Monthly Archives: April 2012

Rajasthan scraps Rs 12,000 cr power project won by Bhel

The Rajasthan government has scrapped tenders worth Rs 12,000 crore that were bagged by Bharat Heavy Electricals (Bhel) more than a year ago for two separate thermal power projects in the state.

Rajasthan Rajya Vidyut Utpadan Nigam Ltd (RVUN), a state government company, has scrapped EPC (Engineering, Procurement and Construction) tenders for upcoming new super critical units of Suratgarh and Chhabra thermal power stations, sources said.
RVUN cancelled the separate tenders floated for two 660 MW units — each for Suratgarh and Chhabra, respectively, without specifying any particular reasons, sources added.

When contacted, Bhel officials said that no reasons have been assigned by RVUN for cancelling the tenders and the company was trying to get in touch with RUVN for ascertaining the same.

Bharat Heavy Electricals Ltd (Bhel) had emerged as the lowest bidder for the Rs 12,000 crore worth tenders, sources said. The second lowest bidder was BGR Energy.

Calls and messages to RUVN Chairman and Managing P N Singhal did not elicit any response. BGR Energy could not be reached for comments.

The cancellation letters were sent on April 25, 2012.

The development comes at a time when Bhel is grappling with slowdown in its order book. Owing to an overall sluggishness in the power sector, the company’s order book more than halved to Rs 22,096 crore last fiscal compared to 2010-11 period.

According to sources, even though the tenders were finalised in January 2011, RUVN initiated price negotiations with Bhel only in January this year.

There were also extensive discussions between the two parties on price, sources added.

When the tenders were floated in November 2009 and opened in April 2010, there were three bidders — Bhel, BGR and Russia’s Power Machines.

RUVN had invited international competitive bids for the two projects.

The tenders were for design, engineering, manufacture, assembly, testing at works, supply, civil structural and architectural works, erection, testing and commissioning of main plant and balance of plant on EPC basis.

The scrapping of the tenders would delay the setting up of two projects — having total capacity of 2,640 MW — in Rajasthan, which is grappling with power shortage. At present, RUVN has an installed capacity of 4,097.35 MW.
Source: BS

State to consider electricity duty waiver for Jayashree Chemicals

The State Level Single Window Clearance Authority (SLSWCA) will decide on the issue of electricity duty exemption for Jayashree Chemicals Ltd, the only manufacturer of caustic soda in Odisha.

Burdened by the steep cost of electricity which accounts for 60 per cent of its production cost, the company had sought waiver in electricity duty for a period of 10 years. The hike in power tariff announced recently by power regulator-Odisha Electricity Regulatory Commission (OERC) had nullified the power conservation efforts of the company which was achieved through installation of membrane cell technology.
At a recent meeting held under the chairmanship of Chief Secretary on grant of incentives to Jayashree Chemicals, the state government asked the company to submit a separate proposal, substantiating its plea for the duty waiver. The proposal would then be considered by SLSWCA.
The company said its financial position did not permit it to set up a captive power plant.

The state government, has however, decided to offer exemption on value added tax (VAT) on incremental production of the company. Jayashree Chemicals had ramped up caustic soda production capacity of its plant at Ganjam in south Odisha from 22,500 tonnes per annum (tpa) to 53,200 tpa. The company had also invested Rs 150 crore on switching over to membrane cell technology from mercury cell technology.

The company which is engaged in the manufacture of caustic soda, liquid chlorine, hydrochloric acid and sodium hypo chlorite counts Emami Paper Mills, Ballarpur Industries Ltd, J K Paper, Hindalco Industries and National Thermal Power Corporation (NTPC) as its major clients.
Source: BS

Chhattisgarh power tariff announcement likely on Saturday

The much awaited power tariff in Chhattisgarh is likely to be announced on Saturday with authorities hinting a hike in the electricity charges.

The Chhattisgarh State Electricity Regulatory Commission is set to release the new power tariff plan for different categories of consumers on Saturday. The announcement was pending for the last couple of months. Officials in the commission said that the budget session of Chhattisgarh Legislative Assembly first prevented to announce the new power tariff. When the commission made necessary preparation to do the same after the session, it was put on hold following gram suraj abhiyan – a village contact programme of the state government.
The authorities feared that the power tariff announced before the gram suraj campaign that started on April 17 and ended today would spark off protest among the people. The chief minister, Raman Singh, who was landing in the villages on surprise visit, could have come under the fire of the villagers. With the gram suraj abhiyan ending today, the electricity regulatory commission is now planning to announce the new power tariff plan on Saturday. The new power tariff will come into effect from April 1, the officials said. The commission is learnt to have recommended a major hike in the power tariff for all categories of consumers.
The officials said that the hike was likely to be 17 per cent on average. Even the domestic consumers were also likely to get the shock, as the commission has reportedly recommended hike of 5 to 10 per cent. The officials hinted that the power tariff for all classes of industry is also likely to go up. During the public meetings convened by the commission for finalising the tariff, voice of protest came from all the quarters. But the commission has reportedly sidelined all the objections.
Source: BS

Tata Power builds its case on Sasan UMPP

After Reliance Power, the company’s arch rival, Tata Power, too, has independently secured a favourable opinion from the country’s top legal brains, including retired Chief Justice of India M N Venkatchaliah and former Solicitor General Dipankar Gupta, over the legality of a government decision allowing Reliance Power to divert surplus coal from the captive mines associated with its Sasan ultra mega power project in Madhya Pradesh.

The opinion given to Tata Power runs contrary to what legal experts have told Reliance Power on their private initiative aimed at strengthening the case on coal diversion. The two companies, which are engaged in a legal battle where Tata Power has challenged the government’s decision in the Supreme Court, are likely to use the legal opinion they secured to strengthen their respective cases ahead of the Saturday’s ministerial panel meeting.

The empowered group of ministers (EGoM) has been convened to examine the official opinion from the Attorney General. At its December meeting, the group headed by finance minister Pranab Mukherjee, had decided to seek fresh legal opinion from the AG Goolam E Vahanvati to defuse the controversy arising from the group’s earlier in-principle decision in 2009 to allow Reliance Power to divert surplus coal following adverse remarks made in a draft report of the Comptroller and Auditor General (CAG) that said that decision meant windfall gain for Reliance Power.

In the opinion given to Tata Power, legal experts have termed the EGoM permission as ‘ultra vires’ as the decision with regard to diversion of coal went against stated policy for allocation of coal blocks. Both Venkatchaliah and Gupta have also said that a change in the terms and conditions of the bid for UMPP in the immediate aftermath of the completion of the bidding process would in effect amount to changing the terms and conditions of the bidding process itself, which is also violation of Article 14 of the Constitution and also arbitrary and unreasonable.

“Tender documents should not be designed to encourage speculation. The allocation of the coal mines is intertwined with the Sasan project and cannot be used for any other project. The permission given by EGoM has augmented the right of the successful bidder for incremental coal. It is ultra vires of the specific provisions of the statute, rules, and the policy governing allocation of coal, and also altered the bid conditions,” Venkatchaliah said in his opinion given to Tata Power.

Tata Power is fighting the issue not solely on government’s decision to allow for diversion of surplus coal, but also the changes the decision made in the bidding condition finalised for Sasan power projects where the company had emerged with the second best bid after Reliance Power. The company has said that as bid conditions were changed after completion of process, fresh bidding for the project should be undertaken with explicit permission on diversion being included in the bid document.

“…In any event, the alterations in the terms and conditions of the contract, which was the subject matter of the tendering process is itself arbitrary, unreasonable and intended to grant undue favours to private parties and against public interest,” Gupta said.

“Tata Power would have a cause of action to file a writ petition under Article 226 for quashing of the award of Sasan UMPP and/ or in any event the grant of permission to use coal from the Captive Coal Mines linked to Sasan UMPP for other projects of RPL, which would have a reasonable chance of success,” Gupta added.

The views given to Tata Power run contrary to views given by legal experts to Reliance Power. Retired chief justices AS Anand and AM Ahmadi and former attorney general Soli Sorabjee in their respective opinion’s have said that there was no violation of Sasan UMPP bid conditions and have cautioned that the cancellation would amount to violation of the principle of promissory estoppel.

The issue between two private sector power entities involves a decision taken by an EgoM in 2009. The group had allowed Reliance Power (RPL), the successful bidder of the Sasan UMPP, to use surplus coal from the Sasan block for another 4,000 mw power project at Chitrangi in Madhya Pradesh.

The government has allocated Moher, Moher-Almohri and Chhatrasal captive coal blocks to help the private developer meet the fuel requirement of the Sasan UMPP, which it bagged through tariff-based competitive bidding.

Tata Power, which bid for the Sasan UMPP, has challenged in court the government’s decision permitting Reliance Power to divert excess coal from the Sasan mines to the Chitrangi power project. Tata Power also cited while tariff for Sasan was 1.19 per unit, the same for Chitrangi has been fixed at 2.45 per unit though coal is coming from the same blocks.

As per existing regulations, captive coal mines are given to specific end-users. Any surplus coal generated from such blocks becomes a property of the central government which then disposes it through its PSU Coal India (CIL). In a few special cases, however, the coal ministry accords permission for sale of excess coal on a temporary basis. With the approval of the bidding process, even captive blocks would now have to be bid.

The EGoM on Saturday is expected to take a view whether its in-principle approval could be could be converted into a final decision after taking legal opinion of the Attorney General.
Source: FE

PFC sets up SPV for 4,000 MW power project in Jharkhand

State-run Power Finance Corp today said it has formed special purpose vehicle, Deoghar Mega Power Ltd, for developing a 4,000 MW ultra mega power project in Jharkhand.

Deoghar would be the second ultra mega power project (UMPP) in the state after Tilaiya, which is being executed by Reliance Power, the company informed the BSE.
Power Finance Corporation, the nodal agency for UMPPs in the country, has awarded four such projects so far.

Three UMPPs — Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaya (Jharkhand) were bagged by Reliance Power and one at Mundra in Gujarat is being developed by Tata Power.

The first round of bidding for the Bedabahal UMPP in Odisha, which was held in July last year, witnessed interest from 20 bidders. The second or the final round would take place after the government completes the amendments in the standard bidding documents (SBDs) for the UMPPs.

The Requests for Qualification (RFQ) or the initial bids for the Sarguja UMPP in Chhattisgarh are likely to be invited in June this year.

The preliminary bids for this UMPP have been delayed many times in the past on account of environmental clearnce.

The government plans to add close to 1,00,000 MW in the next five years, of which a lion’s share would be contributed by these UMPPs.
Source: ET

Tamil Nadu closes gap in energy cost and recovery

The State power utility, Tamil Nadu Generation and Distribution Corporation Ltd, will lose over Rs 4,312 crore in the current year as it buys or generates power at a higher cost and sells it at a lower price. Following the new tariff rates for power, the average cost of supply of power is Rs 5.98 a unit against the average rate of realisation of Rs 5.29. This still leaves a shortfall of Rs 0.69 a unit in the current year.

According to the policy note on energy tabled in the Assembly today, the gap has been closed from a shortfall of Rs 14,312 crore in 2011-12. The realisation then was much lower at Rs 3.74 a unit against a cost of Rs 6.15. The major factors contributing to the deficit are the need to buy power to meet the growing demand and the shortfall of Rs 2.41 on every unit of power sold to the consumer.

The installed power generation capacity in the State is 10,364 MW with the average availability at 8,500 MW whereas the demand ranges from 11,500 MW to 12,500 MW.

Since 2008 the State has seen restriction and control measures in power supply to manage the shortfall.

The situation is expected to improve with improvement in the power position.

The State Government has over 15,507 MW of power projects in the pipeline in various stages of implementation. Over 4,887 MW of power generation will be added by the end of 2013.

The Electricity Minister, Mr Natham R. Viswanathan, announced a series of measures to step up energy efficiency in the State.

An organisation to oversee energy efficiency measures and to frame policies will be created, energy audit will be compulsory for High Tension and commercial supply, street lights in urban areas will be converted to energy efficient light bulbs, electric appliances in government offices will be at least three-star rated in energy efficiency and lighting fixtures will be changed to LED and other energy-efficient units.

Efficiency will be upgraded in the power generation facilities under the State power utility to save over Rs 200 crore worth of electricity, he said. Tamil Nadu has over 6,696 MW of wind energy generators with a potential to add over 10,800 MW. Over the next five years, wind energy capacity will grow by 1,000 MW a year.


The State Government is strengthening the transmission capacity to evacuate and fully utilise the wind power. A Rs 2,752 crore transmission system has been recommended by the Central Electricity Authority and a second phase is under preparation.

A separate transmission corridor with 400 KV substations and 400 KV lines are planned.
Source: BL

Nuclear energy is one part of move towards low-carbon future: Montek

Nuclear energy should be considered a clean energy source, Mr Montek Singh Ahluwalia, Deputy Chairman Planning Commission, said that at the end of the 23-Government Clean Energy Ministerial meeting that took place in London this week.

Mr Ahluwalia, who represented India at the third CEM conference, said that nuclear energy was “one part of a move towards a low carbon energy” future.

India is set to host the fourth CEM meeting in next April. The London meeting brought together representative of governments from across the world, including China, Brazil, Australia and the US, and is meant to be an annual forum for some of the world’s biggest emitters of greenhouse gases to work together on policies to increase their use of renewable energy.

Among the initiatives launched were a joint project by Italy and the US to provide off grid lighting to two million homes in India, as part of a global energy access partnership.

Speaking at a press conference, alongside the US Energy Secretary, Mr Steven Chu; the British Minister of Energy, Mr Edward Davy; and Mr Kandeh Yumkella, Director of the UN Industrial Development Organisation, Mr Ahluwalia warned that if the world continued to develop renewable energy at the rate it currently was, “we are not going to achieve what we need to achieve”.


He said that it was quite clear that India wanted to make “major improvements in energy efficiency and use and the cleanliness of the energy mix.” “The solution to climate change has to be a combination of improvement of energy use and improvements in emissions.” However, at the moment the switch to renewable energy was “not something that can be done without bearing the costs…the good news is that the additional cost is falling.”

Asked about to what extent India’s energy future would incorporate new, and controversial, technologies such as fracking, and how this would affect the future of renewables development, Mr Ahluwalia said that India didn’t currently have a programme for going into fracking “in a big way”. “We are watching experiences elsewhere.”
Source: BL

Tribunal to hear plea against nod to Jindal’s power plant

The National Green Tribunal today agreed to hear a plea challenging the environmental clearance granted to Jindal Power Ltd on November 4, 2011, for increasing the capacity of its 1,200 MW coal-based thermal power plant in Raigarh district of Chhattisgarh to 2,400 MW.

The Tribunal, however, refused to entertain the plea assailing the Ministry of Environment and Forest’s (MoEF) decision to grant environment clearance on March 18, 2011, for the first phase of the project on the ground that it was time- barred.

A bench headed by Tribunal’s acting Chairperson A S Naidu sought replies from MoEF, Chhattisgarh Environment Conservation Board and Jindal Power Ltd on a plea filed by NGO, Mehnatkash Mazdoor Kishan Ekta Sangathan.

“The cause of action for challenging the order dated March 18, 2011, has became grossly barred by afflux of time and thus has attained finality,” the bench, also comprising Professor R Nagendran, said.

“We hold that this appeal shall be confined to environment clearance granted by the MoEF by order dated November 4, 2011,” it said while seeking replies on the same by May 10.

The MoEF had on March 18, 2011, granted environment clearance for establishing a 2400MW coal-based thermal power plant but due to non-availability of coal Jindal Power Ltd established a plant for 1200MW (2×600 MW) and commenced production.

Jindal Power Ltd, however, managed to import more coal and filed another application seeking clearance for additional 2×600 MW coal based thermal power plant.

Jindal’s application was allowed and the MoEF by order dated November 4, 2011, granted clearance for the same.

Both the clearances were assailed in the plea on which the Tribunal held that the March 18, 2011 clearance could not be heard due to lapse of time allowed for challenging the clearances and agreed to hear the plea against the November 4, 2011 clearance.
Source: ET

Industries in India Must Focus on Energy Management

India’s growing economy and the expansion of its manufacturing industry contribute to the country’s increasing dependence on energy. The country, a net importer of energy, imports coal to meet the needs of its expanding electric power industry and imports almost 70 percent of its current oil and gas requirements.

To sustain its economic growth, India needs to expand its capacity to manufacture cement, metals, and others commodities. Typically, these industries are energy intensive, further aggravating the situation on the energy front. Therefore, the country and its industrial companies must focus on energy management and energy conservation.

Several of the country’s high-growth manufacturing industries, such as cement and metals, and oil & gas, are energy guzzlers, with energy constituting over 30 percent of total production cost for some. Industrial companies can reduce energy costs by analyzing the energy consumption of various plant equipment and processes. While energy management initiatives can help contribute to the country’s overall sustainable growth, at the individual company’s level, they can reduce production costs to a significant degree. Thus, it makes good economic sense for manufacturing companies to strategize and reduce their energy consumption by increasing their focus on energy management.
Source: arc group

Power generation firms need to improve efficiency: Shinde

Power generation firms need to improve efficiency to meet growing demands and reduce dependence on coal and gas supply, Power Minister Sushilkumar Shinde said Thursday.

Addressing a seminar on energy conservation, the minister said improvement in efficiency would also reduce green house gas emissions.

“If efficiency is increased then carbon dioxide gas emissions would be reduced and there will be no need for storage of gas which is to be avoided because of the Bhopal gas tragedy,” Shinde said.

The seminar on “Energy Conservation and Energy Security” was organised by Lal Bahadur Shastri Memorial Foundation here.

Shinde pointed out that several legislations have been changed to facilitate investments in power sector and boost growth.

Addressing the seminar, Coal Minister Sriprakash Jaiswal said even though India would continue to rely on coal for energy needs, the emphasis should be on environment friendly sources.

“Energy has become an important resource and there is need to conserve it otherwise it could lead to imbalance. The challenge facing the country now is how are we to manage to realise a self-sufficiency in conservation of resources which is important,” said Sunil Shastri, president, Lal Bahadur Shastri Memorial Foundation.
Source: news track india



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