NTPC-TANGEDCO joint venture project at Vallur and the 2 x 600 MW NCTPS stage II. He asked the officials to expedite the ongoing projects in view of the power shortage prevailing in the State as they were running behind due to various reasons.
The first unit of 500 MW of the Rs.8,000 crore Vallur joint venture project has already been synchronised with the grid on March 9.
The balance works is to be speeded up in order to achieve the full load operation. The State would be getting 345 MW of power each from the three units, an official release said.
SIMHADRI NATIONAL THERMAL POWER CORPORATION UNIT FACES COAL CRUNCH
VISAKHAPATNAM: Coal shortage could pose serious threat to power generation at Simhadri National Thermal Power Corporation (NTPC) here. Apart from its three units of 500 MW each, another 500 MW unit, which was commissioned recently, would be fully operational soon.
Sources said the Simhadri plant was not getting sufficient coal stocks following shortage of supply from Singareni collieries. NTPC Simhadri needs 32,000 metric tonnes of coal every day for its four units. However, the plant is relying on supplies fromMahanadicoal fields. Since the supply channel is on the main line of Kolkata-Chennai railway route, any disruption could pose serious problem to operations at the units, NTPC sources said.
Though the plant has storage of coal for 10-12 days and has facilities to use 20% of imported coal, the authorities do not want to take any chances since utilization of imported coal enhances the production costs. NTPC Simhadri is currently using 6,000 metric tonnes of imported coal fromIndonesiaevery day. The imported coal generates only 10% of ash compared to 35% of ash generated by Indian coal, officials said. Emission levels of imported coal are very low compared to indigenous coal. “Though the power sector has shown improvement in recent years, the coal sector has not grown on a par with it across the country,” NTPC Simhadri general manager D K Sood said.
Sources said to overcome the coal shortage, NTPC is trying to develop its own mines. Sood said NTPC is diversifying beyond the fossil fuels as it has plans to enhance its capacity by entering into hydro, nuclear, solar and wind power generation.
TELK SETS TARGET FOR MANUFACTURING
KOCHI: Transformers & Electricals Kerala Ltd (TELK) has set a manufacturing target of 6,400 MVA for 2012-13 against the installed capacity of 4,500 MVA.
The company, a joint venture of Kerala government and NTPC Ltd, had notched up its highest ever production of 5,806 MVA in 2011-12, registering a significant growth of 12 per cent over the previous year.
The achievement has been significant at a time when many transformer manufacturers have reported operating losses during 2011-12, Mr Arun Kumar Gupta, managing director, TELK, said in a statement.
The manufacturing target for 2012-13 has been set despite stagnation in the power sectors and intense competitive pressure from other domestic and international manufacturers.
All trade unions have supported to achieve the target with minimum costs and highest productivity in the current year 2012-13, he said.
TELK, he said, had completed yet another successful year 2011-12, in the backdrop of difficult market condition adversely affecting the transformer industry.
He pointed out that the company reported an increase of 8.25 per cent in its profit after tax touching Rs 13.21 crore and 8.61 per cent in its net worth. The net worth today stands at Rs 116.24 crore.
The Board of Directors recommended dividend for third consecutive year and also approved the annual account for the FY 2011-12.
Thus, TELK has achieved yet another distinction of being the first PSU for second time to have completed the finalisation of annual account in the State, he added.
NUCLEAR POWER CORP VENDORS CONTEST LIABILITY CLAUSES
NEW DELHI: Vendors to the Nuclear Power Corporation of India Ltd (NPCIL) say the the Civil Liability for Nuclear Damage Act, 2010, has put unlimited liability on them, leading to insurance companies denying them cover.
The vendors also have a problem with a section of the Act that seems to allow proceedings against them under other laws as well. The Federation of Indian Chambers of Commerce and Industry (Ficci) has raised the issue with the Prime Minister’s Office (PMO). In a letter to
V Narayansamy, minister of state, Ficci has sought clarifications on Section 17(b) of the Act, for which the rules were notified last November.
The section says the operator (NPCIL) will have the right to recourse if “the nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with patent or latent defects of sub-standard services.” This, according to the vendors, puts unlimited liability on them. The Ficci communication stated liability on suppliers should not be there in the case of equipment supplied over five years before.
Hence, Ficci has asked the government to change the rules to quantify the liability in terms of time and amount. S K Ghosh, advisor to the nuclear business of Walchandnagar Industries, said it was a very important issue, affecting vendors and their employees, too.
Industry officials say insurance companies, including those in the public sector, refuse to provide them insurance cover since the liability under Section 17(b) cannot be quantified. This is surprising, said the vendors, as the proposed International Financial Reporting Standards says all liabilities must be disclosed in the balance sheet of the company.
Ficci also said Section 46 of the Act allowed for proceedings under laws other than the Act. This would “put suppliers at the risk of unlimited liability,” the chamber said. The rules under the Act are silent on this section.
However, officials of the department of atomic energy said the apprehensions regarding Section 46 are too far-fetched, as the section was relevant only for the operator and not the suppliers. Hence, there does not appear a need for a re-look, the officials said.
Another objection, according to a section of the vendors, is the removal of the indemnification clause from the NPCIL tenders after the new rules. Earlier, the operator was to take the liability in the case of any accident that would result in third-party loss to life and property.
At the time of sanctions againstIndiafor proceeding with a nuclear programme from the late 1990s, vendors continued supplying equipment to NPCIL despite the fact that they also came under the ambit of those sanctions and had to bear a loss of business in their other ventures with theUnited States. They were assured because of the indemnification clause, the vendors said.
“We continued to supply equipment even at the cost of other businesses only due to the indemnification clause that assured us,” industry players said.
Though analysts said public sector companies were also not very comfortable with the new rules, officials of Bharat Heavy Industries Ltd, one of NPCIL’s suppliers, refused to comment when asked. Larsen & Toubro and Godrej are among the non-government vendors to NPCIL.
NPCIL officials tried to play down objections by the vendors, saying there had been some contracts despite the new rules. The government has a target of 63,000 Mw of energy from nuclear sources by 2032, of which 4,000 Mw has been achieved. Only 2.5 per cent of the installed power capacity in the country is through nuclear sources.
SHENZHEN SHANDONG NUCLEAR POWER CONSTRUCTION COMPANY WANTS TO ENCASH VEDANTA ALUMINIUM’S BANK GUARANTEE
MUMBAI: Shenzhen Shandong Nuclear Power Construction Company has moved the Bombay High Court seeking invocation of the 30-crore bank guarantee provided by Vedanta Aluminium for machinery purchase.
A bench comprising Chief Justice Mohit Shah and Justice NM Jamdar directed that the bank guarantee funds be deposited with it. The next hearing will be on July 16.
A single-judge court had earlier ruled in favour of Vedanta.
Vedanta and China’s Shenzhen Shangong are engaged in a dispute over the payment for supply of machinery to the London-listed company’s power plant being set up at a cost of 1,200 crore in Lanjigarh, Odisha. The Chinese company has delivered the equipment, but the project is stuck due to lack of governmental clearances.
Shenzhen alleged that Vedanta Aluminum hid the fact that it did not have the approval of the environment ministry. Vedanta said the contract mentioned that ministry approval was pending. A Vedanta spokesman declined to comment for this report.
TAMIL NADU TO SET UP SOLAR PARKS TO GENERATE 1000 MW
CHENNAI: Tamil Nadu government today proposed to set up solar powered parks with the aim of generating 1000 mw in the next five years in the public-private participation mode.
Initially Rs thousand crore will be invested in southern parts of the state over 500 acres to produce 100 mw, Industries minister P Thangamani told the state assembly.
Replying to the grants for his department for 2012-13, the minister said the Tamil Nadu Industries Development Corporation (TIDCO) will set up such solar parks.
Thangamani recalled that Chief Minister Jayalalithaa had mentioned in her ‘vision 2023’ document the intention to produce 11000 mw of solar power in the next 11 years.
GAMESA TO SELL 700 MW WIND TURBINES THIS YEAR
MUMBAI: Spanish wind turbine major Gamesa today said it is planning to sell 700-MW turbines in the country this year.
“We plan to sell here around 700 MW wind turbines by December which will include machines of 850kv and 2 MW,” Gamesa Wind Turbines India, subsidiary of the Spanish company, CMD Ramesh Kymal told reporters here.
ForGamesa,Indiaaccounts for about 20% of its global sales, touching Rs 1,600 crore in 2011, the company said.
On its investment plans, Kymal said: “We continue to spend on acquiring capability to evacuate power and on R&D to meeting the growing demand from here.”
The company also plans to open a new facility in Chennai, he said, adding, “we will be spending nearly Rs 400 crore here.”
The company has installed and commissioned over 700 wind turbine generators within two years of setting its base in the country and currently has an installed base of 565 MW spread in Andhra, Gujarat, Karnataka,Maharashtra, Rajasthan, Tamil Nadu and Madhya Pradesh.
“We have a portfolio of over 6,000 MW at various stages of development inIndiaandSri Lanka. We expect to achieve a production capacity of 1,500 MW by 2013 from the current 800 MW in these two markets,” he said.
Gamesa had recently expanded its product portfolio by launching the G97 2 MW turbines specially designed for low-wind sites in the country and set up a new factory inGujaratfor manufacturing blades for G5X-850 kw and G9X-2.0 MW turbines at a cost of Rs 175 crore which is estimated to produce 390 blades by 2013.
“We expect such sites to drive a major portion of demand in the 2 MW category and have already procured orders for G97 from a number of investors. We are confident about the G97 2 MW category will enable us grow here,” he said.
“With the introduction of the 2-MW turbines, we expect significant contribution of the Indian subsidiary to our worldwide sales. Besides, since demand in the European and American markets is low, we see a great potential for growth here,” Kymal added.
Kymal also said that the company is targeting to cater to the growing ‘re-powering’ market estimated to be worth 6,000 MW under which old turbines are replaced by new ones to enhance generation capability.
“We have already done five projects in Tamil Nadu for 40 MW and also looking at other regions.”
GOVT BEGINS ISSUING NOTICES TO FIRMS OVER CAPTIVE BLOCKS
NEW DELHI: For the power and steel companies struggling to meet their fuel requirements, the problem might get bigger. Following the recommendations of a review committee headed by additional coal secretary, the coal ministry has started issuing show-cause notices to companies that have failed to develop the allocated captive coal blocks.
Among the first ones that have been warned of cancellation of coal blocks are Arcelor Mittal (India) and GVK Power, Jindal Steel and Power, Hindalco and Sasan Power.
One of the major criteria in allocation of captive coal blocks is that the allottee needs to commence the operations of an open-cast mine within 36 months (42 months in case the area is in forest land) and an underground block in 48 months (54 months for forest land) from the date of allocation.
The companies are required to submit their mine development and end-project schedules to the coal ministry with in three months of coal block allocation.
Most of these companies have already crossed the limit of 36 months. The review committee-headed by the additional secretary coal, had in March said that there were 58 blocks allocated to companies including Sasan Power, Tata Sponge Iron, Orissa Mining Corporation, Andhra Pradesh Mineral Development, Electrotherm and Electrosteel Castings, that have not been developed and therefore, the allocatees should be served with show-cause notice to explain why the block should not be de-allocated.
While the coal ministry did sent two-three notices last month, the numbers of such notices have zoomed from this month.
On Thursday alone, more than 10 companies were issued show-cause notice. The ministry has given them 20 days to send their replies on “why the delay in the development of coal block should not be held as violation of the terms and condition of the allotment.” Failing which, it would take an appropriate action.
CEA CALLS MEETING OF CIL, POWER COMPANIES & MINISTRIES TO BREAK FSA DEADLOCK
KOLKATA: The chairman of the Central Electricity Authority has called a meeting of CoalIndiaofficials, power companies and officials from the coal and power ministries to break the deadlock over fuel supply agreements (FSAs).
Power companies have refused to sign the FSAs saying that the agreements are tilted heavily in favour of CoalIndia, the state monopoly, which has offered FSAs that impose negligible penalties if it defaults.
The meeting, scheduled next week, will be chaired by CEA Chairman Arvinder Singh Bakshi. About 50 FSAs are to be signed but only about 10 has signed it two weeks after CIL invited power companies to sign these agreements.
“Following the refusal to sign the new agreement for power generation units that have been set up after December 2011, public sector companies like Damodar Valley Corporation and NTPC approached the CEA to help break the deadlock for PSUs as well as private producers like Reliance, Tata Power and Adani.
CEA has agreed and scheduled a meeting next week,” a senior power industry official said. “CEA has been approached because it is one of the apex bodies in the power industry which controls private as well as PSU power generation. Since there is no single body that represents all power producers, CEA is best placed to solve the issue,” the official said.
“The new fuel supply agreement is heavily skewed in favour of CoalIndiato the extent that the 80% trigger level considers 85% capacity utilisation. This means the actual coal that would be supplied will be 68% of the total coal required for running any plant at 100% capacity utilisation,” a senior Damodar Valley Official said.
Power companies are also not comfortable with coal being supplied at ports without any consideration for standard practice – delivery of imported coal at the thermal power station end.
“According to the FSA, compensation for oversized stone is limited to 0.75% of total quantity of coal supplied in a year even if 100% stone is supplied in the name of coal. This part is simply not acceptable,” he said.
“Seller also has the authority to terminate FSA in case of disputes. This is grossly in favour of CoalIndia. It should have been normally, through an arbitration process,” a senior NTPC official said.
POWER FIRMS TO BE ALLOWED TO RETAIN EXCESS COAL IN ALLOTTED MINES: OFFICIAL
NEW DELHI: Excess coal from blocks allotted to power companies should stay with them rather than being given to Coal India (CIL), a power ministry official has said.
“It (surplus) is power sector’s coal, it should remain with the producers… the same way steel or cement producers’ fuel should remain with them,” official said.
In the draft guidelines for usage of excess coal, the Coal Ministry has said that the surplus should be made available to state-run CoalIndia.
The Power Ministry’s view incidentally follows Empowered Group of Ministers’ (EGoM) decision last week that the paved the way for Reliance Power to use the surplus from the coal mines awarded for the company’s 4,000 MW ultra mega power project at Sasan in Madhya Pradesh for its another such plant in the state.
The power ministry official said that surplus fuel available after the primary usage (power generation) should remain with the developer, which would encourage more companies to enter into the sector.
“Our point is that if there is no reasonable return on investment, why will the companies come and invest in the sector,” he said.
A private power developer incurs expenditure on excavation of coal required for power generation. If the surplus fuel is given to another company, then the power developer stands to lose a a portion of its original investment for developing the same mines.
The Coal Ministry’s has said that the surplus coal should be given to CIL at notified price or cost of production, whichever is lower.
The draft policy on usage of surplus coal is first likely to be discussed in the Committee of Secretaries (CoS) meeting, headed by the Cabinet Secretary.
“After it’s (CoS) approval the proposal would go to the Cabinet Committee on Economic Affairs (CCEA),” the official said.
The policy would cover the surplus coal available from all the coal mines allotted for all sectors.
COAL INDIA ISSUES 172 LETTER OF ASSURANCES FOR A TOTAL CAPACITY OF 1,08,878 MW
KOLKATA: Coal India has reported that till January 2012, based of authorisations and recommendations for power, the coal companies have issued 172 letters of assurances (LOAs) for a total capacity of 1,08,878 mw.
According to the minutes of the meeting of the long term standing linkage committee this, however, excludes power utilities that are already linked to CoalIndiaor Singareni Collieries, which were commissioned prior to April 2009, for which Coal India has agreed to supply an annual contracted quantity of 305 million tonnes per annum.
It was further reported that out of the 1,08,878 mw, about 26,411 mw has already comeup by March 2012 while the rest at 82,467 mw is yet to come up. Estimates show that 3,835 mw had come up during 2009-10, 5,905 mw during 2010-11 and 16,671 mw during 2011-12.
The minutes of the meeting further mentioned that Coal India has been regularly bringing out the status of negative coal balance of CoalIndiato the Standing Linkage Committee since 2004. During December 2006 to March 2012 the company issued 133 LOAs covering 115 power units involving a quantity of 312 million tones.
According to CoalIndiathe total load on the company due to capacity addition of power units was estimated at about 423 million tonnes. The gap, between the commitments through LOAs/FSAs with power sector and other consumers vis-a-vis production projections works out to more than 400 million tonnes, even if no frsh commitments are made throughout the 12th Plan Period.
WESTERN COALFIELDS WILL HAVE TO PAY MORE FOR LAND IN MAHARASHTRA
MUMBAI: Western Coalfields Ltd, a subsidiary of CoalIndia, will have to pay a significantly higher price for acquiring land inMaharashtra.
The prevalent per-acre rate is Rs 30,000 to Rs 60,000 but the State Government has decided increase the rate to Rs 6 lakh for barren land, Rs 8 lakh for rainfed and Rs 15 lakh for irrigated land.
The price hike will bring major relief to the farmers and land-holders in the districts ofNagpur, Chandrapur and Yavatmal, where the company has major mining operations, a press statement issued by Chief Minister’s office said.
Over the years the company has had to face a number of lawsuits because of lower land acquisition costs. In many cases, the courts have ordered a ten-fold increase in the compensation amount.
The new rates have also been influenced by the land acquisition policy of the Chhattisgarh Government, which makes it mandatory for the acquiring entity to pay Rs 10 lakh per acre for double-crop land and Rs 8 lakh for single-crop areas.
WCL has mining operations in three districts ofMaharashtraand two districts of Madhya Pradesh. In fiscal 2010-11, WCL produced 43 million tonnes of coal. Its turnover was Rs 7,073 crore and net profit was Rs 1,067 crore.
Senior BJP leader and MLA from Chandrapur, Mr Sudhir Mungantiwar said that WCL will find it easier to acquire land in the three districts due to higher compensation. The picture will be clearer when the State Government notifies the decision through a Government Resolution, he said.
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