Role of Private Sector in

Cross Border Transmission Alok Roy,

CEO, Reliance Power Transmission Ltd

Slide

Wide Variation in Resource Endowment and Consumption

Variation in Resources

India and Pakistan : Natural gas and

Coal

Bhutan and Nepal: Hydropower potential

Consumption Pattern

Afghanistan dependent on imported

energy

Maldives dependent on oil

Bangladesh reliant on natural gas

2

Slide

How Balanced are we???

1.6 Bn people in the region

All countries in SAARC region are

oil importing

High T&D losses

Facing high power shortages

inspite of investing heavily in

generation and distribution

3

Transmission

GenerationDistribution

Slide

Key Challenges faced by the Region

Increasing regional deficits with energy

demand to grow at a CAGR of 5%

Dominance of single fuel in fuel mix

Limited exploitation of renewables

Heavy dependence on imports thereby

raising generation costs

Lack of energy infrastructure

Lack of funds to develop capital

intensive projects

4

More export and import

base

Exports (inclpower)

increase, +veon Balance of

Payments

Power availability improves

infrastructure

+ve on manufacturing

and service sectors

Investors attracted,

employment generation

Benefits of Power Trade Benefits of Power Trade

Slide

Global ThoughtsInter Continental Power Transmission

5

Slide

Intercontinental Transmission Highway

for Optimization of Global Energy Resources

LIU Zhenya

President

State Grid Corporation of China

Aug. 26, 2012

Paris, France

Copyright c 2012 SGCC All Rights Reserved.

Slide

With European Super Grid:

Renewable Electricity UHV Power Grid European Super Grid Countries in Europe

With breakthroughs in energy efficiency, new materials and energy storage:

We can transmit massive renewable power from Central Asia, Mid-east, and North Africa to Europe

SuperGrid Desertec

(http://www.friendsofthesupergrid.eu/) (http://www.desertec.org)

Global Thoughts – Future Outlook

7

Slide

Global Thoughts – Direct Transmission (Option I)

8

Source: SGCC presentation at CIGRE 2012

Slide

4715km

Ekibastuz ( Kazakstan) ～Berlin

Global Thoughts – Direct Transmission (Option II)

9

Source: SGCC presentation at CIGRE 2012

Slide

4600km

Siberia ～ St. Petersburg ～ Berlin

Global Thoughts – Relay Transmission (Option III)

10

Source: SGCC presentation at CIGRE 2012

Slide

Potential for Cross Border Trade

Importing

Countries

Exporting Countries

India Bhutan Nepal Bangladesh

India

X Significant quantity

of hydropower can

be exported

Significant quantity of

hydropower can be

exported

Significant amount

of gas based

power may be

possible

BhutanDry Season

Support

X Similarity of

resources; resource

sharing unlikely

Supply of gas

based power in dry

season

NepalThermal power

support, dry

season support

Similarity of

resources; sharing

unlikely

X Gas based power

support

BangladeshSharing of

reserves,

electricity

Hydropower

support

Hydropower support X

11

Slide

Why Private Participation??

• Core Sector Development

• Limited Capital availability

• Cost Plus Model

• Core Sector Development

• Limited Capital availability

• Cost Plus Model

• Brings in Competition

• Additional capital source

• Increased efficiency

• Effective resource utilization

• Brings in Competition

• Additional capital source

• Increased efficiency

• Effective resource utilization

• Reduced delivery period

• Improved service Quality

• Reduced Service Charge

• Releases Capital for Social

Sector

• Reduced delivery period

• Improved service Quality

• Reduced Service Charge

• Releases Capital for Social

Sector

Public Funding Private Investor Benefit

12

Slide

PPP Models in Use - Roles

13

Model Role of Public Partner Role of Private Partner

Joint

Venture

Partial Ownership

Control over key decisions

Handholding for clearances and

approvals

Majority Ownership

Day to Day management & control

Project Implementation

Operation & Maintenance

No cost or time overrun risk as tariff set under

cost plus

IPTC Project conception

Monitoring and Control under

statutory role

100% ownership and complete risk transfer

Pre-committed tariff with no upside

Incentivised to complete faster and reduce

costs (both Capital and O&M)

Slide

Key Construction Issues

• Countries have varied clearance requirements

• Environmental clearances procedures different in various countries

• Require more lead time to study

Clearances

• Key issue in construction of transmission line

• Practices are different in various countries

• Important to empower the developer constructing lines of national importance

Right of Way

• Different codes exist with regards to laying of overhead lines and cables

• Difficult to standardize designs, construction practices for a trans national line

Construction Standards

14

Slide

RoW Challenges

• “Not in my Backyard”!!!!

• World over, the sentiment is picking up

• Fear of depreciating land value, unsightly view

NIMBY factor

• Stiff resistance due to biological effects of EHV lines on humans and animals

• Concerns raised regarding migratory birds, birding hot spots

Resistance by Green Groups

• RoW acquisition set to become tougher with Land Acquisition Acts

• Cost of acquiring RoW to increaseLand Acquisition Acts

15

Introduction of novel and tailor made ways specific to location is the need of the Introduction of novel and tailor made ways specific to location is the need of the

hour

Slide

Right of Way – Different Approach

Check Survey

- Patch finalization

Identify land ownerIdentify land owner

- Revenue records

Issue request letter Issue request letter

to land owner

Damage AssessmentDamage Assessment• Panchnama – Crop & Area

• Reference data for yield from

Agri university & rate from

local market

Owner

Agreement

& Certification by

local Sarpanch

Crop Compensation

Cheque delivered

Engage local Engage local

Community through

CSR activities

16

Slide 17

Slide

What is Expected??

Necessary provisions in Electricity Laws and Regulations

Well defined Project Scope

Well developed in terms of laws, regulation

Clearly laid out procedures for obtaining necessary clearances

Assured mechanism of return of investment irrespective of usage

Insulation from all political risks such as forced take over of assets

Mechanisms to deal with changes in time schedule, cost escalations and line realignments

18

Slide

Recommendations

19

Parameter Way Forward Stakeholders

Technical

• Upgradation of National Grids

• Construction of Transmission lines, s/s

• R&D

Respective Govt.

Private Sector

Political/

Planning

• Decoupling politics and energy

• Single unified regulator

• Frame agreements

• Joint capacity building

Respective Govt.

Financial/

Investment

• Conducive investment environment in

respective member states

• Level playing fields

Respective Govt.

Private Sector

Financial Institutions

Clearances• Co-operation on environmental standards

• Standardization of clearances proceduresRespective Govt.

Slide 20

Western Region

Strengthening System - II

Mumbai Transmission

Talcher II Augmentation

Parbati KoldamNorth Karanpura

5 Projects I 10 States I $ 1.5 Bn

Reliance - Projects Portfolio

Slide 21

Regulated

Parbati Koldam(JV with Powergrid)

Mumbai Transmission

Tariff based

WR System

Strengthening

North Karanpura

Talcher-II

Augmentation

Our Presence

Thank You