Inside
The Darker Side of Brightness
Is the projected power infrastructure a dream? We analyse ground realities of the political agenda ...Page 3
Power Speaks “Quote-Unquote” with the ‘big guns’ in the power industry; their news and their views ...Page 4
The Indian Express- Ahmedabad, Chandigarh, Delhi, Lucknow, Mumbai, Nagpur, Pune, Vadodara The Financial Express- Ahmedabad, Bangalore, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Lucknow, Mumbai, Delhi, Pune
30 January 2009
THE GOVERNMENT OF INDIA RECENTLY ANNOUNCED THAT 53,000 VILLAGES IN THE COUNTRY HAVE BEEN ELECTRIFIED AND PROMISED ‘ELECTRICITY FOR ALL’ BY THE YEAR 2012. THE MINISTRY OF POWER HAS SET A TARGET TO ELECTRIFY 1,20,000 VILLAGES IN THE CURRENT FIVE YEAR PLAN (2007-12) UNDER THE RAJIV GANDHI GRAMEEN VIDYUTIKARAN YOJANA (RGGVY). THE INDIAN GOVERNMENT, IN THE ELEVENTH FIVEYEAR PLAN (2007-12), HAS INCREASED ITS TARGET OF CAPACITY ADDITION TO 90, 000 MW FROM THE INITIAL 78,530-MW TO MEET THE COUNTRY’S RISING ENERGY DEMANDS, TAKING THE TOTAL GENERATION INSTALLED CAPACITY FROM 1,46,902 MW AS ON NOVEMBER 2008 TO 2,38,902 MW BY 2012. IT IS A BIG TASK INDEED AND EVEN IF INDIA DOES NOT TOUCH THE TARGET, IT WOULD HAVE STILL REACHED A FAIRLY SUBSTANTIAL CAPACITY.
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So far, 53,000 villages have been electrified and by 2012 everyone will get electricity,” said Power Minister Sushilkumar Shinde. 1,20,000 villages are being targeted. But having previously been criticised for hyping up miniscule achievements, this ambitious announcement must have been made with calculated refinement. RGGVY was launched in 2005 with the objective to electrify all villages in the country where there is no power. Under the scheme, Government provides 90 per cent subsidy for electricity distribution infrastructure and 100 per cent subsidy for providing power connections to the rural household. Government has already provided electricity connections to 18-lakh
Below Poverty Line (BPL) households out of the targeted 50 lakh such families this fiscal. It has earmarked a total capital subsidy of Rs 33,000 crore for providing electricity connections and for the distribution infrastructure to the rural household. “A subsidy of Rs 28,000 crore has been provided for the XIth plan period for rural electrification. During the previous five year plan period, we got a subsidy of Rs 5,000 crore,” said Chairman and Managing Director REC P Uma Shankar. “We have made arrangements for electrifying 1,20,000 village during XIth plan period,” she added. But to achieve the target Mission of ‘Power for All by 2012’ would mean achiev-
ing the target of 1000 KwHr (Units) of per capita consumption of electricity by this period. Achieving this would mean that there is an immediate need to attract US $ 250 Billion Investment into the sector (FDI & Domestic Investment Combined); adequate capacity growth to Sustain GDP Growth at 8% plus; reliable & quality power on 24 x 7 basis, at least in Urban & Industrialized areas; 100% Rural Electrification with adequate & qualitative power for irrigation purpose; increasing the role of Hydel & Renewable Energy in the energy mix; urgent need to develop the alternatives, both in the Fuel & Technology terms, and focus on implementation.
MoP’s Blueprint The Ministry of Power has prepared a comprehensive Blueprint for Power Sector development encompassing an integrated strategy for the sector development with following objectives: Sufficient power to achieve GDP growth rate of 8% Reliability of power Quality power Optimum power cost Commercial viability of power industry Power for all
Strategies to achieve the objectives: Power Generation Strategy with focus on low cost generation, optimization of capacity utilization, controlling the input cost, optimization of fuel mix, Technology upgradation and utilization of Non Conventional energy sources Transmission Strategy with focus on development of National Grid including Interstate connections, technology upgradation & optimization of transmission cost. Distribution strategy to achieve Distribution Reforms with focus on System upgradation, loss reduction, theft control, consumer service orientation, quality power supply commercialization, decentralized distributed generation and supply for rural areas. Regulation Strategy aimed at protecting Consumer interests and making the sector commercially viable. Financing Strategy to generate resources for required growth of the power sector. Conservation Strategy to optimise the utilization of electricity with focus on Demand Side management, Load management and Technology upgradation to provide energy efficient equipment / gadgets.
Communication Strategy for political consensus with media support to enhance the general public awareness.
APDRP The government has proposed to introduce a restructured Accelerated Power Development and Reforms Programme (APDRP) in the 11th Five Year Plan to cut transmission and distribution losses, early 2008. The APDRP was launched in 2002-03 with the objective of encouraging reforms, reducing aggregate technical and commercial loss and improving quality of supply of power. The Distribution Reform was identified as the key area to bring about the efficiency and improve financial health of the power sector. Ministry of Power took various initiatives in the recent past for bringing improvement in the distribution sector. 29 states have signed the Memorandum of Understandings with the Ministry to take various steps to undertake distribution reforms in a time bound manner.
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INTEGRATED ENERGY POLICY
A NEW ENERGY ERA
BMI Report According to India Power Report from Business Monitor International (BMI), which publishes specialist business information on global emerging markets for senior executives in more than 125 countries, the forecast is that the country will account for 12.12% of Asia Pacific regional power generation by 2012, with a growing generation shortfall that requires rising imports. BMI’s Asia Pacific power generation assumption for 2007 is 6,865 terawatt hours (TWh), representing an increase of 9.6% over the previous year. It is forecasting an increase in regional generation to 9,435TWh by 2012, representing a rise of 37.4%. The report further states that, “For India, coal is the dominant fuel, accounting for 51.4% of 2007 primary energy demand (PED),followed by oil at 31.8%, gas at 8.9% and hydro-power with a 6.8% share of PED. Regional energy demand is forecast to reach 4,915mn tonnes of oil equivalent (toe) by 2012, representing 32.9% growth over the period. India’s 2007 market share of 10.94% is set to rise to 11.49% by 2012. The country’s17.8TWh of nuclear demand in 2007 is forecast to reach 30TWh by 2012, with its share of the Asia Pacific nuclear market rising from 3.27% to 4.65% over the period.” India is still ranked second, behind China in BMI’s updated Power Business Environment rating, thanks to its vast market size and excellent growth prospects. Certain country risk factors offset some of the industry strengths, but the country seems destined to vie with China at the head of the table for the foreseeable future. Between 2007 and 2018, BMI forecasts an increase in Indian electricity generation of 115.4%, which is among the highest for the Asia Pacific region.
The Target The Indian government, in the Eleventh Five-Year Plan (2007-12), had initially recommended a capacity addition of 78,530-MW to meet the country’s rising energy demands, which was later revised to 78,577-MW. The proposed capacity addition has again been revised to 92,000-MW. The earlier estimate of 78,577-MW consisted of 16,553-MW of hydropower, 58,644MW of thermal power and 3,380-MW of nuclear power.
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According to the Central Electricity Authority (New Delhi), the Indian government’s statutory organization for regulating the power sector, projects with a total capacity of 11,404MW have been commissioned through August 2009 for the Eleventh Five-Year Plan. An estimated 7,530-MW of additional capacity was planned for the fiscal year 2008-09. Of this, 2,141-MW has already been commissioned. The remaining 5,389-MW is targeted to be operational before March 2009.
Coal Needs According to the working group of the Planning Commission, India will have to import 100 million tons of coal during the Eleventh Five-Year Plan (2007-12) to fulfill increasing domestic demand, which is projected to 730 million tons by 2012. The group also indicated that the country’s production capacity by 2012 will be around 680 million tons per year, said the Industrial Info Resources, a marketing information service specializing in industrial process, energy and financial related markets. India’s largest coal producer, Coal India Limited (Kolkata, West Bengal), has agreed to increase production from 520 million tons per year to 600 million tons per year by 2012. In an effort to bridge the supplydemand gap, for the first time, CIL will import 4 million tons per year this fiscal year. CIL and public sector companies, such as the Steel Authority of India (New Delhi), NTPC and National Mineral Development Corporation have set up a special-purpose vehicle, International Coal Ventures, to explore mining opportunities overseas. Inter-
national Coal Ventures plans to raise $1 billion to develop coal mines with potential of 10 million tons per year in Mozambique. There are also plans to acquire assets in Canada, Indonesia, Mozambique, South Africa and Australia. The current economic crisis in the United States has gained India’s attention. CIL is in talks with U.S. mining companies to acquire assets. CIL also plans to revive 18 abandoned mines belonging to its subsidiaries Eastern Coal Fields, Bharat Coking Coal and Central Coal Fields. Recently, an agreement was reached between officials of the ministries of coal and power, and representatives from CIL, NTPC and the Central Electricity Authority that 10 to 15 percent of coal required for new power projects in India will be imported. It has also been indicated that the cost of power from imported coal will be higher than power produced from domestic coal. But coal waste will be low since the quality of imported coal is higher than domestic coal. The Ministry of Power will facilitate the fuel-supply agreement between power utilities and CIL. It was also announced that the imported coal may be used in existing power plants. Coal India plans to increase its production target from 380 million tons per year to 405 million tons per year by 2009-10. Experts indicate that at the rate at which India’s coal demand is rising, the country will lose 60 billion-70 billion tons of its coal reserves by 204041. It has become imperative for the Ministry of Coal and CIL to explore new mining avenues both internation-
ally and in the domestic front to sustain demand.
Renewable Energy The Indian government has set a target of generating 14,000 MW additional power through renewable resources in the 11th Five-Year Plan (2007-2012), taking the total generation to more than 26,000 MW, according to Minister for New and Renewable Energy Vilas Muttemwar. “We are doing remarkably well in generating power from renewable resources, as we are at the fourth spot after Germany, Spain and the US in harnessing the wind energy. But still there is much more potential that goes unused,” Muttemwar said. According to the Minister, India has the potential of generating 70,000 MW of power from wind. “We are one of the luckiest countries, where we have plenty of sunshine throughout the year. With this solar energy, we can fulfill the energy needs of the whole world if we harness it in proper channel,” Muttemwar said. India is in a process to establish a solar thermal energy project at Nagpur in Maharashtra which will be Asia’s biggest solar power generation project, according to Minister Muttemwar. “We will also establish many special economic zones (SEZs) exclusively for renewable projects at various locations of the country,” he said. References: Ministry of Power – www.powermin.nic.in http:// en.sxcoal.com Industrial Info Resources: A marketing information service specializing in industrial process, energy and financial related markets India PR Wire PTI
ndia unveiled a new integrated policy that spells out a roadmap to ensure 5.8 percent annual growth in primary energy supplies, seen as crucial to sustain a healthy expansion of the country’s economy. ‘India needs to sustain an economic growth of at least 9 percent over the next 25 years if it is to eradicate poverty and meet its larger human development goals,’ Home Minister P. Chidambaram said, explaining the focus of the new policy. ‘Meeting energy requirements of this growth in a sustainable manner presents a difficult challenge and one that has become more formidable following the steep rise in international energy prices since 2006,’ he said. ‘It is necessary to evolve an integrated policy that provides a coherent framework covering different energy sources in a consistent manner,’ Chidambaram said after a meeting of the cabinet, presided over by Prime Minister Manmohan Singh, approved the policy. Drafted by the Planning Commission, the policy aims at optimal exploitation of domestic energy resources, as also acquisition of energy assets abroad to attain energy security for the country, while advocating appropriate pricing of fuels to promote investment. Chidambaram said the policy also calls for setting up a monitoring committee chaired by the cabinet secretary to review the progress of implementation of energy programmes. ‘The broad vision behind the integrated energy policy is to reliably meet the demand for services of all sectors, including the lifeline energy needs of vulnerable households in all parts of the country with safe, clean and convenient energy at the least-cost.’ The other salient points of the new policy include: ● Appropriate fiscal measures to tackle emerging issues ● Independent regulation to counter anti-competitive market behaviour ● Tax structure for each energy sector be made consistent with overall energy policy
● Ensure level playing field to all play-
ers whether public or private Uniform tax structure across the country and across products ● Subsidies be made transparent and targeted ● Promote energy-efficiency and enforce energy standards effectively ● Autonomy for state-run units in energy sector with full accountability ● Promote technologies that conserve and maximise energy efficiency ● Ensure competitive energy market push efficiency and attract investment ●
THE BROAD VISION BEHIND THE INTEGRATED ENERGY POLICY IS TO RELIABLY MEET THE DEMAND FOR SERVICES OF ALL SECTORS, INCLUDING THE LIFELINE ENERGY NEEDS OF VULNERABLE HOUSEHOLDS IN ALL PARTS OF THE COUNTRY WITH SAFE, CLEAN AND CONVENIENT ENERGY AT THE LEASTCOST
A phased adjustment of domestic fuel prices to reflect market prices ● Coal pricing be left to the market, with free trading ● For natural gas, pricing be determined through competition among producers ● Reduce technical and commercial losses in transmission and distribution ● Promote fuel wood plantations, biogas plants, bio-diesel and ethanol ● Set-up a national energy fund to finance research ● Maintain reserves equivalent to 90 days of supplies ● Acquire energy assets abroad and set up fertiliser units in energy rich countries ● Provide electricity to all rural households and clean cooking energy to all within 10 years. Source: http://www.indiaprwire.com ●
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he capacity addition of a total of 90,000 MW of power in the 11 th plan would probably electrify 1,20,000 villages with an expectation of illuminating India at least with a bulb that lights every house in India . While this is the political agenda, what will be the ground reality of Eleventh Five year plan, when translated into a possible action i.e. 2012, is yet to be seen. Probably the demand and supply might have extended its arm creating another vacuum in the ambitious agenda called “Power for all by 2012” by the Government of India. This is not said out of blind imagination .The following figures demonstrate how projected power infrastructure in the past remained a day dream than a reality. The Eighth Plan (1992-97) target was 40,000 MW and 16,730 MW (41.8%) was achieved. The target of Ninth Plan (1997-2002) 40,245 MW ended up with 19,119 MW (47.5%). Again the Tenth Plan (200207) fixed a target of 41,110 MW but could generate only 50% i.e. 20,500 MW. Unfortunately the failure to achieve the target is an inevitable corollary that the ambitious plan to add 90,000 MW of power in the eleventh plan possibly would end up with 50,000 MW power. Before going into the details of illmanagement of power sector, let us see what the Planning Commission says: “The fast growth of the economy in recent years has placed increasing stress on physical infrastructure such as electricity, railways, roads, ports, airports, irrigation, and urban and rural water supply and sanitation, all of which already suffer from a substantial deficit from the past in terms of capacities as well as efficiencies in the delivery of critical infrastructure services. The pattern of inclusive growth of the economy projected for the Eleventh Plan, with GDP growth averaging 9% per year can be achieved only if this infrastructure deficit can be overcome and adequate investment takes place to support higher growth”. “On the above basis, the aggregate capital formation in infrastructure required to achieve India’s targeted annual average growth in GDP of 9% over the Eleventh Plan period, would have to rise from Rs. 2,59,839 crore in 2007–08 to Rs. 5,74,096 crore in 2011–12 at constant 2006–07 price. Over the Eleventh Plan period, as a whole, this estimate aggregates to Rs 20,11,521 crore”.
The Darker Side of Brightness
tions; SERC strongly endorsed the people’s grievances on the power front and came down heavily on lackadaisical approach of authorities in preventing breakdowns.
THE SLOGAN, “POWER FOR ALL”, ATTRACTS EVERYONE INCLUDING THE HAVE-NOTS. WITH THE MEAGRE 1713 MEGA WATT (MW) POWER IN DECEMBER 1950, TODAY THE COUNTRY REACHED 1,47,402.81 MW OF INSTALLED CAPACITY BUT STILL THERE IS A VISIBLE GAP BETWEEN DEMAND AND SUPPLY. SAYS P R SUBAS CHANDRAN
Positive steps
“The aggregate investment target derived above is broadly consistent with estimates of investment requirements based on sector specific requirements emerging from reports of the Working Groups constituted by the Planning Commission and by InterMinisterial Committees under the aegis of the Committee on Infrastructure. Total anticipated investment in power infrastructure in 10th plan including Non Conventional Electricity is Rs 2,91,850 crore, a share of 33.49% in the total budget allocation while 11th plan is projected at Rs 6,66,525 crore with a share of 32.42% in the total budget of Rs 20,11,521 crore. It means there is a reduction of 1.07% of investment in the power sector amounting to Rs.21,523.27 crore in the 11th plan. The projected investment in power sector during Eleventh five year plan with Central investment is Rs 2,55,316 ( 38.31%) , states with an investment of Rs. 2,25,697 crore ( 33.86%) while private sector shares 27.83% with an investment of Rs. 18,5512 crore . In a nutshell the overall investment in power sector will be Rs. 6,66,525 crore for the Eleventh five year plan with a massive agenda of powering the nation and the readers would be highly motivated with an expectation of seeing India illuminated anywhere and everywhere. Contrastingly and shockingly the outcome will remain a dream project if you come to know how the hidden or the dark side of ill- managed power sector is going to present a gloomy picture in the days to come. Planning commission documentation has projected that there will be power deficit of 13.8% (peaking) and 9.6% of energy shortage that will loom large over the nation in spite of an ambitious power projection. Hold your breath to read the next shocking contents. Planning commission presents a dismal picture on power scenario saying that a whopping 40% of generated power is lost due to Transmission and Distribution (T&D)/ Aggregate Technical & Commercial (AT&C) loss. In other words 58,761.12 MW (40%)of total installed power
generation capacity of 1,46,902.81 MW of power is lost on account of T&D loss. It means a recurring financial loss of Rs.2, 93,805.60 crore every year. This is not the end of the story. The Eleventh Five-Year Plan (2007-12) proposes a capacity addition of 90,000MW and 40% of (T&D)/ (AT&C) loss will be 36,000 MW , costing Rs.1,80,000 crore. In other words the colossal (T&D)/ (AT&C) loss works out to be Rs.4,73,805 crore.(cost per MW @ Rs.5 crore) which is equal to the total annual budgets of Andhra Pradesh, Tamilnadu and Karnataka. Can a poor country like India afford such avoidable astronomical loss? This loss ,in turn, will have a cascading impact in achieving the projected 9% GDP growth, which is certainly going to be a forgotten story.
Power theft, a blow to nation We have painted most of the men in public life as corrupt leaving the rest as angels. If one looks at the way consumers at every level contributed their share to the elephantine loss. Electricity theft is at the centre of focus all over the world but electricity theft in India has a significant effect on the Indian economy, as this figure is considerably high. Further we incorporate more advanced technologies but crooks always have the ability to keep one step ahead of the theft detection system. Now power theft using the remote sensing
devices, tampering of crystal frequency of integrated circuits; theft using armonics, high power electromagnet with capability of effecting the recording of meter etc have been developed. Meters with shunt are a c o m m o n method of slowing down the meter. However the Electricity Act 2003 gives full freedom to vigilance engineers in detecting power theft, confiscating machines, papers, document related to production etc. and permits utilities to frame their own rules. But a sincere effort is still missing; that is the reason that despite all this the power thieves are not being booked the way they should have been.The staff of the licensee who helps in providing means for the theft should also be booked under theft. While posting the engineers, their track record is not the key factor, the key factors are the other means and resources..until and unless the whole system is not revamped the power theft drives will go on papers and will yield a substantial result.
A WEB of wires illegally tapping power... Flaws in Energy infrastructure It has been observed that the overall power sector performance in India has been compared to a “leaky bucket”, where the more funds are invested into the system, the more quickly they spill out without considerable benefits. Improving the efficiency of the country’s power distribu-
tion system could bring enormous benefits from the savings, which might be pumped to other sectors of the society. Factors which contribute to such astronomical energy losses are a combination of technical and non-technical issues. Poor metering, lack of investments in distribution networks resulting in overloaded feeders, ill-maintained substations with aging transformers, and other technical shortfalls are further amplified by inefficient billing and inadequate revenue collection as well as simply un-metered supply and wide spread electricity theft. The lack of consumer education in the rural sector, rampant political interference, and inefficient electricity use, among other factors, only further diminish the already weakened power sector. The transformers and cables of substandard quality are being used. Serious lapses in their procurement and maintenance are main reasons of poor power scenario . The damage caused to transformers and transmission cables is a result of ‘improper testing’ and ‘lack of protective equipment’. The equipment was ‘poorly calibrated’ and used by ‘untrained staff’. Conditions of transformers in the stores were not up to the mark with evidences of oil leakages. Around 20% transformers do not complete their life-cycle which is ‘abnormally high’ as compared to the national average of 2%. It is not until power authorities stop compromising with the quality of equipment that the power situation in the state will not improve. The distribution licensee will have to adopt strong ‘equipment monitoring system’ and ‘adherence to safety measures’ to ensure uninterrupted power supply. The basic idea of investigation of State Electricity Regulatory Commission (SERC) was testing the quality of equipment for the requisite specifica-
National Electricity Fund It appears that the government of India plans to set up a National Electricity Fund (NEF) with an investment of Rs 1,00,000 crore to effect power reforms in energy sector to bring down the T&D loss to 15% from 40%. Be that as it may, the situation is not altogether abject, as the Government has taken a series of steps in the recent period. They include metering of 11 kV feeders; energy accounting and auditing; strengthening the provisions pertaining to theft of power in the Electricity Act, 2003; upgrading and strengthening the sub-transmission and distribution system under the Accelerated Power Development and Reforms Programme (APDRP); and introducing the High Voltage Distribution System (HVDS). Privatisation of Distribution system It is also worth mentioning that distribution of electricity has been privatised only in the National Capital Territory (NCT) of Delhi, and in Orissa. Elsewhere, the job is done by the state-owned entities unbundled from the State Electricity Boards (SEBs) or, in some cases like Tamil Nadu and Andhra Pradesh, by the SEBs themselves. Energy auditing Free power is the mantra of political bosses, but there must be some mechanism to account it. Shockingly, in the name of free power, virtually, in many States, power supply to the agricultural sector and some categories of domestic consumers are not metered and this poses problems in arriving at reasonably correct estimates of consumption in these categories. This can be achieved by putting in place a system for accurate energy accounting. (The author is Editorial Associate for The Indian Express Limited.) Acknowledgements to: M S Bhalla’s Transmission and Distribution Losses (Power); Cogeneration technologies. Source: All CIA World Factbooks 18 December 2003 to 18 December 2008 via NationMaster; Coal Insights; Ministry of Power, Capitaline; http://powermin.nic.in); www.investmentcommission.in
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Power Speaks Power Finance Corporation (PFC) was set up in July 1986 as a Financial Institution (FI) dedicated to Power Sector financing and committed to the integrated development of the power and associated sectors. Today, the state owned power sector financing utility has posted a 6 per cent increase in net profit for the quarter ended December 2008, at the back of loan asset growth of 28 per cent. The company has posted a net profit of Rs 339 crore for the quarter ended December 2008 as compared to Rs 320 crore posted in the corresponding quarter last year (2007-2008). Major projects sanctioned by the financing utility include - Koradi extension power station of Maharashtra State Power Generation Corporation (6,512 crore), Bellary thermal power station of Karnataka Power Corporation (Rs 1,806 crore) and RKM Power Generation (Rs 1,250 crore). Power Grid achieved many milestones & established benchmarks in various areas of its business operations and is playing a strategic role in Indian Power Sector in establishing & maintaining transmission infrastructure. It’s mission remains as Establishment and operation of Regional and National Power Grids to facilitate transfer of electric power within and across the regions with Reliability, Security and Economy, on sound commercial principles.
SHRI SUSHILKUMAR SHINDE UNION MINISTER OF POWER The Power Ministry's vision is absolutely clear as spelt out by our leaders, Smt. Sonia Gandhi and Prime Minister Dr. Manmohan Singh. We will take electricity to every village by the year 2009 and to every household by 2012. The Power Ministry is committed to create an electricity network all over the country. In order to meet this objective, there needs to be a huge capacity addition. During the 11th Five Year Plan, we will be adding more capacity than what we have added in the last three Five Year Plans together. During this Plan , a total of 90,000 MW will be added. As in no other Plan before, up till now, 12,000 MW has already been commissioned and 70,000 MW are actually being implemented on the ground. This is a phenomenal achievement when compared to the fact that historically we have barely added more than 20,000 MW in any Five Year Plan. This target at first sight seems to be over ambitious but when one considers the actual work being done on the ground, it is very much achievable. The capacity addition programme in our country was hamstrung by the fact that there was only one Power Generation Machinery Manufacturer in the country. Thanks to our Government's efforts, today there are at least three other big international manufacturers who are setting up base in India. Our country has the potential to achieve additional 20% energy efficiency which will translate into almost 25,000 MW of extra electricity. Hence, energy efficiency can contribute to 25,000 MW by avoiding capacity addition which, in monetary terms, translates to a saving of Rs. 1,00,000 crores.
Power Grid Corporation of India Ltd has been carrying out its responsibilities efficiently in the Construction,Operation & Maintenance of inter-State transmission systems and operation of Regional Power Grids. It has been notified as the Central Transmission Utility (CTU) of the country. Ever since its inception in 1992, Power Grid has established a transmission network of about 69,480 circuit kms and 116 substations having more than 77,217 MVA transformation capacity. At the begenning of its commercial business, the initial network was only 22,220 circuit kms and 42 substations. Power Grid has achieved many milestones & established benchmarks in various areas of its business operations and now plays a strategic role in the Indian Power Sector in establishing & maintaining the transmission infrastructure.
S.K.CHATURVEDI, CMD, POWER GRID CORPORATION OF INDIA LTD
R.S.SHARMA, CMD, NTPC
SATNAM SINGH, CMD, POWER FINANCE CORPORATION LIMITED
NTPC’s vision is crystal clear – ‘A world class integrated power major powering India’s growth with increased global presence’. NTPC, a government of India organisation, remains a role model with globally comparable excellence on the performance parameters, NTPC’s power generation capacity is 29,894 MW including 2044 MW in joint ventures. We are committed to add new capacity of 22,000 MW and our target is to achieve 75,000 MW pIus capacity by 2017. Corporate social responsibility is an article of faith for us. Lighting rural India is among our cherished commitments. Contributing to high GDP growth IS our mission. And we are moving ahead according to our planned agenda for growth and development. We are the leaders in the sector accounting for about 29% of the total power generated in the country with nearly 19% of the total installed capacity in India. With an all time high PLF of 92.24% in 2007-08, we have joined hands With BHEL for manufacturing power plant equipment, which I am hopeful, will be a booster for the power sector.
During the last one year, XL Telecom & Energy Ltd has grown significantly in Solar Photovoltaic space and has become a leader in the segment. XL in last financial year 2007-08 ending 30th June for the first time has earned more revenues from Energy Segment than Telecom Segment and going forward, the Company should predominantly be a non-conventional energy player with revenues contributing about 80 to 90%. Even in Non-Conventional Energy, it is largely Solar PV space only. XL has initiated the 120 MW Solar Cell Manufacturing plant along with 40 MW Module Expansion Project during the last few months and the same should be operational in Jan –March 2009 – the total capex being about Rs.360 crores. The Company has also become virtually the ‘First company’ in the world to have exposure to Solar Cell – Solar Module – System Integration .
DINESH KUMAR, MANAGING DIRECTOR XL TELECOM AND ENERGY LTD
Inside
Enabling Competitive Power Markets
KPMG report examines important developments towards ‘Competitive Power Markets’ ...Page 2
Towards Energy Sufficiency
Energy sector highlights from the Planning Commission’s 11th Five year plan ...Page 3 2007-2012
The Indian Express- Ahmedabad, Chandigarh, Delhi, Jammu, Kolkata, Lucknow, Mumbai, Nagpur, Pune, Vadodara The Financial Express- Ahmedabad, Bangalore, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Lucknow, Mumbai, Delhi, Pune
25 February 2009
A Space Marketing Feature
As per Central Electricity Authority’s monthly update, India’s installed power generation capacity reached 147402.81 MW as of December 2008. This capacity growth was augmented by 500 MW against that of November 2008 (146902.81 MW), mainly due to the contribution from NTPC. In comparison, the total installed power generation capacity was 138251.63 MW in November 2007, which translates into an increase of 8651.18 MW in one year. The drivers of this growth are the State, Central & Private sectors and they together make the Generation Giants of the Indian power sector. Till December 2008, the installed power generation capacity by mode was: Coal (77458.88 MW), Gas (14734.01 MW), Diesel (1199.75 MW), Nuclear (4120 MW), Hydro (36647.76 MW) and other renewable energy sources (13242.41 MW). The total has been
calculated after segregation into three sectors, viz., State/UT Sector, Central Sector and the Private sector. As of December 2008, the State sector, which involves all 28 states and 7 union territories contributed a total of 76185.57 MW while the Central Sector which includes centre governed corporations like the National Thermal Power Corporation (NTPC), Nuclear Power Corporation of India (NPCI), National Hydroelectric Power Corporation (NHPC) and such like contributed 48, 970.99 MW. The private sector involves varied companies in each state and UT and it con-
tributed 22,246.25 MW all put together. From the statistics provided by CEA, it is clearly indicated that the maximum growth potential seen in the last few months has been in Hydro which has shown immense potential in terms of installed capacity, while data for Renewable energy is available only till March 2008. Nuclear is nil from all quarters except from the Central Sector (Nuclear Power Corporation of India). We have identified the top states which have contributed towards this installed capacity of the country, which in the future (read 2012) has to touch 238902.81 MW. The Indian govern-
ment, in the Eleventh Five-Year Plan (2007-12), has proposed a capacity addition to 92,000-MW after revising the figure twice! The Indian government, in the Eleventh Five-Year Plan (2007-12), had initially recommended a capacity addition of 78,530-MW to meet the country’s rising energy demands, which was later revised to 78,577-MW. The proposed capacity addition has again been revised to 92,000-MW. The earlier estimate of 78,577-MW consisted of 16,553-MW of hydropower, 58,644MW of thermal power and 3,380-MW of nuclear power.
GENERATION X GENERATION V OUT OF THE 35 STATES AND UNION TERRITORIES, CENTRAL ELECTRICITY AUTHORITY HAS CREATED A MODE-WISE BREAKUP AS OF DECEMBER 2008 DEPICTING THE INSTALLED POWER GENERATION CAPACITY OF EACH STATE
UT. WHILE MAHARSHTRA HAS BEEN THE LEADER FOR QUITE SOMETIME, THERE IS AND
A THIN LINE OF DIFFERENCE BETWEEN
KARNATAKA AND WEST BENGAL. GUJARAT, TAMIL NADU AND PUNJAB
FROM THE CENTRAL SECTOR, CEA HAS 11 CORPORATIONS. THESE INCLUDE BELLARY THERMAL POWER STATION DAMODAR VALLEY CORPORATION, HP/NJPC JV, NEEPCO, NEYVELI LIGNITE CORPORATION, NHDC, NHPC, NTPC, NUCLEAR POWER CORPORATION, RATNAGIRI GAS & PPL AND TEHRI HYDRO ELECTRIC CORPORATION. THE FOLLOWING ARE THE TOP 5 AS OF DECEMBER 2008. FIGURES IN MW. IDENTIFIED
WILL SOON BE LOOKING FOR A HIGHER SLOT DURING THIS YEAR.
OTHER STATES WHICH DO NOT FIGURE
NTPC:
28333.99
(Coal- 23310 & Gas – 5523.99)
IN THE LIST BUT ARE IN THE RACE TO BE
10 INCLUDE HARYANA (3153.36 MW), ORISSA (2520.23 MW), KERALA (2122.72 MW) AND CHHATISGARH (2058.05). AMONG THE UTS, ONLY NCR STANDS OUT WITH 920.40 MW. THE FOLLOWING STATES FIGURE IN THE IN TOP
TOP TEN IN TERMS OF TOTAL INSTALLED POWER GENERATION CAPACITY IN
MW
DECEMBER 2008 ACCORDING TO THE CENTRAL ELECTRICITY AUTHORITY MONTHLY REPORT. AS ON
NPCI:
4120.00
(Nuclear)
NHPC:
3673.00
(Hydro)
DVC:
3244.00
(Coal- 3100.00 & Hydro – 144.00)
NLCL:
2490.00
(Coal) NTPC: Nuclear Power Corporation of India NPCI: Nuclear Power Corp of India NHPC: National Hydroelectric Power Corporation
Maharashtra
10563.54
DVC: Damodar Valley Corporation NLCL: Neyveli Lignite Corporation Limited
Andhra Pradesh
7370.16
Karnataka
5838.52
FOLLOWING ARE THE TOP FIVE STATES
West Bengal
5808.56
POWER GENERATION CAPACITY THROUGH
Gujarat
5701.30
Tamil Nadu
5665.30
Punjab
5073.72
Uttar Pradesh
4672.50
Madhya Pradesh
4582.93
Rajasthan
4006.89
CONTRIBUTING TOWARDS INSTALLED
PRIVATE SECTOR. FIGURES ARE IN MW AS OF DECEMBER 2008. ITS
Tamil Nadu:
5433.85
Maharashtra:
4216.50
Gujarat:
3443.40
Andhra Pradesh:
2126.43
Karnataka:
2014.64
2
FEBRUARY 25 I 2009
Enabling Competitive Power Markets The Electricity Act, 2003 was a watershed regulation in the Government’s attempts towards creating a conducive environment for development of the Indian Power sector. This was further supported by a number of policies and regulations; however, almost five years down the line the sector is yet to achieve the desired progress. The inflection point is still awaited by many; the point where a consumer can freely choose his electricity provider and generators have multiple choices for the sale of the power they generate and can manage risks through evolved contracting instruments. Recently, Confederation of Indian Industries (CII) had organised a conclave - India Energy Conclave 2008 wherein KPMG prepared a report which examines some of the recent developments that are important in the move towards ’Competitive Power Markets’. It has also presented its view on the expected developments and identified potential roadblocks. The Demand-Supply Equation The big question on every project developer’s mind today is likely to be ‘When will the demand and supply curves for power cross each other?’. While the country is facing a very significant power deficit today to the tune of 20,000 MW (18 percent peak deficit), there are plans for very large supply additions going forward. Until the Xth Plan (FY 2007), the 5 year plans were dominated by Government capacity additions and constraints to capacity additions were mainly due to Government procurement procedures, equipment sector constraints and project implementation delays. Going forward, the constraints would largely occur on account of fuel sector issues including allotment and
development of coal mines. While over 81 coal mines have been allotted, delays are being seen in mine development on account of reasons ranging from land acquisition, delays in obtaining Government clearances, multiple mine allottees for a given mine with differing viewpoints on mine development plans, and even lack of mine development capabilities. As market forces play out in creation of new capacities, some of the constraints, particularly relating to project management capabilities, equipment procurement and even technical capabilities related to mining are expected to ease out. We, therefore, expect supply side response to the current deficit to speed up and catch up with the demand curve during the XIIth Plan.
The Government would still have a very important role to play if this has to be achieved sooner than later. One, it should evolve a more efficient and transparent solution to coal mine allocation and two, the procedures related to Government clearances should be further streamlined. The recent turmoil in the financial and commodity markets has been a cause for concern and there are apprehensions about the extent to which this would delay the ‘cross-over’ point of demand and supply. Financing for new projects is a challenge in the current environment. However, assuming that the effects of the current turmoil will last for 1218 months, we expect that the overall impact on the ‘cross-over’ point would be to a lesser extent, as supply will eventually catch up and the demand side impact would also be present during the current slowdown. Our estimate is that the cross-over is likely to happen in the timeframe FY 2015 to FY 2017. This is based on an assumption of GDP growth rate of 8 percent till 2017.
The Role of Power Markets Power markets have an important role to play in making the country achieve this capacity requirement. The phenomenon of aggressive merchant plant build-up can already be attributed to short-term price signals in the power market today. Short term power prices are at times as high
as INR 8.0/kwh with the average price for FY 2007-08 being INR 4.50/kwh. The existence of a power market has meant that merchant plants have been able to find a ’market’ for sale of their produce and thereby it has become easier to justify viability and achieve financial closure. In the short run, it has also increased efficiency of utilization of generation assets by trying to match surpluses with deficits. The trading market got a further boost in February 2007, when CERC issued its’ Guidelines for grant of permission for setting up and operation of a Power Exchange’. Till date, the central regulator has granted permission to two applicants; the Multi Commodity Exchange led India Energy Exchange (IEX) and the National Commodity & Derivatives Exchange led Power Exchange of India (PXI). The IEX started operations in June 2008. According to the CERC’s Market Monitoring Report for the month of August 2008, ~5 percent of shortterm trading transactions were done through the IEX, ~57 percent was traded through bilateral contracts and ~38 percent through the UI route. Though this represents a small percentage of the total transactions, the demand for such a platform can be judged from the quick ramp-up of volumes traded on these power exchanges; while the IEX has received total purchase bids for more than 2,000 Million Units (MUs) since its inception on June 27, 2008 the PXI received purchase bids to the tune of 63 MUs on its first day of operation (October 23, 2008). The availability of such a platform is likely to provide a boost for sector development since it acts as an open and transparent platform for buyers and sellers and simultaneously provides a price signal for upcoming generation plants. The other benefit of a vibrant trading market is that this could lead to the evolution of contracting strategies of utilities. Currently, the contracting behavior of utilities in India involves long-term base load contracting. As power market liquidity improves, contracting behaviors are likely to change to reflect different types of contracts for base load and peak load requirements as well as for long term, medium term and short term requirements.
Key Enablers for Deepening the Power Market In order for the power markets to deepen, the country needs rapid addition of new capacity so that there can be adequate trade-able stock of power. Merchant plant developers face certain difficulties in achieving financial closure. These include assurance of fuel supply, comfort of a certain minimum level of power off-take and comfort that transmission bottlenecks will not be constraints. The Government has to facilitate fuel access and market opening through distribution open access. Market forces are then likely to play out to build capacity.
Some of the key enablers to overcome these are as follows: Transparent and speedy process for coal allocation The Ministry of Power (MoP) in order to facilitate capacity addition through MPPs, has been coordinating with the Ministry of Coal to identify coal linkages (for 1000 MW plant) and coal blocks (for 500 - 1000 MW plant) for allotment to such plants. However, the framework for such fuel allocation is yet to be notified and this uncertainty is causing delays in plans for new capacities. Strengthening of the national transmission grid and efficient transmission access and pricing Uncertainties in availability of transmission system capacities had been a concern for some of the MPPs who are not sure of their power off takers. A large portion of new capacity (approximately 30 percent) is coming in
the coal belt states while the demand centers are in the North and West of the country. According to the CEA Plan, the incremental inter-regional power transfer capacity will be 21,000 MW by 2012. Building this out in a timely manner is critical for the power market to function effectively. To augment transmission networks, significant investments are required. Unlike power generation, capacity ad-
dition in power transmission through the competitive bidding route has been slower and till date only two projects6 have been awarded to private developers. Considering the urgent need to augment the transmission network in India, the MoP has taken steps to speed up the bidding process. The ministry has now issued draft Standard Bid Documents for selection of Transmission Service Provider. The MoP has also notified PFC and REC to act as the Bid Process Coordinators to undertake the bidding for a few identified projects.
Demand Supply Supply (Impact of Financial Market crisis)
Retail market opening through distribution open access Freedom and ease of getting open access down to the retail consumer level is the last leg in the development of a fully competitive power market and will likely ultimately lead to depth in the power market. Today, merchant power developers have to depend largely on tenders issued by state utilities through the Case 1 route to tie up capacities through long-term contracts. This is essential for them to get the comfort of minimum off-take and achieve financial closure. However, if the retail segment were to open up, then access to large customers would have provided an alternate option for tie-up on medium to long-term basis. Merchant developers could then be proactive in identifying buyers to make their projects viable rather than wait
for tenders to be floated and procurement processes to be completed for setting up power projects. This could speed up capacity addition. Most of the SERCs had fixed a timeline of end 2008 for opening up the distribution open access for consumers with connected load of less than 1 MW. Further, taking cues from the National Tariff Policy, few state regula-
tors have passed orders for reduction of cross-subsidy surcharge in the recent past. This will likely promote open access as reduction in cross-subsidies will likely help maintain the attractiveness of a cheaper power source. Few regulators like the Maharashtra State Electricity Regulatory Commission have kept a zero level of crosssubsidy surcharge so as to promote competition. While the retail market represents a miniscule proportion of the power market currently, this will likely increase going forward. As the demand-supply gap begins to narrow down, competitive advantage will likely begin to shift towards access to customers. In some states, this is likely to happen sooner. Generators and power players would do well to start planning to develop their capabilities and strengthening their presence in this area as the retail supply segment begins to open up. Once we overcome the supply deficit and retail competition establishes freedom of choice in its true sense and availability of products and information symmetry among consumers; we believe the inflection point can be reached. A well functioning power market can also go a long way in helping ensure that the prolonged history of power deficit in the country does not repeat itself in future.
3
FEBRUARY 25 I 2009
Towards
Energy Sufficiency The XIth Five year plan 2007-12
logical tools such as smart metering and GIS mapping for real time, monitoring and accountability at each distribution transformer. The Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) is a key initiative providing electricity access to all households and actually connecting all BPL households. However, the success of this commendable effort depends critically upon adequate availability of electricity and actual electrification of all households. Mere access without supply of power will only add to frustration. Utility-based generation capacity is expected to rise by less than 30,000 MW in the 10th Plan but we should plan for an increase by 60,000 MW in the 11th Plan to move to a comfortable situation consistent with a growth rate between 8 - 9% per annum.
Coal
T
he 11th Plan provides an op portunity to restructure poli cies to achieve a new vision based on faster, more broad-based and inclusive growth. It is designed to reduce poverty and focus on bridging the various divides that continue to fragment our society. The energy sector prominently features in the Planning commission’s 11th plan and offers certain strategic solace to the sector, both in terms of the plan period as well as long term sustainability.
Energy GDP growth of 9% is not possible without a commensurate increase in supply of energy, electricity, coal, oil and gas and other fuels. Further, with nearly half the country’s population without electricity and without a consistent supply of any other form of commercial energy either, distribution of energy is as crucial to bridging the divide between the haves and the havenots. Ensuring lifeline supply of commercial energy to all is essential for empowering individuals, especially women and girls, who have the backbreaking, time consuming and unhealthy task of collecting and using
non-commercial fuels that remain the primary energy source for cooking in over two thirds of the households. Provision of clean fuels or at least wood plantation within one kilometer of habitation and dissemination of technology for use of clean fuels is vital for good health.
Electric Power Rapid growth of the economy will place a heavy demand on electric power and this is an area of weakness at present. Reforms in this sector have been under way for several years and they have brought about several important institutional changes which were needed to make the power sector efficient and more competitive: The Electricity Act 2003 is in place; The National Electricity and Tariff policies envisaged in the Act have been notified; Regulators are in place in the states and have issued a series of regulatory orders which are beginning to reduce the wide dispersion in electricity tariffs that have existed traditionally and to contain tariffs charged for industries; Many states have unbundled their SEBs into generation, transmission, and distribution compa-
nies for better transparency and accountability. The greatest weakness in the power sector is on the distribution side which is entirely the domain of the states. Aggregate Technical and Commercial (AT&C) losses of most State Power Utilities (SPUs) remain high and have made SPUs financially sick and unable to invest adequately in generating capacity. For the same reason they have also had only limited success in attracting private investors to set up power plants. The Accelerated Power Development and Reform Programme (APDRP) initiated in 2001 was expected to bring down AT&C losses to 15% by the end of the 10th Plan. In fact, the average for all states is closer to 40% (including uncollected bills). However, there are encouraging success stories in loss reduction in a number of cities and small areas as a result of intensified management efforts. Some states, for example, Tamil Nadu and more recently Andhra Pradesh, have shown a much better performance than the national average. This gives hope and provides guidance on how to restructure APDRP, using techno-
Coal production is nationalized at present and private investment in coal mining is only allowed for captive mines supplying coal to designated sectors power, steel, and cement. Taking a longer term view of energy production there is a strong case for denationalizing coal so that private sector investment can come into this crucial area.If petroleum, which is much scarcer than coal, is open to the private sector there is no reason why coal should not also be opened up, especially if we take a longer term view of energy constraints and also the need to absorb new clean coal technologies. Pending a consensus on this issue, every effort should be made to expand coal production through the route of captive mines. Large coal users, especially in the power sector, can be given available proven coal blocks for developing captive mines. Preliminary estimates suggest that in addition to coking coal we may also need to import 40-50 million tons of superior grade thermal coal by the end of the 11th Plan. Thermal power stations on the southern and western coasts can be competitive using imported coal and the country’s electricity requirement does justify such import. This would require necessary port handling capacity and coast based power generation capacity of around 12000 to 15000 MW to absorb the imports. Coal pricing and marketing also needs to be modernized. The e-auction route, opened recently has worked well, and has helped to nudge
consumers towards more rational coal pricing. This window can be expanded over the 11th Plan.
Oil and Gas India will remain dependent on crude oil imports. The scope for transnational gas pipelines needs to be explored from a longer term perspective, but no pipelines are likely to become available for this level of gas import during the 11th Plan. Thus LNG imports would need to rise to four times from the current level of 5 million tons. The most important policy issue in this sector relates to pricing petroleum products. The recent increase in oil prices is now expected to persist for some years and although prices of some petroleum products have been raised the increase still leaves a large uncovered gap. This gap is being borne partly by the oil companies and partly by the issue of bonds by the government to the companies, which is equivalent to a government subsidy. Other critical issues facing the oil and gas sector relate to: pricing of domestically produced natural gas and its allocation to the power and fertilizer industry; strengthening upstream regulation in the oil and gas sector; and ensuring competition and open access in the proposed pipeline transportation and distribution grid.
APDRP,
INITIATED IN
2001
WAS EXPECTED TO BRING DOWN
AT&C LOSSES TO 15% BY THE END OF THE 10TH PLAN. IN FACT, THE AVERAGE FOR ALL STATES IS CLOSER TO 40% (INCLUDING UNCOLLECTED BILLS). HOWEVER, THERE ARE ENCOURAGING SUCCESS STORIES IN LOSS REDUCTION IN A NUMBER OF CITIES AND SMALL AREAS AS A RESULT OF INTENSIFIED MANAGEMENT EFFORTS.
In the longer run, the only viable policy to deal with high international oil prices is to rationalise the tax burden on oil products over time, rationalise existing pricing mechanisms which give the oil companies an excessive margin, realize efficiency gains through competition at the refinery
gate and retail prices of petroleum products, and pass on the rest of the international oil price increase to consumers, while compensating targeted groups below the poverty line as much as possible. The current method of determining prices for petroleum products needs reconsideration. Full price competition at the refinery gate and the retail level needs to be adopted. India is deficient in crude oil but has developed surplus capacity in products. Product price entitlement should therefore be based on trade parity pricing, which would be much lower than import parity. The 10% duty on products has been reduced to 7.5% which is a step in the right direction. There is a strong case for further reducing the duty on products to 5% to equate it with the duty on crude.
Other Energy Initiatives More broadly, as we move into the 11th Plan, we need to take an integrated view of energy policy towards different energy sub-sectors. While the Central and state sectors will continue to dominate the energy sector in the 11th Plan, energy policy should not be determined sector by sector where the dominant public sector players often have significant vested interests. We need to move towards a more transparent policy framework that treats different sources of energy in a similar fashion. The 11th Plan will restructure incentives and support from supply driven programmes to demand driven programmes and technologies. It will also link subsidies and support to outcomes in terms of renewable energy generated, rather than to capital investments. Available fossil energy resources must be optimally exploited. Coal bed methane must be fully exploited and fossil fuel reserves enhanced through more intensive exploration. Renewable energy sources such as wind energy, bio-mass and biofuels account for a very small percentage of total energy but they could increase to 2 - 3 percent in the course of the 11th Plan period. The 11th Plan must also set up a robust energy R&D system to develop relevant technology and energy sources to enhance energy security and lead to energy independence in a cost effective way in the long run. Source:www.planningcommission.nic.in
4
FEBRUARY 25 I 2009
ORISSA: THE POWER SURPLUS STATE ORISSA
STUNNED MANY WHEN IT PRIVATISED THE DISTRIBUTION WORK. IT DID STUN MANY MORE WHEN IT
REDUCED T&D LOSSES FROM 62% TO 32% UNDER THE LEADERSHIP OF SURYA NARAYANA
PATRO, MINISTER
Power Speaks
FOR ENERGY, GOVERNMENT OF ORISSA. EVEN THEN THERE ARE HICCUPS. STILL, THE STATE SURELY IS SURPLUS IN POWER AND IT IS RIDING IT ON WITH VENTURES ABUNDANT AND A FOCUSED VISION.
R
ecently, the Orissa govern ment chalked out plans to source 380 Mw additional power to meet the peak summer demand starting from March. It also announced that there will not be any power cut during the coming summer season. Energy minister Surya Narayana Patro had said that the present demand of the state is about 2060Mw and the state is able to meet the demand fully. “Orissa is the first state to undertake power sector reforms in the country in the year 1996. Utilities in the power sector are not dependant on budgetary support from the government and there has been no hike in retail supply tariff since 2000-01. The electricity tariff in Orissa is one of the lowest in the country. While 500 Mw is sourced through hydro power generation, 800 Mw is obtained from thermal power,” said Power Minister Surya Narayan Patro. The state is drawing 630Mw from Central pool and 130 Mw from captive power plants (CPPs). Since the average demand in summer is likely to increase to 2250 Mw, this will require sourcing about 200 Mw to 250 Mw additional power. Demand for electricity is increasing rapidly in the state as stated below in view of massive industrialization and rural electrification. 2005 2006 2007 to 06 to 07 to 08
2008-09 (upto Nov-08)
Demand
1558 1726 1975
2142
(in MW) Availability 1862 2149 2358 2060-2360* (in MW)
(*with
expansion project by way of construction of 3rd and 4th units of capacity 600 MW each.
OHPC
Orissa Thermal Power Corporation
Ltd (OTPCL) a joint venture company floated by state-owned Orissa
Installed Capacity as on 31-12-2008 (Figures in MW) Sector Hydro Thermal Nuclear R.E.S. Total (MNRE) Coal Gas Diesel Total State 2067.9 420.0 0.0 0.0 420.0 0.0 32.3 2520.2 Private 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Central 116.9 913.4 0.0 0.0 913.4 0.0 0.0 1030.3 Total 2184.8 1333.4 0.0 0.0 1333.4 0.0 32.3 3550.5 Orissa Hydro Power Corporation (OHPC) achieved a record generation of 8060 MU during 2007-08. During the year 2008, OHPC commissioned the 7 th and 8 th units of Balimela Power house of capacity 75 MW each. OHPC has identified to set up 3 nos. of potential hydro projects namely Sindol-I, II & III with total Capacity 300 MW.
GRIDCO GRIDCO, the bulk powder supplier, has been able to earn Rs 1124 crore by sale of surplus power and earned a profit of Rs 566 crore in 2007-08 and narrowed down its accumulated previous losses.
OPTCL
OPTCL, the State Transmission Utility, has taken up the support) commissioning work of 18 nos. Grid Sub-stations and TransOPGC mission line during 2008-09 for quantitative and reliable power Orissa Power Generation Corporasupply in the state. tion (OPGC) also recorded good genThe main thrust is to eradicate eration of 3047 MU during 2007-08 and achieved Plant Factor of 82.6% from the low voltage problem in some its 1st and 2nd units of capacity 210 MW remote and non-remunerative each. It also has moved ahead for its pockets of the state. CGPs
Other Initiatives
Hydro Power Corp (OHPC) and Orissa Mining Corp (OMC), is setting up a 2,000 Mw plant near Kaniha with an investment of Rs 8,000 crore. An Ultra Mega Power Plant (UMPP) of 4000 MW capacity with state share of 1300 MW is proposed to be set up by PFC at Bedhabahal in Sundergarh district. NTPC has moved to set up 4 Nos. power projects in the state namely; 3200MW NTPC Darlipali at Sundergarh district, 3200 MW NTPC Gajamara at Denkanal district, 2400 MW NTPC, Deranga at Angul district and 1320 MW NTPC, TTPS Expansion projects at Angul district. 27 MoUs have been signed with private developers for setting up small hydro projects in the state. OERC has released a policy guideline on pricing of surplus power from CGPs to optimize of generations from CGPs and encourage CGPs to supply of surplus power to the state.
As leader in the energy sector, Coal India Limited (CIL) envisioned its role to meet multi-dimensional challenges in the years to come. With the annualized growth rate pegged at 7.6% during the XI Five Year Plan, ending in 2011-12, CIL is committed to produce 520.5 MTs in 2011-12. Looking further into the future perspective, CIL envisages reaching a production level of 664 MTs in 2016-17. CIL is gearing up to meet these challenges. For this purpose, 125 coal projects for a capacity of about 298 Mty. have been identified to be taken up during XI Plan period; whereas 31 are underground (UG) projects & 94 are opencast (OC). While the capacity of UG projects is about 21 MTs the same in case of OC projects is about 277 MTs. About 98 projects (of the 125) are likely to contribute to the tune of 132 MTs during the terminal year of XI Plan. UG projects
are expected to chip in about 6 MTs. with OC projects shouldering 126 MTs. Technology drive in CIL is a constant endeavour. CIL also provides a lot of importance to Man-Machine interface. Adopting multi-pronged thrust areas, CIL is developing itself as a globally competitive industry through introduction of state-of-the-art high productive mining & beneficiation technologies and capacity building in all facets of the industry covering equipment utilisation, manpower deployment, introduction of modern management tools in marketing and HR practices. Some of the thrust areas that CIL has identified to consolidate its role in securitizing the energy needs of the country are necessity of increasing underground production by opening high capacity mechanized underground mines through state-of the-art technology such as continuous miner, Powered Support Long Wall (PSLW)
and High wall Mining. About 20 High Wall Mining Machines are expected to be introduced in next 4 to 5 years. Setting up of washeries under Build-Own-Maintain (BOM) scheme for creating new capacities is another thrust area in CIL. New strategies for increasing coal production from opencast mines include introduction of higher size equipment to work at a larger stripping ratio with higher availability and utilization secured through long term Maintenance and Repair Contract (MARC), introduction of in-pit crushing and conveying technology for large volume handling etc.
At a time when the petroleum industry is moving towards new horizons, exploring new technologies, collaborating and developing symbiotic relationships to ensure secure, environment-friendly and affordable energy supplies, IndianOil too is seeking quantum leaps in its core business, adding on new and emerging segments on the way. The corporation plans to take the group refining capacity to 80 million tonnes per annum by the year 201112. Similarly, IndianOil will add about 4,000 km of new pipelines by the year 2012. In this, we see gas pipelines as a high-growth area. IndianOil’s new businesses assume great significance for its growth plans for the future with its current marketing margins taking a hit on account of soaring prices of crude oil in the international market and incomplete pass-through of product prices to the customers.
IndianOil is building its petrochemicals business as a major driver of growth. It is also pursuing opportunities in all facets of the gas value chain, that is, sourcing, setting up of LNG terminals, city gas distribution, and cross-country pipelines. IndianOil’s business plan for entry into the biodiesel value chain was finalised during the year. Unlike diversion of food crops into bio-fuel production, which has come under criticism across the globe, IndianOil’s business model for bio-diesel is based on cultivation of non-edible plants such as Jatropha and Pongamia on arid/wastelands. IndianOil is exploring the possibility of including alternative energy sources like wind and solar in its business model. IndianOil’s R&D efforts in the coming years shall focus on futuristic technology in petrochemicals, polymers, bio-fuels and nano-technology; additives for enhanced fuel and engine efficiency; eco-friendly longdrain lubricants; etc.
Sarthak Behuria, Chairman, IndianOil Corporation Limited In the third quarter of the current financial year ended December 2008 IndianOil registered a Profit of Rs. 2,959 crore as compared to a Profit of Rs. 2,091 crore for the same quarter of the previous year. The Corporation sold 48.91 million tonnes of products, including exports, during the period Apr-Dec. 08. The throughput of its refineries and pipelines network was 36.60 million tonnes and 43.86 million tonnes respectively for the same period.
Partha S Bhattacharyya, Chairman, Coal India Limited