Monthly Archives: January 2012

Reliance Power can’t pledge Sasan mining lease as coal ministry rejects proposal

The coal ministry has rejected Reliance Power’s proposal to mortgage the mining lease of two blocks attached to the Sasan ultra mega power project(UMPP) to provide security to lenders, on the grounds that there is no precedence and the request for mortgage should come from the state government.

The government of Madhya Pradesh, where Sasan is located, had leased the mines to Reliance Power last September. An official in the Madhya Pradesh mining department said Reliance Power had approached the state government for permission to mortgage.

Reliance Power spokesperson said: “This is a very normal and standard process in each and every project finance transaction in all infrastructure projects. The due process of seeking approvals is being followed by us.”

The company is required to mortgage the mining lease as per financing agreement signed with a consortium of 14 lenders for the UMPP. A Reliance Power executive said permission to mortgage the coal blocks would send a positive signal to the lenders that include foreign banks.

A consortium of 14 banks led by State Bank of India had in April 2009 agreed to finance 75% of the Rs 19,400-crore Sasan project cost.

The lenders, including IIFCL, Power Finance Corp, Rural Electrification Corp, Punjab National Bank, LIC, Axis BankIDBI BankAndhra BankBank of Baroda and Union Bank of India, sanctioned the funds on the merit of the project – known as project financing. US Exim, Bank of China, China Development Bank and The Export Import Bank of China along with Standard Chartered Bank have refinanced part of this loan.

A senior official at Power Finance Corp said it was early to comment. A Rural Electrification Corp official said there was no communication from Reliance Power on the matter.

The move to mortgage mining lease is unprecedented as no company has till date approached the government, though Rule 37 of Mineral Concession Rules, 1960, provides securing a few scheduled banks. The rule is silent on impact of the mortgage on the blocks, a coal ministry official said.

Reliance Power had in November sought the coal ministry’s approval to assign mining lease of Moher and Moher Amlohri Extension coal blocks as security to lenders of Sasan project, a senior ministry official said. The company has not sought mortgage of Chhatrasal coal block attached to the Sasan project, which the company wants to use for another power project.

Five thrust areas identified to ease power sector woes

The secretarial panel looking into the woes of the power sector has identified five key issues, including fuel supply constraints, for immediate execution to resolve the crisis.

A power sector official said approximately 18,500 megawatt of projects commissioned after March 2009 are likely to generate only 55 per cent of their actual output due to fuel (coal) supply crunch.

The Committee of Secretaries (CoS) headed by the Principal Secretary to the Prime Minister, Mr M. Pulok Chatterjee, was constituted following a meeting of the private power sector honchos on January 18. For the core areas identified, the panel will review the events that take place on or before February end, an official said.

Securing adequate coal and gas and getting compensation by way of fuel (coal/gas) acquired through e-auction and/or imports for power generation, is the most critical challenge faced by the developers today, the official said.

On the domestic coal supply situation, the panel will review the status on fuel supply agreements to be signed by Coal India for all projects up to the 11th Plan period (March 31, 2012).

Coal India has been unwilling to commit delivery of coal confirming to sanctioned linkage quantity for the last two years, the official said, adding no new Fuel Supply Agreement has been signed with the private developers since March 2009.

For allocation of gas for gas-based power plants, the power sector has been seeking a meeting of the empowered group of ministers (EGoM) on gas which has not met for more than two years. Nearly 8,000 megawatt of gas-based power projects ready for commissioning in 11th Plan was awaiting allocation. The group is to meet on February 13.

The power sector players were also seeking meeting of EGoM on UMPP to consider imported coal issues for Tata’s Mundra 4,000 megawatt project and Reliance’s (Anil Ambani Group) Krishnapatanam 4,000 megawatt project as well as for modifications of standard bid documents for forthcoming UMPPs. Sources said the EGoM is expected to meet either on February 20 or 24.

The sector also pressed for a meeting of Group of Ministers on Coal to consider final forest clearances for eight different blocks recommended by Prime Minister’s Office in 2010, which includes Chhatrasal block linked with Sasan UMPP and Mahan block for Essar and Birla group.

Besides, they also wanted the Government to consider a policy of maximising coal production from captive coal blocks to enhance domestic production.

The Prime Minister’s Office recently had directed the Ministry of Coal to put its suo motu policy for use of surplus coal on hold and asked it to hold inter-ministerial consultations to finalise the same.

Source: BL

DIPP told to set rules for FDI in power exchanges

The government has set the ball rolling for foreign direct investment (FDI) in power exchanges. The finance ministry has asked the department of industrial policy and promotion to design a FDI policy for power exchanges on the lines of commodity exchanges.

“There is a need for clear FDI regime for power exchanges. And since these are akin to commodity exchanges a similar structure should be considered,” said an official privy to the deliberations.

The finance ministry, that houses the foreign investment promotion board, has written to the DIPP, that formulates the FDI policy on this issue, the official said, adding that the forthcoming FDI circular due in a month could indicate the policy direction.

At present, FDI in power exchanges is not explicitly banned but the rules not specifically provide for foreign investment on the lines of commodity exchanges. FDI is permitted in power exchanges up to 49%.

Experts say such a clarification is required to provide certainty but said there is a need to relook at the negative list concept followed in the FDI policy as the foreign exchange management act works on positive list concept.

“The current scheme of FDI policy contemplates the concept of negative list… In light of the evolving business scenario, the negative list itself needs to be relooked,” the official said.

Negative list stipulates that sectors not mentioned in it are the ones in which FDI is permitted.

The trigger for the finance ministry’s missive was a recent FDI proposal from Multiples Private Equity, promoted by Renuka Ramnath, to pick up minority stake in Financial Technologies-promoted Indian Energy Exchange(IEX). The proposal, which was put on hold, may get FIPB’s green signal anytime soon, the official said.

But, the industry favours up to 100% FDI in the exchanges. “Trading on the exchange is 100% physical delivery based and only 2% of the total generation is traded through any exchange,” said an official with an exchange. Moreover, he said sector was under close regulation of the Central Electricity and Regulatory Commission.

Currently, India has two power exchanges, the other being National Stock Exchange-promoted Power Exchange India.

The thinking among the policymakers is that FDI policy should be rationalised and simplified to encourage overseas investment in sectors as the country needs foreign capital to support a 9% growth. Infrastructure sectors such as power are receiving government’s special attention.

Though, the government backtracked on FDI in multibrand retail, it is expected to put it on the front burner once the assembly election to key states are over.

Source: ET

Reliance Power can’t pledge Sasan mining lease as coal ministry rejects proposal

The coal ministry has rejected Reliance Power’s proposal to mortgage the mining lease of two blocks attached to the Sasan ultra mega power project (UMPP) to provide security to lenders, on the grounds that there is no precedence and the request for mortgage should come from the state government.

The government of Madhya Pradesh, where Sasan is located, had leased the mines to Reliance Power last September. An official in the Madhya Pradesh mining department said Reliance Power had approached the state government for permission to mortgage.

Reliance Power spokesperson said: “This is a very normal and standard process in each and every project finance transaction in all infrastructure projects. The due process of seeking approvals is being followed by us.”

The company is required to mortgage the mining lease as per financing agreement signed with a consortium of 14 lenders for the UMPP. A Reliance Power executive said permission to mortgage the coal blocks would send a positive signal to the lenders that include foreign banks.

Aconsortium of 14 banks led by State Bank of India had in April 2009 agreed to finance 75% of the Rs 19,400-crore Sasan project cost.

The lenders, including IIFCL, Power Finance Corp, Rural Electrification Corp, Punjab National Bank, LIC, Axis Bank, IDBI Bank, Andhra Bank, Bank of Baroda and Union Bank of India, sanctioned the funds on the merit of the project – known as project financing. US Exim, Bank of China, China Development Bank and The Export Import Bank of China along with Standard Chartered Bank have refinanced part of this loan.

A senior official at Power Finance Corp said it was early to comment. A Rural Electrification Corp official said there was no communication from Reliance Power on the matter.

The move to mortgage mining lease is unprecedented as no company has till date approached the government, though Rule 37 of Mineral Concession Rules, 1960, provides securing a few scheduled banks. The rule is silent on impact of the mortgage on the blocks, acoal ministry official said.

Reliance Power had in November sought the coal ministry’s approval to assign mining lease of Moher and Moher Amlohri Extension coal blocks as security to lenders of Sasan project, a senior ministry official said. The company has not sought mortgage of Chhatrasal coal block attached to the Sasan project, which the company wants to use for another power project.

Source ET

Coal India cuts prices; revenue may take a hit

“The exercise of reviewing the prices has been done. There is definitely a reduction,” Alok Perti, coal secretary, said after a company board meeting. “Probably there could be a reduction in the revenue.”

Perti said a new pricing system that was adopted at the beginning of the year as part of the company’s modernization—the linkage with prices of international grades of coal— will be maintained for only one or two grades.

Coal India, which produces 80% of the nation’s coal, introduced a new pricing regime based on gross calorific value (GCV) on 1 January. The mechanism has a band of 17 grades of coal, compared with seven under the so-called useful heat value system. The GCV system will not be scrapped, Perti said.

Coal prices also rose simultaneously, and while Coal India said the higher rates were the result of the new system that was followed internationally, users of the fuel alleged that the company had raised them in an opaque manner.

Users said prices were up 5-20% and some said they were surprised by the hike.

A revision had been expected after Coal India and coal ministry officials said earlier this month that a review would take place in the wake of protests by consumers, particularly power producers.

A government official said Coal India may review the latest price revision in two months’ time as it will become clear how much expenditure will rise after the wage negotiations with trade unions are completed.

SOURCE: livemint.com

BSES discoms told to clear post-Sept dues by Tuesday

Regulator says revenue enough for doing so; discoms to send protest letter on Monday.

With Delhi Electricity Regulatory Comm-ission (DERC) saying it finds BSES distribution companies in a comfortable revenue zone, it has directed them to liquidate all dues from September 2011 onwards to power suppliers and transmission utilities by February 1. The discoms are expected to file a fresh affidavit tomorrow.
In an order dated January 25, DERC said it has observed that the gaps in revenue collection indicated during the first seven months of the year in the case of both BSES Rajdhani Power Ltd (BRPL) and BSES Yamuna Power Ltd (BYPL) could have been eliminated if collection efficiency had been near 99.5 per cent.
The regulator in its order said this, coupled with other indicators such as large net cash surplus in December 2011, (Rs 158 crore in case of BRPL and Rs 165 crore in case of BYPL), appear to indicate that revenue realised by the utilities is sufficient to liquidate the dues from September 2011 onwards, in respect of generation and transmission utilities.

Reacting to the order, a BSES spokesperson said, “We have examined the observations and will be submitting a detailed response tomorrow, which suitably addresses each of the directions issued in the said order.” He said the company had already given a detailed affidavit on the issue. “We stand by our data,” he said.

For the accumulated dues before September 2011, DERC has directed both firms to repay once the IDBI loan is sanctioned. DERC also said it has noticed that there are unexplained discrepancies in the information relating to power purchase by both BRPL and BYPL.

A BSES spokersperson said DERC was yet to respond to their submissions on the earlier data / affidavits filed with them. “We will also submit in our affidavit being filed that since each of the observations was made without putting BSES to notice, as also without calling upon BSES discoms or giving it an opportunity to explain the monthly filings and cash flow statements (which it has being regularly giving to the commission in the prescribed format), nor was there a hearing on the issues raised, the new affidavit will place cogent reasons with respect to the observations of the commission as being erroneous and unjustified,” said the spokesperson.

Last month, the Delhi government had decided to infuse fresh equity of Rs 500 crore in BSES to help it sustain. Reliance Infrastructure, the parent compnay, also plans to infuse Rs 520 crore, which will enable BSES to avail a loan of Rs 5,000 crore from IDBI Bank after the initial payment of Rs 1,020 crore.

Both the Delhi utilities have dues of Rs 3,000 crore towards power generation companies, including NTPC. The Delhi government and Reliance Infrastructure had infused a total of Rs 576 crore in 2002 when BSES was formed. Reliance Infrastructure holds 51 per cent equity in the discom.

BSES had expressed its inability to pay the dues. Subsequently, NTPC had also served a notice to the company, threatening suspension of power supply. NTPC supplies 2,000 Mw to BSES, which accounts for 70 per cent of power distributed in Delhi. NTPC has now extended the deadline for BSES to make the payments. DERC had also last month slapped notices on BSES, asking why its licence should not be suspended for failing to clear the dues.

IFC Invests in Mahindra Solar One in Rajasthan to Help Electrify Rural India

IFC, a member of the World Bank Group, is providing $5 million in debt financing to Mahindra Solar One for a five-megawatt solar power project in the Indian state of Rajasthan to expand access to clean energy in rural areas and address climate change.

The new solar photovoltaic power plant will generate enough electricity to serve about 60,000 rural homes, and is expected to avoid some 8,000 tons of greenhouse gas emissions.

Mahindra Solar One, a joint venture between the Mahindra Group and Kiran Energy, planned the project as part of the Jawaharlal Nehru National Solar Mission, a government initiative to expand solar production in India by 1,100 megawatts over the next two years.

The Rajasthan plant is expected to generate about 9 million kilowatt-hours annually to help electrify rural parts of the country. By supporting this project, IFC recognizes the potential of large-scale solar-power generation to help meet India’s enormous energy needs, agreed both Vish Palekar, Mahindra Cleantech business head, and Ardeshir Contractor, managing director of Kiran Energy.

“The project is aligned with our strategy of promoting clean growth in the region, and also complements our knowledge partnership with the government of Rajasthan,” said Anita George, IFC Director for Infrastructure in Asia. “IFC’s strategy in the solar sector is to increase energy access in emerging markets by investing in technology and scaling new business models, reducing costs so that more people use solar power.”

Much of India receives high levels of direct sunlight throughout the year, making solar power economically and logistically viable. More than 13,500 square miles of the Thar Desert in northwestern India have been set aside for solar power projects, with much of the activity located in Rajasthan.

Last year, IFC’s Advisory Services team hosted a conference, Rajasthan as a Solar Component Manufacturing Hub, to help investors and solar energy producers recognize Rajasthan’s potential as a hub for generating solar energy.

 

source: presszoom

Power sector attracts huge investments

HYDERABAD: The state government on Sunday claimed that for the first time the the state power sector had attracted a lion’s share of investments of around Rs 2.93 lakh crore and stood number two in attracting investments.
Enthused with the success of CII Partnership Summit- 2012 in attracting substantial investments, the government directed all power utilities to fully gear up and re-double the efforts to meet the power requirements of the entire industrial sector, present and future, by enhancing the generating capacity to the maximum extent, accordign to an official press release.
Out of around Rs 6.47 lakh crore investments, for which MoUs were signed by investors with the government at the summit, a lion’s share of Rs. 2.93 lakh crore investments, the second largest, was cornered by the power sector for the first time.
It clearly shows the credibility of the AP power sector which is the main pillar of sustained economic growth, the statement claimed. Principal secretary (energy) Dinesh Kumar, who is also a member of the investment promotion committee, suggested to AP Genco managing director K Vijayanand, joint managing director D Prabhakar Rao and director (projects) Radhakrishna on Saturday to explore the possibility of taking up shortterm and long-term programmes to achieve the optimum level of enhancing additional generating capacity .
APGenco, as a short-term measure, is planning to generate an additional 3,210 MW with an investment of around Rs 16,000 crore. Power utilities are making all-out efforts to supply satisfactory power to all categories of consumers. As part of this, the government has given approval to APTransco to spend Rs 1,083 crore on purchase of power between mid-January and end of May this year.

PMO zeroes in on power gaps

The committee of secretaries (Cos), constituted recently under Prime Minister’s principal secretary, Pulok Chatterjee, has identified ways to resolve the five key problems cited by power sector firms. According to official sources, the PMO has told the coal ministry to direct state-owned Coal India Ltd (CIL) to execute all fuel supply agreements related to domestic coal for power projects planned up to March 31, 2012.
“This will fuel a capacity addition of 95,000 MW from various power projects,” the source said. The requirement of coal for these power projects is around 425 million tonnes of coal annually.

The PMO will also take stock of the decisions emerging out of the EGoM on gas allocations. The EGoM on gas under finance minister Pranab Mukherjee — which has not met for more than two years — has to fix allocations of gas for nearly 8,000 MW of gas based power projects ready for commissioning in 11th plan period.

The third area being worked by the PMO is to schedule a meeting of another EGoM on ultra mega power projects (UMPP) at the earliest to consider imported coal issues. Projects like Tata’s Mundra 4000 MW project and Reliance’s Krishnapatanam 4000 MW project are awaiting directions of the EGoM after the increase in imported coal prices following change in land and tax laws in countries from where the coal supplies are to be sourced.

Sources said the PMO has also sought scheduling a GoM meeting on coal to consider final forest clearances for eight different blocks, recommended by PMO in 2010, which includes Chhatrasal block linked with Sasan UMPP and Mahan block for Essar and Birla group.

The PMO is also looking into a policy of maximising coal production from captive coal blocks so as to enhance domestic production leading to lower imports and energy security for the power sector.

Indian developers reveal plans for 1.5GW of new wind power

Independent power producer Indian Energy and Trishe Developers have signed a framework agreement to build up to 1GW of wind farms across India by 2016.
In a separate agreement, Welspun Energy unveiled a memorandum of understanding (MoU) with the government of Andhra Pradesh to develop 500MW of wind projects in the state.
The Indian Energy/Trishe deal is one of the largest announced in India’s wind sector since a 2GW agreement between Mytrah Energy and Gamesa in May 2011.
Trishe will develop the projects and sell them on to Indian Energy – a subsidiary of Isle of Man-based Infrastructure India – once “certain development milestones” have been reached, the companies say.
Under its terms, about 300MW of projects will be commissioned during 2013, a further 350MW by 2014 and the remaining 350MW by 2016.
Indian Energy plans to sell power generated to state utilities and industrial users. Details of how the projects will be financed were not given.
Wind turbines will be supplied by various manufacturers, according to the partners. Indian Energy chief executive Rupert Strachwitz tells Recharge: “The advantage of this deal is that we can decide which turbine to use for individual sites, and as such tailor the turbine choice to suit the nature of the site.”
Regarding the role of the largest Indian-owned turbine manufacturer, Strachwitz says: “Suzlon turbines will be considered along with those from all the other major manufacturers.
“This is an important milestone for Indian Energy. We have now created the visibility on the growth of the group to over 1GW of capacity and which we can achieve in a relatively short period of time,” adds Strachwitz.
Indian Energy currently owns and operates 41.3MW across two wind farms in India – the Gadag Plains project in Karnataka (24.8MW) and the Theni project in Tamil Nadu (16.5MW).
The company was bought by Infrastructure India, a London-listed investment group, last autumn after the latter launched an agreed takeover bid that valued Indian Energy at $13m.
Trishe Developers, which lists offices in Chennai, London and the Netherlands, says it is currently developing 800MW in India.
According to its website, its managing director is Ramkhumar Narasimhan, formerly head of the wind division at Indian renewable energy group Orient Green Power.
Bikramaditya Raha, projects president, is a former Vestas and Siemens executive, says the Trishe website.
The Welspun Energy MoU with Andhra Pradesh foresees 500MW of projects being completed by 2014.
The state authorities will assist the company in obtaining necessary permits and approvals, says a statement.
Welspun Energy is part of Indian conglomerate Welspun Group. It is also active in the solar sector and at 50MW has secured the largest project awarded so far under India’s National Solar Mission.

Source: Rechargenews

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