Monthly Archives: February 2012

FDI in power exchange business soon

The government will soon allow foreign investment in the country’s fledgling power exchange business. The Foreign Investment Promotion Board (FIPB) and the department of industrial policy and promotion (DIPP) have come around the view that the overall foreign investment in the sector may be capped at 49%, on a par with the level for the commodity exchanges. Of the 49%, 26% will be foreign direct investment (FDI) and the balance, foreign institutional investment (FII).
The DIPP is likely to issue a press note to this effect in the next few days, official sources said.

The policy is expected to give comfort and clarity to foreign investors and help existing bourses get funds to scale up their operations. Currently, there is no clarity on whether foreign investment is allowed in power

exchanges as this activity

is not defined in the note on foreign investment in commodity exchanges. The proposed press note will remove this ambiguity.

The commodities exchanges also have sub caps for FDI (26%) under the

overall foreign investment cap of 49%.

However, the DIPP is likely to stipulate that private power trading companies wanting to accept FDI must comply with the Central Electricity Commission’s (CERC) power market regulations of 2010. Also, the FDI proposals will be routed through the FIPB.

The proposal of ex-ICICI Ventures head Renuka Ramnath to pick up minority stake in Jignesh Shah-promoted Financial Technologies’ Indian Energy Exchange (IEE) is likely to be the first FDI proposal in the sector to come up before the FIPB.

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

The central electricity regulatory commission (CERC) is thinking of introducing some innovative, power exchange-based electricity trading instruments that would deepen the short-term electricity market and encourage investment in merchant power generation capacity. The regulator is also mulling a move towards capacity trading to reduce the incidents of low grid frequency and improve the quality of power supply.

For example, the CERC is planning to introduce instruments like shorter bidding time block for day-ahead trading at power exchanges that would overcome the problem of transmission network congestion and make it easier for buyers to forecast their electricity demand. Currently, only generated power is traded. But now the CERC wants to usher in trading of power capacity.

The volume of power sold through inter-state trading licensees has increased from 12 billion units (2.16% of total generation) in 2004-05 to 59 billion units (11.54% of total generation) up to October 2011, representing more than four-fold growth in seven years. During the current year, the transactions comprise about 88.5% through long-term, 8.2% through trading (6.4% bilateral and 1.8% power exchange) and 3.3% through balancing market.
Source: FE

Windar Renovables sets up first tower manufacturing factory in Vadodara

The tower factory built on area of 13,500 sq mt is a JV between Windar and Gamesa Wind Turbines with a 68:32 equity stake respectively.
Windar Renovables, world leaders in manufactures of wind towers, in collaboration with Gamesa India, have set up its first tower manufacturing factory in Vadodara, Gujarat and the first in India.
The tower factory built on area of 13,500 sq mt is a JV between Windar and Gamesa Wind Turbines with a 68:32 equity stake respectively. With an investment of Rs. 90 crores, the factory employs 175 people and will produce 240 tubular towers by the end of 2012. Windar will use its technological expertise in manufacturing tubular towers to cater to the markets across country and abroad, supplying towers to clients like Gamesa, Acciona and Alstom.
Speaking on the start of the production facility, Orlando Alonso Villarón, Chairman & President, Windar Renovables S.L., said, “Windar is venturing in India for the first time with a multinational wind turbine manufacturing facility. We expect to build 20 towers of 2 MW machine per week. The new tower factory will cater to wind turbine manufacturers in India and abroad, offering better cost benefits and most importantly providing supply chain certainty. We plan to expand our operations in the country by investing in various other projects related to production of wind towers”
K Bharathy, CEO, Windar Renovables Pvt. Ltd. said, “Windar will use its global expertise to understand the needs of the Indian market in terms of design, raw-material supply, manufacturing, warehousing and delivery of the towers to its final destination. The facility is will supply towers to all WTG manufactures across the country”

Plan panel for secys’ tenure to keep policies in place

The Planning Commission wants secretaries in key ministries of coal, power and petroleum to be appointed for at least three years so that they can deliver.

The panel wants secretary-level appointments in these key economic ministries to be made with caution. Officials said the commission is not happy with the performances of coal, petroleum and power and wants their secretaries to have a fixed tenure to ensure continuity of policies.

Concerned over slow growth in these crucial sectors, the commission members have urged the chairman — Prime Minister Manmohan Singh — to exercise utmost care in selecting secretaries of these ministries. The performances of various sectors was discussed threadbare during a recent meeting between the Planning Commission and the Prime Minister. Officials said the commission was particularly unhappy with the performance of ministry of petroleum and natural gas in the light of the rising subsidies.
The under-recoveries of oil companies in the current financial year is estimated to top Rs 1,40,000 crore. So far the government has provided Rs 50,000 crore as fuel subsidy in 2011-2012. Officials said the commission was of the view that by the time a senior government officials takes charge as secretary, he has little time left, which in many cases is counterproductive from a policy point of view.

Coal, power and petroleum ministries not only oversee major government companies but are also the crucial sectors when it comes to planning growth. Currently, decisions in the coal sector are taken at the Prime Minister’s Office by Principal Secretary to the Prime Minister Pulok Chaterjee.

With a shortage in coal production threatening derailment of power generation targets, the PMO recently intervened with a directive asking Coal India Ltd to meet at least 80 per cent of the committed fuel quantities of power projects.

In the petroleum sector, a secretary-level change happened in the midst of a crucial decision being taken on the approval of the Cairn-Vedanta deal. Besides the issue of fuel prices, which the ministry of petroleum and natural gas is always trying to handle, the ministry is dealing with the fall in natural gas production from Reliance Industries Ltd’s KG-D6 field.

A particular case has been that of former petroleum secretary S Sundareshan, who was shifted out of the ministry in May last year after spending a little over one year in the post. The change happened after Jaipal Reddy took charge as minister last year.

Similar changes also hit policy continuity in coal and power ministries.

Coal Secretary Alok Perti will be retiring in May 2012 after being at the helm for less than a year.
Source: BS

13 more hydro power projects in the offing

The state energy department has plans to operationalize 13 hydro electric power projects over and above the 13 running projects.

According to Atanu Sabyasachi Nayak, minister for energy, of the 13 new hydro power projects, four projects will be executed by state owned Orissa Hydro Power Corporation (OHPC) with the remaining nine to be developed by private players. These hydro power projects are to be taken up in Keonjhar, Kalahandi, Malkangiri, Koraput, Bargarh, Khurda, Rayagada, Gajapati and Cuttack districts and are expected to be commissioned in the 12th Plan period (2012-17).

The cost of hydro power projects to be implemented by OHPC can be assessed after preparation of detailed project report (DPR), the minister said.

OHPC is currently operating seven hydro-electric projects- Hirakud-I (Burla)- 275.5 MW, Hirakud-II (Chipilima)- 72 MW, Balimela- 510 MW, Rengali-250 MW, Upper Kolab- 320 MW, Upper Indravati- 600 MW and Machkund- 14.75 MW.

The 13 hydro power projects currently running in the state have collectively generated 5,165.48 million units of electricity in this fiscal till February 17.

The state government had signed Memoranda of Understanding (MoU) with 32 developers for hydel power projects envisaging generation capacity of 409 MW and involving investment of Rs 2,250 crore.
Source: BS

Boniyar observes strike against erratic power supply

This north Kashmir town observed a complete shutdown for second consecutive day on Tuesday against the erratic power supply in the area.
All shops and business establishments remained closed and traffic on the Srinagar-Muzaffarabad Road was disrupted as people staged protests.
Protesters said the interrupted power supply has become order of the day. “We are facing immense hardships due to erratic power supply. There seems no respite to our woes, despite assurance from even Chief Minister that the area will be provided uninterrupted power supply” said Ghulam Qadir of Boniyar.
Locals alleged that PDD is not adhering to the schedule. “It is disgusting for the entire population of this tehsil that the area where major power plant of NHPC is stationed, which feeds major portion of north India, the residents of that place have to face unscheduled power cuts,” they added.
When contacted the Executive Engineer PDD, Nissar Ahmad said people of the area have been demanding an additional transformer as the existing one could not withstand the load. “We are looking in to their grievances,” he added.
Pertinently, a youth was killed in Boniyar area, in January this year when personnel of Central Industrial Security Force, deployed at NHPC installation opened fire to disperse demonstrators, who were protesting against the unscheduled power cuts.
Source: Greater kashmir

Supply chain roadblocks problematic for Indian CSP

CSP Today explore the difficulties that the Indian CSP industry have faced in treading the fine line between reliance on foreign expertise and building a local manufacturing base, as solar power ramps up in the country.

Developing an indigenous supply chain for solar thermal power projects in India was a fundamental goal of the National Solar Mission (NSM), launched by the Indian Government in 2010. The aim, like in many regions where CSP technologies exist, is to achieve significant cost reductions through increased demand, economies of scale in production and improvements in component efficiencies. It was predicted that India would be able to make significant steps in achieving grid-parity for CSP through the use of local manpower and materials, all at lower costs than those seen in more established markets in Europe and the US.

Under Phase I of the NSM the domestic content requirement made it mandatory for projects to source 30% of their components from local sources, a target that has since been scrutinized by experts in the industry. The unconventional components used in CSP plants and the lack of experience in India to manufacture such components has led to a reliance on foreign manufactures, that has made this target unrealistic if low costs are to be maintained by developers.

The supply of important solar field and power block components has primarily come from Europe. Recent weeks have seen Siemens, General Electric and Areva announcing orders from Indian developers to supply turbines for Phase I projects. Godawari Power & Ispat, Megha Engineering, Reliance Power, Corporate Ispat Alloys and Lanco, all developing projects under the NSM, have placed these orders.

Although solar field components such as pumps and motors could be sourced from local manufacturers there has been little evidence to suggest that Phase I developers have placed these orders. Furthermore, the reliance on foreign EPC groups to undertake plant construction and design, has led to questions surrounding the tension between training local manpower in the long-term and finishing projects within the required time frame and budget.

To overcome the challenge of creating a local manufacturing base in India, CSP Today has announced this week that the World Bank, Cargo Power & Infrastructure, FAST and Lauren CCL will participate at the 3rd CSP Today India Summit 2012 (New Delhi, 14-15 March). The impact of Phase I on indigenisation and the steps that must be taken to ramp up future manufacturing in India will form a critical part of the discussion in New Delhi. In addition experts from Siemens, Areva and Thermosol Glass will outline the key supply chain challenges facing Indian CSP and the role they have played to lower costs and improve efficiencies for Phase I projects.

Other confirmed participants include the Ministry of New and Renewable Energy, Central Electricity Regulatory Commission, Solar Energy Centre, Torresol Energy, Abengoa, Godawari Power and Ispat, Siemens, Reliance power and many more leading CSP players.

The event is set to take place on 14-15 March in New Delhi, with over 350 delegates in attendance.
Source: Eco-business

DLF bid to hive off wind power assets gets response

At least four suitors have emerged for the wind power business of DLF Ltd, India’s largest real estate developer, which is seeking to raise money by divesting assets that aren’t integral to its main business.

Green Infra Ltd, a company promoted by IDFC Private Equity Co. Ltd; Sumant Sinha’s ReNew Power Ventures Pvt. Ltd, Swraj Paul’s Caparo Group; and Orient Green Power Co. Ltd have evinced interest in acquiring the business, people familiar with the situation said.

DLF plans to sell assets that are “non-strategic” to its main business of property development as it seeks to reduce debt, which was Rs.22,758 crore at the end of December. According to a Motilal Oswal Securities Ltd research report dated 13 February, DLF expects to raise Rs.1,000 crore from the sale of its wind power business.

To hive off the unit, the company has hired audit and consulting firm Ernst and Young (E&Y).

This is the second time DLF has put its wind assets on sale. A similar attempt was made earlier, as reported by Mint on 1 April 2009, but had to be abandoned because of differences over valuation.

DLF has an installed capacity of 228.7 megawatts (MW) and owns wind farms in Gujarat, Rajasthan, Tamil Nadu and Karnataka.

“There is considerable interest in DLF’s wind assets. Some of the firms that have evinced interest to Ernst and Young are Green Infra, ReNew Power, Caparo Group and Orient Green Power,” said a person aware of the development, requesting anonymity.

Another person familiar with the situation, who also didn’t wish to be identified, confirmed E&Y’s mandate, but declined to comment on the companies mentioned above.

There have been indications that the Indian wind power sector is looking to consolidate. The Economic Times newspaper reported on 13 February that DLF is banking on the sale of Aman Resorts and its wind energy venture to reduce debt. Even Lanco Infratech Ltd has decided to exit the segment.

According to a company presentation made to analysts, DLF reduced its net debt by Rs.169 crore at the end of the fiscal third quarter to Rs.22,758 crore from the previous quarter (July-September), when it had reported net debt of Rs.22,927 crore. The company closed two information technology park deals during the the third quarter valued at Rs.785 crore.

A 13 February report by Nirmal Bang Institutional Equities Research said: “Despite such non-core asset sales, cash flow after considering interest costs and capex remained negative at Rs.6 billion for 9MFY12 (first nine months of fiscal 2012), indicating worsening cash flow situation from core operations.”

The report added: “The management has given guidance regarding debt reduction of Rs.50 billion in the coming quarters as and when it closes the deal for its hospitality and wind power businesses.”

While Caparo Group couldn’t be contacted, spokespersons for DLF, E&Y and IDFC declined to comment. Questions emailed to Orient Green Power on Saturday hadn’t been answered at the time of going to press on Tuesday.

“We are very busy working on our pipeline of projects and hence are unable to comment on these questions,” Sumant Sinha, chairman and chief executive officer of ReNew Power Ventures, said in an emailed response to questions from Mint. “Acquisition opportunities are not very interesting as we are seeing a very good pipeline of our own projects.”

Interest in wind power generation has been aided by the government’s offer of fiscal incentives, including tax breaks for 10 years and depreciation benefits of 80% on investment in the first year of a project’s operation, besides a chance to earn carbon credits.

While there is interest in developing wind energy sources from conventional power generation utilities, the funding of such efforts has become a concern. It takes capital expenditure of Rs.4.2-4.5 crore per MW of power generated through coal-based or gas-based projects, compared with wind-based projects requiring Rs.6-7 crore per MW.
Source: Live mint

Corporatisation of power dept mooted in JERC meet

The Joint Electricity Regulatory Commission for Manipur and Mizoram asked Mizoram government to expedite restructuring of Power & Electricity department to enhance Administrative, Technical and Commercial efficiencies.

This point was stressed in the State Advisory Committee meeting of the JERC held today in Information and Public Relation Conference Hall in Aizawl which was chaired by H. Bihari Singh.

The meeting highlighted the urgency of corporatisation of the department in the same line with corporatisation of Power & Electricity department of Tripura in 2005. The Commission informed the meeting that a copy of the report of a Study Group sent to Tripura was already submitted to the government for examination.

Reacting to the points raised by the members, the representative of the department Lalduhzuala Sailo, superintendent engineer (Commercial) said, agreement in this regard was signed in 2002 chalking out road maps for corporatisation of the Power & Electricity department with support of funds expected from Structural Adjustment Loan of Asian Development Bank. When the Administrative Staff College of India, Hyderabad, engaged as the consultants by the Deptt. submitted its report for implementation fund from ADB could not be made available, leading to non-conversion of the Dept. into corporation till today. The meeting also asked Power & Electricity Dept. to publicize creation of Public Grievances Redressal Mechanism in various levels and appointment of Assessing Authority and Appelate Authority as well in the print and electronic media of the State.
Source: Kangla

Nuke protesters send legal notice to Prime Minister

Activist S P Udhayakumar, leading the protests against the upcoming nuclear plant in Tamil Nadu’s Kudankulam, has sent a legal notice to Prime Minister Manmohan Singh for his remarks over his group, media reports said Wednesday.

Singh last week said that American NGOs are behind the protests at the Kudankulam plant in an interview to American magazine Science, inviting rebuttals from the activists who said the Prime Minister should prove his statement.

The interview which appeared on Friday, quoted the PM saying: “What’s happening in Kudankulam…the atomic energy programme has got into difficulties because these NGOs, mostly I think based in the United States, don’t appreciate the need for our country to increase the energy supply.”

Udayakumar, the coordinator of the People’s Movement Against Nuclear Energy (PMANE), was caustic in his reaction soon after the story circulated.

“The Prime Minister, who is the head of state of the largest democracy has no sympathetic word for a seven-month-long struggle which is non-violent and democratic. It is a shame. He is belittling the whole thing. We reject this accusation,” Udaykumar said.

“It is completely baseless and he has no trace of evidence. We are not receiving any money from any Indian or international NGO at all,” he said.

“The PM actually insults the people of India. Does he think we are all stooges like Congressmen?” he asked.

“He should take this back. He should prove this charge or get out of government or politics. He is a nominated prime minister of multinationals and so he is saying like this,” Udaykumar said.

“We are not Congressmen, we are people of India. We are not fighting for political office or gains,” he said.

On Friday, Minister of State in the Prime Minister’s Office (PMO) V. Narayanasamy also backed the PM saying that they have received reports about the NGOs in Tirunelveli and Thuthukudi around the project being funded by NGOs of USA and Scandinavia.

He said three NGOs were diverting foreign funds for nourishing this agitation.

On Tuesday a German national was deported back to his home country on charges of raising funds for protests against the Kudankulam nuclear plant, media reports said.

Sonnteg Reiner Hermann, 50, was detained from a hotel in Nagercoil on Monday by Tamil Nadu ‘Q’ branch sleuths, who monitor the activities of non-governmental organisations (NGOs) in the state, reports said.

“We had been watching his movements and found that he was sourcing funds for activists in Tamil Nadu. We collected Hermann’s mobile phone call details and found that he was in touch with Lalmohan, a close aide of Udayakumar who is leading the anti-nuclear agitation in Kudankulam,” a government official said.

Villagers had first began the protest against the Kudankulam Nuclear Power Plant (KNPP) is located in Tirunelveli district of Tamil Nadu last year, resorting to hunger strikes and later continued with the agitation in various forms against the nuclear plant.

Even though India’s Department of Atomic Energy had cleared the Rs 13,000-crore project, locals and environmental organisations, including Greenpeace, have raised concerns over the project’s use of purportedly risky Russian technology.
Source: India Blooms

NTPC inks power supply pact with Bangladesh

NTPC on Tuesday signed a long-term agreement to supply 250 mw to Bangladesh Power Development Board, making it the first Indian generation utility to ink a deal for exporting electricity to a neighbouring country.

NTPC entered into the deal through its wholly-owned trading arm NTPC Vidyut Vyapar Nigam Ltd. The deal, signed in New Delhi, marks a milestone in bilateral ties and takes a step further to India’s idea of creating a SAARC energy grid. Indian power is expected to start flowing into Bangladesh by July, 2013 – the target date for completing a $200 million transmission link between the two grids. NTPC would supply the power from the power ministry’s unallocated quota of electricity generated by the Central utility. The two sides are also discussing the possibility of Bangladesh buying another 250 mw from the Indian open market.

The power will flow through a 500-mw line between Baharampur in West Bengal’s Murshidabad district and Bhermara in Ishurdi-Khulna area of western Bangladesh. ToI had first reported on November 26, 2009, about the two sides working on such a pact during Bangladeshi Prime Minister Sheikh Hasina’s December, 2009, visit to India.

The inking of the power purchase deal and establishment of the transmission link could eventually see Indian firms such as the Tata Group to revive plans of setting up power plants in Bangladesh, using gas form that country’s Bibiyana fields or coal and selling surplus electricity to New Delhi. The group had proposed to set up a power plant as part of its $3-billion investment plan that also included fertilizer and steel units.

A power link between India and Bangladesh will also fill up a gap in the proposed SAARC electricity grid. India has a power link with Bhutan, and is working on ramping up electricity imports to at least 5,000 mw by 2020. Simultaneously, it is also talking to Sri Lanka for an undersea link and Nepal for an overland interconnect that will allow exchange of 250-500 mw initially, up from 50 mw at present. India and Pakistan are also talking of a deal for 500 mw, but the blow-hot-blow cold political ties between the two nations have slowed down the pace of progress.
Source: TOI



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