Icra internship report
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

Icra internship report

on

  • 8,438 views

 

Statistics

Views

Total Views
8,438
Views on SlideShare
8,437
Embed Views
1

Actions

Likes
4
Downloads
440
Comments
3

1 Embed 1

http://www.slideshare.net 1

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Icra internship report Document Transcript

  • 1. S UMMER INTERNSHIP REPORT A Study of Indian Power Sector-Enthralling Private investors? done at ICRA Limited by Manish Kumar Urele 0911033 Under the guidance of Namita Menon Senior Analyst, ICRA ltd.
  • 2. Contents 1.INDIAN POWER SECTOR: AN OVERVIEW ........................................................................................................ 5 1.1.Widening Gap between Demand & Supply ......................................................................................................... 6 1.2.Change in ownership structure: .......................................................................................................................... 6 1. 3 Trends in power generation through five year plan periods ............................................................................. 7 1. 4 Capacity addition programme-target & Achievements .................................................................................. 10 1. 5 Demand Forecast ............................................................................................................................................ 11 1. 6 Coal Availabilty likely to be a bottleneck:......................................................................................................... 12 1. 7 Transmission: ................................................................................................................................................... 13 1. 8 Distribution:...................................................................................................................................................... 14 1. 9 Private Participation......................................................................................................................................... 15 1. 10 Investment opportunity:................................................................................................................................. 16 2. BOTTLENECKS IN INDIAN POWER SECTOR ...................................................................................................18 2.1 Power Sector Policy Issue ................................................................................................................................ 18 2.2. Transportation and Handling facilities for fuel ............................................................................................... 19 2.3Power equipment supplies ................................................................................................................................. 20 2.4. Regulatory & political risk .............................................................................................................................. 20 2.5. Access to fuel, land and water ....................................................................................................................... 21 2.6 GAP IN DEMAND & SUPPLY OF REQUIRED HUMAN CAPITAL ............................................................................................. 21 2.7.Law and Order................................................................................................................................................... 22 2.8 Preferential treatment with government owned/regulated companies .......................................................... 22 2.9. Non-establishment of long-term debt market ................................................................................................ 23 4.10 Meagre investment in R&D ............................................................................................................................. 23 4.12Vicious circle of various clearances .................................................................................................................. 23 3. FUELING GROWTH ......................................................................................................................................24 3.1Coal Reserves in India ........................................................................................................................................ 25 3.2Coal Production .................................................................................................................................................. 25 3.3Supply & Demand of coal for power sector........................................................................................................ 26 3.4Bridging the gap................................................................................................................................................. 27 3.4.1.Coal import........................................................................................................................................... 27 3.4.2. Diversify the portfolio of coal importing nations ................................................................................ 29 3.4.3. Overseas Mining.................................................................................................................................. 30 3.4.4. Captive Mining .................................................................................................................................... 30 3.4.5.Private Mining ...................................................................................................................................... 30 3.4.6. Increasing the thermal efficiency of power plants .............................................................................. 31 3.4.7. Law and Order ..................................................................................................................................... 31 3.5Key Challenges facing the coal industry ............................................................................................................. 31 3.6Key Reform Measures required .......................................................................................................................... 32 3.6.1. Policy and Regulatory Framework ..................................................................................................... 32 3.6.2. Deregulation of the coal sector .......................................................................................................... 33 3.6.3. Independent Regulatory body ............................................................................................................. 33 3.6.4. Improvement in operational efficiency of the coal companies .......................................................... 33 3.6.5. Strengthening of logistics in coal distribution .................................................................................... 34 2
  • 3. 3.6.6. Investment in R & D............................................................................................................................. 34 3.6.7. Focusing on technology for future ...................................................................................................... 34 3.6.8. Information Technology for the Mining Industry ............................................................................... 34 3.7 World coal Reserve and Trends in Global production and consumption .......................................................... 36 4.TRANSMISSION ...........................................................................................................................................38 4.1Growth in Transmission Segment ...................................................................................................................... 38 4.2.Development of National Grid .......................................................................................................................... 40 4.311TH PLAN TARGETS AND ACHIEVEMENTS Funds Requirement in Transmission Segment ........................................... 40 4.4Funds Requirement in Transmission Segment .................................................................................................... 42 4.5.Sources of Funds ............................................................................................................................................... 42 4.6.Funds Available and Sources of Funds For PGCIL .............................................................................................. 43 4.7.Private Players in the League ............................................................................................................................ 43 4.7.1. Powerlink Transmission Limited .......................................................................................................... 43 4.7.2. Reliance Power Transmission Limited ................................................................................................. 43 4.7.3. Infrastructure Leasing and Financial Services (IL&FS) ......................................................................... 44 4.74. Tata Power Limited .............................................................................................................................. 44 4.7.5. Adani Power Limited ........................................................................................................................... 44 4.7.6. Torrent Power Limited......................................................................................................................... 45 4.7.7. Gammon Infrastructure Projects limited ............................................................................................. 45 4.7.8. Kalpataru Power Transmission Limited ............................................................................................... 45 th 4.8. Status of Transmission projects to be executed by Private Players in 11 plan .............................................. 45 4.9Outlook............................................................................................................................................................... 46 5. A STUDY ON ADANI POWER LIMITED ..........................................................................................................48 5.1Background ........................................................................................................................................................ 48 5.2.Company profile ............................................................................................................................................... 49 5.3Power Projects under construction .................................................................................................................... 50 5.4.Future projects ................................................................................................................................................. 52 5.5.Recent developmentNon-establishment of long-term debt market ................................................................ 52 5.6SWOT analysis of Adani Power Limited ............................................................................................................. 52 APPENDIX A ...................................................................................................................................................56 A.1. Raw coal production (in million tonnes) .......................................................................................................... 56 A.2. Regression analysis to determine the linear estimate of coal production ...................................................... 56 A.3. Normative requirement of coal & status of coal linkage ................................................................................. 57 A.4. Indonesian Coal Mining Industry Projections .................................................................................................. 57 A.5. World coal reserve (Country wise data)........................................................................................................... 58 A.6.Worldwide coal production and Consumption trend ........................................................................................ 59 A.7.Existing/Proposed Inter-Regional Power Transfer Capacity ............................................................................. 61 A.8. Proposed Transmission Line with Private Participation .................................................................................. 62 APPENDIX B ...................................................................................................................................................63 B.1. Existing Policy framework in coal industry: A Bird Eye view ............................................................................ 63 APPENDIX C ...................................................................................................................................................65 3
  • 4. C.1. State wise status of IPPs .................................................................................................................................. 65 4
  • 5. 1. Indian Power Sector: An Overview The Indian power sector has registered significant progress since the process of planned development of the economy began in 1950. Hydro-power and coal based thermal power have been the main sources of generating electricity. Nuclear power development, which was introduced in late sixties, is remained on slower track. Decades of economic planning in India following independence placed significant emphasis on the development of the power sector. Electricity generation capacity with utilities in India had grown from 1713 MW in December 1950 to about 157229.48 MW1 (as on 28 Feb 2010). Despite the fact that present generation capacity is being 100 times than that of the early 1950s, the per capita consumption of electricity is still not even comparable in any standard with per capita consumption of world average of 2,595.7 Kwh.2 Per capita electricity consumption is even lower than some of the developing Asian economies (Table 1.0) Table 1.0 S. No. Country Per Capita Electricity Consumption (kWh) 1 China 1780.5 2 Thailand 1950.1 3 Korea 7803.9 4 Kazakhstan 4071.7 5 Malaysia 3301 6 India 480.5 7 USA 13635.7 8 World 2,595.7 During 2005-06 The energy is a prime mover for growth of an economy. The reason for low per capita electricity consumption could be many such as • Non availability of electricity in rural areas • Wide gap between demand and supply • Lower level of industrialization, high cost of electricity etc. 1 http://www.powermin.nic.in/indian_electricity_scenario/introduction.htm 2 http://earthtrends.wri.org/text/energy-resources/variable-574.html International Energy Agency (IEA) Statistics Division. 2007. Energy Balances of OECD Countries (2008 edition)--Economic Indicators and Energy Balances of Non-OECD Countries (2007 edition)--Economic Indicators. Paris: IEA. Available at http://data.iea.org/ieastore/default.asp. 5
  • 6. These reasons are evident in Indian context. The govt. has put enormous effort for rural electrification but still there is long way to go to accomplish the mission of “Electricity for all”. Total inhabited village according to 2001 census are 593732, So far 497709 (83.8% of total) villages are being electrified and 96023 more villages are to be electrified. Out of these 1344 villages are being electrified in period 01-Apr-09 to 31-Jan-103. 1.1. Widening Gap between Demand & Supply: The Indian Power industry has since independence faced the demand and supply gap4 (Table 1.1.1). The said gap is still prevalent even after government initiated the reform process in early nineties. Table 1.1.1 Year Energy Energy Energy Energy Requirement Availability Shortage Shortage % (MU) (MU) (MU) 2002-03 545983 497890 48093 8.8 2003-04 559264 519398 39866 7.1 2004-05 591373 548115 43258 7.3 2005-06 631554 578819 52735 8.4 2006-07 690587 624495 66092 9.6 2007-08 737052 664660 72392 9.8 2008-09 777039 691038 86001 11.1 It is evident from the statistics that the demand-supply gap is widening over the period of time. In the year 2008-09, the electricity generation grew by 2.71% from 704.45 Billion Units (BU) to 723.56 BU, whereas during the same period the requirement grew from 739.35 BU to 774.32 BU. The annual energy shortage increased to 11% from 9.8% in the previous year. The peak shortage however declined to 11.9% in the year 2008-09 from 16.6% in the previous year. The gross electricity requirement by the end of the Eleventh Plan as projected by the Working Group on Power is 1038 BU and peak demand estimation is 151000 MW5. 1.2. Change in ownership structure: A natural-monopoly of government was used to justify the argument that since power sector is a public-utility and hence better to be operating through government. The lack of competition, accompanied by political influence and operational inefficiency, has steered the sector towards the abyss of financial distress. Policymakers recognized this in the early 1990s and opened up the sector for private participation. Encouraged by favorable policy developments and the advent of 3 http://www.powermin.nic.in/rural_electrification/village_electrification.htm 4 Ministry of power Annual report 2008-2009; http://www.powermin.nic.in/reports/pdf/Annual_Report_2008-09_English.pdf 5 http://recindia.nic.in/download/ar2008-09.pdf 6
  • 7. independent regulation, greater private participation is becoming visible in the sector, though not to the extent desirable. The existing ownership structure of the generating capacity is still dominated by CPSUs and state utilities (Table 1.2.1 and only 18% of the generating capacity in the country is 1.2.1) owned by the private sector6. Table 1.2.1 Ownership Structure 18% 50% State 32% Central Private The fuel wise break-up of the installed generation capacity in India ha shown in table up has 1.2.2, which is clearly depicting the dominance of thermal power plants in generation s plant portfolio with almost two-third share. third Table 1.2.2 Generation Installed Capacity (MW) of Power Utilities (Up to February 28, 2010) Ownership Mode-wise breakup Grand Thermal Nuclear Hydro RES** Total Coal Gas Diesel Total (Renewable) (MNRE) State 44002 4046.12 602.61 48650.73 0 27065 2662.41 78378.14 Private 7426.38 6307.5 597.14 14331.02 0 1233 12764.69 28328.71 Central 30915 6702.23 0 37617.23 4340 8565.4 8565 0 50522.63 Total 82343.38 17055.85 1199.75 100598.98 4340 36863.4 15427.1 157229.48 Source: Infraline 1.3. Trends in power generation through five year plan periods: The installed capacity and its ion growth rates since 1947 are given below (As on February 28, 2010 28, 2010) 6 http://www.powermin.nic.in/indian_electricity_scenario/introduction.htm 7
  • 8. Table 1.3.1 Plan/Year Hydro Thermal Renewable Nuclear Total CAGR Energy Sources March 1985 (End of 6th Plan) 14460 27030 1095 42585 - March 1990 (End of 7th Plan) 18308 43763 1565 63636 9.89% March 1992 (End of 2 Annual 19194 48086 1785 69065 4.27% Plans) March 1997 (End of 8th Plan) 21658 61912 2225 85795 4.84% March 2002 (End of 9th Plan) 26269 74549.54 1507.46 2720 105046 4.49% March 2007 (End of 10th Plan) 34653.77 86014.84 7760.6 3900 132329.2 5.19% Mar-08 35908.76 91906.84 11125.41 4120 143061 Mar-09 36877.76 93725.24 13242.41 4120 147965.4 Feb-10 36863.4 100599 15427.1 4340 157229.5 6.27% It is evident from the table that after seventh plan period we have not seen a healthy growth in terms of capacity addition. The decline in the proportion of Hydro capacity, which started in the early seventies, has, continued. The share of Hydro-power projects in the total installed capacity which stood at 51% during 1962-63 slipped to 34% at the end of 6th plan and further to 26 percent at the end of 10th plan, against an optimal share of 40%. The Plan wise capacity addition performance shows that the Central Sector organizations have realized better capacity addition as compared to the State sector utilities. As a result, the share of Central Sector in the total installed capacity, which was 16 percent at the end of the 7th Plan, rose to around 32 percent in February, 2010. Private companies own about 18 percent of the total installed generation capacity. Their share, however, has expected to increase in the future with the opening up of the power sector for private participation. The Plant Load Factor, which is an important indicator of the performance of the thermal power generating units, has shown steady improvement at all India level and has increased from 64.4% at the end of eighth plan period to 77.03% at the end of February 2010. However, there remains considerable scope for further improvement, particularly in respect of the State Sector thermal plants. The plant load factor at various plan periods has shown in table 1.3.2 The losses on account of transmission and distribution have declined marginally but remain much higher than the technically acceptable levels. Partly, this is attributable to 8
  • 9. Table 1.3.2 Plant load Factor five year plans Target Actual Sector-wise (Actual) (%) (%) Central State Private at the end of 8th plan 63.6 64.4 71 60.3 71.2 at the end of 9th plan 69.9 69,9 74.3 67 74.7 at the end of 10th plan 76.3 76.8 84.8 70.6 86.3 2009-10 (Up to Feb 2010) 77.02 77.03 85.05 70.45 82.02 Source: Infraline inadequate investment in the T & D system. Though we have seen a significant growth in electricity generation over the years, the shortage of power continues to exist primarily because of growth in demand for power, outpacing the growth in generation and generating capacity addition. The power supply position at the end of various plan periods has shown in table 1.3.3 Table 1.3.2 Energy Plans Requirement Availability Shortage MU % Growth MU % Growth MU % At the end of 7th plan 2,88,974 2,66,432 22,542 7.8 At the end of 8th plan 4,13,490 6 3,65,900 3.3 47,590 11.5 At the end of 9th plan 5,22,537 3 4,83,350 3.4 39,187 7.5 At the end of 10th plan 6,90,587 9.3 6,24,495 7.9 66,092 9.6 2009-10* 6,88,213 - 620,074 - - - * April 2009 to January 2010 The peak demand shortage was also remained a challenge for the Indian power sector. However, we were able to maintain the steady growth in supplying peak load vis-à-vis increase in demand, but we had not outwent the growth so that to meet a steady deficit of peak load. The trends in peak deficits is shown in table 1.3.4 The main reasons for shortage of power are- • Growth in demand for power outstripping the growth in generation and capacity addition, • Shortage of peaking power in the grid. • Low Plant Load Factor of some of the thermal generating units, mostly in the State Sector 9
  • 10. Table 1.3.3(Peak Deficit trends) Demand Met Shortage (MW) % Growth (MW) % Growth (MW) % At the end of 7th plan 48,055 39027 9,028 18.79% At the end of 8th plan 63,853 32.87% 52,376 34.20% 11,477 17.97% At the end of 9th plan 78,441 22.85% 69,189 32.10% 9252 11.79% At the end of 10th plan 100,715 28.40% 86,818 25.48% 13,897 13.80% 2009-10* 116,281 15.46% 101,609 17.04% 14,672 12.62% * April 2009 to January 2010; CAGR = Compounded Annual Growth Rate • High Transmission & Distribution losses • Inadequate sub-transmission and distribution network in some States. • Inadequate inter regional transmission capacity, for supplying power from surplus regions to deficit regions. • Poor financial position of State Utilities rendering it difficult for them to raise the resources necessary for making required investments to create adequate generation, transmission and distribution system. 1.4 Capacity addition programme-target & Achievements: The planning commission and Ministry of Power had set the target of 41,110 MW to be added in the system to meet the growing power requirement. Out of this, the share of Central Sector was 22832 MW and that of the Private Sector was 7121 MW. The State Sector had a share of 11157 MW. However, once again the actual capacity addition in the power sector has been far below the target set by the Ministry of Power. Capacity addition during this plan period was only 21180.2 MW an achievement of trifling 51.6% of the target. The summary of actual achievement has shown in table 1.4.1 Table 1.4.1 (Capacity Addition-10th Plan achievement) Sector Hydro Thermal Nuclear Total % achievement Central 4495 7330 1180 13005 56.9 State 2691 3553.6 0 6244.6 55.9 Private 700 1230.6 0 1930.6 27.1 Total 7886 12114.2 1180 21180.2 51.6 % Achievement 54.8 47.6 90.8 51.6 • However, shortfalls in all the three segments i.e. Central, State and Private Sector has reported, the shortfalls in achieving the Private sector targets of capacity addition are notable with only 27% achievement. 10
  • 11. • In terms of fuel mix comparison, nuclear sector was able to achieve 90.8% of the modest target set for it. • In Hydro segment 54.8% of the target was achieved and X Plan is notable in the context of clearing the backlog. There were number of hydro projects which were originally due for commissioning in the Eight Plan or even before. But these projects due to associated problems were brought into the Tenth Plan with a long history of time and cost over run. These projects included Naptha Jhakhri HEP (1500 MW), Tehri HEP (1000 MW), Dulhasti HEP (390 MW) and Sardar Sarovar (1450 MW). In the Tenth Plan we have the satisfaction of bringing these projects on track and all of them have been commissioned in the X Plan. • The dismal performance of Thermal segment at 47.6% of the target is mainly due to most of the coal based backup projects could not set due to supply constraint on part of BTG equipment manufacturers especially BHEL. The planned capacity addition in 11th plan was 78577 MW, which has further revised to 62,374MW in the 11th plan Mid-Term Appraisal. The year wise capacity addition target and the actual achievement has shown in table 1.4.2 Table 1.4.2 (Target & Achievement of capacity Addition in 11th Plan) Year Central State Private Total Hydro Thermal Nuclear Hydro Thermal Nuclear Hydro Thermal Nuclear Target 690 3490 660 1682 4767 0 0 750 0 12039 2007-08 Achievement 1030 1990 220 1393 3880 0 0 750 0 9263 Target 0 1750 660 1097 1262.2 0 0 2761 0 7530.2 2008-09 Achievement 0 750 0 969 852.2 0 0 882.5 0 3453.7 Target 252 2490 660 301 4679 0 292 5833 0 14507 2009-10 Achievement 0 1740 440 39 3079 0 0 4287 0 9585 Target 529 5890 1220 597.5 6012 0 219.5 5891 0 20359 2010-11 Achievement - - - - - - - - - - 1.5 Demand Forecast: According to the 17th Electrical Power Survey report the demand projections on all India basis for the year 2011-12, 2016-17 and 2021-22 has given below in table 1.5.1 11
  • 12. Table 1.4.1 Year Electrical Energy Requirement at Power Annual Peak Electric Load at Power Station Bus Station Bus Bars (MU) Bars (MW) 2011-12 968659 1,52,746 2016-17 1392066 2,18,209 2021-22 1914508 2,98,253 1.6 Coal availability likely to be a bottleneck: There are mainly three sources of energy for power generation on which India is relying, namely, Thermal, Hydro and Nuclear. Power generation through nuclear energy is although at nascent stage but nuclear deal with US and other technological advance countries will, in long run, certainly supercharge the power generation through this untapped source. The availability of fuel is the major concern for the policy maker especially for Thermal segment. Coal and gas supply is likely to become bottleneck in achieving the planned capacity addition target of current and forthcoming five-year plans. Renewable energy is so far remained untapped, but it seems to be the promising source of energy in near future provided we could develop the required infrastructure and technology to reap the vast unexploited renewable energy resource. The break-up of total generating capacity in India according to the fuel used is given in table 1.6.1. As per table 1.3.1, it is evident that our energy requirement is largely dependent on coal. 53.3% of our energy requirement is fulfilled through coal and hence it can be easily inferred that in the long-run, availability of coal is going to play a substantial role in meeting the energy requirement of the nation. The coal reserves of India up to the depth of 1200 meters have been estimated by the Geological Survey of India at 257.38 billion tonnes as on 01.04.2007. Coal deposits are mainly located in Jharkhand, Orissa, Chhattisgarh, West Bengal, Madhya Pradesh, Andhra Pradesh and Maharashtra. Table 1.6.1 Fuel MW %age Total Thermal 100598.98 64.6 Coal 82,343.38 53.3 Gas 17,055.85 10.5 Oil 1,199.75 0.9 Hydro (Renewable) 36,863.40 24.7 Nuclear 4,340.00 2.9 Renewable Sources 15,427.10 7.7 Total 1,57,229.48 As on 28 Feb 2010 12
  • 13. Hydropower is currently accounting for about 25% of nation’s energy requirement. The hydro potential is by and large untapped because of the several issue associated with it such as very long gestation period, relocation and rehabilitation of the affected mass population, submergence of forest and its adverse effects on flora and fauna etc. 1.7 Transmission: Transmission of electricity is defined as bulk transfer of power over a long distance at high voltage, generally of 132 kV. In India bulk transmission has increased from 3708 ckm (Circuits Kilometers) in1950 to more than 265,000 ckm today. The nation is divided into five regions for transmission system, namely, Northern region, North-Eastern region, Southern region, Eastern region and western region. The Government of India has an ambitious mission of ‘POWER FOR ALL BY 2012’. This mission would require that country’s installed generation capacity should be at least 2, 00,000 MW by 2012 from the present level of 1,57,229.48 MW. To be able to transmit this power to the entire country an expansion of the regional transmission network and inter regional capacity to transmit power would be essential. The power needs to be carried great distances to areas where load centers exist. Table 1.7.1 shows the existing transmission capacity in India. As part of its ambitious mission to provide electricity to the entire nation by 2012, the Indian government is looking to strengthen the national power grid by adding more than 60,000 circuit kilometers (37,200 miles) of new transmission at a cost of about 7.5 billion rupees (R) ($146 million). That integrated grid is expected to carry as much as 60% of the power generated in the country. The government is also carrying out a Rs 6.5 billion ($126 million) expansion of the five regional systems as well as the interregional grid to boost transmission capacity from 17,000 MW to 37,000 MW7. This project will primarily connect load centers to generation resources that are unevenly distributed around the country. While the predominant technology for electricity transmission and distribution has been Alternating Current (AC) technology, High Voltage Direct Current (HVDC) technology has also been used for interconnection of all regional grids across the country and for bulk transmission of power over long distances. A lot of emphasis is being given to increase the inter-regional power transmission capacity. The proposed target is to achieve cumulative capacity (all five regional grids) of 38,650 MW8 by the end of 11th planning year period. 7 http://www.powermag.com/nuclear/Powering-the-People-Indias-Capacity-Expansion-Plans_1858.html 8 Ministry of power annual report 2008-09 13
  • 14. Table 1.7.1 (All figures in ckm)9 At the end of 10th plan 11th plan Upto March 2009 +500 kV HVDC Central 4368 5668 State 1504 1504 Total 5872 7172 765 kV Central 1775 2709 State 409 409 Total 2184 3118 400 kV Central 50992 61800 State 24730 27696 Total 75722 89496 220 kV Central 9444 10066 State 105185 112894 Total 114629 122960 1.8 Distribution: Distribution is the vital component of the entire electricity supply chain, despite being of its crucial importance it remained as neglected element and thus, resulting in huge Aggregate Technical and Commercial (AT&C) losses. Most of the ills of the Indian power sector find their origin in the distribution segment. The distribution segment has lagged both in terms of operational efficiency as well as financial performance. The slow pace of investment generation as well as distribution segment can be attributed to the severe cash flow problem associated with the under-recovery of costs and poor collection efficiency. Poor operational efficiency further aggravates the situation. Table 1.8.1 shows the All India AT&C loss10 which reveals that almost 1/3rd of the generated power is drained away as losses. This is a great matter of concern for a developing nation like ours. With a vision to achieve overall growth of GDP at the rate of 8-9% our planning committee estimated the installed capacity necessary to achieve the said target. With the losses in the system of such a mammoth magnitude will land us to nowhere near the target. Proper investment and planning is required to minimize these losses to acceptable limits. 9 http://www.indiainbusiness.nic.in/industry-infrastructure/infrastructure/power.htm 10 http://www.cea.nic.in/power_sec_reports/Executive_Summary/2010_01/1-2.pdf 14
  • 15. Table 1.8.1 (All figures in percentage) Year AT & C losses* 2002-03 32.54 2003-04 34.78 2004-05 34.33 2005-06 34.54 2006-07 32.07 *PFC figures PFC: Power Finance Corporation Ltd. Recognizing the urgent need of reforms in the distribution sector the Government of India introduces, the Accelerated Power Development Programme (APDP) in 2001, for the strengthening of Sub Transmission and Distribution network and reduction in AT&C losses. The main objectives of the programme include improving the financial viability of state utilities, reducing of aggregate technical and commercial (AT & C) losses, improving customer satisfaction, and increasing the reliability and quality of the power supply. 1.9 Private Participation: Long after the independence, Indian government realized need of private players to ramp up the growth of power sector. To enable the private companies to enter in the sector, Indian government has introduced many policies/ regulation (eg. Electricity Act 2003, National Electricity Policy) so that private players will ready to channel their money in power sector. At present, private players share 18% of total installed capacity in power portfolio. The government realized that unless comprehensive reforms are undertaken it would be difficult to attract private sector to invest in the power sector. By enactment of Electricity act 2003, formation of central electricity regulatory commission are the steps in this regard. The government also implemented various policies to encourage participation of private sector. Some of these policies were liquid fuel policy, Hydro power policy, Mega Power Policy etc. However, the outcome of these policies was not as expected. The contribution of private sector in capacity addition during 10th plan was only 1970.6 MW which was about 16% of the total achievement in the period. The various issues involved in the low level of private participation are discussed below: Most of the project are financed through Project Financing route. The main difference between corporate financing an project financing is that primary source of loan repayment is sponsoring company backed by entire balance sheet not the 15
  • 16. project alone. If project fails, the investor can expect significant losses even if it is sponsored by AAA- rated company. This risk is the major concern for the potential investor and hence deterring them to invest in private power projects. Large scale capital intensive projects usually requires huge investment up front and only start to generate revenues after a significantly long construction period. Therefore, matching debt repayment obligation with project revenue cash flow implies that, on average, project finance is characterized by much longer maturities compared to other form of financing. With the change in macroeconomic condition the lender will prone to suffer significant losses by investing in these projects. There are numerous operational agreement to be executed before a development of power project which includes EPC contract, fuel supply agreement, power purchase agreement, Govt. clearances etc. Even if the project is being prosed by private players there are too many hurdles which private players have to cross to commence financially viable project. Many projects are delayed due to these agreement and later suspended by the private players with bitter experience in the power sector. The source of financing for independent power project are scarce, because the risk of development are high. Until the project reaches financial closing for construction, ther are a multitude of risk that could reduce the value of the project to zero. This risk include: Political opposition of project Permitting risk Regulatory disapproval and change in law Inability to obtain PPA, either because the power price is too low or the term are not acceptable Inability to secure fuel and fuel transportation under long term contract Dealing with SEBs risk: The weak financial health of the SEBs is the major concern for private players because the ability to repay the loan by private players is directly link with the revenue generated from SEBs. In case SEBs are not in position to pay to the private players, this will be poses a great risk on private players in terms of economical operation of plant and the credit worthiness associated with the name of the private company. However, govt is timely identifying the issues and preparing the ground so that private players can afford to enter in the power sector. It is estimated that about 23100 MW of thermal project for which main plans order have been placed, 21040 MW of UMPP, 8380 16
  • 17. MW for which linkages/ part linkages are identified and is likely to be commissioned by private sector in 12th plan. For 11th plan most of the project announced are either not able to have the financial closure or having in one or other phase of clearances seeking. The state wise detail of the projects are shown in Appendix C.1 1.10 Investment opportunity11: The Sixteenth Electric Power Survey projects a capacity requirement of about 100,000 MW for the period 2002–12. Apart from generation capacity addition and associated network strengthening, additional investment is required to extend the transmission and distribution network to meet the requirement of the un-served population. Government of India estimates for investments in the Power Sector, in order to meet the required targets for Eleventh Plan, stand at Rs.10316 Billion which comprises of funds required for adding power generation capacity, R&M of existing power plants, expansion and up-gradation of transmission and distribution infrastructure, decentralized distributed generation etc. The three key components which drive the Power Sector are Generation, Transmission and Distribution. The total requirement of funds for generation projects, during the Eleventh Plan period is estimated at Rs.4,108,960 million, with Rs.2,020,670 million for the central sector, Rs.1,237,920 million for the state sector and Rs.850,370 million for the private sector. Investments for transmission system development and related schemes during the Eleventh Plan period is estimated at Rs.1,400,000 million, with Rs.750,000 million for the central sector and Rs.650,000 million for the state sector. The total fund requirement for sub-transmission and distribution systems development for urban as well as rural areas during the Eleventh Plan period is estimated at Rs.2,870,000 million inclusive of APDRP and RGGVY schemes. 11 http://recindia.nic.in/download/ar2008-09.pdf 17
  • 18. 2. Bottlenecks in Indian Power Sector There is an immense opportunity for growth in Indian Power sector, but it could be hindered or more appropriate to say, it is being outpacing because of the below mentioned factors: 2.1 Power Sector Policy Issue: The Indian power sector has largely dominated by political influences. Though policy formulation may happen at the central level, its implementation lies with states. Unlike the telecom sector, in power, the success or failure of implementation depends largely on the will of the ruling government at the state level. To bring about reforms, like implementation of unbundling of SEBs, privatization of transmission and distribution are some of the responsibilities which lies with state government and the benefits from these reforms and policies are bearing the direct relationship with efficiency with which state govt. are implementing them. Power is a highly politicized subject and often guided by the possible outcome of near elections. More often than not, reforms take a backseat, given the political nature of the sector. Most importantly, in most cases state utilities control distribution assets along with access to end customers. Tariff for different consumer categories, is determined by the respective state electricity regulator based on fixed RoE norms. Since the hike in tariff has not kept pace with the cost of supplying power, losses have been rising for distribution utilities. The table 2.1.1 below shows the skewed nature of tariff and its consequences in terms of huge losses to the SEB’s and table 2.1.2 shows the cumulative losses in Rs. Crore to SEBs Table 2.1.1 Year Cost of supply Realisation Only Agri Loss (Paise/kwh) (Paise/kwh) (Paise/kwh) (Paise/kwh) FY02 246 181 59 65 FY03 238 195 77 43 FY04 239 203 72 36 FY05 254 209 76 45 FY06 258 221 79 37 FY07 276 227 71 49 FY08 290 232 71 58 Source: CEA, Edelweiss research One of the main reasons why state governments have been hesitant in hiking the agriculture/domestic tariff is that this segment forms the largest part of their vote banks. Consequently, tariffs are far higher for industrial users, forcing them to set-up captive power plants. If this trend continues, it could damage state financials further as industrial customers, who bear the burden of high tariff, are going away (captive), 18
  • 19. Table 2.1.2 State wise Commercial Loss (w/o Subsidy) of Power Utilities (Rs. Crore) Region 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Eastern -3,128 -3,316 -1,114 -1,460 -2,461 -5,173 Region N-E Region -1,136 -1,238 -1,081 -1,543 -806 -946 Northern -8,586 -8,223 -8,031 -14,361 -10,391 -13,722 Region Southern -11,289 -5,833 -5,132 -4,578 -4,894 -5,996 Region Western -5,192 -2,583 -3,748 -2,053 -1,577 -1,609 Region Grand Total -29,331 -21,193 -19,106 -23,995 -20,129 -27,446 Source: Infraline leading to higher subsidy funding by state governments. Further, this type of skewed tariff structure will work as repellent for private players to invest in this sector. Since this tariff structure will lead to the bad financial health of SEBs, which may, in turn default in payment to these private players. Moreover, Indian transmission and distribution system is not efficient; we have almost 33% of AT & C losses. The theft of electricity is also a major concern. SEB’s are carrying this burden for years and resulted into unhealthy financial condition. Whatever power is transmitted, only two-third of its get metered and billed. This resulted in huge losses. Unlike SEBs, private player will not be interested in power production until they ensured that every single unit that is produced and transferred is billed. 2.2 Transportation and Handling facilities for fuel Manifold increase in the demand for coal in coming years, particularly to meet the energy requirement of the country, has put an onerous responsibility on the coal sector. Although extra efforts are being made to meet this demand, the related infrastructure appears to be stagnating, which is creating new problems for transport of coal to various power plants across the country. This situation will worsen if infrastructure like rail, road and port for the import of coal has not developed apace with the capacity addition programme. Rail infrastructure will have to be strengthened to handle this demand. Given that the coal import figures are also likely to go up to 500 Million TPA, the ports must also gear up and invest in infrastructure development. At present, the ports on an average cannot handle more than 30,000-35,000 tonnes of coal. Furthermore, a well thought-out rail-cum-sea route to the southern and western ports should be given consideration in the 11th and 12th Plans. The government must also consider coal 19
  • 20. slurry pipelines. This mode of transport has discussed several times, but unavailability of water and high implementation costs have rendered the proposition unviable. However, no study has made to update the earlier studies after 1992. The earlier studies must be reviewed in light of international experience 2.3 Power Equipment Supplies The equipment used in power plant, if not supplied on time, could cause the delay in the execution of project. In recent times, quite a few projects have got delayed due to delayed equipment delivery across BTG (Boiler, turbine & Generator) and BoP (Balance of Plant) segments. Selected equipment suppliers like transformers manufacturers have increased capacity, but most of the other equipment suppliers (BTG and BoP) are yet to increase their manufacturing capacity. BHEL and Thermax have been key boiler manufacturers in India; BHEL, along with Siemens, has been a key player in turbine generators. BHEL, the largest equipment vendor in the country, has 10 GW annual BTG capacity. However, according to the Eleventh Plan capacity addition targets, the BTG industry is required to have an annual capacity of ~15 GW. BHEL, the major power plant equipment manufacturer, is having its books overbooked and to accommodate the growth in power sector we need a strong backup of these suppliers. While in the interim, developers are resorting to imports, equipment supply has expected to be a cause for concern for developers across the vertical. Most of the private players are inclined to import Chinese BTG equipment because of shorter lead-time. Given the poor performance and quality record of accomplishment of Chinese power plant equipment in the country, the efficient and smooth operation of the power plant could be a cause for concern. In addition, power plants with Chinese equipment work better with imported coal compared to domestic coal. However, the TPP is based on domestic coal. Hence, its operating and maintenance could turn out to be a cause for worry. 2.4 Regulatory & political risk CERC is the regulatory body that sets benchmark norms, which various states could adopt with minor changes post approval. Since most of the existing power projects are regulated and we expect T&D utilities to continue to be regulated over the near future, any change in norms that would affect returns could influence earnings if the same is not offset through scope for efficiency gains. Moreover, political risk is also played as anti-catalyst in power sector growth. 20
  • 21. 2.5 Access to fuel, land and water: Most projects, going forward, are likely to be on competitive basis. Access to fuel, land and water are critical to complete projects on time, remaining competitive at the same time. The requirement is likely to be significantly increase in the Twelfth Plan period. Sourcing them at reasonable prices could be a key hurdle. Any delay in execution may not only result in higher project costs, but could also risk penalty payments; since tariffs are predetermined, returns could be significantly hit. Table 2.5.1 indicates the requirement of these three essential elements per MW of electricity produced based on coal/gas as fuel input. Table 2.5.1 Land Water Fuel Coal 0.8-1.4 acres 29 mn ltrs p.a. 3000-5000 tonnes p.a. Gas ~0.1 acres 10 mn ltrs p.a. 0.05 mmscmd p.a. Source: CEA, Edelweiss research The supplies from Coal India Limited is likely to increase from ~350 MT (End of 10th Plan period) to ~ 500 MT by FY12E (End of 11th plan period), resulting in a shortfall of ~62 MT for coal-fired power plants; the deficit is expected to be met through imports. Looking at the potential shortfall of coal in the coming years, many companies have started looking for coal in countries like Indonesia to meet their requirements. Even companies like NTPC have started importing coal (imports in FY09 – 2.5 mn tonnes; FY10E – 12.5 mn tonnes) to meet coal requirement at their existing plants. GoI, taking cognizance of the gravity of the situation, has started allotting coal mines to the private sector so that mining of the crucial mineral can happen at a faster pace. The other fuel like gas, nuclear fuel etc. is also going to be act as roadblock in the growth path of Indian power sector, because of large demand and supply gap of these resources. 2.6 Gap in Demand & Supply of required Human Capital: The total work force in the power sector at the end of 10th plan was approximately 9.5 lakhs as per the Planning Commission’s Working Group on Power for 11th Plan. The following are the requirements for additional work force for the 11th plan assuming addition of 68,869 MW of generation capacity, 100,000 ckt. Kms of HV, EHV and UHV transmission lines and 16 crore-distribution consumers. 21
  • 22. Table 2.6.1 (Figure in thousands) Area Technical (Work Non Tech (Work Total (Work Force Force required) Force required) required) Thermal 31.4 12.3 43.7 Hydro 25.3 7.1 32.5 Nuclear 3.9 1.6 5.5 T&D 202.1 60.6 262.7 Total 262.7 81.7 344.4 Source: Planning Commission Working Group on Power for 11th Plan It is evident from the table 2.6.1., that to achieve the target for 11th plan an additional 2.5 lakhs technical and 1 lakh non-technical staff is required. While large-scale investments have been planned and numerous projects are underway, the lack of competent work force to execute these projects, subsequently operate, and maintain them is already being felt. The scarcity is increasing by the day and unless the Government, industry and all other stakeholders invest in attracting and training the available talent on an urgent basis, it has the potential to become a major bottleneck and derail the rapid growth in the sector that has just begun. 2.7 Law and Order: India’s major coal reserves lie in the ‘red’ belt or the Naxal-affected regions of the country. Power plants fuelled by coal blocks in these regions face issues like irregular supply. Coal India Ltd (CIL), officials had earlier admitted to transportation problems from coalmines in the Naxal-affected regions of Jharkhand, Orissa, Maharashtra, Madhya Pradesh and Chhattisgarh. Although, at superficial level, Law and order problem is not seems to bear any relation with the coal supply but on the ground of reality, it is. The supply from these regions could boost if government pays proper attention to maintaining law and order in these areas and the sense of safety to the person associated with the coal mining. 2.8 Preferential treatment with government owned/regulated companies: Building a power utility is a capital-intensive task. To raise the money for the power project, private as well as public company are chasing to market. As an investor, one is always interested to invest in public bodies and prefer public company over private company since one feel investment in public (Govt. backed) company is safer. In this regard, although the government has opened its door for private players, but where the question of fund raising comes, they are still competitor. Regulation and reform will be effective only when one can have fund to enter into that domain. The first thing is money so policies must be designed to enable private players to raise easy-funds. Further, in India, BTG packages (major power equipments) are being manufactured by few public companies like BHEL, private companies have to depend on them to fulfill 22
  • 23. their requirement. Here also private companies are subject to less preference than govt owned bodies in case of fulfilling order backlog. This will hamper the project execution and made companies to bear monetary losses associated with that. 2.9 Non-establishment of long-term debt market: In India, we do not have long-term debt market. We can see its effect in the skewed preferences of power project development. The private companies are inclined to build the thermal power project instead of hydro, because of longer gestation period of hydro projects. Leaving aside the fact that, more number of clearances required for hydro than compared with thermal, the non- availability of long-term debt is the other explanation for the said skewed tendency. The use of insurance and pension fund for infrastructure development will boost the private share in power sector. The corporate bond market (If allowed) could also make private player to enter in the power business. 2.10 Meagre Investment in R & D: We have put much less attention toward R&D, due to which, our power system is not efficient. Whether it be, generation, transmission or distribution, we are inefficient. We know that we are going to have a huge deficit of coal supply in near future, through R & D we could come up with new technology which can produce more energy from per unit of coal (Fuel) consumed. Presently, we are mixing the imported coal with domestic coal to improve the overall efficiency of power plant, pulverized coal based firing, coal firing in-tandem with oil firing are similar technologies which we are implemented to improve the performance of power plant. There is significant scope through R & D to come out with technologies, which enable us to improve the efficiency of power plant. Similar story is for transmission and distribution, we are having so much loss in t&d (though major is accounted by theft) but we are not emphasizing the need of R & D in this field to make the system efficient. 2.11 Vicious Circle of various clearances: There are numerous clearance required to set up a power plant. With the project financing, for most of the power projects it become very crucial to complete the project on-time otherwise it will poses penalties as well as monetary loss to the developer. There is long list of clearances which must have to sought before commencing the project like forest, environment, aviation clearance, techno-economic clearance, fuel linkage clearance, there are hundred procedures to make to acquire land etc. this vicious circle of clearance make it very unlikely to the project to complete on time. Government must have to redesign the list of mandatory clearances or assure to provide clearance at faster pace. 23
  • 24. Now we will discuss the various issues concerning growth of Indian power sector in detail: 3. Fueling Growth: Coal dominates India’s 1,57,229.48 MW power generation portfolio with mammoth share of about 53%. According to Planning Commission scenarios, by 2030, coal-fired capacity will likely be in the range of 200 GW to 400 GW, up from the 82 GW today12. The Indian coal industry was nationalized in the early 1970s. The production of coal increased from 70 MT (million tonnes) at the time of nationalization to 492.95 million tonnes in 2008-09. Coal India limited and its subsidiaries are the major producers of coal. 403.73 Million Tonnes of coal was produced by Coal India Ltd. and its subsidiaries during 2008-09 as against the production of 379.459 million tonnes in the year 2007- 08 showing a growth of 6.4%. Singareni Collieries Company Limited (SCCL) is the main source for supply of coal to the southern region. The company produced 44.54 million tonnes of coal during 2008-09 as against 40.604 million tonnes during the last year. Small quantities of coal are also been produced by TISCO, IISCO, DVC and others. 3.1 Coal Reserves in India: India is having a huge reserve of coal (coking & non-coking), India has endowed with 267.2 Billion Tonnes of coal reserves (table 3.1.1). The proven reserve stands at about 105.8 Billion Tonnes corresponding to approximately 8 % of world’s total proven reserves. Coal production is being comes from open cast mines as well as from underground mines; about 84% of the country’s coal production is from Open Cast Mines. Power sector is the major consumer of the domestic coal production with nearly 75% share, other being steel and cement industry. Table 3.1.1 (Figures in billion tonnes) Total Proven Indicated Inferred Reserve Reserve Reserve Reserve Coking 33.4 17.5 13.8 2.1 Non-Coking 233.8 88.3 109.7 35.8 Total 267.2 105.8 123.5 37.9 As on 01.04.2009 Source: Coal India limited 12 Source: Central Electricity Authority, “Power at a Glance”; Ministry of New and Renewable Energy 24
  • 25. However, we have huge reserve of coal but it is misnomer to state them as “Huge”, because of its poor quality. Our coal is having high ash content of the magnitude of as high as 30-40 %, compared with ash in coal in other countries of about 15-20%. Moreover, the calorific value is also not very high. 3.2 Coal Production: The Coal India Limited (CIL) and its subsidiaries is the major producer of coal 431.27 million tonnes of coal was been produced by Coal India Ltd. and its subsidiaries during 2009-10 as against the production of 403.73 million tonnes in the year 2008-09 showing a growth of 6.82%. The raw coal production and its growth have shown in appendix A.1. If we do the regression analysis on the growth of the total coal production from year 1998-99 to 2009-10, we find that on an average there is an increment of about 18 Million tonnes of coal production during the time span (Appendix A.2). Figure 3.2.1 Figure 3.2.2 10th plan period 11th plan period 400 440 430 Production 300 420 Production 410 200 y = 17.74x + 271.78 400 R² = 0.9985 390 y = 25.9x + 353.03 100 R² = 0.9986 380 0 370 0 2 4 6 0 1 2 3 4 Time span Time span Source of input data: Coal India Limited Figure 3.2.1: Regression analysis of total increment in the coal production during 10th plan period Figure 3.2.2: Regression analysis of total increment in the coal production during 11th plan (First 3 years only of the plan period) The installed capacity addition of thermal power plants, proposed in the 11th planning commission report, is based on the “Report of the Working Group on Coal & Lignite”. Let us compare and contrast projection of the report and its ground reality. The report says that • The coal production is envisaged to reach 680 mt in the terminal year 2011-12 of the XI Plan from the anticipated production of 432.50 mt in 2006-07 implying a CAGR of 9.47%. The incremental production in the XI Plan is envisaged to be 247.50 mt as against 104.71 mt likely to be in the X Plan. 25
  • 26. • The incremental production envisaged in the XI Plan from CIL is 156.70 mt, SCCL 3.30 mt, and captive blocks 86.53 mt. To supply the fuel (coal), to the capacity added, it was projected that cumulative increment of 247.50 Mt of coal production must be done. Figure 3.2.1 and 3.2.2 are the regression analysis of the increment in the coal production during 10th and 11th (first three years of the plan period only) plan respectively. It is evident from the regression that during 10th plan period there was an average annual increment of about 18 Million tonnes of coal. During the 11th plan period the pace is although high, of about 26 million tonnes per year, but is far way behind the required one. With this rate we can add at most 130 Million tonnes which is only 80% of the production required from the CIL in the working paper. The story is similar for other coal producing agency. It is having clear implication that even though if we could able to achieve the target of capacity addition there must be shortage of fuel because of non-availability of coal. 3.3 Supply and demand of coal for Power Sector: The overall requirement of coal for all sectors is projected to be 916.818 Million tonnes by Coal India Limited (cumulative for all sectors) at the end of 2016-17. The gap between the projected demand of 916.818 Million Tonnes and the projected domestic availability of 647.5 Million Tonnes works out to 269.32 Million Tonnes in 2016-17. This requirement would need to be met from imports. Further increasing production from captive blocks to bridge the gap also remains as a distinct possibility. In 11th plan upto 2011-12 the projected demand of coal is estimated to be 731.10 Million Tonnes, the demand of power sector utilities is 483 Million Tonnes, which is about 66%. Including the demand for captive power plant of 57.06 Million Tonnes, the share of power sector in the projected demand, works out to about 74%. The demand of steel sector at 68.5 Million Tonnes forms 9.4% of the projected demand. The share of cement sector is 4.4% and that of sponge iron sector is about 4%. The balance 8.2% is for bricks and others sectors. As per the projection by Central Electricity Authority (CEA), capacity addition in 11th Plan in Coal-based projects and normative requirement of coal & status of coal linkage has given in appendix A.3. The Detailed coal requirement vis-à-vis capacity addition during coming years, as projected by CEA/CIL, and Demand-Supply Gap Analysis, has shown in Table 3.3.1. 26
  • 27. Table 3.3.1 (Gap between Demand & Supply of Coal ) CIL Projection (In Million Tonnes) Particular 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 Production 460.002 486.65 514.75 542.75 575.25 609 647.5 Supply Through E- 46 48.665 51.475 54.275 57.525 60.9 64.75 auction Committed Demand 457.544 457.544 457.544 457.544 457.544 457.544 457.544 on CIL sources excluding E-Auction and requirement a/c TPP coming up beyond 1.4.2009 Availability from CIL -43.542 -19.559 5.731 30.931 60.181 90.556 125.206 sources for TPPs coming up after 1.4.2009 Commitment a/c 81.788 298.483 394.524 394.524 394.524 394.524 394.524 TPP coming after 1.4.2009 Net coal -125.33 -318.042 -388.793 -363.593 -334.34 303.968 -269.32 balance/availability for further issuance of LoA Source: Coal India limited Published on 06 April 2010 3.4 Bridging the gap: Coal based thermal power plant, accounts for more than 50% of the total installed power generation capacity, while coal based power plants account for about 80% of domestic consumption of coal. Thus, it remains a dominant fuel for the Indian power sector and is expected to remain so in the near future. Growth of an economy is a function of power consumed. To meet our power requirement we are very much dependent on the availability of coal. It is evident from the projections that domestic coal production is not sufficient to meet our requirement. Therefore, we have to look at the options through which we can bridge this wide gap; some of the options and issues involved have discussed below: 3.4.1 Coal import: We could meet our requirement through import; we are mainly importing the coal from Indonesia, Australia and South Africa. However, this option is not as simple as it seems, there are many issues associated with it, which have discussed below in detail: We are importing coal largely from Indonesia, and any local regulation or coal policy is going to affect us. Indonesian government is planning to put a cap on the 27
  • 28. total export; they are planning to have a maximum export up-to 150 Million tonnes. In a speech on “Coal supply outlook in Indonesia”, Dr. Ir. Sukma Saleh Hasibuan (Director, Ministry of Energy and Mineral Resources (MEMR), Indonesia) expressed this concern. The coal production and supply projection shown by him in the speech has shown in Appendix A.4. This will create shortage in global coal market and put pressure on international coal prices. This is having severe consequences in Indian context, Independent Power Producers (IPPs) who are planning to rely on imported coal in long term, will look it as highly volatile business which confront them with high price volatility and political risk. On December 16, 2008, the Indonesian Parliament adopted a law on mineral and coal mining (“New Mining Law”). The New Mining Law provides that existing contracts will continue to be valid until their expiry, but that the terms of the existing contracts must be modified within one year to make them comply with the New Mining Law. However, the New Mining Law is unclear as to which of its provisions will require amendments to the terms of existing contracts to bring those contracts into compliance with the New Mining Law. The existing holders of contracts may be given five years to comply with such obligation. However, the New Mining Law does not provide any details on when these government regulations will be issued or what specific obligations will be imposed. The legal uncertainty raised by the adoption and implementation of the New Mining Law has increased the risks, and may increase the costs, involved in our sourcing Indonesian coal. We cannot rely on importing of coal because of such unseen able events and unpredictable global political environment. Global Pressure on acquiring coal resource: Asian countries like China, Japan, Kazakhstan, etc are also boosting their power generation capacity and the problem of fuel is same for them. This will create a competition in acquiring the major portion of world coal export or they might try to acquire the coalmines in coal exporting country by going into long-term contracts. China recently signed a MOU of $60 billion, with an Australian Coal major Resource House for a 30 million tonne coal supply deal. Thus, China is finalizing a 20-year contract to receive high quality Australian Coal from a newly developed mining base called First China, which is located in Western Australia State of Queensland. China is now searching coal resources in the entire world. While Asia Pacific countries such as Indonesia, Australia, Vietnam and Mongolia are its traditional coal import sources, footprints of Chinese coal hunters are now left in almost all the continentals. Russia, Canada, the US and South Africa have become China's important coal trade partners. China is now consuming near 45 percent of the global coal, and has accounted for over 20 percent of the world coal trade. The said trend will further aggravate the pressure on coal prices. 28
  • 29. Infrastructure: Although theoretically, coal could have imported in large quantities to meet any domestic shortfall, problems with coal imports arise primarily because of the inadequacy of handling facilities at ports and the lack of inland transportation infrastructure (particularly railways) in India. To handle the large quantity of the imported coal we have to think about the development of our other related infrastructure like ports, transportation etc. 3.4.2 Diversify the portfolio of coal importing nations: We are importing coal from very few nations and mainly from Indonesia. This will lead to the risk of high price volatility and political risk. The risk could be reduced if we could diversify our portfolio of coal exporting countries. For example, we are almost neglecting the Australia as a source of importing coal. Figure shown below depict the decline in Australia’s share in coal import. China’s coal import is growing and export is decreasing. Similarly, Indonesian govt. is planning to put cap of 150 Million Tonnes on the net export. Source: Barlow Jonker In these circumstances, we have to develop our relations with some other countries. Australia can be the option. An Australian trade commission delegation, which recently came to India, presented a paper to the coal ministry saying reducing the import duty of thermal coal and keeping the zero import duty on coking coal intact would not only strengthen bilateral ties but would also enhance the availability of affordable inputs for two Indian infrastructure industry-power and steel. The trade commission pointed out that coking coal import, which was 12 million tonne in 2006-07 from Australia, would touch 18-20 mt in 2010-2011 and 25 mt by 2012, taking into account India’s steel capacity addition. While Australia has its share only in India’s coking coal space, Indonesia commands the thermal coal space. Australia wants to make an entry into the thermal coal space, since imports of thermal coal are likely to go up13. However, political (policy wise) uncertainty will always be there for example recently Australian govt has put Henry Tax on the exported coal, making the coal prices sourer for the importing nations. The similar uncertainty/risk is associated with every coal-exporting nation because of their internal policies. Hence, it will be wise to have tie-up with as many as 13 http://www.coalspot.com/news-detail.php?nid=908 29
  • 30. coal exporting countries as possible to diversify the risk. The main point to be made is that, we should not concentrate on any one or two nation for our coal requirement but to include more countries in our portfolio from where we could tie up long-term linkages. 3.4.3 Overseas mining: Coal supply to meet our energy requirement can be fulfilled by acquiring mines other countries. CIL has formed a subsidiary, Coal Videsh Limited (CVL), to acquire coal blocks in a number of countries including Indonesia, South Africa and Australia. Coal produced by CVL will be channelled into India to meet domestic demand in future. Private companies like Tata, Adani Power limited and GVK have acquired the coalmines mainly in Indonesia and some in Australia. IPPs are reluctant to acquire overseas mining right because of the volatility of business and risk associated with country specific policies, which are keep changes with time, such as imposition of Henry Tax by Australian govt. and introduction of New Mining law, by Indonesian govt. 3.4.4 Captive Mining: The issue of demand supply gap could be resolve through encouraging captive mining. A major constraint in ramping up production is the failure of companies to develop captive coal blocks allotted to them by the coal ministry. Power sector has, so far been allotted over 100 captive coalmines. Except 5-6 of them, none has come up so far14. For Indian coal companies, project planning, approval and commissioning make for a protracted process, involving a multiplicity of clearances at various levels: the Boards of the companies concerned, various Ministries, the Planning Commission, and other Government bodies. Estimates suggest that there are over 30 separate clearances, including environmental clearances, required before Government approves a coal-mining project. This leads to enormous delays, at times years, at the approval stage itself. If captive mining will supercharge its pace, the net production of the coal in the country will certainly increase and this will reduce the burden of CIL to meet the coal requirement. We have abundant coal reserve, according to an estimate our coal reserve will last for more 150 years, but the problem is in mining. For this government have to encourage the captive mining and have to look for collaboration with technologically advanced countries for technology transfer in mining. 3.4.5 Private mining: As the captive mining projects of private sector players have not yielded the desired results, CIL has recently proposed that these players be allowed to produce coal even before their main projects are commissioned. Further, CIL has offered to buy coal from private players at prices to be decided by a committee formed by CIL and the MoC. To overcome the problem of finance or availability of requisite skills outside the domain of the existing Indian coal companies, the GoI has allowed an associate 14 Business Standard 30
  • 31. company of an end-user company to undertake captive coal mining if the end user company holds at least 26% equity in the associate company. The GoI has also allowed private mining in cases where a holding company has an equity stake of at least 26% in both the end-user company and the coal mining company. Additionally, the GoI has permitted consortium mining for captive purposes, where a number of end-users can come together for mining coal. 3.4.6 Increasing the thermal efficiency of power plants: The possible option to curb the widening gap between demand & supply is, to increase the thermal efficiency of the thermal power plants. Currently, we are in practice of mixing our low quality coal with high quality imported coal to increase the overall thermal efficiency. There is scope to invest in R & D to come with the technology to produce more unit of electricity from per unit of the coal consumed. The government must have to seek collaboration with developed nations for technology transfer in thermal power generation. This will help us to meet our energy requirement from the domestically available coal in long run. 3.4.7 Law and order: India’s major coal reserves lie in the ‘red’ belt or the Naxal-affected regions of the country. Power plants fuelled by coal blocks in these regions face issues like irregular supply. Coal India Ltd (CIL), officials had earlier admitted to transportation problems from coal mines in the Naxal-affected regions of Jharkhand, Orissa, Maharashtra, Madhya Pradesh and Chhattisgarh. Although, at the first sight, Law and order problem is not at all seems to be linked with the coal supply but really it is. The supply from these regions could boost if government pays proper attention to maintaining law and order in these area and the sense of safety to the person associated with the coal mining. 3.5 Key Challenges facing the coal industry: The critical issues facing the coal industry are highlighted below: Lack of Investments in Mining: In spite of the economic liberalization of 1991 the mining sector has not seen major investments. This is possibly due to the problems such as government policy, land acquisition, development of infrastructure, transportation system, social engineering and community development involved in major green field site projects. There is a need to re-look at the total management solution for attracting investment in new mines. The solution has to lead to the creation of joint venture institutions with central government, state government and private sector as partners. The facilitation for the project through provision of land, infrastructural development, community development etc, can be done by the government agencies whereas the investment in the mine and the associated technological inputs can come from the private sector. In addition, the private sector must have the freedom to run the mine 31
  • 32. in a cost effective manner. This may be a long term solution for future mines in India and it will have unique opportunities for both the government and private sector to work together for India's development. Historically, opencast mining has been favored over underground mining. This has led to land degradation, environmental pollution and reduced quality of coal as it tends to get mixed with other matter. Further, coal mining in India is associated with poor employee productivity. The output per miner per annum in India varies from 150 to 2,650 tonnes compared to an average of around 12,000 tonnes in the USA and Australia. India has still not been able to develop a comprehensive solution to deal with the fly ash generated at coal power stations through use of Indian coal. Clean coal technologies, such as Integrated Gasification Combined Cycle, where the coal is converted to gas, are available, but these are expensive and need modification to suit Indian coal specifications. Challenges in Jharia: Jharia Coal field in Jharkhand is the richest coal bearing area in India, which contains large quantities of high-grade coking coal. However, this area also contains a large number of mine fires, which have been burning for several decades. A major challenge to the mining community is that of tackling fires that have engulfed large and densely populated coal bearing areas. A technological, cost effective, safe and minimum disturbance solution to this problem has to be found. 3.6 Key Reforms Measures Required15: The vision for coal mining industry should be to come out with an innovative and comprehensive action plan for providing effective solutions and their progressive implementation. This will involve innovation and research in satellite based remote sensing, robotics, mining equipment, mining operation, extraction, beneficiation, processing and transportation. The task of transformation of the coal sector is formidable given the size of investment requirement and the level of political interference that is expected during such process. The following efforts can become the cornerstones of reform in the sector: 3.6.1 Policy and Regulatory Framework: The coal industry in India has traditionally been characterized by state monopoly, lack of independent regulation and lack of transparency in tariff determination. The Government has now realized that a high growth rate in domestic production of coal could not been sustained without carrying 15 http://www.indiacore.com/coal.html 32
  • 33. out structural reform and introduction of competition through participation of the private sector. In this regard, the Government has taken the following measures: • Distancing of the Government from price determination of all grades of coal • Opening of captive coal mining for power, iron and steel, and cement to private investment • Foreign investment in Indian companies taking up coal mining for captive use has been permitted. • The allocation of coal blocks are to be done on the basis of competitive bidding (Proposal stage) • Allowing State Government companies or undertakings to carry out mining of coal (or lignite) reserves (either by opencast or underground method) anywhere in the country • Reduction in customs duty on coal imports to 5 percent (currently planning to remove the custom duty at all) •Downsizing of the budgetary support to the national coal industry 3.6.2 Deregulation of the coal sector: Deregulation and opening of the sector to private participation will spur state owned Coal India Limited (CIL) to improve performance, and help attract investments to upgrade existing mines and open new ones in the next five to seven years. Recognizing this, Government has now decided to offer access to state- owned mining blocks to investors. Simultaneously, Coal India is being encouraged to further identify coal blocks wherefrom coal extraction will be commercially viable. 3.6.3 Independent Regulatory body: An independent Regulatory body to govern investment and operation in the sector is required. Such a body will help create a level playing field and will allow the Government to distance itself from activities like allocation of blocks, approval for mines, etc. The body can also be expected to introduce competitive price regulation. 3.6.4 Improvement in operational efficiency of the coal companies: Coal India is in need of an organizational transformation to gradually align its operating costs to international standards. Mining costs of CIL are at least 35 percent higher than that of the leading coal exporting countries such as, Australia, Indonesia, and South Africa. The productivity should increase from 0.5 tonnes per man-year to 5 tonnes per man-year in underground coal mines using long wall mining and from 15 tonnes per man-year to 30 tonnes per man-year in open cast mines. To improve productivity, Coal India will need to invest in new technologies, improve processes in planning and execution of projects, and 33
  • 34. institutionalize a comprehensive risk management framework. State of the art equipment for open cast mines and long wall mining system are required. More thrust should be given to safety for evolving accident free mining. 3.6.5 Strengthening of logistics in coal distribution: In India, the logistics infrastructure such as ports and railways are overburdened and costly and act as bottlenecks in development of free market. Privatization of ports may bring the needed efficiencies and capacities. In addition, capacity addition by the Indian Railways is necessary to increase freight capacity from the coal producing regions to demand centers in the northern and central parts of the country. On the Indian rail network, freight trains get a lower priority than passenger trains, a problem that promotes delays and inefficiency. Special freight corridors would raise speeds, cut costs, and increase the system’s reliability. 3.6.6 Investment in R & D: Work is required on clean coal technology to prevent the global warming and environmental pollution effects. For a long time there has been a talk about integrated gasification and combined cycle technology. Organizations like NTPC, BHEL and CSIR laboratories should work on this project. Coal India and other producers should help in this project by contributing in beneficiation and washing of the coal input. There should be a time bound programme for getting the results from this project. These results will have far reaching implications on the choice of technology for all future mining applications. 3.6.7 Focusing on technology for future: India’s numerous technology research institutions, are working on energy related R&D. However, there is a possibility that they are operating in a fragmented fashion. The Government may get improved recoveries on its investment by concentrating on few important technology areas. To start with, focus may be applied for tighter emission standards and development of technologies for extraction of methane from coal deposits. All mining operations today involve continuous use of explosives, thereby generating high noise level, vibrations and shocks and very high level of dust pollution. This also takes away very large area as explosive safety zone and environment safety zone. Alternative technologies for using high power laser system for safe, pollution free and precision mining need to be evolved. 3.6.8 Information Technology for the Mining Industry: India has a unique blend of small and large- scale mining operations. There is a need for assimilating the advances in Information & Communication technologies into mining operations for technological up gradation. Experiences from the oil & gas exploration where most advanced ICT have been successfully used will be useful in the mining industry as well. Many times the oil & gas industry has given the thrust to ICT out of necessity– 3D imaging & visualization and 34
  • 35. networking of large scale super computers. Indian mining industry could further modernize by using software for an integrated data management, analysis & 3D geological modeling, 3D plant design and advanced real time control & monitoring systems. Application of Information Technology should lead to robotic mining for improving the precision, safety and overall yield from mining. In addition to the above, the following measures, which have accepted in principle, are awaiting implementation: • Freeing the sector from controls on distribution • Establishment of a regulatory authority to resolve price disputes between producer and consumers of coal • Granting of infrastructure status to coal sector • Allowing public sector enterprises for joint venture projects with private sector. 35
  • 36. 3.7 World coal Reserve and Trends in Global production and consumption .7 The proven reserve of the coal worldwide has estimated to be 826001 Million Tones at worldw s the end of 2008, in the latest report of “BP statistical review of world energy 2009”. 2009” Appendix A.5 is depicting the country wise proven coal reserve at the end of 2008. Figure: 3.7.1 Proven Coal Reserve Total Total Asia North Pacific America Total 31% 30% Middle Total S. & East & Cent. Total Africa America Europe 4% 2% 33% Source: BP statistical review of world energy 2009 Although coal deposits are widely distributed, 80 percent of the world’s recoverable reserves are located in five regions: the United States (28.9 %), Russia (19 %), China (13.9 %), Australia/New Zealand (9.3 %) and India (7.1 %). In 2008, those five regions, 200 taken together, produced 5090.2 Million tons of coal, representing 75.1 % of total world coal production. By rank basis Anthracite and Bituminous coal accounts for 49% of total world reserve on tonnage basis and Sub-bituminous & lignite coal for other 51%. bituminous lign The coal consumption and production trend over the period of ten years from 1998 to 2008 has shown in figure 3.7.2 and 3.7.3 and the detail year wise trend has shown in .7.2 Appendix A.6. The trend shows that there is the spurt in the coal production and coal consumption in Asia pacific region with coal production in the region is nearly double in the given period while the consumption shoots up to more than double in the same period. Most of the production in Asia Pacific is coming from China and Australia and India. In terms of from consumption, India and China are in the head of the list, China alone had a whopping share of 42% in the total world consumption for year 2008. The reserve to production ratio (R/P ratio) for china is only 41, which indicates that China’s reserves are going to deplete very soon. In that condition, to satisfy it domestic requirement China will heavily rely on import of the coal and with the normal demand- demand 36
  • 37. supply equation, it is evident that this will lead to abnormal hike in the international coal prices. Figure 3.7.2(Coal Production) Figure 3.7.3(Coal Consumption) (Coal 1998 2008 1998 2008 2031.2 2030.7 606.9 1031.8 648.8 978.9 582.3 529.5 638.4 456.4 522.7 110.3 437.0 143.4 19.7 23.3 6.89.4 91.6 55.5 0.6 132.0 29.5 0.5 Total Total S. Total Total Total Total Total Total S. Total Total Total Total North & Cent. Europe & Middle Africa Asia North & Cent. Europe & Middle Africa Asia America America Eurasia East Pacific America America Eurasia East Pacific Source: BP statistical review of world energy 2009 Currently, India is importing coal mainly from Indonesia, which is having only 0.5% of the world proven coal reserve and it is having R/P ratio of 19, which is the big reason to ld worry for India. India has to look for other coal exporting nation to satisfy its coal-exporting requirement. In these setting Australia is seems to be a promising solution. Australia is having almost 10% of the world proven coal reserve and it has a potential to supply for a longer horizon (R/P ratio for Australia is 190). United States and Russian Federation constitute almost 50% of the total proven world coal reserve. Production and consumption trends in these regions pointing that the consumption domestic demand has not increased in the region, in fact, the consumption in North America is declined during the period with Russian consumption increased marginally. The production trend is more or less remains replica of consumption. Moreover, the reserve to production ratio is very high in these regions when compared with other countries. Implication of this could be, in long run, Asian countries will become a big market for these regions in terms of coal export, and Asian countries have to heavily dependent on oal them for satisfying their coal demand. For India, Coal transportation cost will be the major portion of the coal cost in near future since importing bulk coal from USA or from Russia will not going to be an easy task for India because of the transportation cost ng constraints. 37
  • 38. 4. Transmission India has endowed with abundant natural energy resources to generate electric power. These resources, however, are largely concentrated in certain pockets. About 90% of coal reserves are to be found mainly in five States of Eastern & Central India, viz. Orissa, Jharkhand, West Bengal, Chhattisgarh & Madhya Pradesh. Renewable hydro-power potential of about 150,000 MW is available mainly in the hilly belt of the Northern and North-Eastern regions of India. Further, a number of nuclear power plants and coastal location coal based power plants with large generation capacities are coming-up at diverse places. This uneven geographical distribution of exploitable energy resources (coal and hydro potential in the country) necessitated large scale transportation of coal across the State boundaries. A decision was taken in the early sixties to create regional electricity grids as basic units for power planning and operations of the electric power system. In the seventies, the regional grids were in position and advantages of sharing generating capacity between the States, and the inter-connected operation was being obtained. In the eighties, with the commissioning of the Regional power stations by Central sector Generating Companies (NTPC, NHPC) and construction of EHV transmission lines by them transcending state boundaries, the development of regional grids was further accelerated. 4.1. Growth in transmission segment16: By the end of 10th Plan the total length of transmission lines in the country comprised about 1.98 lakh ckt kms. During the first two fiscal years of the 11th plan a total of about 23239 ckt km of lines have already been commissioned. Similarly the substation transformation capacity has gone up from about 2.62 lakh MVA at the end of the 10th Plan to 3.06 lakh MVA at the end of fiscal 2009. Figure 4.1.1(a) and Figure 4.1.1(b) are showing the growth in the transmission segment over the five- year plan periods. The focus of transmission system development is to provide adequate inter-regional and intra-regional transmission capacity so as to consolidate and strengthen the national grid network towards a strong all-India grid. The Government of India’s (GoI’s) transmission perspective plans focus on the creation of a national grid in a phased manner by adding over 60,000 ckm of transmission network by 2012. It is intended that integrated grid will evacuate an additional 100,000 MW by the year 2012 and carry 60% of the power generated in the country. The existing inter-regional power transfer capacity is to be enhanced to 30,000 MW by fiscal 2012 through creation of “Transmission Super Highways”. 16 http://recindia.nic.in/download/ar2008-09.pdf 38
  • 39. Figure 4.1.1(a) Figure 4.1.1(b) (b) 250000 350000 300000 200000 250000 150000 200000 100000 MVA 150000 MVA CKM 100000 CKM 50000 50000 0 0 *11th plan upto Jan'10 Figure 4.1.1(a):: Growth of 400kV Transmission line (in CKM) and substation (in MVA) Figure 4.1.1(b): Growth of 200kV Transmission line (in CKM) and substation (in MVA) Apart from the 400 kV and 200 kV transmission line and substations, new initiatives have been taken to introduce Extr high voltage (EHV) and High Voltage Direct Current Extra-high (HVDC) system into the transmission sector. As on Jan’10 we have 3372 ckm of 765 kV C) transmission line with substation of capacity 4500 MVA. For HVDC we have 7443 ckm of 500kV DC link with substation capacity of 8700 MVA. ubstation With the support of Asian Development Bank (ADB), Power Grid Corporation of India Ltd. (PGCIL) is implementing +/-800kV, 6000 MW HVDC Bi-pole Line from North Eastern pole Region to Northern Region (Agra). This shall be the first of its kind (+/-800kV HVDC line) having the largest power carrying capacity and transmitting power over distance more than 2000 Kms. 765kV Extra High Voltage level has already been introduced in the country in Oct’2007. In order to further meet the long-term power transfer requirement and to take care of long erm requirement, environmental considerations, development of an overlaying Super Grid comprising 1200kV UHVAC system has envisaged. At present, there are no standardized parameters s available for 1200kV AC system and equipment at this voltage level are also not pment available commercially worldwide. POWERGRID has taken leadership initiative to carry out R&D in this area to develop the 1200kV system indigenously. A 1200kV UHVAC Test Station along with a 1200kV test line is being established at Bina substation in Madhya stablished Pradesh (Western Region) of POWERGRID, as a collaborative effort with equipment manufacturers, for indigenous development of 1200kV equipment in India. 39
  • 40. 4.2 Development of National Grid: The primary energy resources in India are concentrated in certain geographical locations. This lead to asymmetry of power generation in all territory in India and hence resulted in the problem of load balancing, some parts having excess supply and others are in deficit. This has necessitated the formation of a National Power Grid to fulfill the following objectives: • Enable transfer of power from power surplus regions to deficit regions. • Enable optimal development and utilization of coal and hydro resources, in the overall interest of the nation. • Improve economy, reliability and quality of power supply. At present, the country is having five regional grids, namely, Northern region, North- Eastern region, Southern region, Eastern region and western region. The intra-state power transfer capability is shown in Appendix A.1 PGCIL is playing an important role for development of National Grid. In line with this plan, various inter-regional transmission schemes have been implemented/ are under implementation/ planned in the country to enhance the interregional power transfer capacity of National Grid to more than 37,000 MW by the year 2012. Establishment of National Grid is also facilitating transfer of short term surplus power from anywhere to anywhere in the country from generation under State and Private sector as well. 4.3 11th Plan targets and achievements: To evacuate the additional power generated planned during 11th plan, and to strengthen the transmission network, the planning commission has targeted to have nearly 80000 ckm of transmission lines. Table 4.3.1 is showing the year wise transmission line addition programme. Table 4.3.1 Planned Transmission Line addition in 11th plan (all figures in ckm) Particular 2007-08 2008-09 2009-10 2010-11 2011-12 765 kV line 160 653 632 501 1345 +/- 500kV HVDC line 0 1250 280 0 0 400 kV line 6907 8025 9548 14750 12948 200 kV line 5448 6493 7303 7548 2280.5 Total 12515 16421 17763 22799 16573.5 Source: CEA 40
  • 41. But, the actual work done during the years is not in line with the planned target. Up to during April 2010, only 39285 ckm of transmission line have strung, which is only 45% of the total target. Table 4.3.2 is showing the actual work done during the last three years of .3.2 11 th plan and Figure 4.3.3 is showing the comparision of target and actual work done .3.3 during the last three years. Table 4.3.2 Actual Transmission Line addition in 11th plan (all figures in ckm) Particular 2007-08 2008-09 2009-10 10 2010-11 (up to 30 April 2010) 765 kV line 370 564 445 97 +/- 500kV HVDC line 120 1180 280 122 400 kV line 6947 6827 7857 455 200 kV line 4160 4171 5139 551 Total 11597 12742 13721 1225 Source: Infraline Figure 4.3.3 12000 10000 8000 6000 4000 2000 0 Plan Actual Plan Actual Plan Actual 2007-08 2008-09 2009-10 765 kV line 160 370 653 564 632 445 +/- 500kV HVDC line 0 120 1250 1180 280 280 400 kV line 6907 6947 8025 6827 9548 7857 200 kV line 5448 4160 6493 4171 7303 5139 41
  • 42. The growth plan for inter-regional power transfer capacity is shown in table 4.3.4, which depicts that by the end of 11th plan we are planning to have the total inter-regional capacity of 37150 MW. At present, we have established the level of 20800 MW of transfer capacity, which is only 56% of the target capacity. Table 4.3.4 Inter Regional Transmission Capacity growth plan Year 2002 2005 2007 2010 2012 765 kV 0 0 1100 2200 9200 400 1000 2400 7800 11400 16400 HVDC bi-pole 0 2000 2500 2500 6500 HVDC b-t-b 2000 3000 3000 3000 3000 HVDC mono-pole 200 200 200 200 200 220 kV 1850 1850 1850 1850 1850 Total 5050 9450 16450 21150 37150 Source: http://www.cea.nic.in/power_systems/National_Electricity_Plan/Chapter_1_Introduction.pdf 4.4 Funds requirement in Transmission Segment: In order to meet the projected requirement for additional power generation capacity of 100,000 MW by 2012, the Ministry of Power estimates that the investment requirement for the inter-state transmission network will be Rs. 710 Billion. A significant proportion of this (Rs.500 Billion) is expected to be undertaken by the Power Grid Corporation of India Ltd. (POWERGRID), the Central Transmission Utility (CTU). The remainder (Rs.210 Billion) is expected to come from by private investors. 4.5 Sources of fund: The following are the major sources of fund: • Asian Development Bank (ADB) • World Bank International Finance Corporation (IFC) International Bank for Reconstruction & Development (IBRD) Multilateral Investment Guarantee Agency (MIGA) • India Infrastructure Finance Corporation Ltd. (IIFCL) • Power Finance Corporation Consortium Lending Group Business Development Associates Equity financing • Commercial Banks 42
  • 43. • Private Equity funds • Private Investor • Domestic Bond market • Domestic term lending institutes 4.6 Funding available and sources of fund for PGCIL: Towards achieving the targeted investment programme of Rs. 55,000 Crore for XI Plan for providing matching transmission system for generation capacity addition in Central sector and other generation projects for which transmission system is required to be built by POWERGRID, significant progress has been made during FY 2008-09. Out of this, investment of about Rs. 15,000 Crore has already been made during the initial 2 years period of the Plan, an achievement of about 27% of plan outlay. For the year 2009- 10, an outlay of about Rs. 11,500 Crore has been kept for POWERGRID and balance about Rs. 28,500 Crore shall be utilized in the last 2 years period of XI Plan. Loan agreement for USD 400 Million from The World Bank has been signed in Jan’09 and loan became effective from 30th March’09. Further, loan agreement for USD 200 Million from ADB has been signed in March’09. In addition, The World Bank has also agreed for another loan of USD 1 Billion to POWERGRID, for which preparatory and appraisal missions were deputed by the Bank in Feb.’09 and May’09 respectively. Loan negotiation was been expected to take place in 2nd quarter of FY 2009-10. Thus, till date, around 70% of total loan requirement for XI Plan has already been tied-up or identified and balance shall be raised on year-to-year basis as per requirement. Besides, a proposal for loan assistance of USD 1 Billion from ADB17 had been submit to Ministry of Finance in Feb.’09. ADB has agreed to consider this assistance under ADB lending programme for 2010-11. 4.7 Private Player in the league 4.7.1 Powerlink Transmission Limited: Powerlink Transmission Ltd. is the pioneering example of the Public Private Partnership. It is a joint venture between Tata power and PGCIL with 51:49 stakes resp. Powerlinks transmits power from the 1,020 MW Tala Hydro Electric Power Project in Bhutan and surplus power from the Eastern/north-eastern region of India through its transmission lines between Siliguri (West Bengal) and Mandola (Uttar Pradesh), spanning a distance of 1,166 kms. With a total investment of Rs. 1,545 crores, the project, consisting of 440 kV double-circuit transmission lines, was completed within the scheduled time frame and cost estimates. Reliance Power Transmission Limited (RPTL), a 4.7.2 Reliance Power Transmission Limited: wholly owned subsidiary of Reliance Infrastructure Limited (RInfra), has been qualified for 3 transmission projects- North Karanpur, Talcher-II and East-North interconnection. The three projects are worth Rs56.5bn out of which North Karanpur is for Rs35bn, 17 Power-grid Corporation India Ltd. Annual report 2008-09 43
  • 44. Talcher II for Rs12bn and East-North Interconnection for Rs9.5 billion18. The qualifying for three transmission projects being undertaken for the first time through the competitive bidding guidelines issued by Govt. of India. Earlier, RPTL has bags the WRSSS II transmission project initiated by the nodal agency POWERGRID and awarded the project of construction of 1500 kilometers transmission line. This has envisaged the Company as the first ever private transmission utility to build these first ever 100% privately owned inter-state transmission projects in the country, which would, on completion facilitate the smooth flow of surplus power in Eastern and Northern Regions of the Country to Western Region by the end of year 2010. 4.7.3 Infrastructure Leasing and Financial Services (IL&FS): On January 2009, The Public Sector Power Grid Corporation has announced that it has tied up with Infrastructure Leasing and Financial Services to set up a joint venture company for taking up intra- transmission and sub-transmission projects within India and abroad. Both the company and IL&FS are having 50 per cent stake each in the company. The JV Company, Powergrid IL&FS Transmission, will carry out these works for state power utilities taking the public private partnership (PPP) route in India and with neighbouring countries subject to bilateral agreement between the countries. 4.7.4 Tata Power Limited: The Company has about 1,100 Circuit Kms. of Transmission Network in Mumbai Licensed Area, comprising 973 Circuit Kms. of 220 kV/110 kV overhead lines and 124 Circuit Kms of 220 kV/110 kV underground cables. The Company’s transmission system connects Trombay and the hydro generating stations to 17 receiving stations spread across the Mumbai Licensed Area, with major ones being Carnac, Parel, Dharavi, Salsette and Borivali receiving stations. As per the Tata Power, annual report 2008-09, Tata power is going to expand is transmission link through PPP route in India. Power Transmission Limited, JV of PGCIL & Tata Power, is the pioneering step toward this. 4.7.5 Adani Power Limited: Adani Power Ltd. announces to set up the longest private HVDC link in India. This system will provide efficient transmission of power over a distance of approximately 1000 kilometers from Mundra power plant in Gujarat to Mohindergarh in Haryana. Adani Power Ltd awarded Siemens a contract to install a bipolar 500-kilovolt High-Voltage Direct Current (HVDC) transmission system of 2500 MW capacity. The first phase of the project is scheduled to be commissioned in February, 2011 and the second phase in July, 2011. The investment estimate for the project is about Rs. 3000 crore. The company had issued IPO to fund its ongoing and upcoming projects. 18 http://www.kseboa.org/news/736-reliance-power-transmission-limited-qualifies-for-3-transmission-projects.html 44
  • 45. 4.7.6 Torrent Power Limited: The subsidiary of the company, Torrent power Grid Limited (TPGL) – a joint venture with PGCIL is constructing the 400 kV double circuit transmission line from SUGEN to Pirana (Ahmadabad). The company also has installed transmission line to connect SUGEN plant with substation of GETCO. Three 220 kV double circuit lines from SUGEN to Surat and two 220 kV receiving substation are completed by the TPGL to take of transmission of power to meet Surat requirement. 4.7.7 Gammon Infrastructure Projects limited:Gammon Infra is keen to undertake projects in power sector. They have already bid for two transmission projects under the Rural Electrification Corporation (REC) and two other transmission contracts to be awarded by the Power Finance Corporation (PFC). Though they have not achieved any success in getting those but still they are eyeing to grab the opportunity whenever it comes. 4.7.8 Kalpataru Power Transmission Ltd: Kalpataru Power Transmission Ltd, one of the leading global EPC players in power T&D sector has secured an order worth over Rs. 319 Crores from Chhattisgarh State Power Transmission Co. Limited. 4.8 Status of Transmission projects to be executed by Private Players in 11th plan Target for transmission capacity addition in 11th plan is about 80000 ckm. Out of which as of now only 7637 ckm of transmission line has being propose or executed by the private sector, which is a meager portion of about 10% of the total planned target. Sl Project Company Length Target Remark No (ckm) date . 1 (+/-)500 KV Mundra - Adani Power 1938 Apr'11 Mohindergarh Limited Bipole 2 Mundra-Dehgam Adani Power 868 jan'09 Commission Limited ed on July'09 3 Mohindergarh HVDC - Adani Power 20 Apr'11 Mohindergarh HVPNL Limited 4 Mohindergarh HVDC – Adani Power 160 Apr'11 Bhiwani Limited 5 Kondapalli – Nunna Lanco 44 Aug'09 Commisssio ned on Oct'09 6 LILO of RTPS- Guttur at Jindal TPC 16 Nov'08 Commission Thorangallu JSW S/S ed on Aug'09 7 Jaigad - New Koyna JSW Energy 110 Jun'10 8 Jaigad - New Karad JSW Energy 220 Jun'10 Revised to Dec'10 9 LILO of Rourkela- Raigarh at Sterlite 25 Apr'10 Sterlite TPP 10 Tiroda TPP- Warora Adani Power 400 Mar'11 45
  • 46. Limited 11 Parli(PG)-Pune(PG) Reliance 646 Jul'10 12 Pune(PG)-Aurangabad(MSEB) Reliance 472 Jul'10 13 Parli(PG)-Solapur (PG) Reliance 272 Jul'10 14 Solapur(PG)-Kolhapur(MSEB) Reliance 438 Jul'10 15 LILO of Lonikhand(MSEB)- Reliance 3 Jul'10 Kalwa(MSEB) at Pune (PG) 16 LILO of Solapur(MSEB)- Reliance 232 Jul'10 Karad(MSEB)at Solapur(PG) 17 Rajgarh(PG)-Karamsad(GEB) Reliance 468 Jul'10 18 Limbdi(Chorania((GEB)- Reliance 206 Jul'10 Ramchodpura(Vadavi)(GEB) 19 Ranchodpura(Vadavi)(GEB)- Reliance 280 Jul'10 Zerda(Kansari(GEB) 20 Akhakol-Puna torrent Power 72 Apr'07 Commission ed on May'09 21 Akhakol-Bhatar torrent Power 136 Apr'07 Commission ed on May'09 22 Akhakol-Ved(Dabholi) torrent Power 52 Apr'07 Commission ed on Jun'09 23 Allain Duhangan-Panarsa- Malana Power 349 Jun'09 Revised to Nalagarh D/C Company Ltd May'10 24 LILO of Allain Duhangan- Malana Power 1 Sep'09 Revised to Nalagarh Company Ltd Apr'10 at Chhaur 25 Budge Budge -Kosba CESC ltd 170 Aug'09 Commission ed on Feb'10 26 Sterlite TPP - Sterlite captive Sterlite 9 Jan'10 Commission plant ed on Mar'10 D/C 27 Budhil-Chamera-III Lanco 30 Mar'10 Source: Infraline 4.9 Outlook: In late 2006, the power ministry decided to set up around 14 mega transmission projects through private participation, on the lines of the ultra mega power project series (See appendix A.2 for details of project announced). The plan involves development of independent transmission lines on BOO basis where the bidder would be selected through the tariff-based competitive bidding route. The transmission lines mainly included evacuation systems associated with large power generation projects of NTPC and Damodar Valley Corporation, apart from setting up transfer systems from power- surplus to power-deficient regions. India's experience with private participation in power transmission projects so far is limited. The only project yet awarded on 100 per cent 46
  • 47. private equity basis is the Western Region System Strengthening Scheme-II that is being developed by Anil Ambani’s Reliance Power Transmission Ltd. In terms of private equity in a power transmission project, the very first project is the Tala power transmission lines bring power to India from the 1,020-Mw Tala hydropower project in that country. This 400 kV D/C line being operated on BOO basis is India's first instance of PPP in power transmission. Clearly, in the coming years, the private sector will need to contribute to the power transmission network, much like it has been doing to the generation segment. By themselves, PGCIL and state transmission utilities would not be able to fill up the infrastructure deficit. Going by the current evolution, private participation could be in various forms—fully independent power transmission lines, infrastructure developed in joint venture with PGCIL and that developed in joint venture with state utilities. There is immense scope for private participation, offering scope for all types of risk profiles of private transmission developers. It is also clear that the power transmission sector in future will be a breeding ground for entrepreneurship, where long-standing EPC contractors—KEC International, Larsen & Toubro, Kalpataru Power Transmission, to name a few—could groom themselves into independent power transmission companies. It is also imminent that modern-day entrepreneurs that have taken on power generation in a big way—GMR Group, Lanco, GVK Group, Sterlite Energy, Essar, JSW, etc—and existing private power utilities like Tata Power and Reliance Infrastructure, will make a mark on the power transmission sector. Apart from the 14-odd transmission projects that the Centre plans to build on BOO basis, it is also learnt that private developers will be sought for setting up evacuation systems for the ultra mega power project series. So far, four projects—Sasan, Mundra, Krishnapatnam and Tilaiya—have been awarded and there are at least eight more on the anvil. The Centre has proposed that while PGCIL would set up transmission infrastructure for the first three projects—and it has already begun work—private participation will be sought beginning from the fourth onwards. This gives a huge window of opportunity to private developers. Just like the UMPP series brought in efficient technology (supercritical parameters), one could look forward to similar efficiencies in the concomitant transmission systems. Developing power generation projects along with transmission infrastructure also makes private entrepreneurship more holistic. Besides, competition amongst private players might also bring down wheeling charges, eventually bringing down end-consumer power tariffs. Although private participation in power transmission would materialize only in degrees, it is encouraging to see that a beginning has been made, the delay notwithstanding. The Centre could do well by using the remaining years of the XI Plan to fine-tune guidelines and bidding procedures, so that a fertile ground is created for private power transmission systems to bear fruit from the XII Plan onwards. 47
  • 48. 5. A Study on Adani Power Limited 5.1 Background The Adani Group was been founded in 1988 as a trading house and since its inception; the company has start setting its feet into many sectors, the main ones being Power, SEZ development, Ports, Oil and Gas exploration, etc. Adani power limited is a part of Adani group. Adani Enterprise Limited (“AEL”), is the flagship company of the Adani Group, with total revenues of Rs. 11,587.89 Crores for the fiscal year 2009. AEL was one of the largest traders of coal in India for the three years period ended March 31, 2008, with coal mining rights both in the international and domestic markets, and according to Central Electricity Regulatory Commission, for the three years period ended March 31, 2008, AEL was one of the largest power traders, by volume, in India. With the commissioning of power projects, the Adani Group will have vertically integrated in power sector value-chain through presence in related activities such as coal mining, coal trading, shipping, power generation, power transmission and power trading. Another Adani Group company, Mundra Port and Special Economic Zone Limited (“MPSEZL”), owns and operates one of the largest private sector commercial ports in India, a Special Economic Zone (“SEZ”) at Mundra and a railway line between Mundra and Adipur leading to strong synergies with their projects being set up in close vicinity. In addition, the Adani Group also has operations in other industries, including commodities trading, real estate development, agro processing and logistics. The Company has successfully forayed into power generation business through its subsidiaries, Adani Power Ltd., Adani Power Maharashtra Ltd., Adani Power Rajasthan Ltd., Adani Power Dahej Ltd., Adani Power (Overseas) Ltd. and Mundra Power SEZ Ltd. in the states of Gujarat, Maharashtra and Rajasthan. Adani Power Ltd was been incorporated in the year 1996. The Company became a private limited company on June 3, 2002. Thereafter, it was been converted into a public limited company on April 12, 2007. It is a part of the Adani Group, a leading business group in India. The Company was been promoted by Gautam S. Adani and Rajesh S. Adani, together with their relatives. In 2004, pursuant to internal restructuring amongst the promoters, the entire shareholding of the company was been transferred to Mundra Port and Special Economic Zone Ltd ('MPSEZL'). Subsequently, on May 29, 2006. MPSEZL transferred its entire shareholding in the company to Adani Enterprises Ltd (AEL). The Company is mainly involved in power-project development activity, which is developing, and will operate and maintain, power projects in India. It has four thermal power projects under various stages of development, with a combined installed capacity of 6,600 MW. In addition, the company is also planning to develop two power projects with a combined installed capacity of 3,300 MW. The company intends to sell the power generated from these projects under a combination of long-term power purchase agreements to industrial and state-owned consumers and on merchant basis. 48
  • 49. 5.2 Company Profile Promoter’s holding (As on 31 march 2010)19 • Foreign (Promoter & Group) - 3.2513% • Indian (Promoter & Group)- 70.2484% • Non Promoters (Institution)- 10.7239% • Non Promoters (Non-Institution)-- 15.7764% Subsidiaries • Adani Power Ltd (100%) • Adani Power Maharashtra Ltd (76.64%) • Adani Power Dahej Ltd (100%) • Adani Power Rajasthan Ltd (100%) • Adani Power Overseas Ltd • PT Adani Global, Indonesia – for coal mining in Indonesia (Subsidiary of Adani Global Pte. Ltd., Singapore) • PT Kapuas Coal Mining, Indonesia – for coal mining in Indonesia (Subsidiary of Adani Global Pte. Ltd., Singapore) • Adani Global Pte. Ltd., Singapore. (Subsidiary of Adani Global Ltd., Mauritius) • Parsa Kente Collieries Ltd. • Adani Mining Pvt. Ltd. Key persons • Gautam S. Adani, Chairman • Rajesh S. Adani, Managing Director Key Company Highlights • The company came out with an IPO in July 2009 to raise Rs. 3000 crores, which was heavily subscribed 21 times. • In the power sector, apart from generation the company has further ventured into power trading, coal trading, Indonesian and Indian coal mining. • It has made itself into a vertically integrated company with the above verticals along with shipping. • APL is executing 400 KV D/C transmission line of about 431 KM distance from Mundra to Dehgam. • It is also executing ±500 KV Bi-Pole HVDC transmission line of about 800 KM distance from Mundra to Haryana for transmitting 2500 MW. 19 http://www.capitaline.com/user/framepage.asp?id=1 49
  • 50. 5.3 Power Projects Under Construction: The Company is currently developing four thermal power projects through its said subsidiaries, which are under various stages of development, with a combined installed capacity of 6,600 MW. In addition, the group is also planning to develop two power projects with a combined installed capacity of 3,300 MW at Dahej and Kawai. The group has intended to sell the power generated from these projects under a combination of long-term power purchase agreements to industrial and state-owned consumers and on merchant basis. Details of the various power projects undertaken by the Company have shown in table 5.2.1: Mundra Phase I & II Power Project are having four sub-critical generation units of 330 MW each, with combined capacity of 1,320 MW. The boiler, turbine and generator (“BTG”) package for Mundra I and II was been awarded to Sichuan Machinery and Equipment Import & Export Company Limited and Kowa Company Limited, respectively. The first 330 MW unit of Mundra Phase I and II Power Project is already commissioned in Jan’10, and the second unit of Phase I on Mar’10. The actual target commissioning date of these units, however, was Aug 2009 and Sept 2009 resp. Mundra Phase III Power Project will have two super-critical generation units of 660 MW each, with combined capacity of 1,320 MW. The engineering, procurement and construction (“EPC”) contract for Mundra III was been awarded to SEPCO-III Electric Power Construction Corporation and Shandong Tiejun Electric Power Engineering Company Limited. The first 660 MW unit of Mundra Phase III Power Project has expected to commission by April 2011, and that the power project will have fully commissioned by September 2011. Mundra Phase IV Power Project will have three super-critical generation units of 660 MW each, with combined capacity of 1,980 MW. The EPC contract for Mundra IV was been awarded to SEPCO-III Electric Power Construction Corporation and Shandong Tiejun Electric Power Engineering Company Limited. The first 660 MW unit of Mundra Phase IV Power Project has expected to commission by July 2011, and that the power project will have fully commissioned by March 2012. 50
  • 51. Table 5.2.1 Project Location Installed Fuel Supply Estimated Expected Off take capacity status cost (Rs. commissioning arrangement (MW) Crore) date Mundra Gujarat 2X330 Coal supply 2280 Commissioned Long term Phase 1 agreement with PPA for 1000 (Unit AEL MW entered 1&2) with GUVNL Mundra Gujarat 2X330 Coal supply 2070 Unit 3: Feb’10 Phase 2 agreement with Unit 4: May’10 (Unit AEL 3&4) Mundra Gujarat 2X660 Coal supply 5796 Unit 1: Apr’11 PPA for 1000 Phase 3 agreement with Unit 2: Sep’11 MW with AEL GUVNL for 25 yrs, agreement to sell 221 MW as merchant power with AEL Mundra Gujarat 3X660 Coal supply 8960 Unit 1: Jul’11 Long term Phase 4 agreement with Unit 2: Nov’11 PPA for 1424 AEL; Coal Unit 3: Mar’12 MW entered linkages of with UHBVNL 1366 MW and DHBVNL recommended Tiroda Maharashtra 2X660 Captive mines 6560 Unit 1: May’11 Long term Power allocated by Unit 2: Aug’11 PPA for 1320 Project MoC for MA entered (phase I) generating up with MSEDCL Tiroda Maharashtra 1X660 to 1000 MW of 2730 Apr’12 - Power power; coal Project linkage of 1180 (phase MW II) recommended Tiroda Power Project will have three super-critical generation units of 660 MW each, with combined capacity of 1,980 MW. The BTG package for Tiroda was been awarded to Sichuan Machinery and Equipment Import and Export Company Limited. The first 660 MW unit of Tiroda Power Project has expected to commission by May 2011, and that the power project will have fully commissioned by April 2012. The Adani Power Maharashtra Limited (“APML”) will develop the Tiroda Power Project, APML is 77.38% owned subsidiary of Adani Power limited. The expected cost of the project has estimated to Rs 6560 and Rs. 2730 crores, for Phase I and Phase II respectively. 51
  • 52. 5.4 Future Projects 1980 MW Thermal Coal based power project - Dahej, Gujarat- The project is been developed by the subsidiary Company, Adani Power Dahej Ltd. (APDL). The Dahej power project will utilize imported coal as primary fuel for its operations. The Company has also entered into long-term coal supply arrangements for importing coal for its Dahej power project. It is expected to have three super-critical generation units of 660 MW each, with combined capacity of 1,980 MW. The project has expected to have fully commission by June 2012. The total cost of the project is Rs 8881 crores with an expected debt equity ratio of 80:20. 1320 MW Thermal Coal based power project - Kawai, Rajasthan- The subsidiary Company, Adani Power Rajasthan Ltd. (APRL) is developing this project. The company has entered into a memorandum of understanding with the State Government of Rajasthan to use its best efforts to facilitate the provision of coal for such power project from the Government of India or other sources. The said power project shall have two super-critical generation units of 660 MW each, with combined capacity of 1,320 MW. The power project has expected to have fully commission by January 2012. The cost for the project has expected to be Rs 5889 crores that shall be financed in a debt equity ratio of 80:20. 5.5 Recent Developments Feb 23, 2010: Adani to develop 1,320MW power project in Madhya Pradesh, India Feb 15, 2010: Adani Power Receives LOI from Government of Madhya Pradesh on Development Of 1,320MW Coal-Fired Power Plant 5.6 SWOT analysis of Adani Power Limited STRENGTH: 1. Secured Fuel Supply: The Adani power is having secured fuel linkage for its on-going projects. With India having the demand-supply gap in coal requirement, having fuel linkages is one of the biggest advantages for Adani power ltd. Moreover, Adani group’s past experience in coal trading will be having cutting-edge advantage over other companies in the field. The Adani Group has coal mining rights in both the international and domestic markets. PT Adani Global, a wholly owned subsidiary of AEL, has entered into agreements with holders of long-term exploitation licenses to exclusively mine, coal in Bunyu Island, Indonesia. In addition, they have also allocated two coal blocks in India to mine coal for our Tiroda Power Project. Adani Shipping Pte Limited, Singapore, a wholly owned subsidiary of AEL, has entered into a contract for the purchase of two newly built capsize vessels with expected delivery by December 2010 for transportation of coal from the Indonesian coalmines operated by AEL. 52
  • 53. 2. IPO Listing: The Company was come out with an IPO on July 2009 to raise Rs. 3000 crores, which was been subscribed heavily. With the IPO, company has ascertained to meet its long-term financial requirement. An IPO, therefore, allows a company to tap a wide pool of stock market investors to provide it with large volumes of capital for future growth. 3. Long term Power off take arrangement: The Company has entered into power off-take agreements with Gujarat Urja Vikas Nigam Limited (“GUVNL”), Uttar Haryana Bijli Vitran Nigam Limited (“UHBVNL”), Dakshin Haryana Bijli Vitran Nigam Limited (“DHBVNL”) and MSEDCL for its Mundra Power Projects and Tiroda Power Projects. Off- take agreements generally provide that the consumer purchases power in pre- determined quantities at fixed rates and surplus power, if any, may then be sold to other consumers in the unregulated market. The power produced in excess of what is sold under our Mundra Phase I and II Power Project, Mundra Phase IV Power Project, and Tiroda Power Project off-take agreements will be sold on merchant basis. These arrangements will allow the company to mitigate their off-take risk, while enabling them to sell the residual power at market-determined rates. 4. Integrating power generation business with the installation of transmission lines: The Company is vertically integrating itself in power business, with acquiring coalmines, erecting transmission line for evacuating power, from their power station to the load center. The first of such transmission lines from Mundra to Dahegham, Gandhinagar has already been constructed. Having complete portfolio for power generation business, the company has significantly diversified its risk and dependence on other utilities. WEAKNESS: 1. No Operating History: The APL is having no significant history of operating the power projects. Therefore, it is difficult to evaluate its future performance. If it will fail on any ground, internal or external factor, it will not only hamper the growth of company but also the confidence of investor in investing for the power projects being executed by the private player. 2. High Leveraging risk: The company’s debt to equity ratio is almost tripled during the period March ’08 to march’ 09. Moreover, for its Tiroda project, the project specific debt to equity is planned to be 80:20. With such a high level of debt, the company is exposing itself to a high risk of market fluctuation. 3. Nature of debt: The majority of company’s borrowings are subject to floating interest rates, which exposes them to interest rate risk. Further, they do not currently enter into any swap or interest rate hedging transactions in connection with their loan agreements 53
  • 54. or other material agreements. Any increase in interest expense may have an adverse effect on business prospects, financial condition and results of operations. 4. Dependency on thermal fuel sources: The Company is only focusing on coal based thermal power projects may be because of its confidence in getting fuel supply from AEL. However, if external environment changes, national political or foreign political, because of any reason then the company find it difficult to take out required return on equity and pay out the interest on the mammoth debts. OPPORTUNITIES: 1. Power deficit in India: The India is having huge power deficit and is remained to continue as per 11th plan. The government is looking for significant private participation to bridge this gap. This created an immense opportunity for APL to establish itself in Indian power business. The main thrust of capacity addition is put on through private participation; therefore, government is willing to attract private players through subsidy, relaxation on import duties on certain power equipment, tax holiday etc. It is a great time to reap out all the benefits. 2. Ultra Mega Power Projects: The government has identified nine power projects as ultra mega power projects (UMPP), which are been planned to be executed through private participation. 3. Private Coal Mining: Although, Amendment 2000 bill is pending in parliament pertaining to private coal mining, given the group’s exposure in coal mining ( AEL experience) there are great opportunity for the company to establish itself as major private coal producer, once the bill is passed. The government is also planning to go for captive mining through private company; this further provides added opportunity to the company to set its feet in this segment. THREATS: 1. Global regulations: To meet the coal requirements for Mundra, AEL proposes to procure coal from the mines in Bunyu Island, Indonesia. On December 16, 2008, the Indonesian Parliament adopted a law on mineral and coal mining (“New Mining Law”). The New Mining Law provides that existing contracts will continue to be valid until their expiry, but that the terms of the existing contracts must be modified within one year to make them comply with the New Mining Law. However, the New Mining Law is unclear as to which of its provisions will require amendments to the terms of existing contracts to bring those contracts into compliance with the New Mining Law. The existing holders of contracts may be given five years to comply with such obligation. However, the New Mining Law does not provide any details on when these government regulations will be issued or what specific obligations will be imposed. The legal uncertainty raised by the 54
  • 55. adoption and implementation of the New Mining Law has increased the risks, and may increase the costs, involved in our sourcing Indonesian coal. 2. Long term Power Purchase Agreements: The profitability of company is largely a function of their ability to manage costs during the terms of our PPAs and to operate power projects at optimal levels. Failing which, under the PPAs obligation, the company is liable to penalties and in certain specified cases, customers may also terminate such PPAs. Moreover, if there is an industry wide increase in tariffs, the company will not be able to renegotiate the terms of the PPAs to take advantage of the increased tariffs. In addition, in the event of increase in operational costs, they not have the ability to reflect a corresponding increase in tariffs. Therefore, the prices at which they supply power may have little or no relationship with the costs incurred in generating power, which means that company’s margins will fluctuate significantly. 3. Chinese made BTG equipments: Core equipment of all power plants under execution is of Chinese origin, except MPP phase II, for which the core Boiler, Turbine and Generator (BTG) order, has been placed with Kowa Company of Japan. Given the poor performance record of accomplishment of Chinese power plant equipment in the country, the efficient and smooth operation of the power plant could be a cause for concern. If the power plant’s availability falls below 75%, penalty has been paid under PPA. In addition, power plants with Chinese equipment work better with imported coal compared to domestic coal. However, the TPP is based on domestic coal. Hence, its operating and maintenance could turn out to be a cause for worry. 4. Depreciation of rupees against foreign currencies: A substantial portion of company’s revenues will be denominated in Rupees, while the company is expected to incur substantial indebtedness denominated in foreign currencies to finance the development of power projects. Moreover, they have certain EPC contracts with foreign players, the payments under these contracts are denominated in foreign currencies and secured by a letter of credit. Therefore, there is a exchange rate risk for payments made pursuant to the letter of credit until the conservation of liability from foreign currency to Rupees. In addition, coal supply agreements with AEL are denominated in US dollars. Accordingly, any depreciation of the Rupee against these currencies will significantly increase the Rupee cost to them of servicing and repaying their foreign currency payables. 55
  • 56. Appendix A: A.1 Raw coal production (in million tonnes) Source: Coal India Limited A.2 Regression analysis to determine the linear estimate of coal production Linear Estimate of Coal Production Period 98-99 to 09-10 500 450 400 350 Production 300 y = 18.071x + 202.35 250 R² = 0.9906 200 150 100 50 0 0 2 4 6 8 10 12 14 Time span Source of input data: Coal India Limited 56
  • 57. A.3 Normative requirement of coal & status of coal linkage ormative Description Capacity (MW) Normative requirement (MT) Coal Linkage Available 32455 162.28 Block Allocated 5830 29.15 Imported coal tied up 0 0 Total available 38285 191.43 Linkage required to be 4500 22.5 accorded Block required to be 2500 12.5 accorded Imported coal to be tied up 1350 4.05 Total 8350 39.05 Total Coal based capacity 46635 230.475 addition (MW) in 11th plan Source: Central Electricity Authority (CEA) A.4 400 Indonesian Coal Mining Industry Projections 370 350 320 300 280 240 250 225 220 193 198 200 183 170 148 145 150 150 150 150 150 150 134 130 90 100 75 45 49 53 50 0 2006 2007 2008 2009 2010 2015 2020 2025 Domestic Export Production Source: Speech given by Dr. Ir. Sukma Saleh Hasibuan (Director Ministry of Energy and Mineral Resources (MEMR), Indonesia) on Coal Supply Outlook in Indonesia on 16 October 2007 57
  • 58. A.5 World coal reserve (Country wise data) Coal: Proved Reserves at end 2008 Anthracite Sub-bituminous Million tonnes and bituminus and lignite Total Share of Total R/P ratio US 108950 129358 238308 28.9% 224 Canada 3471 3107 6578 0.8% 97 Mexico 860 351 1211 0.1% 106 Total North Am erica 113281 132816 246097 29.8% 216 Brazil - 7059 7059 0.9% * Colombia 6434 380 6814 0.8% 93 Venezuela 479 - 479 0.1% 74 Other S. & Cent. America 51 603 654 0.1% * Total S. & Cent. Am erica 6964 8042 15006 1.8% 172 Bulgaria 5 1991 1996 0.2% 70 Czech Republic 1673 2828 4501 0.5% 75 Germany 152 6556 6708 0.8% 35 Greece - 3900 3900 0.5% 58 Hungary 199 3103 3302 0.4% 351 Kazakhstan 28170 3130 31300 3.8% 273 Poland 6012 1490 7502 0.9% 52 Romania 12 410 422 0.1% 12 Russian Federation 49088 107922 157010 19.0% 481 Spain 200 330 530 0.1% 32 Turkey - 1814 1814 0.2% 21 Ukraine 15351 18522 33873 4.1% 438 United Kingdom 155 - 155 9 Other Europe & Eurasia 1025 18208 19233 2.3% 268 Total Europe & Eurasia 102042 170204 272246 33.0% 218 South Africa 30408 - 30408 3.7% 121 Zimbabw e 502 - 502 0.1% 287 Other Africa 929 174 1103 0.1% * Middle East 1386 - 1386 0.2% * Total Middle East & Africa 33225 174 33399 4.0% 131 Australia 36800 39400 76200 9.2% 190 China 62200 52300 114500 13.9% 41 India 54000 4600 58600 7.1% 114 Indonesia 1721 2607 4328 0.5% 19 Japan 355 - 355 289 New Zealand 33 538 571 0.1% 111 North Korea 300 300 600 0.1% 17 Pakistan 1 2069 2070 0.3% 496 South Korea 133 - 133 48 Thailand - 1354 1354 0.2% 75 Vietnam 150 - 150 4 Other Asia Pacific 115 276 391 26 Total Asia Pacific 155809 103444 259253 31.4% 64 Total World 411321 414680 826001 100.0% 122 58
  • 59. A.6 Worldwide coal production and Consumption trend Coal: Production * Million tonnes oil equivalent 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 US 603.2 584.3 570.1 590.3 570.1 553.6 572.4 580.2 595.1 587.7 596.9 Canada 40.8 39.2 37.1 37.6 34.9 32.2 34.7 35.6 34.5 36.9 36.0 Mexico 4.8 4.9 5.4 5.3 5.3 4.6 4.7 5.2 5.5 6.0 5.5 Total North Am erica 648.8 628.3 612.6 633.2 610.2 590.4 611.8 620.9 635.2 630.6 638.4 Brazil 2.0 2.1 2.9 2.1 1.9 1.8 2.0 2.4 2.2 2.3 2.4 Colombia 21.9 21.3 24.9 28.5 25.7 32.5 34.9 38.4 42.6 45.4 47.8 Venezuela 4.7 4.8 5.8 5.6 5.9 5.1 5.9 5.3 5.4 5.9 4.7 Other S. & Cent. America 0.8 0.5 0.4 0.5 0.4 0.5 0.2 0.3 0.6 0.5 0.6 Total S. & Cent. Am erica 29.5 28.7 33.9 36.8 33.9 39.9 43.0 46.3 50.9 54.0 55.5 Bulgaria 5.0 4.2 4.4 4.4 4.4 4.6 4.5 4.1 4.2 4.7 4.8 Czech Republic 26.0 23.1 25.0 25.4 24.3 24.2 23.5 23.5 23.7 23.4 22.8 France 3.6 3.3 2.3 1.5 1.1 1.3 0.4 0.2 0.2 0.2 0.1 Germany 61.3 59.4 56.5 54.1 55.0 54.1 54.7 53.2 50.3 51.5 47.7 Greece 8.1 8.0 8.2 8.5 9.1 9.5 9.6 9.4 8.6 9.0 9.1 Hungary 3.0 3.1 2.9 2.9 2.7 2.8 2.4 2.0 2.1 2.0 1.9 Kazakhstan 36.0 30.0 38.5 40.7 37.8 43.3 44.4 44.2 49.1 50.0 58.8 Poland 79.6 77.0 71.3 71.7 71.3 71.4 70.5 68.7 67.0 62.3 60.5 Romania 5.7 5.1 6.4 7.1 6.6 7.0 6.7 6.6 6.5 6.7 6.5 Russian Federation 103.9 112.1 116.0 122.6 117.3 127.1 131.7 139.2 145.1 148.2 152.8 Spain 9.3 8.6 8.0 7.6 7.2 6.8 6.7 6.4 6.2 6.0 5.5 Turkey 13.9 13.3 13.9 14.2 11.5 10.5 10.5 12.8 13.4 15.8 17.8 Ukraine 39.9 42.3 42.0 43.5 42.8 41.7 42.2 40.9 41.8 39.9 40.2 United Kingdom 25.0 22.5 19.0 19.4 18.2 17.2 15.3 12.5 11.3 10.3 10.9 Other Europe & Eurasia 16.7 13.4 14.0 14.4 15.3 15.8 15.6 14.7 15.7 16.7 17.1 Total Europe & Eurasia 437.0 425.3 428.6 438.2 424.6 437.2 438.7 438.4 445.3 447.0 456.4 Total Middle East 0.6 0.7 0.6 0.5 0.4 0.6 0.6 0.6 0.5 0.5 0.5 South Africa 127.1 125.6 126.6 126.1 124.1 134.1 137.2 137.7 138.0 139.6 141.1 Zimbabw e 3.5 3.2 2.8 2.9 2.5 1.8 2.4 1.9 1.4 1.4 1.1 Other Africa 1.4 1.3 1.2 1.2 1.3 1.6 1.3 1.2 1.2 1.1 1.1 Total Africa 132.0 130.1 130.7 130.2 128.0 137.5 140.9 140.7 140.5 142.1 143.4 Australia 149.8 160.8 166.3 179.9 184.5 190.1 198.8 206.5 211.0 218.5 219.9 China 628.7 645.9 656.7 697.6 733.7 868.4 1012.1 1120.0 1205.1 1282.4 1414.5 India 126.5 124.4 132.2 133.6 138.5 144.4 155.7 162.1 170.2 181.0 194.3 Indonesia 38.3 45.3 47.4 56.5 63.6 70.3 81.4 93.9 119.2 133.7 141.1 Japan 2.0 2.2 1.7 1.8 0.8 0.7 0.7 0.6 0.7 0.8 0.7 New Zealand 2.0 2.1 2.2 2.4 2.7 3.2 3.2 3.2 3.5 3.0 3.1 Pakistan 1.5 1.5 1.4 1.5 1.6 1.5 1.5 1.6 1.7 1.6 1.9 South Korea 2.0 1.9 1.9 1.7 1.5 1.5 1.4 1.3 1.3 1.3 1.3 Thailand 6.1 5.7 5.1 5.6 5.7 5.3 5.6 5.8 5.3 5.1 5.1 Vietnam 6.4 4.9 6.5 7.5 9.2 10.8 14.7 18.3 21.8 23.1 23.6 Other Asia Pacific 15.7 18.0 19.3 19.7 19.3 20.0 21.7 23.8 24.1 24.9 25.3 Total Asia Pacific 978.9 1012.8 1040.8 1107.8 1161.0 1316.2 1496.9 1637.1 1764.0 1875.4 2030.7 Total World 2226.8 2225.9 2247.1 2346.7 2358.1 2521.8 2732.0 2884.2 3036.3 3149.5 3324.9 Source: http://www.bp.com/sectiongenericarticle.do?categoryId=9023784&contentId=7044480 59
  • 60. Coal: Consumption * Million tonnes oil equivalent 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 US 545.7 544.9 569.0 552.2 552.0 562.5 566.1 574.2 565.7 573.2 565.0 Canada 30.8 30.5 31.8 34.0 31.6 33.4 29.9 31.7 31.0 32.3 33.0 Mexico 5.9 6.0 6.2 6.8 7.6 8.6 7.0 9.1 9.4 9.1 9.0 Total North Am erica 582.3 581.4 606.9 593.0 591.1 604.5 603.0 614.9 606.1 614.6 606.9 Argentina 0.8 0.9 0.8 0.6 0.5 0.7 0.8 0.9 0.3 0.4 0.4 Brazil 11.4 11.9 12.5 12.2 11.5 11.8 12.8 12.7 12.5 13.4 14.6 Chile 3.7 3.9 3.0 2.3 2.4 2.3 2.6 2.6 3.2 3.3 3.2 Colombia 2.8 2.4 2.7 2.7 2.5 2.4 2.0 2.3 2.4 2.7 2.3 Ecuador - - - - - - - - - - - Peru 0.4 0.5 0.5 0.4 0.4 0.4 0.5 0.5 0.4 0.5 0.5 Venezuela ^ 0.1 ^ ^ ^ ^ - ^ 0.1 0.1 ^ Other S. & Cent. America 0.5 0.6 0.6 0.7 1.0 2.1 1.9 1.8 2.1 2.2 2.2 Total S. & Cent. Am erica 19.7 20.1 20.1 19.0 18.3 19.6 20.5 20.8 20.9 22.5 23.3 Austria 3.0 3.2 3.2 2.9 3.0 2.9 2.9 2.8 2.8 3.1 3.1 Azerbaijan - - - ^ ^ ^ ^ ^ ^ ^ ^ Belarus 0.4 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 ^ Belgium & Luxembourg 7.9 6.9 7.6 7.6 6.7 6.5 6.4 6.1 6.1 5.5 4.6 Bulgaria 8.2 6.6 6.3 6.9 6.5 7.1 6.9 6.9 7.1 7.8 7.5 Czech Republic 20.5 19.0 21.0 21.2 20.6 20.8 20.5 19.8 19.4 20.0 19.1 Denmark 5.6 4.7 4.0 4.2 4.2 5.7 4.6 3.7 5.6 4.7 4.1 Finland 3.4 3.6 3.5 4.0 4.4 5.8 5.3 3.1 5.2 4.6 3.4 France 16.1 14.3 13.9 12.1 12.4 13.3 12.8 13.3 12.1 12.3 11.9 Germany 84.8 80.2 84.9 85.0 84.6 87.2 85.4 82.1 83.5 85.7 80.9 Greece 8.8 9.1 9.2 9.3 9.8 9.4 9.0 8.8 8.1 8.5 8.6 Hungary 3.4 3.4 3.2 3.4 3.1 3.4 3.1 2.7 2.9 2.9 2.8 Iceland 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Republic of Ireland 1.9 1.6 1.8 1.9 1.8 1.7 1.8 1.8 1.6 1.5 1.4 Italy 11.6 11.6 13.0 13.7 14.2 15.3 17.1 17.0 17.2 17.2 17.0 Kazakhstan 22.9 19.8 23.2 22.5 22.8 25.2 26.5 27.2 28.1 30.8 33.6 Lithuania 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2 Netherlands 9.4 7.7 8.6 8.5 8.9 9.1 9.1 8.7 8.5 9.0 9.2 Norw ay 0.7 0.7 0.7 0.6 0.5 0.5 0.6 0.5 0.4 0.4 0.5 Poland 63.8 61.0 57.6 58.0 56.7 57.7 57.3 55.7 58.0 57.9 59.4 Portugal 3.6 3.6 4.5 3.7 4.1 3.8 3.7 3.8 3.8 3.3 3.2 Romania 7.0 6.7 7.0 7.2 7.6 7.8 7.4 7.6 8.5 7.4 7.7 Russian Federation 100.7 101.0 105.2 102.4 103.0 104.0 99.5 94.2 96.7 93.5 101.3 Slovakia 4.5 4.3 4.0 4.1 4.0 4.2 4.1 3.9 3.8 3.8 3.9 Spain 17.7 20.5 21.6 19.5 21.9 20.5 21.0 21.2 18.5 20.2 14.6 Sw eden 2.0 2.0 1.9 2.0 2.2 2.2 2.3 2.2 2.3 2.2 2.0 Sw itzerland 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Turkey 24.0 22.6 25.5 21.8 21.2 21.8 23.0 26.1 28.8 31.0 30.4 Turkmenistan - - - - - - - - - - - Ukraine 36.9 38.5 38.8 39.4 38.3 39.0 39.1 37.5 39.8 39.7 39.3 United Kingdom 38.6 34.3 36.7 38.9 35.7 38.1 36.6 37.4 40.8 38.2 35.4 Uzbekistan 1.2 0.9 1.0 1.1 1.0 1.0 1.2 1.1 1.1 1.4 1.4 Other Europe & Eurasia 20.9 16.4 17.3 16.5 18.7 19.6 20.1 18.4 15.5 15.7 16.1 Total Europe & Eurasia 529.5 504.5 525.6 518.7 518.6 533.9 527.8 514.1 526.6 528.9 522.7 Iran 1.0 1.0 1.1 1.1 1.1 1.1 1.0 1.2 1.3 1.3 1.3 Kuw ait - - - - - - - - - - - Qatar - - - - - - - - - - - Saudi Arabia - - - - - - - - - - - United Arab Emirates - - - - - - - - - - - Other Middle East 5.8 5.7 6.2 7.2 7.6 7.9 8.0 7.9 7.8 8.1 8.1 Total M iddle East 6.8 6.7 7.3 8.3 8.7 9.0 9.0 9.1 9.1 9.3 9.4 Algeria 0.5 0.5 0.5 0.6 0.9 0.8 0.8 0.6 0.7 0.7 0.7 Egypt 0.8 0.6 0.6 0.7 0.7 0.9 0.9 1.0 0.9 1.0 1.0 South Af rica 83.4 82.3 81.9 80.6 83.5 89.3 94.5 91.9 93.8 97.7 102.8 Other Af rica 7.0 6.5 6.4 7.3 7.2 6.4 7.2 7.3 6.8 6.2 5.7 Total Africa 91.6 89.9 89.4 89.3 92.4 97.4 103.4 100.8 102.3 105.7 110.3 Australia 45.8 46.2 46.5 47.9 51.3 50.5 53.1 54.9 56.9 55.8 51.3 Bangladesh 0.1 ^ 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 China 651.9 656.2 667.4 681.3 713.8 853.1 983.0 1100.5 1215.0 1313.6 1406.3 China Hong Kong SAR 4.4 3.9 3.7 4.9 5.4 6.6 6.6 6.7 7.0 7.5 7.0 India 136.1 135.8 144.2 145.2 151.8 156.8 172.3 184.4 195.4 212.9 231.4 Indonesia 9.3 11.6 13.7 16.7 18.0 17.9 20.2 26.1 24.2 28.4 30.2 Japan 88.4 91.5 98.9 103.0 106.6 112.2 120.8 121.3 119.1 125.3 128.7 Malaysia 1.6 1.8 1.9 2.6 3.6 4.2 5.7 6.3 7.3 7.1 5.0 New Zealand 1.1 1.2 1.1 1.3 1.3 1.9 2.0 2.2 2.2 1.6 2.1 Pakistan 2.1 2.1 2.0 2.1 2.4 2.9 3.8 4.1 4.2 5.1 6.7 Philippines 2.7 2.9 4.3 4.5 4.7 4.7 5.0 5.7 5.5 5.9 6.2 Singapore - - - - - - - - - - - South Korea 36.1 38.2 43.0 45.7 49.1 51.1 53.1 54.8 54.8 59.7 66.1 Taiw an 23.6 24.8 28.7 30.6 32.7 35.1 36.6 38.1 39.6 41.8 40.2 Thailand 7.3 7.9 7.8 8.8 9.2 9.4 10.4 11.2 12.4 14.1 15.4 Other Asia Pacif ic 21.3 24.0 25.5 26.4 25.9 26.5 29.6 30.9 33.2 34.2 34.6 Total As ia Pacific 1031.8 1048.0 1089.0 1121.5 1176.1 1333.2 1502.5 1647.6 1777.2 1913.5 2031.2 Total World 2261.7 2250.7 2338.4 2349.7 2405.2 2597.6 2766.2 2907.4 3042.3 3194.5 3303.7 60
  • 61. A.7 Existing/Proposed Inter-Regional Power Transfer Capacity (By the End of XI Plan i.e. 2012) in India (Figures in MW) Region Existing Under Phase-I X Plan & XI Plan Total East-North Dehri-Sahupuri 220 kV S/c 200 Sasaram HVDC back-to-back 500 Muzaffarpur-Gorakhpur 400 kV D/c (Tala Transmission System) 2500 Barh/Kak/N.K' pura 765 kV 3x S/c 5000 Pooling Station-West of Delhi 2000 MW HVDC Bipole Line 2500 Hirma-Jaipur HVDC bipole 2500 Sub-Total 700 12500 13200 East-West Bodhipadar-Korba 220 kV 3 circuits 450 Rourkela-Raipur 400 kV D/c 1000 Hirma-Raipur 400 kV D/c 1000 Hirma-Seepat 400 kV D/c 1000 Sub-Total 450 3000 3450 West-North Vindhyachal HVDC back-to-back 500 Existing 220 kV AC lines 350 Malanpur-Bhiwadi 765 kV S/c 2500 Zerda-Sirohi 400 kV D/c 1000 Sub-Total 850 3500 4350 East-South Gazuwaka HVDC back-to-back 500 500 Existing 220 kV AC lines 200 Talcher-Kolar HVDC bipole 2000 2nd HVDC bipole 2500 Sub-Total 700 5000 5700 West-South Chandrapur HVDC back-to-back 1000 Karnataka-Maharashtra 500 Existing 220 kV AC lines 300 Sub-Total 1300 500 1800 East-North East Bongaigaon-Malda 400 kV D/c 800 Bipara-Salakati 220 kV D/c 200 Sub-Total 1000 1000 Total 5000 24500 29500 Source: http://www.indiastat.com/table/power/26/transmissionanddistribution/284/33358/data.aspx 61
  • 62. A.8 Proposed Transmission Line with Private Participation Sl. No. Project Sl. No. Project 1 1980 MW North Karanpura Project 8 1320 MW Barh-II Project 2 Talcher Augmentation Scheme 9 1000 MW Nabinagar Project 3 1000 MW Maithon Project 10 3200 MW Daripally project 4 Import of NER/ER surplus by NR 11 500 MW Kodarma Project 5 SR-WR Synchronous interconnector 12 1000 MW Mejia Ext. Project 6 Kawas-Navsari 400 kV DC 13 4000 MW Lara Project 7 Navsari-Mumbai 400 kV DC 14 1000 MW Simhadri Ext. project 62
  • 63. Appendix B: B.1 Existing Policy framework in coal industry: A Bird Eye view: Eligibility to do Coal Mining: Under the provisions in Section 3 (3) of Coal Mines (Nationalisation) Act, 1973, Coal mining was mostly reserved for the public sector. Amendments to Coal Mines (Nationalisation) Act, 1973 have been done to facilitate captive mining in approved end-use industries. The parties eligible to do coal mining in India without the restriction of captive consumption are: i. The Central Government, a Government company (including a State Government company), a Corporation owned, managed and controlled by the Central Government. ii. A person to whom a sub-lease has been granted by the above mentioned Government company or corporation having a coal mining lease, subject to the conditions that the coal reserves covered by the sub-lease are in isolated small pockets or are not sufficient for scientific and economic development in a coordinated manner and that the coal produced by the sub-lessee will not be required to be transported by rail. Coal Mining Lease under the Mines and Minerals (Regulation & Development) Act, 1957: Under the provisions of Section 5 (2) of the Coal Mines (Nationalisation) Act, 1973, the Coal India Limited enjoys the status of becoming the deemed lessee of the concerned State Governments in relation to all the nationalised coal mines. Under the provisions of Section 11 (2) of the Coal Bearing Areas (Acquisition & Development) Act, 1957 also, the Coal India Limited acquires the same status of becoming deemed lessee of the concerned State Governments in relation to the lands over the coal bearing areas acquired under this Act. The deemed leases being in the nature of statutory leases, the Coal India Limited does not have to obtain separate leases under the MMRD Act, 1957 from the concerned State Government in respect of the nationalised mines and the coal bearing lands acquired under the CBA Act. However, in case any of the companies eligible to do coal mining in India including CIL and the other Government and private coal companies want to acquire coal bearing lands under the Land Acquisition Act, 1894, they will be required to obtain coal mining leases from the concerned State Governments under the MMRD Act, 1957. Coal being a mineral listed in the First Schedule of the MMRD Act, 1957, the State Governments can grant coal mining leases only with the previous approval of the Central Government accorded under the proviso to Section 5 (1) of MMRD Act. 63
  • 64. Before the previous approval of the Central Government is accorded, the coal mining company is required to get the mining plan for the proposed coal mining area approved from the Central Government. The coal mining leases under the MMRD Act are now granted for 20-30 years initially and can be renewed for a further period of 20 years with the previous approval of the Central Government. The coal mining leases under the MMRD Act, 1957 are ordinarily subject to a ceiling of 10 sq. kms area. 64
  • 65. Appendix C C.1 State wise status of IPPs 1. Andhra Pradesh Proposed Projects: Name of the Capacity Promoter Company Project Location (MW) Fuel Type Status 400 MW Natural Gas Jegurupadu Village, Based Kadiyam Mandal, East Expected to Merchant Godavari District, Andhra come up in GVK Group Power Plant Pradesh 400 MW Natural Gas Twelfth Plan Expected to Vemagiri, Rajahmundry, come up in GMR Group CCPP Andhra Pradesh 800 MW Natural Gas Twelfth Plan Blended Coal (30%- Thermal Powertech Painampuram village, Imported + Expected to Corporation (India) Muthukur (M), Nellore 70% - come up in Limited (TPCIL) 1980 MW TPP district, Andhra Pradesh 1980 MW domestic) Twelfth Plan Near Komarada village & Expected to Alfa Infraprop (P) 2640 MW Mandal, Vizianagaram come up in Limited Project District, Andhra Pradesh 2640 MW Coal Twelfth Plan Tamminapatnam village, Expected to Kineta Power Kineta Thermal Chillakur Mandal, Nellore come up in Private Limited Power Project District, Andhra Pradesh 1980 MW Coal Twelfth Plan Krishnapatnam Blended Power Corporation Tamminapatnam and Coal (70% Momidi Villages, Indigenous Limited, an SPV of Chillakur Mandal, SPS Coal + 30% Expected to Navayuga Group Krishnapatnam Nellore District, Andhra Imported come up in Company TPP Pradesh 1980 MW Coal) Twelfth Plan Blended Coal- Indian Nagarjuna NCC Sompeta Mandal, Coal (70%): Expected to Construction Vamsadhara Srikakulam Dist, Andhra Imported come up in Company Power Project Pradesh 2640 MW Coal (30%) Twelfth Plan Under Construction Promoter Name of the Location Capacity Fuel Status Company Project (MW) Type BPL Power Projects Ramagundam Ramagundam Town, 2 x 300 Coal Unit-I COD: March 2011 (AP) Pvt. Ltd. TPS Karimnagar District, Unit-II COD:May 2011 Andhra Pradesh East Coast Energy Bhavanapadu Bhavanapadu 2640 MW Coal Synchronization of 1st unit Private Limited Thermal Power Village, Srikakulam (Stage I: - September 2011 COD of Plant Project District, Andhra 2x660 MW 1st unit - Dec 2011 Profile Pradesh, India Stage II: Synchronization of 2nd 2x660 MW) unit-Feb 2012 65
  • 66. Konaseema Gas Konaseema Konaseema GT1 140 + Gas FC achieved in February Power Ltd CCPP 27, 2004. Construction completed. GT2 140 + Expected COD: GT-1 ST 165 (140MW): July 2009; GT-2 Gas (140MW): July 2009; ST (165MW): July 2009 Gautami Power Ltd Gautami CCPP Peddapuram GT1 145 Gas FC achieved on (Subsidiary of 29.03.2004. Construction GVKIPL) completed. GT2 145 Expected COD: GT-1 (140MW): May 2009; GT-2 Gas (140MW): May 2009; ST (165MW): May 2009 GVK Power Krisnapatnam Krisnapatnam A 2 x 260 Coal The Project is ready for 'A' testing and commissioning depending on when the natural gas is made available by GAIL. Hinduja-National Vizag Power Vizag 2 x 520 Coal Pending issue of coal Power Project linkage Kineta Power Kineta Power Nellore Distt, Andhra 1980 MW Coal Under Proposal Private Limited Private Limited Pradesh Lanco Kondapalli Lanco Kondapalli, District GT-1: 233 Gas Expected to be Power Pvt Ltd. Kondapalli Krishna MW + ST: commissioned by CCPP Expn. 133 MW November 2009 Stage-II Simhapuri Power Simhapuri Krishnapatnam 640 MW Coal Madhucon Projects Pvt Ltd. Thermal Power South, District Nellore (Phase I- bagged EPC contract Plant 270 MW worth Rs 989.5 crore on Phase II- July 14, 2008. 370 MW) Vikas Power Coastal Pynampuram, 2x135 MW Coal Unit-1: 24 months from the Private Limited Thermal Power Muthukur in Nellore date of financial closure. Project District of Andhra Unit-2: 30 months from the Pradesh date of financial closure. Krishnaveni Sugars Krishnaveni Mahaboob Nagar 28 MW Coal Expected Commissioning Limited Sugars Limited Dist, Andhra Pradesh July 2009 BBI Power Krishnapatnam Krishnapatnam (Distt. 2 x 260 Coal Uncertain. In its load 'B' TPP Nellore) forecast till 2006-07, submitted to the AP Electricity Regulation Commission, APTransco did not mention the project. 66
  • 67. Operational Projects KVK Energy RVK energy Andhra Pradesh 16 MW Gas Operations Started on 28.01.2000 Lanco Kondapalli Kondapalli Kondapalli 350 Gas Commissioned on Power CCPP 22.06.2000 Spectrum Power Godavari Subbampeta 208 Gas Commissioned on 31.03.98 Generation Limited CCGT (Distt. Kakinada) BSES Andhra Power Peddapura Peddapuram 2x110 Naptha/LNG Commissioned on 12.09.02 Limited m CCGT Vemagiri Power Vemagiri Vemagiri 370 Gas Commissioned January 13, Generation Ltd CCPP 2006. GVK Industries Jegurupadu Jegurupadu Ph-I: 235 ; Gas/Naptha Phase -I: Commissioned in CCPP Ph-II: 220 July 1997 Phase-II (Ext Project ): April 2009 2. Karnataka Proposed Projects Name of the Capacity Company Project Location Fuel (MW) Status Ind-Barath Power 3x150 MW Ind- Hankon village, Uttara Expected to come up in (Karwar Ltd) Barath TPP Kannada district, Karnataka Coal 450 MW Twelfth Plan Reliance 2x400 MW Gas Village Dhumansur near Industries Based CCPP Humnabad, District Bidar, Natural Expected to come up in Limited Proposed by RIL Karnataka Gas 800 MW Twelfth Plan Kudgi STPP, Kudgi village, Bijapur district, Expected to come up in NTPC Stage-I Karnataka Coal 2400 MW Twelfth Plan Under Construction Name of the Capacity Company Project Location (MW) Status Udipi Power Udupi TPP Udupi 2x507.5 Expected commissioning Corporation Limited Unit 1: May 2010 (Formerly Nagarjuna Unit 2: September 2010 Power Corporation) Siruguppa Sugars & Siruguppa Mahaboob 40 MW Expected commissioning October 2009 Chemicals Limited Sugars & Nagar Dist, Chemicals Andhra Limited Pradesh JSW Energy Torangallu Bellary 600 MW Under Execution Limited(Vijaynagar) Extension Project 67
  • 68. Jindal Power Co. Ltd Toranagallu Toranagallu 500 The Project was cleared and MoU was Expansion near Bellary signed with the State Govt in 2000. Financial closure awaited and there is dispute over water availability for the project. Other pending issues pertain to allocation of additional land for ash dyke, MoEF clearance and PPA with KPTCL. Operational Projects Company Name of the Location Capacity Status Project (MW) Bhoruka Power Chayadevi Near Narayanpur, 24 MW (2 Commissioned on July 2006 Corporation Plant Shorapur Taluk x 12 MW) KVK Energy & Paschim HEP Sakaleshapura, 2 x 4.5 Commissioned in 2007 MVK Energy Hassan District MW Karnataka Bhoruka Power Mandagere Mandya 2 x 1.75 Commissioned in September 2004. Corporation HEP Bhoruka Power Rajankollur Gulbarga 2x1 Commissioned in August 1999. Corporation HEP Bhoruka Power Shahapur HEP Shahapur 6 x 5.5 Commissioned between April 97 to Corporation November 98. Bhoruka Power Madhavamantri Madhavamantri 3x1 Commissioned in July 2001. Corporation HEP Anicut at Hemmige Village Bhoruka Power Shivpur HEP Shivpur 2x9 Commissioned in November 1992. Corporation Bhoruka Power D9 Shahapur Banathihal village, 1 MW Commissioned in August 2003 Corporation HEP Shahapur taluk Bhoruka Power Neria HEP Near Dharmasthala, 9 MW (2 x Commissioned in March 2006 Corporation Belthangady Taluk 4.5 MW) Bhoruka Power Chitradurga Bettadanagenahalli. 2000 KW Commissioned in March 2005 Corporation Plant Bhoruka Power Sri Rama Near Kattebelaguli 1.5 MW Commissioned in September 2001 Corporation Devara Katte village, HEP Holenarasipur Taluk GMR Energy GMR Energy Mangalore 220 MW Commissioned in November 2001 Jindal Power Toranagallu Bellary 2 x 130 Financial closure achieved on 27.3.99; Company TPS Commissioned in May , 1999. Tata Electric Belgaum Power Belgaum 81.3 Financial closure achieved ; Companies Project Commissioned on 31.3.2001. Tannirbhavi Tanir Bavi Tannirbhavi 220 Financial closure achieved in Power Company Barge Mounted September, 2000 ; Commissioned on Power Plant November,2000. 68
  • 69. 3. Kerala Under Construction Promoter Company Name of the Location Capa Status Project city (MW) Kerala State Industrial Development Kasargode Power 2x Corporation (KSIDC) Generation Limited Kasargode 800 Under Proposal Financial closure yet to be achieved; Under approval. Gas linkage awaited. KPPL are negotiating with Reliance Industries for long term supply of natural gas. 176 acres of Kannur Power Projects Kannur CCGT Kannur 513 land acquired for this project. Siasin Energy Vypeen CCGT Vypeen 1200 Financial closure yet to be achieved. Kerala State Industrial Development Kasargode Power 2x Corporation (KSIDC) Generation Limited Kasargode 800 Under Proposal Financial closure yet to be achieved; Under approval. Gas linkage awaited. KPPL are negotiating with Reliance Industries for long term supply of natural gas. 176 acres of Kannur Power Projects Kannur CCGT Kannur 513 land acquired for this project. 4. Tamilnadu Proposed Projects Promoter Capacity Company Project Name Location (MW) Fuel Type Status Chennai Power Tiruvallur District, Expected to come Generation Ltd 1030 MW TPP Tamil Nadu 1030 MW Imported Coal up in Twelfth Plan North Chennai Power Company Limited, a SPV promoted by ABAN Tiruvallur District, Expected to come Group 1200 MW TPP Tamilnadu 1200 MW Imported Coal up in Twelfth Plan Tridem Port & Blended Coal Power Company Nagapattinam (Indigenous + Expected to come Limited (TPPCL) 2140 MW TPP district, Tamil Nadu 2140 MW Imported) up in Twelfth Plan Tarangambadi, Patel Engineering PEL Thermal Nagapattinam Imported Coal Expected to come (PEL) Group Power Project district, Tamil Nadu 1000 MW (Indonesia) up in Twelfth Plan IL&FS Tamil Nadu 4000 MW Cuddalore district, Imported Coal Expected to come Power Co Ltd Cuddalore TPP Tamil Nadu 3600 MW (Indonesia) up in Twelfth Plan Costal Blended Coal Energen's 1600 Tuticorin District, (Indigenous + Expected to come Costal Energen's MW TPP Tamil Nadu 1600 MW Imported) up in Twelfth Plan 69
  • 70. Under Construction Promoter Company Project Name Location Capacity Fuel Type Status (MW) Unnicornn Powergen Unnicorn Mega Tuticorin, 2x600 MW Coal Expected Private Ltd Power Plant Tamil Nadu Commissioning:2010 Chennai Power Kattupalli Kattupalli 1000 Liquefied Financial closure not Generation CCPP Natural Gas yet achieved. No updates available. Tri-Sakthi Energy North Madras North 525 Imported Coal No updates available TPP–III Madras Videocon Power North Madras North 2 x 525 Imported Coal Ist unit - 42 months, TPP – II Madras IInd Unit - 46 months from Financial Closure Indian Power Vember CCGT Vembar 1,873 LNG Likely Commissioning: Projects near 2009 [uncertain] Tuticorin Cuddalore Power Cuddalore Cuddalore 2 x 660 Imported Coal Unlikely to come up Corporation TPP SPIC Electric Power Tuticorin TPP Tuticorin 525 Imported Coal 12th plan Corporation St. IV Dakshin Bharat DBEC Ennore Ennore 5 x 370 LNG Unlikely to come up Energy Power Project Operational Projects Promoter Company Project Name Location Capacity Fuel Status (MW) Type GMR Vasavi Power Basin Bridge Basin Bridge near 4 x 50 LSHS Commissioned on: DGPP Chennai December 31, 1998 Samalpatti Power Company Samalpatti DGPP Pochkanapalli; 105.66 LSHS Commissioned in: Distt. Dharampuri March 2001 PPN Power Generating Pillaiperumalnallur Pillaiperumalnallur; 330.5 Gas/ Commissioned on: Company CCGT Distt. Thanjavur Naphtha April 5, 2001 Balaji Power Corporation Samayanallur Samayanallur, 106 LSHS, Commissioning: DGPP District Madurai FO, September 22, LSWR 2001. ST-CMS Electric Company Neyveli TPS - Neyveli 250 Lignite Commissioned on: Zero Unit October 11, 2002 Aban Power Co. Ltd. Karuppur CCPP Karuppur Village 120 Natural Commissioned on Near Kuttalam, Gas : August 11, 2005 Thanjavur District. Arkay Energy Valantharavai Valantharavai Unit I: Liquid Commissioned on: GTPP 52.8 Fuel Unit I - October Unit II: (Petrole 29, 2005. 67.11 um) Regency Power Ramanathapuram Ramanathapuram 60 Natural Commissioning : Corporation CCGT Gas 2005-06 Arkay Energy Valantharavai Valantharavai Unit I: Liquid Commissioned t I - GTPP 52.8 Fuel October 29, 2005. 70
  • 71. 5. Delhi Proposed Project Promoter Name Location Capacity Fuel Status Company of the (MW) Type Project NDPL Rithala Rohini, District 108 MW Natural MoEF clearance awaited CCPP North-West in Gas Delhi Apollo Energy New Narela 2 x 175 Coal DPR returned by CEA on 27.2.01 due to Delhi pending inputs. TPS KLT Power Bawana Bawana - II 650 Gas On 30 January 2001, Delhi government - II decided to shelve the project indefinitely. Reliance Bawana Bawana - I 421 Gas Scheme returned on 19.12.97 due to pending Power -I inputs and clearances; On 30 January 2001, Delhi government decided to shelve the project indefinitely. 6. Haryana Promoter Company Name of the Location Capacity Fuel Status Project (MW) Type Magnum Power Gurgaon CCGT Gurgaon 4 x 6.3 LSHS/H Commissioned in Generation Limited FO 1998. Phoenix Power Phoenix Power Gurgaon, 3 x 50 + 1 x 25 HFO The project has Development Project Panchkula, most likely been Corporation Ambala, Panipat shelved. Indian Oil Corporation Panipat Power Panipat 300 Refinery The project has Project Residue most likely been shelved. Yamuna Nagar TPP Yamuna Nagar Yamuna Nagar 500 Coal Project declared Power Project dead. India Power Partners Bahadurgarh Bahadurgarh 2 x 25 -- The project has Power Project most likely been shelved. 7. Himachal Pradesh Proposed Projects Promoter Company Name of the Location Capacity Status Project (MW) Lanco Green Power Pvt Ltd Budhil HEP Chamba 2 x 35 Expected Commissioning June 2011-12 Himachal Sorang Power Sorang HEP Kinnaur 2 x 50 Expected Commissioning June 2010 Corporation Pvt Ltd Jaypee Karcham Hydro Corp. Karcham Kinnaur 4 x 250 Financial closure achieved on March Ltd Wangtoo HEP 2006; Sch commissioning: March 2012. 71
  • 72. LNJ Bhilwara Group Allain Duhangan Manali 2 x 96 Financial closure in April 2005. HEP Infrastructure activities in progress. Everest Power Company Malana II HEP Malana 2 x 50 Expected Commissioning: Unit I : December 2009, Unit II : January 2010 Malana Power Company Bara-Bangahal Bara- 200 MW Under RFQ Stage (RFQ) HEP Bangahal Operational Projects Promoter Name of Location Capacity Status Company the Project (MW) Jaiprakash Hydro Baspa HEP Kinnaur 3 X 100 Financial closure achieved on January 21, Power 1998 ; Commissioned on May 27, 2003. Malana Hydro Malana Malana 2 x 43 Financial closure achieved in July, 2000; Project HEP Commissioned in October, 2001. 8. Bihar Promoter Name of Fuel Company the Project Location Capacity Type Status Stage I (240 MW) : Financial closure Tata Power achieved on December 7,1998 ; Company Jojobera Commissioned on August 27, 2001. Limited TPS Jamshedpur 360 Coal Stage II : Commissioned on Sept 23, 2005 9. Jharkhand Proposed Projects Name of the Project Location Capacity Fuel Type Status 2000 MW TPP Chandwa Tehsil, Latehar District, Expected to come up Proposed by EPJL Jharkhand State 2000 MW Coal in Twelfth Plan Near Chakulia, district Purbi Expected to come up HDIL Chakulia TPP Singhbhum, Jharkhand 1320 MW Coal in Twelfth Plan Under Construction Name of the Project Location Capacity Fuel Type Status Ramgarh in 100 MW Thermal Expected Commissioning: Ramgarh TPS-I Hazaribagh Power Plant Coal September 2009 Expected Commissioning: Unit I KVK Nilanchal Power Near Torpa, District : December 2011, Unit II : March Private Limited Khunti, Jharkhand 2 x 600 MW Coal 2012 Ramgarh District in Expected Commissioning: Unit I: the state of September 2011, Last unit by SKS Ispat & Power Ltd. Jharkhand 1200 MW Coal March 2012 72
  • 73. Operational Projects Name of the Project Location Capacity Fuel Type Status Unit I - 67.5 MW, Unit II: 120 MW, Unit III: All Units Jojobera TPP Singhbhum 120 MW, Unit IV: 120 MW Coal Commissioned 10. Madhya Pradesh Proposed Projects Promoter Capacity Fuel Company Name of the Project Location (MW) Type Status Bhumka-Musamudi Aryan Coal 1200 MW TPP proposed village, Majhauli Beneficiations Pvt by Aryan Coal Tehsil, Sidhi district, Expected to come Ltd Beneficiations Pvt Ltd Madhya Pradesh 1200 MW Coal up in Twelfth Plan 1320 MW TPP Proposed By DB Power District Sinarauli, Expected to come Bhaskar Group Ltd Madhya Pradesh 1320 MW Coal up in Twelfth Plan Moser Baer Power Anuppur Thermal Power Anuppur district, Expected to come & Infrastructure Ltd Project Madhya Pradesh 2000 MW Coal up in Twelfth Plan Jaiprakash Power Ventures Limited, a subsidiary of Nigri village, Tehsil Jaiprakash Singrauli, Sidhi Expected to come Associates Limited Jaypee Nigri STPP district, 1320 MW Coal up in Twelfth Plan Under Construction Name of the Capacity Fuel Promoter Company Project Location (MW) Type Status Escrow cover granted; Bina Power Supply 2x500 MW Financial closure not yet Company Bina TPS Bina (Planned) Coal achieved. Anuppur Expected COD: Phase-I: Moser Baer Power & district, Madhya March 2012, Phase-II: Infrastructures Limited Annupur TPP Pradesh 2000 MW Coal March 2013 Shree Maheshwar Hydel Maheshwar Expected Commissioning: Power Corporation HEP Mandaleshwar 10 x 40 Hydel 2011-12 Pench Expected Commissioning: Pench Power Pench TPS (Chindwara) 2 X 250 Coal 2012-13 SJK Powergen Expected Commissioning: SJK Powergen Limited Shadol 2 x 500 Coal December 2010 Today Homes and Today Homes and Infrastructure Narsimhapur, Infrastructure Pvt. Ltd. Pvt. Ltd. Madhya 2 x 600 Expected Commissioning: (THIPL) (THIPL) Pradesh MW Coal 2012-13 73
  • 74. 11. Chhattisgarh Proposed Projects Capacity Fuel Promoter Company Name of the Project Location (MW) Type Status Bhilai Engineering 2x250 MW BEC Champa District, Expected to come Corporation Limited Power Project Chhattisgarh 500 MW Coal up in Twelfth Plan Korba District, Expected to come Jain Energy Limited 4x300 MW TPP Chhattisgarh 1200 MW Coal up in Twelfth Plan Jindal Power Limited Raigarh district, Expected to come (JPL) 4x600 MW TPP Chhattisgarh 2400 MW Coal up in Twelfth Plan Akaltara Power Limited - 5 x 800 MW Surguja district, Expected to come a subsidiary of PFC Chhattisgarh UMPP Chhattisgarh 4000 MW Coal up in Twelfth Plan Essar Power Chhattisgarh 2 x 600 MW Champa District, Expected to come Limited Mahanadi TPP Chhattisgarh 1200 MW Coal up in Twelfth Plan Washery 2x150 MW Meddling middling JSPL (Jindal Steel & and Coal Fine based Raigarh district, & coal Expected to come Power Limited) TPP, Phase-II Chhattisgarh 300 MW fine up in Twelfth Plan RKM Powergen Private 4x360 MW Uchpinda Champa, Expected to come Limited (PPL) Power Project Chhattisgarh 1440 MW Coal up in Twelfth Plan Vandana Vidhyut District- Korba, Expected to come Vandana Vidhyut Limited TPP Chhattisgarh 540 MW Coal up in Twelfth Plan Under Construction Promoter Name of the Location Capacity Fuel Status Company Project (MW) Type Wardha Power Wardha Power Wardha, 2 x 1800 Coal Expected to be commissioned Company Pvt. Company Pvt. Chhattisgarh by April 2012 Limited Limited Amjhar, Chhattisgarh Champa- Chhattisgarh Steel & Steel & Power Janjgir, Power Limited Limited Chhattisgarh 112.5 Coal Under Development 4x660 MW Tamnar, Jindal Power Additional Power Raigarh 4x660 Limited Plant (Chhattisgarh) (IPP) Coal Under Development 4x300 MW Jain Korba, Jain Energy Limited Energy Limited Chhattisgarh 4x300 Coal Under Process Athena Raigarh 1200 Athena Projects Chhattisgarh District, (2x600M Private Ltd Power Private Ltd Chhattisgarh W) Coal Under Development Bhilai Power Supply Financial closure not yet Company Bhilai TPP Bhillai (Durg) 2 x 287 Coal achieved. Dheeru Power Expected Commissioning: 2009- Private Limited DPPL Korba 500 Coal 10 Proposed by Expected Commissioning: GMR Energy Limited GMR Raipur 1200 Coal Twelfth Plan 74
  • 75. Iffco Chhattisgarh Power Limited ICPL Sarguja 1000 Coal Exp Commissioning: 2009-10 Lanco Amarkantak Mega TPS Lanco Amarkantak (Pathadi) - Phase Pithadi village, Expected Commissioning: Unit- Power I district Korba 2x300 Coal I: May 2009 Unit- II: Dec 2009 Lanco Amarkantak Mega TPS Lanco Amarkantak (Pathadi) Unit 3 Pithadi village, Expected Commissioning: March Power &4 district Korba 2x600 Coal 2012 (Unit IV) KVK Power & KVK Power & Infrastructure Pvt. 2 x 600 Expected Commissioning: March Infrastructure Ltd. Akaltara MW Coal 2012 S V Power Pvt. 2 x 63 KVK Energy Ltd. Korba MW Coal COD ( 1st Phase) : 2009 Patni Project Private Gorra Thermal 4x135 COD of Unit 1 & 2 is January Limited Power Project Fatehpur MW Coal 2011 RKM Power 4x350 Financial Closure achieved in RKM Power Project Project - MW Coal April, 2007 COD: Unit I- June : 2010, Unit II- Vandana Vidhyut Vandana Vidhyut June : 2011, Unit III-IV Limited Limited Korba 540 MW Coal December : 2012 Korba West Korba West Power Power Company Company Ltd. Ltd. Korba 2 x 300 Coal Expected COD: 2011 Visa Chhattisgarh Raipur, Visa Power Power Project Chhattisgarh 1200 MW Coal Under Proposal Korba (West) Scheme returned on 21.5.97due RPG Group TPP (T) Korba West 2 X 260 Coal to pending inputs/clearances. Operational Projects Promoter Name of Location Capacity Fuel Status Company the Project (MW) Type OP Jindal Thermal Raigarh 4 x 250 Commissioned Unit I- May 2007; Complete Power Station TPP Raigarh MW Coal project: 2007- 2008 KVK Energy -- Akaltara 15 MW Biomass Operations Started On December 2005 12. Gujarat Proposed Projects Promoter Company Name of Project Location Capacity Fuel Status (MW) type Shapoornji Pallonji 2x660 MW (Phase-I) Coal Junagadh, 2x660 MW Imported Expected to come Energy (Gujarat) Pvt Ltd Based Super Critical TPP Gujarat Coal up in Twelfth Plan ESSAR Group Limited, Proposed by Vadinar Jamnagar, 500 / 483 Imported Expected to come Power Company Limited Gujarat MW Coal up in Twelfth Plan 75
  • 76. Under Construction Promoter Name of Location Capacity Fuel type Status Company Project (MW) Torrent Power Sugen CCPP Akhakhol, 1147.5 Gas Expected Commissioning: Block I: Generation District Surat March 2009 Block II: March 2009 Limited Block III: April 2009 Adani Power Mundra TPP Kutch 2x330 Coal Expected Commissioning Unit-1: Phase I (Unit August 2009 Unit-2: September 2009 1&2) Adani Power Mundra TPP Kutch 2x660 Coal Expected Commissioning Unit 3: Phase I (Unit 3 February 2010 Unit 4: May 2010 & 4) Adani Power Mundra TPP Kutch 2x660 Coal Expected Commissioning Unit 1: April Phase II 2011 Unit 2: September 2011 Adani Power Mundra TPP Kutch 3x660 Coal Expected Commissioning Unit 1: July Phase III 2011 Unit 2: November 2011 Unit 3: March 2012 Essar Power Hazira CCGT Hazira 515 + Naphtha [Phase I] : Financial closure 1500 achieved; Commissioned on May 26, 1997 Scheduled Commissioning [Phase II] : Stage I (750 MW) : 27 months from financial closure ; Stage II (750 MW) 36 months from financial closure. Nirma Chemical Ghogha TPP Ghogha 250 Lignite Foundation stone to be laid after Works Ltd. general elections (April-May 2004). No progress reported since 2004. Essar Energy Vadinar GBPP Vadinar 1200 Refinery Financial closure yet to be achieved. Residue Indian Oil Savli Power Savli 500 Refinery No Progress Reported. Corporation Project Residue KRIBHCO Pipavav TPP Pipavav 615 Gas Financial closure yet to be achieved. Reliance Power Jamnagar Jamnagar 2 x 250 Petroleum The power project has been shelved. Petcoke TPP Coke Patni Projects Bharuch TPP Bharuch 230 Gas Expected Commissioning: October Private Limited 2008 Pipavav Power Pipavav Power Pipavav, 1000 Coal Expected Commissioning: March Development Project Gujarat 2012 Company Visa Power Visa Pipav Pipav, Gujrat 1000 MW Coal Under Proposal Power Project Operational Projects Promoter Company Name of Location Capacity Fuel Status Project (MW) type Gujarat State Energy Hazira CCPP Mora near 156 Gas Commissioned in June 2002 Generation Limited Hazira Gujarat Industries Power Com. Baroda CCGT Baroda and 160 + 2 x Gas Commissioned on November and Surat TPP Surat 125 18, 1997 and January 16, 2000 76
  • 77. Gujarat Paguthan Energy Paguthan Bharuch 654.726 Naph Commissioned on October 13, Corporation Power Project tha 1998 13. Maharashtra Proposed Projects Name of Promoter Company the Project Location Capacity (MW) Fuel Type Status Ranpur, Pawas 1x1050 MW Finolex Infrastructure Bay, Ratnagiri (Super Critical) Expected to Limited, SPV of 1000 / 1050 district, OR 2x500 MW come up in Finolex MW TPP Maharashtra (Sub Critical) Coal Twelfth Plan Dhopave Coastal Near Dhopave, Expected to Power Company 1600 MW Ratnagiri district, come up in Limited (DCPCL) TPP Maharashtra 1600 MW Imported Coal Twelfth Plan Maharashtra Airport Khairi Khurd Development village, Nagpur Expected to Company Ltd & Mihan district, come up in Abhijeet Group Power Plant Maharashtra 123 MW Coal Twelfth Plan Dhanmukh (Bijora) village, Mahagaon Tahsil, Yavatmal Expected to Jinbhuvish Power 2x270 MW District, come up in Generations (P) Ltd TPP Maharashtra 540 MW Coal Twelfth Plan Dehrand/Shahapur, Expected to 1600 MW Raigad District, come up in Tata Power TPP Maharashtra 1600 MW Imported Coal Twelfth Plan Vidarbha Industries Power Ltd, SPV of 300 MW Butibori MIDC, Expected to Reliance Power Captive TPP district Nagpur, 300 MW come up in Limited (Phase-II) Maharashtra (Phase-II) Coal Twelfth Plan Dhakur / Ajgaon, Sawanthwadi Ind-Barath Tehsil, Sindhudurg Expected to Ind-Barath Power Group district, Import/Domestic come up in (Konkan) Limited Captive TPP Maharashtra 1050 MW Coal Twelfth Plan Medhekhar village, Taluka Alibag, Expected to Patni Energy Pvt Ltd Patni Power Raigad district, come up in (PEPL) Project Maharashtra 405 MW Imported Coal Twelfth Plan Indiabulls Realtech 5x270 MW Sinnar SEZ, district Limited TPP Nasik, Maharashtra 1350 MW Coal - 1320 MW Astrac 2x660 MW Power's Supercritical Super District - Nagpur, TPP critical TPP Maharashtra. 1320 MW Coal - 77
  • 78. Under Construction Promoter Name of the Location Capacity Fuel Status Company Project (MW) Type Amravati Amravati Amravati 2x660MW Coal Financial closure is yet to be Thermal Power Thermal Power Achieved, Likely to be Pvt. Ltd. Project commissioned in XI Plan, Adani Power Tirora Phase I Tirora, District 2x660 MW Coal Expected commissioning August Gondia 2011 Adani Power Tirora Phase II Tirora, District 1x660 MW Coal Financial closure not yet Gondia achieved. Applied for LT coal linkage for 1200-1250 MW capacity JSW Energy JSW Energy Ratnagiri,Mumb 4 x 300 Imported Expected Commissioning: Unit - Ratnagiri TPS ai MW Coal 1 April 2010 Unit - 2 June 2010 Unit - 3 August 2010 Unit - 4 October 2010 Shalivahana Shalivahana Chandrapur 1 x 270MW Coal Expected Commissioning: 2013 Constructions Constructions (India) Private (India) Private Limited Limited Ideal Projects Ideal Projects Nagpur 2x135MW Coal Expected to commissioning: Private Limited Private Limited Phase-I: October 2010 Phase-II: March 2011 Dhariwal Dhariwal Chandrapur 2 x 300 Coal Expected Commissioning: Unit-I - Infrastructure Infrastructure MW June 2011 Unit-2 - March 2012 (P) Limited Chandrapur TPP Operational Projects Promoter Name of the Location Capacity (MW) Fuel Type Status Company Project Tata Power Trombay TPS Trombay, Unit 8: 250 MW [The Imported Syncronisation: Company Extension [Unit 8] Mumbai site already has a Coal January 14, 2009 Total Installed CoD: March 29, 2009 Capacity of 1480 MW] Ratnagiri Gas Ratnagiri CCPP Ratnagiri 1480 RLNG / Block II CoD: 1 and Power Naphtha September, 2007 Block III CoD: 21 Private Limited November, 2007 (Formerly, Dabhol Power Company) 78
  • 79. 14. Rajasthan Proposed Projects Promoter Name of the Location Capacity (MW) Fuel Type Status Company Project Adani Power 1320 MW Kawai, district Expected to come up Rajasthan Limited Project Baran, Rajasthan 1320 MW Coal in Twelfth Plan Under Construction Promoter Name of the Project Location Capacity Fuel Status Company (MW) Type Neyveli Lignite Barsingar Expected Commissioning: Corporation Barsingsar Lignite TPP (Bikaner) 2 X 125 Lignite January 2010 8 x 135 = Expected commissioning Raj West Power Jallipa Kapurdi TPP Barmer 1080 Lignite October 2010 Expected commissioning Raj West Power Jallipa Kapurdi TPP Barmer 2 x 135 = 270 Lignite January 2013 RPG Dholpur Projects development Power Company Dholpur CCGT Dholpur 702.7 Gas stands closed. LNJ Bhilwara Coal based Thermal Mordi, District Group Power Plant Banswara 23 MW Coal Status Unavailable Kershorai Patan Power Kershorai Bhagat Power Project Patan 100 Status Unavailable Bhiwadi Generation Company Alwar Power Project Alwar 100 Status Unavailable Chittorgarh, Bhilwara, Udaipur, British Power Chittorgarh Power Rajsamand, Industries Project Banswara 5 x 100 Status Unavailable Kershorai Patan Power Kershorai Chambal Power Project Patan 166 Status Unavailable DLF Power Barmer Power Project Barmer 2 x 125 Status Unavailable Chittorgarh, Euro Power Chittorgarh Power Hanumangarh, Consortium India Project Bhilwara 5 x 100 Status Unavailable Indo Cal Power Ventures Jodhpur Power Project Jodhpur 100 Status Unavailable Jalipa TPP Jalipa Power Project Jalipa 900 Status Unavailable Jodhpur Electric Jodhpur, Power Jodhpur Power Project Banswara 2 x 75 Status Unavailable Kapurdi TPP Kapurdi Power Project Kapurdi 600 Status Unavailable Peeraj Power Sriganganagar Power Generation Project Sriganganagar 150 Status Unavailable Poysha Power Projects Alwar Power Project Alwar 50 Status Unavailable Vardhan Infrastructure Ltd Abu Power Project Abu 100 Status Unavailable 79
  • 80. 15. Orissa Proposed Projects Name of the Capacity Fuel Promoter Company Project Location (MW) Type Status Near Ampor village, Banta Visaka Thermal 3 x 350 MW Tehsil, Bhadrak District, Expected to come Power Pvt Ltd TPP Orissa 1050 MW Coal up in Twelfth Plan Randia, district Bhadrak, Expected to come FACOR Power Ltd 1x45 MW TPP Orissa 45 MW Coal up in Twelfth Plan Ghantigadia / Nuahata village, Expected to come Bhushan Energy Ltd 2000 MW TPP Angul district, Orissa 2000 MW Coal up in Twelfth Plan Under Construction Name of the Capacity Fuel Promoter Company Project Location (MW) Type Status Bhushan Energy Ltd Bhushan Angul Ghantigadia 2000 Coal Financial closure not yet TPP district Angul achieved CESC Ltd CESC Dhenkanal Neulapoi , 1000 Coal Financial closure not yet TPP Dhenkanal achieved. Essar Power Ltd Essar Talcher TPP Talcher, Angul 1000 Coal Financial closure not yet achieved. GMR Orissa GMR Orissa TPP Dhenkal District in 1050 Coal Expected Orissa Commissioning in February 2012 Kalinga Power Dubri TPP Duburi 2 x 250 Coal Financial closure not yet Corporation achieved. KVK Nilachal Power KVK Nilanchal TPP Kandarei, Cuttack 4x350 MW Coal Expected Private Ltd Commissioning: December 2011 Jindal India Thermal Jindal Angul TPP District Angul, 2 x 600 Coal Unit-I: Sept. 2011 Unit-II: Power Limited Orissa MW March 2012 Lanco Babandh Babandh TPP Babandh, District Phase I : 2 Coal Unit-I COD in Quarter Power Private Ltd Dhenkanal, Orissa x 660 MW Fourth of 2011, within Phase II : 2 11th Plan (Anicipated) x 660 MW Lanco Group Lanco Dhenkal Kurunti & 2x660 Coal Mar-12 TPP Kharagprasad village, Dhenkanal district, Orrisa Navabharat Power Malaxmi Mega Nua-Hata in Angul Phase I Coal Yet to achieve financial Private Limited Thermal Power district :1040 closure Project - Phase I Phase II : 1200 Mahanadhi Aban Mahanadhi Aban Talcher village of 1030 Coal Yet to achieve financial Power Company Ltd Power Project Angul District in closure Orissa Monnet Power Co. Monnet Angul TPP Malibrahmani, 3x335 MW Coal Expected commissioning Ltd District Angul, by September 2011 Orissa 80
  • 81. Reliance Energy Hirma Power Hirma 6 x 660 Coal Financial closure not yet Limited Project achieved. Sterlite Energy Sterlite TPP Jharsuguda 2400 Coal Financial Closure Private Limited Achieved in July 2006. Commissioning expected within XI plan Tata power Naraj TPP Naraj Marthapur, 2000 MW Coal Financial closure yet to Company Ltd Cuttack be achieved. Visa Power Visa Power Cuttack Cuttack, Orissa 1000 MW Coal Financial closure yet to TPP be achieved. 16. Uttar Pradesh Under Construction Promoter Company Name of the Location Capacity Fuel Status Project (MW) Type Reliance Energy Ltd Rosa TPP Phase I Shahjahanpur 600 Coal Expected Commissioning: June 2010 Reliance Energy Ltd Rosa TPP Phase II Shahjahanpur 600 Coal Expected Commissioning: July 2011 Reliance Energy Ltd Dadri CCPP Dadri 7480 Gas Expected Commissioning: 2011-12 Lanco Anpara Power Anpara ‘C’ TPP Anpara 2 x 600 Coal Expected Commissioning: Pvt Ltd Unit-I: June, 2011 Unit-II: August, 2011 Jawaharpur Power Etah TPP Etah 2 x 400 Coal Scheme returned on August 31, 2001. No progress reported. Modi Mirrless Ghaziabad Power Ghaziabad 100 Naphtha No Progress Reported. Blackstone Project Indian Power Chandausi Power Chandausi 100 Naphtha No Progress reported. Partners Project Wasan Power Kosi Kalan Power Kosi Kalan 355 Naphtha No Progress Reported Project Indian Oil Corporation Kosi Kalan Power Kosi Kalan, 110 -- Project has been scrapped. Project Mathura 17. Uttaranchal Under Construction Name of the Promoter Location Capacity Fuel Status Project (MW) Type Alaknanda GMR Chamoli district 140 MW Hydel Exp commissioning: 2011-12 Project of Uttaranchal Jaiprakash Jaiprakash Vishnuprayag 4 x 100 Hydel CoD Ut I: Apr’06 Ut II: Jun’06 Ut Vishnuprayag TPP MW III: Aug’06 Ut IV: Oct’06 81
  • 82. Shrinagar GVK Uttrakhand 330 MW Hydel Expected Commissioning Hydroelectric Schedule: Unit I: July 2011 Unit Project II: August 2011 Unit III: September 2011 Unit IV: October 2011 Duncan's Duncans North Hydro Paun Garhwal 5 x 66 Hydel Financial closure not yet Alakhnanda HEP Power Company achieved; 18. West Bengal Under Construction Promoter Company Name of the Location Capacity Fuel Status Project (MW) Type CESC Ltd Budge Budge South 250 Coal Expected to be TPS Stage III Parganas commissioned by Sept ‘09 Balagarh Power Company Balagarh TPS Balagarh 500 Coal Financial closure yet to be Ltd (Hoogly) achieved. Indian Oil Corporation Haldia Power Haldia 700 Refinery Most likely Shelved Project Residue Gouripore Power Company Gouripore TPP Gouripore 150 Coal Shelved. 19. Arunachal Pradesh Under Construction Name of the Location Capacity Fuel Status Project (MW) Type Demwe Lower Lohit District 1630 MW Hydel Invited EOI for executing project Talong Seppa district on River Kemeng 160 MW Hydel Expected commissioning: 2011 20. Assam Project Promoter Location Fuel Type Status Adamtilla Gas Based Power Plant Cachar Naptha Commissioned Banskandi Gas Based Power Plant DLF Power Cachar Naptha Commissioned 21. Punjab Promoter Name of the Project Location Capacity Fuel Status Company (MW) Type GVK Power and Goindwal Sahib Gowindwal Sahib, 2 x 270 Coal Financial closure not Infrastructure Ltd Thermal Power Project Taran Taran district yet achieved; 82
  • 83. 22. Goa Under Construction Promoter Name of the Location Capacity Fuel Status Company Project (MW) Type Reliance Sancoale, Gas / Expected to come up in Twelfth Energy Goa Power Station Zuarinagar, Goa 52 Naptha Plan Reliance Reliance Energy's Zuarinagar 48 Naptha Financial closure achieved; Goa Power Station Commissioned on 06.07.1999. Goa Energy WHR Power Plant Amona, Navelim 30 Gas Orders for all the BOPs have Pvt. Ltd. been placed except Aux. Cooling Water Heat Exchanger, Compres sed Air System, & DG Set 83