It will be sometime before the light shines on the country’s power sector. A Crisil report says that 46,000 mw of thermal capacities face viability risks; and that the sector will be constrained by discom’s weak financial health and coal-block auctions. Worse still, it says nearly Rs 75,000 crore of loans — or nearly 15 per cent of the aggregate debt to power generation companies — are at risk of turning delinquent in the medium term. And close to Rs 1.9 lakh crore of loans to six weak discoms, for which the moratorium ends in the next 18 months, are at risk if timely support is not extended by the central or state government.What went wrong? Exactly a year after Crisil warned on the state of affairs of the power sector, on 5 October 2012, the centre announced a financial restructuring package (FRP) for discoms under which short-term debts were converted to long-term loans backed by state government guarantees. The FRP was for regular tariff hikes and reduction in AT&C (aggregate technical and commercial) losses. “While tariff hikes were high in the first two years following the FRP, things have fizzled out since then. On the AT&C front, there has hardly been any progress,” says the Crisil report.It lists how a vicious cycle was set off. Because discoms remain financially fragile, they are chary of committing to long-term power purchase (PPA)agreements; lower power purchases by discoms, and inadequate coal and gas supplies, have led to suboptimal plant load factors at generating companies, especially the new projects. Further, tariff aggression shown during competitive bidding has resulted in poor cash flows, which has cramped their ability to service debt despite lower cost of imported coal. The weak generating companies with no long-term PPAs defeat one of the objectives of FRP, which is to progressively reduce short-term power purchases by state discoms.It also highlights the “winner’s curse” in coal block auctions. Post the de-allocation of coal blocks by the Supreme Court in September 2014, the centre went in for auctions where companies bid very aggressively for the nine coal blocks that had fuel to fire around 6,500 mw. “This approach showed strategic fuel security had become more important than profitability,” notes Crisil. Bidders who had agreed to a zero fuel charge in their PPAs, thus foregoing mining costs, also agreed to pay a forward premium of Rs 100 to Rs 1,010 per tonne to the concerned state government. With mining costs and forward premiums not recoverable through the variable charge component in PPA, bidders were exposed to the risk of under-recovery.All this will now come home to roost in the financial sector. The Reserve Bank of India’s Financial Stability Report released in June had given a heads-up: Rs 53,000 crore of loans to seven state electricity boards have a “very high probability” of turning into dud-loans at end-September 2015. Acche din, indeed!— Raghu Mohan(This story was published in BW | Businessworld Issue Dated 24-08-2015)
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The state government will keep a 50% stake in the joint venture in exchange for the land that it will provide for the solar parks to be set up on, reports Simar SinghA proposal, clearing the path for investments worth Rs. 1.56 lakh crore in the Rajasthan’s solar energy sector was passed by the state’s cabinet on Tuesday (28 July) . These investments will be made through a joint venture with four private players- Adani Enterprises, Reliance Power, Essel Infra Projects and Infrastructure Leasing & Financial Services (IL&FS). ”We gave approval for investment proposals worth Rs.1,56,000 crore for solar power production of 26,000 MW in Rajasthan,” said Rajendra Singh Rathore, Parliamentary Affairs Minister, Rajasthan at a press conference. The state government will keep a 50 per cent stake in the joint venture in exchange for the land that it will provide for the solar parks to be set up on. The planned projects will aim at generating 26000 megawatts and the chief secretary will be the chairman of the company. The government has already signed a few MoUs for the same. Rajasthan recently, according to data released by the Ministry of New and Renewable Energy, overtook Gujarat as the leader in solar energy generation in India. The state receives the highest amount of radiation in the country and has enough barren space, which increases its suitability for this land intensive green energy programme. Adani is expected to install one park of 10000 MW, Reliance one of 6000 MW and IL&FS and Essel Infra are expected to set up parks with the capacity of 5000 MW each.
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There is a serious crisis looming over the power sector in the country. It is a crisis of tariff, of bankrupt state owned distribution companies being unable to pay for power or even to sign new power purchase agreements. In turn, this threatens the financial viability of new power projects with a combined capacity of 46,000 MW. Tied up in these power projects is debt in excess of Rs 75,000 crores that might become stressed unless power generation companies get a viable return on their investments. To add to this is the mess in power generation companies that depend on gas supplies because of a continuous and steep decline in gas supplies from the Krishna Godavari basin. All this and much more was revealed in a report on the power sector released by the ratings outfit Crisil today. Some weeks ago, there was a controversy when the Union Power and Coal minister had claimed that the real problem in India was not shortage of power but the willingness and ability of distribution companies-both state owned and private-to buy the power. Many states where power cuts have been crippling during this summer reacted strongly against this. But in reality, the facts do suggest the same. For instance, the latest statistics released by the Union Ministry reveals that peak hour power shortage during 2014-15 had come down to all time low of a little more than 3.7 per cent. So actually, the days of crippling power shortages overall have gone; like the one in 2012 when the entire power grid in North India had collapsed. The root problem is the financial mess of discoms. Take the state of Rajasthan for example. The state owned electricity board there simply doesn't have the resources to repay Rs 90,000 crores in dues and debt. Total outstanding debts to discoms have reached Rs 4.4 lakh crores as of March 31, 2015. According to the Crisil report, the only way of staving off this looming crisis is to allow an increase in tariffs and reduce transmission and distribution losses. But then, both are politically sensitive subjects and industry insiders are waiting with bated breath to see how this pans out.
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India is set to raise about $260 million from a sale of 5 per cent stake in Power Finance Corp Ltd, after the share auction received bids for more than twice the number on offer. New Delhi was selling about 66 million shares in Power Finance as part of a target to raise as much as $11 billion from divestment of its stakes in state-run companies this fiscal year. The sale was subscribed more than 2.3 times, according to stock exchange data. At the indicative price of Rs 254.30 per share, the sale would fetch the government Rs 1,678 crore ($261.24 million). Retail investors will get a 5 per cent discount to the cut-off price. Aradhana Johri, secretary at the government's disinvestment department, told reporters they had received bids worth Rs 3,747 crore for the sale. She said the actual revenue the government will raise from the sale was still being calculated. The proceeds from the asset sale programme are critical for Finance Minister Arun Jaitley's plan to narrow the fiscal deficit to 3.9 per cent of gross domestic product in the 2015/16 fiscal year that began in April. The government has missed its divestment target for the last five years in a row.(Reuters)
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Meeting the energy needs of our fast growing population and industrialisation processes has always been a pain point for any Government in India. One of the growing concerns which the country is grappling today is energy crisis. Electricity has become an essential tool for the sustenance of any economy or country. With the per capita consumption in the subcontinent touching approximately thousand kilowatts and ever increasing; the country has to focus on alleviating the growing concern of energy crisis. Besides, the question of providing this necessity at reasonable prices seems to be unanswered. Today, close to 400 million Indians are completely cut off from grid power, primarily due to inaccessible geography. While renewable energy seems to be a solution, higher investment costs come across to be a huge challenge. In such testing scenarios, innovation can be the polestar addressing the energy crunch of the nation. Inspired by this thinking, researchers at IBM undertook the initiative to ease the power shortage confronted by developing nations. They chose to take responsibility to differentiate themselves from the existing technologies by focusing on another environmental concern- e-waste. As suggested by a study in 2013, the operations of a big multinational IT company in India alone results in more than 10 tons of discarded e-waste. Scientists at India Research Lab, IBM took upon the challenge of turning e-waste into the nation’s advantage. Research scientists at IBM found that discarded laptop batteries still have enough power to keep an LED light on for more than 4 hours a day in a year, when fully charged. From this unconventional solution - UrJar, an IBM India project aims to benefit populations in developing nations where accessibility to reliable power is still a far sighted dream. Adoption of this technology commercially at a large scale can further incentivise the process of organised collection of e-waste. At present, it is estimated that 95 per cent of e-waste collection and recycling in the country is managed by the informal sector involving a network of local garbage dealers, posing safety concerns over disposal of hazardous wastes. Moreover, this solution eliminates the use of kerosene for lighting purposes resulting in reduction of greenhouse emissions by 2.7 kilograms per lamp IBM deployed this innovative solution: UrJar in five street-side shops in Bangalore (which were inaccessible to grid electricity) to understand it’s usability in a real world scenario. The results were gratifying as the users could easily meet their lighting requirements and were pleased by the long duration of backup power provided by the device. We would like to present this solution being a classic case of converting a biggest national challenge to address another; alleviation of energy poverty through reusing e-waste. Two birds with one stone. To conclude, IBM considers UrJar as a vision for not just dissemination but sustenance within the community to compliment the economic enticements with the technological characteristics. It has the potential to channel e-waste towards the alleviation of energy poverty, thus simultaneously providing a sustainable solution for both problems. The author, Vikas Chandan, is Research Scientist & Mohit Jain, Research Engineer, IBM Research Labs, India
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The government's 5 per cent stake sale in power sector lender PFC kicked off on Monday (27 July) with the issue getting subscribed 36 per cent in the initial hour of trade.The government is looking to raise over Rs 1,600 crore from sale of 6.60 crore shares in Power Finance Corp (PFC) through a one-day OFS route at a floor price of Rs 254 apiece.PFC is the second PSU to be divested in the current fiscal under the government's disinvestment programme. In April, government had sold 5 per cent stake in REC to garner Rs 1,550 crore.The share sale, which began at 0915 hours, received good response from institutional investors and portion reserved for them was subscribed 42 per cent by 1025 hrs.The portion reserved for retail investors, who are also getting 5 per cent price discount, was subscribed 11 per cent, as per the stock exchange data.Overall, the Offer was subscribed 36 per cent and the subscription may rise further during the day as bidding will continue till 1530 hrs.As against a floor price of Rs 254 a share for the OFS, PFC shares were trading at Rs 257.70. The current market price was, however, down 0.71 per cent over previous close on BSE.The floor price of Rs 254 a share was at a discount of 2.14 per cent over Friday's closing price of Rs 259.55.At the floor price, the government is expected to mobilise around Rs 1,676 crore through the divestment.At present, government holds 72.80 per cent equity in Power Finance Corporation. After sale of 6.60 crore shares representing 5 per cent stake on offer, government's holding will be reduced to 67.80 per cent.PFC is the first disinvestment under the modified OFS rules of Sebi under which companies are allowed to disclose stake sale plans two 'banking' days ahead of the issue.The Department of Disinvestment had approached Sebi in March saying they do not want trading days in-between the announcement and stake sale.Earlier, the companies were required to give an advance notice of two trading days before the OFS, which the government says gave scope for speculators to beat down the share price of the disinvestment-bound PSU.The Department has a Rs 69,500-crore target from PSU disinvestment in the current fiscal, of which Rs 41,000 crore would come from minority stake sale and Rs 28,500 crore from strategic stake sale.As much as 20 per cent of the issue size is reserved for retail investors and 25 per cent for mutual funds and domestic insurance companies.The remaining portion is left for institutional investors, which are usually lapped up mostly by domestic financial institutions and foreign funds.(PTI)
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Looking to augment solar power generation, Madhya Kshetra Vidyut Vitran Co (MPMKVVCL) has inked an agreement with RattanIndia Apna Solar to develop 5-MW grid-connected rooftop solar power projects in Madhya Pradesh.The power purchase agreement (PPA) and project implementation agreement (PIA) with MPMKVVCL was signed in Bhopal to develop 5-MW grid-connected rooftop solar power project in the state."It gives us immense pleasure to partner with the Madhya Pradesh government in its initiative to provide clean and affordable energy to people," Rajiv Rattan, Chairman, RattanIndia Group said after the signing of the agreement on 17 July.RattanIndia Apna Solar won the order through competitive bidding. This is one of the first rooftop solar projects tendered in the country and more are likely to come up very soon.This rooftop solar power project will be executed on about 75 public buildings in cities of Bhopal, Indore and Jabalpur in Madhya Pradesh."Such initiatives would go a long way in augmenting the government's target of installing 100 GW of solar power capacity by 2020. Our company is fully geared up to contribute to the fast-growing solar power sector in the country," he said.RattanIndia is one of the oldest solar power companies and has been implementing such projects since 2011. It is one of the leading players in solar rooftop power projects.(PTI)
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The Indian Union Cabinet on Thursday approved a power transmission project worth Rs 8,548.68 covering seven states including Andhra Pradesh, Gujarat and Maharashtra. The Cabinet Committee on Economic Affairs (CCEA) has approved the creation of a transmission system in these states that will also covers Himachal Pradesh, Karnataka, Madhya Pradesh and Rajasthan at an estimated cost of Rs 8,548.68 crore, an official release said. The project will have central contribution from National Clean Energy Fund (NCEF) of Rs 3,419.47 crore (which is 40 per cent of the total estimated cost of project). The activities envisaged under the project include establishment of 48 new Grid sub-stations of different voltage levels with total transformation capacity around 17,100 MVA (Mega Volt Ampere) by installing over 7,800 ckt-kms (Circuit Kilometers) of transmission lines in these seven states. The project is proposed to be completed within 3-5 years. The cost on creating intra-state transmission system is proposed to be met through KfW loan (40 per cent of the total cost), NCEF grant (40 per cent of the total cost) and the remaining 20 per cent as state contribution, the statement said. These states are rich in renewable resource potential and large capacity renewable power projects are planned there. Creation of an intra state transmission system will facilitate evacuation of renewable power from generation stations to load centres, it added. Government has planned to have 175 GW of power generation from renewable energy sources by 2022, which includes 100 GW from solar, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydro power.(PTI)
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Salzer Electronics Limited has entered into a technical licensing agreement with Austria-based Trafomodern Transformatorengesellschaft M.B.H.Salzer will use Trafomodern’s technology and design and assistance to manufacture dry type air cooled transformers, Chokes and inductors in India. Dry type transformers is a highly specialised and technical product with applications in Medium & large UPS, renewable energy business, railways, power generation and the marine industry.The cost of the project is around Rs 22 crore excluding the land as the company has surplus land adjacent to its existing land.R. Doraiswamy, Managing Director, Salzer Electronics Ltd said, “Using Trafomodern's technology, we will start manufacturing of dry type transformers in India for our customers here and abroad. Currently, there are very few companies that manufacturer this product in India and most of our customers have to import these transformers.Trafomodern is one of the leading manufacturers of dry type transformers in Europe.Salzer will market this new product in energy management (UPS), Metro Rail, Solar Energy, Wind Energy, Industrial Segment and Marine. The estimated business value in UPS is $250 mn and the estimated business potential in solar/wind energy is $200 mn."Our customers have indicated that they would source the dry type transformers from us, once we start making them.” Doraiswamy added.
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Commercial buildings waste up to 30 per cent of the energy they consume. BW Businessworld caught up with Amarjeet Singh, co-founder and CTO of Gurgaon-based energy analytics startup Zenatix on five simple ways to make your office space energy efficient.1. If there are “deferrable” loads, for instance the water motor that can be operated at any point of the day, then ensure that they operate during off-peak hours so you pay less for these loads.2. Ensure that your air conditioning starts in the morning at the right time so as to precool the building to the right temperature by the time office starts. If the air conditioning is started much earlier than office start time it is a waste of energy and precooling later than start time compromises on the comfort factor of the employees.3. Have a flexible seating plan in the office so that during weekends or late evenings when there are a relatively less number of people working in the office they can sit in the same area, using light and air conditioning only around that space and not of the whole building or office floor.4. Switch off your appliances from the plug when not in use. Desktops/printers running in sleep mode during night time, TV/set-top boxes plugged in and not switched off from the plug consume significant energy.5. Quickly shift from diesel generator to grid supply as soon as the electricity supply is restored after a power cut. Running your diesel generator for even a few extra minutes can cost you a lot to your company.
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