Can you beat this? Bihar's power generation utilities have been shut down since March! After Jharkhand was carved out of the state in 2000, Bihar was left with just three plants — Barauni (2x110 MW), Muzaffarpur (2x110 MW) and the Koshi Hydel Power Station, but none generates power. The four 110 MW units of Barauni and Muzaffarpur thermal power stations have been shut down for R&M (renovation and modernisation) since March 2012; so has Koshi Hydel after devastating floods in 2008. Smaller power units of 15 and 50 MW have long been retired.The state had a recorded requirement of 12,384 million units (MU) in 2010-11, while availability was only 10,772 MU. It had the highest power deficit in the eastern region at 13 per cent (it was short of 1,612 MU); peak deficit was at 22.5 per cent.So, how does Bihar meet its power needs? "Whatever electricity we get is through central allocation; in order to meet the additional requirement, we purchase power from the short- and medium-term market at very expensive rates," says an official with Bihar State Electricity Board (BSEB). "Although we get around 1,600 MW of centrally-allocated power and short-term purchase accounts for 300 MW, any shutdown in the Centre's plants affects the power availability on a high scale," he says.Power is available from the Centre at around Rs 2.30; in order to meet the shortfall, BSEB has to purchase power from the short-term market at almost double the price at Rs 4.31 per unit.However, things are set to change. If all goes well, the people of Bihar might soon get some respite from extreme power starvation. A 2x640 MW private thermal power station — Bihar's first private power plant — is coming up in Banka. Being developed by JAS Infrastructure Capital, the plant is due to be commissioned in April 2014. Also, both the Barauni and Muzaffarpur stations are expected to be back on line by March 2013. Bihar also plans to set up hydel projects, which will further ramp up the state's installed capacity. The state has three more power projects in the pipeline. However, fuel linkages for these projects are yet to be approved, without which operations cannot start. Failure to get adequate coal to fuel the existing thermal plants in the state has also worsened the power situation. In this context, Chief Minister Nitish Kumar recently said that there was a need to develop renewable energy sources in the state.Bihar is also involved in a legal imbroglio with Jharkhand over the Tenughat power station (2x210 MW) situated in Bokaro. The power station is owned by the Bihar government but since it is located in Jharkhand, the Centre has assigned it to Jharkhand. The matter is still pending in the Supreme Court; earlier, the Patna High Court had ruled in favour of Bihar.The state has been hard-pressed for power ever since Jharkhand was carved out of the state and a majority of power plants went to Jharkhand. Bihar had an installed capacity of 1,975 MW and was left with only 584 MW after the division, which also dragged down the state's per capita consumption of electricity from 152 units per year to 60 units per year.(This story was published in Businessworld Issue Dated 23-07-2012)
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Rocked by increasing criticism from all quarters, Goa under its new chief minister Manohar Parrikar is on a drive to set things straight. One of the steps proposed includes auctioning of low-quality iron ore lying in dumps — generated over several decades — across the state. Rough estimates peg it at between 640 million tonnes and 750 million tonnes. The Indian Bureau of Mines is working on the final figure.In the past, the technology to absorb the waste was not available. Of late, with countries such as China blending low-grade ore with high-grade iron ore, a small market has opened up. If the Goa Minerals Policy 2012 comes through, the state government would be able to sell the iron ore dumped on government land.However, for all its positive intentions, the Parrikar government's suggestions have received a lukewarm response from the central government. "Certain guidelines need to be followed before any auctioning takes place," says an official in the ministry of mines. "The dumps belong to the lessee... they cannot be auctioned before the lease lapses." He stresses the necessity to have a clear policy, especially for movement and handling, before commercial selling is allowed.Prasanna Acharya, director of the Directorate of Mines and Geology in Goa, says the government has not taken a decision. While the policy is yet to be finalised, environment activists fear that commercial use of the dumps will aggravate both environment damage and illegal mining in the state. There are questions on the ethics of selling waste generated at least partly by illegal mining. But pollution from the dumps to areas nearby as well as water bodies is proving to be a major hazard. "If another company is willing to buy the waste, it can only be a good thing — beneficial both commercially as well as environmentally," says a member of Goa's mining industry. He concedes there needs to be a large amount of accountability.Goan authorities are planning many measures to curb illegal mining. For instance, a new website would provide an interface between leaseholders and the government. The portal would enable generation of permits, payment of dues to the government as well as filing of returns, thereby increasing efficiency. The auditing for it, which was to be completed last week, is expected to be done in another week.Operators would now need to get no-objection certificates prior to loading. Monitoring minute details such as the number of trucks, loading capacity versus actual loading, routes of transportation (for ore going beyond lease area) are already in place. The suggestion for capping exports at 40 million tonnes is awaiting finalisation by the government. As a part of the clean-up drive, 460 trading licences were revoked. Of them, 45 have been revalidated. These are mostly leaseholders and corporations recommended by the government. In 2010-11, there were 89 operational mines. "There are not more than 44 mines operational mines at the moment," confirms Acharya.(This story was published in Businessworld Issue Dated 23-07-2012)
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Reliance Power risks losing a Rs 300 crore bank guarantee after a court said distribution companies could seek damages from Reliance over a delayed power project in the southern state of Andhra Pradesh.The Delhi High Court lifted a prohibition it had imposed on the distribution companies in March that barred them from taking "coercive steps" against the project. Reliance on Tuesday said it has appealed the order and has filed for arbitration to resolve the dispute.Controlled by billionaire Anil Ambani, Reliance Power stopped construction on the $3.2 billion plant after changes in export rules by Indonesia, its main source of coal for the proposed plant, raised prices and made the project nonviable.Indonesia's rule changes have made about 9,000 megawatts (MW) of power projects in India nonviable, including a 4,000MW plant being developed by Tata Power, because the projects cannot raise tariffs to reflect higher fuel costs.Reliance originally bid to supply power at a fixed rate, but is now arguing that the project will not be feasible without a tariff hike and the Indonesian rule change constituted a force majeure event.Reliance "has been unable to persuade this court...that the escalation in fuel price is a force majeure event providing it with the defence of non-performance of its obligation under the power purchase agreement," the court said.Eleven state distribution companies, which have purchase contracts with the unit of Reliance Power developing the 4000MW project, have demanded Reliance pay Rs 400 crore or give up a bank guarantee for delaying the project.(Reuters)
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The Delhi High Court on Friday ruled in favour of city gas utility Indraprastha Gas Ltd, or IGL, which had contested a directive from a government regulator to cut gas tariffs in New Delhi, leading to a nearly 30 per cent surge in shares.The court ruling settles, for the time being, the uncertainty regarding margins that gas utilities are allowed to earn. The regulator's order in April had dragged down sector stocks over worries similar action on other utilities would hit profit margins.India caps prices of petroleum and natural gas products.Stocks of other sector utilities gained. Gujarat Gas rose 15.2 per cent, while Petronet LNG was up 8.5 per cent. State-run gas utility GAIL India closed 3 per cent higher."If this order remains final, IGL's fair value will increase by 30-40 per cent. Removal of regulatory overhang would also benefit other gas utilities," said Ashutosh Bharadwaj, analyst at Nirmal Bang Institutional Equities."We have to see whether PNGRB goes to Supreme Court or (seeks) some other legal remedy," he added.The Delhi High Court quashed the regulator's order asking IGL to cut some tariffs by nearly 60 per cent, and said PNGRB could not fix network and compression charges, the company said in a release to the exchange.A copy of the order was not immediately available.A growing number of power plants, industries, and city gas projects have pushed up natural gas demand in Asia's third largest economy. India's current gas demand of 166 million cubic metres a day (mmscmd) is projected to rise to 443 mmscmd by 2017.State-owned GAIL is expanding its pipeline network by more than 50 per cent to meet rising demand, and overseas players, including Spain's Gas Natural Fenosa and Germany's E.ON AG, have shown interest in acquiring presence in the market through a stake-buy in city gas utility Gujarat Gas.(Reuters)
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Oil fell below $100 a barrel on Friday for the first time since October 2011 as weak manufacturing data from China and the euro zone debt crisis raised concerns of a slowdown in demand for fuel.China's official Purchasing Managers' Index eased to 50.4 in May, the weakest reading this year. Germany's manufacturing sector contracted at the fastest pace for almost three years, and the euro fell to a 23-month low against the dollar on worries about the Spanish banking sector."We've had constant worries about Greece, Spain, the euro, poor data from the US, and overnight the Chinese data was not positive," said Tony Machacek, an oil futures broker at Jefferies Bache."I think we are getting to levels where we might see a bit of stability coming back to the market."Brent crude was down $1.80 to $100.07 by 0958 GMT after earlier hitting a session low of $99.60, its weakest since Oct. 4. It dropped 14.7 per cent in May, the biggest monthly decline since 2008.US oil slipped $1.45 to $85.08 after losing more than 17 per cent last month, also its biggest slide since 2008.The Chinese data comes ahead of a US employment report, which is expected to show non-farm payrolls increased 150,000 in May from 115,000 in April. Some saw scope for disappointment in the report."I don't think Friday's numbers are going to be any better. It's been a dismal week so far, and we haven't hit bottom," said Jim Ritterbusch, president at Ritterbusch & Associates and who predicted the drop in Brent below $100.SAUDI GETS ITS WISHBrent surged in March to $128 a barrel, the highest since 2008, as increased concern over the loss of Iranian oil due to tighter sanctions combined with supply hitches elsewhere.The price rise worried both oil consuming and producing countries. Saudi Arabia, the top oil exporter, has been raising output and said repeatedly it wanted prices of around $100."We want a price around $100, that's what we want," Saudi Oil Minister Ali al-Naimi said on May 13. "A $100 price is great."The kingdom, OPEC's biggest producer, raised output to 10.1 million barrels per day in May, according to a Reuters survey this week, its highest in decades. Overall OPEC oil supply is at the highest since 2008.Brent's premium to US crude was at $14.83. High US inventories have been weighing on the US benchmark.US crude inventories rose more than expected last week to hit their highest level since July 1990, the US Energy Information Administration said.(Reuters)
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Reliance Power Ltd said it has filed for arbitration against 11 state distribution companies to resolve a tariff dispute that is threatening a $3.14 billion (Rs 17500 crore) power project in the southern state of Andhra Pradesh.Changes in export rules by Indonesia, the main source of coal for the proposed 4,000 megawatt (MW) plant, raised prices and were beyond the company's control, Reliance said. The company has already stopped construction on the plant.Indonesia's changes have made about 9,000 MW of power projects in India nonviable, including a 4,000 MW plant being developed by Tata Power, because the projects cannot raise tariffs to reflect higher fuel costs.Controlled by billionaire Anil Ambani, Reliance originally bid to supply power at a fixed rate, but is now insisting on a tariff hike to meet the higher fuel costs.Reliance in March served notice on the distribution companies that it was seeking an "amicable solution," but the state-run utilities did not respond, Reliance said, prompting the company to file for arbitration.Reliance Power previously obtained a court order in March prohibiting any "coercive steps" against its proposed plant after the state distribution companies threatened to impose penalties for delaying the project.Reliance has already spent an undisclosed amount of cash, mainly in acquiring land for the project, and wants a quick resolution to the dispute, said a company executive, who did not want to be named.(Reuters)
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Adani Ports and Special Economic Zone Ltd said it would develop a dry bulk terminal at Kandla Port in Gujarat with an investment of about Rs 1200 crore.The terminal, which will be developed by its unit Adani Kandla Bulk Terminal Pvt Ltd, will have a capacity of 20 million metric tonnes per annum (MMTPA) and will be constructed in 24 months, the company said in a statement.Adani Group, of which Adani Ports and SEZ is a part, owns and operates three ports - Mundra and Dahej in India and Abbot Point in Australia and is also developing ports at Hazira, Mormugao, Visakhapatnam and Kandla in India and Dudgeon Point in Australia.The group aims to increase its annual cargo handling capacity from 78 million metric tonnes (MT) in 2012 to 200 million MT by 2020, it said.(Reuters)
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India-focused Essar Energy Plc said it agreed to sell a 50 per cent stake in an offshore gas exploration block in Vietnam to Italian oil major Eni SpA.Eni will assume operator status for the block under the terms of the transaction.Further investment is required to establish gas reserves in the block and no gas is being produced at present, Essar Energy said.Block 114 is located in shallow waters off the coast of Vietnam and has undiscovered inplace resources of about 1 trillion cubic feet of gas, according to Essar Energy's website.The company was not immediately available to comment on further details of the transaction, including the value of the deal.Shares in Essar Energy - 77 per cent-owned by privately held Indian conglomerate Essar Group - closed at 122 pence on Friday on the London Stock Exchange.(Reuters)
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