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Day-3, Mr. Ramesh Narayan BYPL Ippai issues in distribution
 

Day-3, Mr. Ramesh Narayan BYPL Ippai issues in distribution

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Day-3, Mr. Ramesh Narayan BYPL Ippai issues in distribution

Day-3, Mr. Ramesh Narayan BYPL Ippai issues in distribution

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    Day-3, Mr. Ramesh Narayan BYPL Ippai issues in distribution Day-3, Mr. Ramesh Narayan BYPL Ippai issues in distribution Presentation Transcript

    • Issues in Distribution & Open Access Aug 3rd , 2013 14th Regulators & Policymakers Retreat 2013 Day 3, Session 7 Ramesh Narayanan Chief Executive Officer [BSES Yamuna Power Ltd.]
    • Contents  Demand Supply Mismatch  12th Five Year plan Targets Envisages..  Power Distribution  Vs Generation / Transmission  Cost of Distribution  Challenges  An approach for Reforms  Models for distribution turnaround 2 BSES Yamuna Power Ltd.
    • DEMAND SUPPLY MISMATCH 3 BSES Yamuna Power Ltd.
    • 4  Installed Capacity : 2,25,133 MW  Grid Demand : 1,32,811 MW PROBLEM : Power Demand Constraints HUGE Suppressed & Unaddressed Demand  Suppressed Demand in the form of  Huge pileup of the New connection pendency (other than private utilities)  45% of the 2 Crs pumpset run on DG Sets (4% un-electrified)  Unavailability of efficient Public transport system : Metro, Monorail etc.  Majority of the un-electrified railway corridors (other than main trunk lines) As on May’13 Upto May13 *Source: www.cea.nic.in
    • Economic Development 5  Installed Capacity : 2,25,133 MW Grid Demand : 1,32,811 MW India Vs China (demand growth in last 21 years)  Installed Capacity : 950,000 MW  Grid Demand : 7,40,000 MW YEAR 1991 YEAR 1991 YEAR 2012 YEAR 2013  Installed Capacity : 1,50,000 MW  Grid Demand : 1,25,000 MW  Installed Capacity : 66,000 MW  Grid Demand : 57,000 MW CHINA INDIA * Data Source : www.wikipedia.org & other web reports 5 Times growth 2.5 Times growth BSES Yamuna Power Ltd.
    • 12TH FIVE YEAR PLAN 6 BSES Yamuna Power Ltd.
    • TARGETS [ 2012-2017 ] 7 Generation Sector 8th Plan 9th Plan 10th Plan 11th Plan 12th Plan* Central 50% 24% 57% 34% 30% State 42% 50% 30% 34% 17% Private 8% 26% 13% 32% 53% Transmission  1,07,440 CKm of X’mission Lines 42 %  2,70,000 MVA of Transformation Capacity 68 %  12,750 MW of HVDS system 130 % Distribution  Additional distribution demand : 1,84,800 MW 2.1 times the generation capacity @ 2.1 Crs / MW Over 3,50,000 Crs of Investment Over 3,00,000 Crs of Investment Over Rs 3,88,600 Crs of Investment ~88,536* MW addition *Source : Planning Commission * Excluding RE of 30K MW) BSES Yamuna Power Ltd. Of existing capacity
    • 8 Envisages…. 1) Debt Restructuring Policy as per 12th Plan’s Expert Group’s recommendation Short Term Liability (STL) restructuring backed by state govt guarantee: o 50% conversion through bonds o 50% rescheduled by lenders serviced by discoms o Restructuring to be accompanied by concrete and measurable o Action to improve operational performance o Private discoms eligible ?? 2) Restructured APDRP  Relaxation of population norms  R-APDRP assistance to private discoms  National Electricity Fund (NEF) for interest relief  Adoption of Multi-Year Tariff framework, timely tariff revisions  Open Access for consumers with load > 0.25 MW  Energy Efficiency & Demand Side BSES Yamuna Power Ltd.
    • 9 Envisages…. 3) Promoting Private Investment & Participation in Distribution  Expansion of Franchise / PPP / Privatization 4) Separation of Rural Feeders / Universal Electrification • Clearing RGGVY backlogs states • Restructuring of RGGVY for rural n/w strengthening 6) Human Resource Development and Capacity Building • Additional workforce requirement of 4Lac 7) R&D in Power Sector • Smart Grid / SCADA / Distributed Generation / Rural Electrification 8) Management of Energy Demand and Energy Efficiency • National Clean Energy Fund : RE sources & smart grid development • Demand Side Mgmt (urban, rural & agricultural sector) BSES Yamuna Power Ltd. FUNDS IDENTIFIED ?
    • Distribution 10 BSES Yamuna Power Ltd.
    • Vs Generation / Transmission Parameter Generation Transmission Distribution Cost reflective Tariffs with timely revisions Tax Holidays ; Excise / Import Duties waivers Project Financing Based on PPAs Based on BPAs Based on Balance Sheets Transparency of cost/expenditure in tariff petition Reduce Disparity Across the Power Chain 11 BSES Yamuna Power Ltd.
    • 12  Power Purchase (80% of total cost) • Generation cost • Transmission cost • LDC cost  O&M Cost includes • Repairs & Maintenance cost • Employees cost • Administrative cost  Financial Cost includes • Depreciation • Interest , Tax • RoE UNCONTROLLABLE Cost of Distribution 75% is attributed to Gencos running on “Cost Plus” basis Controllable Controllable
    • Fund Flow… (Existing & to be explored) 13 Bill Discounting Lease Financing Pension Funds Project Financing
    • Distribution Challenges 14 Policy IssuesAccumulated Losses Generation Cost Inadequate Tariff 1 2 3 4
    • Generation Costs 15 BSES Yamuna Power Ltd. • Cost Plus tariff - adding financial burden on the Discoms • Minimal checks & balances for Performance Audits • Tariff fixation CERC in isolation. • Project based financing Exiting Benefits • “Competitive Route” mandate for fully depreciated plants • Nodal Agency for transparent Performance Audits • Tariff fixation be in close coordination between CERC & stakeholder SERCs • Balancing - The Companies Act, 1956 & The Electricity Act, 2003 Way Forward
    • Inadequate Tariff • Significant rise - Bulk Power Purchase Cost • Stagnant distribution tariffs - Vote Bank Politics • Gap : Avg. cost of supply & avg. realization Reason • De-politcization of Electricity tariff • Build National consensus towards cost reflective tariff • Immediate pass through of Bulk Power cost Way Forward 16 BSES Yamuna Power Ltd.
    • Accumulated Losses • Discoms under huge debts & severely cash constrained • Huge accumulation of Regulatory Assets • Difficulty in raising funds – OPEX, CAPEX Huge Accumulated Losses • FRP package to be implemented expeditiously • Why Private Discoms be deprived of FRP benefits ? • Time bound liquidation of Regulatory asset Way Forward 17 BSES Yamuna Power Ltd. ( Short Term Debt ~Rs. 2 Lac Cr )
    • Health of Utilities – FY 12 Financial Loss - Trend Aggregate Loss + Subsidy Estimated at Rs 1.2 lac Cr ( ~ 1.5 % of GDP) Input Energy Sector Snapshot Cost of Supply ( Rs.6.3/ unit ) Energy Collected Revenue ( Rs.4.2 / unit ) GAP ( Rs.2.1 / unit ) Rs.3.6 lac Cr 770 BU 580 BU Rs.2.4 lac Cr Rs.1.2 lac Cr 32 54 64 96 120 29 34 34 34 27 21 19 14 -10 10 30 50 70 90 110 130 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 Rs.'000Cr. Subsidy Numbers are based on FY12 are estimates Deteriorating Health of Utilities 18 BSES Yamuna Power Ltd.
    • Policy Issues • Fixed RoE (14%) • Margin pressure • Balance sheet based funding Fund Raising • Common Distribution Infrastructure Fund • Funds to be made available at attractive rates • Project Based Funding • Inclusion of private players – RAPDRP etc Way Forward 19 BSES Yamuna Power Ltd.
    • An Approach for Reform 20
    • Distribution : Supporting Framework ADMINISTRATIVE FRAMEWORK  All statutory support to the discoms for schemes like RAPDRP etc  State government assistance for facilitating discoms network infrastructure REGULATORY FRAMEWORK  Realistic approach towards Discom  Time bound discom cost amortization  Cost reflective tariffs & support schemes FINANCIAL FRAMEWORK  Concept of SPV / JV/ Project based Financing  Assured Return on Equity  Low cost debt instruments for overall sectoral growth  Incentives in terms of tax holiday, duties & taxes OBJECTIVE : Provide much needed Impetus to the DISTRIBUTION LEGAL FRAMEWORK  Endorsement of the Electricity Act -2003  Theft / misuse of electricity  Mitigation of regulatory challenges  Discom standards of performance 21 BSES Yamuna Power Ltd.
    • Transparency “Tariff structure breakdown” Commercialization “Cost to Serve ” Fund Addition “ Financial Restructuring Plan ” Balanced Development “Integrated Resource Planning” Strategy- Accelerated Development 22 BSES Yamuna Power Ltd.
    • Proposal 1 Incentivize the efficient DISCOM Prerequisite for the DISCOM 1. Unbundling 2. Privatization 3. Compliance of Electricity Act 2003 4. Loss Reduction 5. 24 x 7 uninterrupted electricity supply 6. 100 % electronic meter 7. Improved customer satisfaction 8. Zero pendency in new connection 9. Setting up special courts/ consumer forum 10. Total Electrification Incentivize discoms by :  Cheaper Power Allocation  Reduced X’mission cost burden  Tax holidays  Customer - Reduction in Tariff  Government - Compliance of The Electricity Act 2003  Distribution Sector - Turn into lucrative sector  DISCOMs - Improved financial health Benefits 23 BSES Yamuna Power Ltd.
    •  Indulge itself with HIGH OUTSTANDING DISCOMS (Non payment of loan)  Discoms to grant LICENSE for certain cities to JV for loss reduction & reform The EXISTING DEBT to be converted to EQUITY portion for that licensee  JV to bring in technical & business efficiencies for those cities Proven Distribution Utility DFI & NBFC JV Proposal 2 Lender-Discom Partnership (LDP) Model 24 BSES Yamuna Power Ltd.
    • Proposal 3 Wire – Content Model 25 WIRE Business (EPC)  Centralized Monitoring (Inline with generation addition)  Centralized empanelment for EPC contractor (for discom network creation)  New n/w created to be leased to the state discom by the Central agency.  State Discom to pay Fixed Cost / Lease rental to the centralized agency CONTENT Business (State Discom)  Power procurement / management  Operations & Maintenance of the WIRE business Much needed impetus to the Network Creation
    • 26 Proposal 4 Green Power for Govt / PSUs “Unique Model “ & a precedence for promoting RPO acceptability cross the nation  Renewable power sourcing as per RPO @ higher tariffs  This power to be channeled to govt / PSU offices at suitable tariffs Advantage :  Government i) Another step towards Demand Side Management ii) Partnering discoms Clean & Green power adoption  Customer iii) Reduced financial burden thereby lesser tariff hike BSES Yamuna Power Ltd.
    • THANK YOU www.bsesdelhi.com 27