Hindustan Power today said it will issue bonds worth Rs 380 crore on private placement basis to Yes Bank for three of its projects in Gujarat."The clean energy arm of Hindustan Power achieved the distinction of entering into the credit enhanced bond market with the issue fully underwritten by YES Bank Ltd," the company said.Under the partial credit guarantee scheme of IIFCL, the infrastructure financing institution will provide a 'first loss' partial credit guarantee to the bondholders and has received an irrevocable back-stop guarantee with the Asian Development Bank (ADB).Placement of these bonds besides opening a new market for financing infrastructure projects, would also significantly bring down the cost of capital for the projects."With the announcement of this transaction we will be refinancing the existing debt in 3 solar SPV's of ours through the placement of Rs 380 crore worth of bonds with Yes Bank at an attractive coupon of 10.05 per cent for a tenure of 10 years," Hindustan Power Chairman Ratul Puri told reporters.This, he added, is a significant milestone for the country in its push towards achieving 100 GW of solar by 2022 and inching closer to the government's agenda of 24X7 power to all.The power company will issue secured, rated, listed, partially guaranteed, debentures worth Rs 380 crore on a private placement basis to YES Bank LtdBSE -0.16 % for three of its "AA+ SO rated" projects in Gujarat.Most of the infra projects are rated BBB or A while investors seek higher ratings.The bonds will be listed on NSE.Currently, banks provide most of the funding for infrastructure projects in India, whereas worldwide Debt Capital Markets are the major source of such financing.(PTI)
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In a stern message to states, Finance Minister Arun Jaitley on Sunday said states cannot expect public sector banks to fund the deficits faced by power distribution companies due to levy of inadequate tariffs. Expressing concern over the financial health of some state-owned power distribution companies (discoms), the minister said some states are not levying adequate electricity tariff. His remarks came against the backdrop of many discoms facing financial stress, which has also resulted in rising non-performing assets in the banking sector. "Some states were not charging adequate money for power, which was affecting the discoms, and these states can not expect the PSU banks to fund the deficit of discoms," Jaitley said while addressing investors and business leaders in Hong Kong. The combined debt of discoms is estimated to be more than Rs 3 lakh crore leading to acute financial stress, with many of them not even able to purchase electricity. The gross Non Performing Assets (NPAs) of state-owned banks at the end of March quarter stood at 5.20 per cent of their total loan portfolio. NPAs have surged mainly due to stress in infrastructure sectors like highways, steel, power and state discoms. Recently, Power Minister Piyush Goyal had said the Centre cannot be considered as a bailout bank for helping debt-ridden discoms and states would have to find a way out of the crisis. "Some states have serious crisis (power) looming large. But at the end of the day, the government of India can only facilitate the turnaround of these discoms. And we cannot finance it," Goyal had said. Problematic utility debts account for a quarter of all restructured bank loans in India. In total, utilities owe $66 billion. New Delhi has identified about $22.7 billion of debt held by financially stretched utilities as most at risk, one of the sources said, adding to the urgency to relieve a banking system weighed down by bad loans. Under a rescue proposal, New Delhi wants to persuade state governments to take over some of their utilities' debt. (Agencies)
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Prime Minister Narendra Modi on Monday (14 September) met the top brass of power utilities, particularly electricity distribution companies (discoms), to review their performance and discuss the issue of their burgeoning debt. The combined debt of power distribution companies (discoms) stands at over Rs 3 lakh crore. Faced with acute financial stress, many of these are unable to buy power. According to several reports, the National Democratic Alliance (NDA) government is working out a bailout package for the debt-ridden discoms so that the government can achieve the goal of providing power to all. Modi earned praise for fixing the power sector in Gujarat when he was Chief Minister. A national solution would polish his image after a series of setbacks to his agenda of economic reform in recent months. In 2014, Gujarat achieved round-the-clock three-phase power supply to its 18,000 villages and 9,700 hamlets. When Modi took the reins in 2001, Gujarat’s electricity supply was as primitive as the rest of India’s. Gujarat had a 500 megawatt demand-supply shortfall, with revenues of $1.1 billion and losses of $393 million. Ten years later, it boasted a power capacity surplus of more than 2,000 megawatts, which it now exports to other states. It made $93 million in annual profit from $3.8 billion in revenues. How did Modi accomplish this? Experts say the power sector reforms undertaken by the Narendra Modi-led BJP government catapulted Gujarat into a power surplus state. The Jyoti Gram Yojana, controlling theft and losses and unbundling of distribution companies into multiple entities became the pillars of the State's success. Modi also gave top priority to the resolution of power woes and dealt with issues such as power theft in agriculture with strict enforcement. Another key reform was the separation of the feeder line that supplied power to the rural areas into two: one to supply power for agricultural needs and other for household and other needs. Since the tariff for power used for agricultural purposes was much lower, many used this subsidised supply for their household needs as well, resulting in huge losses for Gujarat State Electricity Board. The Gujarat experience clearly demonstrated what strong political will to reform the electricity sector can achieve. Of the many innovations Gujarat tried, the separation of feeders was a master stroke. It not only helped farmers get quality power at fixed time but also ensured that leakages were curtailed. The BJP government began plugging the leakages in distribution. Power thefts in Gujarat then ranged between 20 per cent in urban areas and 70 per cent in rural regions. It passed a law against power thefts and set up five police stations across the state, solely to nab such thieves. Stringent action began against those who ran up large power bill arrears, including disconnecting their supply. The Modi government took care to ensure that the state electricity regulator - unlike in most states - remains truly independent of political pressures. India has doubled energy generation capacity in the last decade, helping to more than halve its peak power deficit, but transmission and distribution have remained largely unreformed, leading to regular blackouts across large swathes of the country and debts that threaten the health of the banking system. Getting Indians to pay more for their power is not easy. Across the country around a fifth of power goes unpaid for and many still believe free power is a right rather than privilege.. The performance of Gujarat in turning around the GSEB is noteworthy. Timely tariff revisions have made the sector viable enabling the state to set up adequate generation capacity. With more revenue, the state was able to invest in a more reliable grid, so that Gujarat is today the only state in India to supply 24/7 three-phase power to all of its villages. Gujarat's transformation from a power deficit to a power surplus state in just one decade is a marvel that happened because Modi took tough decisions.
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Prime Minister Narendra Modi is set to meet bosses of loss-making electricity utilities on Monday to debate a rescue package for a sector whose vast debts weigh on the banking system and undermine promises to provide power for all. The government has identified $66 billion of troubled debt held by state-run utilities as a major obstacle to efforts to speed up growth in Asia's third-largest economy, hurting both credit growth and industrial performance. Modi earned praise for fixing the power sector in Gujarat when he was chief minister. A national solution would burnish his reputation after a series of setbacks to his agenda of economic reform in recent months. The pressure to act is rising as a three-year financial restructuring package introduced in 2012 comes to an end, with the utilities still selling power to consumers at below the cost of production and ignoring rampant theft. The prime minister will chair a meeting with finance ministry officials and the head of individual state distribution companies, a top government source and an official in the power ministry told Reuters. The government has not made public the contours of the package, but options under discussion include allowing states to take over debts of distribution companies to ease their financial crunch, in return for a renewed clampdown on electricity losses. Utilities' weak finances mean they cannot buy in more power or invest in transmission lines that are needed if Modi is to get power flowing to industry and to the 300 million Indians living without electricity. India has doubled energy generation capacity in the last decade, helping to more than halve its peak power deficit, but transmission and distribution have remained largely unreformed, leading to regular blackouts across large swathes of the country and debts that threaten the health of the banking system. A fifth of India's electricity still goes unpaid for. "The poor financial health of the distribution utilities has the potential to make all investments made in the electricity value chain unviable," said Umesh Agrawal, a power expert at PwC. "A comprehensive set of measures targeting efficiency improvements as well as setting tariffs to recover costs is required to prevent the situation becoming worse," he said. (Reuters)
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With a three-year government rescue package coming to a close, the highly indebted state of Rajasthan is getting tough - it's demanding farmers start paying for their electricity. In a country where rural communities have become used to free power by hook or by crook, the state that is home to some 70 million is tasking private firms with running power distribution in its big cities as it tries to recoup what it's owed. Restructured power distribution debts alone amount to a quarter of Indian banks' problematic loans, and Rajasthan's state-run utilities owe about 610 billion rupees ($9.2 billion), with some 30 billion rupees due by end-March. While Rajasthan dropped an earlier plan to actually raise existing tariffs after opposition from farmers, state energy minister Pushpendra Singh said the state must push on with plans to enforce existing payment rates. "We can't repay the interest and we still have these losses," Singh told Reuters in an interview. "Every year we are losing more money," he said, estimating a third of Rajasthan's electricity is lost to theft and transmission leaks. With these debt levels echoed across the country, Indian states have little choice but to find ways, extreme or otherwise, to face up to a long-ignored problem. Bad debts aren't just threatening banks - with electricity utilities central to the problem, Prime Minister Narendra Modi's electoral promise of power for all could be jeopardised. Reserve Bank of India (RBI) warned in June that the risk of states failing to repay loans on time was "very high", as a three-year rescue package launched in 2012 comes to an end - the source of Rajasthan's urgency on collecting fees for electricity. And central government has identified the power utility sector as critical to solving banks' bad debt problems. States who cannot pay banks what they owe over the next few years could be forced to turn to the central government for help, putting pressure on India's consolidated fiscal deficit. Modi's government has ruled out a rescue package along the lines of the 2012 scheme launched under the previous government. "We are in touch with each of the states where the discoms (distribution companies) need to be reformed. Those states have been put on notice," Finance Minister Arun Jaitley told businessmen at a conference in New Delhi on Wednesday. A top government source said New Delhi was working on a detailed plan. Under India's federal system, responsibility for reform lies with states - all with different appetites for change, and for pursuing villagers who fail to pay. Rural RewiringAcross India, decades of mismanagement and political meddling have left utilities selling electricity below cost and turning a blind eye to rampant theft. The result is state distributors are sitting on $66 billion worth of debt, according to rating agency CRISIL, double the level four years ago. Getting Indians to pay more for their power is not easy. Across the country around a fifth of power goes unpaid for and many still believe free power is a right rather than privilege. Rajasthan's drive to collect payments from farmers and call in private firms to help run power distribution replicates reforms made a decade ago in Modi's home state of Gujarat. Distributors there are now largely profitable, and power is reliably available across most of the state. But reform has proved tough and not all states are willing to take difficult steps. In largely agricultural Uttar Pradesh, farmers pay a fixed fee for unlimited power, equating to about one rupee per unit of electricity, a sixth of the generation cost. The state power company's finance director says it has no plans to raise prices to close that gap. Rajasthan Energy Minister Singh said his administration had little choice but to act: His aim is to halve theft levels in six months and get all farmers paying by meter in a few years. In the meantime, Rajasthan must find a way to keep banks at bay. As well as the almost 30 billion rupees due before the end of March, its utilities owe banks another 59 billion by 2018, one of India's largest lenders said in a recent presentation sent to the government and seen by Reuters. (Reuters)
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Jaiprakash Power Ventures said proceeds from the sale of its two plants to JSW Energy will help the company reduce debt and interest outgo. The company recently sold its two power plants -- 1091 MW Karcham Wangtoo Hydro Electric Plant and 300 MW Baspa-II Hydro Electric Plant -- in Himachal Pradesh to JSW Energy for Rs 9,700 crore. Speaking at the annual general meeting of the company at Waknaghat near Shimla, company Managing Director Suren Jain informed that the disinvestment proceeds by sale of the two plants will help the company in deleveraging its Balance Sheet including reduction of debt and interest out go. The company had?generated 10,420 million units of electricity which was being supplied to various northern and central region states. The Jaypee Group company had posted a net profit of Rs 137.21 crore for the financial year 2014-15 and registered over 48 per cent increase in total income while the profit after tax had jumped over seven times?from Rs 19.73 crore in 2013-14 to Rs 137.21 crore. Meanwhile, in a filing to the BSE, the company said that its Vishnuprayag hydro power plant, which was temporarily shut down in June, has started functioning. "Company's 400 MW Vishnuprayag Hydro Power Plant, which was temporarily shut down wef June 25, 2015, due to heavy rains and storm in Uttarakhand causing unprecedented flood in river Alakhnanda resulting in excessive silt and debris at Barrage, has resumed power generation wef evening of September 11, 2015," the company said in a regulatory filing.
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Arshad KhanCommerce Minister Nirmala Sitharaman said on Thursday (10 September) that India has the capacity to produce more power but the weak demand prevents the sector from adding existing power generation capacity. “Slew of government policies will help the power sector to overcome the poor demand,” said Sitharaman. Power analysts feel that the statement made by the ministry is contradictory since electricity supply is an issue in major parts of the country. On the long pending infrastructure projects, she said that government is providing long term funding to complete the delayed projects. She adds, “Problem such as arrears in payments to small and medium contractors during the previous regime will be sorted out to encourage SMEs to participate in building infrastructure.” The minister also said that the number of policies and the steps taken under the new government to will improve India’s ranking in the next ease of doing business index. Currently, India is ranked 142 among 189 nations in the World Bank's 'Ease of Doing Business 2015' index. She said that the country will benefit when the states will play the role of a facilitator between private companies and regulatory bodies. “Since the central government took 29 states on board in December last year to make PM Modi’s ‘Make in India’ initiative successful, states are showing positive results in promoting business and fighting red-tapism,” said the minister. To increase industrial competitiveness between states, the World Bank together with a professional agency will release the ranking of Indian state on 'ease of doing business' in a week, informed Sitharaman. Addressing a session to boost investment in the north Indian states, the minister said that since the region is growing at the rate of 7.74 per cent and contributing 30 per cent in the national GDP, there is a huge opportunity for domestic and foreign firms to invest in sectors such as energy, automobile, aerospace etc.
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"Electricity cost pinches me. I want to take some actions to both reduce my bill as well as contribute to a sustainable future. But I am mostly busy with my daily responsibilities. When I sit down to think of what I can do for energy efficiency, all I have with me are monthly bills which don't give me sufficient information on what information should I take."As a facility head or the CFO of an organization, do you feel the same? Another common experience across all our customers has been that there are many energy efficiency or service companies that would offer wide range of energy efficiency products/services - ranging from installation of rooftop solar to replacing your LED lights or even replacing your inefficient Air Conditioning Equipment with more efficient equipment. Taking these decisions are often difficult due to high upfront investment in terms of either capital or infrastructure (in the form of giving your rooftop for solar installation) or both.What if I say that you have many micro power plants operating within your building? These micro power plants are the inefficient operations that go unnoticed because the "Big Daddy" is not watching. These are the hidden treasures of energy from your own building that come in the form of simple actions collectively resulting in more than 10% energy savings. What if you use the power of two of the latest technology trends - "Internet of Things" and "Big Data Analytics" to unearth these hidden energy treasures and that too at possibly no upfront investment?This is where advanced energy data analytics can help you. A smart meter at any load level (e.g. UPS, or Chillers or Air Handling Units) can both measure and communicate the power consumption in real time. Add to this power consumption information, real time data from other sensors that matter (e.g. fuel level sensor in Diesel Tank or temperature sensors in occupied areas) and you have the ingredients to be ready to unearth the micro power plants in your building. So the first thing you need is to equip your facility with such "Internet of Things" in terms of smart energy meters and other relevant sensors and collect all this "Big Data" in a managed cloud platform (to ensure robust data collection at all times without any hassles).This data is of little use unless experts analyze it to derive "actionable insights". These insights should also be delivered to you when it matters i.e. let you know that AC is running in night time when it should not be running or what is the right time to turn on air conditioning in the morning to pre-cool the building at the right temperature by the time office begins.Some of you may already have an extensive (and expensive) "Building Management System (BMS)" already installed in your facility that is collecting all the Air Conditioning and energy data. How many times though has someone looked at the data? The real potential of a BMS is exploited when the collected data is analyzed to decide on the appropriate set points (e.g. what is the right setting for "Leaving Water Temperature" of your Chiller?) so as to result in energy efficient operations.Some of you may also have already invested into a sustainable building by going for green building certifications such as LEED or GRIHA. However, while such buildings are designed with energy efficiency in mind, they may not be operating in the most efficient manner. This is similar to buying a 5-star AC but possibly running it at the set point of 180C thus leading to very high energy consumption.An end to end solution from sensing systems for data collection to data management and analytics to delivering actions (either in the form of SMS/Email notifications or as automated control) will help in identifying the micro power plants within your facility and putting them to good use by eliminating the operational wastage. Recently, some startups have emerged that offer such end to end solution and that too with zero upfront investment model. It then is a no brainer - try them out. If you don't save more than what you are paying them, stop their solution.The author, Amarjeet Singh, is founder of Zenatix and Prof at IIIT DelhiLinkedIn: http://bit.ly/1KFPvfv
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Power producer Hindustan Powerprojects and IPPAI (Independent power producers association of India) jointly organised the 4th edition of the IPPAI Power Awards 2015.This year also witnessed the launch of the Award for Innovation that recognises an entity's innovative contribution towards waste to energy, waste heat to energy, energy storage and other such energy efficiency related activities in the power sector. Ratul Puri Chairman, Hindustan Powerprojects, said: "We need timely commissioning of new projects and also ensure revival of stranded capacity to meet India's surging demand for power. This can be achieved by innovative approach along with well planned risk mitigated approach hence we introduced this category to recognize the players who have been adopting this route."Ravi Arya, President Thermal, Hindustan Powerprojects, "We recently commissioned the first unit (600 MW) of our flagship thermal power project at Anuppur and hence we realised that it is essential for the industry to do more with what it already has - increase the efficiency of its production and transmission segments and save a lot of electricity that gets lost in the process of translation."Among the prize winners for innovation category were Sesa Sterlite for modification to stabilize coal fired power plant, BSES Yamuna Power - IMOS, BSES Rajdhani Power - Modular Integrated Distribution Automation System (MIDAS), Reliance Infrastructure - Feeder Pillar box Design for theft control, Welspun - The methodology of laying cable in hilly terrain, JSW Energy Ltd - utilisation of surplus blast furnace gas. Other categories were Best Performing Distribution Company - Uttar Gujarat Vij Company Ltd Best Progressive State in Power Sector - Gujarat, Award for Best State to promote Renewable Energy - Tamil Nadu, Best Thermal Power Generator (cheapest producing with efficiency) - Dahanu Thermal Power Station, Reliance Infrastructure Ltd. Energy Conservation- Reliance Infrastructure, Wind forecasting Methodology-GE Renewable Energy India."The Indian power sector requires intervention from the regulators and government bodies to sustain the momentum of growth. We should continue to organize such platforms to engage all stakeholders for inclusive development of the sector." adds Ravi Arya, President, Thermal, HPPPL. The conference was supported by the Ministry of Power, the Ministry of New & Renewable Energy and the Ministry of Coal. The Retreat celebrates the achievements of the Indian power and energy sector in which regulators, policymakers and other stakeholders participate.(BW Online Bureau)
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Diluting equity to finance power unit buys in a depressed power market may be a risky strategy, says Neeraj Thakur JSW Energy has shown a tremendous risk appetite for buying distressed power assets in the market. With the announcement of an MoU to buy Jaiprakash Power’s (JP) Bina (500 MW) power plant, the group is now in official talks to buy three of JP’s assets with a total generation capacity of 1891 MW. Not just this, JSW Energy is also eyeing an under construction 1050 MW power asset of Monnet Ispat. Through the acquisition of these assets, JSW Energy wants to double its power portfolio to 6,081 MW from the current level of 3140 MW. If we leave Adani Power that managed to buy one power asset for Rs 6,300 crore from Lanco, other groups like Reliance Power and Tata Power have not shown the heart to take the risk in this market where infrastructure companies are ready to sell their power plants to pay off their debt. While JSW Energy has one of the best debt-to-equity ratio in the sector, its strategy to grow inorganically can make the balance sheet of the company similar to the players who want to sell their power plants in the market. With its debt of Rs 8,210 crore in March 2015, the purchase bill of the new assets - if all deals go through- would be around Rs 20,000 crore. JSW energy’s debt-to-equity ratio in March 2015 was just 0.47, a sign of a healthy company. The management of JSW Energy has said that it was ready to infuse equity into the company to fund acquisitions. However, to fund its acquisition spree, the promoters will have to dilute a significant amount of equity in the company. A brokerage analyst requesting anonymity said “no promoter wants to put in equity above 5,000 crore so easily. If Jindals do that, it would be a bold step to grow through brownfield projects in a depressed power market. Thermal power plants across the country are struggling with low plant load factor. NTPC reported a decline in its PLF at 77.6 per cent from 84.3 per cent in the first quarter of FY16. JSW energy’s own Ratnagiri power plant with a generation capacity of 1080 MW has reported decline in unit sales due to lack of demand from state discoms in the past. The company's plant load factor, a measure of the utilisation of a power plant, declined 75 per cent in the June quarter of FY16 as against 84 per cent a year ago. In such a scenario, even if the company is occupying operational assets, chances are that the company would not be able to realise margins required to retire the newly acquired debt on the company’s balance sheet. While the company management in its press conferences has said that it is looking at long term gains from these acquisitions, it would be important to note that in the long term, thermal power market will face pressure on margins from renewable energy players who are beginning to quote prices at Rs 5 per unit. Analysts expect the per unit realisation for JSW Energy power plants at Rs 4 per unit in FY16 and FY17, this guidance itself put a question mark over the valuation of the assets that the company is eyeing.
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