powerline

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t highlights

Extension of 10-year

tax holiday

Launch of feederseparation scheme

Adequate coal supply

to power plantsEnhancedclean

energycess

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forultra

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solarpow

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Acceleration

ofGreen

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Infocus:

Diesel Enginesand Gensets

Special story:

FuellingGrowthFuellingGrowthBudget 2014-15 expected to

drive investments in the sector

I N D I A ’ S F I R S T P O W E R M A G A Z I N E

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POWERLINEVolume 18 ● No. 11 JULY 2014

20 PFC and REC register strong performance

22 Focus on ramping up coal transportation

44 Industry opinion on proposed reconstruction fund

46 Interview with Haryana government’s Devender Singh

82 Profile of Tata Power Solar’s Ajay Goel

20 PFC and REC register strong performance

22 Focus on ramping up coal transportation

44 Industry opinion on proposed reconstruction fund

46 Interview with Haryana government’s Devender Singh

82 Profile of Tata Power Solar’s Ajay Goel

55

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1P O W E R L I N E ● July 2014

PUBLISHINGAlok Brara

EDITORSNandita Sardana Kochhar

Shubhra Puri

EDITORIAL OPERATIONSMudita Mehta (Director)

Shyama Warner (Consultant)

EDITORIALRaka Sarkhel (Senior Sub-Editor)

RESEARCHTapas Bhowmik (Senior Analyst)

Anchal Mittal (Senior Analyst)Reya Ramdev (Senior Analyst)

Mandvi Singh (Analyst)Neha Bhatnagar (Analyst)

Shruti Goel (Analyst)Jaspreet Kaur Anand (Associate)

Shashank Shanker (Associate)

BUSINESS DEVELOPMENTRaman Dev Narang (Sr. Vice-President)

Natasha Kirti (Manager, Sales)

DESIGNJoybroto Dass (Art Director)

Jaison Jose (Graphic Designer)

ADMINISTRATIONJose James

Saroj Kumar

CIRCULATIONSumita Kanjilal

PHOTOGRAPHYPallee

OFFICEB-17, Qutab Institutional Area

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EditorialA mid-month announcement by the power minister that 45 power generating plantsin the country have coal stocks of less than seven days, together with NTPC’s revela-tion that six of its plants have coal stocks of less than two days, have made it clearthat coal availability has hit an alarmingly low level.

The one issue that the new government needs to address most urgently in the sectoris coal supply. This alone will fix many related issues: operational and strandedcapacities will get the optimum amount of coal and run well; the discoms that arecurrently resorting to load shedding will be able to meet the demand; new projectswill come up; and power demand will grow, in turn boosting the country’s economy.

In the budget and in general, the government has emphasised its keenness to tacklethe coal supply issue. It has talked about rationalising linkages so that mines can sup-ply coal to the nearest power plants and save freight costs. It has also talked aboutramping up availability through additional mining of coal, improving supplies fromCoal India Limited and reducing the e-auctioning of coal. It has urged the state gov-ernments to resolve local land issues so that railway lines can be built to transport coal.

While these measures should yield results, the coal sector needs some major reformsto ensure that coal crises such as the one this month do not occur again. The crux ofthe problem is that while coal-based generation capacity has increased by 46 per centin the past five years, domestic coal supply has increased by only 22.5 per cent, and thepressure is now beginning to show. Imported coal can only alleviate part of the pres-sure. To effectively resolve the issue, domestic coal supply has to be ramped up.

The other important matter is that of augmenting transmission capacity so that sur-plus power can be transmitted to deficit areas. Many discoms can identify sourcesoutside their state where power is available in plenty and at cheaper rates to meettheir demand. However, they are not able to execute transactions due to transmis-sion bottlenecks, not just in the local grids but also in the central grid.

Unless these two basic issues are resolved, the sector will continue to struggle and willbe unable to achieve its true potential to become the growth engine of the economy.

POWERLINEPOWERLINE

VOLUME 18 ■ No. 11 July 2014

C O N T E N T S

2 P O W E R L I N E ● July 2014

NEWS BRIEFS 4

SPECIAL STORIESFuelling growth 16Budget 2014 is expected to drive

investments in the sector

Promising performance 20Strong showing by PFC and REC

Supply bottleneck 22Need to ramp up coal

transportation infrastructure

Case for reforms 26World Bank report takes stock of

distribution segment

Gas uncertainty 28Private sector producers seek policy

intervention

Coal crisis 30Stocks plummet to six-month low

Advantage AD 32Industry pins its hopes on the res-

toration of accelerated depreciation

COMPANIESTorrent Power Limited 34Plans for growth across the energy

value chain

India Power 37Exploring expansion opportunities

ANDRITZ HYDRO India 40Strengthening its presence in the

hydropower segment

FOCUS ON REGULATIONPositive role 42MPERC takes steps to improve sector

performance

FORUMRescue bid 44Reconstruction fund proposed for

stressed projects

Interview with 46Devender Singh“Our goal is to serve all

consumers with conti-

nuous, reliable power”

FINANCEPrivate equity push 50Sterlite Technologies raises

foreign funds

Financial briefs 52

INFOCUS: DIESEL ENGINES & GENSETSMarket overview 56Demand drivers and key challenges

Revival in demand 58Growth expected after the slowdown

Cost considerations 62Demand for diesel-based power

despite high price of generation

Choice of fuel 64Diesel dominates in backup power

systems

Technology advances 68Efficiency improvements in diesel

engines reduce costs and emissions

Environmental concerns 70Stricter emission norms proposed

for DG sets

Road to growth 72Rental energy plants help bridge

the demand-supply gap

Key statistics 74

INDUSTRIAL POWER: SUGARPower savings 78Sugar manufacturers adopt energy

conservation measures

IT IN POWERPayment security 80Utilities focus on prepaid metering for

better billing and collection

PEOPLEAjay Goel, Tata Power Solar 82S.K. Chaturvedi, Joint Electricity 84Regulatory CommissionDr G. Prasad, MNRE 84Venkatasiva Reddy, KPTCL 85Dr H.R. Sharma, Tractebel Engineering 85Sibir Roy, CESC Limited 86Vinay Rustagi, BRIDGE TO INDIA 86

PHOTOGALLERY 87

COMPANY RELEASE 88

POWER DATAPower trading 89At IEX and PXIL in June 2014

Key statistics 90Global gas production

Power generation 92Monthly statistics year over year

FORM IV

Publisher Alok BraraPrinter Alok BraraOwner India Infrastructure Publishing Pvt. Ltd.Editor Alok BraraPrinting Press International Print-o-Pac Limited,

C-4 to C-11, Hosiery Complex, Phase-II Extension, Noida 201305

Place of B-17, Qutab Institutional AreaPublication New Delhi 110016

Budg

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The Central Electricity Regulatory Commission (CERC) has notifieddraft amendments to the Open Access in Interstate TransmissionRegulations, 2008. The amendments attempt to make changesin the National Load Despatch Centre’s methodology for levy-ing operating charges, among other provisions. The commis-sion has also notified draft amendments in the Appointmentof Consultants Regulations.

The CERC has rejected NTPC Limited’s petition for revising the tariffnorms for 2014-19. The regulator had set the new norms with thenotification of the Terms and Conditions of Tariff Regulations,2014, in February 2014. According to NTPC, these norms, whichintroduce several modifications in the operational parametersfor power projects, will adversely impact the economic viabilityof its plants, leading to a loss of about Rs 70 billion to the com-pany. NTPC will take up the issue with the Delhi High Court,which had earlier this year directed it to approach the CERC forseeking amendments to the new tariff regulations.

The Union Budget 2014-15 has announced a plan outlay of Rs603.84 billion for the power sector, an 11.9 per cent increase overlast year’s expenditure (revised) of Rs 539.63 billion. Several keypolicy measures that seek to revive the power sector and pro-vide a fillip to renewable energy projects have also been noti-fied in the budget.

The Ministry of Power (MoP) has approved the construction ofnine high voltage interstate transmission line projects entailing aninvestment of Rs 125 billion. These projects, for which biddingwill take place soon, will facilitate power evacuation frommajor generation projects including NTPC’s 660 MW Sipatthermal power project (TPP) and 1,600 MW Gadarwara TPP,and Reliance Power’s 3,960 MW Sasan ultra mega power pro-ject (UMPP).These lines will form a part of the northernregion transmission network and help reduce congestion by

adding significant interregional transmission capacity, whichis expected to reach 66,000 MW by 2016-17.

NHPC Limited’s 2,000 MW Lower Subansiri hydroelectric project inArunachal Pradesh is reportedly incurring daily losses of Rs 100 mil-lion on account of depreciating capital assets (Rs 30 million) andloss in revenue (Rs 70 million) due to zero output. The plant wasexpected to be commissioned in March 2014, but developmentwork has been stalled since December 2011 owing to environ-mental concerns raised by local activists as well as concernsregarding the possible impact on the downstream population.Around 55 per cent of construction work on the project has beencompleted, with commissioning targeted for 2018-19.

A technical committee under the purview of the Ministry of Coal(MoC) has identified eight coal mines for allocation to the powersector. The mines include the Pokharia Paharpur and Gosai-Pahari-Siulibani mines in Jharkhand, the Kuraloi (A) Northmine and the Saradhpur (N) Sector-1 mine in Odisha, and theKapsdanga-Bharkata coal mine in West Bengal. Meanwhile,four coal blocks have been identified for allocation on thebasis of competitive tariff bids, applications for which wereinvited in December 2013.

The MoP has sought the MoC’s intervention for securing taperingcoal linkage for power plants aggregating 9,940 MW. Theseinclude projects totalling 5,845 MW that have been allocatedcaptive blocks but where coal production has been delayedby more than a year, and another 4,095 MW of capacity thatdoes not have captive blocks. The projects, however, areexpected to be commissioned before March 31, 2015. The keyprojects in this category include Essar Power Limited’sMahan TPP in Odisha, GVK Power and InfrastructureLimited’s Goindwal Sahib TPP in Punjab, the GMR Group’sRaikheda TPP in Chhattisgarh, and Monnet Ispat and EnergyLimited’s Malibrahmani TPP in Odisha.

The Ministry of Environment and Forests (MoEF) has granted envi-ronmental clearance to GAIL (India) Limited for setting up a 380 MW gas-based power plant in Guna district, Madhya Pradesh.Although the project was cleared by the expert appraisalcommittee in May 2014, it is yet to receive official clearance.The project entails a total investment of Rs 12.09 billion, andwill be set up on 45 acres of land on the existing premises ofGAIL’s liquefied petroleum gas manufacturing facility-cum-compressor station. The plant requires 530 million standardcubic feet per annum of gas, which will be transported throughpipelines from the company’s compressor station.

National NewsSummary of key developments

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R E F O R M S A N D R E G U L A T I O N S

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The central government has postponed the proposed gas price hike,which was to come into effect from July 1, 2014 onwards, by threemonths. The government believes that the Rangarajan formula,on which the price hike is based, is limited in scope. Forinstance, it takes into account Japan’s import prices whilereaching the end price, neglecting the fact that the same is sus-ceptible to country-specific issues, as Japan is not a gas tradinghub. Moreover, the formula overlooks the fact that the powersector is a major consumer of gas, and given the recommend-ed hike, the sector will not be in a position to absorb the com-modity. Currently, gas-based projects worth around Rs 1,000billion are stranded on account of fuel scarcity.

The central government has reportedly decided to do away withthe proposal to split Coal India Limited (CIL) into seven regionalcompanies. The move is directed at ensuring a quick and time-ly solution to the country’s coal deficit problem. The govern-ment feels that instead of restructuring the company,increasing output from individual mines and improving CIL’soperational processes would go a long way in ramping updomestic coal production.

The central government has decided to restore the 4,000 MWSurguja UMPP in Chhattisgarh, which had been cancelled earlieron account of coal linkage issues. The two blocks linked to thisproject – the Pindrakhi and Putaparogia coal blocks located inthe Hasdeo Arand coalfields, Chhattisgarh – were in the “no-go” area of the forest and hence, were not granted clearance.The central government is currently working on alternativecoal linkages for the project.

The Neyveli Lignite Corporation (NLC) has decided to undertakecapacity expansion of its Mine-1 A from 3 million tonnes per annum(mtpa) to 7 mtpa at an investment of Rs 14.53 billion. The MoEF’sexpert appraisal committee has recommended the project’sterms of reference, and directed the company to formulatethe environmental impact assessment and environmentmanagement plan for obtaining various statutory clearances.NLC is also currently in the process of replacing its over five-decade-old 600 MW Thermal Power Station-I, Neyveli, withthe 1,000 MW New Neyveli Thermal Power Station, at a costof Rs 59.07 billion. The plant is expected to be commissionedin 2015-16.

NTPC has decided to set up a 300 MW solar park in Guntur districtof Andhra Pradesh. It will award development contracts for theproject through the international competitive bidding route.In a related development, the Andhra Pradesh governmenthas requested NTPC to expedite construction of the upcom-ing 4,000 MW coal-based power plant at Pudimadaka inVisakhapatnam district of the state. The state government hasfurther notified that a suitable site for the project will behanded over to NTPC within a month.

NTPC has received around 34 proposals from independent power

producers in response to an expression of interest floated by itearlier this year for acquiring TPPs aggregating 55,000 MW ofcapacity. Of these, around five projects have been ascer-tained as viable purchase options by NTPC, based on apreliminary assessment. The company will undertake acomprehensive evaluation of these plants for assessing theirfinancial viability before acquiring the projects. Parameterssuch as coal linkage, power purchase agreement (PPAs) andclearances will be factored in for evaluating the projects.

Rajasthan Rajya Vidyut Utpadan Nigam Limited has commissioned a250 MW unit of its coal-based Chhabra power plant. Followingthis, the total installed capacity of the plant has reached 1,000MW, while that of the state genco has reached over 5,628 MW.The project was part of a Rs 9.9 billion contract that wasawarded to Bharat Heavy Electricals Limited (BHEL) for set-ting up two units of 250 MW each as an expansion of theChhabra power plant, the first of which was commissioned inDecember 2013. BHEL’s scope of work in the contract includ-ed design, engineering, manufacture, supply, erection andcommissioning of steam generators and steam turbine gen-erators, along with the associated auxiliaries and instrumen-tation system.

The Telangana and Chhattisgarh governments have reportedlysigned an agreement for transmitting 1,000 MW of power from thelatter state to the former. The agreement, however, is condi-tional upon the availability of power evacuation infrastruc-ture in Chhattisgarh.

The West Bengal government plans to set up a 250 MW solar powerproject near the 900 MW Purulia pumped storage project (PPSP) atBaghmundi at an estimated cost of Rs 17 billion. A proposal for thesame has been submitted to the Ministry of New andRenewable Energy, while the detailed project report is underpreparation. The project, envisaged to be set up on 700 acres ofland, will assist in pumping water for the PPSP, thereby result-ing in a complete natural water pumping station harnessingsolar and hydro energy.

NTPC and the Telangana government have reached an agreementwhereunder the former will set up a 4,000 MW coal-based powerplant adjacent to the existing 2,600 MW Ramagundam power plant inthe state. Issues of coal linkage, environmental clearances andland allocation for the project will be taken up by the state gov-ernment on an urgent basis. The genco is ready to commenceconstruction activities with immediate effect and targets tocommission the plant’s first unit within a period of 39 months.

The Andhra Pradesh government has directed the state discoms tosign PPAs with NTPC’s various TPPs. The discoms will procure200 MW from NTPC’s Jhajjar TPP in Haryana and 100 MWfrom its Barh TPP in Bihar. The discoms will also sign a long-

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term PPA with NTPC for tying up output from the FarakkaTPP in West Bengal.

The Delhi Electricity Regulatory Commission (DERC) has approvedan average tariff hike of 8.32 per cent for the three state discomsfor 2014-15. Under the revised tariff schedule, a hike of 2.5 percent has been notified for domestic consumers consumingup to 400 units, while a hike of 7.5 per cent will be imple-mented for domestic users consuming between 400 and 800units. The hike for domestic consumers with a monthly con-sumption of over 800 units will be 15 per cent. For commer-cial consumers, the tariff has been hiked by up to 11 per cent.Meanwhile, the commission has decided to withdraw thepower purchase adjustment cost of 8 per cent for a period ofthree months (August-October 2014). In a separate develop-ment, the DERC has received a plea from Tata Power DelhiDistribution Limited for the termination of its PPAs for 340MW of power procured from costly gas-based generators,including NTPC.

Sterlite Energy Limited’s (SEL) first 660 MW unit of the 1,960 MWTalwandi Sabo supercritical power plant in Mansa district of Punjabhas commenced generation. The plant is being implemented byTalwandi Sabo Power Limited, a special purpose vehicle andsubsidiary of SEL. The remaining two units of the plant areexpected to be commissioned by October 2014 and February2015 respectively. The entire output of the plant has been tiedup with Punjab State Power Corporation Limited through aPPA for a period of 25 years.

Owing to a decrease in international coal prices, the compensatorytariff for Tata Power Company Limited’s 4,000 MW imported coal-based Mundra UMPP will reportedly be revised downwards. TheCERC had notified a compensatory tariff of 52 paise per unit inFebruary 2014. At present, the tariff works out to about 42paise per unit and it could reduce further to 32 paise per unitas coal prices in the international market are expected todecline in the coming months.

TBEA Energy (India) Private Limited, a subsidiary of the China-basedTBEA Group, has commissioned a Rs 10 billion ultra high voltagepower transformer manufacturing facility at Karjan, near Vadodara,Gujarat. The plant’s manufacturing capacity is 20 million kVAper annum. Going forward, the company plans to introducethe wind-solar complementary power station integration tech-nology, solar energy core components manufacturing technol-ogy, wire and cable manufacturing technology, and powerelectronics integration technology in the plant’s operations.The facility will also be used as an exporting unit, targeting theSoutheast Asia region.

CG Lucy Switchgear Limited, a joint venture company of CromptonGreaves Limited and UK-based W Lucy & Company Limited, has

commissioned a Rs 100 million ring main unit (RMU) productionfacility at Nashik, Maharashtra. Following this, the company’sRMU production capacity has more than doubled to over1,000 units per month. The facility is also equipped with apartial discharge testing facility for voltage levels up to 33 kV.

Crompton Greaves has commissioned a motor manufacturing facilityin Bhopal, Madhya Pradesh. The facility, which includes a globaldesign centre for high voltage motors, is equipped to manu-facture motors of up to 15 MW, generators of up to 25 MVA andtraction alternators. The plant will serve both the domestic andinternational markets including the Americas, the Middle East,Africa, Europe and Asia-Pacific.

Tata Power Company Limited plans to invest Rs 18.79 billion duringthe four-year period 2014-15 to 2018-19, for developing a backbonedistribution network in Mumbai and augmenting last mile connectiv-ity in its licensed distribution area. The company has appliedfor renewal of its distribution licence term, which expires onAugust 15, 2014, with the Maharashtra Electricity RegulatoryCommission (MERC). MERC is likely to pass an order in thiscontext by August 10, 2014. During 2013-14, the companyinvested around Rs 3.51 billion in its Mumbai distributionbusiness, and was able to capitalise assets worth Rs 3.02 billionduring the year.

Alstom T&D India Limited has received a Rs 277 million contractfrom Himachal Pradesh Power Transmission Company Limited forsupplying one 66 kV gas-insulated switchgear (GIS) substation. Thescope of works under the contract includes design, engineer-ing, manufacture, supply, testing and commissioning of the66 kV GIS, along with the substation automation and controlsystem. The substation will facilitate transmission of powergenerated at upcoming hydropower projects to Kinnaur dis-trict in the state.

L&T Construction has won orders worth Rs 3.92 billion in both thedomestic and international markets in the power transmission busi-ness. The domestic order is from Bihar State Power Tran-smission Company Limited for turnkey construction of theKanti-Motipur-Muzaffarpur-Bhikanpura 220/132 kV trans-mission line.

NTPC has awarded a contract worth Euro 13 million to Alstom IndiaLimited and NTPC Alstom Power Services Private Limited for under-taking the renovation and modernisation of electrostatic precipita-tors (ESPs) at its 2,000 MW coal-based Talcher power plant inOdisha. The scope of the contract includes engineering, sup-ply, erection, commissioning and testing of new parallelpasses installed for four ESPs, dry ash handling systems fornew passes, and the associated civil, mechanical and electri-cal works. The works entailed in the contract are scheduled tobe completed by 2018. ■

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The State Grid Corporation of China (SGCC) has energised its 800 kVhigh voltage direct current electric power transmission project in southChina. The project, estimated to be the largest of its kind, willtransmit 40 billion kWh of electricity annually from the 13.86 GWXiluodu hydropower station, built on the border of southwestChina’s Sichuan and Yunnan provinces, to the power-deficiteastern region. As part of the project, SGCC has constructed a1,680 km long transmission line from Yibin in Sichuan provinceto Jinhua in Zhejiang province. The line has a rated capacity of 8GW and crosses the provinces of Sichuan, Guizhou, Jiangxi,Hunan and Zhejiang. The project has also entailed the construc-tion of two converter stations, one at Ssangyong Yibin in Sichuanprovince and the other at Wuyi in Jinhua, Zhejiang province.

Mitsubishi Hitachi Power Systems (MHPS) has signed an MoU withthe Mitsubishi Corporation and two Indonesian power generationfirms, PT Pembangkitan Jawa Bali (PJB) and PT Indonesia Power, tojointly provide operations and maintenance (O&M) services for gasand steam turbines. The agreement is an extension of MoUs thatMHPS had individually signed with PJB and Indonesia Power in2008. The new MoU extends the scope of services and has beenconverted to a joint MoU with the inclusion of the MitsubishiCorporation as a signatory. As per the agreement, the four com-panies will partner on several activities related to gas andsteam turbines, including technical training, technology semi-nars, joint research and field service.

A consortium of Saudi Arabia-based ACWA Power and Vietnam-basedTaekwang Power Holdings Company Limited has signed an agreementfor the development of the 1,200 MW Nam Dinh 1 coal-fired powerproject in Vietnam. The power plant is a part of the 2,400 MWNam Dinh thermal power complex. It will be located in HaiHau district of Nam Dinh province in Vietnam and will entailan investment of $2 billion. Coal will be supplied to the plantby the government-owned coal mining company Vinacomin.The consortium will also be responsible for the O&M of theproject. South Korea-based POSCO E&C has been selected as apreferred bidder for the engineering, procurement and con-struction (EPC) of the project. The construction of the NamDinh 1 power plant is scheduled to be completed in late 2016.

A consortium of Germany-based Siemens and UK-based MMCEngineering Services has secured a contract from Malaysian oiland gas company Petroliam Nasional Berhad (Petronas) for con-struction of the 1,200 MW Pengerang cogeneration plant inMalaysia. Under the contract, Siemens will build the plant fea-turing four cogeneration units, each comprising a gas turbineand a waste heat recovery steam generator. The deal includes

a long-term maintenance and services contract. On comple-tion, the plant, being developed in Pengerang, southern Johor,will have the capacity to produce about 1,480 tonnes per hourof steam for the Petronas Pengerang Integrated Complex(PIC). The first unit of the power plant will supply power to thenational grid while the remaining cogeneration units will sup-ply energy to PIC’s facilities.

MHPS has received a contract to supply a gas and a steam turbine forthe 410 MW Bheramara gas turbine combined cycle power plant beingconstructed in Khulna district in Bangladesh. The plant is beingdeveloped by North-West Power Generation Company Limited,a regional power provider under the Government of Bangladesh.It will receive a loan from the Japanese government through theJapan International Cooperation Agency. The main contractorfor the project is the Marubeni Corporation. MHPS will supplythe turbines to India’s Larsen & Toubro, which has been awardeda contract for construction of the plant by the MarubeniCorporation on an EPC basis. The delivery of equipment willbegin in September 2015.

The Pakistan government has announced that it plans to privatiseelectricity transmission lines for improving the performance of itspower sector. The Ministry of Water and Power is currently work-ing on the draft plan for the same. The government also plansto develop new transmission lines, worth $6 billion-$7 billion,through the independent power producer (IPP) route.Pakistan’s National Electric Power Regulatory Authority will bethe designated authority to fix tariffs for transmission projectsthat will be taken up in the IPP mode.

Afghanistan may reduce the electricity transit fee it would levy onelectricity imported from Tajikistan and Kyrgyzstan through the pro-posed Central Asia South Asia Electricity Transmission and TradeProject (CASA-1000). Earlier, Afghanistan had demanded a tran-sit fee of $0.025 per unit for the delivery of electricity fromTajikistan and the Kyrgyz Republic to Pakistan, while Pakistanhad offered to pay $0.0056 per unit to Afghanistan, as per WorldBank estimates. The move follows a sale purchase contractunder which Pakistan had agreed to buy electricity at the rateof $0.051 per unit from Tajikistan. The project aims to facilitatetrade of 1,300 MW of electricity among the four Central Asiancountries – Tajikistan, the Kyrgyz Republic, Afghanistan andPakistan. The CASA-1000 project involves the construction ofover 1,200 km of electricity transmission lines and associatedsubstations to transmit excess summer hydropower from theexisting generating stations in Tajikistan and the KyrgyzRepublic to Pakistan and Afghanistan.

International NewsAround the globe

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BHI Co. a South Korea-based subsidiary of Swiss Foster WheelLimited, has secured a contract from South Korea-based SamsungC&T Corporation to design and supply six heat recovery steam gener-ators for the 2,100 MW Rabigh II combined cycle power plant inSaudi Arabia. The contract value and the terms of agreementhave not been disclosed. The power plant is being developednear Jeddah and will supply electricity to Makkah. The projectwill deliver electricity to state-owned power utility SaudiElectricity Company (SEC) under a 20-year power purchaseagreement (PPA). The plant is jointly owned by ACWA Power,Samsung C&T Corporation and SEC. Samsung C&T has beenawarded the EPC contract for the plant, which is slated to startcommercial operation in 2017.

National Grid SA, the transmission subsidiary of Saudi Arabia’sSEC, has selected US-based Doble Engineering Company to strengthenthe country’s transmission grid. The deal is a part of Saudi Arabia’splans to invest $35.7 billion in water and power projects during2014. However, the terms and details of the deal have not beendisclosed. The scope of work will involve an asset health reviewof nearly 1,000 transmission transformers as well as a review oftesting and maintenance practices undertaken by National Gridto analyse the root cause of historic failures, along with a com-prehensive study of Saudi Arabia’s in-house electrical insulatingoil laboratories. The move is aimed at strengthening the trans-mission network to support the country’s plans of increasing itsgenerating capacity from 55 GW to 120 GW by 2020.

GE Power & Water has secured a contract for the supply of four aero-derivative gas turbines to Jacobsen Elektro for a 150 MW natural gasturbine power plant in Kinyerezi, Tanzania. The plant is owned byTanzania’s state-owned power company Tanzania ElectricSupply Company Limited. Under the contract, GE will deliverfour of its LM6000-PF dual-fuel aeroderivative gas turbines,which will provide around 44.5 MW of power each at about 40per cent efficiency. The plant is anticipated to start commercialoperation by early 2015.

The Nigerian government has given the go-ahead to commencework on the 3,050 MW Mambilla hydropower plant. The plant, to bebuilt in the state of Taraba, had been facing delays of over 30years owing to lack of political support. It will be developed bythe Power Construction Corporation of China, a conglomerateof Sinohydro, the HydroChina Corporation and the ChinaRenewable Energy Engineering Institute. When complete, theproject will be Nigeria’s largest hydropower installation, andwill double the country’s installed capacity.

The Zimbabwen government has terminated the contract awardedto China Machinery and Engineering (CMEC) for the expansion ofthe Hwange coal-fired power plant. The project involves buildingtwo 300 MW units, adding 600 MW to the present plant capa-city of 920 MW. The decision has been taken due to CMEC’sfailure to meet timelines. The government has now awardedthe contract to Sinohydro Group Limited, China’s biggest

builder of hydroelectric dams and the second highest bidder.In 2012, CMEC was awarded the $1.3 billion contract by thestate-owned Zimbabwe Power Company to expand the plant.

Japan-based Toshiba has secured a contract to deliver two 600 MWsupercritical steam turbines and generators (STGs) for the Vinh Tan4 thermal power plant in Vietnam. The order has been awarded byDoosan Heavy Industries and Construction of Korea and theMitsubishi Corporation of Japan. The power plant is beingbuilt in Binh Thuan province. Toshiba expects to commencethe delivery of equipment in 2015 and the plant’s first unit isscheduled to start operations in 2017.

Malaysia’s state-owned power utility Tenaga Nasional Berhad(TNB) has signed a 25-year PPA with Jimah East Power Sdn Berhadfor the 2,000 MW Track 3B power plant, being developed inMalaysia. Jimah East is a joint venture between 1MalaysiaDevelopment Berhad and Japan’s Mitsui & Company Limited. Itis constructing the power plant under the MYR 11 billion con-tract awarded to it by Malaysia’s Energy Commission inFebruary 2014. The company will design, construct, own, oper-ate and maintain a coal-fired electricity generating facility,which will be located at Jimah in Port Dickson. The power plantis slated to be fully commissioned by April 2019.

French engineering firm Alstom has supplied a high capacity powertransformer to Bangladesh’s central transmission and distributionutility Power Grid Company of Bangladesh (PGCB). The 520 MVA,three-phase, 420/235/33 kV transformer will be installed at the420 kV Bibiyana II substation, which is being developed byBangladesh-based Summit Bibiyana II Power Company Limi-ted. The substation will be operated and maintained by PGCB.The substation is the first 420 kV switchyard in Bangladesh andwill evacuate power from the nearby 340 MW power plant.

The Qatar General Electricity & Water Corporation (Kahramaa) hasissued tenders for works on multiple packages under Phase XII of itstransmission system expansion programme. The scope of workinvolves the supply and installation of substations, under-ground cables and overhead transmission lines for upgradingQatar’s transmission and distribution infrastructure. For thesubstation packages, nine tenders have been launched, whichinvolve the installation of new substations of voltages rangingfrom 66 kV to 400 kV and expansion of existing substations. Thelast date for submission of bids is September 25, 2014. The com-pany has also issued six tenders for the supply and installationof underground extra high voltage power cables with voltagesranging from 66 kV to 400 kV. Interested parties can submit theirbids till September 18, 2014. Contractors have also been invitedto submit bids for the construction of a 400 kV overhead trans-mission line to connect the planned independent water andpower project to the country’s transmission grid. The scope ofwork also involves the upgradation of an existing 132 kV over-head line (OHL) and dismantling another 132 kV OHL. The lastdate for the submission of bids is September 11, 2014. ■

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Budg

ethighlights


tax holiday




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Allocations

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S P E C I A L S T O R I E S


The recently announced Union Bud-get is being largely seen as a “conti-nuity budget” with no big surprises

or U-turns on policies or programmes.It outlines the economic priorities andaction plan of the new government. Thefiscal deficit target has been set at 4.1per cent for fiscal 2015, down from 4.6per cent in the previous year. The gov-ernment, moreover, hopes to increaserevenues through indirect taxes andbig-ticket PSU disinvestment worth Rs 584 billion. A GDP growth of 5.4-5.9per cent has been estimated for the cur-rent fiscal. The budget lays emphasis onsectors such as agriculture, manufac-turing, infrastructure and real estate.Liberalising the foreign direct invest-ment norms for insurance and defence

(both from 26 per cent to 49 per cent) isalso a progressive step.

Infrastructure augmentation has beenaccorded top priority by the govern-ment. It has introduced innovative fund-ing mechanisms such as infrastructureinvestment trusts and lowerered regula-tory requirements on long-term infralending, which is expected to encourageinvestments in the sector. The creationof 100 smart cities, strengthening ofpublic-private partnerships (PPPs) andproviding a larger allocation to sectorssuch as roads, irrigation and watershould boost infrastructure growth. In-frastructure spending is budgeted toincrease by 24 per cent over the previousfiscal to Rs 2.1 trillion.

For the power sector as well, the budgetincludes positive mechanisms that willhelp boost investments. No big schemeshave been withdrawn. The governmentaims to focus on ensuring coal availabili-ty, rationalising coal linkages, easingfinancing of power projects, encouragingrenewables and ensuring 24x7 powersupply. The budget also seeks to reviveinvestor sentiment in the renewableenergy sector through budgetary alloca-tions, incentives for domestic manufac-turing of renewables and setting up ofrenewable power generation facilities.

The following are the key highlights of thebudget pertaining to the power sector…

Power projects• Extension of the income tax holiday

under 80-IA for power projects (gener-ation, transmission, distribution) tobe commissioned till financial year2016-17 is a big positive, as power pro-jects have long gestation periods andmany projects that have been held updue to fuel constraints or lack of envi-ronmental clearances will now haveimproved viability.

• The proposal for the rationalisation ofcoal linkages to benefit projects thatare already commissioned or are likelyto be commissioned by March 2015will positively impact coal-based pro-ject promoters.

• Another positive is permitting banksto raise long-term financing for theinfrastructure sector and lowering theregulatory requirements for long-terminfra lending.

• A hike has been announced in theclean coal cess for both domestic andimported coal, from Rs 50 per metrictonnes (mt) to Rs 100 per mt. There hasalso been an increase in basic customsduty on bituminous coal, from 2 percent to 2.5 per cent. Both these devel-opments are expected to increase the

Budget 2014-15 expected to drive investments in the power sector

Fuelling Growth



Industry reactions

Dr Arup Roy Choudhury, Chairman and ManagingDirector, NTPCThe budget clearly indicates exciting times for the power

sector, besides encouraging mobilisation of resources by

PSUs. The finance minister has provided clarity on FDI,

which was only getting extended year by year, and has

now got a long-term push. This will definitely encourage

investors. Further, the declaration for ensuring adequate

coal availability to all plants that have been commis-

sioned or are likely to be commissioned by 2015 will

attract loans from banking and financial institutions. The

finance minister has mentioned that coal will be crushed

and supplied, thereby putting to rest disputes regarding

the quality of coal. The budget also talks of the rational-

isation of customs duty on all types of coal. A lot of

encouragement has been given to the new and renew-

able energy sector, in addition to announcing financial

support of Rs 500 crore to the solar mission in Jammu

& Kashmir, Rajasthan, Tamil Nadu and Gujarat. The bud-

get also provides relief to solar equipment manufactur-

ers, which will definitely incentivise indigenous produc-

tion and reduce the cost of solar equipment.

Tata Power Company’s ViewThe Union Budget 2014-15 has focused on policy and

taxation reforms to provide an impetus to the economy.

The finance minister has expressed the government’s

desire to move towards an annual growth of 8 per cent,

which is possible only if the power sector grows at 11-

12 per cent per annum.

The government has rightly given high priority to the

development of renewable sources of energy. The bud-

get seeks to boost the renewable energy sector with

incentives for domestic manufacturing and setting up of

renewable power generation facilities in the country.

Encouraging large-scale solar power generation as well

as providing fiscal incentives will help boost adoption,

revive investor confidence and increase capacity. With

Tata Power’s focus on renewable energy, we welcome

the government’s proposal to develop and allocate Rs

500 crore for ultra mega solar power projects in

Rajasthan, Gujarat, Tamil Nadu and Jammu & Kashmir.

Power plants have a long gestation period and

extending the 10-year tax holiday for power compa-

nies to March 31, 2017 will help achieve the capacity

generation targets. Fuel security for domestic coal-

based plants could become a reality by providing coal

linkages, improving coal production and optimising

coal transport. The budget has also made the basic

customs duty on different varieties of coal imports uni-

form. However, a lot still needs to be done to make the

existing imported coal-based plants viable.

We are hopeful that the introduction of innovative

schemes like Gujarat’s Jyotigram Yojana for feeder sep-

aration would help in increasing efficiency and bringing

down distribution losses. The Rs 2 billion fund allocat-

ed to distribution reforms in Delhi is a good step. We

are hopeful that the positive announcements of the

budget will be implemented effectively.

K.V.B. Reddy, Executive Director, Essar PowerEasing of norms for bank lending to the infrastructure

sector and facilitating the setting up of infra trusts will

improve access to funding for a sector that needs a

high quantum of long-term financing. Coal linkage

rationalisation, provision of coal for standing projects

and easier mining laws are key for reviving the sector;

but steps on the ground are more important.

Extension of the tax holiday is a positive, although

MAT (minimum alternate tax) relief would have been

useful for the sector, which is going through financial

stress. The continued focus on promoting renewables

is another step in the right direction.

Tulsi Tanti, Chairman and Managing Director, SuzlonThis is a growth-oriented and futuristic budget. Key

announcements on investments in physical infrastruc-

ture development, direct allowances for new invest-

ments in plant and machinery, FDI, implementation of

the gross sales tax and long-term financing options are

likely to boost manufacturing.

Extension of the 10-year tax holiday for power

companies till March 31, 2017 provides the much-

required predictability for investors in the sector. The

new government aims to provide 24x7 power supply to

all homes, which augurs well for the growth of the

Indian energy sector.

Further, the budget proposal to increase the clean

energy cess from Rs 50 per metric tonne to Rs 100 per

metric tonne for financing and promoting clean energy

projects will give a major boost to the wind energy seg-

ment in particular. The Clean Energy Fund will now be

doubled annually from Rs 4,000 crore.

Investment allowance along with the continuation

of additional depreciation (of -60 per cent) is also like-

ly to benefit small and medium enterprises that would

like to invest in the wind segment.

The budget has provided much-needed relief in

the form of waiving the special additional duty of 4 per

cent on parts and materials required for manufacturing

wind-operated generators. Execution of the Green

Energy Corridors project is also likely to act as a cata-

lyst in the evacuation of wind power.

All these measures are likely to boost investment

in the wind energy segment, which is likely to grow by

50 per cent in 2014-15.

Anil Chaudhry, Country President and ManagingDirector, Schneider Electric IndiaThe budget has focused adequately on energy, in sync

with the new government’s vision, and announced var-

ious measures that will ensure sustained growth. The

power sector will get some respite, if the measures

announced in the budget are implemented properly.

There are measures to strengthen the entire power

value chain. From the Rs 1 billion allocation for super-

critical ultramodern thermal power to the rationalisa-

tion of coal linkages – these measures will help the

stranded power plants rebound. The government’s

promise to resolve the existing deadlock in the coal

sector and provide fuel to all projects coming up before

March 2015 will get the sector on course to meet the

Twelfth Plan target of 88,000 MW.

The budget has also put emphasis on the solar

energy sector. An allocation of Rs 5 billion for ultra-

modern solar power projects will provide the much-

needed push to solar power developers to increase

generation capacity. Other measures that will increase

the utilisation of solar energy and reduce the depen-

dence on conventional energy resources are the allo-

cation of Rs 1 billion for setting up 1 MW solar parks on

canal banks and Rs 4 billion for setting up solar

power–driven pump sets. Implementation of the Green

Energy Corridors project will be a positive move for inte-

grating channels for the evacuation of solar power.

The removal of customs and excise duties on solar

equipment will also incentivise indigenous manufac-

turing and reduce the reliance on imports.

Deepak Puri, Chairman and Managing Director,Moser Baer India Limited Overall, it is a good budget for the manufacturing and

renewable energy sectors in general and solar PV

manufacturing in particular. There will be a scaling up

on the demand side through mega solar plants in

Rajasthan, Tamil Nadu and Jammu & Kashmir. A

focused approach and the implementation of solar-

powered irrigation pumps can generate business

opportunities worth Rs 6 billion in the short run for

100,000 installations. Another positive development

is doing away with the inverted duty structure. This will

drive competitiveness of local manufacturers and

bring down costs of solar power. Reducing duties on

“

cost of electricity and be reflected inhigher costs to the end-consumers.

Transmission and distribution• The budget allocation for the transmis-

sion and distribution (T&D) segmentshas nearly doubled to Rs 80 billion.

• Faster implementation of the GreenEnergy Corridors project, which invol-ves the construction of transmissionlines connecting green energy corri-dors to load centres, is to be ensured.

• Another key initiative is the introduc-tion of the Deen Dayal Upadhyay GramJyoti Yojana, which has an allocation ofRs 5 billion and is aimed at ensuring24x7 power supply to rural households.

• The Rs 5 billion Jyotigram Yojana forfeeder separation in Gujarat will helpaugment power supply in rural areasand strengthen sub-transmission anddistribution systems, thereby bringingdown distribution losses.

• The Rs 2 billion fund allocated fordistribution reforms in Delhi is agood step.

Renewables• An allocation of Rs 1 billion has been

made for the development of 1 MWsolar parks on the banks of canals.

• The government has proposed todevelop and allocate Rs 5 billion forultra mega solar power projects inRajasthan, Gujarat, Tamil Nadu andJammu & Kashmir.

• There is an allocation of Rs 4 billionfor launching schemes for solarpower-driven agricultural pump setsand water pumping stations to ener-gise 100,000 pumps.

• There is a reduction in basic customsduty, from 10 per cent to 5 per cent, onforged steel rings used in the manu-facture of wind generators, a conces-sional basic customs duty of 5 per centfor machinery and equipment requir-ed for setting up compressed biogasplants and a basic customs duty of 5per cent on machinery and equip-ment required for setting up projectsfor solar energy production aside fromexemption of customs duty on rawmaterials such as flat copper wire forphotovoltaic (PV) ribbons.

• While the exemption of excise duty onsolar and wind equipment will benefitdomestic manufacturers, the reductionin customs duty on solar, biogas andwind equipment will increase foreigncompetition for domestic players.

Gas• The budget proposes to build 15,000

km of gas transportation pipelines as apart of the national gas pipeline gridunder the PPP model. While the finan-ce minister talked about a reduction infuel subsidies, there was no clarity withregard to the issues related to domesticgas pricing and the New ExplorationLicensing Policy.

Clean technologies • On the clean technology front, an allo-

cation of Rs 1 billion has been annou-nced for ultra modern supercriticalcoal-based thermal power technology.

ConclusionWhile the budget has been largely posi-tive, critics feel that the government maynot be able to contain the fiscal deficit asenvisaged due to the sluggish growthexpected this year as well. Further, it doesnot include a specific road map for thereduction of subsidies. That said, thebudget should help boost investmentsfor the power sector. While the conces-sions and budgetary allocations have theright intent and have found favour withindustry stakeholders, effective imple-mentation will be crucial. This includesensuring the availability of coal for powerprojects, streamlining clearances, remov-ing transmission bottlenecks and imple-menting the proposed programmes. ■

Shubhra Puri



PV manufacturing equipment will bring down costs and

drive local manufacturing and job creation. Improving

power evacuation infrastructure will also help in solar

energy development.

Girish Kadam, Vice-President, Corporate SectorRatings, ICRA LimitedThe stated intent of rationalisation of coal linkages for

projects that have been commissioned or will be com-

missioned by the end of financial year 2015 will help

ensure adequate coal availability and improve the viabili-

ty of their operations. Further, the extension of the eligi-

bility period for power projects to avail of tax holidays till

financial year 2017 will benefit power projects that are

scheduled to be commissioned by then. Moreover, the

new rural power scheme announced is expected to

improve power supplies for rural households as well as

enable loss reduction for distribution utilities. However,

the hike in the coal cess and the marginal increase in

customs duty on steam coal would lead to a rise in power

generation costs by about 2.5 paise per unit, which will

put pressure on retail tariffs.

Higher budgetary allocation and duty rationalisation

for the clean energy sector are positive steps. The

announcement of ultra mega solar projects is expected to

facilitate large-sized solar capacity addition in the country

and encourage domestic manufacturing of solar equip-

ment. The duty measures announced for wind and com-

pressed biogas projects are also a positive, which will

help reduce capital costs and hence, tariffs. In addition,

the focus on evacuation of renewable energy is expected

to encourage capacity addition.

CRISIL’s View The 10-year tax holiday for power plants will benefit 18-

20 GW of competitively bid projects that are expected

to be commissioned between 2014-15 and 2016-17. In

the absence of this extension, the equity IRR (internal

rate of return) would be lower by 150-200 basis points.

Higher allocation of funds to the T&D segments will

help reduce aggregate, technical and commercial loss-

es (through investments in metering, feeder separation

and grid modernisation) as well as improve demand,

particularly from rural areas. Long-term financing for

infrastructure by banks will help improve funding for

the sector.

On the renewable energy front, we believe that the

impact of the customs duty cut on specific inputs used

in solar and wind power equipment will be negligible

given that these components account for only a small

proportion of the overall capital costs. ■

”



Despite the challenging economicenvironment and overall slow-down, state-owned power sector

lenders Power Finance Corporation(PFC) and Rural Electrification Corpor-ation (REC), registered encouraging per-formance with good asset growth, strongasset quality and healthy margins dur-ing 2013-14.

Power Line takes a look at the lendingand borrowing patterns, and oper-ational performance of PFC and REC…

Lending patterns PFC achieved its business targets for2013-14 despite the economic downturnand the subdued performance of thepower sector. During the year, the com-pany sanctioned loans aggregating Rs 607.29 billion compared to a targetedamount of Rs 590 billion. However, thiswas significantly lower than the Rs 751.15billion sanctioned by PFC during 2012-13. As for disbursements, PFC disbursedloans aggregating Rs 471.62 billion during2013-14 against the target of Rs 470 bil-lion, which was 4 per cent higher than theRs 451.51 billion disbursed during theprevious year.

In addition, PFC’s loan sanctions for theRestructured Accelerated Power Devel-

opment and Reforms Programme (R-APDRP) increased by 16 per cent to Rs 43.31 billion in 2013-14 from Rs 37.28billion in 2012-13. Of the total R-APDRPsanctions, Rs 40.85 billion was for worksto be undertaken under Part B of thescheme while the remaining Rs 2.46 bil-lion was for Part A works.

Power generation projects accounted for69 per cent of loan sanctions (excludingthe R-APDRP) and 67 per cent of dis-bursements in 2013-14. The share ofpower transmission projects in sanctionsand disbursements was 5 per cent and 4per cent respectively, and that of distribu-tion sector projects was 8 per cent and 4per cent respectively. Loans extended byPFC as transitional finance and short-term loans as well as for funding of regulatory assets, buyer’s line of credit,decentralised management, computeri-sation works and studies accounted for17 per cent of the sanctions and 25 percent of the disbursements.

Sector-wise, 76 per cent of the total loansanctions were for state sector projectsand 21 per cent were for private sectorprojects, while the share of joint sectorand central sector projects remainedmarginal. In terms of disbursements, thestate sector’s share remained at 70 per

cent, the private sector’s stood at 24 percent, the joint sector’s at 5 per cent andthe central sector’s at 2 per cent.

As for the loan assets composition, ofthe gross outstanding assets of Rs 1,889billion as of March 31, 2014, 77 per centpertained to generation projects, 6 percent to transmission, 4 per cent to distri-bution and 13 per cent to the “others”category. In terms of the sector-wise dis-tribution of borrowers, 85 per cent of theloans were outstanding from state, cen-tral and joint sector borrowers, and theremaining 15 per cent from private sec-tor borrowers.

As for REC’s lending pattern, the loanssanctioned by the company during2013-14 decreased to Rs 707.4 billion,compared to Rs 795.28 billion in 2012-13. During the given period, the loansdisbursed by the company also decrea-sed to Rs 355.46 billion compared to Rs392.75 billion.

In terms of composition, 56 per cent ofthe loans sanctioned during 2013-14were for transmission and distribution(T&D) projects, and 41 per cent were forgeneration projects. The share of T&Dand generation projects in total loan dis-bursements stood at 59 per cent and 37per cent respectively. The share of short-term loans in REC’s sanctions and dis-bursements during the year was 3 percent and 4 per cent respectively.

At the end of 2013-14, REC’s total out-standing loan amount stood at Rs1,486.41 billion, which was up 17 per centcompared to Rs 1,273.56 billion out-standing at the end of the previous year.Sector-wise, the state sector accountedfor 81 per cent of the outstanding loans,the private sector for 14 per cent, and thecentral sector for 5 per cent. Discipline-wise, the share of T&D projects and gen-

Strong showing by PFC and REC

Promising Performance



eration projects in the outstanding loansstood at 55 per cent and 44 per cent res-pectively, while other categories account-ed for 1 per cent share.

Resource profile In terms of PFC’s resource profile, 85 percent of its funds are sourced from bor-rowings from financial institutions andthe money markets, while the remaining15 per cent is raised from equity share-holders. Of the company’s total borrow-ings of Rs 1,592 billion as of March 31,2014, 80 per cent was raised throughbonds, 19 per cent through term loansand 1 per cent through short-term loans.Currency-wise, rupee loans constituted94 per cent of the borrowings.

REC’s total borrowings as of March 31,2014 stood at Rs 1,262.4 billion. Of this,59 per cent was raised through subordi-nated and zero coupon bonds, 20 percent was raised through tax-free andinfra bonds, 14 per cent through foreigncurrency borrowings, 6 per cent throughbanks and other financial institutionborrowings, and the remaining 1 percent through commercial papers.

Operational performance PFC registered a strong operational per-formance during 2013-14. It managedto reduce its non-performing asset(NPA) ratios despite the overall trend ofrising NPAs in the power sector. As ofMarch 31, 2014, PFC’s gross and netNPAs aggregated Rs 12.28 billion and Rs 9.85 billion respectively against loanassets of about Rs 1,900 billion. Thecompany’s gross NPA decreased to 0.65per cent as of March 31, 2014 from 0.71per cent as of March 31, 2013, while thenet NPAs decreased to 0.52 per centfrom 0.63 per cent.

PFC’s capital adequacy ratio at the end ofMarch 2014 stood at 20.1 per cent, whichwas higher than the regulatory require-ment of a minimum of 15 per cent. Thisprovides adequate headroom for near-term growth. During 2013-14, PFC man-aged to increase its capital adequacy ratioto 20.1 per cent from 17.64 per cent, pri-marily on account of raising subordinat-

ed debt of Rs 38 billion at competitiverates (almost at the same rate at whichthe long-term senior debt was raised).

As for the return on average assets, itincreased marginally, by 8 basis points, to2.98 per cent for 2013-14. The return onaverage net worth increased by 143 basispoints to reach 23.07 per cent while thedebt-equity ratio stood at 6.36 times.

During the year, PFC also managed tokeep the cost of borrowing competitive,despite volatile interest rates and foreignexchange markets. The cost of fundsdecreased 24 basis point to 8.85 per centfor 2013-14 from 9.09 per cent for 2012-13. During the year, the company raisedabout Rs 450 billion at a marginal cost of8.96 per cent, which includes Rs 50 bil-lion of tax-free bonds.

In addition, the company made freshdisbursements at rates higher than theaverage yield during the previous year.PFC also saw the accrual of additionalincome of Rs 1,440 million due to the re-pricing of existing loan assets at higherrates. As a result, the company’s interestspread increased by 59 basis points from2.86 per cent to 3.45 per cent, and thenet interest margin registered an inc-rease of 53 basis points to 4.94 per centfrom 4.41 per cent. Accordingly, thecompany’s net interest income increas-ed 34 per cent from Rs 63 billion in 2012-13 to Rs 85 billion in 2013-14.

REC also maintained a healthy oper-ational performance during 2013-14with its percentage of gross NPAs to out-standing loans decreasing to 0.33 percent from 0.38 per cent in the previousyear. Its percentage of net NPAs to out-standing loans also registered a declineto 0.24 per cent from 0.31 per cent dur-ing the same period.

As for other performance indicators,REC’s yield on loans improved 56 basispoints to 12.18 per cent in 2013-14 from11.62 per cent in 2012-13. Its net interestmargin also improved by 35 basis pointsto 4.9 per cent from 4.55 per cent, whileits return on average net worth improvedby 72 basis points to 24.57 per cent from 23.85 per cent. REC also managedto increase its interest spread to 3.6 percent in 2013-14 from 3.45 per cent in2012-13; however, its cost of fundsincreased to 8.58 per cent from 8.17 percent previously.

Conclusion PFC and REC play a crucial role as non-banking finance institutions dedicatedto the power sector. The strong perform-ance registered by both companiesdespite the economic slowdown andsubdued investor interest reflects therobustness of their respective businessmodels. It is a good indicator of theirability to efficiently manage challengesin the power sector. ■

Mandvi Singh

Key indicators PFC REC

2012-13 2013-14 2012-13 2013-14

Sanctions (Rs billion) 751.47* 607.29* 794.28 707.40

Disbursements (Rs billion) 451.51* 471.62* 392.75 355.46

Outstanding sanctions (Rs billion) 1,637.20* 1,563.90* 1,273.56 1,486.41

Yield on assets# (%) 11.94 12.31 11.62 12.81

Cost of funds# (%) 9.09 8.85 8.17 8.58

Interest spread# (%) 2.86 3.45 3.45 3.60

Net interest margin# (%) 4.41 4.94 4.55 4.90

Return on average networth# (%) 21.64 23.07 23.85 24.57

* Excluding R-APDRP; # Quarterly ratios have been annualised

Sources: PFC; REC

Key performance indicators for PFC and REC

The power sector’s problems may notbe solved by merely ramping up coalproduction; a significant part of the

problem is the country’s inadequate rail-way network, which is unable to trans-port the incremental coal production.Currently, the majority (40-50 per cent)of the coal movement takes placethrough the railways, while roadsaccount for 30 per cent, and ports caterto imports as well as domestic coalmovement along the eastern coast fromOdisha to Andhra Pradesh, Tamil Naduand West Bengal.

Power plants are facing supply issues dueto inadequate rail infrastructure, unavail-ability of rakes and wagons during highcoal demand periods, congestion onexisting routes and slow development ofnew railway links in coal corridors.

The average rake availability for CoalIndia Limited (CIL) stood at 190 rakesper day in 2013-14, as against its require-ment of 212 rakes per day. To meet thecoal offtake target of 520 million tonnes(mt) during 2014-15, the company hasprojected the average requirement at221 rakes per day. CIL has often cited its

inability to increase production in highcoal-bearing areas owing to the lack ofadequate evacuation infrastructure.

Taking these factors into consideration,the new government has initiated somesteps to fast-track critical railway lineprojects, some of which have beendelayed for over a decade. In addition,an exercise to rationalise coal linkages topower plants is under implementation.Further, in a bid to decongest the rail-ways and develop alternative trans-portation modes, the government hasannounced the development of a keyinland waterway transport (IWT) projectin the Union Budget 2014-15.

Expediting critical railway linksCIL has significant coal reserves in theNorth Karanpura (Jharkhand), Ib Valley(Odisha) and Mand Raigarh (Chhattis-garh) regions. However, the progress ofkey railway line projects for coal evacua-tion from these areas has been slow dueto delays in land acquisition and in thegrant of environmental and forest clear-ances. As a result, the company has beenunable to augment production or opera-tionalise new mines in these regions. In a

bid to facilitate coal evacuation, the rail-way and coal ministers held a joint meet-ing in June 2014 and decided to expeditethe implementation of critical rail con-nectivity projects for coal movement.These railway line projects are as follows:• Tori-Shivpur (44 km) and Shivpur-

Kathautia (53 km) railway lines inNorth Karanpura.

• Jharsuguda-Barpalli-Sardega railwayline (53 km) in lb Valley.

• Bhupdevpuir-Korichapan-Dharamjai-garh (180 km) line in Mand-Raigarh.

The completion of these three railwaylines can increase the coal evacuationcapacity by about 100 mt in the firstphase and by 300 mt in the second phase.The projects are estimated to entail atotal investment of Rs 100 billion and willbe partly funded by CIL, considering theresource crunch faced by the IndianRailways. A project monitoring unit willbe formed, with representatives from therailway and coal ministries, and theDepartment of Revenue and Forests ofthe concerned state government, for bet-ter coordination. The operations are like-ly to commence from 2016-17.

Progress of DFCIn order to cater to the projected in-crease in freight traffic, especially coal,and congestion on existing trunk routes,Indian Railways has envisaged the set-ting up of the Dedicated Freight Corri-dors (DFC) project. The project com-


Need to ramp up coal transportation infrastructure


Supply Bottleneck



prises two corridors – Eastern andWestern – and is being implemented byDedicated Freight Corridor Corporationof India Limited (DFCCIL).

The 1,839 km long Eastern DFC will passthrough six states and will facilitate bulktransportation of coal for power plantsin Uttar Pradesh, Delhi, Haryana,Punjab and Rajasthan from EasternCoalfields Limited. It is projected thatcoal will account for about 68 per cent ofthe total traffic on the Eastern DFC. TheWestern DFC will cover 1,483 km fromthe Jawaharlal Nehru Port Trust inMumbai to Dadri near New Delhi, andenable the transportation of importedcoal from the ports to the hinterland.

So far, of the 10,667 hectares of landrequired for the two corridors, the awardof compensation has been declared forabout 87 per cent. Civil contracts for theconstruction of a few sections of theDFC have already been awarded. TheWestern DFC is targeted to be commis-sioned in 2018 and the Eastern DFC in2019. The DFC is expected to benefitcoal transportation significantly.

Inland waterwaysConstraints in the availability of ade-quate rail infrastructure have forceddevelopers to look for alternative meansof transportation for coal. For instance,NTPC started carrying imported coal bybarges through inland waterways for its2,100 MW Farakka thermal power pro-ject (TPP) in West Bengal in 2013. Thefirst set of three barges carried about1,500 tonnes each of imported coal,berthed near Farakka TPP, on November13, 2013. In June 2014, the plant receiveda domestic coal shipment throughinland waterways in the face of supplyhurdles caused by the railways. NTPCwill transport 3 mtpa of coal throughinland waterways from Haldia to theFarakka TPP for seven years. In August2011, a tripartite agreement was signedin this context between NTPC, theInland Waterways Authority of India andJindal ITF. NTPC also intends to trans-port coal for its upcoming Barh projectin Bihar through a similar mechanism.

The Union Budget 2014-15 has given aboost to IWT through the allocation of Rs42 billion for the development ofNational Waterways-I. The project, calledJal Marg Vikas, will be developed on theGanges between Allahabad and Haldia tocover a distance of 1,620 km. It willenable commercial navigation of about1,500 tonne vessels. The project wouldinvolve the construction of permanentterminals at various places, includingVaranasi and floating terminals atAllahabad and Ghazipur. It is anticipatedto be completed over a period of six years.The project has the potential to transportimported coal from ports on the eastcoast to the northern hinterland.

The way forwardThe government’s renewed focus on cre-ating adequate coal transportationinfrastructure is an important develop-ment for the sector. The timely comple-tion of critical rail and waterway pro-jects can help considerably to ease coaltransportation constraints. Notably, IWTis a cost-competitive transportationsolution as compared to rail and roadtransport. If the economic costs of car-bon emissions and noise pollution arefactored in, IWT is a better choice overrail and road transport. In the past, IWThad been used, albeit infrequently, to

transport heavy power equipment forupcoming power projects.

In order to meet the coal demand, whichis expected to surge from about 720 mt in2013-14 to 980.5 mt by 2016-17, domesticcoal producers need to step up supplyfrom the existing mines as well as opera-tionalise new ones. Given that coal-basedpower generation capacity is set toincrease in the coming years, there will beadditional pressure on the existing trans-portation networks to deliver higher vol-umes of coal. Over 45,000 MW of coal-based capacity is expected to be added by2016-17. Apart from the augmentation ofrailway networks, port infrastructure alsoneeds to be strengthened to accommo-date the expected rise in imports.

To sum up, there is an urgent need toramp up coal transport infrastructure.The domestic coal production targetsfor 2016-17 are about 715 mt in a busi-ness-as-usual scenario and 795 mt in anoptimistic scenario. Even if the produc-tion targets are met, timely delivery topower plants will remain a cause forconcern. Therefore, it is imperative thatcoal transportation projects are com-pleted in a timely manner to ensure reli-able supply to power generators. ■

Neha Bhatnagar

Year Annual average requirement of rakes Average availability of rakes

(No. of rakes/day) (No. of rakes/day)

2010-11 185.0 161.9

2011-12 175.0 167.7

2012-13 193.3 184

2013-14 212.2 190

2014-15 221 –

CIL’s rake requirement vs availability

Commodity 2016-17 2020-21

Eastern DFC (up direction)

Coal for power plants 54.46 61.96

Coal for other uses 0.61 0.95

Western DFC (down direction)

Coal, cement, iron and steel 6.30 9.40

Source: DFCCIL

Coal traffic projections for the DFC (mtpa)



The World Bank recentlyreleased the “More Power toIndia: The Challenge of

Electricity Distribution” report,highlighting the need for majorreforms in the distribution seg-ment to meet the country’s goal of provid-ing electricity access to all by 2019. Thestudy analyses the achievements of thesegment since the enactment of theElectricity Act, 2003 (EA, 2003) and the keychallenges. Excerpts from the report…

The agenda for addressing distribution per-formance must now be a priorityUtility finances – critical to realizing sec-tor goals – deteriorated sharply over2003–11. Power sector after-tax losses,excluding state government support(subsidies) to the sector, were Rs 618 bil-lion ($14 billion) in 2011, equivalent tonearly 17 percent of India’s gross fiscaldeficit and around 0.7 percent of GDP.When subsidies are included as revenue,losses fall by more than half, to Rs 295 bil-lion ($6.5 billion). Aggregating profits andlosses over time, sector-wide accumulat-ed losses stood at Rs 1,146 billion ($25 bil-lion) in 2011, more than twice (in realterms) the amount in 2003. Accumulatedlosses grew at a compound annualgrowth rate of 9 percent in real termsfrom 2003, though the share of losses rel-ative to GDP remained stable at about 1.3percent, largely because the economyalso grew strongly over this period.Discoms and bundled utilities are thelargest contributors to accumulated loss-es, though their share has fluctuated from90 percent in 2003 down to 79 percent in2008 and back up to 86 percent in 2011.

Sector losses have been financed byheavy borrowing by all sector segments,with total debt growing to Rs 3.5 trillion($77 billion) in 2011, or 5 percent of GDP.Discoms are responsible for the largestshare of this debt (36 percent in 2011),

followed by generation compa-nies. Many discoms have reliedon short-term loans to meetoperating expenses in recentyears: long-term loans declinedfrom 87 percent of total sector

borrowing in 2007 to 77 percent in 2011.The interest burden on utilities fromshort-term borrowing is onerous, withdebt-heavy capital structures becomingmore common.

Mounting debt and continuing losseshave led to a precipitous decline in dis-com creditworthiness. In Uttar Pradesh,Rajasthan, Meghalaya, and Haryana,power sector debt exceeded 10 percent ofstate GDP in 2011. Facing the prospect ofhuge and increasing nonperformingassets and approaching their sector exp-osure limits, lenders pulled the plug onloss-making utilities by late 2011. As cred-it dried up, these discoms were unable topay for power purchases, with a knock-on effect on upstream (generation)investor sentiment. The flow of liquiditylimited the pressure on discoms toimprove performance and on state gov-ernments to permit tariff increases.

Analyzing operational and financial perfor-mance of distributionAggregate technical and commercial(AT&C) losses have fallen from 38 percentto 26 percent over 2003-11. Distributionlosses have dropped from 32 percent in2003 to around 21 percent on average in2011. Distribution-utility revenue lossescan be decomposed by source: fromunderpricing, undercollection, and fromphysical losses of energy. In 2011 the ab-solute amount lost was highest in TamilNadu, followed by Rajasthan and AndhraPradesh; losses in five states were morethan 100 percent of distribution revenuesearned. Collection efficiency has general-ly remained stable, rising from 89 percentin 2003 to 94 percent in 2011. Average

debtor days have come down from 213days to around 170 over 2003–11.

In 2003, in aggregate, states were charg-ing an average billed tariff well above costrecovery, and losses that year were over-whelmingly driven by distribution losses.By contrast, in 2011, states were chargingan average billed tariff below cost recov-ery. Thus, underpricing emerged as animportant contributor to losses, thoughdistribution inefficiencies continued tobe the largest contributor to total losses.Calculated across all states, the margin ofcost recovery declined over 2003–11because tariff increases failed to keeppace with cost increases.

The sector operating environment has con-tributed to discom financial difficultiesWhile average revenue grew at a realcompound annual growth rate of 6 per-cent over 2003–11, the average cost ofsupply rose at about 7 percent, growingby 70 percent in real terms over the peri-od. The share of power purchases in totalcosts rose from 56 percent in 2003 to 74percent in 2011.

Power has become more expensivebecause of a decline in domestic fuelavailability and because of poor procure-ment planning by discoms. A sharpincrease in the use of imported coal ande-auctions to purchase coal have furtherpushed up the cost of power generation.Rising interest expenses, driven by dis-coms’ increased borrowing to meet cash-flow needs, have also contributed toescalating costs. The escalation in cost isalso not always permitted to be a pass-through, adding to the pressure on dis-coms. The expense of providing below-cost power to key consumer groups, suchas agricultural and rural consumers hasalso weakened utility finances.

The share of agriculture in total electrici-ty consumption was 23 percent in 2011,while revenues from agriculture wereonly 7 percent of the total. The problemfor utility finances arises because there isoften a gap between the volume of subsi-dies booked by utilities as compensationand the amount received from the gov-

World Bank report takes stock of distribution segment

Case for Reforms



ernment. The gap was Rs 119 billion ($2.6billion) for all states in 2011. Since 2003subsidies booked have grown 12 percenta year and subsidies received by 7 percenta year; the cumulative gap between themwas $10 billion for 2003–11.

State support to the power sector aver-aged 1.3 percent of state GDP in 2011across the 16 Indian states in which dis-tribution utilities received support, andwas as high as 6 percent in Punjab and 5percent in Uttarakhand. As a share of thestate budget in 2011, state support aver-aged about 2 percent but was 15 percentin Bihar and 22 percent in Uttarakhand.Most states also subsidize a substantialportion of domestic consumption. Of allelectricity consumed by domestic con-sumers in India, 87 percent was subsi-dized in 2010. As the domestic sectorconsumes almost a quarter of electricitysold, this is equivalent to 21 percent ofall electricity consumed, with the aver-age subsidy being Rs 1.5 per kWh.

Institutional factors and governance short-comings are other contributorsAnalysis for this report shows thatachieving sector outcomes is linkedclosely to the degree to which each statehas implemented the EA. An index ofoutcomes on objectives ranging frompower availability and affordability, toaccess and reduction of fiscal burden, toopenness and sector financial viabilitywas used to measure overall sector per-formance. It shows that sector out-comes, in line with the implementationof reforms, have been uneven acrossstates, with Gujarat and Punjab rankinghighest in achievement of outcomes.

The EA’s requirement for unbundlingand corporatization of utilities wasintended to limit state involvement intheir operations, increase transparencyand accountability, and bring a com-mercial orientation to their operations.But while unbundling the SEBs has pro-gressed quite well on paper, actual sepa-ration and functional independence ofthe unbundled entities is considerablyless than it appears. Corporatization hasalso been unable to insulate utilities

from state interference. Utility boardstend to have more government andexecutive directors than recommendedand fewer independent directors. Only16 percent of 69 utilities studied havethe recommended share of independentdirectors, and several entirely lack inde-pendent directors.

The regulatory environment has not suf-ficiently pushed utilities to improve per-formance. SERCs have been establishedin all states but have generally struggledto achieve true autonomy from state gov-ernments. In addition, many SERCs lackthe resources to perform their functions.Perhaps most important, there is no clearaccountability mechanism to hold SERCsresponsible for implementing their man-dates. As a result, although most SERCshave notified the key regulations neces-sary to enact the EA 2003 mandates,many have yet to implement them fully.On average, states score 74 percent on anindex measuring implementation of reg-ulatory mandates. Andhra Pradesh,Himachal Pradesh, and Karnataka are thehighest ranking SERCs.

Mounting regulatory assets have addedto the discoms’ cash-flow problems,jeopardizing routine operations. Althou-gh the Appellate Tribunal has ruled thatregulatory assets must be recovered overthree years, the sheer magnitude of cur-rent regulatory assets means this wouldcause a major tariff shock. So, recoveryhas been spread over a longer period withno relief to utility finances. Exacerbatingthe problem are delays in “truing up,”regulators assigning lower power-pur-chase costs than used by discoms.

Another source of pressure on utilityfinances is the mandate to build and“power up” the vast network of lines laidacross the country under the centralgovernment’s flagship access program,RGGVY. In 2011 utilities lost Rs 3($0.06)–Rs 4 ($0.08) per unit of powersold to rural consumers; the aggregateburden of serving rural consumers in2010 was around Rs 200 billion ($4.4 bil-lion) in 12 large states studied. UnderRGGVY, the REC provides a 90 percent

subsidy for the capital cost of grid exten-sion. But by January 2013 the amountsanctioned by the REC for all RGGVYprojects, Rs 342 billion ($8 billion), cov-ered only 58 percent of the estimatedactual cost of Rs 590 billion ($13 billion),and the government had only disbursed84 percent of the sanctioned amount.

A potentially transformative two-partcentral scheme to increase distributionefficiency, the R-APDRP, has not yet real-ized its potential. No state has complet-ed even the first part of the scheme,largely because utilities were not in-formed of the extensive change manage-ment needed for implementation; thiswas made worse by limited resources, alack of appropriate capacity, and theabsence of a supportive IT ecosystem inthe broader economy.

Way forward: priority areas for actionPoor power sector performance has itsroots in distribution inefficiencies andlimited accountability, so fixing themwill help improve service delivery andother metrics of sector performance, putthe sector on a financially sustainablepath, and ensure that power is no longera bottleneck for growth. Priorities foraction are as follows: • Implement fully the key EA mandates,

especially those on competition anddistribution (tariffs, open access, andstandards of performance).

• Ensure regulatory autonomy, effec-tiveness, and accountability.

• Ensure that high-quality, updated dataare publicly available and that thesedata are used for monitoring and ben-chmarking performance and for plan-ning and decision making to incen-tivize improved utility performance

• Use central programs and other sup-port to incentivize operational andfinancial efficiency.

• Learn from different models of serviceprovision, including private sectorparticipation through joint ventures(Delhi), franchising (Bhiwandi), man-agement contracts, and so on.

• Rationalize domestic tariff structuresto improve targeting and reduce thefiscal burden. ■

The lack of fuel linkages has virtuallystalled gas-based power generation.The private sector is the worst hit as

it grapples with stranded assets and ris-ing debt servicing costs committed inanticipation of assured domestic gasavailability. In Andhra Pradesh, inde-pendent power producers (IPPs) recent-ly approached the government, seekingsupport for securing fuel supply forstranded power plants in the state.

Present scenarioAndhra Pradesh accounts for about one-third of the country’s gas-based powergeneration capacity that is dependent onthe national gas grid for fuel. However,only 17 per cent of the total gas-basedcapacity is operational. The plants oper-ate at an average plant load factor of 32per cent. Gas availability for these pro-jects is 3.28 mmscmd, against a demandof 14 mmscmd. Further, 2,233 MW of gas-based power capacity remains strandedfor want of fuel. These plants are lyingidle as they do not receive any gas supply.Some of these projects are Gautami (464MW), Konaseema (445 MW), Vemagiri(370 MW), Kondapalli Extension (366MW) and Kakinada (220 MW). Another4,000 MW of capacity is ready to be com-missioned but has no gas allocation. Thisincludes major projects such as ReliancePower’s 2,400 MW Samalkot project.

There are huge costs associated with theidle and suboptimal utilisation of assets.Plants running at a low capacity utilisa-tion level entail high fixed costs, whichare recovered by developers from the dis-tribution utilities. For idle projects, devel-opers are forced to undertake debt restr-ucturing, while in some cases financiersalso categorise them as non-performingassets. The stranded power plants inAndhra Pradesh entail an investment ofabout Rs 380 billion, of which the debtcomponent is about Rs 270 billion.

Private producers have emphasised thatoperationalisation of stranded plants canhelp mitigate the region’s peak deficit. Asper the Central Electricity Authority, thesouthern region had a peak deficit of2,967 MW (7.6 per cent) as of 2013-14.Also, as per the recent tariff order issuedby the regulator, utilities can procurepower from gas-fired plants at highercosts. In 2013-14, utilities procured 10 bil-lion units of power at an average price ofRs 6 per unit and another 2.5 billion unitsat Rs 10 per unit. Therefore, industriesfeel that there is a strong case for gas-based power plants in the state.

Assistance soughtPower developers sought several mea-sures to improve the gas-based power sit-uation in the state. As per the developers,the state government should facilitate thesetting up of a liquefied natural gas ter-minal in which private producers cantake equity stakes. It was suggested thatgas supply should be pooled for plants inthe state and tariffs above the thresholdof affordability should be shared amongstthe stakeholders.

In addition, the developers emphasisedthat the discoms should enter intopower purchase agreements (PPAs) withthe state’s gas-based power projects.Such PPAs, based on two-part tariffs,would be conditional upon the com-mencement of pooled gas for powerprojects. Further, transmission connec-

tivity should be strengthened in order toenable power evacuation to majordemand centres. In particular, the 1,000km long 765 kV double-circuit Vemagiri-Chilakaluripeta-Cuddapah-Salem linewas highlighted as the most important.It was also suggested that private pro-ducers could take equity stake in thepower transmission network.

Further, IPPs have put forward keyissues that the Andhra Pradesh govern-ment could take up with the central gov-ernment. The most important of theserelate to fuel supply and pricing. Theysuggested that at least 6 mmscmd of gasproduced by the Krishna-Godavari (KG)basin should be allocated for AndhraPradesh’s gas-based power plants. Inaddition, incremental gas supply ex-pected from the KG basin should be allo-cated for the state’s power projects. Asfar as prices are concerned, it has beenargued that the government should treatthe power sector differently from otherconsumer segments, considering that arise in gas prices would impact powerofftake. It was also pointed out that theMinistry of Power should promote thecase of gas-based power projectsthrough steps such as mandating cleanpower purchase obligations and stipu-lating the use of gas-based power forancillary services such as frequency sup-port, voltage support and smootheningload curves.

The way forwardThe central government is currentlydeliberating on the sensitive issue of gaspricing. There is a consensus that higherprices are important to incentivise nat-ural gas exploration and production.Based on the Rangarajan committee’smethodology, domestic gas prices couldreach $8.4 per mmBtu. This may entailsubsidy support for utilities to enablepower procurement in the short term.However, the allocation of gas for powerplants is unclear. About 60 mmscmd-65mmscmd of incremental supply isexpected by 2018-19, a part of whichneeds to be allocated for stranded andidle gas-based power plants. ■

Tapas Bhowmik


Private sector producers seek policy intervention


Gas Uncertainty

Coal inventories at power projectsonce again made headlines in July2014, with nearly half of India’s

thermal plants reporting coal stocks atcritical levels. Data monitored by theCentral Electricity Authority (CEA) forJuly 22, 2014 showed that coal invento-ries at 47 thermal power stations (out ofthe 100 monitored coal-based stations)were close to 11 mt, sufficient to meetrequirements of only up to seven days.These included 30 power stations, wherecoal stocks had reached even morealarming levels of less than four days. Asper the norms, coal stocks should bemaintained at a minimum level of 21 to30 days worth.

While dwindling coal stocks have alwaysbeen a challenge for thermal powerplants, an analysis of data for the past sixmonths shows that coal stocks declinedsharply in July. A key reason affectingthese plants is that the coal supplied byCoal India Limited’s subsidiaries hasbeen much below their annual contract-ed capacities. In the last two fiscal years,the coal quantities despatched to powerplants has only been 85-86 per cent ofthe contracted capacity.

The current scenario is in complete con-trast with what the coal supply situationwas more than a year ago. Data frommid-August last year shows that stocks atas many as 30 power sta-tions exceeded the norma-tive requirements, whileonly five stations reported acoal stock position of lessthan five days and one sta-tion had supercritical stocksof less than four days. Thiswas largely attributable togood monsoons, a lowerpower demand scenario andimproved coal productionlevels at the time.

Affected stationsOf the 30 power stations that have coalstocks of less than four days, the majority(12) belong to the state sector. Another 11stations belong to the central sector andthe remaining are private projects.Developer-wise, the worst impacted isNTPC Limited. It has nine stations (inclu-ding two operating under joint ventures)running on stocks of less than four days.These plants have an aggregate capacityof 18,560 MW, representing almost 43 percent of the company’s total installedcapacity of over 43,000 MW. The powermajor has reportedly asked the powerministry to ensure higher coal supplies atsix of its coal plants where coal stocks areless than one day.

Damodar Valley Corporation is the othercentral sector player to have beenimpacted by supercritical coal stocks.State sector plants with stocks of lessthan four days have an aggregate capac-ity of 15,770 MW and belong to the stateutilities of Rajasthan, Chhattisgarh,Gujarat, Maharashtra, Madhya Pradesh,Andhra Pradesh and Karnataka.

Seven stations with a total capacity of7,000 MW, owned by private sectorcompanies Lanco Infratech, SterliteIndustries, Reliance Power and GVKPower and Infrastructure Limited,Nabha Power and Ind Barath Power

Limited, have also reported extremelylow stock levels.

OutlookThe problems are, however, not entirelyon the coal availability side. Coal stocksat 15 power stations exceed the norma-tive requirement of three weeks (withtwo plants reporting coal stocks as highas 57 days and 88 days). This highlightsthe poor transportation planning anddistribution logistics in the coal distrib-ution policy. Rationalising coal linkagesand ensuring better transportation canhelp divert surplus coal from theseplants to fuel-starved projects.

Even though thermal power generationand plant load factor estimates for July,when the coal stocks dipped, are yet tobe released by the CEA, data up to June2014 does not indicate a significant con-cern. Also, hydropower generation in thecountry has exceeded targets, with gen-eration in the first quarter of 2014-15being about 8 per cent higher than in thesame period of the previous year.

Nonetheless, the scenario could worsenin the coming months as a deficientmonsoon has been predicted, whichwould lead to additional pressure onthermal power plants to make up for thelower-than-expected hydro power out-put. Also, with the impending monsoons,coal despatches could suffer a setback, asrains in coalfields adversely impact pro-duction and transportation of coal frommines to railway sidings. The power min-istry has already advised power utilities toimport 54 mt in 2014-15 to bridge theshortfall in domestic coal (against 80.3 mt

in 2013-14).

Thus, it will be imperativefor generators, coal pro-ducers and planners toinstitute a clear strategythat effectively addressesissues of coal production,transportation and alloca-tion, to prevent the prob-lem from snowballing intoa major crisis. ■

Reya Ramdev


Stocks plummet to six-month low


Coal stocks at thermal power stations

26

31

2123 22

30

42

18 18

1310

14

18

23

0

10

20

30

40

50

No of plants with critical coal stocks less than seven days No of plants with critical coal stocks less than four days

Source: CEA Note: Above graph shows values for 1st of each month

January 2014 February 2014 March 2014 April 2014 May 2014 June 2014 July 2014

Coal Crisis

Investments in the wind power seg-ment have been impacted due to thenon-availability of accelerated depre-

ciation (AD) benefits for the past twoyears. In the year-ended March 2012, thetax incentive helped attract Rs 190 bil-lion of investments to the wind segment,supporting the addition of 3,200 MW ofcapacity, of which about half was set upthrough the AD route. However, in 2012-13, investments declined to Rs 102 bil-lion and only 1,700 MW of capacity wasadded during the year. While the sce-nario improved in 2013-14 (largely dueto reinstatement of generation-basedincentives [GBIs]), with the country wit-nessing a capacity addition of 2,100 MW,it was not close to the levels achieved in2011-12. The AD scheme, if reinstated,will drive capacity addition and, in turn,investments in the wind power segment.

The wind industry segment that was themost impacted by the withdrawal of theAD scheme was equipment manufactur-ing. According to Anish De, chief execu-tive officer (CEO), Mercados EMI, “Thegrowth in the wind power segment wasaided by favourable fiscal policies(mainly AD for new build) and the stan-dard feed-in tariff (FiT) procurementregime. With these two support mecha-nisms, investors dived into manufactur-ing, logistics, project development andtechnology development. However, thewithdrawal of AD has led to a partial col-lapse of the wind market, and this canundo the gains from the past.”

To a certain extent, De’s argument is cor-rect because a large amount of domesticmanufacturing capacity has been lyingunutilised on account of lower demandand growing competition in the domesticmarket. While sub-MW scale turbine ma-nufacturers like Pioneer Wincon and Le-itwind Shriram have been the most hit astheir businesses were dependent on

clients availing of AD benefits, largercompanies like Suzlon Energy, whichhave installed a majority of India’s windpower capacity set through the AD route,have also been adversely impacted. Thecombined share of only-kW-scale turbinemanufacturers like Pioneer Wincon,Leitwind, Southern Wind Farms andShriram EPC in the total capacity addi-tion declined from 8 per cent in 2009-10to almost negligible in 2013-14.

The revival of AD may help these com-panies restore their market position.“There is a class of investors, includingmedium-sized enterprises, which wouldwant to save on power costs by investingin wind power with their cash surplus.Such companies would drive thedemand for sub-MW turbines after AD isreintroduced,” noted S. Rajendran, chiefoperating officer, Pioneer Wincon, in amedia statement.

The AD storyThe initial push for the wind energymarket in India came in the form of fis-cal incentives, primarily AD benefits. In1992-93, the government introduced 100per cent AD benefits for wind energyprojects to provide fiscal incentives tocounter the risks associated with thethen unproven wind energy technology.

The AD benefits were instrumental in dri-ving large wind power capacity addition

as well as facilitating the creation of astrong manufacturing base in the coun-try. As of March 2014, India ranked fifth interms of the global wind power capacity,with an installed capacity of about 21,000MW. Over 16,000 MW of this capacitycomprises projects set up through the ADroute, which gave a huge boost to thedomestic turbine manufacturing indus-try, with the annual capacity reachingabout 5,000 MW during the mid-2000s.

According to Chintan Shah, president,strategic business development, SuzlonEnergy, AD also helped the SME sector touse relatively cheap electricity for theircaptive consumption. “We have seenthese instances, particularly in the textilesector where at least 30 per cent of costsare energy related, but textile companieshave been able to hedge these costs on along-term basis by investing in wind pro-jects, thereby becoming competitive inthe global space.”

Although the AD scheme significantlyhelped in the initial growth of the windpower market, the main purpose of gen-erating power through wind was side-lined. Wind energy projects were beingset up by companies and their sub-sidiaries as well as individuals to avail ofAD to save corporate taxes.

Therefore, once the key objective of windturbine technology proving its efficacywas met, it became essential to replacethe AD scheme with a mechanism thatpromoted higher efficiencies in the seg-ment. The government decided to phaseout AD by lowering these benefits to 80per cent from 2005 onwards before com-pletely withdrawing them by the end ofthe Eleventh Plan period (2007-12).

In 2009, the government announced theintroduction of GBI which led to theentry of independent power producers


Industry pins its hopes on the restoration of accelerated depreciation


Advantage AD

(IPPs) whose main objective was toensure higher returns on investmentsthrough greater focus on turbine life andefficiency. Since then, the share of IPPs inthe total capacity addition has witnesseda significant increase. Capacity additionby IPPs is estimated to have increasedfrom less than 10 per cent in 2009-10 toover 70 per cent in 2013-14. However, itwas not enough to meet the annualcapacity addition targets in the first twoyears of the Twelfth Plan (2012-17).

Can AD help meet the Twelfth Plan targets?On a broader scale, the industry believesthat the restoration of AD benefits,which attract a different class of inv-estors, would help fill the current gapbetween the targeted and actual capaci-ty addition. However, industry stake-holders differ on the amount of gap thatcan be filled owing to the AD scheme. Inorder to meet the Twelfth Plan target of15,000 MW, 11,200 MW of wind powercapacity needs to be set up during 2014-17 given that only 3,800 MW of windpower projects have been set up in thefirst two years. This translates into anaverage capacity addition of 3,700 MWper annum from 2014-15 onwards.

While most manufacturers that havebeen pushing for the restoration of ADbenefits are highly optimistic that it willhelp achieve the targets, wind IPPs(which are neutral to the introduction ofAD) are of the view that AD will only aidpartial growth in the segment. Speakingto reporters at Renergy 2014, Madhu-sudan Khemka, chairman, Indian WindTurbine Manufacturers Association, andmanaging director, ReGen Powertech,said, “At an all-India level, in 2014-15, weexpect a capacity addition of around3,000 MW. If the AD scheme is restored,it will lead to an increase of another1,500 MW or more.” Also, according to K.Bharathy, CEO, Windar Renewable, amanufacturer of wind towers, “Therestoration of the AD scheme will resultin a capacity addition of 3,500 MW-5,000MW in 2014-15.”

On the other hand, according to SunilJain, president, Wind Independent Power

Producers Association and CEO andexecutive director, Hero Future Energies,the revival of AD benefits will lead to anincremental capacity addition of only 500MW-600 MW. He says, “The Twelfth Plantarget cannot be achieved only by reviv-ing AD and, for that matter, even throughGBI. These incentives can only helpattract new players into the segment butcan not be used to drive large-scalecapacity addition, which requires astrong policy and regulatory framework.”

The wind power segment continues to beexposed to various risks and challenges,especially regulatory challenges andcounterparty credit risks pertaining todistribution utilities. Inadequate powerevacuation is also a hindrance to capaci-ty addition. For instance, Tamil Nadu,which contributes about 35 per cent tothe overall wind-based capacity in thecountry and offers one of the lowest windpower tariffs in the country, has wit-nessed a significant decline in capacityaddition on account of continued pay-ment delays by Tamil Nadu PowerGeneration and Distribution CompanyLimited, besides issues such as grid inad-equacy and increased banking charges.

On the regulatory front, many develop-ers are not satisfied with the FiTs that arecurrently being offered. According toJain, the key challenge relates to difficul-ties in land acquisition and land costs,which are not adequately factored inwhile determining tariffs. In fact, theMaharashtra Electricity RegulatoryCommission has recently issued a newtariff order, lowering the FiTs for windpower in the state. This move, along withthe discoms’ hesitance in signing powerpurchase agreements with developers,has stalled the capacity addition plans ofseveral IPPs in the state – to the extentthat Maharashtra, which added over1,000 MW of projects in 2013-14, maywitness a capacity addition of onlyabout 400 MW in 2014-15.

Another example is that of Rajasthan,which witnessed a nominal capacityaddition in 2013-14 due to policy paraly-sis related to the introduction of com-

petitive bidding for wind power projects.Further, the state government recentlyannounced that it would not be addingmore than 400 MW-500 MW of windpower capacity in 2014-15.

With states like Rajasthan and Maha-rashtra, which registered the highestcapacity additions in 2012-13 and 2013-14 respectively, showing reluctance toadd large-scale capacity, IPPs will be leftwith fewer options to expand their port-folio. However, some states, includingMadhya Pradesh and Andhra Pradesh,are taking steps to drive growth in theirwind power segments. Meanwhile, theentire renewable energy sector faces amajor regulatory challenge with regardto renewable purchase obligation (RPO)compliance. RPO was believed to be thekey driver for renewable capacity addi-tion in the country, but has failed tomake an impact so far.

In fact, this has been the prime reason forthe failure of the renewable energy cer-tificate (REC) market. The majority ofRECs offered on sale are currently lyingunsold. Some of the other key challengesfor the segment include inadequatepower evacuation capacity, complyingwith forecasting and scheduling norms,difficulty in obtaining open access inmany states and high interest rates.

Future outlookOverall, the long-term demand outlookfor the wind energy segment is expectedto remain strong, supported by largewind energy requirements to meet theRPO targets. Also, given the fact thatwind-based energy benefits from itsincreasing cost competitiveness againstthe conventional sources of energy dueto spiralling fuel prices and persistingdomestic fuel shortages, it can ensurehigher returns on projects. As far as thereintroduction of AD is concerned, it maynot be enough to help achieve a capacityaddition of over 3,500 MW per annum,given the aforementioned challenges.However, it will help the manufacturingindustry to support higher domesticcapacity additions. ■

Dolly Khattar



Torrent Power Limited (TPL), a partof the Ahmedabad-headquarteredTorrent Group, is an integrated pri-

vate power entity that has a markedpresence in Gujarat’s power generation,transmission and distribution seg-ments. The company came into exist-ence in 2005, subsequent to the amalga-mation of Torrent Power Ahmedabad(formerly Ahmedabad Electricity Com-pany [AEC]), Torrent Power Surat (for-merly Surat Electricity Company [SEC])and Torrent Power Generation. Thenearly century-old AEC and SEC wereacquired by the Torrent Group in the1990s. Recently, in May 2014, TPL decid-ed to merge Torrent Energy Limited(TEL) and Torrent Cables Limited (TCL)with itself in order to achieve synergiesin operations. The merger is yet toreceive regulatory approval.

Today, TPL has expanded its distributionfootprint to Maharashtra and UttarPradesh through the franchise route, andhas plans to augment its generationcapacity, which currently stands at about2,000 MW, by over 60 per cent. Notably,the company’s performance in turningaround its distribution operations inBhiwandi, Maharashtra, is considered amodel for franchise-based public-privatepartnerships in the power sector.

GenerationThe company’s installed capacity isspread across five units in Gujarat – the1,147.5 MW SUGEN combined cyclepower plant (CCPP) along with its exten-sion, the 382.5 MW UNOSUGEN project;the 422 MW coal-based Sabarmati ther-mal power station (TPS) along with the100 MW Vatva CCPP (together referred toas the AMGEN power plant); and a 49.6MW wind power plant. Around 84 percent of the company’s installed capacityis based on gas, and the rest on coal. Thecompany’s coal-based portfolio com-

prises the Sabarmati TPS in Ahmedabad.The plant, which was part of the erst-while AEC, has been operational since1934 and has undergone upgradationand modernisation on several occasions.Its entire output is supplied to TPL’s dis-tribution arm in Ahmedabad. During2013-14, the Sabarmati plant recorded ageneration of 2,717 MUs, marking a 4.5per cent decrease over the previousyear’s generation of 2,846 MUs. It report-ed a plant load factor (PLF) of 76.55 percent in 2013-14.

The company’s gas-based power plantsaggregate 1,630 MW of capacity. Thelargest among these in terms of capacity,the SUGEN plant located in Surat wascommissioned in 2009-10 and supplies amajor share (over 800 MW) of its outputto TPL’s Ahmedabad, Gandhinagar andSurat distribution circles, while the rest issold on an interstate and short-termbasis. In April 2013, the company under-took brownfield expansion at this site bycommissioning UNOSUGEN. AlthoughSUGEN achieved a plant availability fac-tor of 99.99 per cent, its capacityremained largely unutilised due to gas

unavailability and the procurer’s inabilityto buy power generated using costly liq-uefied natural gas.

During 2013-14, the company’s gas-based plants reported a significantly lowPLF on account of limited availability ofdomestic gas. In fact, in March 2013, sup-plies from Reliance Industries Limited’sKrishna Godavari-D6 block had stoppedentirely. This led to a reduction inSUGEN’s PLF from 41.21 per cent in2012-13 to 22.87 per cent in 2013-14.TPL’s gas-based plants reported a totaloutput of 2,279.92 MUs in 2013-14, a dec-line of around 48 per cent over the pre-vious year’s generation of 4,389.9 MUs.

The company also operates a 49.6 MWwind power plant in Jamnagar, Gujarat.The plant was commissioned in March2012 and despatched 89 MUs during2013-14, achieving a plant availabilityfactor of 97.39 per cent.

TransmissionTPL is present in the transmission sectorthrough Torrent Power Grid Limited, a74:26 joint venture (JV) of TPL and PowerGrid Corporation of India Limited. The JVruns the evacuation system associatedwith the SUGEN CCPP on a build-own-operate basis. The first phase of the pro-ject, which comprised the 28 km Vapi-Jhanor line in line out (LILO), was com-missioned in March 2009. The secondphase of the 80 km double-circuit (D/C)400 kV Jhanor-Dehgam LILO was com-pleted in March 2010 while the finalphase, involving the 144.5 km, 400 kVD/C line from SUGEN to Pirana and theLILO at the 400 kV substation at Pirana,was completed in February 2011.

DistributionThe company’s distribution activities inthe state cover three major cities –Ahmedabad, Surat and Gandhinagar –

C O M P A N I E S

Plans for growth across the energy value chain

34

Torrent Power Limited

P O W E R L I N E ● July 2014

across an area of 408 square km. In 2013-14, the company sold 9,235 MUs to over2.2 million consumers. During the year,it met an overall peak load demand ofover 1,990 MW while maintaining distri-bution losses at 6.54 per cent. In May2014, the Gujarat Electricity RegulatoryCommission (GERC) approved a tariffhike of Re 0.44 per unit for the distribu-tion areas covered by TPL. The tariff hikeincluded an increase in fixed chargesand energy charges by 7.5 per cent for allconsumer categories. The hike, whichhas been in effect since May 1, 2014, willbring in additional revenues of Rs 4.49billion for the company.

TPL was awarded the country’s firstinput-based distribution franchise licen-ce for Bhiwandi, in December 2006, byMaharashtra State Electricity Develop-ment Corporation Limited for a period of10 years. Through its various networkaugmentation measures, IT initiativesand automated meter reading, TPL effec-tively reduced the area’s aggregate tech-nical and commercial (AT&C) lossesfrom over 50 per cent in 2006-07 to 22.68per cent in 2013-14. In addition, the con-sumer base increased from 174,000 in2006-07 to 258,000 in 2013-14, and col-lection efficiency from 59 per cent in2006-07 to 97.3 per cent in 2013-14.

However, during 2013-14, electricitysales decreased by 2.58 per cent to 2,760MUs from 2,833 MUs in the previousyear, mainly on account of a strikeagainst tariff hike by the local power-loom industry. In spite of that, the peaksystem demand increased from 560 MVAto 571 MVA during this period.

Besides Bhiwandi, the company is thedistribution franchise licence holder forAgra, which was awarded to it by UttarPradesh Power Corporation Limited inApril 2010. TPL performed satisfactorilyin Agra, reducing AT&C losses in theregion from 54.33 per cent in 2011-12 to43.47 per cent in 2013-14. It registeredaggregate sales of 1,283 MUs in 2013-14as against 1,125 MUs in the previousyear. The consumer base in Agraexpanded from 304,000 to 336,000 and

the peak system demand decreasedfrom 431 MVA to 409 MVA during thesame period. The company was alsoawarded the distribution franchise forKanpur in April 2010 but operationshave been delayed owing to resistancefrom employees and consumers.

Upcoming projectsTPL is currently setting up the 1,200 MWDGEN gas-based power plant in theDahej special economic zone through aspecial purpose vehicle, TEL, with aninvestment of about Rs 60 billion. Theengineering, procurement and construc-tion works for the project are being exe-cuted by Siemens under a contractualagreement executed in July 2010. Theproject is at an advanced stage of con-struction and is likely to be commis-sioned in 2014-15, subject to gas avail-ability. The company has contracted thedevelopment, construction and main-tenance of a 75 MW wind-based powerplant in Sangli, Maharashtra, to ReGenPowertech Private Limited. Commis-sioning of the project, which was sched-uled for February 2014, has been delayedto the second half of 2014-15.

FinancialsThe company reported total revenues ofRs 89.32 billion during 2013-14, a 6.78per cent increase over the Rs 83.65 billion reported during 2012-13. Thecompany’s net profit (after taxes andminority interest), however, declined by72.87 per cent to Rs 1.05 billion from Rs 3.87 billion during the same period.This can be attributed to an increase intotal expenses due to the purchase of

short-term power for its distribution cir-cles and of expensive liquefied naturalgas for its generation units, as well asunder-recovery of the fixed cost of theSUGEN extension plant in its tariff.

Challenges and the way forwardSecuring gas for its power plants isamongst the prime targets of the com-pany, going forward. In addition, man-aging fuel costs, especially after theproposed gas price hike comes intoeffect, would be a challenging task.Since the company is vertically inte-grated, fuel issues in the generationsegment impact the power procure-ment strategy and costs of the distribu-tion segment. Regulatory bottlenecksrelated to pass-through of fuel costs arealso a concern. In addition, the antici-pated upward revision of renewablepurchase obligation (RPO) targets byGERC is a hurdle for the company as itwas not able to meet its RPO target inthe past fiscal. Land availability forconstructing greenfield power projectsand substations as well as right- of-wayissues for developing the transmissionand distribution network are also acause of concern for the company.

These challenges notwithstanding, TPL’sfuture outlook seems positive, given thatdomestic gas production is anticipatedto increase in the next two to three years.Moreover, in light of the company’slong-standing experience in effectivelymanaging distribution operations, itcould be a serious competitor in upcom-ing franchise auctions. ■

Shashank Shanker

C O M P A N I E S


Fuel Plant Capacity

Gas SUGEN CCPP 1,147.50

UNOSUGEN 382.50

Vatva CCPP 100.00

Coal Sabarmati TPS 422.00

Wind Jamnagar 49.60

Total 2,101.60

Source: TPL

TPL’s installed generation capacity

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C O M P A N I E S


Kolkata-based India Power Corpo-ration (formerly known as DPSCLimited) is one of the oldest inte-

grated power utilities in the country. Itwas founded in 1919 as a part of AndrewYule and Co. by the British conglomeratewith the objective of supplying electrici-ty to coal mines in the Asansol-Ranigunjbelt of West Bengal. Subsequently, thecompany distributed electricity toindustries and commercial establish-ments as well. It continued to be a pub-lic undertaking until 2010, before it wastaken over by India Power Corporation,a private sector company. The two com-panies were merged and rechristenedIndia Power Corporation Limited inSeptember 2013.

Today, India Power owns a distributionlicence in West Bengal for an area cov-ering 618 sq. km. The aggregate techni-cal and commercial (AT&C) losses inthe area are less than 3 per cent asagainst the national average of 25 percent and the system reliability is at an

impressive 99.5 per cent, one of thebest in the industry. The generationportfolio of the company currently con-sists of around 100 MW of wind energyin Rajasthan, Gujarat and Karnataka.India Power is working on an ambitiousexpansion strategy. From June 1, 2014,it started operations under the distrib-ution franchise it won in 2013 for powerdistribution in Gaya, Bodh Gaya and itsadjoining towns in Bihar. It has chalkedout significant investment plans forupgrading the existing distribution net-work, which suffers from extremelyhigh AT&C losses.

Operations DistributionIndia Power has a combined distribu-tion area of around 1,700 sq. km in WestBengal and Bihar. It caters to a varietyof consumer segments including criti-cal industries such as undergroundcoal mines, railways and large indus-tries. It also serves retail consumers inits licensed area.

Significant infrastructure investmentshave been made in the Asansol network,including the installation of 100 per centautomated meter reading systems andring main circuits for increased reliabili-ty and efficiency. Such measures havehelped reduce AT&C losses to 3 per cent.

Investments are also being made in Gayato reduce transmission and distributionlosses, which are currently close to 70 percent. The company is targeting to bringdown the loss levels to around 15 per centin the next four to five years. These areashave more than 100,000 customersacross the agricultural, commercial anddomestic segments. The operations ofthis franchise are being controlled by aspecial purpose vehicle, India PowerCorporation (Bodh Gaya) Limited.

GenerationIndia Power boasts of a substantialrenewable energy portfolio with around100 MW of wind energy and 2 MW ofsolar energy. The wind portfolio consti-tutes a 60 MW plant in Jaisalmer, Rajas-than, a 25 MW plant in Samana, Gujarat,and an 11 MW plant in Chitradurga,Karnataka. The power generated bythese is sold to the respective state dis-coms at varied rates as per the respectivepower purchase agreements.

Exploring expansion opportunities

India Power

C O M P A N I E S


The company also has a 2 MW solarpower plant at Seebpore, West Bengal,which has been set up in a joint venturewith the West Bengal government. Theplant commenced generation in 2009and generates nearly 3.3 MUs of electric-ity annually, which is fed to India Power’sdistribution network in Asansol.

The company has around 2,000 MW ofthermal capacity under development, ofwhich the 450 MW Haldia ThermalPower Plant (TPP) is likely to be com-missioned in 2015.

Financial performanceIndia Power has delivered a consistentlysound financial performance. The totalincome of the firm has increased fromRs 4.17 billion in 2010-11 to Rs 6.97 bil-lion in 2013-14. Net profit has grownfrom Rs 56.7 million in 2010-11 to Rs292.4 million in 2013-14. Total income islikely to increase in the near future withthe addition of revenues from the Gayadistribution circle and the operationali-sation of the Haldia TPP.

Future plansGoing forward, the company plans toexpand its distribution and generationbusinesses simultaneously. Currently,the company has a distribution net-work with 450 MVA of load and genera-tion of around 100 MW. In the nextthree to four years, it aims to have a dis-tribution portfolio of 1,500 MVA and ageneration portfolio of 2,000 MW. Whilethe company’s current generation assetbase is dominated by renewable power,the share of conventional power isexpected to go up in the next few years.India Power is setting up a 450 MWcoal-based power plant in Haldia,expected to be commissioned by June2015. The Rs 26.56 billion project isbeing financed at a debt-equity ratio of70:30, with the loan component beingprovided by the Rural ElectrificationCorporation and Power Finance Corpo-ration. Apart from this project, IndiaPower is implementing a 540 MW ther-mal plant in Raghunathpur, WestBengal, and has other coal-based pro-jects under development. It is also

looking at inorganic opportunities toexpand its generation portfolio.

To ensure consistent fuel supply, thecompany had set up a wholly ownedsubsidiary, Swambhu Natural Resour-ces Limited.

In the distribution segment, several pro-jects are under implementation toenhance capacity and system reliability.A 220/33 kV substation at JK Nagar inAsansol, West Bengal is under construc-tion and is expected to be commissionedby September 2014. Also, two 33/11 kVsubstations are under construction tocater to the growing demand.

The company also has robust plans toimprove distribution efficiency, reducetransmission and distribution losses andincrease collections in its Gaya distribu-tion circle. The company plans to replaceall existing meters with new meters thatconform to regulatory standards andconcentrate on customer support. Ateam of engineers, officers and supportstaff will monitor the voltage and fre-quency of the power supplied to con-sumers and will be on call to addresscustomer issues at short notice. In addi-tion, several 24x7 customer care centresare being set up for each of the zonescovering the 1630 sq. km area. For ruralareas of Manpur, doorstep services willbe provided for issuing new connections.

Further, India Power aims to expand itsdistribution portfolio and is looking atopportunities in the form of distributionfranchises and public-private partner-ship opportunities throughout the

country. The company aims at being anintegrated power utility on a nationalscale in the next three to four years.

Challenges and the way forwardIndia Power’s portfolio of upcominggeneration projects is largely coal domi-nated. The company believes that thelack of adequate coal availability couldbe a challenge, but it is working on astrategy to ensure long-term availabilityof coal. “Our long-term fuel strategyincludes domestic sourcing throughlinkages and imported coal sourcingthrough the acquisition of coal mines.We may need to adopt trading and e-auctions in the short term to secure coalin case of shortages. With the new gov-ernment and active policy measures inplace, we feel that fuel availability fromdomestic mines will increase signifi-cantly and there will be an improvementin the domestic coal output,” saysHemant Kanoria, chairman, India PowerCorporation Limited.

Apart from fuel availability, Kanoriaadds that there are other structural chal-lenges that need to be dealt with, inareas such as financing of the power sec-tor and distribution reforms. He empha-sises that the government should pro-mote more private participation in thedistribution sector. He points out thatprivate discoms should be allowed totake part in government schemes suchas the R-APDRP, which will help the dis-tribution franchisees reduce lossesfaster in high-loss areas. “Financingschemes should be available to a distrib-ution franchisee keeping in mind thatthe franchisee is responsible for a por-tion of the overall licensed area and itscompliance should be limited to its fran-chise area,” says Kanoria.

Despite these challenges, India Power iswell placed to deliver in its newlyacquired distribution circles while offer-ing reliable power supply in its existinglicensed areas. The company’s invest-ment plans in the generation segmentaugur well for the projected load growthin its licensed areas. ■

Jaspreet Kaur Anand

India Power’s financials (Rs million)

274

276

278

280

282

284

286

288

290

292

6,200

6,300

6,400

6,500

6,600

6,700

6,800

6,900

7,000

2012-13 2013-14

Total income

Net profit

Source: India Power

ANDRITZ HYDRO India, a sub-sidiary of the Austrian equipmentmajor ANDRITZ HYDRO GmbH, is

a key player in the electromechanicalequipment market for hydropower sta-tions. It has secured orders from majorpublic and private developers and hasinvested in a strong manufacturing basein the country with facilities located inMadhya Pradesh and Haryana. In thelast two years, it has also made inroadsinto other markets such as Vietnam,Malaysia and Indonesia. While the paceof capacity addition in the hydro seg-ment has slowed down in recent times,the company continues to see theIndian market as a key contributor to itsgrowth and expects business opportuni-ties to open up once the order scenarioimproves. Meanwhile, the companyplans to expand its manufacturing base,implement diversification strategies andstrengthen its focus on its projects inIndia and overseas.

BackgroundANDRITZ HYDRO GmbH,a group company underthe international technology groupANDRITZ AG, is headquartered in Graz,Austria. The group also supplies equip-ment and services across other sectors,including paper and pulp, metal andsteel, and separation technology.ANDRITZ HYDRO GmbH has an experi-ence of over 170 years with global instal-lations exceeding 30,000 turbines, aggre-gating 420,000 MW. Its product portfolioand offerings include turbines, genera-tors and other equipment for small andlarge plants with an output of over 800MW per turbine unit as well as mainte-nance, refurbishment and upgradationservices for existing ones. Pumps fortransport, irrigation and applications forvarious industries as well as turbo-gener-ators for thermal power stations are otherbusiness areas of the company.

At a global level, hydro project contracts(worth Euro 1,865 million) accounted forabout one-third of the group’s total orderinflows in 2013. On a regional basis, theAsian market (excluding China) account-ed for 14 per cent of its orders.

Company operationsANDRITZ HYDRO was the first multina-tional company to set up shop in India ata time when BHEL was the dominantmarket player. It was established in Indiathrough a 50:50 joint venture betweenElin GmbH and Crompton Greaves inNovember 1996. This entity was known asCG-Elin. In June 2001, VA Tech Hydrobought the entire equity of CromptonGreaves, which led to the formation of VATech Hydro. In July 2009, the AndritzGroup acquired VA Tech Hydro andANDRITZ HYDRO was formed. The com-pany has two equipment manufacturingfacilities – one at Prithla, Haryana formechanical components and the other at

Mandideep, Madhya Prad-esh, for electrical compo-nents. The Mandideepfacility manufactures hyd-

ro power generators for small and largeprojects, in addition to electric power sys-tems and control and monitoring sys-tems. In fact, Teesta Urja Limited’s TeestaStage III project in Sikkim was suppliedgenerators, with an output of 222 MVA,from this facility. The Prithla plant manu-factures hydro turbines, main inletvalves, microprocessor-based governorsand automation systems.

In order to strengthen its competency,the company has been offering severaladvanced technology solutions. It offersa patented coating technology to reducecorrosion in underwater parts of plants,which is one of the key issues faced bydevelopers. Other technology offeringsinclude in-house automation systemsfor remote controlling of power plants.

Key projectsThe company has completed/is execut-ing several private and public sector pro-jects in India including Jaiprakash PowerVentures Limited’s 1,000 MW KarchamWangtoo project, Karnataka Power Corp-oration Limited’s Varahi undergroundpower house Units 3 and 4 with a capaci-ty of 230 MW, NHPC’s 132 MW Teesta LowDam Stage III project, Meghalaya EnergyCorporation Limited’s 126 MW MyntduLeshka project, the Kerala State Elec-tricity Board’s 25 MW NeriamangalamExtension project, Jammu & KashmirState Power Development CorporationLimited’s 450 MW Baghlihar Stage II pro-ject, North Eastern Electric Power Cor-poration Limited’s 110 MW Pare projectand Himachal Pradesh Power Corp-oration Limited’s 111 MW Sawra Kudduand 195 MW Kashang hydro projects.

It is also executing the largest indepen-dent power producer hydro project in thecountry – Teesta Urja Limited’s 1,200 MWTeesta III plant. In the overseas market, itis executing Nepal’s largest project, the456 MW Upper Tamakoshi plant, andseveral others in Sri Lanka, Vietnam,Laos, Indonesia and Malaysia.

Future plans The company expects the hydro seg-ment to revive in the next two years andis expecting an order guidance of appr-oximately Rs 20 billion by 2015-16. Itplans to focus on compact projects inIndia and is looking to expand its man-ufacturing base in the near term. It willalso focus on the turbo generator mar-ket and introduction of new technolo-gies. However, the company faces sever-al challenges in the current marketenvironment. First, given that the mar-ket has few upcoming projects, theorder situation has become very com-petitive. Second, there are sectoralissues such as delays in environmentalclearances, project cost over-runs anderosion of investor interest. With indus-try optimism that the country’s GDP willincrease from 4.5 per cent to 7 per centby early 2015, the company is hopefulthat the hydro sector will gain mom-entum in the next 1-2 years. ■

C O M P A N I E S

Strengthening its presence in the hydropower segment

40

ANDRITZ HYDRO India


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Madhya Pradesh has emerged asone of the fastest growing statesin the country with a GDP

growth of 11.08 per cent in 2013-14 ascompared to the national GDP growth of4.86 per cent. A similar course has beenfollowed by the state’s power sector.From registering a power deficit of 18.5per cent in 2004-05, Madhya Pradeshtoday is one of the few power-surplusstates in the country, with a peak dem-and of 9,716 MW met during 2013-14.The state also recorded moderate trans-mission and distribution (T&D) losses of3 per cent and 25 per cent respectively.

The Madhya Pradesh Electricity Regula-tory Commission (MPERC), which wasconstituted in August 1998, has played akey role in improving the performance ofthe state’s power sector. The commissionoversees the functioning of its power util-ities: MP Power Generating Company,MP Power Transmission Company, MPPoorv Kshetra Vidyut Vitran Company(distribution), MP Madhya Kshetra Vid-yut Vitran Company (distribution), MPPaschim Kshetra Vidyut Vitran Company(distribution) and MP Power Manage-ment Company (trading).

Apart from notifying key regulationsrelated to tariff setting, open access andrenewable energy, the regulator hasencouraged the implementation ofmeasures aimed at loss reduction andmetering. “The state is surplus in powerand the demand-supply gap is nil. Itdoes not resort to power cuts in any areaand there is no requirement for purchas-ing short-term power. This situation isenvisaged to continue in the future,”says Rakesh Sahni, chairman, MPERC.

Tariff rationalisationMPERC has been revising the retail tariffrates on an annual basis, even before theAppellate Tribunal for Electricity man-

dated this for the state regulators inNovember 2011. It notified the Terms andConditions for Determination of Tariff forDistribution and Retail Supply of Elec-tricity and Methods and Principles forFixation of Charges Regulations, 2006 fortariff determination for the control peri-od 2007-08 to 2009-10. For the next con-trol period, 2010-11 to 2012-13, the regu-lator notified the tariff regulations in2009. For the third control period, till2015-16, MPERC notified the regulationsin November 2012.

For 2014-15, MPERC has not increasedthe tariffs. Also, it has been allowing rev-enue income equal to the annual rev-enue requirement (ARR) proposed bythe discoms. In order to improve theefficiency of discoms, the regulator hasset the loss level and distribution costs.A deviation from these levels is not con-sidered as a pass-through at the time oftruing-up of the ARR and the associatedcosts are borne by the utility.

For tariff rationalisation, MPERC issued

a cross-subsidy road map on October 6,2007 with the aim of bringing tariffs forvarious consumer categories within arange of ±20 per cent of the average costof supply by 2010-11. However, in 2012-13, the approved gap between the tariffsand cost of supply for some consumercategories, like low-tension non-domes-tic and high-tension non-industrial, hasbeen as high as 40 per cent.

Open accessMPERC notified the Terms and Condi-tions for Intra-State Open Access inMadhya Pradesh Regulations in 2005.While the majority of the states faceissues such as non-availability of suffi-cient transmission networks for allowingopen access, MPERC sees no difficulty inthe implementation of open access inMadhya Pradesh. The regulator allowedopen access in the state in a phasedmanner between May 2005 and October2007. All consumers with a power de-mand of 1 MW and above were allowedopen access beginning October 1, 2007.MPERC also constituted the Open AccessMonitoring Dispute Resolution andDecision Review Committee in Decem-ber 2012 to ensure efficient implementa-tion of open access in the state. As ofMarch 31, 2014, MPERC had received 114applications for grant of open access foran aggregate capacity of 352.52 MW. Ofthese, it has approved 101 applicationsaggregating 173.23 MW of capacity,rejected three applications for 6.15 MWwhile 10 applications for 173.14 MW ofcapacity are pending.

MPERC takes steps to improve sector performance

Positive Role

Particulars MP Poorv MP Paschim MP Madhya State

Total ARR proposed for 2014-15 67.55 81.23 71.63 2,20.42

Revenue income from tariffs 67.55 81.23 71.63 2,20.42

Uncovered gap/Surplus 0.00 0.00 0.00 0.00

Source: MPERC

Proposed and approved tariff revenue for 2014-15 (Rs billion)

F O C U S O N R E G U L A T I O N


Loss reductionReduction in T&D losses is anotherfocus area for MPERC. The regulator hasbeen specifying a loss reduction trajec-tory for the state discoms since 2006-07.The aggregate technical and commer-cial losses in the state stood at around25 per cent in 2013-14. Of this, collec-tion efficiency has been almost 100 percent. By 2015-16, the loss level of MPPoorv is expected to be 18 per cent, thatof MP Paschim 16 per cent and that ofMP Madhya 19 per cent. The regulatorhas also designed a mechanism toincentivise the discoms to achieve afaster rate of loss reduction.

MPERC is encouraging the implementa-tion of a scheme for agricultural feederseparation. Under this, the majority offeeders have been segregated. The regu-lator has approved capex plans worth Rs 50.48 billion for MP Poorv for 2012-16,Rs 39.88 billion for MP Paschim for 2012-16 and Rs 52.7 billion for MP Madhya for2013-17. The planned works include sys-tem strengthening, feeder separation,and projects under the RestructuredAccelerated Power Development andReforms Programme, and the RajivGandhi Grameen Vidyutikaran Yojana.

MPERC has directed the utilities to aug-ment the system capacity to reduce tech-nical losses. It has encouraged the instal-lation of aerial bunched cables, cen-tralised monitoring systems, high voltagedistribution systems and tamper-proofmeter boxes. It has also suggested mea-sures such as replacement of defectivemeters, installation of meters near thecall bell location and replacement of ser-vice lines by armoured cable.

MeteringMetering is a key focus area for MPERC.As of 2013-14, almost 13.15 per cent ofthe total 8.07 million domestic connec-tions in the state were unmetered. Theseunmetered connections are concentrat-ed in the rural areas as the discoms haveachieved 100 per cent metering for urbandomestic connections. The number ofunmetered connections has increasedfrom 683,000 to over 1.06 million during

the past 10 years. However, the number ofconnections has increased from 4.58 mil-lion to 8.07 million. The regulator hasdirected the discoms to provide no newconnection without a meter and to com-plete meter installation for the existingconnections by 2014-15.

MPERC has directed the discoms to stepup the metering process for agriculture-predominant distribution transformerson an interim basis till meters for allindividual agricultural connections areprovided. “The commission is of theview that all consumers should be me-tered individually. Also, the current flatrate billing regime for unmeteredconnnections has no incentives for con-sumers who save energy,” says Sahni.

On the positive side, the state has a highproportion of electronic meters installed.As of 2013-14, the central discom hadelectronic meters for all its consumerswhile the other two discoms had elec-tronic meters installed for over 80 percent of connections. Also, all the high ten-sion (HT) consumers in the state havebeen provided with electronic meterswith time-of-day features and automaticmeter reading facility. The low tension(LT) industries with a load of 25 HP andabove have electronic meters capable ofrecording the demand and storing pastdata. These consumers are also providedwith AMR facility. Similar meters arebeing installed for other consumer cate-gories with loads of 25 HP and above.

In terms of feeder metering, MP Poorv

has metered all its 11 kV feeders (to-talling 3,684) and 33 kV feeders (totalling1,575). MP Paschim has metered all its33 kV feeders (2,342) while 529 feeders ofthe total 4,710 feeders at the 11 kV levelare yet to be metered. MP Madhya has135 feeders at the 33 kV level and 588feeders at the 11 kV level for whichinstallation of meters is in progress.

Renewable energyWith the aim of encouraging theabsorption of renewable energy,MPERC notified the Cogeneration andGeneration of Electricity from Rene-wable Sources of Energy Regulations,2010. Under this, MPERC set renewablepurchase obligation (RPO) targets forsolar and non-solar energy for eachyear beginning 2010-11 till 2014-15. For2014-15, the target for solar RPOs is 1per cent and that for non-solar RPOs is6 per cent. In order to ensure RPOcompliance, the regulator has ear-marked Rs 4.75 billion and Rs 13.78 bil-lion in the retail tariff order for 2014-15for the purchase of 590 MUs of solarpower and 3,544 MUs of non-solarpower respectively.

ConclusionMPERC has played a proactive role inreviving the state’s power sector. Whilethe sector is already successful in meet-ing the state’s power demand and is in aposition to supply power to other states,the regulator needs to ensure a reduc-tion in T&D losses as well as deploymentof advanced IT systems. ■

Shruti Goel

Consumer category 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

LT

Domestic 95 91 93 95 95 97 98 100

Non-domestic 152 146 144 139 140 136 140 136

LT industry 121 121 127 124 123 123 122 122

Agricultural 67 69 67 75 73 77 75 77

HT

Industrial 125 125 127 121 119 121 120 123

Non-industrial 138 136 136 126 129 119 137 137

Bulk residential users 97 97 103 100 97 99 99 99

Source: MPERC

Average tariff realisation as a percentage of the average cost of supply (%)

F O R U M

44

How can the proposed reconstruction fund foracquiring stressed assets help operationalisestranded assets?

Rahul AgrawalThere are currently four broad classes ofstranded power generation assets. Theseare assets under operation, assets readyfor operations, assets at the construc-tion stage and assets that have beeninvested in but are yet to take off. For theproposed reconstruction fund, in orderto set a target base, we need to under-stand the issues that are responsible forthese stressed projects. Unless the issuesare understood in a comprehensivemanner, the fund’s objective of support-ing the power sector will be limited.

A major issue responsible for the oper-ating stressed assets is the non-avail-ability of fuel and non-realisation ofpower sale revenue from the buyer,mainly the discoms. Apart from thesefactors, projects under development are

facing time and cost overruns, andhence require additional funds. For pro-jects under construction, there are dif-ferent issues like delays in clearances,lack of power purchase agreements(PPAs), no coal linkages, etc.

This fund will be more suitable for pro-jects that are facing financial issues. Theprojects that may receive support fromthis fund include those that are opera-tional but are not able to run becausetheir tariff proposal has not yet beenapproved by the regulatory authority.There are instances where the developerwants to exit the power projects. Thefund would be useful for this category ofstranded assets as well.

For stranded projects in the other twocategories, this fund will be of limitedhelp. It will not help solve problemsrelated to non-grant of clearances, fuelavailability or finalisation of PPAs. Theproposed reconstruction fund is not

going to serve the purpose of all cate-gories of stranded projects.

Rajesh MokashiPower projects that have incurred sig-nificant cost overruns due to issuesrelated to delays in obtaining the nec-essary clearances or acquisition of landhave suffered primarily on account ofunfunded interest costs and in a fewcases where the main plant compo-nents were imported, due to adverseforex impact. These projects, if provid-ed longer-tenor loans compared to theexisting loans with back-ended or bal-looning repayments, can still be opera-tionalised as the effective life of powerplants is 25-30 years, whereas the typi-cal tenor of project finance loansextended by lenders is 10-12 years.However, power projects that have fun-damental issues such as non-availabili-ty of fuel (gas-based power projectswith an aggregate capacity of 12,000MW or captive mine-based projectswhere coal mines are not developed butpower projects are complete) will con-tinue to face challenges until the keyissues are resolved.

Nitin ZamreThe primary issues facing strandedpower plants are fuel supply, powerevacuation and offtake by utilities.There is no clarity on how the proposedfund can resolve these issues, which aremore physical in nature than opera-tional or financing related. It is still notknown whether it will be a debt fund,

The country’s thermal power generation segment is facing several challenges including inadequate fuel availability, non-realisationof power sale revenues by discoms and delays in granting statutory clearances. This has resulted in many generation assets gettingstranded at the operational or developmental stages. In order to address this problem, the Ministry of Power has proposed to float areconstruction fund for acquiring stressed power projects. This will not only help in operationalising currently stranded assets, butwill also provide a fillip to future investments in the power sector by stabilising its medium- to long-term outlook. That said, the val-uation of these stressed assets is of primary importance, and a comprehensive policy is needed to undertake an unbiased evalua-tion. Sector experts share their views on the issue and elaborate on its possible implications…

Rescue BidReconstruction fund proposed for stressed projects

Rahul AgrawalDirector, Technical,

GVK Power andInfrastructure Limited

Nitin ZamreManaging Director,

ICF International India

Rajesh MokashiDeputy Managing

Director,CARE Ratings


equity fund, or both. However, some-thing that the fund can probably do isprovide cheaper finance over the longterm (for instance, through takeoutfinancing) that can bring down thefinancing cost of power projects. Theoverall power cost may come down toan acceptable level even with the use ofalternative fuels.

What are the key parameters that need to beconsidered in the valuation of stressed assetsfor sale?

Rahul AgrawalThere are a number of factors that couldplay a role in the valuation of stressedassets. The valuation depends on thestage at which the asset is. Aspects suchas the type of PPA (long, medium orshort term), fuel linkage, power evacua-tion facilities, quality of the plant(design, construction and manufactur-ing), manufacturers’ supply source(Indian or Chinese), and other parame-ters like heat rate and auxiliary power

consumption play an important role inreaching the final valuation of stressedassets. For coastal projects, port andcoal jetty linkages are crucial. If the pro-ject is inland, adequate railway linkageis important.

Rajesh MokashiThe key aspect would be to analyse theavailability of major clearances, qualityof equipment used in the projects andany possibility of extracting valuethrough synergy or cost optimisation.

Nitin ZamreThe key aspects would be the ability ofthese assets to get access to fuel andevacuation networks, and their capabil-ity to tap key markets for long-termsales (as and when the other problemsare resolved).

How can this initiative ensure that irrationalinvestments (that is, contracts based on irra-tionally low bids) are not unduly rewarded?

Rahul AgrawalThis is the case for projects that are eitherunder construction or are yet to take off.When a project is under development,you are not sure of the end quality. Deve-lopers executing projects awarded throu-gh tariff bidding always construct theproject within the quoted rate. Moreover,due to intense competition in the biddingprocess, bidders quoting really low ratesare chosen, resulting in a reduction in thecapital cost, which impacts the quality ofthe finished asset. Some of the powerplants that are stressed quoted a very lowrate at the bidding stage, which was unvi-able and, therefore, the developers aredeciding to exit the power projects. Duediligence of the project needs to be car-ried out to evaluate the asset’s quality andother aspects.

Rajesh MokashiAs with the recent Central ElectricityRegulatory Commission order forimported coal-based projects, the mainconsideration for the reconstructionfund should be to make the projectsoperational/viable during a period ofhardship and to safeguard lender inter-ests. Equity returns should only beallowed after a reasonable period forrecovery to prevent incentivising irra-tional bids.

Nitin ZamreIt is likely that the criteria for accessingthis fund will have conditions to detersuch irrational investments in thefuture. However, it is too early to defini-tively say how this scheme will benefitthe sector, as its details have not beendefined yet. ■

F O R U M


“The fund will not helpsolve problems related to non-grant of clear-

ances, fuel availability orfinalisation of PPAs.”

Rahul Agrawal

“Power projects that havefundamental issues suchas non-availability of fuelwill continue to face chal-lenges until the key issues

are resolved.”Rajesh Mokashi

“The primary issues facingthe stranded power plants

are fuel supply, powerevacuation and offtake byutilities. There is no clarityon how the proposed fundcan resolve these issues.”

Nitin Zamre

F O R U M

46

What are your top priorities for Haryana’spower sector in the next few years?

Our top priorities are to:• Provide uninterrupted, 24x7 reliable

and affordable power supply to all.• Create sufficient generation capacity

through own assets and contractualcapacities.

• Strengthen the transmission systemin view of the load growth.

• Strengthen the distribution networkthrough coordinated transmissionand distribution (T&D) planning andextensive use of information andcommunication technology, includ-ing smart grids and supervisory con-trol and data acquisition systems.

• Institutionalise energy auditing andaccounting.

• Offer comprehensive customer careon a digital platform.

What were the significant achievements of thestate’s power generation, and T&D segmentsin 2013-14?

During 2004-05, the installed generationcapacity in Haryana was 1,587.7 MW;this has now increased to 5,300.50 MW.During 2013-14, Haryana Power Genera-tion Corporation Limited (HPGCL)achieved its lowest ever auxiliary con-sumption of 8.49 per cent, station heatrate of 2,447 kCal per kWh and oil con-sumption of 0.85 ml per kWh.

In the transmission segment, HaryanaVidyut Prasaran Nigam Limited(HVPNL) constructed 14 new (66 kV andabove) substations, augmented 63 exist-

ing substations and laid 211.38 km oftransmission lines, along with the addi-tion of 1,740.30 MVA of transmissioncapacity at an investment of Rs 4.85 bil-lion. During March 2005 to January2014, 257 new 33 kV substations werecommissioned, 363 existing 33 kV sub-stations augmented and 2,000 km ofnew 33 kV lines added to the system.

In the distribution segment, due to thepersistent efforts of the discoms (UttarHaryana Bijli Vitran Nigam andDakshin Haryana Bijli Vitran Nigam) toimprove operational efficiency, the rev-enue received in banks increased to Rs 149.1 billion in 2013-14, a 30 per centincrease over the previous year. As ofMarch 2014, around 1.45 million energymeters (about 63.5 per cent of the totalconnections) were relocated outsidepremises in urban areas to avoid tam-

pering. About 95 per cent of the feederindexing work was completed. Theamount recovered from theft casesincreased by 33 per cent (Rs 400 mil-lion) in 2013-14 compared to 2012-13(Rs 309.6 million).

What measures are being taken to managethe demand-supply gap?

The total installed and contracted gen-eration capacity available to Haryanais 10,635.72 MW. The highest dailypower supply of 190.2 MUs was on July16, 2014, when the record maximumdemand of 8,752 MW was met.Haryana’s utilities constantly monitorload projections vis-à-vis generationcapacity likely to be made available in

the future. In case of excess or idle gen-eration capacity, utilities sell surpluspower on the exchanges. The process ofreleasing new and pending connec-tions is also being streamlined, so thatit may lead to load growth and higherpower consumption.

What are some of the new initiatives beingtaken by the state’s power sector?

The concept of circle-wise long- andshort-term coordination planning bet-ween T&D utilities has been introducedfor the first time in Haryana. A three-yearplan for strengthening the infrastructurewas completed based on load growth, 70per cent loading of transformers and 250ampere loading of 11 kV feeders. A capitalinvestment plan of Rs 117.25 billion forT&D companies has been finalised forthe period 2014-15 to 2016-17. During

Haryana’s power sector is growing at a fast pace, backed by dedicated efforts by the state government. The state has more thantripled its installed generation capacity in the past eight years. Since 2005, about 21,532 MVA of transmission capacity has beenadded with system availability of over 99.7 per cent. The revenue on energy purchased by discoms increased to Rs 3.63 per unitduring 2013-14, about 14 per cent higher than the previous year, indicating a reduction in distribution losses. In a recent interviewwith Power Line, Devender Singh, principal secretary, power, Haryana government, outlined the achievements of the state’s powersector, its future plans and key challenges. Excerpts…

Interview with Devender Singh“Our goal is to serve all consumers with continuous, reliable power”


F O R U M


this period, 173 new 33 kV substationsand 95 new substations of 66 kV andabove are proposed to be built.

A major step has been taken towardscorporate governance by appointingindependent directors on the boards ofthe utilities. Performance managementsystems (PMSs) have also been intro-duced. PMSs in discoms are based pri-marily on loss reduction, revenue-in-bank achievements and customer ser-vices; the PMS in HVPNL is based onreliable and uninterrupted power sup-ply with minimum transmission losses;the PMS in HPGCL is essentially focusedon the reduction of generation cost andminimum forced outages.

In the transmission segment, gas-insu-lated switchgear (GIS) substations havebeen introduced to optimise the use ofland resources for substations. Thestate’s first 66 kV GIS substation wascommissioned in Sector 43, Gurgaon, inNovember 2009. The use of multicircuittowers and underground cabling hasbeen taken up in high population densi-ty areas such as Gurgaon. A 220/33 kVdistribution system with undergroundcabling has been planned in theGurgaon-Faridabad region.

A number of initiatives have been takento minimise distribution losses andimprove the financial position of dis-coms. These include comprehensiveenergy audit of meters; introduction ofvillage supply improvement schemes inSinghran and Chirod villages in Hissaron a pilot basis; implementation of themeter pillar box scheme and automat-ed meter reading (AMR); introductionof special design transformers for bet-ter supply to the Dera/Dhanis; and im-plementation of the financial restruc-turing plan (FRP).

Further, a smart grid pilot project will beimplemented in Panipat, at an estimat-ed cost of Rs 460 billion with a grantfrom the New Energy and IndustrialTechnology Development Organisation,the only Indian project to be funded by agrant from the Japanese government.

What is the expected capacity addition inHaryana across fuel sources?

HPGCL proposed to set up Unit 9 of 660MW capacity based on supercriticaltechnology on the available land at thePanipat thermal power station (PTPS),by way of simultaneous phasing out ofthe old and less efficient Units 1-4 (eachof 110 MW capacity). Of the total domes-tic coal requirement of 2.24 milliontonnes per annum (mtpa) for the pro-posed unit, 1.6 (mtpa) will be madeavailable by transferring the existingcoal linkage of Units 1-4 and the balancewill be arranged from the Mara II-Mahan coal block allocated jointly toHPGCL and the Delhi government. Theengineering, procurement and con-struction contract for the unit is expect-ed to be awarded in 2014-15 and the unitis likely to be commissioned by 2019-20.

HPGCL has planned to set up a 660 MWsupercritical unit at the 600 MW Deen-bandhu Chhotu Ram Thermal PowerPlant (DCRTPP) in Yamunanagar. TheMinistry of Coal (MoC) has allocatedthe Kalyanpur-Badalpara coal block inJharkhand, which will partially meet thefuel requirement of the project. The pro-ject is expected to be commissionedduring the Thirteenth Plan period. Thetotal domestic coal requirement for theproject is 2.24 mtpa, of which 1.5 mtpawill be met from the Kalyanpur-Badalpara coal block and the balancewill be arranged from the Mara II-Mahan coal block.

Another supercritical unit of 660/800MW capacity is proposed to be set up byHPGCL on the available land at the RajivGandhi thermal power plant, Khedar.

The feasibility report for this unit isunder preparation and it is expected tobe commissioned after July-August2019. The total coal requirement is 2.24mtpa, which is proposed to be met fromthe Mara II-Mahan coal block.

HPGCL plans to set up a 2x750 MW (+5per cent) gas-based power plant inFaridabad. Around 91 acres of land hasbeen purchased by HPGCL for setting upthe project in village Mothuka/Arwa inFaridabad district, and the purchase ofanother 41 acres is in process. The gasrequirement for the project is assessedat 7.5 million standard cubic metres perday (mmscmd). The Ministry of Power(MoP) has recommended an allocationof 2.8 mmscmd of natural gas, which issufficient for the operation of only oneunit at a plant load factor of 70 per cent.The project is expected to be commis-sioned during the Thirteenth Plan.

HPGCL is the nodal agency for facilitat-ing the setting up of the 2,800 MW(4x700 MW) nuclear power plant byNuclear Power Corporation of IndiaLimited. The process of land acquisitionhas been completed. In the first phase ofthis project, two 700 MW units (1,400MW) are proposed to be set up by 2020-21, at an estimated cost of Rs 206 billion.The foundation stone of the project waslaid on January 13, 2014.

The development of the Mara II-Mahancoal block has been held up for want offorest clearance from the Ministry ofEnvironment and Forests. The Kalyan-pur-Badalpara coal block in Jharkhandwith coal reserves of about 102 milliontonnes has been allocated jointly toHPGCL and Uttar Pradesh Rajya VidyutUtpadan Nigam Limited in a 50:50 ratio.Coal production from both blocks is exp-ected to start during April-October 2021.

What steps are being taken to strengthen thestate’s T&D network?

Haryana’s discoms have been witnessingsubstantial growth in their consumerbase over the past few years and the trendis expected to continue in the coming

“A high priority for us isencouraging competitionand offering an enablingenvironment for private

sector participation in thepower industry through asolid policy framework.”

years. Our primary goal is to serve all con-sumers with continuous, reliable power.New substations are being taken up withthe objective of catering to the additionalload, to provide better quality supply andbetter consumer service. After the cre-ation of new substations, a few originaloverloaded feeders will be shifted fromthe original substations to new substa-tions, or the load of a few feeders from theoriginal substation will be shifted to anew substation.

For ensuring proper power evacuation,the utilities have drawn up capitalinvestment plans till 2016-17, underwhich an investment of Rs 47.89 billionwill be made with the help of fundingagencies like the Rural ElectrificationCorporation, the Power Finance Corpo-ration and the Japan InternationalCooperation Agency. The major activi-ties that will be undertaken till 2016-17are the creation of 76 new 33 kV substa-tions, augmentation of 119 existing 33kV substations, erection of 600 km of 33kV lines, erection of 800 km of new 11 kVlines, implementation of AMR for allconsumers with usage of over 10 kW,and execution of a smart grid pilot pro-ject at Panipat, etc.

How have the state discoms benefited fromthe central government’s FRP scheme?

The FRP for the state discoms wasapproved by the state government.Under this, the discoms are projected tobecome profit positive in three to fouryears and cash positive in five to sixyears. As mandated under the FRPscheme, bonds of Rs 73.66 billion havebeen issued to banks towards 50 percent of the short-term liabilities to betaken over by the state government. Acompetitive interest rate of 9.8 per centhas been finalised on the bonds.

What steps are being taken by the state gov-ernment to encourage private participation inthe power sector?

To ensure energy security, the Haryanagovernment is encouraging private par-ticipation in the power sector. Haryana

was one of the pioneers in inviting inde-pendent power producers (IPPs) to setup projects through tariff-based com-petitive bidding under the Case 2 mech-anism. The 2x660 MW Mahatma GandhiSuper Thermal Power Plant in Jhajjar,was set up in 2012 by CLP India PowerPrivate Limited under the same mech-anism. Further, the state governmentplans to set up two coal-based powerplants through tariff-based competitivebidding under the Case 2 mechanism.The preliminary survey of a few sites inSirsa and Bhiwani districts has been car-ried out for this purpose by HPGCL.

Discoms are planning to implement dis-tribution franchises on a pilot basis invarious urban towns to promote privatesector participation and competition inpower distribution. The utilities are alsomooting a proposal to implement 11 kVfeeder-wise retail supply franchises onsuch feeders having a loss of more than50 per cent.

What initiatives are being taken to promotethe development of renewable energy inHaryana?

Haryana has created an enabling envi-ronment for investments in renewableenergy. Six biomass power projects aggre-gating 63 MW are being set up by IPPs. Ofthese, two projects totalling about 20 MWof capacity are at the final stage of com-pletion. For power generation fromindustrial waste, 11 cogeneration pro-jects of 24.95 MW capacity have been setup in industries and four projects of 12.6MW capacity are under installation.Haryana’s state nodal agency emerged asthe best in the country for the installa-tion of solar water heating systems for2011-12. Allocation of 80-90 MW of solarpower under the Jawaharlal NehruNational Solar Mission at a tariff of Rs5.50 per unit has been assured.

What is your vision for the state’s power sec-tor five years from now?

Our aim is to make the utilities efficientand economically viable so as to boostsocial and economic development in the

state. In the coming years we will be in aposition to efficiently arrange for 24x7supply of electricity throughout thestate, including pockets with inadequatesupply. Round-the-clock, quality powersupply to industries is another short-term goal for us. Another high-prioritygoal for us is encouraging competitionand offering an enabling environmentfor the participation of the private sectorin the power industry through a solidpolicy framework.

What are the key challenges that the state’spower sector needs to overcome?

The quality of coal supplied to HPGCLthrough various Coal India Limited (CIL)subsidiary companies is an issue. Pay-ments are made to CIL on the basis ofcoal quality grade, which is tested anddeclared at the loading (colliery) end.The quality of coal tested at the loadingend is normally found to differ widelyfrom the quality of the same coal whentested at the receiving (power station)end. This results in heavy financial loss-es for the generation utility. Therefore,joint testing of the supplied coal shouldbe implemented.

The delay in granting forest clearancefor the Mara II-Mahan coal block is alsoan issue. Further, gas allocation for theproposed power plant in Faridabad isalso a concern. The issues relating to theexpansion of DCRTPP include the non-availability of long-term coal linkagesand extending the validity of the termsof reference. Also, a policy needs to beput in place for transferring the coallinkage of old units to new units for theproposed supercritical Unit 9 at PTPS.

The consumer base of Haryana’s dis-coms predominantly comprises ruraland agricultural consumers. Supplyingcontinuous power to these consumers isa challenge. Mitigating the high networkand commercial losses in the low ten-sion network is a key constraint. Anotherarea of concern for us is ensuring com-mercial viability of discom operationswhile meeting our social responsibilitiesand improving our books. ■

F O R U M


India Infrastructure Research (publishers of RenewableWatch and PowerLine magazine) is currently developing and will soon release thereport on “Hydro Power Projects in India 2014”, the most up-to-date information on the hydro power sector in India.

The fourth edition of the report will be in two sections with 16 distinct chapters:

To order a copy, please send a cheque or draft payable to “India Infrastructure Publishing Pvt. Ltd.” and mail to:

Raktima MajumdarManager - Information ProductsIndia Infrastructure Publishing Pvt. Ltd. B-17, Qutab Institutional Area, New Delhi - 110016. IndiaTel: +91-11-46078365(D), 41034600/01; Fax: +91-11-26531196Mobile: +91-8826127521 E-Mail: [email protected]

Hydro Power Projects in India 2014

New Report

Project Pipeline and Economics; Sector Outlook and Opportunities

Section A: Overall Sector Overview

Executive Summary Focus on Northeast States Size and Growth Opportunities in Neighbouring Countries Recent Developments (2013-14) Project Economics Project Pipeline Analysis Tariffs Analysis of Project Delays Financing Ecological Impact and Environmental Issues Equipment Market Outlook Opportunity in Key States Future Outlook

Section B: Project Profiles

Projects under Construction This chapter will cover around 50 projects including Subansiri Lower, Teesta III, Parbati II Kol Dam, Ratle, Tapovan, Vishnugad, Kameng, Baglihar II, Teesta VI, etc. Each profile will have detailed information on developer, capacity, location, EPC/ equipment providers, project cost, financing, expected commissioning, status, etc.

Projects under Survey and Investigation This chapter will cover around 75 projects. Each profile will have key data on developer, capacity, location, type, status, etc.

The report is priced at Rs 50,000 (plus 12.36 per cent service tax) for a Site Licence and Rs 75,000 (plus 12.36 per cent service tax) for anEnterprise Licence.

There is also a special pre-publication “early bird” discount. The report is priced at Rs 45,000 (plus 12.36 per cent service tax) for a Site Licence and Rs 67,500 (plus 12.36 per cent service tax) for an Enterprise Licence for orders and payments received on or beforeAugust 8, 2014.

The report will be accompanied by a presentation in PDF format and will be ready in September 2014.

F I N A N C E


In a significant development, SterliteTechnologies Limited is set to raise Rs 5 billion from Standard Chartered

Private Equity. This will be the firstforeign investment in India’s powertransmission segment. As per the agree-ment signed between the two compa-nies, Standard Chartered Private Equitywill invest the amount in Sterlite PowerGrid Ventures Limited (SPGVL), a sub-sidiary of Sterlite Technologies focusingon the development of inter-state trans-mission projects.

In a press statement, Pravin Agarwal,chairman, SPGVL, and director, SterliteTechnologies Limited, said, “We lookforward to a long-term partnership withStandard Chartered Private Equity inour power transmission infrastructurebusiness. Through our initiatives intransmission, we endeavour to con-tribute to the new government’s statedvision of providing 24x7 power to everyIndian household.”

On his part, Udai Dhawan, managingdirector and India head, StandardChartered Private Equity, stated, “We areextremely excited to partner with Ster-lite, which has established itself as aleading player in the power transmis-sion sector. We believe that our partner-ship with the Sterlite Group will help inthe buildout and strengthening of trans-mission infrastructure in India.”Standard Chartered Private Equity hasinvested more than $5 billion in over 100companies across Asia, Africa and theMiddle East since 2002.

Though the financial terms of the dealhave not been disclosed, SPGVL will issueconvertible securities to Standard Char-tered Private Equity for a minority share.The proceeds will be utilised as equitycontribution for existing and new trans-mission projects of the company.

Project portfolioSterlite Technologies has a portfolio of sixinter-state transmission projects on abuild-own-operate-maintain basis – thelargest among private sector developers.The company will design, finance andconstruct transmission systems andmaintain them for a period of 25-35years. The projects have been awarded bythe Ministry of Power on the basis ofcompetitive bidding.

These include the East-North Inter-connection transmission project, theJabalpur transmission project, theBhopal-Dhule transmission project, thetransmission system associated with theRajasthan Atomic Power Project (RAPP),the Eastern Region System StrengtheningScheme-VII (ERSS-VII), and the NorthernRegion System Strengthening Scheme-XXIX (NRSS-XXIX). These inter-statetransmission projects entail the settingup of about 5,000 circuit km (ckt. km) ofextra high voltage lines and associatedsubstations. Once commissioned, theprojects will cumulatively earn about Rs11 billion in tariffs annually. As of March2014, Sterlite Technologies had incurred atotal capex of Rs 35 billion for the inter-state transmission projects.

In September 2013, the company com-missioned the 400 kV double-circuit(D/C) Purnia-Biharsharif line, a part ofthe East-North Interconnection project.The line recorded transmission systemavailability of 99 per cent and earned rev-enues of about Rs 350 million in 2013-14.Other lines of the East-North Intercon-

nection, and the Jabalpur and Bhopal-Dhule transmission projects are likely tobe commissioned during 2014-15. Theseprojects were won by the company inFebruary 2010, January 2011 and Feb-ruary 2011 respectively, and are beingexecuted by project-specific special pur-pose vehicles .

Further, the transmission project forRAPP (Units 7 and 8) and the ERSSS-VIIwere awarded in September 2013. Thelatest inter-state transmission projectwon by the company is the NRSS-XXIX,which was awarded in May 2014. Theproject entails the setting up of 800 ckt.km of transmission lines, which wouldcarry over 1,000 MW of power fromPunjab to Jammu & Kashmir. The com-pany had quoted an annual tariff ofabout Rs 4.4 billion for the project, about5 per cent lower than the next highestbid. This will be Sterlite Technologies’largest project in terms of revenues andscale. Financial closure for these threeprojects (RAPP, ERSS-VII and NRSS-XXIX) is expected in the next two yearsand operations are likely to commencefrom by 2016-17.

Summing upStandard Chartered Private Equity’sinvestment in SPGVL augurs well for thecompany and the power sector as awhole. While the generation segment hasattracted foreign investors in the past, thetransmission segment has failed to do so.This is mainly because the power sectorhas so far focused mainly on increasinggeneration capacity while the transmis-sion and distribution (T&D) segmentshave been lagging behind, leading toissues such as transmission network con-gestion and high T&D losses. With grow-ing private participation in the transmis-sion segment through the setting up ofinter-state transmission projects, the sce-nario is likely to improve in the comingyears. Given Sterlite Technologies’impressive track record in winning inter-state inter-state transmission projectsamidst tough competition, it is poised toemerge as a leading private sector devel-oper in the transmission segment. ■

Neha Bhatnagar

Sterlite Technologies raises foreign funds

Private Equity Push

13th Annual Conference on

PPrrooggrreessss && PPootteennttiiaall;; IIssssuueess && OOppppoorrttuunniittiieess

Smart Utilities

Organisers:

Delegate FeeThe delegate fee is Rs 22,500 for one participant, Rs 37,500 for two, Rs 52,500 for three and Rs 67,500 for four. There is also a 20 per cent “early bird”

discount for those registering before August 8, 2014.

There is a special low fee of Rs 5,000 per participant for the state electricity boards and their successor units (state-owned gencos, transcos and dis-

coms), regulatory authorities, research organisations and academic institutions.

Service tax of 12.36 per cent is applicable on the registration fee.

Plenary Sessions:The conference will have eight general/plenary sessions:

Key Trends and Outlook Interoperability Technology Integration

Update on Smart Grids Utility Perspective Cyber Security Issues in the Power Sector

Communication Technologies Cloud Computing Etc.

DISTRIBUTIONAdvanced Metering Infrastructure

SCADA

Distribution Management System

Outage Management System

Substation Automation

Load Forecasting and Analysis

GIS-based Consumer Indexing

Customer Relationship Management

TRANSMISSIONWide Area Monitoring Systems

Load Flow Studies

Unmanned Substations

Structural Analysis and Design Software

GIS-based Applications in Transmission

Planning

Occurrence Reporting System

IT Applications to Enable Open Access

Renewable Energy Integration

GENERATIONPower Plant Automation

Plant Monitoring and Diagnostics

Optimising Asset Management

Performance Analysis Diagnostics &

Optimisation

Inventory and Fuel Management

Project Planning and Execution

E-procurement

Data Centres

Sponsorship opportunities are open

Tracks:There will be dedicated segment-specific tracks on generation, transmission and distribution. These will cover areas such as communications,data analytics, real-time monitoring, asset management, regulatory compliance, management information systems, smart grid, etc. The dedicated tracks will also cover focused areas including:

The conference will also focus on the R-APDRP experience and its impact on the distribution sector. It will provide a platform for sharing of best

practices, challenges, early successes, etc. It will be an extended session and may have sub-sessions including:

Key Achievements Government Perspective Case Histories

Lessons Learnt Key Challenges The Way Forward

September 1-2, 2014, The Grand, Vasant Kunj, New Delhi

For sponsorship opportunities, contact: Varun Thomson Boyle For registrations, contact: Richa Jhamnani

Tel: +91-11-41034600, 41034610(D), 9999430 521 Tel: +91-11-41034616, +91-9971992998, 9311217271

India Infrastructure Publishing Pvt. Ltd., B-17, Qutab Institutional Area, New Delhi 110016.

Fax: +91-11-26531196, 46038149. E-mail: [email protected]

F I N A N C E


■ REC, PFC approve Rs 78.42 billion loan fortwo power plants (India)The Rural Electrification Corporation(REC) and Power Finance Corporation(PFC) have accorded in-principle ap-proval for providing a loan of Rs 78.42billion for two upcoming supercriticalpower projects in Andhra Pradesh. Theprojects have a capacity of 800 MW eachand will be set up by Andhra PradeshPower Generation Corporation Limitedat its existing plant sites: the 1,260 MWcoal-based Vijayawada station and the1,600 MW Krishnapatnam supercriticalpower station respectively. The estimat-ed aggregate cost of setting up these twounits is Rs 104.26 billion.

■ SPGVL to receive Rs 5 billion equityinvestment Standard Chartered Private Equity Lim-ited has decided to invest Rs 5 billion inSterlite Power Grid Ventures Limited(SPGVL) in the form of equity. An agree-ment to this effect has been signedbetween Standard Chartered and Ster-lite Technologies Limited, the holdingcompany of SPGVL. SPGVL will issueconvertible securities to Standard Char-tered Private Equity for a minority sharein the company. The amount invested isplanned to be utilised for funding theequity portion of existing as well asupcoming transmission projects ofSPGVL. Reportedly, this will be the firstforeign institutional investment in thecountry’s power transmission sector.SPGVL has a portfolio of six independ-ent transmission projects on a build-own-operate-maintain basis.

■ ReNew Power Ventures receives $140million equity investmentReNew Power Ventures Private Limitedhas received an equity infusion amount-ing to $140 million (Rs 8.35 billion) fromthree financial institutions – GoldmanSachs, the Asian Development Bank

(ADB) and the GEF South Asia Clean En-ergy Fund (SACEF) India. While GoldmanSachs has injected $70 million into thecompany, ADB and GEF SACEF haveinvested $50 million and $20 million res-pectively. Following this, the total equityinvestment in ReNew Power has reached$390 million. This is the second instanceof Goldman Sachs injecting equity in Re-New Power, the first being a $135 millioninvestment in 2011.

■ Powergrid board approves investments ofover Rs 55 billion for two projectsPower Grid Corporation of India Lim-ited’s (Powergrid) board has approvedinvestments of over Rs 55.5 billion in twopower transmission projects, to be imple-mented over the next four years. The firstis the Transmission System Strengthen-ing in Western Region-Northern RegionTransmission Corridor for IndependentPower Producers in Chhattisgarh, whichentails a cost of about Rs 51.51 billion andhas a commissioning schedule of 45months from the date of investment app-roval. The other project, the TransmissionSystem Associated with NTPC’s Lara Sup-er Thermal Power Station I (1,600 MW),entails a cost of about Rs 4 billion and hasa commissioning schedule of 34 monthsfrom the date of investment approval.

■ PFC receives shareholders’ approval toraise up to Rs 440 billionPFC’s shareholders have approved thecompany’s plan to raise up to Rs 440 bil-lion through a private placement of non-convertible debentures during 2014-15.They have also approved a proposal todouble the company’s borrowings to Rs 4,000 billion (in rupees) and to $8 bil-lion (in any foreign currency equivalent).

■ ADB approves $300 million loan tostrengthen Assam’s power infrastructureADB has approved a multi-tranche loanfacility amounting to $300 million for

the Assam government to augment thestate’s power infrastructure. The loan ispart of ADB’s broader 10-year, $3.5 bil-lion state investment programme andwill fund the upgradation of the genera-tion and distribution infrastructure,including construction of a 120 MWhydropower plant. It will also financethe deployment of new energy efficientgenerating equipment at the existingplants and the setting up of new distrib-ution lines and substations. The fundswill be disbursed in three tranches of$50 million, $50 million and $200 mil-lion respectively, with the first install-ment planned to be utilised for the rep-lacement of ageing gas turbines at the 60MW gas-based Lakwa power plant.

■ Alstom accepts GE’s acquisition offer(France, USA)France-based Alstom’s board has approv-ed the Euro 23.75 billion purchase offermade by US-based General Electric (GE)for acquiring the former’s energy busi-ness. As per the deal, GE will acquire Als-tom’s thermal power, renewable powerand grid businesses for an equity value ofEuro 12.35 billion and an enterprisevalue of Euro 11.4 billion. Under thedeal, the two companies will form 50:50joint venture companies for the grid andrenewable power segments. Alstom willget 100 per cent ownership of GE’s railsignalling operations.

■ World Bank signs $600 million loan forBangladesh’s rural T&D sector (Bangladesh)The World Bank has signed a loan agree-ment worth $600 million with theBangladeshi government for the coun-try’s Rural Electricity Transmission andDistribution (T&D) Project. The projectaims to improve the access and qualityof power supply in the rural areas in the eastern part of the country. Thestate-run Power Grid Company ofBangladesh and the Bangladesh RuralElectrification Board will set up newpower T&D lines and substations. Theloan proceeds will support the con-struction of new lines and substationsas well as upgradation of the existinglines in the rural areas of Dhaka,Chittagong and Sylhet. ■

Financial BriefsIndia and overseas

Indian Power Sector and Equipment Market Outlook (2014-19)

India Infrastructure Research (a sister division of Power Line and Indian Infrastructure magazines) has recently released “Indian Power

Sector and Equipment Market Outlook (2014-19)” report.

The “Indian Power Sector and Equipment Market Outlook (2014-19)” report provides realistic projections for power demand and

supply in the country, as well as for the various segments of the power equipment market for the period 2014-19. The outlook and projections

are based on the recent trends and developments in the sector; external factors such as economic growth; sector issues like fuel

availability, deceleration of demand and worsening discom finances; status of current projects; etc.

The report has two elements:

– 159-Slide Presentation

– 113-Page Written Report

The “Indian Power Sector and Equipment Market Outlook (2014-19)” report has two distinct sections:

Section A: Power Sector Outlook

Key Trends and Drivers Power Supply Projections

Power Demand Outlook Fuel Outlook

Section B: Power Equipment Market Outlook

Boiler, Turbine and Generator Market T&D Equipment Market

Balance of Plant Equipment Market Renewable Energy Equipment Market

The report is priced at Rs 54,000 (plus 12.36% service tax) for a Site Licence and Rs 81,000 (plus 12.36% service tax) for an Enterprise

Licence.

The report (write-up and presentation) is available in PDF format.


Deepali SharmaManager, Information ProductsIndia Infrastructure Publishing Pvt. Ltd. B-17, Qutab Institutional Area, New Delhi - 110016. IndiaTel: +91-11-46038153, 41034600/01; Fax: +91-11-26531196Mobile: +91-9971407082 E-Mail: [email protected]

available

I N F O C U SD I E S E L E N G I N E S & G E N S E T S


Infocus

Market overview: Demand drivers and key challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Revival in demand: Growth expected after the slowdown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Cost considerations: Demand for diesel-based power despite high price of generation . . . . . . 62

Choice of fuel: Diesel dominates in backup power systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Technology advances: Efficiency improvements in diesel engines reduce costs

and emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Environmental concerns: Stricter emission norms proposed for DG sets . . . . . . . . . . . . . . . . . . . 70

Road to growth: Rental energy plants help bridge the electricity gap . . . . . . . . . . . . . . . . . . . . . . . 72

Key statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Diesel Engines & Gensets

Diesel engines and generator setsare among the most preferredoptions for decentralised power

generation across industries. A sample-based survey of captive power units of 1MW and above by India InfrastructureResearch indicates that as of 2012-13,about 2,600 MW of capacity was basedon diesel and liquid fuels. Increasingly,the demand for diesel generator (DG)sets is being driven by service sectorenterprises such as information tech-nology, hospitality and commercialbuildings. It is also facilitated by theneed to maintain performance reliabil-ity of sensitive electronic equipmentsuch as data centres as well as serversacross organisations.

Current statusOver the years, the market for dieselengines and gensets has become moreorganised and competitive. Broadly, theproduct offerings are categorised undersmall DG sets (15-75 kVA), medium DGsets (75.1-375 kVA) and large DG sets(375.1-2,000 kVA). Domestic manufac-turers supply DG sets with ratings ran-ging from 4 HP to 11,000 HP for meet-ing backup power and continuouspower needs. An efficient distributionnetwork with reliable product supportservices is essential for companieslooking to capture this market. This isparticularly required by industries opt-

ing for high rating baseload gensets.

The capital costs of diesel gensets varyaccording to engine speeds. High speedengines with 1,500 revolutions perminute (rpm) cost Rs 15 million-Rs 18million per MW while intermediate-speed engines (1,000 rpm) cost Rs 20million-Rs 25 million per MW, and low-speed engines (600-750 rpm) cost overRs 35 million per MW. The operatingexpenditure of DG sets varies from Rs 10per unit to Rs 14 per unit. To manageoperational costs, industries are explor-ing options such as dual-fuel systems, inwhich 70 per cent of the fuel require-ment is met by producer gas or naturalgas. In some cases, gas-based generatorsbased on liquefied natural gas havereplaced diesel-based units due to theircost competitiveness. Another compo-nent of cost is servicing. DG sets typical-ly require servicing after 300-500 hoursof operation.

Regulatory developments such as emis-sion norms also have an impact on thecost economics. Central PollutionControl Board’s revised emission normsare awaited. Most of the leading playersin this market are already geared toadhere to these norms. While this wouldresult in higher product costs, it woulddifferentiate their offerings from thecompetition. Also important in this con-

text are technology improvements suchas greater use of electronics to controlfuel consumption, which ensures overallefficiency in power generation.

For equipment manufacturers, the keychallenge is to provide cleaner dieselengines and gensets. Over the years,there has been a growing emphasis ondual-fuel systems, which use alternativefuels such as natural gas and producergas based on biomass resources, bio-diesel, etc. along with diesel. Also, there isa strong business case for the deploy-ment of cogeneration solutions based ondiesel engines and gensets in industrieswhere diesel-based baseload captivepower units are required. Such systemsoffer higher efficiencies in terms ofrationalisation of operational costs.

Efficiency is also one of the factors driv-ing the growth of rental solutions fordiesel gensets. A frequently cited rea-son for choosing rental solutions forgenerators is the project’s time sensitiv-ity. Rentals ensure speedy supply ofequipment, thus providing users withpower supply within a short time. Fastdelivery is critical in situations wherethere has been an unplanned poweroutage or when reliability of power iscritical for production processes. Longlead times are often encountered whencompanies opt for permanent equip-ment for power generation. The rentalroute, moreover, offers flexibility toindustries to increase or decrease thegeneration capacity based on immedi-ate need and ensures minimum equip-ment downtime.

That said, the power rental market inIndia is quite fragmented in terms of ser-vices and offerings. Many companiesoffering rental power are small, family-owned businesses with a limited fleet. Inaddition, the business model for offer-ing turnkey rental power services is stillrelatively underdeveloped in India but isbeing introduced by a few companies.

Key demand segmentsTelecom tower companies are thelargest users of diesel gensets as towers

Demand drivers and key challenges

Market OverviewI N F O C U S D I E S E L E N G I N E S & G E N S E T S




require backup power facilities for un-interrupted operations. The role ofgensets is particularly critical in ruralareas where grid power supply is highlyunreliable and inadequate. The averagegenset run-time for telecom towers inthese areas is as high as 16-20 hours perday. Irregular and unreliable power sup-ply often requires tower companies toprovide for redundancy in capacity byinstalling gensets of 10-15 kVA capacity.

The telecom sector’s demand for dieselgensets is expected to grow in the com-ing years. There are about 400,000 tele-com towers in the country and the towerbase is expected to grow to 450,000 by2015 and 550,000 by 2020. However,steps are being taken to optimise the useof diesel gensets in this segment. Toweroperators are increasingly seekinghybrid solutions such as a combinationof solar power and diesel gensets tominimise operational costs. Off-gridsolar power solutions are being activelyconsidered to reduce the dependenceon gensets, especially since the cost ofsolar power generation is becomingmore competitive as compared to thelatter. By 2015, about 100,000 telecomtowers are expected to be equipped withsolar-powered backup solutions.

The industrial demand for DG sets isalso being driven by the mining and

construction segments. Even with largecaptive power generation capacities forbaseload energy requirements, miningcompanies frequently deploy portablegensets for their remote mining sites.Mining companies have been procuringgenerator sets mainly as outright pur-chases. However, of late, a slowdown inthe mining and construction sectors hascontributed to an overall decline in theofftake of DG sets.

Meanwhile, turnkey solutions are beingsought for competitive options in equip-ment planning, sourcing as well as oper-ations and maintenance. The construc-tion sector opts for diesel gensets tosource flexible temporary power, notonly for sites in remote areas and diffi-cult terrain but also to tide over frequentpower interruptions.

The incremental demand for gensets isalso being driven by service sectorenterprises such as information tech-nology-enabled service companies,business process outsourcing units,data centres, commercial complexesand hospitality businesses, which needbackup units for round-the-clockpower supply. In fact, with greater useof sensitive electronic equipment byorganisations, backup power will becrucial to ensure minimum disruptionin operations. In this context, the

demand for DG sets appears robustdespite the power supply scenario pre-vailing in the country.

The way aheadAlthough diesel continues to be the pre-ferred fuel for most industries, the asso-ciated costs may increasingly force usersto consider other alternatives. This isdue to the rising diesel prices driven bythe government’s steps to deregulateprices and eventually ensure importparity prices. Industries can, thus, lookat alternatives such as natural gas, whichmay become a preferred fuel optionwith the growing reach of gas pipelineconnectivity in the country.

Environmental concerns are also result-ing in active policy encouragement forindustries to reduce their dependenceon DG sets. The Telecom RegulatoryAuthority of India has stipulated that atleast 50 per cent of all rural towers and20 per cent of urban towers are to bepowered by hybrid power by 2015. Forother industries too, off-grid renewableenergy solutions are emerging as com-petitive alternatives to DG sets in selectsegments of their business and produc-tion processes. While this may not seri-ously impact the long-term demand fordiesel-based generators, it highlights theincrease in competitive options forindustrial power requirements. ■

Fuel-wise distribution comparison of captive capacity in 2010-11 vis-à-vis 2012-13

2010-11 2012-13

Coal: 47 Coal: 57

Gas: 12

Gas: 13

Diesel/liquidfuels: 12

Diesel/liquidfuels: 5

Bagasse:10

Bagasse: 9

Wind: 9Wind: 8

Cogeneration/WHR: 7

Cogeneration/WHR: 5

Biomass: 2

Biomass: 2Others: 1

Others: 1

Despite an overall reduction in thepower deficit in the past one year,erratic supply, delayed power gen-

eration projects and the lack of adequatetransmission and distribution infrastruc-ture in remote areas have been the keydrivers for the use of diesel generator(DG) sets for power generation. Higherreliability, easy availability of fuel due to awide distribution network and ease ofinstallation make DG sets an ideal choicefor meeting industries’ power needs.

A look at the key demand segments forDG sets, the factors impacting demandas well as the challenges ahead…

Key segmentsOne of the key demand segments for DGsets used for power generation is infra-structure and construction. DG sets areused for powering construction machin-ery and material handling equipmentsuch as crawler excavators, wheel load-ers, compactors, backhoe loaders, drills,stone crushers and heavy cranes. The key

customer segments for DG sets withinthe construction segment include roads,bridges, railways, ports, airports, irriga-tion and power. Oilfield activities areanother related demand segment for theDG set market. DG sets are increasinglybeing used for drilling operations in oiland gas rigs, as well as for meeting light-ing requirements at drill sites.

Another key demand segment for DGsets is mining, especially companiesthat are engaged in the production ofcoal, lignite, steel, cement and otherminerals. DG sets are used to powerearthmoving equipment such as dum-pers, shovels and excavators, aside fromsupporting equipment such as surfaceminers, loaders, blast hole rigs, dozersand graders.

In recent years, the telecom industry toohas emerged as an important consumersegment for DG sets. The increase in thenumber of telecom subscribers is result-ing in the growing installation of base

station antennas across the country.These require continuous power supply,which can be effectively provided by DGsets. As per industry estimates, the aver-age DG run-time in rural areas is as highas 16-20 hours per day. The resultingelectricity and DG fuel costs account fornearly one-third of the network opex.Telecom towers usually deploy DG setsranging from 10 kVA to 15 kVA at sites,depending on factors such as geograph-ical location, power outage pattern andthe equipment used. Larger DG sets of25-62.5 kVA are used for base transceiv-er station controllers and 200-750 kVAunits are used for switching centres.

Large- and small-scale commercialenterprises also significantly rely on DGsets for their power requirements. Forthese users, investment in DG sets iscritical for maintaining their productiv-ity and competitiveness, as frequentpower shortages impact their produc-tion, resulting in losses.

The hospitality sector and institutionalusers like malls, office complexes andschools are other major consumers ofDG sets. DG sets are also used in thebanking and retail sectors. The mostcommonly used DG sets in these sectorsare of 200-1,500 kVA. In recent years,

I N F O C U S D I E S E L E N G I N E S & G E N S E T S

Growth expected after the slowdown

58

Revival in Demand




there has also been a growing demandfor DG sets from the IT industry, in orderto meet the need for reliable electricitysupply at data centres.

The demand from residential complexeshas also witnessed a rise due to the grow-ing population and higher standards ofliving. In fact, the provision of backuppower through DG sets has become anorm rather than an exception in largercities, owing to the lack of consistent gridpower supply, as well as for emergencyrequirements like elevators.

A model that is gaining widespreadimportance across these consumer seg-ments is the rental option. Suppliers areoffering a wide range of temporary rentalpower units with easy-to-operate cus-tomer interfaces for improving flexibility,lowering set-up time and reducing cap-ital requirements, including operationsand maintenance and repair services.This benefits customers by allowing themto focus on their core business activities,in addition to being more cost effective.

Issues and challengesIn the recent past, the demand for DGsets has been adversely impacted due tothe slowdown in the infrastructure sec-tor. Further, the low entry barrier hasallowed automobile manufacturers toenter the DG set market and offerengines at competitive prices, thus

denting the demand for DG sets. Thecompetition has also intensified as for-eign DG set manufacturers from Chinahave entered the market.

Rising fuel costs and the deregulation ofdiesel prices are other factors that haveimpacted the demand for DG sets.Industry estimates show that the aver-age cost of generation from DG sets is Rs 16-Rs 17 per kWh. The cost of diesel-based generation has been increasing intandem with the increase in diesel costs,which rose by Rs 8.50 per litre on anaverage during 2012-13. This is signifi-cantly higher than the average cost ofgeneration from coal-based powerplants, which stands at Rs 3.20-Rs 4.00per unit, and that from gas-based plants,which is around Rs 6 per unit.

Environmental concerns are another keyconsideration. A growing number of tele-com companies are adopting variouspractices to build green sites and lowertheir carbon footprint. Using renewableenergy sources like solar power instead ofDG sets for powering base stations is amajor step in this regard. Currently,Bharti Infratel has 1,500 solar sites andIndus Towers owns about 1,000. Further,the government has advocated the use ofrenewable energy sources. The Depart-ment of Telecommunications has issueda directive that stipulates that at least 50per cent of all rural towers and 20 per

cent of urban towers are to be run usinghybrid power (renewable energy tech-nologies and grid power) by 2015; and by2020, 75 per cent of rural towers and 33per cent of urban towers are to be operat-ed on hybrid power.

OutlookDemand from all sectors is likely torevive with the expected economicrecovery, which will in turn lead to aspurt in infrastructure investments. Thehuge $1 trillion investment outlay forthe infrastructure sector for the TwelfthPlan will provide a significant boost tothe demand for DG sets, especially fromthe construction business. The govern-ment’s emphasis on setting up newindustrial clusters in the 2014-15 bud-get, coupled with the overall increase ininvestments in the infrastructure seg-ments, is expected to help kick-start thecapex cycle in various industries. In thetelecom industry, the launch of 3G and4G services is likely to increase powerdemand at tower sites, which will pro-vide a major opportunity to DG setmanufacturers. Solar power still posescertain deployment challenges at tele-com sites, in terms of its high capex andlocal issues such as the security of pho-tovoltaic installations at project sites.Thus, despite the shift to renewableenergy sources, it is likely that DG setswill continue to be an important sourceof power for the industry. ■

Diesel and allied liquid fuels arewidely preferred for use in backuppower units by small- and me-

dium-scale industries, primarily due totheir ease of availability and handling. Inaddition, diesel generator (DG) setscome with benefits such as low capitalcosts, quick start-up, speedy installa-tion, and low space and cooling require-ments. However, the unit size of diesel-based power units is restricted to up to30 MW. Frequent power cuts and unreli-able supply from the grid are the key dri-vers for industrial and commercial con-sumers to install DG sets. It is ironic thaton the one hand, industrial consumersdo not receive adequate power supply,and on the other, they are charged thehighest tariffs among all consumer seg-ments. Industrial and commercial con-sumers continue to cross-subsidiseother consumer categories and paymore than the cost of supply. Also, theincomplete operationalisation of openaccess restricts these consumers fromexploring competing alternative powerprocurement options.

Cost structureFuel costs constitute 75-80 per cent ofthe total lifetime costs of a DG set,while capex on equipment accountsfor 12-15 per cent and the remainingis accounted for by spares, mainten-ance costs, etc.

As per industry estimates, the averagecapital cost of DG set-based captivepower plants (CPPs) is Rs 35 million-Rs 36 million per MW. In comparison,the capital cost of a coal-based CPP(capacity: 0-50 MW, technology: sub-critical) is Rs 43 million-Rs 44 millionper MW, and that of a gas-based CPPis Rs 39 million-Rs 40 million per MW.

However, the cost of generation fromDG sets is the highest among all fuel

sources (coal and domestic gas) at Rs16-Rs 17 per unit. In comparison, theaverage tariff for industrial and com-mercial consumers stood at Rs 6.26 perunit and Rs 7.64 per unit respectively in2013-14. Despite the wide difference incost, industrial and commercial con-sumers invest in DG sets as frequentpower outages severely impact theirmanufacturing processes/businessesand, in turn, affect revenues.

Diesel price trendThe high cost of generation from DGsets can be attributed to the high priceof the input fuel – diesel. In line withcrude oil prices, diesel prices have fol-lowed an increasing trend over the years.

Between 2009-10 and 2013-14, the priceof crude oil (Indian basket) increased ata compound annual growth rate (CAGR)of over 10 per cent, from $70 per barrelto $105.5 per barrel. The average retailselling price (RSP) of high speed dieselgrew at a CAGR of over 12 per centbetween 2008-09 and 2012-13, from Rs 33 per litre to Rs 52 per litre. As of July2014, the average RSP of diesel stood atabout Rs 61 per litre.

A key development was the introductionof a dual-pricing policy for diesel inJanuary 2013, wherein bulk users wererequired to pay market prices and retailusers subsidised prices. In addition, oilmarketing companies (OMCs) wereallowed to raise the price of diesel forretail consumers by 40-50 paise per litreper month. As a result, the under-recov-eries of OMCs on diesel came downfrom about Rs 10.40 per litre in 2011-12to Rs 8.40 per litre in 2013-14.

OutlookThe government is likely to continuefuel price deregulation in order toreduce the subsidy burden and fiscal

deficit. Reportedly, diesel prices maybe completely deregulated fromDecember 2014, if the global crudesupply and price trends remain sta-ble. Further, the capital costs of DGsets are expected to rise as manufac-turers make design modifications tomeet the stringent emission normsintroduced by the Central PollutionControl Board (CPCB). With effectfrom July 1, 2014, new DG sets of up to800 kW are required to comply withCPCB-II norms, which mandate areduction in engine exhaust emis-sions. As the economy recovers andthe industrial sector gets back on thegrowth track, the demand for reliablepower supply and, therefore, for DGset generation is bound to increase. ■


Demand for diesel-based power despite high price of generation

62

Cost Considerations


Company Units generated Cost of via DG sets generation

(MUs) (Rs/kWh)

United Phosphorous Limited 0.49 24.7

Essar Steel Limited 1.40 20.9

Jaypee Cement 7.84 19.1

Hindalco 1.62 17.8

Jindal Steel and Power Limited 0.81 16.8

Shree Cement 0.51 16.7

Grasim Cement 0.14 16.2

Monet Ispat and Energy Limited 14.10 15.6

Madras Fertilisers Limited 3.16 14.7

UltraTech Cement 61.84 13.9

Sources: Companies’ annual reports

DG-based generation cost of select companies

Diesel generator (DG) sets have beena traditional source of power back-up for commercial and industrial

applications. As per the PetroleumPlanning and Analysis Cell (PPAC), DGsets account for over 1.15 per cent of thetotal retail consumption of diesel andaround 4.34 per cent of the total dieselconsumption by the non-transport sec-tor in India. Some benefits that havepopularised the deployment of DG setsinclude their small size, ease of installa-tion, quick start and shutdown, higherefficiency and lower maintenance.

Fuel costs comprise about four-fifths ofthe total DG generation cost, whichmakes the choice of fuel a major consid-eration for users. Though various typesof fuel can be used to run DG sets, dieselis the most common. However, the ris-ing prices of diesel and environmentalconcerns have encouraged industries toconsider other fuel options.

Fuel market trendsIn 2013-14, the consumption of highspeed diesel (HSD) stood at 68.4 milliontonnes (mt). During the same year, the

consumption of furnace oil (FO) was6.19 mt and that of light diesel oil (LDO)was 0.39 mt. Over the past five years, theconsumption of HSD has increased at acompound annual growth rate (CAGR)of 5 per cent. In contrast, the consump-tion of FO and LDO has witnessed adecline during this period, with a CAGRof 14.57 per cent and 4.15 per centrespectively. The major reason for this isthe subsidised price of HSD, whichmakes it a more attractive option whencompared to FO and LDO, which aresold at import parity prices.

The price of petroleum products dep-ends largely on international crude oilprices. During the past five years, theinternational prices of the Indian basketof crude oil have been highly volatile.The average price of crude oil wasrecorded at $111.89 per barrel in 2011-12, touching the highest mark of $123.61per barrel in March 2012. However,prices have eased during the last twoyears, mainly due to the global econom-ic slowdown and a subsequent fall indemand. The price of crude oil in 2012-13 and 2013-14 stood at $107.97 and

$105.52 per barrel respectively.

In tandem, the international prices ofrefined fuels witnessed a similar trend.For instance, the international prices ofdiesel stood at $125.38 per barrel in2011-12, before dropping to $121.97 perbarrel in 2012-13 and further to $119.41per barrel in 2013-14. The internationalprices of FO and naphtha stood at$595.79 and $881.3 per tonne in 2013-14.In rupee terms, the retail prices of dieselas of July 1, 2014 ranged from Rs 56.22 toRs 66.01 per litre across states. WhileMaharashtra recorded the highest dieselprices, the lowest prices were recordedby Haryana. Diesel prices in Delhi stoodat Rs 57.84 per litre. Diesel is sold at sub-sidised rates to retail consumers whileto bulk consumers, it is sold at marketprices. Currently, the difference betweenthe retail rates and bulk rates rangesfrom Rs 1.80 to Rs 2.50 per litre. As aresult of the government’s drive toderegulate diesel prices, this gap isexpected to reduce going forward.

Fuel optionsDG sets can operate on a variety of fuelsincluding HSD, heavy fuel oil (HFO), pro-ducer gas, LDO, FO, biodiesel and blend-ed fuels. Fertiliser and petrochemicalunits use naphtha while small industrialunits prefer LDO and FO. HSD is the pre-ferred choice for DG sets due to its pricedifferential compared with other fuels.


Diesel dominates in backup power systems

64

Choice of Fuel




Diesel is the most commonly used fuelfor DG sets due to several advantagesincluding high thermal efficiency whichcan yield a low per unit capital cost inlarge applications – typically 150 kW ormore. In addition, diesel-fuelled DG setscan provide power backup in remoteareas that do not have natural gas infra-structure. Historically, one of the majorreasons behind the extensive use of dieselin DG sets in India is that it is cheaper ascompared to other fuels. Diesel is beingsold at a subsidised price in the country.However, prices are now witnessing anupward trend as a result of deregulationof diesel prices. This, along with risingenvironmental concerns, has encour-aged industries to use alternative fuels.

Biodiesel is emerging as an importantalternative to diesel for running DG sets.It is a clean burning alternative fuel, produced by the chemical reaction ofvegetable oil or animal fat with alcohol inthe presence of a catalyst like sodium orpotassium hydroxide. Biodiesel is simpleto use, biodegradable and non-toxic. Itcan be used alone or blended with dieselin any proportion to create a biodieselblend, which can be used to operate con-ventional petro-diesel generators withslight modifications at a low cost.

There has been an increasing emphasis

on dual-fuel systems, which use alterna-tive fuels such as biodiesel, natural gasand producer gas based on biomassresources along with diesel, therebyleveraging the benefits of each. Theseoptions are being widely adopted byindustries to rationalise fuel costs.

Producer gas, which is obtained by thegasification of biomass, is another fueloption available for DG set users. Likebiodiesel, producer gas is also environ-mentally friendly and entails lowercosts. However, DG sets cannot be oper-ated solely on producer gas. To over-

come this issue, dual-fuel generator setsare now available in the market, whereinthe modifications are confined to a spe-cial induction manifold and gas air-mixer. Apart from producer gas, othergaseous fuels, such as natural gas orpropane vapour, are gaining wider ac-ceptance. A combination of these fuelsin a definite proportion also providesadditional fuel options. Another fueloption is gasoline; although it is consid-ered to be a poor fuel choice, it isextremely volatile as compared to dieselor gaseous fuels and has a significantlylower thermal density.

ConclusionDiesel remains a popular choice for DGsets and this trend is likely to continuegoing forward. According to the PPAC,the demand for HSD is expected toincrease to 72.6 mt in 2014-15 and to81.6 mt by 2016-17. The demand fornaphtha, LDO and FO is likely to bearound 11.42 mt, 400,000 tonnes and 7.9mt respectively. However, rising fuelprices and growing environmental awa-reness have encouraged industries toadopt other fuel choices such asbiodiesel, producer gas and dual fuel.The majority of these fuels can be usedby making minor modifications in theexisting DG sets. However, owing to theease of availability and use of diesel,there is a long way to go until alternativefuels become as popular as diesel. ■

Year HSD Naphtha LDO FO

2004-05 46,081 15,796 1,385 10,580

2005-06 47,730 16,016 944 10,314

2006-07 53,676 18,176 803 12,259

2007-08 58,482 17,983 713 12,642

2008-09 64,139 16,797 609 14,714

2009-10 73,249 18,782 472 15,257

2010-11 77,684 19,309 597 18,672

2011-12 82,929 18,707 502 17,722

2012-13 91,090 18,851 400 14,514

2013-14* 93,749 18,420 423 12,951

* Provisional

Source: PPAC

Production trend of liquid fuels and naphtha (‘000 tonnes)

Month 2009-10 2010-11 2011-12 2012-13 2013-14

April 50.14 84.08 118.64 117.97 101.57

May 58.00 76.16 110.80 108.05 101.10

June 69.12 74.33 109.99 94.51 101.11

July 64.82 73.54 112.53 100.34 104.86

August 71.98 75.13 106.94 110.07 108.45

September 67.70 76.09 108.79 111.77 109.47

October 73.06 81.11 106.11 109.79 107.37

November 77.39 84.26 109.62 107.87 106.55

December 75.02 89.77 107.19 107.28 108.72

January 76.61 93.87 110.47 109.55 105.29

February 73.69 101.62 117.67 112.68 106.19

March 78.02 110.71 123.61 106.45 105.30

Average 69.76 85.09 111.89 107.97 105.52

Source: PPAC

International price trend of Indian basket of crude oil ($ per barrel)

The deployment of diesel engines inthe industrial sector has been on therise owing to the enhanced efficiency

it offers in comparison to gas-based ones(up to 30 per cent more efficient). This isdue to the inherent characteristics ofdiesel that make it a high power densityfuel source, hence reducing its usage interms of specific quantity used per unit ofpower generated. Of the total diesel con-sumed in India in 2012-13, industrialgenset applications accounted for nearly4.34 per cent. Efficiency improvements indiesel engines are of paramount import-ance for industries as they not onlyreduce operational costs but also ensureuninterrupted power during instances ofgrid failure, natural calamities, etc. Giventhe government’s growing focus on dere-gulating diesel prices and introducingstringent emission norms, engine/gensetmanufacturers’ need to develop tech-nologies that offer fuel consumption op-timisation and effective emission control.A look at some of these technologies…

Reducing NOx emissionsA major challenge for diesel enginemanufacturers lies in optimal allocationof the inherent trade-off between NOxand particulate matter emissions. Inorder to minimise the first, diesel mustnot be burnt entirely, which results inaccumulation of the latter componentpresent in the unburnt fuel. Currently,available technologies for reducing NOxemissions include delayed fuel injec-tion, water injection, fuel water emul-sification, inlet air cooling, intake airhumidification and changes in the com-pression ratio or turbocharger.

A widely used method for reducing NOxconcentration is treating the emissionswith hydrocarbons (HC) through a pro-cess called selective catalytic reduction.NOx reacts with HC to form nitrogen, car-bon dioxide and water. Selection of the

appropriate catalyst is ofparamount importance assome HCs reduce NOx toharmful nitrogen dioxiderather than to nitrogen.This process is capable ofover 80 per cent cutback inNOx emissions.

Exhaust gas recirculation is another tech-nology that has delivered impressiveresults with regard to reducing NOx emis-sions. The basic working principle be-hind this technology is that it reduces thecombustibility of diesel by decreasing itsoxygen content through the mixing offuel with the exhaust gas. This processlowers the temperature at which the fuelis burnt, hence reducing NOx emissions.

Enhancing efficiency Several energy efficiency technologieshave been developed in the dieselengine space. These technological ad-vancements have introduced additionalavenues in the diesel generator (DG)sets that are capable of capturing theentire heat present in the fuel.

Complementing DG sets with a wasteheat recovery (WHR) system is findingapplications as industries seek to max-imise energy utilisation from scarce fuelresources. This is particularly the case forindustries meeting most of their captiveneeds through DG sets. The processinvolved in WHR starts with diesel en-ergy generation, which produces anaccessible source of waste heat. Thewaste heat is released through exhaustsand captured by recovery systems suchas regenerators, recuperators and econo-misers, and then fed into a turbine gen-erator. Energy consumption can poten-tially be reduced by 5-30 per cent by util-ising a WHR system.

Another commercially viable way of

increasing efficiency isthrough the usage of dualfuel-based diesel enginesthat offer increased fuelefficiency with minimalchanges in the enginedesign. Besides improvingsystem efficiency, theyfacilitate reduction in

emissions owing to the use of alterna-tive fuels such as natural gas or lique-fied natural gas instead of diesel foraround 80 per cent of operations.Diesel is only used to ignite the pre-mixed air and alternative fuel.

A noteworthy development in this con-text is the use of producer gas, derivedfrom biomass resources such as ricehusk, as the alternative fuel. The produ-cer gas replaces around 70 per cent of thediesel consumed, translating into consid-erable savings due to lesser raw materialcosts. Studies have shown that such a sys-tem can generate power at around halfthe cost entailed during diesel-basedgeneration. This sort of a dual-fuel sys-tem is suitable for application in the agri-cultural sector as a substitute for gener-ation through diesel engines, given thevast biomass resources generated duringagricultural processes.

The recent past has witnessed consid-erable development in silent DG settechnology. Among other factors, thishas been driven by the Ministry ofEnvironment and Forests’ mandateallowing maximum permissible soundpressure level for new DG sets with arated capacity of up to 1,000 kVA,manufactured on or after July 1, 2003 atnot more than 75 decibels at 1 metrefrom the enclosure surface. The tech-nologies utilised for reducing DG noiseinclude acoustic barriers and insula-tion, exhaust silencers and cooling airattenuation techniques. ■


Efficiency improvements in diesel engines reduce costs and emissions

68

Technology Advances




The growth in the market for dieselgenerator (DG) sets is accompaniedby increasing environmental toxicity,

owing to the emissions produced bydiesel fuel usage entails. Diesel exhaustcontains more than 40 toxic air contami-nants, including many cancer-causingsubstances such as benzene, arsenic andformaldehyde. Diesel particulate matter(PM) has been classified by several gove-rnment agencies as either “human carci-nogen” or “probable human carcinogen”.

Thus, stringent diesel emission normshave assumed paramount importance.Currently, DG sets conform to emissionstandards stipulated by the Ministry ofEnvironment and Forests (MoEF), whichhave not been revised since 2005. TheCentral Pollution Control Board (CPCB)is the nodal agency for the implementa-tion of these rules. The CPCB-II norms,which have been formulated recently buthave not been implemented yet, man-date a significant reduction in the engineexhaust emission requirements for dieselgenerators of up to 800 kW in India.These conditions will apply to all newengines for genset applications and prod-ucts manufactured and assembled in orimported into India. As per an MoEF not-ification dated December 11, 2013, theseemission limits were to be effective fromApril 1, 2014. This date was later extendedto July 1, 2014; however, currently there isno update on its implementation status.

Reducing emissions The proposed norms are a stringent revi-sion of the existing norms, in line with theEuro Stage III A (EU III A) and UnitedStates Environment Protection Agencynorms. In fact, the Indian norms aremore stringent than the European Union(EU) norms in that they are applicable forall power generation systems up to 800kW, unlike the EU norms, which areapplicable to up to 560 kW for mobile

sets. Also, since these norms have comeafter a gap of eight years, they demand aquantum jump in emission reduction.Compared to the existing standards(CPCB-I), the permissible levels of nitro-gen oxide (NOx) and PM have beenreduced significantly in CPCB-II.

As per the previous norms, the permissi-ble emission limit for NOx and hydrocar-bons was 10.5 gm per kWh, which hasbeen revised down considerably, to arange of 4.0 to 7.5 gm per kWh. The limitof PM emissions, which was previously at0.3 gm per kWh, has been scaled down toa range of 0.2 to 0.3 gm per kWh. How-ever, the carbon monoxide (CO) emissionlimit has remained unchanged at 3.5 gmper kWh. No changes have been sug-gested in the norms for power gensetsabove 800 kVA either since they arealready technologically compliant withthe revised CPCB norms.

Impact of the new normsWith the tightening of the regulatorynorms, new and advanced technologicalsolutions will need to be adopted forcombustion optimisation. This changein technology and material will impactgenset prices, which are likely to go upby 15-20 per cent, since upgradingengines would entail some capitalexpenditure for setting up new or addi-tional facilities and infrastructure.

While the CPCB-II norms are similar to

international standards in general, thedifference lies in the fact that the EU III Ais applicable for rental (mobile) gensetsof up to 560 kW only, which typically con-tribute to 5 per cent of the EU market.However, CPCB-II is applicable to allgensets of up to 800 kW, increasing thechallenge for the Indian genset industry.

Industry experts feel that PM and NOx,the two most significant diesel engineexhaust constituents, are two ends of asee-saw. High temperatures and excessoxygen are conducive to the formation ofNOx and lowering the in-cylinder temper-atures and oxygen content reduces it.However, it also decreases the fuel con-version efficiency and increases soot (orPM) production. Placing limits on boththese constituents at the same time isbound to challenge engine manufactur-ers to develop alternative solutions.

Large-scale genset manufacturers likeCummins and Kirloskar have commen-ced production of a new series of genera-tor sets and engines at their manufactur-ing plants. Given the criticality associatedwith the usage of diesel-backed power asa reliable power supply alternative, thedemand for such gensets is only likely topick up in the future, with the rapidurbanisation of the economy. Hence,these norms hold great value in terms ofpromoting a cleaner and safer environ-ment. However, the exact benefits can beassessed only on their implementation. ■

Stricter emission norms proposed for DG sets

Environmental Concerns

Category Existing norms (gm per kWh) Proposed norms (gm per kWh)

NOx+HC CO PM NOx+HC CO PM

Up to 19 kW 10.5 3.5 0.3 7.5 3.5 0.3

19-75 kW 10.5 3.5 0.3 4.7 3.5 0.3

75-176 kW 10.5 3.5 0.3 4.0 3.5 0.2

176-800 kW 10.5 3.5 0.3 4.0 3.5 0.2

Source: CPCB

Existing and proposed emission norms for DG sets

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Economic excitement is back inmany countries in the world.Construction activities have pick-

ed up, investment is flowing and manu-facturing has once again gained mo-mentum. India’s economy, for instance,is expected to reflect a buoyant growthrate of around 5.3 per cent in 2014 and5.8 per cent in 2015, riding high onintense government and private sectorfunding and on an aggressive push tobuild new and improve on existing pub-lic and industrial facilities. India’s new-found economic vitality has attractedentities and professionals from all overthe world to set up shop and work in thecountry, respectively. From informationtechnology to industrial manufacturingto consumer goods, the best globalbrands are flocking to India as a safe betfor investment.

While the foregoing bodes well for thefuture of the country and its people, thefrenetic pace of economic and social

activities in India is taking a toll on thecountry’s power supply. A study con-ducted by the Central Electricity Autho-rity reported that the energy deficitwould be felt across the country andthat the surplus power capacity of thenorthern regions would graduallyrecede. This situation has actually beenlooming for some time now. Recordeddata in recent years showed thatdemand for energy in India had consis-tently outstripped supply, both in termsof baseload energy and peak availabili-ty. India, the data suggested, registeredan 8.5 per cent deficit in baseloadrequirement and a 9.8 per cent shortfallin peak load requirement.

The government, in recognition of theabove, had initiated rural and urbanelectrification projects that comprisedpower plants that run on traditional andalternative energy sources. The discrep-ancy between the rates of addition ofelectric power supply and the growth in

demand is, however, too wide for theavailable energy to fulfil the require-ment. This gap is observed to be growingcontinuously, whether in generation,transmission or distribution.

The repercussions of the power shortageare clearly visible. In 2012, a massiveblackout left 700 million people in Indiawithout electricity. In what is touted to beone of the worst blackouts in its history,20 of India’s 28 states suffered the effectsof the power interruption that almostincited social unrest amongst citizens.With the feverish growth rate of econom-ic and social activities in India, the coun-try’s demand for electricity should notshow any signs of slowing down.

How can energy be sustained?Permanent power plant projects cannotbe completed in days or months. Thefacilities may take decades to complete,as planning, designing, approving, con-structing and commissioning involve

Road to GrowthRental energy plants help bridge the demand-supply gap

Robert Bagatsing, Marketing Manager, Altaaqa Global; and Arvind Murali, India Sub-Continent Territory Manager, Altaaqa Global



time, effort and processes that go throu-gh different channels. What, then, can bedone? Is there anything that can possiblysupport the permanent infrastructurewhile new additions are being built?

Temporary power generation companieshave technologies that have the capacityto support the existing power generationinfrastructure, bridging the gap betweenelectricity demand and supply whereand when the necessity arises. In timeswhen the power demand heavily out-strips the supply, rental power genera-tors, running on diesel for example, canprove to be a viable and affordablesource of energy to avoid disastrouspower interruptions, unscheduled loadshedding and widespread blackouts.

Though some parts of the country mayhave occasional surplus power capacity,its availability may be periodic and canbe severely affected by a disrupted sea-sonal pattern. For instance, some partsof the country where hydroelectricpower stations operate may experiencedrought or prolonged absence of rain,which, in turn, can drastically reduce thepower generation capacity of the saidplants. Solar or photovoltaic farms thriveduring summer months but may experi-ence a shortage in production on cloudyor rainy days. In these situations, rentalpower plants can support the power gen-eration capacity of the current facilitiesto bridge the gap during the crucialmonths of seasonal change.

With its booming industrial manufactur-ing sector, production facilities in Indiaoften need to double, even triple, theircapacities to meet the international pro-duction requirement in certain months,say during Christmas or Diwali. The con-sequent spike in power consumptionmay usher in operational challenges. It ishighly probable that during the peakmonths, utility companies will set capsfor electricity consumption or will askproduction facilities to pay an additionalconsumption premium during peakhours. In this case, based on the cost-benefit studies conducted amongstindustries within the arc of peak months,

it will be more economically viable formanufacturing facilities to hire tempo-rary power plants than to pay an addi-tional fee for every peak kilowatt used, orshut down parts of the production com-plex when power usage is at its peak orpay a hefty fine for using more powerthan what has been allocated. Peakerpower plants are an ideal solutionoffered by energy rental companies tocurb seasonal electricity demand duringpeak production months.

Power partner checklistTo capitalise on the advantages of tempo-rary power technologies, the governmentand the utility companies in India needto be discerning in hiring an interimenergy service provider. While selecting atemporary electricity partner, one shouldlook at the provider’s experience, organi-sation, support system, rate of deploy-ment and equipment reliability and sus-tainability before signing any agreement.

One of the most important things to con-sider when entering into an agreementwith a rental energy provider is its trackrecord in delivering executable, measur-able and sustainable solutions to a widearray of projects. If the mobile generatorcompany cannot supply the requiredpower, it may cause more delays in theproject, eventually leading to legal dis-putes and further economic damage.The government and the utility compa-nies should avoid dealing with backyardrental companies that promise but even-tually do not deliver. One should ask,“Can we really trust mom-and-pop ren-tal power companies when we are sup-plying power to airports, hospitals, min-ing facilities, telecommunication entitiesand petrochemical companies?”

Though temporary power plants areengineered to endure the harshestconditions, they are by no means inde-structible. The government and theutility companies in India must keep inmind that the service of a rental energycompany should not end when theelectric power generators are switchedon. The company should have access tothe spare parts and human resources to

carry out after-sales support for theinstalled and commissioned projects atany given location, at any given time.One should ask, “Do we stop a 100 MWpower plant simply because there areno spare parts available?”

The interim energy partner should havethe capability to react, deploy, mobiliseand commission the temporary powerplants at a moment’s notice. This meansthat the provider should have the avail-able equipment and manpower on theground to carry out rapid delivery. If thepower rental company has the availableequipment to deploy and a team of pro-fessional logistics personnel that candeal with the complexities of ports, cus-toms and transportation, it can immedi-ately resolve the power crisis.

Providing solutions for the power re-quirement of different entities does notfollow any template nor is it governed bya rule of thumb. Each case should becarefully studied and evaluated in orderfor the rental power companies to sug-gest an optimal solution. The only waythat an interim energy company canafford to meet the exact requirement ofany client is for it to have adequate andstate-of-the-art technologies availablein its product line.

There is now a solutionThe power supply scenario in India doesnot have to be a Catch-22 situation. Thecountry cannot possibly turn its back oninvestors and professionals just becausethey consume a significant amount ofelectricity and thus put more pressureon the country’s power facilities. On theother hand, the country’s economy can-not continue growing at the expense ofits limited power supply. In times oftough choices such as this, rental powerplants can make a difference. With inter-im generators supporting the existingpower infrastructure, India can take theroad to economic growth without sacri-ficing its energy supply. While perma-nent power facilities are under way,rental energy plants can bridge the elec-tricity gap, allowing India to power itsway to a brighter future. ■


Company-wise DG set-based generation

Aarti Industries Limited 2,352,646 14.61

Aditya Birla Nuvo Limited 8,170,000 14.98

Alicon Castalloy Limited 2,986,092 11.76

Ambuja Cements Limited 12,800,000 12.04

Amtek India Limited 4,573,000 12.71

Arch Pharmalabs Limited 5,798,915 12.83

Ardent Steel Limited 19,800,000 12.52

Asahi Industries Limited 4,948,000 15.65

Asian Paints Limited 12,393,870 17.15

Astrix Laboratories Limited 2,344,600 13.57

Avanti Feeds Limited 2,680,732 16.96

Bajaj Motors Limited 10,279,016 11.36

Balkrishna Industries Limited 22,161,287 13.47

Bhilai Engineering Corporation Limited 2,358,309 12.67

Bhushan Power & Steel Limited 16,190,000 11.44

Biocon Limited 15,621,000 16.38

Bright Autoplast Limited 11,281,000 12.17

Britannia Industries Limited 2,310,000 13.63

Capsugel Healthcare Limited 6,587,626 11.86

Cavinkare Private Limited 2,407,689 12.36

Chettinad Cement Corporation Limited 2,431,000 15.80

Dabur India Limited 2,168,729 17.06

DCW Limited 8,819,000 13.99

DLF Utilities Limited 15,969,834 11.01

Dr Reddy’s Laboratories Limited 11,536,089 17.83

EID-Parry (India) Limited 2,185,754 16.00

Eskay K’N’It (India) Limited 26,599,000 14.64

Everest Industries Limited 3,391,000 17.25

Fertilisers and Chemicals 37,565,000 15.60

Travancore Limited

Fertilizer Corporation of India Limited 50,042,888 11.03

GlaxoSmithKline Consumer 5,061,000 15.58

Healthcare Limited

Goodricke Group Limited 2,270,525 18.75

Granules India Limited 7,348,833 14.63

Hetero Drugs Limited 2,619,000 11.82

Highway Industries Limited 2,269,000 12.84

Hind Industries Limited 2,272,942 14.44

Hitech Plast Limited 2,145,000 13.30

IAL Construction & Agri Equipments 87,181,000 11.97

Private Limited

Indian Rare Earths Limited 3,523,000 11.38

Ipca Laboratories Limited 2,372,812 16.35

Jaiprakash Associates Limited 7,838,045 19.07

Jaybharat Textiles & Real Estate Limited 18,429,000 14.64

Jindal Industries Limited 2,748,240 11.48

Jubilant Life Sciences Limited 4,810,654 12.84

KG Denim Limited 3,171,000 15.16

Kandagiri Spinning Mills Limited 8,548,000 13.01

Kansai Nerolac Paints Limited 8,143,000 15.51

K-Lifestyle & Industries Limited 26,831,000 14.64

KPR Mill Limited 4,800,000 13.68

Krishna Maruti Limited 2,261,702 11.68

Lakshmi Precision Screws Limited 3,432,540 12.50

Lakshmiji Sugar Mills Company Limited 7,186,515 11.67

Lambodhara Textiles Limited 4,372,852 11.35

Loyal Textile Mills Limited 3,706,885 14.86

LT Foods Limited 2,706,138 13.05

Lupin Limited 6,261,000 16.20

MM Forgings Limited 3,128,186 15.61

Madras Fertilizers Limited 3,160,700 14.74

Manali Petrochemicals Limited 2,587,382 13.52

Mangalore Chemicals & 256,245,000 13.80

Fertilizers Limited

Marico Limited 2,043,757 16.94

Maris Spinners Limited 3,067,778 14.06

Merchem Limited 4,290,080 13.48

Mondelez India Foods Limited 11,820,000 13.50

Company Total Cost of Company Total Cost of generation generation generation generation

(kWh) (Rs/kWh) (kWh) (Rs/kWh)

74

Key Statistics


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Monnet Ispat & Energy Limited 14,095,001 15.62

Mother Dairy Fruits & Vegetables 2,535,800 11.67

Private Limited

MRF Limited 12,929,677 17.99

Natco Pharma Limited 5,518,343 15.42

Nikita Papers Private Limited 4,579,800 11.06

Orchid Chemicals & 3,486,523 11.56

Pharmaceuticals Limited

Panacea Biotec Limited 4,438,000 12.40

Pennar Industries Limited 2,540,826 14.40

Pepsico India Holdings Private Limited 30,144,188 12.75

Pochiraju Industries Limited 9,464,449 13.00

Precot Meridian Limited 16,958,000 13.48

Procter & Gamble Hygiene & 3,979,387 13.79

Health Care Limited

PSL Limited 9,809,080 16.22

Ramco Cements Limited 5,046,000 14.83

Ranbaxy Laboratories Limited 7,177,351 16.50

Reckitt Benckiser (India) Limited 2,630,000 13.30

Reliance Industries Limited 11,282,000 12.49

Roca Bathroom Products Private Limited 3,219,958 11.32

Ruchi Infrastructure Limited 2,838,645 13.66

Ruchi Soya Industries Limited 6,465,683 15.62

STL Global Limited 2,079,583 13.08

Salona Cotspin Limited 3,351,856 12.01

Sambandam Spinning Mills Limited 11,587,000 13.96

Sandhya Spinning Mill Limited 2,257,000 13.65

Sanghi Industries Limited 7,896,000 15.29

SEL Manufacturing Company Limited 3,053,000 11.65

Shasun Pharmaceuticals Limited 4,022,000 16.27

Shree Digvijay Cement Company Limited 27,700,000 11.04

Shri Govindaraja Mills Limited 9,381,712 11.12

Simpson & Company Limited 2,296,209 16.46

Somic ZF Components Limited 2,388,935 15.33

Sona Okegawa Precision Forgings Limited 5,284,279 12.32

Sri Arumuga Cottspin Private Limited 2,132,781 12.11

Sri Karthikeya Spinning & 4,065,550 11.94

Weaving Mills Private Limited

Sri Nachammai Cotton Mills Limited 7,385,714 13.56

Steel Strips Wheels Limited 5,259,000 12.99

Super Sales India Limited 8,913,480 13.26

Super Spinning Mills Limited 10,860,000 13.20

Tanfac Industries Limited 3,291,155 13.98

Tata Global Beverages Limited 2,483,000 14.88

Tiruppur Textiles Private Limited 2,436,000 12.58

Torrent Pharmaceuticals Limited 3,121,000 16.76

Triveni Engineering & Industries Limited 3,901,000 17.80

TVS Srichakra Limited 5,287,984 18.26

Unichem Laboratories Limited 2,933,000 14.90

Universal Chemicals & 204,363,000 12.42

Industries Private Limited

Vidyut Metallics Private Limited 5,925,283 13.10

Vivimed Labs Limited 3,000,000 13.82

Winsome International Limited 2,152,800 16.63

Wipro Limited 3,730,162 14.01

Source: Prowess database

Company Total Cost of Company Total Cost of generation generation generation generation

(kWh) (Rs/kWh) (kWh) (Rs/kWh)

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I N D U S T R I A L P O W E R SUGAR


With an annual production cap-acity of over 25 million tonnes,the Indian sugar industry ranks

second in the world after Brazil. It pro-duces nearly 15 per cent of the world’ssugar. Despite a long history of sugar pro-duction, the use of by-products obtainedfrom the sugar manufacturing processfor power and steam generation is a rela-tively recent phenomenon. Cogenerationholds significant potential in the presentpower-deficit scenario. Apart from cater-ing to the needs of the manufacturingplant, the surplus power can be sold todiscoms or third parties in order to createadditional revenue streams. Also, thesugar industry has been facing challengeslike declining availability and rising costsof sugarcane, increasing energy costs andstringent emission norms. All theseissues necessitate cost optimisation,which can be achieved through simpleenergy conservation measures.

Power Line takes a look at some of theinitiatives undertaken by leading sugarmanufacturers…

Kothari Sugars and Chemicals Limited,Lalgudi, Trichy district, Tamil NaduKothari Sugars and Chemicals Limited, aflagship company of the HC Kothari

Group, is a pioneer in the manufactur-ing of white crystal sugar in India. Thecompany is also engaged in the cogener-ation of power and production ofethanol, industrial alcohol and organicmanure. Its first sugar manufacturingunit was established in 1961 at Kattur,near Lalgudi in Trichy district of TamilNadu. The other unit, the Sathaman-galam unit in Ariyalur district of TamilNadu, was commissioned in 2007. TheLalgudi unit, which is among the earliestsugar facilities set up in Tamil Nadu, hasbeen at the forefront in terms of energyconservation. It undertakes comprehen-sive energy audits every year and subse-quently implements all viable recom-mendations. In addition, the unit has acomprehensive wastewater treatmentand recycling system, thereby achievingzero liquid discharge.

In an industry where energy consump-tion plays a vital role for the sustainabil-ity of production, the unit managed toreduce its specific thermal energy con-sumption from 3.69 kCal per tonne in2011-12 to 2.83 kCal per tonne in 2012-13. Further, its specific electrical energyconsumption reduced from 501.34 kWhper tonne in 2011-12 to 464.11 kWh pertonne in 2012-13.

Various energy conservation initiativeswere implemented by the company at itsLalgudi unit during 2012-13. The unitinstalled variable frequency drives(VFDs) with a low tension motor for allits three pumps to regulate the speedaccording to the required flow rate. Theunit also replaced one of the direct cur-rent (DC) motors with a 200 kW alternat-ing current motor with VFDs for themassecuite centrifugal machine. As aresult, the machine’s specific power con-sumption came down from 1.24 kWh pertonne to 0.72 kWh per tonne of masse-cuite, besides achieving savings in themaintenance cost of DC motors.

Since the 37 kW condensate extractionpump (CEP) was designed for maximumcondensate (in fully condensing mode),the unit installed one 15 kW CEP to beoperated during the cane-crushing sea-son when the condensate volume is onlyabout 25 per cent. Consequently, 45,216kWh of electricity was saved during2012-13. The unit also replaced theworm reduction gear system with aplanetary gear and installed an inputmotor of lower rating, which saved17,419 kWh of energy.

In addition, the unit undertook several

Sugar manufacturers adopt energy conservation measures

Power Savings

I N D U S T R I A L P O W E RSUGAR


measures for reducing thermal energyconsumption in its various processes.For instance, the installation of a paral-lel set of evaporators helped mitigatethe problem of frequent scale deposits,which affected heat transfer. Thisresulted in a reduction in averagesteam consumption, leading to higherpower generation. The unit alsoinstalled a condensate flash recoverysystem, which helped in input steamsavings. Other measures include theuse of evaporator vapour for pan wash-ing instead of low pressure steam, theinstallation of an E-Melt system (whereelectricity is used to generate steamand this steam is used for melting thesulphur) for the sulphur burner and theinstallation of a plate heat exchangerfor the centrifugal superheated washwater system.

While all these measures entailed aninvestment of Rs 62.5 million, they haveled to monetary savings worth about Rs37 million in the first year, through areduction in electrical and thermal ener-gy consumption.

Bannari Amman Sugars Limited, Thandrampa-ttu Unit, Tiruvannamalai district, Tamil NaduThe Bannari Amman Group is one of thelargest industrial conglomerates insouth India, which is engaged in a widespectrum of activities including manu-facturing, trading, distribution andfinancing. Currently, the group has fiveintegrated sugar complexes, three ofwhich are located in Tamil Nadu and theremaining two in Karnataka. The unit atThandrampattu in Tiruvannamalai dis-trict of Tamil Nadu comprises a 5,000tonnes of cane per day (tcd) sugar plantbased on the phosphatation process anda 28.8 MW cogeneration plant. It alsohas a 500 tonne per day refined sugarproduction facility.

The Thandrampattu unit has taken var-ious energy conservation measures,which reduced the specific electricaland thermal energy consumption by30.04 per cent and 25.19 per centrespectively in 2012-13 as compared tothe previous year. In particular, specific

electrical energy consumption reducedfrom 30.13 units per tonne of cane in2011-12 to 21.45 units per tonne of canein 2012-13. The power thus saved wassupplied to the grid, hence providingadditional revenue.

The major initiatives taken to reduceelectrical energy consumption includedthe installation of VFDs at the mill houseand the boiling house vapour absorbingmachine and various pumps andmotors. Further, a 62.5 kVA diesel gener-ator set was modified to run on biogasfuel and was installed at the effluenttreatment plant to generate power. Theunit also replaced motors operating atbelow capacity level. It managed to savea significant amount of thermal energyby the recovery of flash steam from theshort retention time (SRT) clarifier andmodification of the SRT outlet line toavoid vapour leakage.

The unit undertook an investment of Rs 3.62 million for energy conservationinitiatives in 2012-13 and reported costsavings of nearly Rs 10.36 million in thefirst year itself.

EID Parry (India) Limited, Pugalur SugarFactory, Karur district, Tamil NaduEID Parry (India) Limited is a memberof the Murugappa Group, headquar-tered in Chennai. The group has busi-ness interests in diversified areas likeengineering, abrasives, finance, generalinsurance, cycles, sugar, fertilisers,plantations, bio-products and nutra-ceuticals among others.

EID Parry has five sugar factories with acombined capacity of 19,500 tcd atNellikuppam, Pugalur, Pettavaithalai,Pudukkottai and Puducherry. All theunits, except the Puducherry unit, havecogeneration facilities. The company iscurrently generating 64.5 MW of powerat its Nellikuppam, Pugalur and Puduk-kottai units, and is in the process ofestablishing a 20 MW cogenerationplant at Pettavaithalai.

The company’s Pugalur unit was set upin 1939 and has a crushing capacity of

5,000 tcd. The facility also houses a 22.6MW cogeneration plant that uses ba-gasse, a by-product of sugarcane crush-ing which is used as boiler fuel. Also, theexhaust obtained from the power tur-bines is used in the manufacturingprocess. Owing to the implementationof various energy conservation mea-sures, the unit’s specific thermal con-sumption reduced from 3.17 millionkCal per tonne of sugar in 2011-12 to3.01 million kCal per tonne of sugar in2012-13. Specific electrical consumptionalso reduced from 287 kWh per tonne ofsugar in 2011-12 to 263 kWh per tonne ofsugar in 2012-13.

The Pugalur unit has installed VFDs forthe auxiliary cooling water pump.Other measures include the usage ofVFDs for the cogen instrument air com-pressor, brix-based evaporator automa-tion, continuous pan and batch panautomation, and use of e-boilers formelting sulphur to eliminate excessivesteam consumption.

The unit also undertook the replace-ment of batch weighing scales with flow meters, inefficient worm gearswith planetary gearboxes, and metalhalide lighting with fourth-generationlighting solutions such as inductionlamps. The unit installed auto star deltastarters for motors, mechanical sealsfor pumps, effective cooling and con-densing systems, regenerative-type DCdrives with interlocking for batch cen-trifugal machines, and vapour genera-tive transient heaters.

ConclusionIn an intensely competitive environ-ment, energy conservation initiativesthat translate into financial savings andbetter operational efficiency give sugarmanufacturers an edge over their com-petitors. Energy conservation can beattained through simple measures suchas installation of VFDs, replacement ofconventional systems with more effi-cient ones, and design modifications incertain equipment. Going forward,these steps can provide significant ben-efits to sugar manufacturing facilities. ■

I T I N P O W E R


There is a growing focus on prepaidmetering to improve revenue collec-tion and billing efficiency. The

recently unbundled utility of Manipurhas taken up large-scale prepaid meter-ing to reduce the state’s network losses ofover 40 per cent. In Odisha, the state gov-ernment directed utilities to install pre-paid meters in government buildings, fortemporary connections and for periodi-cally defaulting consumers. High net-work losses also led to the Bihar Elec-tricity Regulatory Commission (BERC)stipulating prepaid metering. Experienceshows that utilities stand to gain fromlower costs of billing and collection activ-ities, and an overall improvement in rev-enue management.

Features and benefitsPrepaid metering is a metering andbilling mechanism wherein the con-sumer pays in advance for the contract-ed power supply. For the most part,these metering systems are standardisedin functionality. The meters have thefacility to connect or disconnect supplybased on the credit amount available.The meter trips if the connected loadexceeds the sanctioned level. Consu-mers get recharge coupons from utilitiesfor renewing their credit balance, andcan monitor usage through an in-housedisplay unit.

Prepaid meters also have significantstorage facilities. These meters canincorporate 64 different tariff structures,and any one of them can be activated bythe utility, depending on the consumercategory. They can record operationalparameters such as phase currents, volt-ages, power factor, consumption in kWhand kVAh, and instantaneous load.Manufacturers also offer an MRI port inprepaid meters for data download.

Even with higher costs than standard

electronic meters, prepaid meters offerkey benefits. For the utility, they reducethe costs associated with meter reading,data collation and processing, as well asbill printing, distribution and collec-tion. Further, they reduce the workingcapital requirements as payments arereceived in advance. In contrast, theusual billing cycle involves a credit peri-od of over 40 days. The benefit of loweroperational costs of prepaid meters isshared with consumers, in the form of a3-5 per cent rebate.

For consumers, the option of prepay-ment offers flexibility. Consumers canchoose the frequency and amount ofrecharge on the prepaid meter. The pre-paid option also enables them to moni-

tor and control their consumption,therefore acting as a demand-side man-agement mechanism. In effect, the con-sumer’s relation with the distributionutility changes. The onus is on the con-sumer for the power consumed andtimely recharge of coupons for contin-ued supply. Consumers also tend to con-serve energy in such cases. In Manipur,for instance, ongoing prepaid meteringhas reportedly reduced consumer loadby 40-50 per cent.

Prepaid metering can be instrumental inthe proposed smart grid power distribu-tion framework. Such meters can beconfigured to operate as a two-waycommunication link between the distri-bution utilities and consumers, andenable features like time-of-use billing,real-time pricing and peak pricing.

ImplementationSo far, prepaid meters have been de-ployed for select segments such as tem-porary connections, government build-ings and rented premises to improve

Utilities focus on prepaid metering for better billing and collection

Payment Security

Distribution utility No. of prepaid meters

CESC Limited 19,651

Maharashtra State Electricity Distribution Company Limited 12,437

West Bengal State Electricity Distribution Company Limited 10,131

BSES Rajdhani Power Limited 5,928

Tata Power Delhi Distribution Limited 4,259

Assam Power Distribution Company Limited 3,578

BSES Yamuna Power Limited 3,022

Madhya Gujarat Vij Company Limited 1,352

Uttar Gujarat Vij Company Limited 250

Himachal Pradesh State Electricity Board 250

Brihanmumbai Electric Supply and Transport 190

DPSC Limited 185

Noida Power Company Limited 112

Sources: Power distribution utilities

Prepaid meters installed by major distribution utilities

I T I N P O W E R


collection efficiency. However, distribu-tion utilities are increasingly consider-ing a broad-based deployment of pre-paid meters, covering domestic andcommercial consumers in the low ten-sion network. This is because of thefocus on network loss reduction andcost minimisation. Utilities such as theManipur Power Development Corpo-ration are deploying over 60,000 prepaidmeters under the Restructured Acce-lerated Power Development and Refor-ms Programme (R-APDRP).

Importantly, directives from the stategovernment and regulatory authoritieshave played a key role. In Gujarat andDelhi, for instance, the governmentshad issued directives for prepaid meter-ing. In West Bengal, the first state tohave implemented prepaid meters, thedirective came from the regulator.Recently BERC directed the state distri-bution utility to deploy prepaid metersfor government and residential connec-tions. A few other utilities implementedit of their own accord. Tata Power DelhiDistribution Limited undertook prepaidmetering much before the governmentissued a directive. Maharashtra initiatedit as a pilot scheme.

The implementation experience revealssome of the common issues faced byutilities. The utilities point to the diffi-culties in raising a supplementary billfor recovering fuel surcharges or othersubsequent tariff adjustments. This isoften perceived by consumers as dou-ble-charging, while for the utilities theconstraint is that once the prepaidmetering card is logged in, no adjust-ment can be made till the amount on thecard is exhausted. This is not a problemin states where fuel supply adjustmenthas not been implemented. However,with an increasing number of state elec-tricity regulatory commissions (SERCs)allowing fuel adjustment in tariffs, thisissue needs to be addressed.

Complex tariff structures have also beencited as a factor hindering the imple-mentation of prepaid metering. In WestBengal, the utility expressed its inability

to incorporate the tariff structure involv-ing fuel costs, electricity duty, cess, etc.,in addition to fixed and energy charges.This led the SERC to simplify the tariffstructure and notify flat rates for the cat-egories billed on prepaid meters. Assuch, the recovery of taxes and dutiesbecomes difficult for the utility, espe-cially when the charges are imposedwith retrospective effect. It is all themore onerous as duties and taxes arebased on recorded energy consumption,which in the case of prepaid meters isnot known in advance.

Prepaid metering has also been fraughtwith legal uncertainty. There are legisla-tive provisions that specify norms fordisconnecting power supply in the eventof a payment default. Under the Elec-tricity Act, 2003, prior notice needs to begiven in case of a payment default. In apayment dispute, the act stipulates thatthe utilities should avoid disconnectingthe line if a consumer deposits theclaimed sum or a sum equivalent to theaverage of the past six months. But withprepaid metering, disconnection isautomatically done after a consumer’scredit account is exhausted. This ap-pears as a violation of the stipulations ofthe Electricity Act, 2003.

To address this problem, the Forum ofRegulators sought legal advice. It washeld that the deployment of prepaid

meters is not violative of the ElectricityAct, 2003 and that the SERCs can autho-rise prepaid metering in any consumercategory. Nevertheless, there is a need tomake appropriate amendments to theact, so as to make an exception for pre-paid metering systems.

The way aheadThe challenges notwithstanding, thedemand for prepaid metering is on therise. While some utilities are initiatingthis as part of their business strategy,others are being driven by policy stipu-lations. The government-sponsoreddebt restructuring plan for distributionutilities makes prepaid metering a pre-condition for the utilities. Similarly, theSERCs are stipulating the deployment ofsuch systems in their tariff orders aspart of the mandate for loss reductionby the utilities.

Though it was introduced for select con-sumer segments, prepaid meteringcould set the stage for smart metering ata later stage. Consumers tend to con-serve energy in a prepayment set-up,mainly due to the visibility of their con-sumption. This facility could be ex-tended further with the two-way com-munication mechanism of smart meter-ing. Some key functionalities like time-of-day tariffs are present in the existingprepaid meters and can be leveraged forthe planned smart grid framework. ■

State/Utility No. of planned Detailsinstallations

Nagaland 715 Planned for Dimapur under Phase I;

another 200 proposed under Phase II

Manipur 60,336 Meters to be installed in 13 towns under

the R-APDRP by end-2014

North Bihar Power Distribution 5,000 Proposed in tariff petition for installation

Corporation Limited on government premises

North Eastern Electricity Supply Company 5,765 Proposed in tariff petition for 2014-15;

of Odisha implementation under government

directive

Western Electricity Supply Company of Odisha 5,025

Southern Electricity Supply Company of Odisha 7,055

Sources: Tariff orders/petitions; News reports

Prepaid metering plans of select utilities

P E O P L E


Management consultant McKin-sey & Company often encour-ages its associates to leave the

rarefied confines of their conferencerooms and get down and dirty in theactual world of business. Many do nottake the plunge. Ajay Goel is one of thefew who decided to take the leap andmove to the world of clean energy, oneof the most challenging spaces.

The thought of making the transitionoriginated whilst working with solarpower companies alongside his other hi-tech clients at the McKinsey office inSilicon Valley in 2007. The choice waseasy because of solar power’s potential,as he puts it, “to change the energyfuture of the world”.

His move was also favoured by themacro environment. The consulting

business, owing to the 2008 slowdown,was passing through a slow phase. This,coupled with the fact that climatechange was the topic du jour and a lotof solar businesses were taking off,made the decision to move somewhateasier than it might otherwise havebeen. As it turned out, Goel was not tobe disappointed by the switch fromconsulting to managing.

The company Goel joined was Bright-source Energy, the world’s leading solarthermal company. His last post, beforecoming to India two years ago to headTata Power Solar, was with MEMC/SunEdison as vice-president. In this role,he helped expand the company’s solarbusiness globally tenfold in less thanthree years by increasing its presence inSouth America, Europe and India, andoffering not just rooftop solar but also

larger, utility-scale plants, residentialsystems, etc. “I had to drive a lot of inno-vation. It wasn’t easy but it was satisfy-ing,” he says.

Goel found the new experience of run-ning a company to be a smooth ride. Ashe explains: “At McKinsey, we don’t justoffer advice but make sure it is imple-mented. I worked with clients who werevery execution oriented, so my experi-ence with them helped immensely as Iknew the right things to do.”

His five years at McKinsey involved look-ing at a company holistically – finance,operations, strategy, engineering, learn-ing and applying best practices. All thiscame in handy, along with the habit ofquestioning conventional wisdom toarrive at a solution.

On joining Tata Power Solar two yearsago, he and his family had to decide notjust about the job but also about movingback to India. His entire professional lifehad been spent in America. His wife of21 years, Lalima, had to give up her joband their son Advik, at age 13, had toadjust to a new city and school.

“We all had our doubts but, after a fewchallenges in the initial months, we set-tled down. It wasn’t an easy decision butonce the family realised my commitmentto the industry and how solar couldimpact lives in India, they fell in step withme. They wanted to support me and I’mgrateful that my wife enabled this moveand travelled halfway round the world tomake it work,” he says.

The challenge of working in Indiaturned out to be a relatively smoothjourney. Says Goel, “The Tata Groupabides by the same set of core values asMcKinsey, and honestly, it felt like com-ing home. Given that the Tata Group isa global conglomerate, with more thanhalf its revenues coming from outsideIndia and a very global workforce, theadjustment of moving from the US toIndia was minimal.”

In fact, Goel’s first job after graduating in

Ajay Goel, CEO, Tata Power Solar, envisions broadening the reach of solar to rapidly cover all of India– rural and urban, homes and businesses – to achieve its full potential as a power of change…

EnablingSolar

P E O P L E


electrical engineering from IIT Delhiwas with Tata Consultancy Serviceswhere he worked for two years beforeleaving for the US in 1993. (Later, he didhis MBA at the University of Chicago.)

“We are a company in transition,” saysGoel. “The past few years have been dif-ficult, for everyone in the industry. Wehave to make the business work, not justby focusing on short-term profitabilitybut by looking at long-term growth. Thebiggest thing we have managed toachieve over the past two years is stemthe tide in our top line. The year I joinedTata Power Solar was one of our worstyears in recent history in terms of rev-enue, partly because our manufacturingbusiness was affected by competingcheap Chinese imports and partly due tothe exit of our main customer, BP Solar.”

Losing a big customer in a highly com-petitive market was a big knock. If Goelwas able to stop the revenue free fall, itwas not so much through manufactur-ing but through upstream projects andoff-grid products. “For us, the experi-ence was a good morale booster, show-ing us that when we focus and workhard, we can make money in this busi-ness,” he says.

Apart from staunching the losses, Goeldrove the team to innovate on designsand engineering to bring project costsdown below $1 per watt in large EPCprojects; and in off-grid products, he hashad the team work on innovative low-cost solutions that can be delivered sub-sidy-free to bring heat, light and powerto the remotest areas of the world.

Goel feels exhilarated when he thinks ofsolar energy’s power to be a “disruptiveinnovation” in the way the world pro-duces energy, and how people can pro-duce and consume electricity. Theindustry has lived up to its early expec-tations, he feels, as witnessed in the factthat electricity demand in some parts ofthe US and Europe is actually shrinking.Germany, not a sunny country, gets athird of its generation from solar, thanksto rooftop solar plants. What excites him

is the idea of extrapolating this kind ofexperience to India’s power-deficit econ-omy and then watching the extraordin-ary benefits roll in.

Among the things that India needs inorder to exploit its solar potential is thesame clarity of direction in executionthat Germany possesses. “In the Jawa-harlal Nehru National Solar Mission,which was launched in 2010, we have anadmirable vision, but have had no con-sistent direction. Investors want to see aconsistent policy so that they can makea strong business case,” he says.

In policy, Goel believes that three bigchanges will help make solar viable. Oneis the need for more competitive finan-cing, given that the initial costs for aplant are significantly higher than thosefor a conventional power plant. Banksshould make solar a priority lendingarea, as it is actually a long-term hedgeagainst coal and fossil fuels.

“In the US, even though the cost of con-struction is higher than that in India, thecost of financing is lower, resulting in alower cost per unit, which is a big driverfor consumption,” he says.

Second, the government needs to inc-rease its support to the domesticmanufacturing industry, to ensureIndia’s long-term energy security, givenits heavy dependence on coal and oilimports. Goel says a clear policy is nec-essary to make India a global solarmanufacturing hub.

Third, he says, there needs to beconsistent and streamlined funding of

the programmes that have already beenannounced. Goel says that a number ofprogrammes for solar water heaters,rooftop generation, etc. have beenannounced as well as deployed, withsubsidies approved but not paid up.This tends to create an environment of uncertainty.

At Tata Power Solar, the core mission of“Enabling Solar Everywhere” focuses onthree areas: cost leadership in manufac-turing, rapid growth in solar projectsand a slate of affordable new productsfor the off-grid market.

He is optimistic about India’s future. Therecent election verdict of replacing theold guard in favour of a new team is, hesays, a sign of a “maturing democracy”and a rejection of a whole set of ineffec-tual policies. Like many industrialists,Goel is hoping that the new governmentcan restore the country’s interruptedgrowth trajectory to bring the prosperitythat everyone desires.

Tata Power Solar may be a 25-year-oldcompany, but Goel likes to tell his teamthat it’s a “25-year-old start-up”. He says,“We feel young and now we’re startingfrom scratch, unlearning the bad habitsof the past and learning new ones thatwill make us agile and nimble to meetthe needs of the market. That is my pri-mary focus and is going to keep myhands full for the next few years.”

His motivation level is kept high, seeingthe impact of solar on people’s lives,whether it is giving power to remotemonasteries in Ladakh, solar irrigationpumps to farmers in Rajasthan or solarstreet lights for low-income housingcommunities in Tamil Nadu.

The company has produced a coffee-table book to showcase its work over thepast 25 years, illustrating 300 ways inwhich its solar power projects and prod-ucts have brought cheer to householdsacross the country. “We have a vision toenable solar everywhere, and the smileson the faces of those we have impactedare my driving force,” he says. ■

“In the Jawaharlal NehruNational Solar Mission, wehave an admirable vision,

but have had no consistentdirection. Investors want tosee a consistent policy so

that they can make astrong business case.”

P E O P L E


Dr G. Prasad has been a pioneer inpromoting and developing solar

energy during his long association withthe Ministry of New and RenewableEnergy. He joined the ministry in 1989and worked in its regional offices atLucknow, Chennai and Hyderabad till2006. Thereafter, he worked at the SolarEnergy Center, Gurgaon, till 2009.

Prasad has been associated with theJawaharlal Nehru National Solar Mission(JNNSM) since its inception and is cur-rently heading the off-grid and decen-tralised solar applications programmeunder the mission. In this position, hehas been looking into the deployment ofseveral decentralised solar applicationssuch as solar pumps, solar street lights,home lights and small solar plants forcaptive consumption.

Commenting on the solar off-gridsegment in the country, Prasad states, “Adefinite demand exists, and several

states have been increasing-ly looking at deploying thesesystems, as well as at thesolar lighting programmeand the pumping pro-gramme for irrigation in therural areas.” According tohim, “The primary problembeing faced in this segmentis funding for these decentralised solarpower systems. The central governmenthas its own set of limitations in provid-ing funds and, therefore, it is importantthat the state governments should con-tribute to funding as well so as to helpimprove the reach of these pro-grammes.”

When Prasad joined the JNNSM off-grid programme, the scale of deploy-ment was minuscule, about 4 MW peryear. In 2012-13, it reached 130 MW-140MW. Achieving such growth in a span ofonly four years represents a major

accomplishment for him aswell as for the ministry.

Prasad has a postgradu-ate degree in physics fromBanaras Hindu University aswell as a Ph.D. in solar cells.He has also written a num-ber of research papers.

Prasad is happy to put inadditional hours at work if required. Healso enjoys reading and researching inthis area for leisure and makes sure he isabreast of all the latest developments inthe sector.

He prefers spending time with hisfamily on weekends instead of going onholidays. Prasad enjoys the cuisine of hishome state, Andhra Pradesh. Althoughhe has not given much thought to hisretirement, he says he would like to set-tle down in Hyderabad eventually, whilecontinuing to be associated with thesolar power segment. ■

Dr G. Prasad Director, Ministry of New and Renewable Energy

During a professional careerspanning over four decad-

es, S.K. Chaturvedi has work-ed with and led several majorpublic sector undertakings inthe power sector. He has ser-ved in various roles in the reg-ulatory, generation and trans-mission arenas of the sector.

Chaturvedi started his career as amanagement trainee with NMDC in1976. Five years later, he joined NTPC,where he was associated with the devel-opment of projects like Farakka and Vin-dhyachal. In 1991, he moved to PowerGrid Corporation of India Limited andlater joined NHPC as director, personnel,in 2004. “While I was with NHPC, Ibrought the company to the top in termsof HR practices and received manyawards for these efforts,” he says.

He rejoined Powergrid in 2008 asCMD and spearheaded several key pro-

jects, including the India-Bangladesh transmissionlink. He also took steps toexpand Powergrid’s busi-ness overseas, including inKenya, Bhutan, Afghanistan,Dubai and Nigeria. In 2012,he joined the Joint Elec-tricity Regulatory Commis-

sion as a member and was later promot-ed as chairperson.

Chaturvedi pursued his graduationand postgraduation from LucknowUniversity in 1970 and 1972. He was afellow at the Council for Scientific andIndustrial Research and at the UniversityGrants Commission. He also obtained apostgraduate diploma in personnel ma-nagement and industrial relations fromthe Andhra Pradesh Productivity Cou-ncil and an advanced managementdegree from the Administrative StaffCollege of India, Hyderabad.

According to Chaturvedi, the powersector has been hit hard by the lack offuel and transmission infrastructure.“The sector needs urgent reforms ingeneration, transmission and distribu-tion,” he says. Also, renewable energyneeds to be given a boost and steps haveto be taken to improve the financialhealth of utilities.

Chaturvedi strives to maintain anarm’s length between his professionaland personal commitments. He is a vora-cious reader and enjoys books on historyand contemporary subjects. “I have a col-lection of around 4,000 books in mylibrary,” he says. The latest book that hehas read is Beyond the Lines by KuldipNayar. His other interests include garden-ing and floriculture. He also enjoys listen-ing to music, especially classical songsand ghazals. In a few years, Chaturvediplans to serve society by being an acade-mician and teach children free of cost. ■

S.K. Chaturvedi Chairman, Joint Electricity Regulatory Commission

P E O P L E


Venkatasiva Reddy considers electrici-ty of primary importance for a coun-

try’s development. According to him,focusing on renewable energy develop-ment and encouraging private sectorinvestments in power generation are,therefore, important steps that the cen-tral and state governments should taketo improve the power scenario and pro-mote economic growth. Further, hebelieves that the sector should moveaway from subsidy schemes and achange be brought in the public mindsetof electricity being a free commodity.

An engineering graduate from PESCollege of Engineering, Mandya, Reddystarted his career in the power sector in1978, joining the erstwhile KarnatakaElectricity Board. During the course of hiscareer spanning over three decades, hehas served the state electricity depart-ment in various capacities. At present, heis director of Karnataka Power

Transmission CorporationLimited (KPTCL) as well as ofall the discoms in the state.In this capacity, he enjoys theopportunity to directlyengage with the senior man-agement of KPTCL and allthe discoms regarding tech-nical, revenue-related andmanpower matters, and take the compa-nies forward. He has also been activelyinvolved in human resource develop-ment and currently serves as president ofthe Karnataka Electricity Board Engi-neers Association.

Commenting on his most memorableassignment, Reddy recalls the time hewas a part of a special squad in the elec-tric meter testing division of BangaloreElectricity Supply Company (BESCOM).At the time, he was an executive engineerand his team undertook a comprehen-sive analysis to recognise the pattern as

well as methods of powertheft in the region, followingwhich raids were arranged.The exercise, which resultedin a yield of nearly Rs 1 billionfor BESCOM, was instrumen-tal in putting an end to thecity’s high volume of unlaw-ful power consumption.

A curious traveller, Reddy is alwayson the look-out to discover the latesttechnologies and learn the best prac-tices from around the world, so that hecan implement them in his state.

On the personal front, Reddy says hehas been an avid agriculturist since hischildhood, which has made him a hard-working individual. Reddy enjoys read-ing books on science and technology,industry, and agriculture. His leisuretime is spent watching Telugu andKannada movies and plays. He alsoenjoys continental cuisine. ■

Venkatasiva Reddy Director, KPTCL

With over 55 years of expe-rience as a hydropower

engineer, Dr H.R. Sharma hasbeen engaged in all aspectsof hydropower development– from investigations, plan-ning and feasibility studies todetailed engineering, con-struction and monitoring.

Sharma holds multiple doctorates inengineering and technology fromGermany and Norway. Prior to workingwith Tractebel Engineering as chief tech-nical principal, he held key positions invarious organisations, some of thenotable ones being director, CentralWater Commission; member, hydro,Central Electricity Authority and ex-offi-cio additional secretary to the uniongovernment; chairman, Nathpa JhakriPower Corporation (now SJVN Limited);adviser on water and energy, Mauritiusgovernment; and director, design and

engineering, GVK Technicaland Consultancy Services.

Sharma is optimisticabout the outlook for hydropower. “Given the vast hydropotential, resources andexpertise in the country, thefuture of hydro developmentis very bright,” he says. Every

hydro project should aim to get the coop-eration of the local people and improvetheir living standards, he suggests.

Given his rich and diverse experi-ence, Sharma finds it difficult to pickone memorable assignment. “I havealways loved and enjoyed my assign-ments,” he remarks. He, however, recallsthe designing of the Yamuna HydelScheme Stage II in the 1970s and thecomplex studies for the 900 MW tidalpower project in the Gulf of Kachchh inthe 1980s, as among his favourites.

Sharma is credited with the develop-

ment of several innovations in the field ofhydropower, water resources and tidalpower engineering. He has also been inv-olved in the preparation of various Indianstandards. He has received severalawards including the Central Board ofIrrigation and Power’s Diamond JubileeShanti Yadav Mohan Award (1987), theBharat Udyog Award (1993), the Inter-national Engineer of the Year 2008 Award,and the Leading Engineer of the WorldAward for 2007 and 2011.

Sharma leads a simple life andderives pleasure from his work. He fol-lows the teachings of the Gita: “Do yourduty without aspiring for the fruit.” Heenjoys reading, writing technical arti-cles, spending leisure time with family,especially his grandchildren. He aspiresto write a book on the advances inhydropower development and updatehis previous book, Integrated WaterResources Management. ■

Dr H.R. Sharma Chief Technical Principal, Tractebel Engineering

P E O P L E


Vinay Rustagi, managing director,BRIDGE TO INDIA has more than 15

years of experience in project advisoryand financing of energy and infrastruc-ture projects across India and Europe.Over the last few years, his work hasbeen concentrated on large-scale solarand wind projects. This has given him adeep understanding of the solar powersegment, including project develop-ment and related technical, operationaland regulatory issues.

According to Rustagi, solar powercan play a critical role in resolving someof the energy challenges that the coun-try faces today, while simultaneouslyimproving energy access. Commentingon the current state of the segment,Rustagi says, “The Indian solar powermarket continues to disappoint, despiteits huge potential. The new governmentneeds to make solar central to India’senergy mix and give it strong impetus

through policy reforms.” In his current role, Rusta-

gi advises companies, insti-tutions and policy-makerson a wide range of strategic,policy, financial and businessdevelopment challenges.Prior to this, he was workingwith Standard CharteredBank as senior director, Project and Exp-ort Finance, South Asia, and was involvedin the financing of a number of wind andsolar projects. In the past, he has workedat the National Australia Bank, the Sumi-tomo Mitsui Banking Corporation andICICI Securities. Among his most memo-rable transactions are the financing of a240 MW rooftop solar portfolio and a 110MW landfill gas project in Europe.

A graduate in mechanical engineer-ing from the Delhi College of Engineer-ing, Rustagi also holds an MBA from theLondon Business School and from the

Indian Institute of Manage-ment, Ahmedabad.

His management style isinformal, direct and perfor-mance-oriented. He believesin creating a positive, ener-getic environment that moti-vates people to deliver theirbest. He also recognises the

importance of having strong and specificinterests outside of work for relaxing anddestressing. Rustagi likes to travel withhis family. He has travelled all overEurope and Southeast Asia. In India, hisfavourite holiday destinations includeUttarkashi, Darjeeling and Kerala. Asports enthusiast, he plays golf and ten-nis and runs on a regular basis.

Says Rustagi, “We spend a large partof our lives at work and it is importantthat we have a work culture where peoplenot only work hard but also have a lot offun. Office banter is very important.” ■

Vinay Rustagi Managing Director, BRIDGE TO INDIA

As deputy general manag-er with CESC Limited’s

Budge Budge GeneratingStation in West Bengal, SibirRoy is responsible for max-imising process efficiency,minimising energy con-sumption as well as carry-ing out maintenance at anoptimum cost. Prior to his current position, he was associated with thecompany’s electrical and instrumenta-tion department.

Commenting on the key challengesfacing the power sector at present, hesays, “The policy framework needs tobe revisited in order to allow for greaterprivate sector participation. Moreover,the issues that are hindering full utilisa-tion of installed capacity need to beaddressed. Apart from this, the provi-sion of single-window clearance forprojects and ensuring fuel linkages will

help fast-track stalledpower projects.”

He further emphasises,“The upgradation of oldpower plants to improvetheir efficiency and reliabili-ty along with technicalenhancements is a must.Alongside, to enable power

plants to operate at high plant load fac-tors (PLFs), the demand side has to bemanaged effectively.”

While he believes that the PerformAchieve Trade (PAT) regime is a positivestep forward, he points out that slowdomestic coal production, low averagePLFs and interference from the stategovernment in tariff determination areissues that need to be resolved on anurgent basis.

Open communication, motivationand empowerment are the foundationsof Roy’s management style. In his two

decades of experience in the operationsand maintenance segment of coal-based power plants, he recalls dealingwith post-commissioning challengesrelated to maintaining stability andreliability of Budge Budge’s third unit(250 MW) as one of his most memo-rable assignments till date.

An electronics and telecommunica-tion engineer from the Regional En-gineering College, Silchar, Roy is also acertified boiler operations engineer andinternal auditor for ISO 9001:2000 andISO 14001:200.

Despite having a packed schedule,he makes it a point to spend qualitytime with his family. He enjoys playingthe guitar and reading self-help booksand thrillers, his favourite being TheSecret by Rhonda Byrne. Roy is also anavid traveller who enjoys reliving hischildhood memories by visiting varioushill stations. ■

Sibir Roy Deputy General Manager, Budge Budge Generating Station, CESC Limited

P H O T O G A L L E R Y


Recent events and industry highlights

Sector Snapshots

K. Biswal, Director, Finance, NTPC Limited, addresses the Twelfth

Foreign Lenders Meet organised by the company in Mumbai

Piyush Goyal (right), and Upendra Tripathi, Secretary, Ministry of

New and Renewable Energy, at an interaction with wind power

equipment manufacturers and independent power producers in Delhi

(From left) K. Rajaram, Vice-President, Larsen & Toubro Engineering,

Construction and Contracts; N. Thombre, Chief Executive Officer

(CEO), CG Lucy Switchgear Limited; L. Demortier, CEO and

Managing Director (MD), Crompton Greaves (CG); R. Dick, Chairman

and MD, W. Lucy & Company Limited UK; and J.G. Kulkarni,

Executive Vice-President and President, Power Business, CG, at the

inauguration of CG Lucy Switchgear's RMU facility at Nashik

(From left) Prime Minister Narendra Modi; N.N. Vohra, Governor,

Jammu & Kashmir; and Piyush Goyal, Minister of State (Independent

Charge) for Power, Coal and New and Renewable Energy, at the

inauguration of NHPC Limited's 240 MW Uri II hydroelectric

plant in Jammu & Kashmir

C O M P A N Y R E L E A S E


Astonfield and Solesa partner to deliver solar power solutions in IndiaAstonfield Renewables and international engineering andproject management firm Solesa have announced a strategicpartnership to deliver solar power solutions to industrial busi-nesses in India. Marketed as Astonfield Solesa Solar, the com-pany will deploy customisable solutions that can save com-mercial and industrial businesses up to 30-40 per cent ontheir diesel fuel costs. The partnership also announced thecommissioning of its first project, a 100 kW ground-mountedsolar-diesel hybrid system, for iron manufacturer Indo ShellCast Private Limited in Tamil Nadu. This system reduces costsby feeding uninterrupted power to the factory from a combi-nation of three generation sources – solar, diesel gensets andthe state power grid. It consists of 384 solar photovoltaic mod-ules and two diesel gensets, all of which are controlled by thehybrid power controller to prioritise consumption of the mostcost-effective power source at any given time. The system isexpected to produce close to 150 MWh per year.

Doosan Heavy Industries & Construction acquires safety milestone Doosan Heavy Industries & Construction’s Rabigh constructionoffice in Saudi Arabia achieved 40 million hours of accident-free operation, a world record among power plant constructionprojects worldwide, on April 23, 2014. The Rabigh 2 project callsfor simultaneous construction of four power plants andinvolves more than 15,000 workers from 37 countries deployeddaily, which makes the new record significant. Doosan HeavyIndustries & Construction is implementing Environment,Health and Safety (EHS) programmes focused on educationand hands-on experience, including repeated training of work-ers to prepare for real accident situations, operation of a dailysafety patrol system by all staff members, and awarding prizesto exemplary workers. The Rabigh 2 project, which the compa-ny acquired in 2010, is 97.3 per cent complete and at present,Plants 1, 2 and 3 are concurrently operating to test output. Also,the company’s Mong Tung 2 construction office in Vietnamreceived the Golden Hard Hat Award to certify safety manage-ment capacity of the builder achieved through exemplary EHSactivities, including application of a systematic safety manage-ment at work sites, and extensive efforts to establish safetyawareness among its workers.

SGS wins contract from Vale SA to source and supervise a manufac-turing project in China Brazilian multinational diversified metals and mining corpo-ration Vale SA has contracted SGS Industrial Services for pro-viding extensive inspection and training expertise to overseethe sourcing, production and delivery of a conveyor belt, stack-er, reclaimer and steel structure from China. As part of this pro-ject, SGS has provided a team of 45 experts who will manage

and supervise the quality of service delivered to Vale. This teamwill assist Vale with the selection and evaluation of appropriatesuppliers from China to enable it to make an informed selec-tion. One of the most challenging issues for sourcing in China isthe quality of raw materials. Since SGS has local material test-ing laboratories located in 13 cities across China, it can provideindependent precise materials testing with fast turnaroundtime, according to international standards.

Perkins launches updated 750 kVA engine Perkins has launched an updated 750 kVA engine, Perkins®4006D-23TAG2, which uses a diesel oxidation catalyst aftertreatment system to meet India’s Central Pollution ControlBoard-II emission standards. The mechanical fuel injectiondiesel engine is specifically designed to meet customers’ criticalrequirements and ensures that they benefit from a competitivewhole life cost. The new engine offers ease of packaging and, bydrawing on the common architecture of the 4000 Series enginefamily, uses the same standard spare parts, thus reducinginventory requirements. Perkins is already taking orders for the4006D-23TAG2, which will be available from August 2014.

Honeywell launches Experion® Orion ConsoleHoneywell Process Solutions unveiled the advanced displaytechnology Experion® Orion Console at the 2014 HoneywellUsers Group Symposium in San Antonio, Texas. The consolehas been built on Honeywell’s flagship Experion ProcessKnowledge System control platform and features animproved ergonomic design and better display to simplifycontrol system management, reduce operator fatigue andimprove situational awareness. It also includes a large, flexi-ble, ultra-high definition display that provides clear statusassessments of process operations at a single glance formore informed management.

CG receives Euro 150 million order for wind project in the NetherlandsCrompton Greaves (CG), along with consortium partnersFabricom and Iemants, has been selected by Van Oord for theGemini offshore wind project in the Netherlands. The scope ofthe order, worth Euro 150 million, includes design, delivery andinstallation of two high voltage (HV) offshore substations andone HV onshore substation. Of this, CG’s scope covers designand engineering of the overall electrical HV system, manufac-ture and supply of all key equipment and connecting theonshore substation to the 400 kV Tennet HV grid. The Geminiproject, which is located 85 km north of the island ofSchiermonnikoog in the Dutch North Sea, will consist of twooffshore wind farms – the 300 MW Buitengaats and the 300 MWZeeEnergie. The project is expected to begin in 2014 and becompleted by 2016. ■

Company Release

P O W E R D A T A P O W E R D A T A


Volume traded in day-ahead market

IEX PXIL

MU

s

0

20

40

60

80

100

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Prices in day-ahead market

Rs

pe

ru

nit

IEX

PXIL

2.00

2.50

3.00

3.50

4.00

4.50

5.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Power TradingThe electricity traded in the day-ahead market at the IEX and PXIL in June 2014 was 2,617 MUs and 26 MUs respectively. The averagemarket clearing price range at the IEX was Rs 2.85 per unit to Rs 4.67 per unit and at PXIL was Rs 2.09 per unit to Rs 4.30 per unit.

At the Indian Energy Exchange and Power Exchange India Limited in June 2014

Buy bids Sell bids Total volume traded Equilibrium price (Rs per REC)

IEX Solar 636 147,026 636 9,300

Non-solar 50,743 3,166,863 50,743 1,500

PXIL Solar 1,018 88,520 1,018 9,300

Non-solar 88,711 3,809,585 88,711 1,500

REC trading during June 2014

Traded volume (MUs) Average traded volume per day (MUs) Maximum price (Rs per unit) Minimum price (Rs per unit)

IEX 0.25 0.008 4.00 4.00

PXIL – – – –

Week-ahead market

Note: The IEX’s region-wise average clearing prices (minimum, maximum in Rs per unit): North 1&2 (2.48, 4.59); North 3 (2.70, 4.59); Northeast 1&2 (2.48, 4.59); East 1 &2(2.48, 4.59); West 1&2 (2.47, 4.59); West 3 (2.47, 4.59); South 1 (4.19, 5.22); South 2 (4.35, 6.50)

PXIL's region-wise average clearing prices (minimum, maximum in Rs per unit): North 1 (1.00, 6.17); North 2 (1.00, 6.17); North 3 (1.00, 6.17); East 1 (1.00, 6.10); East 2(1.00, 6.10); South 1 (1.00, 6.10); South 2 (1.00, 6.10); West 1 (1.00, 6.10); West 2 (1.00, 6.10); West 3 (1.00, 6.10); Northeast 1 (1.00, 6.10); Northeast 2 (1.00, 6.10)

Sources: IEX; PXIL

P O W E R D A T A


Key Statistics

USA 681.2 687.6 1.3

Canada 156.0 154.8 (0.5)

Mexico 56.9 56.6 (0.2)

Total North America 894.2 899.1 0.9

Argentina 37.7 35.5 (5.6)

Bolivia 18.3 20.8 14.4

Brazil 19.3 21.3 11.0

Colombia 12.0 12.6 5.8

Peru 11.9 12.2 3.1

Trinidad & Tobago 42.7 42.8 0.5

Venezuela 29.5 28.4 (3.2)

Other South and Central America 2.9 2.5 (13.4)

Total South and Central America 174.3 176.4 1.5

Azerbaijan 15.6 16.2 3.8

Denmark 5.8 4.8 (15.6)

Germany 9.0 8.2 (8.8)

Italy 7.9 7.1 (9.9)

Kazakhstan 18.4 18.5 0.8

Netherlands 63.9 68.7 7.9

Norway 114.7 108.7 (5.0)

Poland 4.3 4.2 (1.4)

Romania 10.9 11.0 0.6

Russian Federation 592.3 604.8 2.4

Turkmenistan 62.3 62.3 0.4

Ukraine 18.6 19.3 4.0

UK 38.9 36.5 (5.9)

Uzbekistan 56.9 55.2 (2.8)

Other Europe and Eurasia 8.7 7.5 (13.8)

Total Europe and Eurasia 1,028.1 1,032.9 0.7

Bahrain 13.7 15.8 15.2

Iran 165.6 166.6 0.8

Iraq 0.7 0.6 (4.4)

Kuwait 15.5 15.6 0.7

Oman 30.0 30.9 3.3

Qatar 150.8 158.5 5.4

Saudi Arabia 99.3 103.0 4.0

Syria 5.3 4.5 (15.2)

UAE 54.3 56.0 3.3

Yemen 7.6 10.3 36.5

Other Middle East 2.6 6.5 148.5

Total Middle East 545.5 568.2 4.5

Algeria 81.5 78.6 (3.3)

Egypt 60.9 56.1 (7.7)

Libya 12.2 12.0 (1.5)

Nigeria 43.3 36.1 (16.4)

Other Africa 18.5 21.6 17.2

Total Africa 216.3 204.3 (5.3)

Australia 43.4 42.9 (0.9)

Bangladesh 21.1 21.9 4.2

Brunei 12.6 12.2 (2.6)

China 107.2 117.1 9.5

India 40.3 33.7 (16.3)

Indonesia 71.1 70.4 (0.7)

Malaysia 66.5 69.1 4.2

Myanmar 12.7 13.1 3.1

Pakistan 41.2 38.6 (6.2)

Thailand 41.4 41.8 1.2

Vietnam 9.4 9.8 4.5

Other Asia Pacific 18.2 18.7 3.3

Total Asia Pacific 484.9 489 1.1

Total world 3,343.3 3,369.9 1.1

Note: The above figures exclude gas flared or recycled; and include natural

gas produced for gas-to-liquid transformation

Source: BP Statistical Review of World Energy June 2014

Country 2012 2013 Change in 2013 Country 2012 2013 Change in 2013 over 2012 (%) over 2012 (%)

Global gas production(billion cubic metres)

P O W E R D A T A


Key Statistics

USA 922.12 892.64 (3.07)

Canada 67.10 69.54 3.91

Mexico 15.74 16.65 6.03

Total North America 1,004.96 978.82 (2.50)

Brazil 6.62 7.37 11.75

Colombia 89.02 85.50 (3.70)

Venezuela 3.12 2.33 (25.20)

Other South and Central America 0.86 2.83 232.96

Total South and Central America 99.62 98.03 (1.70)

Bulgaria 33.43 28.62 (14.21)

Czech Republic 54.97 48.98 (13.17)

France – – –

Germany 196.17 190.27 (5.51)

Greece 62.96 53.76 (14.37)

Hungary 9.29 9.55 3.03

Kazakhstan 115.66 114.71 (0.11)

Poland 144.09 142.87 (1.91)

Romania 33.90 24.72 (26.88)

Russian Federation 356.10 347.10 (1.87)

Spain 6.34 4.43 (32.51)

Turkey 72.04 61.67 (13.51)

Ukraine 88.20 88.20 0.27

UK 17.05 12.84 (24.47)

Other Europe and Eurasia 91.44 93.85 4.25

Total Europe and Eurasia 1,281.63 1,221.56 (3.75)

Total Middle East 1.18 1.18 0.27

South Africa 258.27 256.70 (0.34)

Zimbabwe 1.59 1.59 0.27

Other Africa 2.47 2.48 0.55

Total Africa 262.34 260.77 (0.32)

Australia 452.84 478.03 7.32

China 3,645.00 3,680.00 1.24

India 606.51 605.13 0.12

Indonesia 386.00 421.00 9.37

Japan 1.32 1.20 (8.64)

New Zealand 4.93 4.53 (6.58)

Pakistan 3.37 3.43 1.91

South Korea 2.09 1.81 (13.13)

Thailand 18.07 17.98 (0.19)

Vietnam 41.90 41.19 (1.41)

Other Asia Pacific 81.58 81.74 0.65

Total Asia Pacific 5,243.60 5,336.05 2.41

Total world 7,893.32 7,896.40 0.77

Note: The above figures are for commercial solid fuels only, that is, bitumi-

nous coal and anthracite, and lignite and brown (sub-bituminous) coal; also

include coal produced for coal-to-liquid and coal-to-gas transformation

Source: BP Statistical Review of World Energy June 2014

Country 2012 2013 Change in 2013 Country 2012 2013 Change in 2013 over 2012 (%) over 2012 (%)

Global coal production(million tonnes)

P O W E R D A T A


GenerationMay 2014

Power GenerationMonthly statistics year over year

Total power generation stood at 89.73 billionunits. At around 35.09 billion units and 30.49 bil-lion units respectively, the central and state sec-tors accounted for the major share of generation.

Total power generation increased by 6.91 per cent in May 2014 as compared to the samemonth last year, with an increase of 6.99 per cent in thermal generation and a 6.42 per centincrease in hydel generation.

State sectorAndaman & Nicobar Islands 15.46 Andhra Pradesh 3,337.77 Arunachal Pradesh – Assam – Bihar – Chhattisgarh 1,321.54 Delhi 290.28 Gujarat 2,266.95 Haryana 655.10 Himachal Pradesh 187.96 Jammu & Kashmir 442.43 Jharkhand 283.99 Karnataka 2,457.79 Kerala 673.47 Madhya Pradesh 1,690.90 Maharashtra 4,476.76 Manipur – Meghalaya 57.57 Mizoram – Nagaland – Odisha 875.20 Puducherry 6.86 Punjab 1,289.14 Rajasthan 2,238.75 Sikkim – Tamil Nadu 2,825.11 Tripura 65.13 Uttarakhand 384.37 Uttar Pradesh 2,305.26 West Bengal 2,338.12 Lakshadweep – Total SEBs/EDs 30,485.91 Central sectorBBMB 979.73 SJVNL 866.24 NHDC 173.74 DVC 2,131.70 THDC 328.79 RGPPL –Neepco 318.90 Neyveli 1,765.39 NHPC 2,802.45 NTPC 22,864.66 NPC 2,757.06 ONGC 105.80 Total central 35,094.46 Private sector 24,147.97 Total generation 89,728.34 Imports from Bhutan 267.15 Total availability 89,995.49

Sector MUs

Pow

erge

nera

tion

(BU

s)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

68

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

86

87

88

89

90

91

2014

2013

Month Thermal and % Hydel % Total % nuclear (MUs) change (MUs) change (MUs) change

2013

May 72,900 5.38 11,025 10.05 83,925 5.97

June 63,855 (1.66) 12,151 6.80 76,006 (0.40)

July 63,587 0.05 15,886 33.25 79,473 5.29

August 59,362 (0.02) 19,421 37.83 78,782 7.24

September 66,853 15.54 15,024 3.71 81,877 13.17

October 66,771 (2.95) 12,087 30.90 78,859 1.05

November 68,486 3.85 8,779 28.53 77,265 6.17

December 74,523 5.76 8,192 24.74 82,715 7.38

2014

January 76,151 5.58 7,497 16.19 83,649 6.45

February 69,219 10.13 7,423 26.47 76,643 11.52

March 75,423 5.48 9,164 4.47 84,587 5.37

April 77,307 11.35 9,783 18.48 87,089 12.11

May 77,995 6.99 11,733 6.42 89,728 6.91