Monthly Archives: February 2014

NTPC to be most hurt by new power tariff order, says Fitch

NTPC ,India’s largest thermal power generator, would be the most hurt among the country’s rated state-linked electricity utilities by the Indian electricity market regulator’s final tariff order for the upcoming five-year regulatory period from April 2014 to March 2019, Fitch Ratings says in a report.

There is limited impact on the other two rated power utilities which are NHPC Limited and Power Grid Corporation of India Ltd(PGCIL), which are both rated at ‘BBB-’ with Stable Outlooks.

Fitch estimates that the new tariff order by the Central Electricity Regulatory Commission (CERC) would reduce NTPC’s pre-tax return on equity by around 350 bps. As a result, Fitch will trim its estimates for the company’s EBITDA and profit after tax (PAT) from the financial year ending March 2015 (FY15) onwards by around 8%-11%.

The weaker returns arising from the tariff order means NTPC’s net leverage would be higher than previously expected. NTPC’s net leverage was expected to increase over the next few years due to its large capex programme.

While this will not have an impact on NTPC’s current ‘BBB-’ ratings, which are constrained by India’s ratings of ‘BBB-’ with Stable Outlook, it will however reduce the rating headroom of its unconstrained standalone rating of ‘BBB’, says Fitch.

For thermal generation companies including NTPC, the threshold for full receipt of the capacity charge continues to be linked to a minimum plant availability factor (PAF), which has been cut to 83% for the first three years of the next control period from 85% previously, which will help reduce disincentives in certain plants.

However, NTPC’s profitability will be further reduced because incentives for thermal generators in the next regulatory period will be based on companies reaching a plant load factor (PLF) of at least 85%, rather than the PAF.

PLF is dependent on the ability of the state electricity distribution companies’ ability to offtake power from the plants. NTPC’s coal-based power plants had an average PLF of 83% in FY13, with 10 of its 15 coal-based plants having PLFs of less than 85 per cent.

The coal-based plants’ PLF further fell to 79% for the nine months ended December 2013, implying that even fewer of NTPC’s plants would qualify for the incentives. None of NTPC’s seven gas-based plants have PLFs over 85 per cent.

Furthermore, the CERC has tightened certain operational standards and required sharing of cost benefits with power distributors. Fitch expects that the profitability of NHPC and PGCIL to fall only by 2%-4% from FY15.

As such, their forecast credit metrics will remain largely unchanged from the agency’s previous expectations. NHPC and PGCIL would remain relatively immune to the change in the tax used to calculate pre-tax return on equity as they use the MAT rate.

NHPC’s incentives would still continue to be linked to normative plant availability factor, although the CERC has raised the factor for three out of NHPC’s 14 plants. PGCIL’s incentives are linked to the transmission system availability factor, which has been increased to 98.5 per cent (from the earlier 98%) for alternating-current systems and 96 per cent (95% previously) for high-voltage direct-current systems.

Source: Economic Times

TN to get first supercritical power station at Rs 4,956 crore

As a part of measures to step up power generation in Tamil Nadu, Chief Minister J Jayalalithaa today laid the foundation stone for setting up a 660-MW supercritical power station at an investment of Rs 4,956 crore. 

“This is the first supercritical thermal power station to be established in Tamil Nadu,” an official release said. 

She laid the foundation stone for station through a video conference facility, it said. 

Jayalalithaa had announced in the assembly last year that a supercritical power station would be set up that would consume less coal for generating more power. 

At a function held at the secretariat today, Jayalalithaa presented the work order to the Lanco Infra Tech Executive Chairman L Madhusudhan Rao, it said.

Source:Business Standard

NTPC seeks coal-based power assets

The company has asked interested parties to offer their power plants, whether operational, commissioned, synchronised, under construction or under planning stages

NTPC issued an expression of interest (EoI) on Thursday, seeking to buy coal-based power plants, whether operational, commissioned, synchronised, under construction or under planning stages. The state-owned power generator wishes to use its huge cash pile to consolidate its presence as the country’s largest in the sector. In a sector that has been grappling with a slowdown, the move is expected to revive the merger & acquisition (M&A) activity.

State electricity boards (SEBs), independent power producers, power plant developers and captive power producers have been asked to offer projects based on domestic coal, imported coal or a mix of both. EoIs will have to submitted by April 7. Analysts said time was ripe for NTPC to make acquisitions as valuations were low. Besides, the company is among a handful of Indian firms with the balance sheet strength to pull off such deals. It had a cash reserve of Rs 16,867 crore as on March 31, 2013.

“This is appropriate time for acquisitions. A number of developers have realised that the high returns originally envisaged are not possible; they are willing to exit,” said Salil Garg, director (corporate affairs), India Ratings and Research. Garg said no major acquisitions had occurred in the sector over the past year. He, however, cautioned that most projects likely to be sold had issues like regulatory hurdles.

Apart from the EoI, a sub-committee of NTPC board was also looking at a few proposals for acquisition, chairman & managing director, Arup Roy Choudhury, had said earlier this month. NTPC, which owns and operates 22 power plants, has a generation capacity of 42,400 Mw. around a fifth of India’s total installed capacity. It had earlier evaluated at least six projects, including Larsen & Toubro’s (L&T’s) Rajpura project in Punjab and all thermal power projects of the debt-laden Jaypee group, beside Shapoorji Pallonji’s imported coal-based plant in Gujarat and state government’s projects in Bihar & UP.

Source: Business Standard

Indian Supreme Court rules against Enercon

INDIA: India’s supreme court has dealt a blow to Enercon’s case against former partner Wind World by ruling against the German company’s bid to settle the case in London. 

According to reports in the Indian press, the court decreed only rulings made by Indian institutions would be seen as valid in the German manufacturer’s attempt to stop Wind World (formerly Enercon India) from using its designs.

Enercon had been planning to seek arbitration in London in the hope that any decision made under the UK’s stricter IP rules would be deemed applicable in India, but this has now been ruled out.

The issue stems from the formation of the Enercon India (EIL) joint venture with Mumbai-based Mehra Group in the country in 1994.

The relationship between the two companies has become increasingly acrimonious since 2004 when a patent pact for the joint venture expired.

This reached a head in 2007, when Enercon’s own representatives were effectively excluded from the board of EIL, which was re branded as Wind World in 2012.

Since then, co-operation between the two companies has stopped and Enercon has disowned the 800kW turbines being built by Wind World.

In 2011, India’s patent court declared 12 Enercon-owned patents to be void. Although the patents are registered with authorities in Europe, Canada and the US, the board dismissed them as “demonstrating lack of novelty” and “representing no real innovation.”

The Indian company changed its name in 2013, dropping any reference to Enercon, in a move that was interpreted as a conciliation to Enercon.

Last year Wind World took the position of number one turbine manufacturer in India from Suzlon. In 2012, the company installed 454 MW in the country.

Source: Windpowermonthly

Key highlights registered in SR grid in the month of January

Southern grid comprising of Tamil Nadu, Karnataka, Kerala and Andhra Pradesh and the Union Territory of Pondicherry during the month of January 2014, catered to the all time high demand, also it saw a growth rate of 10% and all constituents had showed a positive growth rate which had varied between 3% and 28% as compared to January 2013.

Southern Region met a maximum demand of 35024 MW during the month of January 2014 & the daily maximum consumption of 791 MU during the month of January 2014 which was all time high. The state of Karnataka met a maximum demand of 9290 MW and Tamil Nadu met a maximum demand of 12764 MW during the month of January 2014 which was all time high.

Similarly Andhra Pradesh met a maximum demand of 12575 MW during the month of January 2014 which was all time high. Andhra Pradesh met the single day maximum consumption of 278.72 MU on 25th January 2014 which was also the all time high.

 

Shree Uttam Steel & Power to Set Up Rs. 11,156 Crore Mega Project in Maharashtra

Integrated project to comprise 1.5 MTPA manufacturing plant and a 40 MW Captive Power Plant
To generate employment for 2500 people
Signs MoU with Government of Maharashtra

Shree Uttam Steel and Power Ltd (SUSPL) today, signed an MoU with Government of Maharashtra for setting up a new Mega Project comprising of a manufacturing facility with a capacity to produce 1.5 MTPA of Hot Rolled (HR) Coil; and a 40 MW Captive Power Plant at Sindhudurg district in Maharashtra. The integrated project is being set up in a D+ Zone with an estimated investment of Rs 11,156 crores. The project will provide a massive boost to the local economy by generating employment for approximately 2500 people.

Shri Apurva Chandra, Principal Secretary (Industries) and Mr. Anuj. R. Miglani, Director, Shree Uttam Steel & Power signed the MoU in the presence of Honourable Chief Minister of Maharashtra, Shri Prithviraj Chavan, Honourable Minister of State (Industries), Mr. Sachin Ahir, and Chief Secretary, Shri J. S. Saharia.

Commenting on the project, Mr. Anuj R Miglani, Director, Shree Uttam Steel & Power said, “It is a great opportunity for us. The project could not have materialized without the help of Government of Maharashtra, who provide ambient environment for companies to operate in. The industrial climate of Maharashtra is very conducive for growth and Maharashtra has become one of the most progressive states in the country. The political leadership in Maharashtra has very ambitious plans for growth and the bureaucracy provides an efficient and diligent mechanism to implement such plans.” “The project will help in providing a great impetus in generating employment which will help in boosting the local economy as well.” he added.

CERC shifts to plant availability factor under ’14-19 tariff norms

Despite strong opposition from NTPC, power sector regulator has shifted the incentive structure to plant load factor from plant availability factor

Shares of NTPC Ltd hit a five-year low, as the Central Electricity Regulatory Commission further tightened its noose on operating norms for power generation companies in its 2014-19 (Apr-Mar) tariff structure.

India’s largest power generation company’s shares closed at Rs 116.90 on the NSE, down 11.7% while Power Grid was down 0.40 per cent at Rs 94.75.

CERC, in its final guidelines for tariff fixation released Saturday, has shifted the incentive structure to plant load factor from plant availability factor in the previous norm for the period 2009-2014 (Apr-Mar). The regulator also maintained the base return on equity on transmission systems at 15.5%, which is much lower than 18-20% sought by companies.

In its draft regulations released in December, the commission had suggested an incentive linked to plant load factor of a power unit, which was strongly opposed by the industry, especially by the biggest player NTPC. Plant availability factor in relation to a generating station for any period means the average of the daily declared capacities for all the days during the period.

On the other hand, plant load factor for a thermal generating station or unit for a given period refers to the total sent out energy corresponding to scheduled generation during the period.

NTPC had argued saying PLF was beyond a power company’s control and had requested the regulator to go back to the incentive linked to PAF. The commission has also brought down the PAF threshold for availing the incentive to 83% from 85% earlier.

“NTPC would be worst hit due to across-the-board cut in its incentive grossing up of tax on actual tax paid v/s applicable tax rate to hit NTPC,” global brokerage firm Bank of America Merrill Lynch said in a report.

“Provided that in view of shortage of coal and uncertainty of assured coal supply on sustained basis experienced by the generating stations, the NAPAF (Normative Plant Availability Factor) for recovery of fixed charges shall be 83% till the same is reviewed,” the regulator said.

Incentives based on PLF would depend on actual power generation, a scenario that could result in lower income.  However, in a move that would be a major disadvantage for NTPC, the commission has retained its decision to remove the tax arbitrage that existed when companies like NTPC charged a higher tax rate from its customers leading to a tax arbitrage for NTPC alone at around 5 bln rupees a year.

Norms for 2009-14 allowed utilities to retain tax benefits applicable to power projects by recovering higher tax from beneficiaries than the actual income tax paid. However, the new norms limit the recovery of tax to the actual tax paid by utilities.

“…the effective tax rate shall be considered on the basis of actual tax paid in the respect of the financial year…The actual tax income on other income stream (i.e., income of non-generation or non-transmission business, as the case may be) shall not be considered for the calculation of ‘effective tax rate’,” the commission noted.

Opposing the move in the draft regulation, NTPC had argued saying its new projects planned in the coming years as per their power purchase agreements signed with different beneficiaries requiring investment of around 4.80 trln rupees would be adversely affected.

Other key regulations include a ‘special allowance’ for coal and lignite based power plants that could be availed and following which the revision of capital cost would not be allowed and applicable operational cost shall not be relaxed.

“In case of coal-based/lignite fired thermal generating station, the generating company, instead of availing R&M may opt to avail a “special allowance…as compensation for meeting the requirement of expenses including renovation and modernisation beyond the useful life of the generating station or a unit thereof, and in such an event, revision of the capital cost shall not be allowed and the applicable operational norms shall not be relaxed but the special allowance shall be included in the annual fixed cost,” the regulator said.

It added the special allowance would be 750,000 rupees per megawatt a year for 2014-15 (Apr-Mar) and would be escalated at 6.35% every year during the tariff period till Mar 2019.

- See more at: http://freepressjournal.in/cerc-shifts-to-plant-availability-factor-under-14-19-tariff-norms/#sthash.2MVwyZh6.dpuf

Toshiba Corp wins USD 180 mn order from NTPC

Chennai-based Toshiba JSW Power Systems Pvt Ltd, a Toshiba Group company, has been awarded a contract by NTPC “for the supply of two 800 MW super-critical steam turbine and generator island packages for the Darlipali super thermal power station,” the company said in a statement.

 

Toshiba Corp has won a USD 180 million order from state-owned power generator  NTPC for supply of super-critical steam turbine and generators for its 800 MW power station at Darlipali in Odisha.

Chennai-based Toshiba JSW Power Systems Pvt Ltd, a Toshiba Group company, has been awarded a contract by NTPC “for the supply of two 800 MW super-critical steam turbine and generator island packages for the Darlipali super thermal power station,” the company said in a statement. The new steam turbines will enter operation by early 2018.

Toshiba JSW will carry out engineering, procurement and construction (EPC) of the complete steam turbine and generator island packages. “NTPC’s evaluation reflects the high performance and the reliability of Toshiba’s supercritical steam turbines and generators, and the company’s capabilities in integrating engineering and manufacturing functions,” the statement said.

Last month, Toshiba integrated the engineering function of Toshiba India Pvt Ltd into Toshiba JSW Turbine and Generator Pvt Ltd, a manufacturer of turbines and generators based in Chennai. The company, renamed Toshiba JSW, will provide full EPC solutions for thermal power plants, and is working to expand its business in India and the surrounding region.

“In India, Toshiba Group is an undisputed market leader in supercritical steam turbines and generators in the 800 MW category, having won orders for ten sets in all,” it said. These include five for Coastal Gujarat Power Ltd, a subsidiary of Tata Power Company Ltd, India’s largest private sector power utility, for its Mundra ultra mega power project in Gujarat, which are now in successful commercial operation.

Other orders include three for NTPC’s Kudgi super thermal power project. “The company has also won an order for two 660 MW supercritical steam turbine and generator island packages for Meja Thermal Power Project from Meja Urja Nigam Pvt Ltd, a joint venture between NTPC and UPRVUNL,” the statement said.

 

Toshiba said India’s power generation equipment market is expected to see demand growth of more than 16,000 MW a year in the decade to 2017.

Source: Money Control

Integrated Power Policy – a Study

The book has discussed various social, economic and environmental issues confronting our society because of ill-conceived policies and practices of the power sector in the country. It has discussed a frame work for people centric, environmentally friendly and sustainable power policy :
In view of the gross inefficiency prevailing in the power sector, it can be said that the power cuts and all the other problems of the sector were/are entirely avoidable. Due to the impact on the society of conventional power projects abd Global Warming implications, the society has no alternative but to be very responsible in managing its electricity demand and conserving its natural resources. The legitimate demand for services of our communities can be met satisfactorily with a national per capita electricity of about 1,000 kWH, provided we ensure highest possible efficiencies in all aspects of our life. This is essential for a sustainable life-style, and the huge potential available in the form of renewable energy sources can provide most of this electricity. In order to move to such a regime a paradigm shift is required and a commitment to involve various sections of the society in the relevant decision making process.

Through an objective review of the power sector in India and the past practices in it, the book has concluded : (i) the true demand for grid quality electricity is much less than the huge figure projected by IEP; (ii) the overall efficiency of the power sector is abysmally low; (iii) the need for additional conventional power plants need not be as high as being planned/built; (iv) the natural resources and the general environment is being seriously impacted by a large number of ill-conceived conventional power projects; (v) an integrated and objective approach to the sector’s multifarious problems can provide a model where the highest possible efficiencies and widespread use of new & renewable electrical power sources can meet the legitimate demand for electricity of all sections of our society on a sustainable basis; (vi) the power sector will continue to impact deleteriously the social, economic and environmental aspects of our society, unless a paradigm shift is adopted in the way our society looks at the demand/supply of electricity/energy.

Download Complete report:

 

CG Launches Mobile Phone Operated Energy Efficient Pumps

  • Sector specific pumps and accessories for all applications, launched
  • Smart, Energy Efficient, Stainless Steel pumps for the Agricultural sector
  • Intelligent Pump Controller to control pumps through mobile phones
Avantha Group Company Crompton (CG),  launched  a wide range of energy efficient pumps which can be operated through mobile phones for residential, agricultural, commercial and industrial applications.These pumps, can be switched “on” and “off” remotely, through a mobile phone call or an SMS through intelligent microchip technology embedded in the GSM (Global System for Mobile Communications) Pump Controller and the Electronic Control Panels .They can also be programmed to send an SMS alert to the customers’ mobile phones informing of any shutdown or power failure.  Other value-added features are a voltage and current display and a protection from short circuits and overload.

Pumps generally consume huge amounts of electrical energy and hence present a tremendous opportunity for energy savings. Today, discerning consumers are displaying a preference for energy efficient pumps.

For the residential customers, a choice of premium pumps namely Mini Pacific, Mini Masterplus, New Aqua Gold and Pressure booster were launched with special features such as higher performance, brass inserts and Cathodic Electro Deposition (CED) coating.  In addition, few of these pumps come with a two-year warranty. Crompton’s reliable, energy-efficient pump solutions work more efficiently, with greater precision and for longer periods. They also reduce electricity bills and require lower maintenance.

For the agricultural sector, Crompton launched four new premium submersible pumps. These are 4 inch and 6 inch pumps, 50 feet per stage, in stainless steel finish, and Vertical Open Well Submersible pumps. These products have incorporated a change in material construction from cast iron to stainless steel; they are now corrosion resistant and abrasion free – an important feature required for submersible pump applications. The superior design of these pumps reduces power consumption and electricity bills.

For the commercial and industrial segment, Crompton launched the Vertical and Horizontal Multistage Pumps, suitable for high rise buildings. These pumps can raise water up to a height of 265 meters, at the desired pressure. The pumps are fortified with pressure boosters to maintain water pressure at the same level irrespective of the height at which the outlet is located.

Commenting at the launch, Crompton’s Executive Vice President and President, Consumer Business, Ash Gupta said, “We are constantly researching with materials and new designs to increase the energy efficiency and lifespan of our products. The latest range of our pumps combine the elements of design, construction material and microchip technology to give our customers a world class, energy efficient, cost effective and reliable product.”

About CG

Avantha Group Company CG is a global pioneering leader in the management and application of electrical energy. With more than 15,000 employees across its operations in around 85 countries, CG provides electrical products, systems and services for utilities, power generation, industries, and consumers. The company is organized into three business groups: Power, Industrial and Consumer. CG clocks US$ 2.3 billion in revenues from product lines that cover the entire value chain of engineering offerings.

For more information on CG, please visit: www.cgglobal.com.

About Avantha 

The Rs. 25,000 crores (US$4bn) Avantha Group is one of India’s leading business conglomerates. Its successful entities in diversified sectors include Crompton Greaves (power transmission and distribution equipment and services), BILT (paper and pulp), The Global Green Company Limited (food processing), Biltech Building Elements Limited (infrastructure), Avantha Power (energy), Salient Business Solutions Limited (IT and ITES), Jg Glass (glass containers)

With a global footprint, the Group operates in 90 countries with more than 25,000 employees worldwide. Led by Gautam Thapar, Avantha demonstrates strong leadership globally and emerges as a focused corporate, leveraging its knowledge, leadership and operations, adding lasting value for its stakeholders and investors.

For more information on Avantha, please visit www.avanthagroup.com

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