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October 2014

Volume 3 | Issue 6 | `100

www.InfralinePlus.com

The Complete Energy Sector Magazine for Policy and Decision Makers

Modi govt prepares blue print


for Solar Power industry

Supreme
Court scraps
allocation of 214 coal
blocks out of 218

Changing Paradigm in
Indo-China
Business Relations

S L Rao Narendra Taneja SP Kansal R N Nayak


former Chairman energy cell convener CEO-Coal Division, Chairman & MD
CERC at BJP Videocon Industries Ltd Power Grid Corp

The current model of We are committed to All allocations of natural The JVs with steel
power generation is transforming the Indian resources should be companies will be for
broken, with inefficient energy sector to global made through open manufacturing of tower
utilities standards auction parts
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Ava iscoun
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Bird Till r,
th Oct
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9
2014
2nd Annual Conference on
Shale Gas: Critical Technologies for
Successful Projects
5th November, 2014, Hotel Royal Plaza, CP, New Delhi

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Interestingly, exploration of unconventional resources such as shale gas in India would one of the top agendas for discussion
when PM Narendra Modi visits the US later this month. The US has emerged as the worlds leading producer of shale gas
and energy efficient India, which has taken preliminary steps towards mining such hydrocarbons, needs technology to
drive exploration. According to preliminary reports, India has huge shale gas deposits in coastal state, Assam, Gujarat and
Rajasthan, among others. But no work has been done to verify the exact potential in India
It is in this context , the 2nd Annual Conference on Shale Gas: Critical Technologies for Successful Projects is being
organized and will take place on 5th November 2014 at Hotel The Royal Plaza, New Delhi.

For more details and to get registered,


Contact Details:
Ankit Gupta, InfralineEnergy Monika Mongia, InfralineEnergy
Mobile: +91 9718944234 Mobile: +91 8800550580
Email: ankit.gupta@infraline.com Email: monika.mongia@infraline.com
InfralinePlus
The Complete Energy Sector Magazine for Policy and Decision Makers
October 2014 | Volume 3 | Issue 6

Editorial

Editors Letter Shashi Garg, Editor


Neeraj Dhankher, Deputy Editor
The sight of industry unequivocally supporting
News Team
governments initiatives has not been a common
scene especially in the recent past. But Prime Pankaj Bhagat
Minister Narendra Modis Make in India Ankit Bhatnagar
initiative saw industry brimming with renewed Analysts
vigour to surpass neighbouring China and Ashima Tyagi
become the global manufacturing hub. Industry Prerna Singh
titans including Reliance group Chairman Gaurav Sharma
Mukesh Ambani, Tata Group Chairman Cyrus
Pallonji Mistry, Chairman of the Aditya Birla Content Consultants
Group, Kumar Mangalam Birla came forward to StratSol Consultancy
extend all possible support to make this dream
come true. To achieve sustained healthy single digit growth, any nation Design
needs robust manufacturing industry. We bring you a detailed analysis www.solutionsfaktory.com
of how India can achieve the ambitious goal considering the fact that
at present manufacturing only contributes 17 percent of countrys GDP.
Our cover story offers a detailed account of what went wrong in coal
blocks allocation and what future lies ahead of India on account of
energy security. In one of the strongest verdict delivered in the history of Business Development
India, the Supreme Court showed no mercy and scrapped allocations
of 214 coal blocks out of 218 allocated since 1993. The bench observed Manoj Narang, Director
Tel.: 0120-4979706
that the Screening Committee has never been consistent, and there Email: manoj.narang@infraline.com
was no proper application of mind in allocating coal blocks. Do read.
We have had a turbulent relationship with neighbouring China, yet Advertisement
we find ourselves enamoured by the rapid progress the dragon land Rakesh Ranjan
has made in last few years. Our team has attempted to analyse the Tel.: 0120-4979757
importance of President of China Xi Jinpings India visit. Why is the visit Mobile: +91 9560626589 1
important for India and how can India benefit from Chinese firms which Email: rakesh.ranjan@infraline.com
have superb ability to build large projects, including nuclear-power
stations, new cities and railways. A growing India needs a competent Circulation & Subscription
partner. Will China be the partner, our country needs? Our story will help Nupur Bhardwaj
you find answers to these questions. Tel.: 0120-4979772
Mobile: +91 9953226526
In the Renewable Energy section, we share insight as to how would Email: nupur.bhardwaj@infraline.com
India help ailing local manufacturers use their idling capacities and get
more orders under mandatory local content purchase rules. Our article
gives a detailed account of the plans that are underway to increase the
solar-power target under the solar mission.
Our OffBeat section shares with you initial glitches in Vistaras launch. Form IV
The new airline is likely to miss the Diwali deadline - the peak season Periodicity of its Publication: Monthly
for air travel in the country when airlines are known to mint money. The Printers / Publishers /
Mrs Shashi Garg
launch has been pushed back by at least two months as a number Editors / Owners
of regulatory clearances are yet to come. Our wait perhaps stretches Nationality Indian

little longer when we get a taste of the renowned hospitality of the Tata Address
14-D, Atmaram House, 1, Tolstoy Road
New Delhi - 110001
Group and Singapore Airlines.
14-D, Atmaram House, 1, Tolstoy Road
Place of Publication
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Name and address of individuals who own the newspaper and partners
or shareholders holding more than one percent of the total capital Owner:
M/s Infraline Technologies (India) Private Limited, 14-D, Atmaram House,
SHASHI GARG 1, Tolstoy Road, New Delhi - 110001
Managing Director and Editor Shareholders holding more than one percent of total Capital of the
InfralineEnergy Research and Information Services owner Company
1. Mrs Shashi Garg, 60, Siddhartha Enclave, New Delhi-110014
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Registered Office Branch Office
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Signature of the Publisher
October 2014
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InfralinePlus

Contents
Editors Letter
1

Cover Story 43
Will SC verdict on coal
blocks ruin the power
sector?
The countrys highest court said
control over almost all coal blocks
allotted since 1993 will have to
be returned, saying they were
granted illegally. The decision
could aggravate a coal shortage in
the country. The cancellation puts
at least $47 billion of investments
in such industries as power, steel

43
and aluminum at risk

Power Coal
4 30
News Briefs: National p4 News Briefs: National p30
News Briefs: International p5 News Briefs: International p31
In Depth: India, China Redefining ties in Trade, In Depth: Power crisis may increase as SC
Infrastructure p6 scraps coal blocks allotment p32
In Depth: Power grid eyeing Joint Ventures for
next round of growth p10 In Depth: Coal block de-allocation leads to
$10-12 billion bad loans p34
In Depth: US, India agree to cooperate on
major issues facing the two nations p13 Expert Speak: SP Kansal, mining engineer working
In Depth: BSES develops cloud based Consumer with Coal Division, Videocon Industries Ltd p38
Portal to help save energy p14 Statistics p41
In Conversation: Chintan Soni Chief Executive
Officer, Ecolibrium Energy p16
Expert Speak: Ms. Ashima Tyagi, Senior Consultant
Metals and Mining, InfralineEnergy p18
In Conversation: Bruce Davis, Sales-Director
Power Generation, Wyman-Gordon p21
Expert Speak: Lajpat R. Shrivastav CEO, Topics Covered
Jindal India group p24
Statistics p28 Corruption in block allocation
Banks exposure in energy sector
Topics Covered
Transmission and distribution network Coal imports
Power crisis Coal mining

Cover Design by: www.solutionsfaktory.com


October 2014
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Oil and Gas Renewable


48 64
News Briefs: National p48 News Briefs: National p64
News Briefs: International p49 News Briefs: International p65
In Depth: ONGC puts in place new In Depth: Clean energy revolution,
tendering process p50 the buzzword p66
In Depth: BJPs roadmap for Indias In Depth: With govt efforts underway
energy sector p54
Solar Power gets a new lease of life p69
Expert Speak: Madhura Joshi - associate fellow,
and Anjali Ramakrishnan - research associate In Depth: Modi launches mega initiative to make
at TERI p58 India a global manufacturing hub p71
Statistics p62 Statistics p73

Topics Covered Topics Covered


Hydrocarbons Solar technology 3
LPG, Kerosene subsidies Domestic manufacturing industry
Gas price
Anti-dumping duty

Expert Speak / In Conversation Off Beat 75


Vistara set to miss October-launch date

Lajpat R. Shrivastav Chintan Soni


CEO, Jindal India group Chief Executive Officer,
Ecolibrium Energy

75
Anjali Ramakrishnan Bruce Davis
Infrawatch
Research associate, TERI Sales-Director, Power Generation Policy push to stalled road projects p79
Wyman-Gordon
October 2014
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NewsBriefs | Power National


4000Mw Pudimadaka power plant Bharat Heavy Electricals 900 Mw Upper Karnali Hydro Power Project
Project to get fast-track status Telangana govt awards two EPC contracts GMR Group signs PDA with Nepal

The first mega investment cleared by the Andhra The Telangana government has awarded contracts GMR Infrastructure Ltd., said is Group had signed
Pradesh after bifurcation 4000 MW power plant by for 800 MW Kothagudem project and 1,080 MW the Project Development Agreement (PDA) for the
NTPC at Atchutapuram, about 40 km from here will Manuguru unit to Bharat Heavy Electricals Ltd 900 MW Upper Karnali Hydro Power Project with
get fast-track project status. After 1200 acres allotted (BHEL). Chief Minister K Chandrasekhar Rao agreed the Government of Nepal. The agreement, which is
to the power major with the issuance of GO on to give the EPC (Engineering, Procurement and a major milestone for the project, was signed after
September 4, which is under possession of APIIC, Construction) contract on the request of top BHEL due approvals of the Board of Investment Board
NTPC is hopeful of commissioning the entire project officials, including CMD B P Rao; Director (Power) of Nepal and the Cabinet of Govt. of Nepal. The
using super critical technology within five years. Atul Sobti and Executive Director (Marketing) S Upper Karnali Hydro Power Project was awarded to
Chief Minister N. Chandrababu Naidu has instructed Gopalakrishnan, who called on him at the Secretariat, the GMR Group on BOOT basis. The project, with a
the officials to accord all clearances without any a CM office statement said. The Chief Minister said capacity of 900 MW, is being developed as an export
delay. Sources said the project would involve a total the execution has to be time bound and targeted. oriented project, to be constructed in a period of
investment of `20,000 crore. around five years.

Hinduja power plant Hydro Power Project Kalinga Power


NTPCs 520 Mw first unit ready Jaiprakash, Reliance Power call off deal Drops `65 billion project in Odisha

The steam blowing activity of 520 MW unit of Jaiprakash Power Ventures attempts to monetise Kalinga Energy & Power Ltd, a subsidiary of Kolkata-
Hinduja National Power Corporation Ltd was made its hydro power assets to cut debt have fallen flat based Shyam Group, has withdrawn is its 1,320 Mw
successfully at Palavalasa. With this the stage is set again after Anil Ambanis Reliance Power terminated coal-fired power plant proposal in Odisha, citing
for commissioning of the first unit. The coal-fired discussions to buy the assets for around 12,300 delays in obtaining financial closure for the project.
power plant has two units each with a capacity crore. The deal was called off a day before the Following the companys request, Odisha Industrial
of 520 MW. Steam blowing activity is a process exclusivity of the memorandum of understanding Infrastructure Development Corporation (Idco) has
of cleaning of pipelines from boiler to turbine by between the two companies expired. The assets asked the Collector of Jharsuguda to stop land
passing steam at high pressure and temperature. were the 300-MW Bapsa II and 1,091-MW Karcham acquisition process for the power plant developer.
This will be the second power plant in the district. Wangtoo projects in Himachal Pradesh and the 400- The client company has submitted withdrawal
NTPC Simhadri Super Thermal Power Station at MW Vishnuprayag plant in Uttarakhand. proposal for the private land measuring 120.85
4 Parawadasupplies 1,000 MW from stage-I and 33 acre because of the delay in implementation of
per cent of 1,000 MW from stage-II to Andhra. their project.

6,720 MW Pancheshwar project Zambia 75 MW hydropower plant


Nepal, India approve charter Signs 300Mw power agreement with GMR Alstom bags contract from Vietnam

In a very significant development in the power Zesco Ltd., producer of most of the electricity used Engineering major Alstom has bagged a contract
cooperation sector, Nepal and India have agreed to by Zambian copper mines, signed a power-purchase worth around 13 million from Electricity of Vietnam
develop the much touted bi-national Pancheshwar agreement with the local unit of Indias GMR Group, for the extension project of the Thac Mo 75 MW
Multipurpose Project and endorsed the charter for the African nations Mines Minister Christopher hydropower plant in the country. The aim of this
the Pancheshwar Development Authority. With the Yaluma said. The agreed tariff with EMCO Energy project is to increase peak load capacity to support
signing of the charter for the PDA, the two sides have Zambia will be in the range of Zescos deal with the existing 150 MW Thac Mo power station with 75
renewed hopes of the 17-year-long bilateral project Maamba Collieries, the Nava Bharat of India unit MW of additional power, Alstom said. The scope of
being implemented. The project has an installed thats building a 300-megawatt coal plant in the the contract includes design, manufacturing, testing,
capacity of 6,720 MW and is expected to be a boon country, Yaluma said in an interview in Lusaka on supply, erection and commissioning of electro-
for development of Nepal and northern India. The Sept. 18. The GMR units 300-megawatt coal-fired mechanical equipment, consisting of one vertical
multi- billion-dollar projects costing will be revised plant will cost about $700 million, Chief Executive Francis turbine of 75 MW, generator, control systems
after a cost analysis later. Officer Ajit Mishra said by phone. and electrical balance-of-plant equipment.

Power Grid Connectivity Larsen & Toubro Power Transmission Scheme


Cabinet clears agreement with Nepal Wins `18.85 bn order from NTPC Govt okays `47.54 billion for Arunachal, Sikkim

The government cleared the agreement on power L&T-MHPS Boilers Private Ltd, a joint venture between The government approved a scheme for
grid connectivity with Nepal which will facilitate and Larsen & Toubro Ltd and Japans Mitsubishi Hitachi strengthening power transmission in Arunachal
strengthen cross-border electricity transmission, Power Systems, secured an order worth `1,885 crore Pradesh and Sikkim at an estimated cost of
grid connectivity and power trade between the two from NTPC. The contract includes setting up of two `4,754.42 crore. The CCEA approved this scheme.
countries. The Union Cabinet gave its approval for units of 660 MW each supercritical steam generators The intra-state transmission and distribution
the India-Nepal Agreement on Electric Power Trade, for Tanda Thermal Power Plant Stage-II on an systems in the North-Eastern states are very weak.
Cross-Border Transmission Interconnection and Grid engineering, procurement and construction basis. This Presently, 5 out of 20 districts in Arunachal Pradesh
Connectivity, said an official statement after the is LMBs first order for supercritical steam generators are connected to the transmission network, a
meeting of the Cabinet. from NTPC. The order was won through competitive statement said. The project would be implemented
bidding involving several national and international by Power Grid with its consultancy fee of 12 per
players. The project is scheduled to be completed in cent of the execution cost. After commissioning, the
46 & 52 months for the units. projects would be owned, maintained by the state.
October 2014
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International
4800Mw Medupi power plant 1320Mw coal-fired power plant Brazil
S.Africas Eskom to start plant on Dec 24 Dhaka-Kuala Lumpur to sign deal Suspends auction of 6.1GW hydro plant

South African state-run power utility Eskom said the Dhaka and Kuala Lumpur are finally set to sign a The Brazilian government has suspended the auction
first unit of its new coal-fired Medupi plant would Memorandum of Understanding for setting up a of the 6.1 GW So Luiz do Tapajs hydroelectric
link up with the grid on December 24, a clear signal 1320-MW coal-fired power plant in joint venture plant earmarked for December. The Mining and
that the much-delayed project is finally on track. on Monday. As per the proposal, a consortium of Energy Ministry cited a need for changes to a
Eskom has never given a precise date for when Malaysian state-owned Tenega Nasional Berhad and study into the impact on indigenous communities,
Medupi would synchronise with the grid, beyond Powertek Barhad and Bangladeshs state-owned according to state media service Agncia Brasil.
saying it would do so by the end of 2014, a full year Power Development Board will set up a joint-venture A new date for the auction was not given. The
after its previous deadline. Eskom says that when company on 50:50 equity basis at Maheshkhali, announcement comes a day after environmental
plant is fully operational, the unit will feed almost Chittagong. Bangladesh and Malaysia earlier lobby group Amazon Watch accused Brazil of
800 MW to the grid and when the other five units agreed to implement the project at Maheshkhali, flouting international law by failing to properly
come online, Medupi will generate almost 4,800 and a contract was supposed to be signed in consult local communities about the project.
MW of power. October last year.

Tanzania Siemens Sembcorp


IPTL signs 2,000mw power contract Wins Suez power plant contract Inks power plant deal with China

A grand power project to benefit both Tanzania Siemens has received an order to supply, install and Sembcorp Industries has signed a joint venture
and Kenya will be implemented by the Pan African commission major electrical components for the deal with a state-owned enterprise in China in a bid
Power Solution, with its subsidiary company the East Delta Electricity Production Companys Suez to grow its energy business there, it said. The deal
Independent Power Tanzania Limited. Completion Thermal Power Plant in Egypt. The oil-fired thermal involves investments in coal-fired power plants in
of logistical arrangements follows conclusion of power plant is located at Suez is located on the Chongqing, a city in south-west China. Sembcorp
discussions and an agreement between the company north coast of the Gulf of Suez, on the Red Sea. The will buy a 49 per cent stake in an existing plant
administration and the Kenyan government for scope of Siemens supply covers the whole electrical owned by Chongqing Songzao Coal and Power,
production of 2,000MW. Confirming immediate package including key electrical components such a unit of Chongqing Energy Investment Group.
plans for implementation of the project in Dar es as an uninterruptable power supply and all types of Chongqing Energy Investment Group is owned by the
Salaam, Kenyan Petroleum and Energy Principal cables. In addition, Siemens is responsible for the Chongqing municipal government and is the largest
Secretary, Eng Joseph Njoroge said a letter of installation, testing and commissioning of equipment energy production and supply group in the huge city, 5
agreement was signed on August 19, 2014. supplied by EDEPC. which has a population of about 30 million.

United States Nigeria Zimbabwe join hands with China


To provide $1m aid for power plant in Pakistan IFC, others commit $400m to power generation Inks MoU for $4bn energy deal

The United States will provide $1 million grant to The International Finance Corporation, Lafarge Energy secretary Partson Mbiriri signed a
Khyber Pakhtunkhwa for feasibility of a 400-435 Nigeria Limited, and Wartsila Development and memorandum of understanding with a Shanghai
megawatt gas fired electricity plant in the province. Financial Services Company based in Finland have Electric (Shanghai)-led group for electricity
An agreement in this regard was singed by US concluded arrangement to construct 260MW power generating projects countrywide. This comes as
Consul General in Peshawar Escobar Gabriel and plant in Ewekoro in Ogun State. The cost of the Zimbabwe grapples with an acute power shortage
general manager, thermal of the Pakhtunkhwa Hydel project put at $400 million, according to the Minister and the consortium has unveiled plans for the
Development Organisation Syed Zainullah Shah. It is of State for Power, Mohammed Wakil is borne out construction of a $4 billion coal-fired plant in north
the first-ever US-Pakistan energy related partnership of the realisation that a lot of resources would be western Zimbabwe. Shanghai chairman Zheng
in Khyber Pakhtunkhwa, according to a press release required in the power sectors new direction, which Jianhua said that the plant will begin at a 300 MW
issued by the US Consulate. is private sector driven. capacity and increase to 1 200 MW, and beyond as
the phases progress,.

Nigeria Britains 19 bn euro nuclear plant Bangladesh


Lafarge to build $400m power plant EU regulators set to clear project To come up with second Nuclear power plant

African cement giant, Lafarge Africa has partnered European Union state aid regulators are set to State Minister for Science and Technology Yeafesh
with the IFC and Finnishs Wartsila manufacturing approve Britains 19-billion-euro plan to build a Osman has said that a nuclear power plant will be
company to build a 220 megawatts gas-fired power nuclear plant with French utility EDF, several people set up in Labanchhara in south-western district
plant in Nigeria. The plant will cost an estimated familiar with the matter said. The case is important of Khulna. He said the Chinese government has
$400 million. This will enable Lafarge to more than for Britain, which wants to replace a fifth of its ageing shown their interest to build the nuclear power
triple the power output in its Ewekoro power plant in nuclear power and coal plants over the coming station in Bangladeshs south-western region. The
Nigeria and also give about 1.4 million households decade, and for France, whose nuclear sector would government has already taken a decision to establish
access to electricity in a country of about 170 benefit from the major export contract. Other EU the countrys second nuclear power station in Khulna
million people. The project is Lafarges first major countries such as Germany, which is phasing out and Labanchhara has primarily been selected as the
outlay since the merger of its South African and nuclear energy, and pro-nuclear Lithuania and Poland site of the plant, he said.
Nigerian assets to form Lafarge Africa. are also following the case for guidance on the level
of state aid allowed for such projects.
October 2014
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InDepth
India, China Redefining ties in
Trade, Infrastructure
China promised India cooperation in developing industrial parks, railways & smart cities
Chinese firms have superb ability to build large projects

Chinese President Xi Jinping, with Prime Minister Narendra Modi spins charkha at Sabarmati Ashram in Ahmedabad

Infraline Bureau

Cultural exchanges and trade through to play down mutual problems and China together amount for 10 per cent of
the Silk Route dominated the emphasise on prospects for economic world exports.
relationship between Indo and China cooperation, while at the same time Chinas infrastructure firms have
since time immemorial. In the 1950s, bluntly warning Indias northern superb ability to build large projects,
Indias first Prime Minister Jawaharlal neighbour that small incidents (border including nuclear-power stations, new
Nehru embarked on a political skirmishes) can impact bilateral ties. cities and railways. PM Modi who
relationship with China, based on the During 1991-2010, while the unlike his predecessors is giving much
five principles of peaceful co-existence world economy grew at 2.7 per cent, more emphasis on business diplomacy
(Panchsheel). But the association China and India grew at 10.5 per cent seems to have grasped Indias gains in
between the two powerful Asian giants and 6.5 per cent respectively despite trade tie-ups with China. To take Indias
soured in the 1960s, and a war ensued the economic slowdown. With large economy on a rapid growth path, he
over border issues. Six decades later, domestic markets, rising middle class is thus looking for foreign capital and
Prime Minister Narendra Modi wants and high investments, today India and technology both from the West and East.
October 2014
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Overseas investments by Chinese investment, infrastructure development, equipment and expansion of Reliances
firms can be seen in every sector and in energy conservation and environment 2G and 3G networks. Several other
every form; although the takeover bids protection, high-tech industry, clean MoUs were also signed in sectors such
of publicly listed targets by Chinese energy and sustainable urbanisation. The as wind energy, seafood, chemicals,
majors only make headlines. Having SED will also explore designing joint cotton and pharmaceuticals.
the worlds largest forex reserves of demonstration projects and initiatives in Wang Hejun, Economic Counsellor,
$3.95 trillion, China has plans to invest smart cities. Chinese Embassy said, These
$500 billion overseas in the next five Deals worth $3.43 billion were agreements are an effort by our
years, and India undoubtedly is an signed between Indian business houses companies to address the issue of trade
attractive destination. and the Chinese business delegation deficit. Besides, with our expertise in
The New York Times wrote recently, accompanying the President. Indias infrastructure development, China wants
China has the ability to channel billions domestic low-cost carrier IndiGo to cooperate with India in developing
of dollars into Indian infrastructure and Airlines signed a $2.6 billion deal with its infrastructure. It may be noted that
manufacturing projects, allowing Mr the Industrial and Commercial Bank of trade deficit between India and China
Modi to pursue the jobs-creation agenda China (ICBC) for leasing and financing was $36.2 billion in 2013-2014. While
that was at the heart of his campaign. 30 aircraft. Reliance Communications India exported goods worth $14.8
signed two memorandums of billion, its imports stood at $51 billion.
President Xi Jinpings understanding (MoUs) worth about
India visit $150 million each, with Chinese Enhancing Cooperation in
The Indian Prime Minister and Chinese telecommunications firms ZTE and Infrastructure
President Xi Jinping met for the first Huawei Technologies, respectively, for Chinas investment in infrastructure
time in June this year on the sidelines is $3,228 billion (more than 31 times
of the sixth BRICS (Brazil, Russia, of India). Similarly, its investment in
India, China, South Africa) Summit, China has plans to logistics is 13 times more than that 7
which was followed by Chinese Foreign of India ($1,241 billion). According
Minister Wang Yis visit to India the
invest $500 billion to reports, India will need $1 trillion
same month. Commerce and Industry overseas in the next for investments in infrastructure as
Minister Nirmala Sitharaman had also five years, and India per the Twelfth Five Year Plan and is
visited Beijing in June and firmed up undoubtedly is an certainly looking at China as a potential
many investment plans. partner. China has also shown interest
The investment plans took a concrete
attractive destination for investing in Indias railways, roads,
shape as Chinese head of the state came
on a visit to India this September. India
and China inked 12 pacts in a range
of areas including railways and outer
space as Beijing promised investments
of $20 billion over five years, though
there was an anticipation that China
would swear investments of $100 billion
in India. Nevertheless, the Chinese
President Xi Jinping said that China
would invest billions of dollars over the
next five years in railways, industrial
parks and nuclear power in India. We
(India-China) can bring prosperity to
Asia, and we can create opportunities
for the world, said Xi Jinping during
the ceremonial welcome at the
Rashtrapati Bhawan.
The leaders dispensed the Strategic
Economic Dialogue (SED) to explore
new areas for collaboration in industrial
October 2014
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InDepth

telecom, nuclear and solar power, ports help develop a more broad-based and Energy
and river-linking plans. sustainable economic partnership. Cooperating on promotion of the use of
China is building a 3,200 km clean energy, India and China expressed
highway project from its north-east to Railways unanimity that expansion of civil nuclear
Thailand through Myanmar. This will China agreed to develop and upgrade the energy programmes is an essential
complement its effort to build a road 640 km railway line between Bangalore component of national energy plans to
link to Bangladesh through Myanmar. and Mysore (through Chennai). The ensure energy security. There will be
China has plans to link Nepal by the leaders agreed that India and China bilateral cooperation in civil nuclear
Qinghai Tibet Railways, which would will cooperate to identify the technical energy in line with their respective
help to do away with the geographical inputs required to increase speed on international commitments, including
barrier among South Asian countries the existing railway line from Chennai working level consultations between the
because of the Himalayas. Further China to Mysore via Bangalore; China will Department of Atomic Energy of India
has plans to double its high speed rail provide training in heavy haul for and the China Atomic Energy Authority.
network to about 16,000 km by 2020 100 Indian railway officials; the two
and also plans to sell its high speed countries will cooperate in areas such Smart Cities
trains globally. Today, it has the fastest as redevelopment of existing railway Agreements on establishing a
passenger train in the world (486 kmph). stations and establishment of a railway provincial partnership between
All this are indicators that India can university in India; and India will Gujarat and Guangdong Province
greatly benefit from Chinese technology. actively consider cooperating with the and Sister-City relationships between
Several avenues of cooperation Chinese side on a high speed rail project. Mumbai-Shanghai and Ahmedabad-
in infrastructure development were Guangzhou were signed. According to
discussed between the leaders of both the agreement, a city or state from one
countries. Those include: country will have close ties with a state
India and China inked in the other country.
8
Industrial Parks 12 pacts in a many
China announced the establishment of areas, including Disaster Management
two industrial parks in India, one in railways and outer India admired China for providing
Gujarat and one in Maharashtra. Both flood-season hydrological data and the
countries agreed to facilitate companies space and Beijing assistance in emergency management.
of the other country to invest and promised investments Expert-level mechanism on the
operate in their country. The two sides of $20 billion in India provision of flood-season hydrological
will work together to forge production over five years data and emergency management, and
and supply chain linkages, which will exchange views on other issues of
mutual interest was decided upon.

Tourism
The leaders decided to designate 2015
as the Visit India Year in China and
2016 as the Visit China Year in India.
Under this, the two sides will carry out a
series of promotional activities to boost
two-way tourism flows and strengthen
people-to-people bonds. China also
decided to open a new route through the
Nathu La Pass for the Indian pilgrims
going on Amarnath Yatra.

Measures to Boost
Economic Ties
The two countries have set up a services
trade promotion group for greater
market access and job opportunities for
October 2014
www.InfralinePlus.com

partner excluding European Union,


Hong Kong and ASEAN. At present
Chinese projects worth more than $60
billion are being implemented in India.
It is a fact that Chinas economy is
now four times the size of India and
Beijing sees the United States and not
India as its competition. But areas of
economic cooperation are too many. If
India is increasingly importing Chinese
electrical and telecom equipment, China
too has a huge population with large
purchasing power which gives scope
for Indian industry to gain from the
Chinese market. There is tremendous
scope where India and China can
make use of each other in taking their
economies further. Hindi-Chini can
professionals in both countries through a Commerce, bilateral trade between India certainly be bhai-bhai eyeing success in
relaxed visa regime. and China is expected to go up to over business together.
In the financial services sector, China $80 billion by March 2017. Since 2008,
also plans to offer credit lines worth China is Indias biggest partner, while
billions of dollars, through EXIM Bank India is Chinas fifth largest trading For suggestions email at feedback@infraline.com
of India. Bank of China, Chinas state- 9
owned bank, is also likely to open a
branch in Mumbai.
The two countries are looking
Shree Cement Ltd
into the progress made in promoting (Category-I Interstate Electricity Trading Licensee)
cooperation under the framework of One Stop Solution for Electricity trading
the BCIM (Bangladesh, China, India, Shree Cement accorded with AAA rating, by CARE Rating Ltd.
for exemplary operating and financial parameters. Contact us:
Myanmar) Economic Corridor and
also agreed to hold the Seventh India- Our prologue in power business segment Mr. S. S
Category I Interstate power trading licensee Khandelwal
China Financial Dialogue in New Trading cum clearing member on both Exchanges IEX & PXIL
One of the fastest growing power trading company (Company Secy)
Delhi this year to enhance cooperation +91 9214337406
Rich experience in Power Advisory & Consulting services
between Indian and Chinese financial blended team of highly experienced & young dynamic professionals Mr. Amarjit Singh
regulators. Both countries have agreed Wide spread clientele spanning across region and industrial segment
Own Power Generation of 597 MW in which 400 MW is sold in the market (General Manager)
to initiate a dialogue mechanism The prime offerings of SCL as power trading licensee include: +91 9214775894
between the Department of Economic Sale / Purchase of Power/REC through Power Exchanges either on Mr. Chetan Rawat
IEX or PXIL
Affairs of the Government of India Supply of power to HT consumers from Interstate/Intrastate,
(Sr. Manager)
and the Development Research Centre 3rd Party clients +91 9212791234
Retail Sale - Selling Surplus Power from Own Power Plants directly to Mr. Amit Kumar
of the State Council of the Peoples HT Consumers
Republic of China. Advisory services for availing Open Access and complete power (Sr. Manager)
portfolio management +91 9212655595

Looking Ahead Our clientele


According to a knowledge paper
prepared by KPMG, India-China
bilateral trade is likely to reach $100
billion by 2015. Being two large
economies with rising domestic demand, Shree Cement Limited
Delhi Off: 114, Hans Bhawan, 1, Bahadur Shah Zafar Marg, New Delhi - 110002
India and China have tremendous scope Jaipur Off: Shree Corporate Tower, SB-187, IVth Floor, Opp. Rajasthan University,
of leveraging from each others markets. JLN Marg, Bapu Nagar, Jaipur - 302015
Email: powertrading@shreecementltd.com, shreepowertrading@gmail.com
As per estimates by PHD Chamber of
October 2014
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InDepth
Power grid eyeing Joint Ventures
for next round of growth

10

Investing in new technologies in the field of Transmission, Smart Grid, and Energy Efficiency
Has set up centralised monitoring system for better operations, maintenance of sub-stations

Infraline Bureau

Envisaging an all round inclusive facilities and also for manufacturing Nayak further said adding that it has
growth, Power Grid Corporation of transmission line conductor and also signed MoU with Delhi-Mumbai
India, leading power transmission Polymer Insulators companys Industrial Corridor Development
company in the country is looking at Chairman and Managing Director Corporation Limited (DMICDC) &
strategic alliances with prime steel R N Nayak said. Gujarat Industrial Corridor Company
manufacturing companies to achieve Moreover, the Company is actively (GICC) to form a JV to undertake
backward integration for manufacturing involved in implementation of a Solar development of transmission and
key transmission products as well Power Project of 4000 MW, in phases, communication network including
as successfully competing in the beginning with 1000 MW in first phase, smart grid and other associated
Tariff Based Competitive Bidding through a JV with strategic partners system at Dholera Special Investment
(TBCB) regime including export of for development of its transmission Region in Gujarat.
quality products. infrastructure. Formation of JV Power Grid has established two
The JVs with steel companies will for development of pilot off-shore JVs with States of Bihar and Odisha
be for manufacturing of tower parts wind project and its transmission for developing subtransmission
including research & development infrastructure is also envisaged, Mr projects in these States. In addition,
October 2014
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discussions are under progress with Camera has been introduced for the first Indian Grid. It includes installation of
other States for development of their time in the country by the company. more than 1700 Phasor Measurement
sub-transmission system. Moreover, the company is setting up Units (PMU) at all inter-State and intra-
POWERGRID Advance Research & State extra high voltage substations,
Initiatives for future Technology Centre (PART) at Manesar which will have milli second (msec)
preparedness complex at a cost of about `200 crore. visualization and real time event
Power Grid is putting continuous The centre is being equipped with multi- monitoring/ analysis tools at NLDC,
efforts in Research, Development disciplinary advanced RD&D facilities RLDCs and SLDCs.
and Demonstration (RD&D) of and shall be operational in the current In the distribution area, upon
new technologies in the field of financial year. successful implementation of Pilot
Transmission, Smart Grid, Energy Smart Grid project at Puducherry
Efficiency, Quality Power, which are b)Smart Grid covering various attributes of
key to sustain the leadership position. Recognizing the need and utility Smart Grid viz.
Some of the initiatives taken with a of Smart Grid in the country in the Advanced Metering Infrastructure,
view towards long term sustainability entire electricity value chain, Power Outage Management System, Demand
and future preparedness are: Grid has taken pioneering steps in Response, Power Quality Management,
bringing Smart Grid technology. It is Net Metering, Electric Vehicle
a)Technology & Inclusive implementing a State-of-the-Art Wide Integration etc., Power Grid has been
Innovation Area Measurement System (WAMS) as assigned, as an Advisor-cum-Consultant
Power Grid is pursuing for indigenous part of smart transmission for real time for the implementation of a number of
development of 1200kV Ultra-High- monitoring and control of very large smart grid projects in the country.
Voltage AC system, 800kV HVDC It has also filed patent on
system, FACT devices, Gas Insulated Power Grid is putting technological product i.e. Field
Switchgear, 765kV equipment including continuous efforts Programmable Gate Array (FPGA) 11
transformers/reactors, demonstration based Microgrid control and monitoring
of High Temperature Super Conductor
in RD&D of new system in the field of smart grid.
cable system in grid, Superconducting technologies in the Development of four other technological
Fault Current Limiters (SFCL), Large field of Transmission, products is also under pipeline.
Scale Battery energy storage etc. In Smart Grid, With the BJP government bullish on
its quest to achieve fully digitized Energy Efficiency, smart cities, Power Grid is being already
substations, the company is also Quality Power involved in Dholera, Gujarat is also
introducing Process Bus technology. looking forward to getting associated
The companys initiatives of
establishing National High Power Test
Laboratory under Joint Venture (JV)
route and Transmission Line Research
Lab at Bina in central part of India,
to undertake testing of EHV & HV
equipment, are in advanced stage of
completion and will be operational
shortly, a senior company official said.
Towards improvement of operational
performance, Power Grid has
established a State-of-the-Art National
Transmission Asset Management Centre
(NTAMC) at Manesar for centralised
monitoring and control including virtual
manning in operation & maintenance of
the sub-stations.
For monitoring of transmission lines
spread over Pan-India, Helicopter based
aerial patrolling using high resolution
October 2014
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InDepth

in the development of other Smart Grid has also evolved a comprehensive infrastructure of about `4.50 lakh Crore
City projects. integrated plan viz. DESERT POWER for development and grid integration of
INDIA 2050 for harnessing the these renewables.
c) Renewable Integration huge solar and wind energy potential Power Grid has also developed
The company has taken a lead initiative utilizing waste land in countrys desert plan for installation of rooftop Solar
and developed a comprehensive master regions of Kutch, Thar, Lahaul & Spiti Photo Voltaic system for residential,
plan for grid integration of renewable and Ladakh. It envisages a potential commercial buildings, metro stations &
generation capacity addition of about of about 300GW of renewables and tracks and solar street lights for Delhi
33GW, envisaged during the XII Five transmission infrastructure requirement towards sustainability.
Year Plan through Green Energy for its integration with National A comprehensive report Green
Transmission Corridors across India. Grid, balancing and spinning reserve Delhi has been prepared by the
The estimated fund requirement for requirements and challenges in the company covering about 2300
development of Green Energy Corridors area of RD&D as well as indigenous MWp solar capacity and submitted
is about `25,000 Crore comprising intra- manufacturing, etc. The report to Government of Delhi and
state strengthening (~ `12,000 Crore) envisages an investment of about `43.75 other concerned departments of
and interstate strengthening including lakh Crore including transmission Government of India.
control infrastructure (~ `13,000 Crore).
Power Grid has been assigned International
the implementation of Inter-State Power Grid has also interconnections
Transmission System portion of the developed plan for Continuing to strive for development of
scheme, setting up of Renewable installation of rooftop South Asian Association for Regional
Energy Management Centres and Solar Photo Voltaic Cooperation (SAARC) Grid, which
control infrastructure with the funding shall go a long way in harnessing
assistance from KfW/GIZ, Germany
system for residential, resources for mutual benefit, the
12
and the Asian Development Bank. commercial buildings, company has established international
Recognizing the need for increased metro stations & interconnection between India and
transmission capacity to address the tracks and solar Bangladesh through commissioning of
growing penetration level of renewables, street lights for Delhi Bheramara (Bangladesh) - Baharampur
the Company is also developing second towards sustainability. (India) 400kV Double Circuit line along
report of Green Energy Corridor. Power with 500 MW High Voltage Direct
Current (HVDC) back-to-back terminals
at Bheramara, Bangladesh, enabling
power exchange between the countries.
In addition to the existing
interconnections with Bhutan & Nepal,
a 400kV Double Circuit line each
between Bhutan & India and India
and Nepal are under construction,
which will be completed by 2015/16.
With the completion of these lines, the
international power transfer capacity
would be enhanced to over 4,000MW.
Further, feasibility study for HVDC
interconnection through under-sea
cable between India and Sri Lanka is
under finalization.
In the international arena, Power
Grid has emerged as leading global
consultant and has already made foot
prints in 18 countries.

For suggestions email at feedback@infraline.com


October 2014
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InDepth
US, India agree to cooperate on major
issues facing the two nations
Two sides agree to resolve issues on civil nuclear energy cooperation
US in to help India develop smart cities in Allahabad, Ajmer, Visakhapatnam

Infraline News Service

Prime Minister Narendra Modis US


visit was importent for more reasons
than one. After all it was a meeting
of two significant democracies of the
world. In their first Summit meeting
spread over two hours at the White
House, the two discussed a broad
range of issues covering cooperation in
energy economic and space, defence,
security. The significant that the two
sides took was to break the impasse on 13
implementation of civil nuclear deal.
We are serious about resolving
issues on both sides in civil nuclear
energy cooperation. This is important
to India for meeting energy security
needs, Modi said. US President Obama with Indias PM Narendra Modi at a function in the United States
Both of us are committed taking
forward the civil nuclear partnership between Modi and Obama. This is a Missile Technology Control Regime
agreement. We are serious about very major issue for us, he said. and is now ready for the membership
resolving at the earliest issues relating Underlining the fact that India and of Nuclear Suppliers Group (NSG),
to civil nuclear energy cooperation. the US are natural global partners, the a 48-member elite body that controls
This is important for India for meeting official said that the two countries have global nuclear trade.
energy security needs, he said. agreed to extend defence cooperation Obama also reaffirmed US
The two sides are serious about the for another 10 years. India has recently support for Indias membership of
issue and have decided to set up an raised the FDI cap in defence sector the expanded UN Security Council
inter-agency contact group to address to 49 percent from 26 percent earlier. and backed it for voice and vote in
the issues of liability, administrative Modi invited US companies to international financial institutions like
and technical issues. participate in defence manufacturing IMF and World Bank.
We are setting up an inter-agency sector in India. The US will also Furthering Indo-US cooperation on
contact group to be able to resolve cooperate as knowledge partner for terrorism, Prime Minister Narendra
all issues that are outstanding and Indias planned National Defence Modi and President Barack Obama
hindering the rapid deployment of University as well as technology on Tuesday agreed to make joint and
US-origin nuclear reactors in India, partner in the Indian Navy. concerted efforts to dismantle safe
that includes by liability, it includes During the meeting, Modi asked havens for terror and criminal networks
administrative issues and it includes Obama to take steps to ensure easier like LeT, JeM, D-company, al Qaeda
technical issues, Vikram Doraiswami, access to Indian companies in services and Haqqani network.
Joint Secretary in the Ministry of sector in the US markets. While Obama
External Affairs said after the meeting said India meets the standards of the For suggestions email at feedback@infraline.com
October 2014
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InDepth
BSES develops cloud based
Consumer Portal to help save energy

14

To handle the shortage, govt plans to reduce demand by 1000MKW via DSM measures
Cloud based Consumer Portal helps track energy consumption on a real-time basis

Infraline Bureau

Energy costs hit everybody with which is steadily leading to an increase adopting DSM measures.
equal force. Be it home, business, in electricity prices. DSM is a win-win situation for all.
municipality and industry, the multi- Adopting the next generation DSM If implemented properly, it will help
faceted problem has tentacles that measures can help consumers, not only customers reduce their energy bills
reach into every unit. Considering the reduce their energy consumption, but and improve availability of supply.
rising input cost of energy generations, also their power bills For discoms, DSM will reduce stress
BSES has taken up the cause in Speaking on the occasion, on the network, Rajesh Bansal, Vice
partnership with technologists to R.K. Verma, Chief Engineer, President, BSES said.
provide relief to its consumers. Central Electricity Authority said, The company has developed a
Countrys demand for power as been Government has a target for 24X7 cloud based Consumer Portal that
increasing at nearly 6-8% annually, power supply. To handle the shortage, can helps consumers track their energy
Gopal Saxena, Director, BSES said. government has planned to reduce consumption on a real-time basis and
Even the cost of fuel has been rising, demand by 1000MKW in each state by recommend measures that can help
October 2014
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Bank surplus power with BSES and withdraw


at your own sweet will
BSES has also started a new initiative where consumers can bank their surplus power and draw
the same power without any cost. A BSES official responds to InfralinePlus on related issues.
What is the current demand and by consumer. The basic benefit to the help in overcoming this
supply gap in power sector in India consumer is that his/her dependence c) At various places in Delhi, there is no
and how much of it can be plugged on the Grid electricity reduces and in
right of way to lay down additional
by methods currently available to us? many cases, it will be also be cheaper.
infrastructure for distribution.
Presently, the total generation capacity What are the challenges in Distributed Roof Top system is
in India is around 227 GW, out of which, implementing this concept on a wider
one of the solutions to overcome
approximately 28GW is renewable. As scale. As we understand generation
per the forecasted data, the expected of clean power would need huge this constraint.
shortage is around 8 to 10 %. The open spaces, which unfortunately is What is the quantum of gap in the
government has planned to control the not available to many people living best technology available in the
demand using DSM methods at around in metros. Does that mean, this world and what is available in India.
1000MW per state. concept would not see success in How can we optimize drawing of
Kindly share the concept of Power metro cities? power on our investments?
Banking and its advantage. How On the face of it, it looks as if large open
Now the best of Roof Top Renewable
can one generate power from clean spaces are required for solar generation
and that is not available in metro cities. energy generation systems are
resources and bank the same?
But even if we consider the available available in India. MNRE, CEA have
The concept of Net Metering is to already published various standards
popularize distributed generation, which Roof Tops, shed tops, we can expect
substantial generation of power. It is to ensure quality of performance of the
is based on renewable energy at the
important to know that the bulk of power systems. The consumer has to select 15
consumer premises. As a consumer
cannot consume all the power will still be generated from mega plants. the right vendor and technology. This
generated by him/her at all times, Distributed/ Roof Top type of generation will optimize the generation of power,
therefore the surplus generation can be is only to ensure that there is no further commensurate with their investment.
increase in the peak demand.
fed back to the grid. The consumer is, What do you feel should be done
therefore, billed on the net of import and What is the quantum of gap in the to bring the cost of technology
export of energy. Roof Top Solar Energy best technology available in Delhi,
NCR in next two years. How would affordable so that it can be used by
or Micro Wind Mill are a few options, general public for their day to day
which a consumer can opt for, to you quantify the probable benefits?
work? Is government supporting
generate electricity at his/her premises. In around one sqkm area, one can have
upto 60 MW (approx) worth of solar enough to help this cause?
What all benefits would one have
by adopting this idea? Who would systems. Delhi has an area of 1500 We feel as on date the technology
maintain the infrastructure installed sqkm and thus, we can expect plenty is affordable for various categories
for power generation? of Roof Top based Solar generation of consumer. Once there will be an
in the coming days. Following are increase in the volumes and the
For generating power at the consumer few benefits:
end, either Roof Top Solar, Micro Wind government will come out with new tariff
or even a Biomass based (say large a) Generate Clean energy directives and policies, the technology
farm houses ) system can be installed. b) As Delhi power transmission will be affordable without any external
The infrastructure has to be maintained corridor is already congested, it will support/ subsidy etc.

save anywhere between 8-20 percent, the company


The benefits of Consumer Portal recently unveiled the initiative.
Track energy consumption on a real-time basis The Consumer Portal, will actively serve as a
Give alerts on critical parameters bridge between the consumers and the suppliers of
Reduce inefficiencies, prevent leakages and help in renewal energy equipment. This will help consumers
reducing electricity bills take advantage of DERCs guidelines on solar
Give recommendation for reducing energy consumption
power generation and reduce their energy bills in
Energy consumption during various Time of the Day periods
the process.
Monitoring of diesel generators and roof-top solar systems
Comparison of energy consumption with similar type of
consumers For full version of the interview, visit www.infraline.com
For suggestions email at feedback@infraline.com
October 2014
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InConversation
Combating Power Loss with
Ecolibriums Smart Grid
The company which is managing more than 700 MW of power
through its demand side management programme is helping
customers save 5-25 per cent of energy cost and focusing on
energy management solutions, demand response programmes
for distribution companies, and renewable energy integration
in the grid. Chintan Soni, Chief Executive Officer, Ecolibrium
Energy, in an interview with InfralinePlus, spoke at length how
his company is helping commercial, institutional and industrial
organisations use energy intelligently. Excerpts:

India needs quality power for its In a country like India where there
economic growth. Can you throw are millions of un-employed youth
light on the possible solutions in the country, this technology
Chintan Soni
16 which can reduce the challenges would minimise the involvement Chief Executive Officer, Ecolibrium Energy
related to power loss? of people. Do you think India is
Indias official figures of transmission ready to adapt this technology? on investments (ROI) of less than
and distribution (T&D) losses is close Without the involvement of end eight months. To give you an example:
to 30 per cent. The first step towards customers, technology never succeeds. In at Harsha Engineering Ltd, a global
reducing the losses is to figure out this case as well, consumer participation solution provider of Bearing Cages
where are the losses, how much and is a must. Rather this will increase the as well as special purpose stamped
why. Once we know where and how participation of customers. We have more components, based in Ahmedabad,
much, the next step is to fix the losses. than 450 customers who are able to view we installed the SmartSense in August
The only solution to this is to have a their energy consumption on a real-time 2010. Analysis and verification was
real time energy audit system. This basis. This enables them to act on the areas done on data which we received from
will bring a lot of transparency in where there are leakages on real time. our SmartSense on the server. Our
fixing the losses. analyst team and energy experts along
Can smart grid be used in systems with Harsha Engineers team carried out
What kind of market do you that use power from different leakage and free air delivery (FAD) test
see for smart grid solutions in sources, i.e. conventional or on-site. During the investigation, we
India especially considering that clean energy? estimated that leakages in compressed air
there are cases of power misuse Absolutely yes. This is the main purpose line were more than 50 per cent. Hence
and theft in some pockets of of Smart Gridsto combine all different leakages at many locations were closed
the country? sources and optimally use each source so off and the leakage test was made a
Smart grid in a sense is an absolute as to reduce the carbon footprint. regular practice thereafter.
necessity for India where power theft After arresting the leakages, power
and misuse is very high. Smart grid How cost effective is the consumption in the compressors
makes the entire system transparent technology. Can you share a case went down drastically. A compressor
and real time. This allows the study to help us understand the efficiency evaluation: FAD test was
distribution companies to act in the benefits the technology offers? carried out to evaluate the efficiency of
high theft areas, right when the theft is SmartSense, our demand side individual compressors. Efficiency of
taking place and not wait for months. management platform, provides return two compressors was found to be lower
October 2014
www.InfralinePlus.com

than normal. After maintenance, again Advanced Energy Management Solution Solution for the Delhi Metro Rail
FAD test was conducted. There was (AEMS), SmartSense Energy Trading Corporation; Indias rst comprehensive
improvement in the efficiency of the (ET), Smartsense Meter+, Smartsense Smart Grid Demonstration project in
compressors after maintenance. FAD Furnace and Boilers (F&B), SmartSense association with Torrent Power and
test was also made a regular practice Load Manager, etc. Smartsense ET is a GEDA, etc.
thereafter. Considering 320 days of solution for open access consumers who Here are a few case studies of our
annual operation and unit cost `6.5, it buy/sell power from power exchanges successful projects:
was estimated that there would be annual or perform bilateral trading. SmartSense At Esteemed Engineering based at
savings of `6,83,920. AEMS is for geographically distributed Faridabad, which manufactures sheet
Harsha Engineers now saves about industries or Commercial Establishments. metal components, tubular components,
10 per cent on energy and breakdown SmartSense Meter+ solution is designed assemblies and sub-assemblies for the
costs through its real time monitoring to replace manual reading for sub-meters. global automotive industry, Ecolibrium
and alerts on critical situations SmartSense Furnace and Boilers is an installed SmartSense ET comprising
across three plants, preventive and advanced energy efficiency solution of ABT 0.2s class energy metre with
predictive maintenance, plugging which monitors and controls the air hi wireless communication unit, NBA
in compressor leakages by real time into the combustion chamber by blower tool and bid strategy matrix on August
monitoring leading to savings of nearly control using a feedback loop from 22, 2013. We gave them a solution for
`7,00,000 annually. The company is an O2 analyser. improving bidding efficiency on energy
now expanding the Advanced Energy exchange and increase the net benefits
Management Solution (AEMS) We have more than derived from bidding on the power
installation to its plant in China too. exchange as compared to purchasing
450 customers who power from the distribution company.
Kindly share how does this are able to view their SmartSense ET is being currently
technology of remote monitoring energy consumption used in over 70 companies across 17
work. What all benefits on a real-time basis India, with an average savings of over
would it offer? `10,00,000 annually.
SmartSense provides real-time daily Can you share the details of the The installation of Ecolibriums
15 minutes power consumption data, current projects your company is SmartSense Furnace solution in XYZ
bid optimisation strategy and analysis handling. What difference have Engineering Limited, a Hi-Chrome
for maximising benefits of trading, user smart grids made to the clients? producer based in Ahmedabad, on
configurable alert management system Our main projects include Indias October 15, 2013, has resulted in annual
for SMS/e-mail alerts, daily net benefit rst pilot Automated Demand savings in fuel costs to the tune of ~15
analysis report for tracking profit/losses Response project for the Maharashtra per cent and generated a payback period
due to bidding on the energy exchange State distribution company in Pune, of ~seven months.
and demand side management in case of Maharashtra; Pioneer Smart Micro-Grid Another case study I would like to
digression from the bid. project for the Solar Energy Centre, mention is that of a Gujarat-based client
Our solutions include SmartSense Gurgaon; Wireless Energy Management of ours which was very conservative
in its bidding for power at the energy
exchange which lead to an opportunity
loss of nearly `1,29,000 for a period of
seven days. This matter was presented
to the management and they took note
of the problem and gave more emphasis
on installing and using SmartSense ET.
By using optimal bid strategy matrix, the
client started bidding aggressively hence
reducing the gap between consumption
and net bid units.

For full version of the interview, visit www.infraline.com


For suggestions email at feedback@infraline.com
October 2014
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ExpertSpeak
Power capacity addition to
boost CRGO demand
Limited capacity in India to account of the fact that cost of CRGO
produce Cold Rolled Grain can contribute to around 35-50 per cent
Oriented (CRGO) steel has been of a transformer manufacturing cost,
a cause of concern especially for depending on the design capabilities and
power sector. While India has been its nature. State electricity boards in India
importing lower grade CRGO steel historically follow L1 vendor selection
because of pricing, the power criteria. This has led to proliferation of
sector bore the brunt of low quality many small players, who compromise on
equipments. CRGO steel is a the quality of transformers manufactured.
critical input for the manufacturing Low-entry barriers in the distribution
of transformers which is key for transformer market saw more such
generation, transmission and unorganized players entering the arena,
distribution of electricity to end- and further competing on the price factor.
users. Senior consultant - metals At the receiving end of these
18 and mines at Infraline Energy - developments was the power industry
Ashima Tyagi takes us through as well as the end consumers, who
Ashima Tyagi, Senior Consultant Metals and
the issues that power generation Mining, InfralineEnergy
suffered on account of high maintenance
industry has faced for long. and recurrent replacement of such
India is estimated at 10-15 per cent transformers. India manufactures both
(in stark contrast to the less than 2 per power and distribution transformers,
Indias tryst with CRGO (electrical grade cent in developing countries). Apart wherein CRGO is mostly used as a
steel) for manufacturing transformers has from inferior technical parameters, the core material except in cases where
at best been an imbroglio. When CRGO transformers are afflicted with higher amorphous metal is used. In India,
supply was constricted globally decades losses, increased carbon emissions, power transformers account for 40-45
back, India imported sub-grade material greater oil consumption, larger size of per cent of the total installed capacity
for manufacturing the core of power core and noise pollution. while distribution transformer accounts
and distribution transformers. This was In contrast, cost incurred for for the remaining 55-60 per cent. In the
partly on account of zero indigenous manufacturing transformers became power transformer segment, step-down
manufacturing capabilities as well as a competitive, for sub-grade material transformers account for 75-80 per cent
balance of payment crisis, which made it generated from scrap was way cheaper of the total installed capacity while
impossible to import prime grade CRGO. than the prime grade material. This is on step-up transformers comprise the rest.
Even today, import of prime grade Indias power generation installed
CRGO costs three times more than the capacity at the end of 11th Five-Year
non-prime grade one. As a result, cost According to Indian Plan (FYP) stood at approximately
over quality mantras seeped into the Electrical & Electronics 200 GW. Thereafter, the government
DNA of transformer manufacturing announced that the target for power
Manufacturers
in India and the power sector suffered sector capacity addition during the 12th
adversely. While the life span of a
Association, the size FYP would be a record 88,537 MW
transformer with prime grade CRGO of Indian transformer (comprising 72,340 MW Thermal,
is around 25-30 years, the one with industry is likely to 10,897 MW Hydro and 5,300 MW
non-prime material barely lasts for 5 grow to about `30,000 Nuclear). It seemed the government bit
years. At the same time, the failure crore ($5.1 bn) by 2017 off more than it could chew, considering
rate of distribution transformers in past trends of 60-70 per cent achievement
October 2014
www.InfralinePlus.com

steels has seen an upward swing over the


past several years, as given in the figure
below. The demand for such steels will
present an opportunity for international
players in the coming years as well,
given the massive expansion plans of
the nation.
Inadequate supply of prime quality
CRGO steel is the biggest challenge
faced by transformer manufacturers in
the country. The country continues to
rely on imports till date in the absence
of domestic capabilities. Since CRGO
requirement is completely met through
imports; it is difficult to assess the
true quality of the material used by
transformer manufacturers in India.
of such targets. However, the first year for transformers would grow to an Over the years, Japan, Korea and Russia
of the 12th FYP (2012-13) bought in estimated 16 lakh MVA, pushing the have dominated CRGO exports to India.
high optimism as against the targeted need for CRGO to approximately 1.8 The import share of Japan and Korea
17,956 MW, India added 20,622 MW, MT as against the current 0.25-0.3 MT. has risen, primarily because India cuts
reflecting an overachievement of target The import of both CRGO and CRNO tax on steel from these countries after
by 14.8 per cent.
With a majority government 19
anointed in May 2014 under the
leardership of Prime Minister Narendra
Modi, ambitious plans for expediting
investments in the power sector shall
be de rigueur, in view of significant
power deficit, continued T&D losses
and a need for bringing forth economic
growth momentum. With huge power
capacity being envisaged, the need for
transmission will drive demand for
transformers. According to the 12th FYP
targets, around `13,00,000 crore ($2.2
tn) is likely to be invested in the power
sector. This spending on the power sector
is expected to be equally distributed
between generation and T&D. Spending
on power T&D infrastructure shall in
Country-wise Import of CRGO by India during FY12 14 (in tons)
turn boost demand for transformers.
2011-12 2012-13 2013-14 (Apr - Dec)
As per the estimates of Indian JAPAN 44,872.60 49,009.38 47,988.41
Electrical & Electronics Manufacturers KOREA RP 19,078.16 39,157.71 35,306.91
Association (IEEMA), the size of Indian RUSSIA 28,803.10 39,002.28 30,273.52
transformer industry at the end of FY12 POLAND 13,732.20 17,766.96 6,305.23
will be approximately `12,400 crore USA 23,912.58 11,555.36 6,852.70
($2.1 bn), which is likely to grow to CHINA RP 8,499.43 2,670.19 1,149.09
about `30,000 crore ($5.1 bn) by the GERMANY 8,993.00 4,394.61 1,731.09
end of the 12th FYP in 2017, implying a Others 27,369.58 19,533.57 10,790.65
tremendous CAGR growth of 19 per cent Total 175,260.65 183,090.06 140397.6
during the five-year period. Requirement Source: Infraline Research
October 2014
www.InfralinePlus.com

ExpertSpeak

signing free trade pacts in 2010 and Specifications of CRGO under mandatory Bureau of Indian Standards
2011, respectively. certification
Only 15 steel mills, including Nippon Indian Title HS Code Date of coming into force of the product
Steel, JFE Steel, Arcelor Mittal, Posco, Standard in the standard to the extent given below
US Steel, Baosteel, Tata Corus and number
ThyssenKrupp, across the globe have 3024 Grain 72251100 (a) Domain Refined Grain Ori- 1st July,
CRGO manufacturing capability. JFE oriented 72261100 ented Electrical Steel Sheets and 2014
electri- Strips with minimum polarization 1st
was the foremost company to supply
cal steel of 1.85 Tesla at a field strength of October,
CRGO to the Indian market, followed sheet 800 A/m and maximum specific 2013
by Nippon Steel, which was granted and strip core loss of 0.90 Watt/Kg (1.70
in-principle approval in February 2012. (CRGO) Tesla/50 Hz) for nominal thick-
JSW Steel, one of Indias largest private ness of 0.23 mm and 0.95 Watt/
steel producers and Japans JFE Steel Kg (1.70 Tesla/50 Hz) for nominal
Corporation had also signed a joint thickness of 0.27 mm.
agreement wherein JFE was to provide (b) For products excluding
technology for production of CRGO at (a) above
Source: Infraline Research
the formers existing plant. In August
2013, it was reported that state-owned
Rashtriya Ispat Nigam Limited is in
talks with Russias Novolipetsk Steel
Company (NLMK) to enter into a
technical collaboration in setting up a
steel plant for producing silicon steel.
20 In spite of several announcements of
collaborations for transfer of technology,
the same have not fructified into real
projects. In May 2014, CSIR-National
Metallurgical Laboratory, a government-
enterprise, proclaimed that it shall take
the lead to develop a technology to
produce CRGO in the country soon
jointly with the Ministry of Steel and
domestic steel makers, Tata Steel and
Rashtriya Ispat Nigam. Work on the same
is expected to begin by the end of 2014. import and use of seconds, defective In view of the orders, it has been
In view of increased imports, the and recycled CRGO. This order was noted that 13 of the 15 companies
country has been cautious in terms of notified again for amendment in March worldwide, with CRGO technology,
quality of CRGO steel being imported, 2013, giving it an extension till October have already got themselves registered
so that the quality of transformers, 1, 2013. In April, this order was again as per the appropriate BIS certification.
especially distribution transformers, amended with further extension for a At the same time, Indian steel companies
manufactured domestically does not particular grade of CRGO: are expected to up the ante to grab a
suffer. The Ministry of Steel released Indian Transformer Manufacturers piece from the CRGO pie, which they
the first Steel Quality Control Order Association (ITMA) has championed have been losing out to international
in September 2008, which made the cause of prime grade CRGO usage companies. With huge investments
certification of CRGO mandatory. The and welcomed the quality control orders, pouring into power and infrastructure
same was rolled back on the behest of especially for promotion of energy- sectors, the transformer market in India
vested interests, which were against efficient practices. According to the is slated for robust growth; and so will be
the move. Later, nonetheless, the Steel association, a 0.5 per cent increase in the case with CRGO import market.
Quality Control (Second) Order in March efficiency of distribution transformers
2012 made BIS certification mandatory would result in an annual saving of 4-5
for CRGO under IS:3024. The stated billion KwH together with reduced CO2 The views in the article of the author are personal
objective of this order was to prevent emissions to the tune of 4 MT a year. For suggestions email at feedback@infraline.com
October 2014
www.InfralinePlus.com

InConversation
Wed start manufacturing in India
if we get tax incentives
Wyman-Gordon is a company that designs and manufactures
complex metal components. It has a long history of making
forged metal components, particularly for general industrial
applications and power generation. The company is now a
subsidiary of Precision Cartsparts Corporation (PCC), and
is based in Houston, Texas, United States. Wyman-Gordons
Sales-Director, Power Generation, Bruce Davis speaks to
InfralinePlus on its plans to enter India and issues faced
thereof. Excerpts.

The range of products which alloys which we produce, most of the


your company has, how are alloys carries our trademark.
Bruce Davis, Sales-Director
they applicable in the Indian So since 1995 we are Power Generation, Wyman-Gordon
industrial market? in India. Before that We see
Our parent company is PCC, Precision it was a trading the market to build a power plant, fuel, 21
Cartspart Corporation, PCC Energy agreement growing very power purchase agreements,
and there are two groups within India with Greaves strongly, whether environmental and contracts were
that participate. One of them is Special Cotton. But it be the elections all in place and the market was
or continued
Metals and the other one is Wyman after establishing development of very strong. Since then in the
Gordon. PCC Energy, Special Metals office in India power plant 2010-2011 time frame the market
and Wyman Gordon deal with materials, our relationship projects has fallen off a bit and struggled
deal with metals. Special Metals is a with Greaves Cotton somewhat. But we see the market
developer, pattern holder of nickel based cut off and we started with continuing very strongly in India,
metals that are used in the chemical the customer directly. As Bruce was whether it be the elections or continued
processing within the oil and gas, power maintaining, Wyman Gordon started the development of power plant projects, we
and also within airspace. Wyman Gordon operations in 2004, and we started with see a good market in India.
deals with carbon steel, stainless steel, sales representation, as agents. And as From the Special Metals point, we are
ferritic alloys that are utilized in the per we have evolved over the last ten in all the industries not just power. We
transfer of steam, hot pressure steam. years we have staff of three employees are in chemicals, aerospace, automobile,
for Wyman Gordon and two employees oil and gas. So we have a steady market.
So you are in India since when? for Special Metals. We have locations Whenever oil and gas goes we also grow.
We had our first order in India in 2004 in Trichy, Chennai, Bangalore and Now most of the Indian companies are
with BHEL and from there it kind of also in Mumbai. concentrating on exports, we deal mostly
launched. Wyman Gordon started the with fabricators. They are concentrating
business supplying pipes to BHEL in Having worked in India for the on exports particularly for Middle-East
their Trichi manufacturing board. As far last ten years how has your so there is also lot of Special Metals
as Special Metals goes, started in 1995, experience been regarding the equipment which goes into Middle East,
the Indian operations. Before that it was business environment? Far East. Companies like Larsen and
handled by Greaves Cotton, Thapar When we came in 2004 2005, the Tourbo and Godrej, they concentrate on
Group. They were the agents for Special business environment was very strong. exports because Middle East is booming
Metals. Previously it was called Inco A lot of the power plants were being now. So we also get our good share of
Alloys International and most the nickel constructed, a lot of elements required ferret metals like nickel alloy. In fact
October 2014
www.InfralinePlus.com

InConversation

there is another group called Titanium coal and the fuel source in China is coal, customers .And once the tax advantages
Metals Corporation which also belongs the populations are basically the same. and benefits are made available, we
to PCC. Even in titanium, we are Whereas China has built their markets would pursue having an investment
doing very well with all the fabricators very quickly, we see a longer sustained within the Indian market. We have
concentrating on petrochemicals and growth coming out of India. So it wont looked at Gujarat to make an investment,
oil and gas. be a quick 4 to 5 years growth, it will we have looked at Tamil Nadu but it has
be sustained over two decades, maybe to make sense. The product has to be
Coming to the power sector, even three decades. produced in India more economically
you have seen a slowdown. So than it could be produced any place else.
what kind of strategy have you That is what our customer tell us.
adopted to survive in this gloomy We dont see any The titanium company, they are trying
scenario? What are the options organic growth here to trying to get into an agreement with
you are looking at to diversify and other than possible Kerala Investial Group for titanium
expand? personnel to grow as sponge. They wasnt to do a tie up with
The option that is available to us is to them for making titanium sponge in India
the market grows with
broaden the products we offer to the along with Kerala government and some
market place which we have done. We
us. We have grown in private partners. The talk is going on.
have further penetrated the Indian market India. From the Wyman
defining new customers and products. We Gordon side the staff Apart from tax issues which are
are a global company so we may have was zero. Now there the policy issues which you think
a small depth in the market in India. We is a staff of three. need a twist to help your business
may see an increase in China, European And from the Special grow in India?
or African markets, we look at it from Metals side it has gone Number one, you have to look at it
a global stand point where India maybe from an economical standpoint of
22 from one to three.
down but another part of the world production. And number two is demand
maybe up. for the product and right now a lot of
How much have you invested products are getting stalled in giving
How much is India contributing to in the last ten years in Indian clearances. The higher demand in India
your overall business? operations? the more the drive to have indigenous
Indias contributing probably 30 per cent None, zero. We have made attempts to manufacturing here. So there are two
on a global basis. make investments in processing and we things we would look at; the cost basis
have looked at it from the standpoint and the demand cycle.
Is that the target that you are of seeking benefits from the Indian
looking at? government for having indigenous Any policy issues where you
We are looking at something much above manufactures. To our disappointment, would need support from the
50 per cent. We are comfortable with our there have not been any indications government?
customers, partnerships and clients that from the Indian government that Incentives to set up indigenous
we have in India. We have some very they are receptive to any tax benefits manufacturing. Probably we are thinking
good established relationships. As the as other companies have offered to of finishing line first. It would start on
market dips and grows, we will dip and Wyman Gordon. the finishing but if the demand is in the
grow with the market itself and adjust our market and if the incentives are provided
staff in India to affect that growth. Since these incentives are by the government, the state government
not coming forward, isnt or the federal government then we
Talking about the demand-supply it a roadblock? How do you would very seriously consider placing
scenario, do you think India has sustain your operations in this operations here in India.
more demand as compared to country then?
China or South-East Asia? One of the things which makes Wyman Could you specify the incentives
I think India has the potential for more Gordon and Special Metals unique is that you are talking about?
demand. The way we typically look at we are capital intensive company. One Tax benefits would be for any products
the market is fuel source and population of the benefits of having operations in that are indigenously produced, if tax
and the largest fuel source in India is India would be speedier markets for our credits are available to the company
October 2014
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for national projects, we are looking to talk about technology, it comes at a Talking about oil and gas
manufacture, process within India and price. A problem which companies applications, you have those
when those incentives are available face is of pricing. How do you plan applications, right?
we want to produce for the Indian to beat that aspect of it? We do have an oil and gas application.
market. We are not looking to export, A lot of the equipment that we use is We do not pursue it as heavily as we
we want those incentives to be made capital intensive so we do not use a lot do the power sector other than the
available for indigenous processing for of labour on the manufacture of our materials, the nickel materials. We are
indigenous projects. product. And that being the case because just now making a stronger push into
of the equipment that we have and the the Indian market.
When you say 30 per cent of investment that we have made in the Right now in the Indian market they
your business comes from capital we are very competitive. And do not go for nickel, the reason is that
India, it basically comes from I would say that of the mills that are oil and gas if three tier it is not sour gas
exports. Which is your nearest supplying those custom products to the so right now they are managing with
export centre? Indian market, Wyman Gordon would be low grade alloy steel and other things.
The nearest export centre is Texas in number one or number two. In Middle East and North America
United States. they use a lot of nickel alloys. It is
Considering the elections which not the situation here in India. It may
You are looking at setting up a are going one, as an investor change. The company is PCC Energy,
base in India? what kind of signals does it send Wyman Gordon and Special Metals,
We would start with a processing centre. to you? as the name special metals implies we
We would look for a partner, we would Growth will come from a more pro- are more custom, more specialized,
look for a processing facility. We would active government. And whichever party more at the higher end of the product
go from the processing facility to the provides that pro-active environment range whether it be metallurgy, we
next level up which would be the light would be the one Wyman Gordon would are not a commodity operation at 23
manufacturing and then depending on the enjoy as others would. all. We are highly specialized with
demand we would do full manufacturing. targeted marketing going after specific
Talking about your growth plans, customers in specific regions.
The segment that you are in is you have any plans to get involved And PCC as a group has
highly competitive. In India there in inorganic growth? a shareholding in one of the
are already lot of players which We dont see any organic growth here Indian companies.
are well established. How do you other than possible personnel to grow
think you are different? as the market grows with us. We have So as you have some policy
We are very unique in the size of the grown in India. From the Wyman Gordon initiates you are all set to enter
pipes and the fact that the pipes are side the staff was zero. Now there is the market?
custom, there is a lot of commodity a staff of three. And from the Special Yes, we have tried to enter and we have
type manufactures located in India. But Metals side it has gone from one to three. found that processing our product here
there are very few of any custom mills So PCC Energy with Wyman Gordon, under the current environment with
within India that are manufacturing Special Metals has grown by nearly 200 providing an economic benefit to the
products that we have. The technology per cent during the course of the time Indian market and if that is the case
that we have to manufacture these pipes we have been here. We would continue then there is no reason to pursue the
is a hundred years old and we still have to grow as the demand grows and as our capital investment but if the incentives
challenges everyday in manufacturing. products more and more utilized within were there we would definitely pursue.
We have been through the learning the market place. We have done it in other countries.
curve and what we do is to provide non
standard custom pipes for power plants. Do you plan to partner with any of You have a presence in China?
Commodity, piping, mills are available the India players? Yes, we do. We have setup a processing
and useful in the Indian market do not Yes, if we get a processing facility we facility there with our customers which
compete with us. would certainly look for partner to work provide economical and speed benefits.
with. I have felt that the best partner would
Indian consumers are quite be a customer who would be able to utilize
For full version of the interview, visit www.infraline.com
sensitive to price. And when you products that we manufacture together. For suggestions email at feedback@infraline.com
October 2014
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ExpertSpeak
Coal Crisis will stall growth unless
dealt with on war Footing Basis
Lajpat R. Shrivastav, CEO with Jindal India group, has worked with
some of the most reputed top companies including NTPC, L&T, Tata
Power, Bechtel and Atomic Energy over a period of four decades at
senior level positions. Before joining Jindal Group, he was working as
Chief Executive Officer for Moser Baer Power & Infrastructures Limited
for six years. He was recently honoured with Fellowship by All India
Management Association for his significant contributions in the field
of management and his chosen field Power Sector. A a Mechanical
Engineer by qualification, Mr Shrivastav has been working as a Member
of National Power Committee of CII for the last two years.

Power sector saw huge surge of stagnation to the capacity addition


investment from private sector and program and only few projects are
foreign direct investment from 1992 going ahead because they were already
onwards when the reforms were first committed, but no one is prepared to take
Lajpat R. Shrivastav
24 taken up in power sector under the risk of starting a new project. CEO, Jindal India group
Prime Minister Shri P. V. Narasimha Post Mr Narendra Modi taking
Rao and his cabinet colleague & Finance charge as Prime Minister, demand was projected to be around 315
Minister Mr Manmohan Singh. However the country is bullish Modi to 335 GW by 2017 as per various
despite lot of hype & euphoria soon about achieving govt. institutions (CEA estimates were
there came a time when sentiments double digit has started around 213 GW). However as per
of investors were at low ebb because economic growth the process of CEA published data, the capacity
of prolonged delays in clearances, in coming years. creating positive at the end of 12th five year plan
impact through
development and land acquisition etc. His government i.e. 2017 will be at approximately
policy framework
This resulted in withdrawal of almost all has started to attract 220 GW which is significantly
off shore companies and only few Indian the process of investment. short of demand projections. There
companies continued their efforts and creating positive are four major factors which drive
eventually could realise their projects. impact through policy demand for electricity, namely growth
In 2003 after the Electricity Act- framework to attract investment. of manufacturing sector, residential
2003 was implemented sector saw some With this back drop it is absolutely consumption growing @ almost 14 to
activity again. Since then there has certain that India is poised to grow faster 15%, increase in demand when the 30%
been significant investment by private than ever before. odd population of India gets connected
sector in the power sector, mainly in This will mean all round development to grid/electricity and lastly realisation of
generating capacity addition. In the last and construction in infrastructure projects demand suppressed due to load shedding.
five year plan, first time the contribution like railways, highways, ports, power One can easily conclude from the above
of private sector in capacity addition plants etc. Further he has been laying lot logic that demand which was projected
was close to 40%. Although there of emphasis on having manufacturing by CEA is likely to be more realistically
may be scope for improvement in the base in India to provide cheaper & around 315 to 335 GW due to Indias
provisions of the EA-2003, but it has quality goods to the world and has been growing aspirations under the dynamic
significantly improved the investment trying to attract foreign companies and visionary leadership of Mr Modi.
environment in the sector. engaged in manufacturing to come to A quick look at what is happening
However over last 3 to 4 years, coal India and set up manufacturing facilities. in power sector will immediately cast
shortage has hit the sector badly and This will further increase power demand. gloom and nervousness to anyone who
has almost brought about complete Prior to General Elections, electricity is bullish and optimistic about achieving
October 2014
www.InfralinePlus.com

the vision set by Modi. The reasons are close to 150 MTPA which can only be offer imported coal and is limiting
not far to seek: met through import. its obligation to only supply of
1. More than 12000 odd MW capacity 4. Even though revised National Coal indigenous coal (which may vary
already commissioned is stranded & Distribution Policy stipulates supply from 65% in first year of 12th Plan to
further 30000 odd MW will become of 100 % coal requirement by CIL, 80% in final year of 12th Plan). Added
stranded by the end of 12th Plan provided CIL is mandated to import to this CIL is not offering to pay any
period due to non-availability of coal/ coal on behalf of developers and significant penalties for failure to
gas. This is creating non-productive supply of imported coal on cost plus meet their commitment of supply of
assets and causing stress in the basis to meet the gap. However as coal, leaving developers exposed to
banking sector and creating serious it stands now, CIL has not come fuel risks. Further under most PPAs,
setback for further investments in the out with any plans or policy to imported coal cost is pass through
generating assets. only if it is imported & supplied by
2. The projects expected to come up by CIL. Hence cost of imported coal by
March2015 have only been granted There are four major developer may not be allowed as pass
coal linkage but the remaining factors which drive through unless it is facilitated through
capacity planned in the balance period demand for electricity, policy change.
of 12th Plan does not have fuel tie namely growth 5. The recent decision of Supreme Court
up. Further beyond 12th Plan period, to cancel all coal blocks except few,
CIL or MoC has not assured any fuel
of manufacturing will aggravate the situation. Many
supply or linkage. sector, residential projects were operating or under
3. Coal demand for power sector is consumption growing construction with coal linked from
expected to be around 765 MTPA at @ almost 14 to 15%, captive mines. Now these will also
the end of 12th Five Year Plan based increase in demand require linkage coal which is already
on the capacity addition expected as when the 30% odd in short supply. 25
above, whereas by the end of 12th 6. The problems being caused because
Plan period the total coal availability
population of India of policy frame work are not
is projected to be around 615 MTPA gets connected to grid/ proposed to be discussed here in this
based on most optimistic estimates electricity and lastly article. However one most critical
of CIL. Out of this only around 586 realisation of demand is urgent need to revise Standard
MTPA will be power sector and suppressed due to load Bidding Guidelines for Case-1 for
rest will be for other industries and shedding. procurement of power.
E-auction. This will leave a gap of 7. We have an excellent example of
China where most reputed suppliers
of Boiler and Turbine were allowed
to set up shop in China only through
joint ventures with local companies
to ensure technology transfer and
avoid foreign exchange outgo. This
needs to be emulated in India to create
equipment manufacturing capacity.

These are just a few examples of


where the country is headed in terms
of capacity addition beyond 12th Five
Year plan. The pipeline is completely
dry beyond 12th plan.
Considering the fact that a coal based
power project takes 6 to 7 years from
concept to commissioning in India, there
is a scary scenario that there may be very
little or no capacity addition beyond 31st
March 2017 i.e. end of 12th Plan period
October 2014
www.InfralinePlus.com

ExpertSpeak

due to following reasons: of area bearing mineral potential out has added to this grim situation
No Gas available for based capacity of 575000 Sq Kms available. This is being created. Now of course these
addition & imported LNG is not significantly less as compared to other blocks stand cancelled.
viable as of now coal rich countries.
Nuclear capacity can provide only Demand for coal grew by almost These are some of the major factors
few thousand MWs 100% more as compared to which have resulted in current coal crisis
Capacity addition through Hydro and production of coal in the same period and situation. The only way country can
other non-conventional sources will during 10th and 11th Plan periods. come out of it quickly and not allow
also be restricted to a small fraction of In India predominantly exploration such problems to derail the growth of
our total demand is still in the hands of government economy is to embark upon multiple
Hence coal based capacity will agencies such as CMPDIL, actions on war footing basis with a
continue to be main stay source of GSI and MECL etc who have time bound implementation program to
meeting demand. If Government does limited capability. responsible agencies.
not find ways to assure coal supply Proven reserves of coal in India It is pertinent to note that a power
to prospective developers, even are at 118 Bn Tons as compared to project takes almost 5 to 6 years
if from imported sources and fuel estimated reserves of 293 Bn Tons. minimum to become operational and
charge being allowed as pass through Per capita income in coal rich states if coal supply is assured to prospective
in tariff, projects will not come up is among the lowest in the country as developers (but the criteria for selection
beyond 12th plan period. also lowest as compared to coal rich has to be such that only those who have
This presents a very scary scenario the real capability to make it happen are
for the country, because India is selected for coal linkage) projects can
now aspiring to achieve double digit Per capita income be developed to prevent a complete dry
GDP growth under the dynamic and in coal rich states is period after 31st March2017. 5 to 6
26 visionary leadership of Mr Modi, but among the lowest in years period is good enough to ensure
such dreams will remain unfulfilled the country as also coal production is augmented through
unless power situation is handled with lowest as compared implementation of various suggested
lot of foresight and care. measures on war footing basis.
to coal rich countries It is therefore very important for
The situation demands an all-out effort in the world. This Ministry of Coal to prepare an aggressive
on the part of government. In this partially explains the plan to increase production on war
article an effort has been made to offer opposition & resistance footing basis. Some of the suggestions
possible alternate solutions or options to exploration and in this direction are as follows some
which can be converted in to solutions developments in coal of which may already be under active
if concerted efforts are made. It is not to consideration of CIL;
be misunderstood as if the situation is
rich states. 1. One excellent step already taken
sought to be over simplified but if any by Modi government is to merge
of the suggestions made here are of any countries in the world. This partially all three ministries dealing
use in addressing this grim situation, this explains the opposition & resistance with conventional power, Non-
article would have served its purpose. to exploration and developments in conventional power and coal.
Before I delve in to options, let me coal rich states. 2. Drilling for establishing the reserves
provide some startling facts about coal While the reserve estimation is done to be increased from 400000
sector /mining sector in India, as below: based on exploration up to 1200 meters pa to 1500000 per meters.
As per Planning Commission, the mtr depth, but actual coal mining Attract private & reputed off shore
achievements have been average is limited only up to 300 mtr depth. companies for this.
50.5% of target coal production from While CIL is sitting on huge pile of 3. Private sector including reputed
1992 to 2007. cash but has not invested enough to foreign companies to be attracted to
In India mining sector contributes adopt latest technologies in mining mineral exploration sector through
only 2 to 2.5% of overall GDP leading to poor performance & policy initiatives.
growth as compared to other coal rich u/g mining. 4. Private sector companies including
countries like South Africa (8.5%) Coal blocks allotted to NTPC & reputed foreign companies to
and Australia (8%) and China (4%). other state governments & PSUs be attracted in coal mining to
India has explored only 75000SqKms have not made any progress which implement latest technology and
October 2014
www.InfralinePlus.com

to 65 tons plus in Australia.


This will improve if modern
technology is deployed.
12. The coal produced through
under-ground mining only
should be allowed to be sold
through E auction.
13. Speedy implementation of
Coal Procurement and Pricing
Mechanism (CPPM) through which
coal import can be easier to meet the
deficit in coal availability.
14. CIL should set up a separate
wholly owned SPV to carry out
import of coal and distribute
through FSA. This will allow them
to comply with NCDP & remove
hurdles for use of imported coal.
The only way country can come out of it quickly 15. CEA had published a Paper
and not allow such problems to derail the on pooling of prices of Indian
and imported coal but it never
growth of economy is to embark upon multiple got implemented. GoI should
actions on war footing basis with a time bound give serious consideration
implementation program to responsible agencies. in implementing the same or 27
any modified version to serve
particularly for u/g mining through progress of development of such the purpose.
policy initiatives. mines must be monitored strictly 16. The process of forest clearance for
5. A separate special cell must be and defaulters penalised without any land to be acquired for coal block
created in Railway Ministry fear or favour. development should be simplified
OR better still in PMO to 8. CIL should fast track award of and time lines should be set for
monitor speedy development of more coal blocks on MDO basis to MoEF to clear the proposals. This
infrastructure to support fast increase off shore companies and reputed will facilitate speedy production
in productionby opening new mines Indian companies & demand speedy from new coal blocks.
or augmenting current producing exploration through deployment of 17. Mine closure expenditure to be
mines. Such a Cell can also monitor modern technology. considered for tax exemption.
speedy clearances for starting 9. Through policy initiatives GoI 18. If more blocks are given to CIL
production from mines. should allow up to 30% surplus which is already stretched, it is
6. Coal Regulator has been set up, production from captive mines to not going to serve the purpose
but with limited scope & authority. be allowed to be given on E auction of increasing the production in
Coal regulator with wide ranging rates to CIL for distribution through near term future, which is the
scope & authorities need to be linkage. This will increase coal demand of time. Hence it would
activated on urgent basis. This will availability in the pool. be important to attract private
help evolve mechanism for to bring 10. For a limited period of time, till sector in coal block development
transparency & regulation in coal situation improves, MoP may allow and production.
sector & cost being allowed as pass imported coal cost as pass through
through in Tariff. in tariff even under already signed These are some of the major
7. Instead of completely restricting PPAs through suitable policy frame suggestions/steps which have the
allotment of coal blocks to private work. This will prevent assets from potential to help increase availability of
companies because of recent becoming non-productive. coal in near term future.
developments, create a proper & 11. Output per man shift for open cast
transparent frame work for allotment mining is at 10to 15 tons in India The views in the article of the author are personal
of mines to private sector. The which is very low as compared For suggestions email at feedback@infraline.com
October 2014
www.InfralinePlus.com

StatisticsPower
List of Thermal Power Projects Pending for Environment Clearance
(As on 31.08.2014)
Sr. No. Project Details Received on Status
Andhra Pradesh
1 Dr. Narla Tata Rao Thermal Power Station (Dr. NTTPS) Stage - V (1x800 8/8/2014 Will be placed before EAC (Thermal Power).
MW) at Ibrahimpatnam (M), Krishna, Andhra Pradesh
Company: Andhra Pradesh Power Generation Corporation Ltd. (APGENCO)
Gujarat
2 GIPCL-SLPP Station-III: 2x300MW Expansion Power Project at village Nani 29/04/2013 Was placed in the the EAC (T) meeting held during 19-20 September 2013. Project deferred.
Naroli, Taluka Mangrol, District: Surat, Gujarat. Addl. Information Additional information sought from the Project Proponent has been recently received. However,
Company: Gujarat Industries Power company Limited 08/07/2014 certified compliance report from MoEF R.O. for the existing EC is awaited.
3 Expansion by addition 2x830 MW (Phase-II) Supercritical Imported Coal 1/5/2014 The proposal was considered by the EAC (Thermal Power) in its meeting held during 31st July &
fired Based Thermal Power at Village Tunda Wand, in Mundra Taluk, in 1st August, 2014.
Kutch Distt., in Gujarat Project deferred and additional information sought from the PP is awaited.
Company: Coastal Gujarat Power Ltd.
Jharkhand
4 1x66 MW Imported Coal, Dolochar and Middlings Based Group Captive 03.01.2012 Since the PP has started construction prior to EC, directions were issued on 15.07.2014
Thermal Power Plant at village Kuchidih, in Saraikela - Kharsawan Distt., Addl. Information under Section 5 of the Environment (Protection) Act, 1986 in accordance with the O.M.s dated
in Jharkhand 24.02.2014 12.12.2012 and 27.06.2013. The same were complied and the file is under submission.
Company: Kohinoor Power Private Ltd.
Karnataka
5 Expansion by addition of 1x660 MW Imported coal based TPP at Village 4/3/2014 Was placed in the 8th EAC (T) meeting held during January 9-10, 2014.
Toranagallu, Sandur Taluk , District Bellary in Karnataka Project deferred.
Company: JSW Energy Ltd. Additional information sought from the Project Proponent has been received.
The proposal was re-considered by EAC (Thermal Power) in its meeting held on 1st & 2nd July,
2014. EC recommended.
File under submission.
Madhya Pradesh
6 Expansion of Sasan UMPP by addition of 2x660 MW at Singrauli in Madhya 10/12/2013 The proposal was considered in the 56th Meeting of the EAC (Thermal Power) held during
Pradesh September 3-4, 2012.
Company: Sasan Power Ltd. Proposal deferred.
On submission of the information sought, the proposal was again considered in the 11th EAC (T)
meeting held for February 13-14, 2014. EC recommended.
MoEF has sought a clarification at the earliest from MoP and State Government whether a stand-
alone thermal power plant can be set up in the same land allotted for UMPP and by using the same
28 water allocation. The same is awaited.
7 Mixed Fuel (Coal & Pet Coke based) Captive Thermal Power Plant of 2x30 9/4/2014 The proposal was re-considered by EAC (Thermal Power) in its meeting held on 1st & 2nd July,
MW at Budhui Industrial Area, Distt. Sehore (MP). 2014. EC recommended.
Company: Trident Corporation Ltd. File under submission.
8 Request for Environmental Clearance Unit II of 2x660 MW Coal-based 28/03/2014 The proponent requested for deferment, will be placed before EAC (Thermal Power) accordingly.
Super-critical Power Plant at Deosar, Singrauli Distt., Madhya Pradesh Further, the certified compliance report from MoEF, Regional Office for the EC of Unit 1 needs to be
Company: DB Power (Madhya Pradesh) Ltd. submitted. Shall be delisted.
Maharashtra
9 5x660 MW Dondaichal Coal Based Thermal Power Plant at village Vikharan, 8/5/2014 The proposal was considered by the EAC (Thermal) in its meeting held during 31st July & 1st
Methi 8s Varjhadi, in Sindhkheda Taluk, in Dhule Distt., in Maharashtra August, 2014.
Company: Maharashtra State Power Generation Co. Ltd. Project deferred and additional information sought from the PP is awaited.
10 Expansion of Nasik TPP by addition of 1x660 MW coal based TPP at Village 6/3/2014 Firm coal linkage is not submitted along with the EIA/EMP. Hence, will be considered only after
Eklahare, Nashik Taluk in Nashik District in Maharashtra submission of the same and shall be delisted from the pendency.
Company: MAHAGENCO Ltd.
Odisha
11 2x660 MW coal based TPP at villages Ghantbahal, Mohda and Bhalegaon, 10/09/2013, Was considered in the 6th meeting of the Expert Appraisal Committee (Thermal Power) held during
Tehsil Titilagarh, District Bolangir, Orissa. 26/02/2014 December 5-6, 2013.
Company: Sahara India Power Corp. Ltd. Addl. Infor Project deferred. Additional information sought from the Project Proponent has been received.
19/08/2014 The proposal was placed before EAC (Thermal) meeting held on 1st & 2nd July, 2014. Project
deferred.
Additional information sought from the PP was received on 19.08.2014 and will be placed before
EAC (Thermal Power).
12 2x800 MW Thermal Power Project District. Sundargarh, Odisha 7/2/2014 The proposal was considered in the 13th meeting of the Expert Appraisal Committee (Thermal
Company: Mahanadi Basin Power Ltd Power) held during March 25-26, 2014.
Project deferred and additional information sought from the PP is awaited.
13 (175 + 3x27) 256 MW CFBC Imported Coal based Thermal Power Plant at 1/7/2014 The proposal was considered by the EAC (Thermal) in its meeting held during 31st July & 1st
Meramandali, Distt. Dhenkanal, in Odisha. August, 2014.
Company: Bhushan Steel Ltd. Project deferred and additional information sought from the PP is awaited.
14 (165 + 20) 185 MW CFBC Imported coal based TPP of Meramandali, 1/7/2014 The proposal was considered by the EAC (Thermal) in its meeting held during 31st July & 1st
Distt. Dhenkanal in Odisha. August, 2014.
Company: Bhushan Energy Ltd. Project deferred and additional information sought from the PP which is awaited.
Rajasthan
15 Environmental Clearance for Chhabra Second unit of Supercritical Coal 31/01/2014 The proposal was placed before EAC (Thermal) meeting held on 1st & 2nd July, 2014. EC recom-
Based Thermal Power Plant Stage-II (2x660 MW Unit 5 & 6) at village mended subject to the submission of Board of Directors Resolution for closure of four older Kota
Chowki-Motipura at Chhabra, in Baran Distt., Rajasthan TPPs and for diversion of coal allotted to Kota units for the Unit 6.
Company: Rajasthan Rajya Vidyut Utpadan Nigam Ltd. The same is awaited.
Uttar Pradesh
16 1980 MW Ghatampur Thermal Power Station (3x660MW) in Ghatampur, 17/09/2013 Was considered in the 6th meeting of the Expert Appraisal Committee (Thermal Power) scheduled
Kanpur, Uttar Pradesh 29/01/2014 during December 5-6, 2013. Project deferred.
Company: Neyveli Lignite Corporation Ltd. The additional information sought by EAC was submitted by the PP on 29.01.2014. The proposal
was again considered in the 11th EAC (T) meeting held for February 13-14, 2014.
Project deferred and additional information sought from the PP is awaited.
17 2x660 MW Bilhaur Super TPP at Bilhaur, Kanpur, Uttar Pradesh. 8/8/2014 Will be placed before EAC (Thermal Power)
Company: NTPC Ltd.
October 2014
www.InfralinePlus.com

List of Thermal Power Projects Pending for TOR


(As on 31.08.2014)
Sr. Project name Received on Status
No.
Andhra Pradesh
1 5x800 MW Pudimadaka Super Thermal Power Project at Lalamkoduru, Rambilli, 1/1/2014 The proposal was considered in the 13th meeting of the Expert Appraisal Committee (Thermal
Veduuruvdda & Pudimadaka District:- Visakhapatnam, Andhra Pradesh Power) held during March 25-26, 2014.
Company: NTPC Ltd. Proposal was deferred. Additional information sought from the PP is awaited.
2 Expansion by addition of 2x660 MW (Phase-Ill), Super Critical Coal based Thermal 14/02/2014 The proposal was considered in the 18th meeting of the Expert Appraisal Committee (Thermal
Power Plant Village: Tamminapatnam & Mommidi, Taluk: Chillakur District: Nel- Power) held during on 31st July & 1st August, 2014.
lore, Andhra Pradesh ToR recommended and proposal is being processed.
Company: Simhapuri Energy Limited
3 3960 MW Thermal Power Project in three phases 2x 660 MW in each phase at 12/8/2014 Will be placed before EAC (Thermal Power).
Vempadu and surrounding villages of Nakkapalli Mandal comprising Kagitha, DL
Puram, Nellipudi and Vempadu, District Visakhapatnam, Andhra Pradesh
Company: Yeswanth Industrial Infrastructure Projects Pvt. Ltd
Chhattisgarh
4 250 MW Coal based Captive Thermal Power Plant at Madpal and Markel vVillage, 27/05/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
Distt. Bastar, Chhattisgarh Power) held during on 28th-29th August, 2014.
Company: NMDC Limited Minutes under preparation.
Jharkhand
5 4000 MW UMPP of at Usainabad, Devipur Division, District Deoghar State: 17/10/2012 Was considered in the 60th Meeting of EAC (T) held during November 5-6, 2012.
Jharkhand TOR Recommended. File under review.
Company: Deoghar Mega Power Ltd.
6 Expansion project of 8 MW Power Plant within its existing premises at village 4/6/2014 The requirement of EC for the project needs to be examined.
Nawagaon, O.P., West Singbhum, Jharkhand
Company: Sai Sponge (India) Ltd
Madhya Pradesh
7 Proposed 16MW coal/solid fuel based co-generation power plant at existing bulk 22/01/2014 The proposal was placed before EAC (Thermal) meeting held on 1st & 2nd July, 2014. Proposal
drug and formulation Manufacturing site at Village Sejavta Tehsil & Ratlam District deferred.
in Madhya Pradesh. Additional information sought from the Project Proponent has been received and was reconsidered
Company: Ipca Laboratories Ltd. by the EAC (Thermal Power) in its 20th meeting held during on 28th-29th August, 2014.
Minutes under preparation.
8 1600 MW (2x800 MW) coal based Super Critical Bansagar Thermal Power Project 22/06/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
in Sakhi Village in Shahdol Distt. Power) held during on 28th -29th August, 2014.
Company: Bansagar Thermal Power Company Ltd. Minutes under preparation.
Maharashtra
9 Proposed 2000MW combined Cycle Power Plant at Guhagar in Ratnagiri District, 22/01/2014 The proposal was considered in the 13th meeting of the Expert Appraisal Committee (Thermal
Maharashtra. Power) held during March 25-26, 2014.
Company: Synergy Li Power Resources India Pvt. Ltd Proposal was deferred for visit of the proposed site (s) by a sub-group of EAC. 29
10 2640 MW Coal based Thermal Power Plant Village: Rohana, Tehsil: Mohadi 6/2/2014 The proposal was considered in the 18th meeting of the Expert Appraisal Committee (Thermal
District: Bhandara, Maharashtra Power) held during on 31st July & 1st August, 2014.
Company: Bhandara Thermal Power Corporation Ltd., Hyderabad ToR recommended and proposal is being processed on file.
11 3x300MW coal based Power Project at village Parsodi, Taluk- Selu, District 15/01/2014 The proposal was considered in the 13th meeting of the Expert Appraisal Committee (Thermal
Wardha, Maharashtra Power) scheduled during March 25-26, 2014.
Company: Vidarbha Industries Power Ltd. Upon the request of the PP, the proposal was deferred. Shall be delisted.
12 660 MW Captive Power Plant (Coal based) at JSW Steel Ltd. Villages Geetapuram, 25/08/2014 Will be placed before EAC (Thermal Power).
Dolvi, Taluka: Pen, District: Raigad Maharashtra
Company: JSW Steel Ltd.
Odisha
13 2x660 MW Taleha Thermal Power Project at Angul Distt., in Odisha 27/05/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
Company: NTPC Limited Power) held during on 28th-29th August, 2014.
Minutes under preparation.
14 2x660 MW Super critical TPP at Jamuchakada, Dist. Dhenkanal, Odisha 17/07/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
Company: Chambal Infrastructure Ventures Ltd. Power) held during on 28th-29th August, 2014.
Minutes under preparation.
Tamil Nadu
15 4x660 MW Super Critical Coal based Thermal Power Plant Village: Athiyakurichi, 11/2/2014 The proposal was considered in the 18th meeting of the Expert Appraisal Committee (Thermal
Taluk: Tiruchendur District: Thoothukudi, Tamil Nadu Power) held during on 31st July & 1st August, 2014.
Company: NC Energy Ltd. ToR recommended and proposal is being processed on file.
16 Proposed to augment the capacity from 1x60 MW to 1x180 MW and additional 3/3/2014 The proposal was considered in the 18th meeting of the Expert Appraisal Committee (Thermal
1x300 MW coal based Captive Thermal Power Plant at Sithurnatham, Sirupulalpet- Power) held during on 31st July & 1st August, 2014.
tai and Eguvarpalayam Village, in Gummidipoondi Taluk, in Thiruvallur District, in ToR recommended and proposal is being processed on file.
Tamil Nadu.
Company: ARS Metals Ltd.
17.. Alathiyur Cement Plant - ProposedAddition of 6 MW Turbine to existing 2x18 MW 24/04/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
Captive Power Plant for Operational Advantage-Alathiyur Village, Sendural Taluk, Power) held during on 28th-29th August, 2014.
Ariyalur Distt. Tamil Nadu. Minutes under preparation.
Company: The Ramco Cements Limited
Tripura
18 3x21 MW Natural Gas Based Thermal Power Plant of at Village Rokhia, District: 9/4/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
Sepahijala, Tripura Power) held during on 28th-29th August, 2014.
Company: Tripura State Electricity Corporation Ltd. Minutes under preparation.
Uttar Pradesh
19 Expansion of Rose Thermal Power Project 2x660 MW Stage-Ill at village Choud- 3/12/2013 Was considered in the 11th EAC (T) meeting held for February 13-14, 2014.
heer District Shajehanpur, Uttar Pradesh Project deferred and additional information sought from PP is awaited.
Company: Rosa Power Supply Company Ltd.
20 1x660 MW Coal Based Supercritical Panki extension Power Project at Panki, Distt. 9/5/2014 The proposal was considered in the 18th meeting of the Expert Appraisal Committee (Thermal
Kanpur, UP Power) held during on 31st July & 1st August, 2014.
Company: Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited ToR recommended and proposal is being processed on file.
West Bengal
21 Proposed 1320MW (2x660) Coal based TPP at near village Char Bhabanipur, 13/01/2014 The proposal was considered in the 13th meeting of the Expert Appraisal Committee (Thermal
Balagarh Taluk, District-Hoogly, West Bengal Power) held during March 25-26, 2014.
Company: CESC Ltd. Upon the request of the PP, the proposal was deferred. Shall be delisted.
22 Extension project of 1x40MW Thermal Power Plant by addition of 20 MW at 27/01/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
Sarishatali- Alanson in West Bengal Power) held during 28th-29th August, 2014.
Company: Crescent Power Ltd. Minutes under preparation.
October 2014
www.InfralinePlus.com

NewsBriefs | Coal National


Apex court scraps 214 coal blocks Government to auction SC levies fine
Allotted since 1993 Coal blocks within 6 months Govt to get `800 billion

In a major blow to companies involved in coal The government will auction coal blocks within six The Government is set to be richer by `80,000
mining, the Supreme Court ordered the cancellation months to raise output and is likely to ask Coal India crore as according to the Supreme Courts order, all
of 214 of the 218 coal blocks that were allocated to take charge of the 40 operational captive coal the 40 operational blocks which have been given
between 1993 and 2011. It also imposed a penalty of mines. Coal blocks, which have acquired land and six months time to wind up their operations, are
295 per tonne on the coal illegally extracted by 42 obtained regulatory clearances, will be auctioned to pay a fine of `295 per tonne on the quantity of
companies which had commenced production. The first. However, the government will have to work out coal extracted by them date. Also with the court
verdict evoked strong reactions from the corporate ways to compensate the present captive coal block having further directed that the fine be levied on the
sector. Most companies hoped the Government owners for the blocks and modalities to take the land quantum of dry fuel which the companies holding
would have a Plan B that would, among other things, back from the companies, a senior coal ministry these blocks will mine till March 31, 2015, the
make clear on what happens to the investments official said. The coal ministry official said it will be Government ultimately is likely to receive much more
already made. A three-judge Bench Joseph rejected easy to auction five de-allocated coal mines that than the aforementioned amount.
the argument made on behalf of coal companies. were expected to begin production this financial year.

Coal import bill CIL to be part of new SPV CIL has so far signed 161 FSAs
To shoot up by `180 billion For ICVLs first buyout For a capacity of 73,675 MW

Indias coal import bill is likely to go up further by Coal India is likely to be part of a new special Coal India (CIL) has so far entered into fuel supply
around `18,000 crore due to the cancellation of purpose vehicle set up by International Coal pacts with 161 power units for a capacity of 73,675
coal blocks by the countrys apex court, according Ventures, a consortium of five state-run companies, MW. Out of 78,000 MW capacity as on date,
to a report. The Supreme Court quashed the to spearhead its maiden $50 million acquisition CIL (Coal India Ltd) has signed 161 FSAs (fuel
allocation of 214 out of 218 coal blocks allotted in Mozambique. NTPC may not join the new SVP, supply agreements) for a capacity of 73,675 MW,
to various companies since 1993. Around 40 of although a top ICVL official clarified that there are no according to a Coal India document. The Cabinet
them were operational. In the event of complete immediate plans to restructure the consortium which Committee on Economic Affairs (CCEA) had earlier
de-allocation of the coal blocks, the import bill was formed in 2009 to secure overseas coal assets. directed for coal supplies in respect of power
of India would jump by $3 billion. The two most SAIL and CIL hold 28% stake each in the consortium projects worth 78,000 MW capacity, it said. As many
impacted companies are Jindal Steel and Power and while NMDC, NTPC and RINL have 14% share each. as 172 FSAs are to signed in this regard. The status
30 Hindalco, Macquaire had said in a recent report. We are yet to make the payment to Rio Tinto, ICVL of the pending 11 FSAs was reviewed in the meeting
chairman CS Verma said. of the standing linkage committee held last month.

Indias coal import rush Coal India may raise prices GVKs Oz partner seeks
Leads to port congestion Of lower-grade coal by 10pc More time for investment

Indian power and steel companies are importing Coal India may raise prices of lower-grade coal, GVKs Australian partner Aurizon has decided
shiploads of coal due to a severe shortage at home, used to generate power, by a little over 10%, a move to postpone its commitment to their coal mine
leading to heavy congestion in one of the countrys that will help offset the fall in miners revenues from development project till early next year. This will
busiest ports that now has twice the number of selling smaller volumes through e-auctions, reports delay the projects timeline by two years as coal
vessels waiting than its available berths. The over- Indronil Roychoudhury in Kolkata. A CIL director prices keep falling and make it less viable to mine
crowding at Paradip port in eastern Odisha could said, on the condition of anonymity, a proposal coal in the near future. This is bad news for the
derail Indias efforts to prevent a shutdown of more to rationalise prices of coal had been mooted by Hyderabad company as it will have to incur $90
than half of its power plants which are running on Eastern Coalfields (ECL), given the huge disparity million of interest and operating cost per annum
stocks of less than a week in the worst deficit since in cost per kcal/kg between higher and lower grades with no revenue in sight for two years. And to make
a massive blackout in 2012. Govt has urged power of coal. The director said coal and power minister, matters worse, GVK will have to shell out $560
firms to import coal, but the countrys ports are Piyush Goyal, had, in principle, agreed to the idea of million by this month-end to Hancock Prospecting
finding it difficult to deal with the swelling traffic. rationalising prices and CIL was awaiting a go-ahead. as payment for the takeover of the mine.

WBMDTC coal mining project Overseas Coal Mines Galilee Basin rail line
Panel recommends green nod NTPC eyes stake GVK Hancock advances development

A high-level panel has recommended environment NTPC is scouting for coal assets overseas and has GVK Hancock has commenced a Material
clearance, with some riders, for the coal mining invited proposals form coal miners interested in Change of Use application for the approximate
project of West Bengal Mineral Development and offloading stake. The move is aimed at ensuring a 310 kilometers of its rail corridor in the initial
Trading Corp Ltd. The Expert Appraisal Committee, steady supply of imported coal which the power phase, following years of extensive planning and
after detailed deliberations, recommended for producer needs for its plants. NTPC, which generates hydrological assessments in development of
granting EC with...Specific conditions, said an 43,128 MW of power through its 38 power stations, infrastructure to connect its Galilee Basin coal
official document. The conditions include regular imports coal to meet its fuel requirement. The deposits with export markets. The development of
monitoring of methane and other air quality company plans to use 17 million tonnes of imported the Galilee Basin will give Queensland, one of the
parameters alongwith the subsidence, avoiding the coal this fiscal. The company has floated an EOI most significant pieces of regional and economic
dumping of coal and building materials on forest seeking to acquire strategic stake in coal mines development and this application will allow meeting
land, continuous monitoring of subsidence and against which the mining company will offer a all regulatory requirements to support such a
taking mitigation measures, it said. longterm commitment for off-take of coal. significant development.
October 2014
www.InfralinePlus.com

International
Adanis $2.2 billion rail line ICVL approaches steel ministry China will hit peak
Gains Federal approval With restructuring proposal Thermal coal demand by 2016

Adanis plans to build a new $16 billion coal mine International Coal Ventures Ltd (ICVL) has Chinese demand for coal may peak as soon as this
are a step closer after the Federal government approached the steel ministry with a proposal to year, hurting a world market already suffering from
approved a new 310km railway that will link the restructure itself as NTPC and CIL are no longer oversupply and low profits, the Carbon Tracker
operation to the port. The North Galilee Basin willing to stay put in the special purpose vehicle Initiative said. Investments in coal assets may be hit
Rail project was given the green light by Federal (SPV) as promoters. Government sources said the by falling costs for renewable energies and tighter
Environment Minister Greg Hunt, who placed 23 proposal would be taken up soon for consideration regulation to combat global warming, said the group,
conditions on the proposal. The rail line will link and if the inevitable happens SAIL, RINL and which promotes the idea that the world cant burn
Adanis yet-to-be-built Carmichael mine to already NMDC, three firms under steel ministry, would share all the fossil fuels its investing in while meeting
established rail lines in the Bowen Basin. Capable among themselves NTPCs and CILs combined 42% its climate goals. There are a host of signals that
of carrying 60 million tonnes of coal per year, the stake in ICVL. ICVL was set up in 2009 for acquiring Chinese demand for coal is close to peaking which
commodity will then be exported through Abbott coal mines abroad with an initial authorized capital of will cause a seismic shift in the market, Anthony
Point coal terminal. about `10,000 crore. Hobley, chief executive officer, wrote in a report.

Brazilian mining company Vale Dart Energy surrenders We Energies aims to double
To double coal production in Mozambique Stake in Indian CBM blocks Coal storage capacity

Brazilian mining company, Vale says it is doubling Oil and Natural Gas Corp. (ONGC) has been hit by We Energies plans to spend $62 million over the
its coal production in Mozambique as it launches news Dart Energy has surrendered it stake in the next couple of years to double coal storage capacity
the second mining phase which is expected to see companys coalbed methane (CBM) exploration at the 2,400-MW Oak Creek baseload power plant
output hit 17 million tons. The mining group plans project. In June 2013, ONGC had offered a 10 25% in Wisconsin, partly so it can burn more low-sulfur
to double production to about 17 million tons of stake in four of its CBM blocks to Dart. However, Powder River Basin coal. Oak Creek, located on
metallurgical coal and 5 million tons of thermal Dart Energy has cited tough conditions of doing Lake Michigan near the town of Oak Creek, currently
coal over the next two years, an official with business in India as a reason for its decision to exit burns a blend of PRB and Appalachian coal. Test
Mozambiques Tete Province said. Vale launched the country and surrender its interests in the CBM burns, some still underway, indicate the plant
operations at the Moatize coal mine in the interior blocks. In line with the groups re-focused strategy, could increase its use of PRB coal and save the
province of Tete in August 2011 and also started it is seeking opportunities to farm-out and/or sell Milwaukee-based utility on fuel costs. Since PRB
rehabilitating existing, and constructing new railway or exit all of its activities in India, Dart said in its coals heat content is lower than Eastern high-sulfur 31
tracks the Nacala Railway Corridor to transport coal. annual report. coal, more storage would be needed.

Peabody Says Its Encouraged New coal mines uneconomic Coal of Africa sells
By Metallurgical Coal As China demand growth slows Mooiplats thermal underground coal mine

Peabody Energy Corp. (BTU), the largest U.S. coal A potential $112 billion of coal mine expansion and Coal of Africa has offloaded its Mooiplats thermal
producer, said its encouraged by the outlook for development to 2025 is uneconomic at current spot underground coal mine, as it looks to dispense of
coal used by steelmakers following supply cuts and coal prices, a report by non-profit financial think non-core assets. The coal mine has been sold for
rising Chinese demand. The company estimates 25 tank Carbon Tracker Initiative said. CTI, which works US$ 23.5 million to a wholly-owned subsidiary
million to 30 million tons of worldwide output cuts to highlight how investment in fossil fuel resources of Blackspear Holdings. Blackspear must prove
have been announced this year, almost 10 percent might be affected by the global drive to curb climate evidence of funding before the end of October
of global seaborne supply, St. Louis-based Peabody change, said many of the worlds future coal mines 2014. The Mooiplats mine, in the Ermelo coalfield
said in a statement. It estimated in July that there had are not economic as Chinese demand growth slows. in the Mpumalanga province of South Africa,
been almost 20 million tons of cuts. China, which represents around half of the global has been placed on care and maintenance since
thermal coal market, plans to cut coal use to below October 2013.
65 % of energy by 2017 to tackle air pollution, which
CTI said will cascade through the seaborne market.

Vickery coal mine Waratah Resources continues Central Queensland mines


Whitehaven Coal gets greenlight Indonesian coal push BMA cuts 700 jobs

The NSW Department of Planning and Environment Waratah Resources has updated on the progress A major mine operator in Central Queensland
has approved Whitehaven Coals Vickery coal of a proposed sale to an international coal trading says it plans to cut 700 jobs from its Bowen Basin
project in the Gunnedah Basin. The approval comes company of trial 55,000 tonnes of thermal coal from coal operations, in order to stay profitable. BHP
as Whitehaven ramps up operations at its nearby South Kalimantan, Indonesia. An initial total of 9,000 Billiton Mitsubishi Alliance is the largest employer
Maules Creek coal mine, and was welcomed tonnes of coal has been delivered to the customer in the Bowen Basin, with more than 10,000 staff
by Whitehaven CEO Paul Flynn who called it a however commercial difficulties experienced by and contractors. The company says a review of
significant positive step for the company. This Waratahs supply partner have prevented delivery and its operations in the region found the mines are
provides another growth option for the company implementation of the full amount. The buyers ship overstaffed, and can operate more efficiently with
following the development of Maules Creek, he is concluding the current cargo with coal sourced fewer workers. BMAs asset president, Lucas Dow,
said. Whitehaven can now seek to form a joint from elsewhere, while Waratah is arranging an says the coal industry is at a crossroads and tough
venture for this long life development which will alternative buyer for its remaining 46,000 tonnes. decisions needed to be made.
produce Maules Creek quality coal.
October 2014
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InDepth
Power crisis may worsen as SC
scraps coal blocks allotment

32

The sector which is already reeling under shortage of coal may have to wait longer
Only solace for power companies is the fact that coal prices in intl market are low

Infraline News Service

The Supreme Courts decision to cancel illegal. According to the court, these were received 69, and cement industry which
all the coal blocks allocated during 1993- allocated in an arbitrary, unfair and non- had received eight. As many as 41 blocks
2010, may further plunge the countrys transparent manner without following were offered for commercial mining.
power sector into darkness. any objective criteria. The major listed private companies
The power sector which is already These 218 coal blocks have geological which received coal blocks since 1993
reeling under shortage of coal may have reserves of about 5,000 crore tonne. include Jindal Group (11 out of which
to wait longer to get access to domestic After 2010, coal blocks were allotted seven were for Jindal Steel and Power
coal, and may have to import more coal based on auction and hence these Limited (JSPL)), Bhushan Group of
till the issue gets resolved. allocations remain safe. companies (5), Hindalco Industries (4)
A special bench of the Supreme Court Out of 218 coal blocks, the power and Tata Group (6).
(SC) has declared all the 218 coal blocks sector had received the maximum of 95 The power sector which accounted
allocation between 1993 and 2010 as blocks, followed by iron and steel which for 76 per cent of the total coal demand
October 2014
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in India during 2013-14, has been forced be 551.60 MT against supply of 466.89 opening till September 16.
to import coal due to acute shortage. The MT during 2014-15. The uncertainty over Supreme Courts
coal shortage situation has come to such Power, mining and metal sector final decision on cancellation of the coal
a pass that on September 1, 2014, as stocks have reacted negatively to the blocks will keep putting pressure on the
many as 56 hydel power units had coal news. The BSE Power index has shed performance of power sector stocks. If
that would last for less than a week. three per cent between August 25 and indeed the court cancels the coal blocks
However, the power companies September 16, 2014. The BSE Metal (except the 46 operational ones), it would
may take solace from the fact that index also dropped two per cent during depend on how quickly the government
international coal prices are trading the same period. is able to re-allocate the blocks.
at their five-year low due to a Among the power stocks which According to a Kotak Securities
glut-like situation. reacted sharply on the day of the court report, the process of reallocation, which
It is quite likely that the problems of verdict included JSPL (-14 per cent), involves conduct of auctions, transfer
the power companies will aggravate if Reliance power (-4 per cent), Tata of assets to the government and the
the Supreme Court cancels all the coal Power (-3.5 per cent), KSK (-3 per cent), new owner post the auction and restart
blocks allocated since 1993. This would JP Power. of mines under new ownership and
also hurt the profitability and margins of JSPL is among the worst-hit of the lot management, will take time.
power, metals and mining companies as which is down by 26.5 per cent from its We also do not rule out legal
they have invested billions of dollars in August 25 opening of Rs 297. Reliance challenges by companies who may have
setting up coal blocks. Power is down 17 per cent, while Tata felt aggrieved by the Supreme Courts
Naveen Jindal, Chairman, Jindal Steel Power is 11 per cent since its August 25 uniform judgment, it adds.
and Power, said recently in a summit on However, some brokerage houses
mining and metal in New Delhi that the are of the opinion that given the power
company had made a total investment Of the 218 coal blocks, situation in the country, SC may not
of Rs 4 lakh crore for developing the power sector had cancel all the allocations. An Emkay 33
coal blocks. received the maximum Global report opines that in the case
According to the Central Electricity of tangible asset such as coal blocks,
Authority (CEA), the power sector
of 95 blocks, followed location relevance of mines and
imported 80.30 million tonnes (MT) by iron and steel power plants (or users) would make it
of coal in 2013-14. The Coal Ministry 69, cement industry imperative to reallocate the mines to the
has estimated that the demand-supply eight and 41 blocks same power plant owner/user. While the
gap would further increase in 2014-15. were offered for committee will undertake a case-by-case
According to the Ministry, demand for commercial mining approach in disposing the illegal mining
coal from the power sector is estimated to cases, it is likely that majority of the
cases will be dealt by imposing penalty.
Indias coal import increased by 18
per cent to 171 MT in 2013-14 compared
with 145 MT in 2012-13. Coal India
Limited (CIL), which accounts for 80
per cent of the domestic coal production,
has been producing less coal than its
target. It mined only 462 MT against the
output target of 482 MT in 2013-14. In
2012-13, CIL produced 452.5 million
tonnes of coal, short of its goal of 464
million tonnes.
India imports 76 per cent coal (non-
coking) from Indonesia and South Africa,
while the remaining (coking coal) comes
from Australia.

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InDepth
Coal block de-allocation leads
to $10-12 billion bad loans
De-allocation of coal blocks since 1993, banks loans to the tune of $10-12 billion could go bad
Analysts expect that about 9-10% of banks loans released to the overall power sector

34

Infraline News Service

Finally the Supreme Court decides of banks loans released to the overall banks have lent 14.4% more to the
to go ahead with de-allocation of power sector would be in trouble with power sector as against previous
coal blocks since 1993, a similar the verdict of captive mines being year at `5.08 lakh crore (8.8 per cent
judgement to the 2G spectrum case. de-allocated. This pertains to nearly of non-food credit) as on Q1FY15.
The move is certainly bad for power 17,000-18,000 mw of thermal power Of this, about `2.65 lakh crore have
generation industry but it is collateral plants. In other words, more than been provided to state electricity
damage for banks too. Exposure 50% of the total coal-based power boards or discoms.
to power sector in terms of banks plants in the country. Both private as The Supreme Court has said that
loans could hit the banking sector to well as public sector banks would be allocations of more than 200 coal
the tune of $10-12 billion, industry equally hit by such a move. blocks are illegal. However,
watchers told Energy Infraline. According to data available with countrys biggest bank SBI, which
Analysts expect that about 9-10% Reserve Bank of India, the Indian has `4,000 crore exposure to captive
October 2014
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coal mines, feels that de-allocation


of these blocks would not hurt the Analysts expect that about 9-10% of banks
banking sector much. loans released to the overall power sector
The economics of these things would be in trouble with the verdict of
will change to some extent but not
drastically so much that the entire
captive mines being de-allocated. This
amount has to be written off, SBI pertains to nearly 17,000-18,000 mw of
Chairperson Arundhati Bhattacharya thermal power plants. In other words, more
was quoted saying by PTI. than 50% of the total coal-based power
According to Bhattacharya, Even plants in the country.
if these blocks get de-allocated that
does not mean the companies will
not get coal. It will mean that coal Dangerous Exposure
that they use will be a little more Company Project Capacity (MW) Key Lenders
expensive. So their margins may Adani Power Tiroda-I 1980 SBI, PFC, REC, ICICI
shrink. That is all that it means. It JSPL Tamnar-I 1000 SBI, Canara
JPVL Nigerie 1320 ICICI, PNB, IDBI, United
doesnt mean that my `4,000 crore
KSK Wardha 1800 PFC, RC, PNB, Axis
has gone down the drain.
KSK Wardha expansion 1800
She is hopeful that the government
Lanco Babandh 2640 IDBI, ICICI
would make the right intervention GMR Kamalanga 1400 IDBI, ICICI
considering the impact on power GVK Goindwal Sahib 540 Axis, IDBI
generation industry and Indias Essar Mahan I 1200 ICICI, PFC, REC, PNB
humungous power requirement. Essar Tori I 1200
Again as I said it is not the end of Essar Tori II 600 35
the world, and we will see ourselves DB Power Bara Darhaa 1320 SBI, Union, L&T Infra
go through this. I am sure that the Abhijeet Banka 1320 SBI, PNB, Axis
authorities will take the right decision, Total Capacity 18120
Bhattacharya was quoted saying. Source: Company data, Credia Suisse estimates

The colagate scam, as has been


commonly known, has been at the
centre since the previous Manmohan
Singh-headed UPA government
was in power. In 2012, the national
auditor Comptroller and Auditor
General (CAG) said that government
exchequer may have lost to the tune
of $33 billion for not auctioning
coal blocks.
Switzerland-based Credit Suisse
Group said in one of its recent reports
that the fact that the allocations have
been declared illegal makes the risks
quite high for these projects.
As the SBI Chairperson has
pointed out, in a scenario where
captive mines are de-allocated, the
power firms would have to buy
expensive coal through e-auctions
from Coal India Ltd. It is to be seen
of the PSU miner has substantial
RBI governor Raghuram Rajan deliberating on issues relating to Indias financial strength volumes to feed nearly 17,000-18,000
October 2014
www.InfralinePlus.com

InDepth

mw of power stations. Generally, the


cost of production from a captive
coal mine hovers around `800 per
tonne. On the other hand, coal
procured through e-auction costs
anything upto `3,500 a tonne of the
same calorific value. Other option is
to import expensive coal.
Australia-based Macquarie Group
said that the move would increase
Indias import bill by $3 billion.
The government will impress
upon the Court about coal shortages,
power cuts and derailment of the
investment process, Macquarie said.
There are more concerns for
captive mines where on-ground
mining is yet to be started. The
Supreme Court observed that Industry watchers also point out that if a power
allocations to state mineral plant uses expensive coal (bought through
development corporations (SMDC) e-auction or imported), the tariff would go-high.
in 2001 were not legal. Some of these On the other hand, most of these stations have
state PSUs had formed joint ventures
with private power producers
signed long-term power purchase agreements
36 (PPAs) with state-run discoms, which are
and handed over the coal mining
operations. If these mines stop unlikely to agree for a higher tariff. As has been
producing it could hurt several power the case with Tata Powers Mundra UMPP and
plants that are either operational or Adani Powers plant at the same location in
about to be commissioned. Gujarat, the discoms would approach regulators
Industry watchers also point out
that if a power plant uses expensive
to not pay a higher tariff.

coal (bought through e-auction or


imported), the tariff would go-high.
On the other hand, most of these
stations have signed long-term power
purchase agreements (PPAs) with
state-run discoms, which are unlikely
to agree for a higher tariff.
As has been the case with Tata
Powers Mundra UMPP and Adani
Powers plant at the same location
in Gujarat, the discoms would
approach regulators to not pay a
higher tariff. Moreover, state polls in
Maharashtra and Haryana on October
15 and other states in the later part
of the year or early next year may
play spoilsport.

For suggestions email at feedback@infraline.com


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October 2014
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ExpertSpeak
Auction of Coal Blocks Have
we made the right choices?
SP Kansal, a mining engineer by qualification, is working with the Coal
Division for Videocon Industries Ltd since 2010 and has been engaged
in developing two coal concessions in Central Kalimantan Province of
Indonesia. He was part of the new Coal Industry initiatives that followed
large scale private sector participation in power sector. He had earlier
worked with Hinduja National Power Corporation and Lanco Infratech
Limited in their Coal Divisions. He worked with Coal India for over two
decades before moving to private sector.

Distorted government policies and Despite of acute shortage of coal


half hearted attempts at deregulation first attempt at auction three coal blocks
created conditions that were exploited failed to attract significant interest and
by unscrupulous actors in allotment had to be aborted. Something must
of coal blocks that led to the present be seriously wrong with the process
38 mess in the industry. New and or fundamental assumptions. Instead
SP Kansal, mining engineer working with Coal
radical initiatives are needed to get of rushing headlong into suggesting Division, Videocon Industries Ltd
the industry out of this log jam. remedial measures
These reformative policy initiatives let us understand There over the find. Most of the searches
have to ensure: how does rest is (PL) do not end up in finding the
A. Process for allocation of mineral / of the world widespread mineral resource. Failing to find
coal resources to entrepreneurs to do it? Mining
acceptance to mineral resource would result
the idea that all
be made impartial, transparent and after all is one in termination of PL. Successful
allocations of natural
objective; of the oldest resources should be find over the concession
B. Massive increase in domestic industries. made through a authorizes the PL holder first
coal production and making coal For a number process of open right to award of ML.
available to public utilities at of countries like Auction.
economical prices Australia, South How are the Prospective
Africa and Canada License (PL) awarded a
There is widespread acceptance to it contributes a dominant share of nd what are the financial
the idea that all allocations of natural their GDP. Let us understand how payouts to government?
resources should be made through these countries allocate mineral / PL are awarded to any applicant
a process of open Auction. The coal resources. A number of Indian (including foreigners) that meets
Mines and Minerals (Development companies have acquired coal / mineral minimum financial/technical criteria
and Regulation) Act 1957 has been concessions in these countries. laid down for the purpose and is
amended to provide for Auction Prospecting License (PL) awarded on first come first served
of Prospecting Licenses (PL) and authorizes the holder to carry out basis. The geographical area for PL
Mining leases (ML). Rules laying search operations within a defined is selected by the applicant and is
down procedure for the process for geographical area for specified accepted by the government as long
conducting auctions have also been minerals within a specified time as it does not superimpose over an
notified. True to its character the Indian period. On successful completion of existing PL or ML and the area is
bureaucracy has retained enough exploration PL can be upgraded to a within the maximum permissible area
maize of procedures, dos and donts to Mining Lease (ML). ML authorizes for a PL. The concessionaire has to
ensnare prospective bidders. the holder to develop and operate mine commit to a minimum annual work
October 2014
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program and adhere to it. All geological been uneconomical earlier would India for any procedure that is not a
data created as result of the search turn economical. In past although hands free process (free of subjectivity
is to be shared with the government exploration work was done ML was not on part of bureaucracy or government
and can be accessed by public. Only obtained on lean resource. For award like selection amongst the applicants
administrative fee is charged for award of PL or ML on such concessions through screening committee). Through
of the PL. Concessionaire can be the principle of First Come First Auction the lessee would make
penalized by revocation of PL and / or served continues to be applied. The payments in addition to the Royalty
forfeiture of Bank Guarantee if there is geological information available with accruals. There is little to differentiate
deviation from minimum exploration the government can be accessed by between the two taxes/payments accept
program. Failure to find mineral would public on payment of prescribed fee. that the Royalty rates are fixed by the
result in loss of investment for the The government assigns priority list to government and are case neutral while
Concessionaire. An annual Land rent is multiple applicants and disposes their payments committed under Auction
charged on the basis of land area of the applications in order of priority. would be those bid by the lessee and
PL. This is done to discourage squatters would be case specific. Government
who lock up the area for the duration could have included the components of
of the PL. The government gains by
Upon successful Auction process into Royalty regime
securing geological data for the PL area completion of also thereby obviating the need for
at the cost of the Concessionaire. exploration amendments to MMDR Act, but that is
Concessionaire has beside the point.
How is Mining lease (ML) a right to award
awarded and what are of ML should he Problems associated with
the financial payouts to Auction Process
government?
meet the minimum PL grants an exclusive right on the
Upon successful completion of eligibility criteria laid lessee to search for a coal / mineral 39
exploration Concessionaire has a right down in the law and resource in a defined geographical
to award of ML should he meet the obtains prerequisites location which is expected to contain
minimum eligibility criteria laid down like Environmental such coal /mineral resource. A PL
in the law and obtains prerequisites Clearance, Forest holder does not possess a defined or
like Environmental Clearance, Forest measured mineral resource but only
Clearance etc. Only administrative
Clearance etc. a promise of such resource. Auctions
fee has to be paid to the government of a License (PL) which holds only
for processing of the ML application. What is the difference a promise of resource is not likely to
As the mineral is owned by the State between Royalty payment fetch good returns. Prerequisite for a
the Concessionaire is required to pay and Auction Proceeds? proper auction of a coal block would
for the right for its extraction. The The argument given in public discourse be adequate exploration, economical
ML holder is required to pay Royalty that National resources have been coal resource estimate and minimum
on the coal / mineral extracted from given away for free is not true. The approvals like Forest and Environment
the mine. The ML holder pays either state levies tax in the form of Royalty being in place. Although there is wide
the Royalty or Dead Rent whichever for the mineral mined by the Lessee. consensus but WHO is going to do the
is higher on annual basis. The dead However the rate of Royalty is exploration and take approvals, HOW
rent is a punitive tax imposed on such uniformly applied and is notified by much time will it take and WHEN
Concessionaire who fails to extract the government. Royalty rates are not would the coal blocks be available
mineral / coal after allocation of ML. It case specific and Royalty is levied post for auction? The track record of
is designed to act as a deterrent. mining and is linked to the quantum of government agencies in this respect has
coal/mineral extracted. been dismal and it would take those
How are ML issued over In India there is an underlying years if not decades to get coal blocks
such area that have been assumption that the royalty does ready for auction. A few coal blocks
explored in the past through not adequately tax the Coal Mine that have been explored and have been
PL but no ML were granted allotees and that they are making / reasonably developed and are being
over them likely to make windfall profits by canceled may fit the bill and may
Often with passage of time lean being Captive consumers of the coal come up for Auction in near future.
mineral resources which would have allotted to them. There is little faith in But once these low hanging fruits are
October 2014
www.InfralinePlus.com

ExpertSpeak

auctioned we would again be staring at


another logjam.

How Do Developed Mining


Countries carry out
Exploration?
Exploration is primarily carried out by
private entrepreneurs. To encourage
them a conducive system of reward for
locating new mineral / coal resource
has to be in place. This is done by
making PL and ML freely transferable
between business entities. No
unreasonable restrictions are imposed
on sale of minerals / coal by the ML
holder at market determined price and
allowing access to capital markets
to PL holders for finding funds for
exploration work. Such liberal works
in a country with good governance
in place. These countries allow little viability of the mineral resource has
subjective authority to the bureaucracy Auction may seem to been established and big mining
and they are expected to respond to be a panacea for coal companies get involved they are able to
40 each application in a well laid out block allocations in secure project finance through formal
procedure in well defined time frame. the present vitiated banking institutions.
The Government agencies are seen atmosphere. It would
to be handling award of PL and ML Conclusion
in fair and transparent manner. This
work for a small number Auction may seem to be a panacea for
is not the case with India. Our laws of coal blocks which coal block allocations in the present
provide a lot of subjective discretion to can be auctioned as vitiated atmosphere. It would work
the bureaucracy and the government. they would meet the for a small number of coal blocks
True to human nature such subjective essential prerequisite which can be auctioned as they would
authority leads to misuse and criteria required for a meet the essential prerequisite criteria
thereby lack of faith in government required for a fair Auction process.
agencies. The ill effect is the lack
fair Auction process. This process would not work for
of private initiative in exploration This process would not unexplored coal blocks. In the long
activity in India. work for unexplored run such policies that encourage
coal blocks. private sector entrepreneurship in
Junior Mining companies exploration and development of coal/
Exploration for minerals is a high risk made mineral discovery they sell their mineral resources have to be put in
area with majority of initiatives ending licenses to bigger mining companies place. We do not need to go far to
in failures. This is an area where who have the financial wherewithal find such policies being successfully
large mining companies avoid getting to obtain ML and subsequently implemented in many countries and
involved. This work is done by small develop coal / mineral mines. The need to draw lessons for us. The
mining companies that operate on Junior Mining Companies start their solutions would have to be unique to
shoestring budgets and are manned by operations with small seed capital our situations but we must learn from
motivated geologists. They use basic contributed by the promoters. They how others are succeeding where we
geological data available in public are able to raise further capital either are faltering.
domain and secure multiple PL. They through private placements or through
search for minerals on a number of PL Alternative Stock Exchanges which
in hope that a few of them would result allow raising of equity capital for The views in the article of the author are personal
in good finds. Soon after they have exploration companies. Once economic For suggestions email at feedback@infraline.com
October 2014
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StatisticsCoal
Coal Blocks likely to come into production during 12th Plan and early 13th Plan
Sl. Coal Block Utility GR Ultimate Date of EC Granted Status of forest clear- End use Project (TPS)
No. (Million capacity ance
tonnes) (MTPA)
Central Sector
1 Pakri-Barwadih NTPC 1436 15 19-May-09 Forest clearance Granted Lara Ph-I (2x800 MW) Darlipalli Ph-I ( 2x800
MW)
2 Kagra Joydev Damodar Valley Corporation (DVC) 196 3 22-Jun-09 under process Mejia Ph-II (2x500 MW) (Commissioned)
3 Talabira II &III Mahanadi Coalfield Limited MCL/Neyveli 589 20 under process under process Orissa TPS (4x500 MW) Hindalco CPP (900
Lignite Corporation Limited(NLC)/ Hindalco MW)
4 Gondulpara DVC and Tenughat vidyut nigam limited (TVNL) 166. 185 4 8-Jan-14 Subject to Forest Forest clearance under Power project in Jharkhand
clearance process
5 Talaipali NTPC 1267 18 2-Jan-13 Forest clearance Granted Lara Ph-I (2x800 MW)
6 Kerandari NTPC 285 6 31-Mar-10 Forest clearance stage-I Barh St-II TPP (2x660 MW) Unit-1 (Commis-
Granted sioned) Tanda Expn. (2x660 MW)
7 Chatti Bariatu NTPC 194 7 19-Apr-10 Forest Barh St-II TPP (2x660 MW) Unit-1 (Commis-
clearance sioned) Tanda Expn. (2x660 MW)
Granted
8 Dulanga NTPC 196 7 3-Mar-14 Forest clearance stage-I Darlipalli Ph-I ( 2x800 MW)
Granted
Total 4329.185 80
State Sector
1 Tara Central Chhattisgarh mineral development corporation 317.39 6 23-May-12 Forest clearance stage-I IFFCO Chhattishgarh (2x660 MW)
(CMDC) Granted
2 Badam Tenughat vidyut nigam limited (TVNL) 144.63 3 13-Mar-08 Forest clearance stage-I Tenughat TPS Extn. (2x660 MW)
Granted
3 Gidhmuri CSPGCL 350 5.6 under process under process Bhaiyathan TPP 2x660 MW
4 Paturia Chhtisgrah state power generation company under process under process
ltd (CSPGCL)
5 Tadicherla-I APGENCO 47.93 2.5 under process under process Kakatiya TPP Stage-II (600 MW)
6 Amelia MPSMCL 393.6 8.4 27-Mar-08 Forest clearance under Existing & proposed TPS of MPPGCL
process
7 Machhakata and GSECL/ MSPGCL 140 0. 65 30 under process Forest clearance under Koradi Ext. (Unit 8,9,10) 3x660 MW
Mahanadi process Chandrapur (unit 8,9) 2x500 MW
Parli (unit 8) 1x250 MW
Bhusawal (Unit 6) 1x660 MW
Ukai (unit6) 1x500 MW (Commissioned)
Wanakbori 1x800 MW Sinor 1x800 MW
8 Dongrital -II MPSMCL 175 2.9 22-Feb-12 No forest land Jaypee Nigree STPP (2x660 MW)
U-1 (Commissioned)
9 Chendipara & 1811.96 40 under process Forest Obra extn C 2x660 MW
Chendipara II clearance under process Jawaharpur TPP 2x660 MW
Dopaha TPP- 3x660 MW
Meramandali - 2900 MW
Dondaicha TPS St-1 2x660 MW
10 Manoharpur OPGCL 181.68 8 21-Feb-14 Forest clearance stage-I Ib TPS (Unit 3&4) 2x660 MW
Granted
11 Parsa CSPGCL 184 5 under process Forest clearance under Marwa TPP 2x500 MW U-1 (Commissioned)
process
12 Gare Pelma GIDC 210.2 5 23-May-13 Forest clearance Granted KSK Mahanadi 3x600 MW
Sec-III U-1&2 (Commissioned)
Total 5217.04 116.4
Private Sector
1 Tokisud North GVK Power 92.92 2 24-Sep-08 Forest clearance Granted Goindwal Sahib TPP 2x270 MW
2 Mahan ESSAR Power / Hindalco/ 144.2 8.5 23-Dec-08 Forest clearance Granted Mahan TPP (Essar) 2x600 MW U-1 (Commis-
sioned) Mahan CPP (Hindalco)-900 MW
3 Chakla ESSAR Power 83.1 4.5 recommended subject to Block recommended for Tori TPP 2x600 MW
Forest clearance deallocation by IMG
4 Tubed Hindalco/ Tata Power 189 6 under process Block recommended for Tata Power Tiruldih Power Project ( 3x660
deallocation by IMG MW) Hindalco CPP (6x150 MW) of Jharkhand
Aluminium Project
5 Durgapur II/Sarya DB Power 91.67 2 5-Jul-13 Forest clearance Granted 2x600 MW TPP U-1 (Commissioned)
6 Mandakini-A Monnet Ispat/ Jindal Photo/ Tata Power 322.52 7.5 17-Jan-11 Forest clearance stage-I Derang TPP 2x600 MW Monnet TPP 2x500
granted Block recom- MW Tata Power 2x660 MW
mended for deallocation
by IMG
7 Fatehpur East JLD Yavatmal/ RKM Powergen/ Vis Power / 330.87 10 1-Jan-14 Subject to Forest Forest clearance under JLD Yavatmal Energy Ltd 1215 MW TPP
Athena Chhattisgarh/ Vandana Vidyut clearance process Block recom- R.K.M. Powergen Pvt. Ltd 1440MW
mended for deallocation Visa Power Ltd 1200 MW TPP
by IMG Athena Chhattisgarh Power Ltd 1200 MW
Vandana Vidyut Ltd. 540 MW TPP (2x135, U-1
Commissioned+1x270MW)
8 Ganeshpur Tata Steel/Adhunik Power 137. 88 4 24-Jan-14 Forest clearance stage-I 2x270 MW Adhunik TPP (commissioned) 600
granted Block recom- MW CPP of Tata Steel
mended for deallocation
by IMG
Total 1392.16 44.5
Total No. of Grand Total 10938.38 240.9
Blocks = 28
Note: Considering coal requirement of 4.5 MTPA per 1000 MW the above coal blocks can cater to about 53500 MW capacity.
October 2014
www.InfralinePlus.com

StatisticsCoal

Coal Blocks which are producing coal and likely to be affected by Supreme Courts decision

42 S. Coal Block Utility GR (MT) Ultimate Name of linked EUP Capacity of linked EUP Investment in Investment
No. capacity coal block (INR in EUP (INR
(MTPA) Crore) Crore)
Central Sector
1 Barjora (North) DVC 85 3 Mejia TPS Ph-II 2x500MW 283.36 5000
Total 85 3 1000 MW 283.36 5000
State Sector
2 Pachwara Central PSEB 562 7 PSEB plants under operations 2620 MW 540.82 13100
3 Tara (East) WBSEB 84.47 4 Existing thermal power plants Bakreshwar 5x210 MWSagardighi 2x300 MW 320.04 13000
under operations andSantaldih2x250 MW expansion Unit 450 MW
4 Tara (West) WBSEB 125.71
5& Integrated Gangaramchak & WBSEB 13.68 1 42
6 Gangaramchak Bhadulia
7 Barjore WBPDCL 3 0.5 65.54
8 Pachwara North 609.35 15 297.33
9 Baranj-I KPCL 68.31 5 Bellary TPS Stage-I 1x500MW 609.49 5000
10 Baranj-II
11 Baranj-III
12 Baranj-IV Bellary TPS Stage-II 1x500MW
13 Kiloni 39.51
14 Manora Deep 44.7
15 Talabira -1 Hindalco - - Hirakud CPP 367.5 MW - 2000
Industries
16 Parsa East* RRVUNL 532.86 10 Chhabra Phase II U:3&4 2x250 MW 961.16 13055
17 Kante Basan* Kalisindh U:1 & 2, U-2 not 2x600 MW
commissioned
18 Amelia (North)@ MPSMCL 123.54 2.8 Jaypee Nigree STPP, U-2 not 2x660 MW 573.73 3000
Commissioned
Total 2207.13 45.3 9607.5 3410.11 49155
Private Sector
19 Sarisatolli RPG Indus- 140.47 2.9 All power plants under Budge Budge (2x250 MW) Titagarh (4x60MW) 52.23 4375
tries / CESC operation Southern Generating Stations (2x67.5 MW) (All power
plants under operation)
20 Gare-Palma-IV/2 Jindal Power 123 5.25 Raigarh TPP 4x250 281.25 4057.14
21 Gare-Palma-IV/3 Jindal Power 123
Total 386.47 8.15 1875 333.48 8432.14
No. of Blocks = 21 Grand Total 2678.6 56.45 12482.5 MW 4026.95 62587.14
*Started production in 2012-13 and yet to achieve full capacity
@ Under commercial categories but coal supply to power plants. Started production in 2013-14 and yet to achieve full capacity
October 2014
www.InfralinePlus.com

CoverStory
Will SC verdict on coal
blocks ruin the power sector?
Power plants operators will have to pay penalties, which has implications for power prices
Delays in decision making will lead to more policy uncertainties

43

Infraline Bureau

In what could be a big jolt to power and SAIL, the other two were allocated Screening Committee has never been
generation industry, the Supreme under competitive bidding for ultra consistent, it has not been transparent,
Court has deallocated 214 coal blocks mega power projects. there is no proper application of mind,
out of the 218 coal blocks allocated "The entire allocation of coal it has acted on no material in many
since 1993. Four blocks for which the block as per recommendations made cases, relevant factors have seldom
Apex Court was little lenient and are by the Screening Committee from been its guiding factors, there was
exempt from the verdict belong to the July 14, 1993 in 36 meetings and the no transparency and guidelines have
Central government and those blocks allocation through the government seldom guided it," a bench headed by
are not mined under any joint venture dispensation route suffers from the vice Chief Justice RM Lodha had said in its
agreement. While two belong to NTPC of arbitrariness and legal flaws. The 163-page verdict.
October 2014
www.InfralinePlus.com

CoverStory

The Court has accepted CAG's of the coal sector once for all. may strike down the policy on which he
estimation of the loss while giving its The order on the one hand adds to [based] his investment decision."
strong verdict. The former Comptroller policy uncertainties of doing business, It's not just the power companies
and Auditor General Vinod Rais report but on the other hand it also paves that have to worry after this verdict.
of 2012 on the coal block allocations way for some clarity on coal mining Even banks are going to bear the brunt
computed the undue gains at `1,86,000 in India, something which business of the apex court's decision to cancel
crore. The report suggested that country leaders were seeking to make big the allocation of 214 coal blocks.
suffered loss as the government did not investment plans. State-run lender IDBI Bank Ltd has
follow transparency in allocating coal The country's highest court on close to `2000 crore loan exposure
blocks to private players. The CBI, Wednesday said control over almost to companies affected by a Supreme
which is investigating the multi-crore all coal blocks allotted since 1993 will Court order scrapping coal blocks but
scam, has alleged that for several have to be returned, saying they were not all of it will be problematic, the
years, mining licences were given granted illegally. The decision could lender's head said. "We are assessing
arbitrarily to private companies without aggravate a coal shortage in the country, (the quantum of loss)," MS Raghavan,
a transparent bidding process. analysts said. chairman and managing director of
The Court said that there was The cancellation puts at least $47 IDBI Bank.
no reason to show leniency as the billion of investments in such industries Ajay Bhatt, the finance chief at
allocations were arbitrary. The as power, steel and aluminum at risk, Monnet Ispat & Energy Ltd., said
companies involved have also been said Ashok Khurana, director general at his company has invested close to $2
penalised at `295 per mega tonnne the Association of Power Producers. "It billion in building steel and power
for the loss (to the country). The does create uncertainty in the mind of plants in the last five years with the
government is now free to hold auctions an investor," he said. "He will think that assumption it would have a stable
or give them to Coal India. Though the even after 10, 15 or 20 years, a court supply of coal from blocks it had been
44 government is preparing an action plan
post Supreme Court's verdict on the For the blocks which are already operational will
issue, experts believe most of the coal
blocks would be given to Coal India
get 6 months to wrap up their operations, as per the
as giving it to private companies may court order. But the power producers dependent on
again delay the process of coal mining these coal blocks will not suffer as even after Coal
from the blocks. India takes them over, it will continue to provide
For the blocks which are already coal to the power producers.
operational will get 6 months to
wrap up their operations, as per the
court order. But the power producers
dependent on these coal blocks will not
suffer as even after Coal India takes
them over, it will continue to provide
coal to the power producers.
On August 25, the Supreme Court
had said that the coal block allocations
were illegal since 1993. It had said that
the government did not adhere to proper
guidelines and no objective criteria
were being followed either. However it
has not deallocated coal blocks yet and
said that would require further hearing
to see if it needed to deallocate 218 coal
blocks. The Court verdict potentially
created uncertainty about coal supplies
for the industries using the fuel, but also
giving an opportunity to the Narendra
Modi-led government to clear the mess Power Minister Piyush Goyal addressing a gathering in National Capital
October 2014
www.InfralinePlus.com

De-allocation of operating coal mines to


severely impact metal players: CRISIL
Supreme Court de-allocates all Players with operational coal blocks in the iron & steel sector
but four captive coal blocks
Captive therm al coal
On September 24, 2014, the Supreme Production
Peak
Production in production as a % of annual
Com pany Nam e Block Nam e capacity
Court de-allocated almost all captive Start Month
(MTPA)
2013-14 requirem ents at the
sponge iron plant in 2013-14
coal blocks (allotted to government
Jindal Steel and Pow er
and private companies), which it had Limited (JSPL)
Gare Palma IV/1 Feb-99 6 5.999 100%

earlier termed as illegal. Of the 46 Monnet Ispat Limited (MIL) Gare Palma IV/5 Jun-04 1.1 0.919 65-70%

blocks which are either producing (40 Jayasw al Neco limited


Gare Palma IV/4 Sep-06 0.48 0.444 100%
(JNL)
blocks) or about to start production Prakash Industries limited
Chotia Jul-06 1 1.001 100%
(6 blocks), it cancelled 42 blocks (PIL)
Surana Industries Limited
(37 operational and 5 about to (SIL)
Belgaon Dec-07 0.27 0.149 100%

be operational). For these cancelled Usha Martin Limited (UML) Kathautia Dec-08 0.8 0.763 78%

blocks, the court granted six months Electrosteel Castings


Parbatpur Dec-08 1.24 0.462 75-80%
Limited (ESCL)
to shut down operations. Moreover, Sarda Energy Limited
Gare Palma IV/7 Mar-09 1.2 1.164 85-90%
players with operational blocks have (formerly RAPL)
B.S.Ispat Marki Mangli-I Mar-11 0.33 0.08 NA
been asked to pay a penalty of `295
0.318 (For Marki
per tonne of coal mined upto 2014-15, Shree Virangana Steel
Limited
Marki Mangli-II Dec-11 0.21 Mangli-II and NA
which will translate to `100 billion. Marki Mangli-III)

The four coal blocks which have Shree Virangana Steel


0.318 (For Marki 45
Marki Mangli-Ill May-13 0.3 Mangli-II and NA
Limited
not been de-allocated pertain to NTPC Marki Mangli-III)

(Pakri-Barwadih), SAIL (Tasra) and Sova Ispat Limited & Jai


Ardhagram Nov-12 0.4 0.277 50%
Balaji Industries
Reliance Powers Sasan Ultra Mega
Power Project (UMPP) (Moher and Source: Ministry of Coal, CRISIL Research
Moher Amlohri Extension. Moreover,
Players with operational coal blocks in the Aluminum sector
in its ruling on August 25, 2014, the
SC had held that blocks allocated to Profitability of players in the operational coal blocks on 7-8 GW
Com pany Nam e Block Nam e Peak capacity Production in
UMPPs through competitive bidding metals sector to witness a sharp of linked power projects will be
(MTPA) 2013-14 (MTPA)
would not be de- allocated. decline limited as these operate under a
Hindalco Industries Limied Talabira-I 3.0 2.5
Of the 218 coal blocks allotted so Players who have operational coal fixed return model. Moreover, we
far, only 40 blocks have commissioned blocks
Source: will witness
Ministry a sharp
of Coal, CRISIL Researchdecline expect alternate domestic coal
as of 2013-14, with a production of 39 in profitability post 2014-15, as they supply (albeit at a higher price as
million tonnes. would have to substitute captive compared to captive coal) to be
The sector-wise status of coal with imported
Deallocation of minescoal to havewhich is impact on
limited operational
provided powerprojects
to these projects as most
operational blocks is given in the about four times more expensive (as
The impact of de-allocation of operational coal blocks on of7-8
these
GW ofare operated
linked by state
power projects will be limited as these
following table. Coal India may not supply domestic
operate under a fixed return model. Moreover, we expect owned utilities.
alternate domestic coal supply (albeit at a higher price as
coal to these players given its FSA
compared to captive coal) to be provided to these projects We as most of these arepower
operatedpurchase
by state owned utilities.
Sector-wise captive coal commitments to the power sector). expect the
production in 2013-14 We expect the power
In 2015-16, purchase
impacted cost for utilities
players in cost for utilities to rise, particularly
to rise, particularly in West Bengal and Punjab, where it would
Sector Peak Production increase by Rs. 0.5-0.8
the sponge iron andper unit given that a these plantsinaccount
aluminum Westfor Bengal and of
a large share Punjab, where However,
power purchase. it at a
capacity in (MTPA) pan-India level, we expect the impact to be negligible aswould
sectors are expected to witness these plants account for less than
increase by `0.5-0.8 per unit 5 per cent share of total
(MTPA) 2013-14 generation.
a 900-1,000 bps and 300-400 bps given that a these plants account
(MTPA) decline, respectively, in operating for a large share of power purchase.
profitability. However, at a pan-India level, we
Power 70 25
Iron & Steel 17 11 2 Deallocation of mines to have expect the impact to be negligible
Aluminium 3.5 2.5 limited impact on operational as these plants account for less
Total 91 39 power projects than 5 per cent share of total
Source: Ministry of Coal, CRISIL Research The impact of de-allocation of generation.
October 2014
www.InfralinePlus.com

CoverStory

allotted. "Who will compensate me?" to the government.


he asked. "I have paid taxes, paid The four mines spared were for two Possible after effects of
SC's verdict
royalty and dividends. There is huge blocks granted to Reliance Power Ltd.
shadow of uncertainty." for a 4,000 megawatts, Ultra Mega 1. The government is likely to
The deallocation followed a Power Project and one each granted constitute a committee of
secretaries to review the
ruling by the court last month that to NTPC Ltd. and Steel Authority of
judgement
allocation of the blocks was arbitrary India Ltd. 2. The committee is expected to
and nontransparent. The Comptroller While the mines comprise about 7% study the judgement and see
and Auditor General in 2012 said the of the country's coal output, there are if there's any need of seeking
government lost as much as 1.86 lakh billions of dollars of investment riding clarification from the Supreme
rupees ($30 billion) in potential revenue on their future. Court on aspects including
because it gave the blocks without "Our main concern is on the kind of penalty payment of `295 per
competitive bidding. negative impact on the economy, which tonne.
The Supreme Court deallocated has just been showing signs of recovery 3. The committee will also suggest
214 of the 218 coal blocks allotted after over two years of slowdown," to the government how it should
since 1993. The decision took effect move ahead on allocating the
coal blocks. The decision of the
immediately for the 172 blocks not
in production. It will take effect in It's not just the power committee is expected to be
tabled before the cabinet before
six months for 42 blocks already companies that have to moving forward.
producing; to ensure that coal supplies worry after this verdict. 4. In all likelihood, the government
aren't affected as the government Even banks are going will auction most of the coal
decides what to do with the coal blocks blocks while also hold back
to bear the brunt of the some of the producing mines
it has got back. It is likely that most of
them will be auctioned while others will
apex court's decision to with Coal India Ltd.
46
remain with state-owned Coal India cancel the allocation of 5. As per the court order, the 42
Ltd., analysts said. The few that were 214 coal blocks. State- coal blocks which comprise,
producing mines as well as
producing coal from the blocks will run lender IDBI Bank Ltd those about to start production,
have to pay 295 rupees a tonne for the has close to `2000 crore will be handed to Coal India Ltd.
coal that they have extracted so far and
loan exposure within next six months. The time
will continue to do so until it is handed frame is crucial as it gives the
government enough room to
gear up for auctioning the coal
blocks.
6. Meanwhile, the CBI will continue
its investigations into allocation
of the coal blocks even though
the Supreme Court has de-
allocated them.

said Rana Kapoor, managing director


of YES Bank and president of the
Associated Chambers of Commerce and
Industry. Before the ruling, the industry
group said cancellation could shake
the confidence of domestic and foreign
investors and lead to huge losses and
loan defaults.
As companies have waited to learn
the fate of the coal-mining rights and
get some clarity about government
plans for the heavily regulated sector,
October 2014
www.InfralinePlus.com

in production. But still the ruling will


lead to some increase in coal imports
as government policy for new mode
of alloaction, which will be in all
likelihood an open competitive bidding,
shall take time.
Global investment bank Goldman
Sachs said the deallocation will have
a muted impact on the power sector,
but there can some increase in power
tariffs. Possibly as temporary coal
shortage may lead to rise in input cost.
Out of the 42 coal blocks that have
been permitted to operate for about six
months, 22 are from the power sector.
Rating and research firm Crisil
said that metal companies will
witness a sharp decline in profits
in the next financial year as they
have to import coal to substitute
Global investment bank Goldman Sachs said the the coal they were getting from the
deallocation will have a muted impact on the power deallocated coal blocks. Crisil notes
sector, but there can some increase in power that imported coal is about four times
tariffs. Possibly as temporary coal shortage may more expensive. In the next financial 47
year, the impacted companies in the
lead to rise in input cost. Out of the 42 coal blocks sponge iron and aluminum sectors
that have been permitted to operate for about six are expected to witness a drop in
months, 22 are from the power sector. operating profit of 9-10 percentage
points, and 3-4 percentage points,
the country has faced a severe coal respectively, it added.
Possible after effects
crunch. The country needs to produce Salil Garg, director of India
more coal if it wants economic growth Power plants operators will have Ratings said that the deallocation is a
to reach 10% again, economists to pay financial penalties, and short-term negative which has positive
have said. this will have beering on power potential for the south Asian nation in
Roughly 70% of the country's prices. the long-term. The court ruling paves
electricity is generated by burning The Supreme Court will take the way for the government to make a
coal. The country is the world's third- some time to decide on the transparent coal allocation policy that
reallocation process. It will lead
largest producer of coal, behind China would attract more investment.
to delays and more uncertainties
and the U.S. Yet it relies heavily on over the policy. Only time will tell how the
imports because of mismanagement Domestic coal prices are likely Narendra Modi government uses the
and an onerous bureaucracy in coal to rise, while global coal prices opportunity to bring in key reforms in
exploration, production and power are falling. the coal sector and revive its growth,
generation. As a result, nearly a The banks will have to rework which is key to India's economic
quarter of India's 125 crore people their bad loan balances as more growth. Private sector needs to enter
have no electricity, according to the loan accounts will go awry. the sector for commercial mining and
World Bank. The government may want a say time is just ripe for the government,
The ruling also hurts hopes of in how coal blocks are allocated, which has number on its side in
traders who were hoping that mass since this is a policy decision Parliament, to amend the archaic coal
that cant be left just to the
cancelation may lead to a massive surge law and throw open the gate for big
courts. This can lead to more
in coal imports as the Supreme Court delays if executive and courts private investors and companies.
has given the window of six months are fighting over the issue.
for the operational mines to continue For suggestions email at feedback@infraline.com
October 2014
www.InfralinePlus.com

NewsBriefs | Oil & Gas National


Centre defers decision Farzad-B gas field on auction list ONGC to begin oil production
On new gas price To pressurise India From KG-5 block in 2019

For the second time the Modi-led Government In a bid to pressure India to invest in a Persian Gulf ONGCs significant oil discovery in Bay of Bengal
has shied away from taking a decision on the new gas field, Iran has put ONGC-discovered Farzad-B will begin production in 2019, with a peak output of
price of domestically produced natural gas. The gas field on a list of fields it plans to auction citing 4.5 million tonnes a year, 20% more than previous
decision has been deferred to November 15. Earlier, delays by the Indian firm in its development. ONGC estimates. The oil discovery in Krishna Godavari
the Government had deferred the decision by three Videsh Ltd, the overseas arm of state-owned ONGC, basin block KG-DWN-98/2 or KG-D5 will be the first
months on the grounds that it had just come to had in 2008 discovered the Farzad-B gas field in its large oil production from the east coast. The block
power and the subject needed more discussion. This Farsi exploration block in the Persian Gulf. In August/ also has 10 gas discoveries. We are moving fast
time, the Government did not give any official reason September, 2010, it submitted a revised Master on KG-D5 development. First gas from the block
barring the one given by Law and Justice Minister Development Plan (MDP) for producing 60 per is planned for 2018 and first oil in 2019, Oil and
Ravi Shankar Prasad, who said: Life doesnt revolve cent of the 21.68 trillion cubic feet of in-place gas Natural Gas Corp (ONGC) Chairman and Managing
around gas price.. reserves but had not signed the contract because of Director Dinesh K Sarraf said.
threat of being sanctioned by the US..

Natural gas production falls TAPI gas pipeline RIL gas pricing dispute
8.3percent in August US firms drop out of race SC appoints arbitrator

Domestic natural gas production fell 8.3 per cent Top US energy companies Chevron and The Supreme Court appointed retired judge Michael
in August, primarily due to lower production from ExxonMobil have dropped out of the race to Kirby of Australia as chairman of a three-member
onshore fields as production from offshore fields become a consortium leader in financing the arbitral tribunal to decide the disputes between
grew marginally. During the month, natural gas Turkmenistan, Afghanistan, Pakistan and India the government and Reliance Industries on various
production was 2.729 billion cubic meters against (TAPI) gas pipeline following dismissal of their aspects of the Krishna-Godavari basin gas pricing.
2.977 billion cubic meters in the same month last demand for an equity stake in the project, a report Senior counsel Harish Salve for RIL suggested the
year. Crude oil production also fell in August by 4.8 in the local media said. The two companies were name and judge J S Khehar accepted it. Solicitor
per cent. During the month, crude oil production was seeking shareholding in the field from where General Ranjit Kumar did not raise any objection.
3.024 million tonnes against 3.179 mt in the same Turkmenistan would supply gas to energy-starved The court hoped the chairman-nominee would not
month last year. Falling domestic production also led Pakistan, Afghanistan and India in response to their disappoint us and accept the post. The other two
48 to lower refinery throughput. Refinery throughput was commitment to providing funds for laying the gas members of the panel are retired Supreme Court
4.3% lower in August at 18.550 mt (19.387 mt). pipeline, officials say. chief justices V N Khare and S P Bharucha.

RIL KG-D6 gas output BPCL to reserve GNRL Oil & Gas Limited
Likely to improve $2 billion for Mozambique Strikes oil at Dholasan field

Reliance Industries eastern offshore KG-D6 gas Bharat Petroleum Corp. Ltd (BPCL) says it will GNRL Oil & Gas Limited (formerly Heramec Limited
output is likely to improve to 15 million standard reserve over $2 billion for oil and gas exploration in and a subsidiary of Gujarat Natural Resources
cubic meters per day by second half of current Mozambique in the next four years. The investment Limited) has announced a new oil discovery in
fiscal as it completes work-overs on the main fields, had been planned so that assets in Mozambique and Mehsana formation in the newly drilled well North
UBS said. Gas production from KG basin block has Brazil could enter the production phase at the end Dholasan-1A in the Dholasan field, onshore India.
dropped to just over 12 mmscmd and RIL is carrying of the 2019 financial year, BPCL group chairman Presently, the well is under production testing to
out workover on main Dhirubhai-1 and 3 gas fields. S. Varadarajan. Between 2010 to 2012, over 4,200 determine whether the discovery is of potential
In research note, UBS said it expects RILs core billion cubic metres (150 trillion cubic feet) of commercial interest. GNRL 0il & Gas Limited
petrochemical, refining and domestic exploration and natural gas reserves were discovered in the Rocuma holds 30 per cent participating interest and is the
production businesses to improve over the next two Basin, off the coast the northern Cabo Delgado operator for Dholasan field where two new wells
years. RILs $13 billion capex including $8.5 bln for Province in Mozambique. North Dholasan-1A and South Dholasan-1A have
petrochemical units was on track. been drilled.

India-Nepal oil pipeline Aegis Logistics forms JV ONGC to commission


IOC to lay network With Japans Itochu Petroleum Dahej petrochem plant by June 2015

In a major step towards strengthening the oil and gas Aegis Logistics Ltd, one of the Indias leading oil, Oil and Natural Gas Corps (ONGC) long-delayed
infrastructure of Nepal, the Centre has decided to set gas, and chemical logistics companies, has sold mega petrochemical plant at Dahej in Gujarat will be
up an oil pipeline from Raxaul in Bihar to Amlekhganj 40% stake in its Singapore based wholly owned commissioned by June next year but at 27 per cent
in the Himalayan kingdom. The pipeline which is subsidiary, Aegis Group International Pte Ltd, to higher cost of `27,122 crore. ONGC had in 2006 set
to be constructed by IOC will be an environment- Itochu Petroleum Co (Singapore) Pte Ltd, a wholly up ONGC Petro-additions Ltd (OPaL) for building a
friendly initiative, which will replace the current owned subsidiary of Itochu Corporation for a mega petrochemical complex at Dahej in Gujarat.
arrangement where oil is supplied through hundreds total consideration of $ 5.85 million (about `35 The plant was originally planned to come on stream
of trucks plying to that nation on a daily basis. PM crore). In order for Aegis Logistics to strengthen by end 2012 but delays have led to two revisions
Modi during his visit to Nepal on August 3-4 had its competitive position in LPG sourcing, supply in completion dates. Pre-commissioning activities
announced that India will help lay pipelines in Nepal, and shipping and also to support the company in have started at Dahej. Commercial operations will
and the 43 km long Raxaul-Amlekhganj pipeline has building new LPG import terminal capacity in the start by June 2015, ONGC Chairman and Managing
been proposed subsequently. future, management wish to ink JV with Itochu Corp. Director Dinesh K Sarraf said.
October 2014
www.InfralinePlus.com

NewsBriefs | Oil & Gas International


Pakistan plans to sell stake GE launches new gas turbine US tight oil technology
In oil & gas development Signs MoU with TransCanada May add upto 3 mb/d by 2030

Pakistan said it plans to sell a stake in the countrys GE announced at the Turbomachinery Symposium in There continues to be great potential for surprises
biggest oil-and-gas exploration business, mostly to Houston the launch of a new 16.5 megawatt (MW) to the upside in production of US tight oil according
foreign investors via the London Stock Exchange, in gas turbine (NovaLT16) for mechanical drive and to Wood Mackenzies latest integrated analysis.
a test of international financial appetite as the nation power generation applications in the oil and gas Growth in US tight oil continues to impress as
begins to emerge from a political crisis. The planned industry. Developed by GE Oil & Gas to meet the development technology and techniques have yet
sale of as much as 10% of the governments share in industrys evolving challenges, NovaLT16 combines to mature beyond adolescence, says Phani Gadde,
Oil and Gas Development Company Limited, slated the best technology from industry-proven GE senior North America upstream analyst for Wood
for early next month, will be the largest divestment turbines and benefits from the industry insights of Mackenzie. To better illustrate, Gadde says additional
since Prime Minister Nawaz Sharif came to power TransCanada Corporation. The 16.5 MW NovaLT16 volumes from Enhanced Oil Recovery (EOR) will
in June 2013 with promises of a large-scale gas turbine will provide up to 37% mechanical come on stream after 2020, and could add 1.5 to 3
privatization program and economic revival. efficiency, which raises the standards of efficient and million barrels per day (mb/d) by 2030, up to 25%
reliable pipeline compressions, etc. more oil than is being forecasted.

Iran gas trunklines ExxonMobil not to withdraw Frances Total sells Utica assets
To be built by Russian companies Far-Eastern LNG project To Korean companies for $450 million

Russian companies have voiced their readiness to US energy giant ExxonMobil will not withdraw from Frances energy giant Total plans to sell its 25
complete or construct Iran gas trunklines (IGATs), the Far-Eastern LNG plant project, even though percent interest in Cardinal Gas Services, a
Asghar Soheilipour director of the specialized recent reports in the media suggested otherwise. midstream company in Ohios Utica shale play, to a
committee of investment at NIGC said. Soheilipour The vice president of Russias Rosneft, Vlada group of Korean companies for $450 million. Total
stated the Russian firms are ready to handle IGAT-6, Rusakova said that she received no information is selling its stake to Korean energy companies E1
IGAT-7, IGAT-9 and IGAT-11, all destined to export about the alleged withdrawal of ExxonMobil, Corp. and a consortium led by Samchully, for about
Irans gas. He added that a memorandum has been adding that she has several meeting scheduled $400 million, plus an estimated price adjustment
signed with a Russian company for the construction with the US companys management, reports RIA of $50 million. The sale of this non-strategic asset
of a pipeline stretching from Iranshahr to Chabahar Novosti. Rusakova also noted that building the reflects the groups active portfolio management and
in southeastern Iran, noting that the implementation Far-Eastern LNG plant within the Sakhalin-1 project enables us to unlock value while continuing with the
of the pipeline needs $700 million. The Russian is the best option, adding that the Sakhalin region development of our resources in the Utica basin as 49
delegation will travel to Iran, Soheilipour said. administration supports integration of $8 bln project. planned, said Olivier de Langavant.

Norways Statoil signs deal National Iranian Gas Company Siemens splurges $7.6 billion
Russias OAO Rosneft In talks over gas investments On Dresser-Rand Group Inc

Norways Statoil AS A signed a deal with Russian The National Iranian Gas Company (NIGC) has Germanys Siemens AG has agreed to buy U.S.
state oil company OAO Rosneft to develop Russias entered into talks with 17 domestic and foreign oilfield equipment maker Dresser-Rand Group
mostly untapped offshore energy resources in the companies for investment in gas industry, managing Inc for $7.6 billion (4.65 billion pounds) in cash,
Arctic, in a venture that could require an investment director of NIGC, Hamidreza Araqi said. Araqi told paying a relatively rich price to belatedly beef up
of as much as $100 billion over decades. Statoil that NIGC has changed its investment procedures, its presence in the U.S. shale oil and gas industry.
joined U.S.-based Exxon Mobil Corp. and Italys Eni, adding that in the past, the contractors and investors The acquisition, which ranks among the biggest in
which have signed similar deals, in the scramble tasked with providing necessary funds for investment the history of the industrial group, will strengthen
for the Russian Arctic, following Moscows approval received the funds for implementation of the Siemens position in the United States, its weakest
of long-awaited tax breaks for the potentially rich projects, Irans SHANA news agency reported. He region, and bring it nearer catching up with rival
offshore fields. Russia faces declining production added based on the new changes, investors and General Electric Co (GE.N). Siemens oil and gas
from its traditional oil regions and is eager to attract contractors should join together for funding and revenue will increase to around $11 billion, including
Western energy companies with money & expertise. implementation of the projects. the acquisition of Rolls-Royce Holdings Plc.

PTT Exploration and Production Total to sell more assets KoPT looking to build
Expands its presence in Brazil Cuts oil output target FSRU near Kolkata

PTT Exploration and Production (PTTEP) announced Total will step up asset sales and overhaul Kolkata Port Trust invited Expression of Interest (EOI)
the 20 per cent acquisition in an oil and gas exploration after cutting its oil output targets and for setting up of non-jetty based Floating Storage
exploration project in Brazil, a month after it struck the French oil company also said it was seeking and Regasification Unit (FSRU) or Floating Storage
the first deal in the South American country. In a European funds to deliver a Russian gas project on Unit (FSU) for import, storage and transfer of LNG.
statement, CEO and President Tevin Vongvanich time despite international sanctions. Total, which Located in the open sea within KoPT limits, the
said that PTTEP Brazil Investments in Oil and Gas has struggled with production outages in Libya, Floating Storage and Regasification Unit would be
Exploration and Production Limitada (PTTEP BL), a Kazakhstan and Nigeria, cut its 2017 output goal connected via a subsea pipeline to a landfall point.
subsidiary, has entered into an agreement to acquire to 2.8 million barrels of oil equivalent per day from The FSRU/FSU would be a Common User facility
a total 20 per cent participating interest from Shell a previous 3 million. Frances biggest company where users and marketers of natural gas will source
Brasil Petroleo Ltda in Concession BM-ES-23. This by market value and the Wests fourth biggest oil LNG from various suppliers, stands in the KoPT
agreement is subject to approval of Brazils National and gas group launched a high-risk, high-reward invitation document.
Agency of Petroleum, Natural Gas & Biofuels. drilling strategy two years ago.
October 2014
www.InfralinePlus.com

InDepth
ONGC puts in place
new tendering process

50

ONGC plans to simplify, streamline material management processes


Had employed Boston Consulting Group to suggest the new strategy

Infraline Bureau

In a strategic move that is expected advantageous tender instead of providers with proven technical
to massively cut down delays in just lower cost, which has been the expertise and global repute. This
project implementation and increase practice so far. should help the countrys largest
oil and gas output, state-run oil Many international service explorer ONGC to get access to the
and gas major ONGC has decided providers find the current practices right technology and, consequently,
to overhaul its entire procurement relatively cumbersome when improved performance.
process. The Maharatna firms board compared to those of other global oil Petroleum Minister Dharmendra
has given a go-ahead to implement and gas majors. BCG has objectively Pradhan has raised concerns
recommendations by the Boston looked at multiple criteria and come about in-ordinate delays in project
Consulting Group (BCG) that would up with a set of re-designed processes implementation by ONGC that has
help to select the most economically to help ONGC attract service obstructed the firms hydrocarbon
October 2014
www.InfralinePlus.com

output to increase. A review done by competence and importance of service and methodology for each category
the government early this year on levels and value impact of tender leading to efficiencies. Effectiveness
performance of 41 ongoing projects to be decided based on net present in rate negotiations and reasonability
of ONGC worth `78,265 crore value of benefits to accrue from said due to accurate cost estimates. Conduct
brought to limelight that nearly half procurement. The benefits would vendor management. Benefits will be
the projects, amounting to `41,259 be selection of most economically category management brings a strategic
crore, are behind schedule, with advantageous tender instead of just view to procurement, improved
delays in some cases being as large lowest cost, improved quality of vendor management and accuracy
as 9-10 years. Most of these delays vendors in critical categories and in budgeting.
are because of contractors not able improved effectiveness in procurement.
to complete the job on time owing to Life Cycle Costing: Life cycle
cost over-run, arbitrations and change Category Management: To create costing methodology for long life
in scope of work. well defined procurement strategy cycle equipments with operations,
maintenance and commissioning
ONGCs initiative for and decommissioning costs being a
simplification and Many international significant proportion of life cycle
streamlining of material service providers find costs. Create life cycle cost model for
management processes the current practices equipments based on the ONGCs
include these steps: relatively cumbersome system data of the equipment. External
when compared to consultants could also be used for one
Quality and Cost based selection those of other global time creation of life cycle cost model
(QCBS) process: Adoption of QCBS for high spend capital equipment.
to take into account the quality and the
oil and gas majors. Evaluation of proposals for capital
cost of the proposal in the selection
BCG has objectively equipment based on life cycle costs 51
of the vendor. The procurement to looked at multiple will consider costs in acquisition,
be classified into categories based criteria and come operations and decommissioning.
on degree of technical influence, up with a set of re- Benefits will be most economic offer
value impact of tender. Degree of designed processes over entire life cycle of procurement
technical influence to be determined by to help ONGC and the right contracting strategy
considering degree of differentiation attract service
of offerings, importance of technical Vendor Management (Registration,
Empanelment & Ratings): Vendor
Management System to increase the
efficiencies in effectively managing
the process right from Vendor
Identification to the Performance
ratings. It involves Vendor Registration,
Empanelment and Ratings. All
vendors inputs will be stored at ONGC
data server and that can be access to all
work centers. The vendors will have to
register themselves to portal providing
basic information and indicating the
category of goods they want to supply.
Vendors to upload standard documents
that can be used throughout the year
across tenders and quote the unique
document reference number while
submitting bids. Documents to be
picked up by ONGC from the system
and once approved, can be used for
other procurements directly. Vendors
DK Sarraf, ONGC Chairman
October 2014
www.InfralinePlus.com

InDepth

empanelled annually on fixed criteria Stringent criteria for JVs/


through open ICB tender during Evaluation of Consortiums: Only incorporated joint
opening of empanelment window for a proposals for capital ventures or consortiums to be allowed
52 fixed duration Tenders in the category equipment based on to bid (services, rigs LSTK, FMS).
floated only to empanelled vendors life cycle costs will The use of technical collaborators to
with just price quotes or price quotes consider costs in be restricted and allowed if market
with additional technical/quality structure dictates it (for example
checks.Vendors to be rated objectively
acquisition, operations vessels).The financial and experience
on their performance on delivery on and decommissioning. criteria linked to scope of work to
milestones (during tender process and Benefits will be most be performed by specific partner and
performance of contract) and rating economic offer over also financial criteria to be considered
impact future technical/quality scores entire life cycle of by converting roles/responsibilities
of vendor in subsequent tenders. procurement and to value terms based on such split in
Benefits will be long term supplier the right contracting ONGCs cost estimates
relationship, efficient data sharing strategy
of vendors between work centers, Disposal: Rate contracts for disposal
better vendor selection and vendor of proposed scrap. A single standing
performance, limit multiple submissions period will be input to budget which disposal board formed at each work
of same documents by vendor, limits will be prepared line item wise. Line centre for condemnation and disposal
multiple approvals of same documents, item wise budgeting with required level action. There is no requirement to
vendor ratings give an objective view of diligence to be carried out to obtain assess value to decide level of board
to ONGC and the vendor of their Financial concurrence at budgeting for condemnation. Fixation of reserve
performance, inclusion of vendor ratings stage itself. Benefits will be forecasting price can be dispensed with. However
in future tenders motivates vendors to leads to economies of scale, reduction reasonability of disposal price needs
perform well in current tenders and in procurement effort, increased ease to be ascertained by the disposal
continuous vendor feedback process to of contracting and reducing tender committee. System value to be used
facilitate execution / delivery without finalization time, among others. as reserve price for surplus stores
delays and actively work with quality and spares.
vendors to further improve. Financial Criteria (LSTK and
Civil works): The criterion
Budgeting & Forecasting: has been developed to select
Forecasting on a three year rolling financially capable bidders. For suggestions email at feedback@infraline.com
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October 2014
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InDepth
BJPs roadmap for
Indias energy sector
Integration of policies for coal, power, gas, oil and bio-fuel to be priority
Private players may be allowed to commercially mine coal

54

Home Minister Rajnath Singh and Prime Minister Narendra Modi displaying commitment in making India self reliance in energy

Infraline Bureau

Aiming to provide 24x7 power to catering to the needs of power and oil to increase the countrys oil and gas
all within its tenure of five years, the and gas sector. It is planning a massive production and reduce dependence on
Narendra Modi led BJP government is pan-India gas pipeline infrastructure imported fuels, the government is also
stepping up efforts and is seen working of another 15,000 km criss-crossing seen talking tough with its cash rich
at multiple levels to ensure Indias the length and breadth of the country PSU such as ONGC and Coal India Ltd
energy security. besides new power transmission lines (CIL) and has asked them to submit
From working on an integrated carrying electricity from regions surplus detailed roadmap to increase domestic
energy policy which takes an umbrella in power to those facing shortages. production of oil and gas as also coal.
approach to looking at power, coal, All these measures are aimed to fight Sharing the Bharatiya Janata Partys
oil and gas and bio fuels to bringing energy poverty and ensure energy governments roadmap on energy and
related energy departments under one security to the country in times to come. its chief priorities on this front, partys
fold, the government is also planning Besides working on reforms in energy cell convener Narendra Taneja
to put in place a robust infrastructure the coal and power sector in order said: The energy sector we inherited
October 2014
www.InfralinePlus.com

from the UPA government is in a very Gas) under UPA was pushing for India is a home to 1.26 billion people
bad shape. They did almost nothing changing the licensing regime from and energy poverty is widespread.
particularly during their last three one form to another which could have Over 30 crore people have no access
years. The entire oil and gas sector is created lot of confusion, he said. The to electricity. The country needs every
in a mess. Production of oil and gas aim of the new government is to first single source of energy. It does not have
has gone down, and the overall picture establish clear principles and objectives the luxury to pick and choose. It needs
does not appear very encouraging at of the government policies and follow oil, gas, solar, wind, hydro, shale, coal,
the moment. Luckily, the fundamentals that in letter and spirit. nuclear, bio-mass or anything else.
are all still intact. We have a huge task The aim of the new dispensation is Basically the new energy policy will
in our hand from reassuring investors to incentivize the domestic oil and gas be such that it will target and seek to
to revamp, rejuvenate and modernize production. The priority is to first put adopt every single source of energy.
the entire sector. We are committed to the house in order. The government The government will actively engage
transforming the Indian energy sector to plans to streamline the working of with the various state governments
global standards. the downstream oil companies as so that they become stakeholders
While public sector oil marketing well as power companies so that gas and partners in energy security. Two
companies (OMCs) such as IOC, is available for power production third of un-electrified houses in India
BPCL and HPCL have the potential and other requirements. We will fix are located in just five states Uttar
to be world-class players, they are accountability and responsibility to Pradesh, Bihar, Assam, Odisha and
not in a very healthy shape today as create a favourable environment in the Jharkhand. Nearly 22 per cent of
their financial fundamentals have been oil and gas sector, a source said. worlds population with no access
heavily compromised. They were not to energy is in India. The challenges
allowed to realise their full potential - are enormous.
the UPA government controlled these Energy is a In renewable energy sector the
companies so tightly that they could commercial commodity central government plans a revolution 55
hardly breathe. The NDA governments and it will be good by making it economical and self
first priority is to put these companies that people appreciate sustaining. Grid connectivity with
on the recovery path and help them that, be it wind power, regard to renewable energy will
build a robust health. Our oil and gas be taken up. At the same time, the
companies are central to Indias energy
oil and natural gas or authorities will develop plans and
security We want our companies to
coal. Today we import policies for off grid plants.
increase production of oil and gas from 80 per cent of our oil The UPA government talked
domestic basins so that we can reduce requirements and 30 about integrated energy policy but it
our dependence on imported oil and per cent of our natural never became a reality. The integrated
gas, he said. The new government gas. We are importing policy was not run in an integrated
has set out many priorities to revamp coal, uranium and manner. How an integrated energy
and revitalize the energy sector. The equipment for policy could be run without developing
government aims to be more efficient your policy, formulating contours of
solar plants.
in dealing with policy issues and your policy, putting together a policy
implementing them. All the pending infrastructure and executing it? The
decisions will be taken in time and National Energy Policy BJP led government will have an
projects will be started. The national energy policy will focus integrated approach. The bringing
on balancing power generation through together of various ministries will help
Domestic oil production conventional and non-conventional in developing an integrated approach.
In the oil and gas sector, there was sources. The new government wants We wish to integrate every state, city,
very little interest in the NELP (New to have an umbrella approach when town and village in the energy agenda
Exploration Licensing Policy) due to it comes to energy issues relating to of the country, a source close to the
poor administration and lack of specific oil, gas, coal, hydro power or nuclear government said.
policy under UPA, a source claimed. energy sector. The aim is to take a
There are several issues relating to holistic approach and put up a national Big investments needed
NELP bidding rounds and uncertainty policy and vision and road map so The country needs big investments
on several fronts. The MoPNG that helps the country realise its full in the oil and gas sector especially
(Ministry of Petroleum and Natural potential in each and every segment. international investments for
October 2014
www.InfralinePlus.com

InDepth

exploration and production in deep the diplomatic relations which would energy security and ambitions. We
water basins. Besides this the country help ease out contentious political want to bring certain reforms in the
also needs international expertise and and business issues between the sector which will help the country
technology. International players should two countries, including a tripartite realize its full potential, modernize coal
come here and explore and help Indian deal between India, Pakistan and production and bring best available
companies in deep water and ultra deep Iran for supplying of gas from the practise in the sector to boost coal
water basins. We also need investments Persian country. production so that we could reduce
to build pan India gas pipelines from We are very keen but Pakistan first dependence on imported coal, sources
Mizoram to Gujarat and from Jammu needs to give us trust so that we are said. The Narendra Modi government
and Kashmir to Kerala. The aim is able to put our money into the project. will soon initiate efforts for allowing
that at least most of the population These pipelines are important for private companies to commercially
from urban and semi urban areas are countrys long term energy security. mine coal. The move may end the
able to source gas from these pipelines Given the political situation in Pakistan, monopoly of PSU Coal India Ltd
and not from LPG cylinders. These our companies and investors are not (CIL), they said.
pipelines would, in turn, be connected able to generate sufficient confidence in The new government is keen to
with LNG terminals and trans-national investing in pipelines in Pakistan, the allow private firms into commercial
gas pipelines. source close to the government said on coal mining to increase supply of
Iran-Pakistan-India gas pipeline: condition of anonymity. the fuel in the country. But we are
After Pakistani prime minister Nawaz not opening too many fronts at this
Sharief visited India for the swearing in Coal sector reforms moment. We will start discussions with
ceremony of prime minister Narendra The other important area is the coal stakeholders on commercial mining
Modi a positive note was prevalent in sector which is central to Indias only after Coal Indias public offer,
a senior coal ministry official was
56 quoted as saying in a media report. A
The new government is keen to allow private roadmap to allow private commercial
firms into commercial coal mining to increase mining of coal will be prepared after an
supply of the fuel in the country. But we are in-principle nod from all stakeholders is
not opening too many fronts at this moment. secured, he said.
We will start discussions with stakeholders The CIL has over the years facing
on commercial mining only after Coal Indias fire over not being able to increase
coal production to match the surge in
public offer.
demand although the country has huge
coal reserves. Private companies like
Tatas and Adani among others have
mined coal in India and abroad but
legally in India they cannot sell their
mined coals in the open market but can
only use them for their captive power
plants or production units.
Allowing them to sell coal in the
market will give a big boost to industry,
particularly power plants, and cut
imports that amount to almost `1 lakh
crore a year, the media report said.
Sources are saying that the central
government will engage with trade
unions of coal companies on the issue
of public offer of the CIL which is
slated for later this financial year. The
trade unions are reportedly opposed
to the move, and they are against
an amendment to the Coal Mines
October 2014
www.InfralinePlus.com

merging of three ministries Coal,


Power and Renewable, BJP Energy
cell convenor Narendra Taneja told
Infraline Plus: People are getting it
slightly wrong. These are different
ministries. They have been put under
the command of one senior minister
so that the decision making becomes
quick and fast. Otherwise the ministry
of coal is separate. Should there be
one integrated energy ministry
well, that is something that is being
thoroughly studied by experts and
the government.
The Gujarat energy model is an
inspiration for everybody in the country.
Gujarat has shown what can be done in
the fields of solar, wind, hydrocarbon
or power. The state has 24x7 power
Nationalization Act that seeks to allow supply. The state is being closely
commercial coal mining since 2000. We are very keen but studied by the central government and
According to media reports, the Pakistan first needs wherever found necessary it would
amendment bill was introduced in to give us trust so be replicated.
April 2000 and a group of ministers
that we are able to 57
was constituted in 2001 to engage Price of power
with the trade unions. The panel was
put our money into Energy is a commercial commodity and
reconstituted in August 2009 but the the project. These it will be good that people appreciate
Manmohan Singh government was not pipelines are important that, be it wind power, oil and natural
successful in getting the bill cleared. for countrys long gas or coal. Today we import 80
The trade unions of Coal India Limited term energy security. per cent of our oil requirements and
are against the governments move to Given the political 30 per cent of our natural gas. We
offload 10 per cent in the behemoth. situation in Pakistan, are importing coal, uranium and
The public offer could fetch equipment for solar plants. Last
our companies and
`23,000 crore, over half of the `43,425 year we imported fuel worth USD
crore that the government proposes to
investors are not able 190 billion. It is important that we
mop up in 2014-15 from equity sale in to generate sufficient communicate with the people and help
state-run companies, the report said. confidence. them understand that bulk of what we
The coal ministry has sought the law consume is imported.
ministrys comments on amending We have approached the law ministry On the issue of acquisition of
the Coal Mines Nationalization Act. for comments, the official was assets by Indian companies, Taneja
This comes in the backdrop of the quoted as saying. said that So far the government was
recently amended Mines and Minerals There was an urgent need to fast mainly supporting the public sector
Regulation and Development Act that track entry of the private sector in companies when it comes to acquiring
provides for coal block allotments commercial coal mining to augment energy assets overseas. We are open
through auction for captive use. countrys coal production and reduce to supporting anyone and everyone
The Mines and Minerals imports of the fuel that cost `95,175 public private or state level companies
(Development and Regulation) crore in 2013-2014, the government whosoever needs our support as long
Act was amended only recently to said in the Economic Survey as the company is registered in India.
auction coal blocks. Now, we have a released on July 9. They will get our full support in terms
challenge in opening the coal sector as of diplomatic push.
the amended act doesnt provide for Merging of ministries
bidding blocks to commercial purposes. On the issue of combining and For suggestions email at feedback@infraline.com
October 2014
www.InfralinePlus.com

ExpertSpeak
Reforming LPG and Kerosene Subsidies:
Short term priorities & long term ambitions
A detailed study on the impact
of re-alignment of subsidies
on fuels used by the masses
revealed that the move did help in
eliminating hoarding and black-
marketing of the subsidised fuels,
but it also brought out the level
of dissatisfaction among the
beneficiaries with regard to the
scheme as a whole. Madhura
Joshi - associate fellow, and
Anjali Ramakrishnan - research
associate at TERI are sharing the
whole picture on fuel reforms.

Anjali Ramakrishnan Madhura Joshi


58 Around 31% of the population of the Research associate, TERI Associate fellow, TERI
country uses kerosene as its main source
of lighting and more 67% are still previous years lifting by the respective for Domestic LPG. For the year 2013-14,
dependent on biomass for their cooking states. The OMCs supply kerosene to the annual reported under-recovery
needs. Subsidies were introduced on the state delivery systems through fair was `30,575 per crore and `46,458 per
kerosene and LPG with the aim of price shops (FPS) andoil depots. This crorefor the fuels respectively. At the
providing basic lighting and cleaner PDSKerosene is sold through a network same time, the fiscal subsidy offered
cooking options at affordable rates for FPS and Kerosene Oil Depots (KODs) to from the government budgets amounted
the poorer sections of the rural and urban the final consumers. to `0.82 per litre for PDS Kerosene and
population. However, the significant As of March 2014, the under-recovery `22.58 per cylinder for Domestic LPG.
difference between the (non-subsidized) of OMCs stood at `33.98 per litrefor With the rising fuel prices over the years,
actual price and the (subsidized) retail PDS kerosene and `499.52 per cylinder the subsidy amounts have also mounted.
selling price (RSP) of kerosene/LPG
encourages diversion to black-markets, Figure 1: Supply chain of PDS kerosene
irregularities and leakages from the
distribution system.Consequently, those
who need the subsidies the most are not Fiscal Subsidy Under-recovery
the ones who benefit the most. Theres
a need to ensure that these subsidies
are better targeted to ensure maximum
benefit to the intended population and to Refinery Ration
reduce spurious consumption. PDS Wholesale FPSs/
gate/Sea OMCs card
Under the PDS, kerosene is made Kerosene Dealers KODs
port holders
availableby the Central Government
available to the States and Union
Territories based on the coverage of
liquefied petroleum gas (LPG) and At import parity prices At discounted prices
pipednatural gas (PNG), the per capita
Source: TERI (2012)
allocation of kerosene in the state and the
October 2014
www.InfralinePlus.com

Table 1: Per-Litre/Cylinder Subsidy and Under-Recovery on Kerosene and LPG and fertilizers. In December 2011, the
Year PDS Kerosene (`/ Litre) Domestic LPG (`/Cylinder) Government of Rajasthan launched
From By Public Total From By Public Total
a pilot scheme in Kotkasim, Alwar
Govt. Sector Oil Subsidy Govt. Sector Oil Subsidy
to test a system of direct transfers of
Budget Companies Budget Companies
2002-03 2.45 1.69 4.14 67.75 62.27 130.02
cash subsidies to bank accounts of
2003-04 1.65 3.12 4.77 45.18 89.54 134.72 beneficiaries. In the case of LPG, the
2004-05 0.82 7.96 8.78 22.58 124.89 147.47 DBT was launched in 20 districts in July
2005-06 0.82 12.10 12.92 22.58 152.46 175.04 2013.As per the scheme, the subsidy
2006-07 0.82 15.17 15.99 22.58 156.08 178.66 amount under centrally funded social
2007-08 0.82 16.23 17.05 22.58 214.05 236.63 protection schemes would be transferred
2008-09 0.82 24.06 24.88 22.58 234.88 257.46
through an electronic payment system
2009-10 0.82 14.85 15.67 22.58 178.13 200.71
2010-11 0.82 17.39 18.21 22.58 249.94 272.52 (National Electronic Funds Transfer,
2011-12 0.82 26.46 27.28 22.58 320.30 342.88 NEFT). Under the proposed system, the
2012-13 0.82 31.16 31.98 22.58 427.14 449.72 fuel would be bought from the ration
2013-14 0.82 33.98 34.80 22.58 499.52 522.10 shop or LPG distributer (on delivery)
Source: PPAC
at the full (unsubsidised) market price,
after which the subsidy amount would
be electronically, transferred to the
beneficiary bank accounts.
The DBT scheme for LPG functions
under the framework of a (nominally
voluntary) national identify program
(Unique Identification [UID], or
Aadhaar )which would link the 59
individual banks accounts with UID
numbers. The PDS kerosene operates
with the bank accounts linked with
the ration card details held by the
consumers. The receipt of subsidy
continues to be contingent on fuel
consumption and, as with the current
system of subsidized fuel supply, no
forms of targeting is applied.

The Table 1 below gives a decadal Pilot Projects in Alwar


growth of the total subsidy for Kerosene To reduce the and Mysore
and LPG. inefficiencies present With the aim of testing the impact
To reduce the inefficiencies present in in the distribution and efficacy of the schemes launched,
the distribution mechanism, there have mechanism, there have TERI and IISD undertook evaluation
been longstanding demands to look at been longstanding the pilot launched forPDS Kerosene
new methods for delivering subsidies in Kotkasim, Alwar; for LPG, Mysore
to the intended population.One such
demands to look at new was selected.The study covered four
method towards reforming the subsidy
methods for delivering villages in Kotkasim and five taluks
delivery mechanism is the direct transfer subsidies to the in Mysore andcomprised of a primary
of subsidies to the bank accounts of intended population.One survey of 160 beneficiary households
the intended households who consume such method towards for PDS Kerosene and 120 for LPG.
the fuel(s). reforming the subsidy This was supported by structured
The Direct Benefits Transfer (DBT) delivery mechanism is interactions with different stakeholders
was first announced in the 2011-12 the direct transfer of coveringdistrict officials, key personnel
Union Budget. It statedthe Governments subsidies to the bank (banking officials, oil market company
aim to move towards direct transfer accounts officials),dealers/local distributers, and
of cash subsidy for kerosene, LPG, affected households. The survey ensured
October 2014
www.InfralinePlus.com

ExpertSpeak

geographic spread of the sample across Observationsof the study especially by poorer households, and
the district, with a mix of APL and BPL Domestic LPG, Mysore often on an interest-paying basisin
households; Antyodaya Ann Yojana A major requirement of the scheme was order to facilitate purchase of LPG
(AAY) households were also included in the seeding of the bank accounts to cylinders at the new decontrolled price
Kotkasim. The respective studies were Aadhaar numbers. While the intention (which increased to over INR 1,100)
undertaken with the aim of assessing of the process was to streamline and which aggravated the problem. These
the performance of the pilot project monitor purchases effectively, the entire budget constraints also forced households
against its stated objectives of subsidy process was often tedious and demanded to limit LPG consumption and shift back
access and fuel expenditure, as well as too much paperwork.Respondents to biomass-based cooking that essentially
highlight lessons on the implementation often reported an inability to qualify worked against states policy objective
process and potential challenges faced for subsidy payment due to their of promoting increased adoption of
before nationalising the scheme. gasconnection being in a relatives name, cleaner fuels. This is despite the fact that
However, it is important to note that, with delays in the processing of changes households (and particularly women)
while the scheme for PDS Kerosene to connection details leading to denialof valued LPG as a clean, efficient and
is in its third year of implementation, subsidy. There was also a persistent lack cost-effective fuel, and were keen to
DBT-for-LPG was suspended in all of clarity among the beneficiaries on continue to use it.
districts on January 30, 2014 pending the subsidy transfer system. Concerns
formation of a committee to examine were also raised regardingthe distance PDS Kerosene,
the extensive problems reported to banking locations for subsidy Kotkasim, Alwar
with the program, with LPG supply withdrawal. There was also an increase With the onset of the scheme in
reverting to the previous system. in short-term household borrowing December 2011, the kerosene sales
dropped drastically (from 90.8 kilolitres
(kl) from December 2011 to June 2012to
Subsidies on kerosene and LPG were aimed at 35.4 kl between July 2012 and January
60
providing basic lighting and cleaner cooking 2013) at the FPS. The price of kerosene
options at affordable rates for the poorer sections increased from the subsidised rate of
of the rural and urban population. However, `17.5 per litre to `51.22 per litre (retail).
the significant difference between the (non- The declining up-take by the FPS dealers,
subsidized) actual price and the (subsidized) led to a reduction in the overall allocation
retail selling price of kerosene/LPG encourages of Kerosene by the OMCs. This decline
diversion to black-markets, irregularities and could be majorly attributed to success in
leakages from the distribution system plugging diversion of kerosene for non-
household purposes, and the usage being
limited to those who actually used it for
lighting or at times cooking purposes.
One of the most affected parties of this
scheme, however, were the FPS dealers.
They faced a decline in revenues on
two counts: a fall in sales affecting their
earning from the commission, and the
complete removal of the opportunity
to earn by diverting even marginal
quantities of kerosene.
Some issues in implementation were
also identified in the study. While most
accounts were opened prior to the launch,
the coverage was not complete. New
accounts for the remaining beneficiaries
were also opened gradually after the
launch, leading to a delay in transferring
the subsidy into accounts. A major gap
in the implementation process was the
October 2014
www.InfralinePlus.com

households take place before launch


of the scheme.
Access to banking facilities must
be extended in villages must be
improved in order to avoid multiple
trips and additional costs borne by
the households. A possible adoption
of the Baking Corresponding (BC)
Model can be deliberated.
Conducting concurrent reviews
of the scheme that along with
scheme-related documents that
must be made publicly available for
better evaluation.
Provide higher incentives to the
FPS dealers in case of kerosene
(timely increase in commission and
regular communication) inorder to
ensure optimal penetration of the
scheme.Involving local stakeholders
in the implementation process
lack of full and correct information provides the necessary impetus to
about the scheme and the awareness The suspension of the better awareness among households
of related banking mechanism among DBT for LPG program Overtime digitisation of fuel 61
the beneficiaries. Misconception on the and constitution purchases (through ration card or
delayed transfer of subsidy taken as of a committee to LPG cards) and dealer transactions
no-transfer altogether dissuaded many examine the scheme to ensure permanent and tamper-
households from purchasing kerosene at represents an proof maintenance of records.
all, for fear of not receiving the subsidy. important opportunity
On the other hand, while the upfront to reconsider both the The suspension of the DBT for
cost of purchasing kerosene may have LPG program and constitution of a
increased, the impact on household
objectives and methods committee to examine the scheme
expenditure and budgets was limited
of implementing represents an important opportunity
primarily due to the rapid decline in the subsidy reform. to reconsider both the objectives and
uptake of the fuel.Therefore, there was methods of implementing subsidy
no visible increase in fuel expenditure. conveying successful achievement reform. This in turn ensures that
However, in the case of kotkasim, in eliminating hoarding and black- any future proposals to reform LPG
electricity access stood at an average marketing of the subsidised fuels, also subsidies at a national level reflect
of 12-14 hours a day. Thus, it implied brought out the level of dissatisfaction the lessons learnt from the pilot
a relatively high price elasticity of among the beneficiaries with regard to districts. At the same time, lessons
kerosene as a source of energy. This led the scheme as a whole. Based on the from the ongoing scheme in Kotkasim
to changes in consumption as soon as the detailed evaluation results, the following put implementation priorities in
prices were increased. Moreover, since recommendations have been drafted perspective while ensuring efficient
kerosene was not used as a primary fuel setting the policy context: delivery and subsidisation of kerosene
for cooking or lighting, the reduction in Adequate planning time and subsidies. Sharing of experiences
its consumption cannot necessarily be preparation of structured systemfor between the stakeholders, as well
linked to an increase in consumption of information dissemination must as learning from implementation
other fuels. be assured well before launch of experiences in other states.
the scheme.
Recommendations and Ensure that the registration of
Way Forward Aadhaar Numbers/ opening of The views in the article of the author are personal
The findings of the two studies, while bank accountsfor all beneficiary For suggestions email at feedback@infraline.com
October 2014
www.InfralinePlus.com

StatisticsOil & Gas


Crude Oil and Gas Production under the PSC Regime for August, 2014
FIELD/BLOCK Average Oil / Condensate Production (BOPD) Average Gas Production (MMSCMD)
CB-OS/2 8,336 0.34
KG-DWN-98/3 6,169 12.45
M&S TAPTI 632 1.35
PANNA-MUKTA 20,521 5.66
RANIGUNJ SOUTH 0 0.37
RAVVA 20,907 0.46
RJ-ON-90/1 144,037 1.40
Production Increase/Start-up

Crude oil production under PSC regime during August, 2014


(000 Ton)
AREA/STATE OPERATOR FIELD BLOCK ANNUAL TARGET PRODUCTION DURING PRODUCTION DURING
(2014-15) AUGUST, 2014 AUGUST, 2013
A. OFFSHORE
EASTERN OFFSHORE
CEIL RAWA 1024.040 87.485 93.327
GSPC KG-OSN-2001/3 33.746 0.000 0.000
HARDY PY-3 0.000 0.000
HOEC PY-1 0.000 0.283 0.000
RIL KG-DWN-98/3 370.012 22.521 21.407
EASTERN OFFSHORE TOTAL 1427.798 110.289 114.734
GUJARAT OFFSHORE
CEIL CB-OS/2 336.515 32.959 31.087
GUJARAT OFFSHORE TOTAL 336.515 32.959 31.087
WESTERN OFFSHORE
ONGC+BG+RIL M&S TAPTI 23.647 2.338 2.773
ONGC+BG+RIL PANNA-MUKTA 934.211 81.965 78.793
WESTERN OFFSHORE TOTAL 957.858 84.303 81.566
A. OFFSHORE TOTAL 2722.171 227.551 227.387
62 B. ONSHORE
ARUNACHAL PRADESH
GEOENPRO KHARSANG 83.992 6.084 7.580
ARUNACHAL PRADESH TOTAL 83.992 6.084 7.580
ASSAM
CANORO AMGURI 0.000 0.000
ASSAM TOTAL 0.000 0.000
GUJARAT
ESSAR CB-ON/3 3.448 0.070 0.056
GSPC CB-ON/2 3.839 0.200 0.297
GSPC CB-ONN-2000/1 48.046 3.296 4.257
GSPC CB-ONN-2002/3 1.131 0.026 0.000
GSPC CB-ONN-2003/2 1.743 0.061 0.000
GSPC UNAWA 0.562 0.000 0.068
HERAMEC ALLORA 0.893 0.000 0.000
HERAMEC DHOLASAN 2.893 0.062 0.000
HKRAMEC KANAWARA 10.823 0.433 0.516
HERAMEC NORTH KATHANA 0.766 0.057 0.066
HOEC ASJOL 0.872 0.073 0.084
HOEC CB-ON/7 4.795 0.516 0.556
HOEC N.BALOL 0.000 0.000 0.000
HRDC SANGANPUR 0.300 0.007 0.007
INTERLINK BAOLA 0.000 0.000
JTI DHOLKA 36.120 3.851 3.425
JTI WAVEL 2553 0.306 0.311
NIKO HAZIRA 0.610 0.287 0.543
OILEX BHANDUT 0.000 0.000 0.000
OILEX CAMBAY 1.855 0.157 0.054
OILEX SABARMATI 0.180 0.029 0.042
ONGC CB-ONN-2002/1 0.996 0.000 0.000
SELAN BAKROL 7.916 0.990 0.932
SELAN INDRORA 1.320 0.102 0.067
SELAN LOHAR 8.500 0.679 0.721
GUJARAT TOTAL 140.161 11.200 1Z003
RAJASTHAN
CEIL RJ-ON-90/1 8703.334 621.274 752.281
FOCUS RJ-ON/6 4.050 0.301 0.165
RAJASTHAN TOTAL 8707.384 621.574 75Z446
B. ONSHORE TOTAL 8931.537 638.858 772.029
GRAND TOTAL 11653.707 866.410 999.416
October 2014
www.InfralinePlus.com

Natural gas production under PSC regime during August, 2014


(in Million M3)
AREA/STATE OPERATOR FIELD BLOCK ANNUAL TARGET PRODUCTION DUR- PRODUCTION
(2014-15) ING AUGUST, 2014 DURING AUGUST, 2013
A. OFFSHORE
EASTERN OFFSHORE
CEIL RAWA 292.872 14.217 41.519
GSPC KG-OSN-2001/3 517.206 0.000 0.000
HARDY PY-3 0.000 0.000
HOEC PY-1 31.965 3.344 6.374
RIL KG-DWN-98/3 4619.296 385.898 434.541
EASTERN OFFSHORE TOTAL 5461.339 403.459 482.434
GUJARAT OFFSHORE
CEIL CB-OS/2 95.238 10.596 8.779
GUJARAT OFFSHORE TOTAL 95.238 10.596 8.779
WESTERN OFFSHORE
ONGC+BG+RIL M&S TAPTI 532.811 41.756 71.254
ONGC+BG+RIL PANNA-MUKTA 2027.486 175.430 170.643
WESTERN OFFSHORE TOTAL 2560.297 217.186 241.897
A. OFFSHORE TOTAL 8116.874 631.241 733.110
B. ONSHORE
ARUNACHAL PRADESH
GEOENPRO KHARSANG 14.203 1.816 2.031
ARUNACHAL PRADESH TOTAL 14.203 1.816 Z031
ASSAM
CANORO AMGURI 0.000 0.000
ASSAM TOTAL 0.000 0.000
GUJARAT
ESSAR CB-ON/3 0.000 0.000 0.000
GSPC CB-ON/2 6.342 0.606 0.584
GSPC CB-ONN-2000/1 1.478 0.115 0.087
GSPC CB-ONN-2002/3 0.060 0.000 0.000
GSPC CB-ONN-2003/2 0.000 0.002 0.000
GSPC UNAWA 0.111 0.000 0.012 63
HERAMEC ALLORA 0.000 0.000 0.000
HERAMEC DHOLASAN 0.000 0.000 0.000
HKRAMEC KANAWARA 6.222 0.464 0.240
HERAMEC NORTH KATHANA 0.000 0.000 0.000
HOEC ASJOL 0.000 0.000 0.000
HOEC CB-ON/7 0.304 0.039 0.040
HOEC N.BALOL 8.030 0.797 0.750
HRDC SANGANPUR 0.096 0.006 0.006
INTERLINK BAOLA 0.000 0.000
JTI DHOLKA 9.125 1.658 1.074
JTI WAVEL 0.000 0.000 0.000
NIKO HAZIRA 44.861 4.983 6.078
OILEX BHANDUT 3.302 0.000 0.000
OILEX CAMBAY 1.082 0.000 0.000
OILEX SABARMATI 0.000 0.000 0.000
ONGC CB-ONN-2002/1 0.000 0.000 0.000
SELAN BAKROL 2.345 0.546 0.628
SELAN INDRORA 0.000 0.005 0.003
SELAN LOHAR 0.000 0.011 0.012
GUJARAT TOTAL 83.358 9.231 9.513
RAJASTHAN
CEIL RJ-ON-90/1 616.485 43.330 40.973
FOCUS RJ-ON/6 378.675 28.371 15.439
RAJASTHAN TOTAL 995.160 71.701 56.412
B. ONSHORE TOTAL 1092.722 8Z748 67.957
C. CBM
JHARKHAND
ONGC JHARIA 3.378 0.228 0.269
JHARKHAND TOTAL 3.378 0.228 0.269
MADHYA PRADESH
RIL SOHAGPUR EAST 3.000 0.012 0.332
RIL SOHAGPUR WEST 1.140 0.032 0.038
MADHYA PRADESH TOTAL 4.140 0.044 0.371
WEST BENGAL
ESSAR RANIGANJ EAST 368.785 6.676 2.720
GEECL RANIGUNJ SOUTH 196.316 11.424 10.074
WEST BENGAL TOTAL 565.101 18.100 11794
C. CBM TOTAL 572.619 18.372 13.433
GRAND TOTAL 9782.215 732.360 814.500
October 2014
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NewsBriefs | Renewable National


200Gw Renewable Energy Plants Coal India Rajasthan
India seek investment from US Plans building $1.2 bn of solar projects IFC to give `2.02 billion for solar project

Indian PM Narendra Modi will seek U.S. investment Coal India Ltd, the biggest producer of the fuel, is The IFC will provide about `202 crore loan for a
and technology to build 200 gigawatts of renewable considering building 70 billion rupees ($1.2 billion) 100-MW solar project being devweloped by ACME
plants over 10 years. Thats roughly equal to the of solar projects to compensate for carbon pollution, Solar Energy in Rajasthan. Overall cost of the plant is
total power-generating capacity of the Middle East said people familiar with the plan. The company is in about `808 crore. IFC, which is a part of the World
combined and would require about $210 billion, talks with the Ministry of New and Renewable Energy Bank Group, had earlier extended funding for ACMEs
based on current benchmark capital costs in India. for a combined capacity of 1,000-megawatts, said solar project in Madhya Pradesh. The proposed
State-run companies NTPC Ltd. (NTPC), the biggest the people, who asked not to be identified before an IFC investment consists of an IFC A Loan of up
power generator, and Coal India Ltd. (COAL), the announcement. Earlier this month, coal and power to `2,019 million (approximately USD 34 million)
biggest producer of the fuel, will be responsible for minister Piyush Goyal described Coal India and and possible syndication of up to `3,883 million
implementing the project, according to the report. power producer NTPC Ltd. as massive polluters (approximately USD 66 million), according to the
and said they must give back to the society. global lender.

2500 MW solar plant in AP Bharat Heavy Electricals Offshore wind policy


Govt inks pact for projects worth `800 bn To develop 20 Mw solar power plant India to target 1 Gigawatt by 2020

Piyush Goyal said that the countrys first ultra mega BHEL will develop a 20 Mw solar power plant at India is set to introduce an offshore wind policy
solar power park with a capacity of 2500 MW will come Manamunda industrial estate in Boudh district. A targeting 1 gigawatt by 2020, seeking to mimic
up in AP. He announced this after nine memoranda letter of intent has been issued to BHEL which will Europes success in generating power at sea. The
of understanding were inked, majority of them in the develop the proposed solar plant. It will also operate Ministry of New and Renewable Energy will seek
power sector, coinciding with the 100 days rule of N. and maintain the plant for a period ten years, said cabinet approval for the policy shortly, according to
Chandrababu Naidu as the CM of Andhra Pradesh. an official of GEDCOL. BHEL is currently engaged in Joint Secretary Alok Srivastava. Development of the
The Union Ministry of New and Renewable Energy and the design, engineering, manufacture, construction, technology has made offshore wind projects viable
Andhra Pradesh Government and the Solar Energy testing, commissioning and servicing of a wide now, Srivastava said by phone. By 2018, the cost of
Corporation of India, AP Genco and New and Renewable range of products, systems and services for the core electricity from offshore windmills will equal that of
Energy Development Corporation of Andhra Pradesh sector companies in the field of power, transmission, land-based projects in Asias second-biggest turbine
64 entered into agreements to develop ultra mega solar transportation, renewable energy, oil and natural gas market, he said. Wind farms in some states in India
park in the State. and defence. are generating power cheaper than new coal plants.

Neyveli Lignite Asian Development Bank Rays Power


To invest over `5 bn in clean energy projects To provide $150-m loan to Rajasthan To set up 50 MW solar farm

Power producer Neyveli Lignite Corporation has lined The Asian Development Bank has agreed to give Rays Power Experts announced its plans to set up 50
up renewable energy projects worth over `500 crore. $150-million loan to the Government of India to mw solar power generation park within six months
The company plans to set up over 80 MW of wind help build transmission lines for renewable energy in Andhra Pradesh. Rahul Gupta, Director, Rays
and solar energy projects. The board has approved in Rajasthan. The Government of India and ADB Power Experts, in a statement said, Independent
the 25 MW solar power project at Neyveli, Tamil have signed two loan agreements. The loans form Solar Power Parks are a brand new vertical we are
Nadu, the company informed. The Navratna company the first tranche of the $500-million Rajasthan entering into and this project marks the first step
said that of the 25 MW, 10 MW will be installed in Renewable Energy Transmission Investment towards this direction. We aim to complete this
an area of about 54 acres in first phase and another Program approved by ADB in 2013. The loans will project by January 2015 and then gradually move on
15 MW as an expansion in the second phase. The be used to finance high-voltage transmission lines to establish similar solar parks in other parts of the
project is scheduled to be completed within 9 and sub-stations to be built by Rajasthan Rajya country. The company has invested `20 crore of the
months from the date of LOA. Vidyut Prasaran Nigam Ltd. `300 crore overall project cost.

Tata Power Solar Telangana Punjab


To supply modules to L N Bangur Group To give licenses to build 500Mw of solar capacity L&T commissions 7.52 MW rooftop solar unit

Tata Power Solar, one of the pioneering solar Indias newly formed state of Telangana announced L&T Construction said it has commissioned a large
manufacturers in the world, announced that it has plans to auction licenses to build 500 megawatts rooftop solar plant of 7.52 MW at Amritsar. More
won a significant DCR order under JNNSM phase-2 of solar capacity. Solar installations are set to than 30,000 panels have been erected on the rooftop
batch-1. The company will supply the entire module accelerate in India, including Telangana, carved of a shed spread over 94,000 sqm. The energy
requirement for the 10 MW project to be built by out of Andhra Pradesh state in June, as Prime generated from the unit is being fed to the local grid
Palimarwar Solar Project Private Limited in Rajasthan Minister Narendra Modis government pledges to through PPA with the state distribution company
which belongs to the L N BANGUR Group and is extend photovoltaic power from irrigat ion pumps under the New and Renewable Sources of Energy
held under under its renewable energy arm, LNB supplying farmers water to village huts and mall Policy.L&T said it has used the multi-crystalline
Renewable Energy (Pvt) Ltd. The 45,000 modules rooftops. Companies must submit bids by Sept. 26 module technology and central inverters to optimise
needed for the project will be manufactured at Tata to Telanganas Southern Power Distribution Co., the efficiency. Since the modules were to be placed on
Power Solar state-of-the-art manufacturing facility state-run utility that plans to sign 25-year power fragile asbestos roof sheets, lightweight aluminium
in Bangalore. purchase contracts with the solar plants. structures were used for mounting the modules.
October 2014
www.InfralinePlus.com

International
Japan 100MW Moroccan wind farm Duke Energy
To build 60MW in Floating Solar Plants GE to support construction of plant Buys 40 MW Elm City solar power project

Japanese solar panel company Kyocera Corp is GE has been awarded a contract to deliver 56 1.7- HelioSage Energy, a national developer of utility
teaming up with Century Tokyo Leasing Corp to 100 wind turbines for the 100MW Akhfennir wind scale solar projects, has announced the sale of a
construct a pair of gigantic floating solar energy farm in Morocco. Being developed near Akhfennir 40 megawatt AC solar PV project to Duke Energy,
plants which could be operational by as soon as in southern Morocco by Energie Eolienne du Maroc the largest electric holding power company in the
April 2015. The two plants, both of which will be (EEM), a subsidiary of Nareva, the wind facility will United States. The project, known as the Elm City
built in collaboration French renewable energy firm help meet Moroccos renewable energy goals while Solar Facility, is presently under development in
Ciel Terra, will be situated in ponds in the Japanese the electricity generated will support local industrial Elm City, North Carolina. When commissioned, it
prefecture of Hyogo just west of Osaka. The first will firms. The project is part of a 720MW first phase of will be one of the largest solar PV facilities east of
possess 1.7 megawatts of capacity and the second a the Morocco Governments plan to generate 2GW the Mississippi and will be owned and operated by
capacity of 1.2 megawatts, with work on the project of energy from wind by 2020 with an investment of Duke Energy.
set to commence next month. MAD31.5bn ($3.62bn).

UK wind farms Renewable energy West African solar project


Abu Dhabi to invest 525m Azerbaijan invests over $120 mn EIB to finance 23 million euros

High quality global journalism requires investment. Over 100 million AZN has been invested in the The European Investment Bank has agreed to
Please share this article with others using the link development of alternative and renewable energy provide 23 million euros to support investment in
below, do not cut & paste the article. Abu Dhabi sources in Azerbaijan from public funds so far, one of the largest photovoltaic power stations in
is investing 525m in one of the UKs largest the head of the State Agency for Alternative and sub-Saharan Africa. The 70.5 million euro project
wind farms, in a deal that will see it buy part of a Renewable Energy of Azerbaijan Akim Badalov will be constructed at Zagtouli on the outskirts of
stake held by Statoil of Norway. Masdar, owned told reporters Sept.23 within the framework of Ouagadougou, the capital of Burkina Faso, where
by Mubadala, Abu Dhabis state investment fund, the regular business forum organized by Caspian it will be operated by the national electricity utility
is purchasing a 35 per cent stake in the 1.5bn European Club. Sonabel. The new plant is expected to act as a
Dudgeon project off the Norfolk coast from Statoil, benchmark for future solar investment across the
the Norwegian state-controlled oil company. continent.
65

110-MW Texan Wind Turbine California solar power plant 1800 Mw renewable energy
Vestas wins order Google to invest $145mn Jordan to commission capacity by 2018

Vestas Wind Systems A/S said it won a Google is providing $145m in equity financing for Middle Eastern countries are rapidly working
110-megawatt wind turbine order from Duke Energy the Regulus solar plant in Kern County, California, towards strengthening renewable energy
Corp. (DUK)s renewables unit in Texas. The order US. The project can produce enough energy to infrastructure, and Jordan is the latest one to
for 55 V110 2-megawatt machines is for the Duke completely power over 10,000 homes. Being built announce plans to add substantial capacity over
Los Vientos V wind farm, Vestas said in an e-mailed by solar energy services provider SunEdison on the next few years. The energy minister of Jordan
statement. The farm is due for completion late next an abandoned gas and oil field in North America, recently announced that the country is expected
year, and the deal includes a three-year service the power plant will provide power to Southern to commission about 1,800 MW of wind and solar
agreement, Vestas said. California Edison through a 20-year power power capacity by 2018. This includes 200 MW
purchase agreement. The 737-acre 82MW DC solar of solar power projects, for which power purchase
photovoltaic power plant will feature over 248,000 agreements have already been signed.
SunEdison mono-crystalline solar PV modules.

Alstom EDF Renewable Energy Mainstream Renewable Power


Lifts Brazil wind production to 900MW To sell 57 MW of solar projects Wins deal to develop $525m wind farm in Ghana

Alstom has announced the third shift of its wind California-based EDF Renewable Energy has agreed Mainstream Renewable Power, the wind energy
turbines factory located in Camaari, State of Bahia, to sell two solar projects with a combined 57 MW to company established by the Airtricity founder Eddie
Brazil, which will now reach a total manufacturing U.S. energy company Dominion. The two California OConnor, has reached an agreement with a Swiss
and assembly capacity of up to 900 MW per year. projects include the 32.6 MW Cottonwood Solar company to buy a $525 million (405 million)
When the factory was inaugurated in 2011, its and 24.3 MW Catalina Solar 2. Cottonwood consists coastal wind farm project in Ghana. MRP says it
total production capacity was 300 MW. This was of three sites, two of which are ground-mounted will co-develop the Ayitepa project, located about
enhanced in 2012 to 600 MW. Three years after its installations located on private land in the central 40km from the African nations capital, Accra,
inauguration, the factory has thus tripled its capacity. California counties of Kern and Kings totaling 31.6 alongside the Swiss vendor NEK Umwelttechnik until
As a consequence, the additional investment in MW of capacity. The third site is a 1 MW carport the deal closes next year. The company said the
Camaari unit will be worth 3 million ($A4.3 structure to be built in Marin County. The project has 225-megawatt wind farm will supply about 10 per
million) in the next four months. secured a 25-year power purchase agreement. cent of all electricity generated in Ghana, once the
project is completed.
October 2014
www.InfralinePlus.com

InDepth
Clean energy revolution,
the buzzword

66

India embarks on power revolution building on the Gujarat model


Challenges galore as Modi prepares blue print to power economy

Infraline News Service

Expectations are high from the As chief minister of Gujarat, Modi the number of blackouts.
Narendra Modi government, which pioneered the first incentives for In his Presidential Address,
came to power on the development solar power in 2009, a year before outlining the new governments
plank. Though Modi has not said UPA-II launched the Jawaharlal Nehru plans, President Pranab Mukherjee
much about how he plans to end National Solar Mission (JNNSM). too stressed development of energy-
the policy paralysis, especially We need a saffron revolution that related infrastructure, human resource
true in the power sector, he seems focuses on renewable energy sources and technology. The government
to have embarked on a clean such as solar energy, to meet Indias will come out with a comprehensive
energy revolution. growing energy demand, Modi National Energy Policy. It will expand
The BJPs manifesto indicated a had said after taking the reins of the the national solar mission and connect
countrywide solar power revolution, newly-formed government at the households and industries with gas-
building on the model successfully Centre. A boost to solar industry, he grids, he said.
implemented in Gujarat. feels will drive the economy and cut At the opening of Indias biggest
October 2014
www.InfralinePlus.com

photovoltaic plant, Modi called for


more environment-friendly ways to If these renewable resources
power the economy. The Japanese were exploited properly,
announcing the launch of a feasibility
study by Japan International
we wouldnt have required
Co-operation Agency (JICA) for mining coal or spending so
setting up of a 10 MW canal-top grid much on importing crude
connected solar photovoltaic (PV)
and petroleum products
power plant in Gujarat as a model for
next generation infrastructure seems Narendra Modi
to be a step in that direction. Prime Minister
India has suffered a power deficit
since 1984. According to Central
Electricity Authority, the country is fears plans for more reactors will meet its future energy demand. If
expected to see a power shortage of get caught up in red tape. We have India switches from coal and oil, it
5.1 per cent this fiscal even as the a lot of potential for solar and wind, is possible that 70 per cent of the
deficit is projected to be very high particularly in parts of Rajasthan, electricity and 35 per cent of its total
in the southern region. The shortfall Gujarat and Karnataka, he said. energy can be derived from renewable
is hampering efforts to revive the Rao, who was appointed to the resources by 2030.
economy of the country. regulatory body by an independent If these renewable resources were
committee, said he has no exploited properly, we wouldnt have
Challenges political affiliation. required mining coal or spending
Over 40 per cent of rural and 6 per so much on importing crude and
cent of urban Indian households dont petroleum products, he said. 67
have electricity, while load shedding is The Prime Minister pledged
Over 40 per cent
still common across India. Blackouts an energy overhaul with saffron
may spread to Delhi, Haryana and of rural and 6 per revolution. The colour of energy is
Maharashtra as slash in consumer cent of urban Indian saffron, he said, referring to so-called
bills, a populist move before elections, households dont green and white revolutions in the
has jeopardized a $31 billion have electricity, while 1900s that turned India into a major
government bailout of the industry. load shedding is still agricultural exporter and the worlds
According to S L Rao, head of top milk producer.
common across India
central electricity regulator from To achieve energy security for
1998-2001, the current model of all, the government is exploring the
power generation is broken, with Modis vision countrys coastline to set up nuclear
inefficient utilities and fuel subsidies Addressing a gathering after power plants. Gas-based power plants
skewing the market. dedicating to the nation 765 KV are proposed in Uttar Pradesh, Odisha
State electricity boards are Solapur - Raichur transmission and Madhya Pradesh and thermal
incurring heavy losses because of lines, Modi said, The dream of my power plants in coal-producing
costly fuel and little pricing power. government is to provide electricity all states of Bihar, Jharkhand, West
Moreover, the sector barely seven days a week, 365 days a year, Bengal, Chhattisgarh and Andhra
grew in the fiscal year ending in 24 hours a day to every village. Pradesh. Hydro power plants have
March as delays in clearances The Prime Minister stressed been planned in Jammu & Kashmir,
and funding issues stalled many reducing Indias dependence on Himachal Pradesh, Uttarakhand,
infrastructure projects. coal, which generates 68 per cent and the northeasten states. Solar
The power sector needs tough of electricity. We have to focus energy will be harnessed in Rajasthan
politics, and the only person in politics on generating more power from and Gujarat.
today who might be capable of that our abundant renewable energy Industry executives believe
kind of toughness is Modi, said Rao, resources, Modi said. Modi will act in favour of solar.
according to his website. Promoting solar power, wind Mr. Modi has already articulated
He thinks nuclear power can energy, geothermal and conventional his wind and solar vision, said
displace coal in the energy mix, but hydropower can enable India to Vineet Mittal, managing director of
October 2014
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InDepth

Welspun Energy Limited, adding, from solar energy by 2020. aided by a plunge in solar prices and
I wouldnt be surprised if he came Carrying it forward, the Modi higher costs for oil, gas and coal,
out with a 200,000-megawatt target government has doubled the target according to Tarun Kapoor, the joint
by 2025. The company owns the of the upcoming phase of JNNSM. secretary at the Ministry of New and
countrys largest solar power plant Piyush Goyal, the minister for coal, Renewable Energy.
at Bhagwanpura. power and renewable energy, in his
100-day address, said the current States dominance
Staying on track targets of clean energy would be kept Modi has been talking of his big
Modi had accused the Manmohan intact; their achievement period would ideas during rallies across the country,
Sing-led UPA government of pushing be expedited to bridge gap in energy but he has been very, very frugal with
the country into dark age by security and accessibility. specifics, said Satish Misra, senior
mismanaging the power sector. Singhs administration intends fellow at the Observer Research
But it is no denying the fact that to more than triple Indias solar Foundation think tank in New Delhi.
solar power capacity reached 2,444 capacity to 10,000 megawatts by His doubts are genuine as the state
MW, from practically nothing in 2017, enough for about 40 million administrations wield more power in
2009, backed by UPAs flagship solar Indian homes. It wants photovoltaic the sector than the central government.
power programme JNNSM. The working as cheaply as coal by 2022. States control the power grids and
Mission, divided into three phases, Its on track to surpass those goals supply free or below-cost electricity to
envisages 20,000 MW of electricity five years earlier than expected, farmers, thereby increasing the debt.
In Gujarat, Modi split electricity for
agriculture from the rest of the market
To achieve energy security for all, the as a viable answer to the problem.
government is exploring the countrys coastline Farmers get cheap power only for
68 to set up nuclear power plants. Gas-based a few hours in a day. Uninterrupted
power plants are proposed in Uttar Pradesh, supply is guaranteed to businesses,
Odisha and Madhya Pradesh and thermal households and industries at a cost.
An A-plus rating to Gujarats
power plants in coal-producing states of
distribution utilities from the Ministry
Bihar, Jharkhand, West Bengal, Chhattisgarh of Power speaks volumes of effective
and Andhra Pradesh. Hydro power plants management of resources, which is
have been planned in Jammu & Kashmir, seconded by the fact that it is one
Himachal Pradesh, Uttarakhand, and the of the two states that didnt suffer
northeasten states. a power deficit in the 10 months
to February, according to Central
Electricity Authority data.
The renewable sector is very much
driven by state chief ministers more than
the central government, Sumant Sinha,
chief executive officer of Goldman
Sachs Group Incs ReNew Power
Ventures Pvt., said in an interview.
Even if the central government gives
the right policies, when it doesnt flow
down, its a problem.
Even as the Centre plans to roll out
3,000 MW project under JNNSM in
Andhra Pradesh, it expects more states
to expressed intention to be part of
this central mega programme, official
sources said.

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With govt efforts underway Solar
Power gets a new lease of life

69

Solar is key to Indias energy security plan and goals to cut the its import dependence
Plans are afoot to help ailing local manufacturers use their idling capacities

Infraline News Service

The government has dropped a plan to from almost nothing in 2010--when the country while local manufacturers
impose antidumping duty on solar cells India launched the Jawaharlal Nehru suffered against imported equipment.
imported from the U.S., China, Taiwan National Solar Mission to build a solar Local solar power companies preferred
and Malaysia as the South Asian nation power generation capacity of 20,000 using cheaper imported gear compared
looks to give a boost to its solar-power megawatts by 2022--to 2,753 megawatts to the one made locally as the overseas
ambitions and cut dependence on now on the back of government equipment also supported by attractive
imported fossil fuels. subsidies and programs to promote the foreign loans.
But will this be enough for the use of solar power in the country. Such As local manufacturers lost a lot
holistic development of the countrys an ambitious plan also called for local of business to rivals in U.S, China
solar power sector that comprise both manufacturing and assembling of solar among others, they complained to the
solar power developers and solar cells to feed the power ambitions. government in 2012 for dumping of
equipment manufacturers. But in the last four years solar power cheaper solar cells in India at below
Solar power generation has risen generators multiplied their presence in market price. The Directorate General
October 2014
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InDepth

of Anti-Dumping and Allied Duties, economy and generate thousands of jobs shops or are running at extremely low
a part of Commerce and Industry A senior official from the Ministry capacities. They have put on hold
Ministry, initiated its investigations of New and Renewable Energy said investment plans and are awaiting
in November 2012 and concluded plans are under way to increase the suitable government policy that would
in May 2014 that indeed dumping solar-power target under the solar uplift their business.
happened in the country, injuring the mission, something that would also Sector experts say that
local manufacturers. It recommended help ailing local manufacturers use manufacturers need a regular flow
imposing duties ranging from 11 to their idling capacities and get more of orders from domestic solar power
81 U.S. cents per watt of electricity orders under mandatory local content generating companies as well as help
produced on solar cell manufacturers purchase rules. from government in lowering customs
such as First Solar Inc and Trina duty and altering the inverted duty
Solar Ltd. structure so that their input cost goes
But after taking a considerate view Indias imports of oil, down and they can compete well with
about Indias energy security plan gas and coal have overseas suppliers.
and goals to cut the countrys import ballooned in recent International trade expert says that
dependence, the Ministry of Finance years, contributing the move to drop the plans to levy
rejected the recommendation. anti-dumping duty could also help
to a chronic trade
The decision comes as a relief to in improving upon a trade dispute
domestic solar-power generators who deficit that has with the U.S. India and the U.S. are
have planned huge investment in the shaken international already battling it out at the World
sector as well as the policy makers who confidence in its Trade Organization, where U.S has
plan to expand the use of solar energy in future. To help reduce charged India of indulging in unfair
the country. But manufacturers cry foul import dependence practice of a mandatory local content
and there are murmurs of a bias or short- rules for solar power developers. India
70 and limit carbon
termed vision. maintains that the rules which helps
Indias imports of oil, gas and emissions, India had local manufacturing does not violate
coal have ballooned in recent years, launched the national any international law.
contributing to a chronic trade deficit solar mission. That Piyush Goyal, the renewable-energy
that has shaken international confidence would bring solar minister, in August, also said the
in its future. To help reduce import to about 5% of its government is committed to supporting
dependence and limit carbon emissions, local manufacturers, but didnt say how
power mix from nearly
India had launched the national solar the government will be doing it.
mission. That would bring solar to about 1% now. Some analysts say bad economics
5% of its power mix from nearly 1% can not support the growth of any
now. India currently meets more than Analysts cheered the move to drop industry and government should rather
75% of its energy needs from imports. the antidumping tariff plans. They invite overseas local equipment makers
The rare rejection of a said access to sophisticated foreign to change the dynamics of domestic
recommendation also underscores the technology and cheap overseas loans, manufacturing, something that will meet
emphasis Prime Minister Narendra which come along with the equipment- governments manufacturing goals as
Modi has put on the future of solar import deals, is key to Indias solar well give solar power developers access
power in energy-hungry India. Mr. Modi plans. Also, antidumping duty would to quality technology.
is said to be the pioneer of the solar- render solar power expensive for But some in the government argue
power boom in the state of Gujarat, consumers, who mostly use coal-fired in favor of hand holding the young
where he was its chief minister before electricity, analysts added. Indian manufacturers against unfair
becoming the countrys prime minister. But Indian Solar Manufacturers international competition or unfair trade
But then Mr Modi is the one who Association, which represents practice and dumping.
on August 15 gave the call for Make manufacturers, said they want But for now, it seems Mr Modi has
in India to boost manufacturing in the to expand and enhance domestic overruled as he aims for power for
country. India has set a target of raising manufacturing and need governments all by 2025.
the share of manufacturing to 25% of assistance. Till date, nearly a dozen
gross domestic product by 2025, from of local solar equipment or cells and
15% now, as it looks to boost the ailing modules manufacturers have shut For suggestions email at feedback@infraline.com
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Modi launches mega initiative to make
India a global manufacturing hub

71

Manufacturing contributes 17% of countrys GDP v/s 69% that comes from services
Modi says, My definition of FDI for the people of India is First Develop India

Infraline News Service

Just as Modi was about to leave for Inviting global companies to India, To sharpen the process involved
the US, he launched the mega Make Modi said, I do not have to waste time in making this dream a reality, the
in India initiative as industry titans to inviteI need to give the address. For government is setting up a dedicated cell
including Mukesh Ambani, Cyrus Mistry the world, FDI is an opportunity. My to answer queries of business entities
and Kumar Mangalam Birla and others definition of FDI for the people of India within 72 hours. The government also
keenly heard the Prime Minister. Though is First Develop India. plans to closely monitor all regulatory
he didnt announce any incentives for While the government strongly processes to simplify issues involved and
industry to invest in manufacturing, displayed its intent to make India a global lessen the regulations of compliance.
Modi stressed that besides the Look manufacturing hub, it is the business Industry experts highlight the fact
East policy, we must also Link West. houses and not the government that will that in a long time, the government has
Many believed that the message was have to be in the drivers seat. The intent promised to ease the process of doing
directed towards international businesses, behind launching such an initiative is to business in India. It has assured to clear
especially those in the US. make India a global manufacturing hub. investment proposals in a time bound
October 2014
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InDepth

manner; to make labour laws more


flexible; to trust businesses enough to Reliance group will create 1.25
allow them to self-certify documents; and lakh new jobs and invest `1.8-
so on. These are indeed morale booster lakh crore in the next 12 to 15
for business houses and would encourage
investments towards the cause.
months as part of the movement.
Manufacturing contributes 17% of Indias long-term GDP growth
countrys GDP compared to 69% that potential is 8-10 per cent
comes from services and 14% from
agriculture. In terms of employability, Mukesh Ambani
only 100 million do manufacturing Chairman, Reliance Industries

Manufacturing
jobs, while 232 million work on working 14 hours a day and motivates
contributes 17% farms and 142 million in the services a billion Indians to dream and do,
of countrys GDP businesses. About 474 million people Ambani said adding, You have
compared to 69% in the country are gainfully employed, inspired the whole India to dream and
that comes from as per official statistics. do. He said that the group will invest
services and 14% In recent years, investment in `1.8-lakh crore in the next 12 to 15
manufacturing has been hindered by months. Indias long-term GDP growth
from agriculture. In
many factors inflexible labour laws; potential is 8-10 per cent, Ambani said.
terms of employability, complex tax regime; depressed market. The first speaker among the
only 100 million do Describing Make in India campaign industrialists, Cyrus Mistry said his
72 manufacturing jobs, as a historic day for Indian industry, Tata Group remains fully committed to
while 232 million work Mukesh Ambani, Chairman Reliance investing in India. Generating 12 million
on farms and 142 Industries said that RIL will create jobs from manufacturing was a challenge
1.25 lakh new jobs over the next 12-15 and that employability has to be
million in the services
months as part of the movement. improved through skilling, Mistry added.
businesses. PM Modi dreams and does, He also highlighted the need for
sound infrastructure, balanced tax and
duty structure and efficient logistics.
Pre-requisites for Make in India initiative to see success Our aspirations on the global
Administrative machinery has to be efficient for healthy business environ- manufacturing arena will be fulfilled
ment. The country suffers from an image where people believe the country if we address certain challenges on
has too much of red tapism when it comes to allowing companies to do priority, Mistry added.
business. A business-friendly environment can be created with easier ap- Pointing out senior officials of
proval processes and a hassle-free clearance mechanism. the biggest defence firms, prominent
The systems should be created to iron out elements that adversely affect American pension funds and
manufacturing competitiveness. Focus should also be on offering tax investment banks would attend the
concessions to companies who plan to invest in India session, USINPAC Chairman Sanjay
System must recognize and respect novelty and innovation. Small and Puri said, These are the kind of people
medium-sized enterprises need to be encouraged as they can help coun- who provide the building blocks of
try take next big leap in manufacturing. The government has to chart out Make in India.
plans to give special sops and privileges to these sectors.
The industry lauded the initiative
Having a huge manufacturing industry in neighbouring China, India by and felt that the government now looks
default will be compared with Made in China campaign. Indian industry serious to address some of the factors
should continuously build its strength so as to outpace Chinas envious
by doing away with the controversial
position in the manufacturing sector.
retrospective tax, but there are other
To achieve desired success in Make in India initiative, India needs to
fundamentals that have to be addressed
encourage research and development and high-tech imports. The country
also needs to be better prepared to do world class R&D. The government
by businesses themselves.
should ensure conducive environment for R&D
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October 2014
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StatisticsRenewableEnergy
Tentative domestic manufacturing capacity of solar cells and modules (Till June 2014)
Companies Cells (MW) Module (MW) Companies Cells (MW) Module (MW)
Installed Capacity Installed Capacity Installed Capacity Installed Capacity
capacity under capacity under capacity under capacity under
Operation Operation Operation Operation
as on date as on date as on date as on date
Access Solar - - 18 - Surana Ventures 130 - 60 -
Ajit Solar - - 20 4 TATA Solar 180 70 200 200
Alpex - - 75 50 Titan Energy - - 140 -
Bharat Heavy Electricals 8 8 8 8 UPV Solar Udhaya Energy 12 5 7 -
Limited (BHEL) Photovoltaics
CEL 3 3 10 2 USL Photovoltaics - - 7 -
EMMVEE Photo Voltaic - - 135 135 Vikram Solar - - 150 75
Power Pvt. Ltd. Waaree Energy - - 250 -
Euro Multivision Ltd. 40 40 - - Websol Energy System 120 - 100 100
Evergreen - - 20 20 XL Energy Ltd. 80 - 210 -
Enfield Solar - - 20 - Gautam Solar - - 25 25
Green Brilliance - - 45 - Modern Solar - - 25 25
HHV - - 50 50 Shan Solar - - 60 30
Indosolar Ltd 450 80 - - Sova Power - - 50 50
Jupiter Solar 70 70 - - Jain Irrigation - - 55 55
KL Solar - - - - Andromeda - - 30 20
Kotak Urja Pvt. Ltd. - - 25 25 PV Power - - 14 14
Lanco - - 75 75 SunShine Power Products - - 10 3
Maharishi Solar Technology 10 - 20 - Krishma Solar - - 20 20
Micro sol - - 14 - Aggarwal Renewable Energy - - 15 15
Moser Baer 200 - 230 80 Pvt. Ltd.
Photon Energy Systems - - 45 40 HBL Power Systems Ltd. - - 20 20
photonix - - 25 - Topsun Energy - - 40 40
PLG Power - - 50 25 JJ PV Solar Pvt. Ltd. - - 25 25
Premier Solar Systems (P) 20 20 75 40 SLG Solar - - 8 -
Rajasthan Electronics & - - 20 - Plaza Power & Infrastructure - - 20 20 73
Instruments Ltd. Company
Reliance Industries Ltd - - - - Sun Energy Solar Solution - - 30 10
Shurjo - - 5 - Bharat Electronics Ltd. 3 1 5 3
Solar Semiconductor 60 - 195 - Total 1386 297 2756 1304
Source: MNRE

State wise Biomass Tariff Determined by CERC (Till 2015)


S. State Tariff Order Fixed Variable Net
No. Date Cost Cost Applicable
Tariff
1 Andhra 28-02-2013 2.21 3.34 5.55
Pradesh
15-05-2014 2.91 4.19 7.10
2 Haryana 28-02-2013 2.25 3.80 6.05
15-05-2014 2.97 4.77 7.73
3 Maharashtra 28-02-2013 2.26 3.89 6.15
15-05-2014 2.98 4.88 7.85
4 Punjab 28-02-2013 2.27 3.98 6.25
15-05-2014 2.99 4.99 7.97
5 Rajasthan 28-02-2013 2.20 3.32 5.52
15-05-2014 2.91 4.16 7.07
6 Tamil Nadu 28-02-2013 2.20 3.29 5.49
15-05-2014 2.90 4.12 7.02
7 Uttar Pradesh 28-02-2013 2.21 3.40 5.61
15-05-2014 2.92 4.26 7.18
8 Others 28-02-2013 2.23 3.57 5.80
15-05-2014 2.94 4.48 7.42
Source: CERC
October 2014
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StatisticsRenewableEnergy
Status of Target Vs Achievement of Channel Partners for the year 2013-14 in SWH Systems
Sl. Channel Partner name Target Achieved %age Sl. Channel Partner name Target Achieved %age
No area (M2) area (M2) No area (M2) area (M2)
1 Akson Solar Equipments Ltd 5000 2114.09 42.28 37 Savemax Solar Systems P Ltd 20,000 17,973 89.87
2 Alfa Interiors Pvt. Ltd. 5,000 2,996 59.92 38 Shriram Green Tech 5,000 1,205 24.10
3 Anu Solar Power Pvt. Ltd. 60,000 23,961 39.94 39 SLT Energy Ltd 5,000 2,327 46.53
4 Bipin Engineers Pvt Ltd 40,000 17,776 44.44 40 Solar Hitech Geysers 8,000 3,358 41.98
5 Bosch Limited 20,000 0 0.00 41 The Standard Products 15,000 6,204 41.36
6 Choice Solutions Ltd. 5,000 1,147 22.94 42 Star Coating Services 10,000 10,002 100.02
7 Dheemanth Solar Industries Pvt. Ltd 9,000 2,112 23.47 43 Steam Power Enertech 15,000 9,076 60.51
8 Divya Industries 10,000 9,359 93.59 44 Sudarshan Saur Shakti Pvt. Ltd. 1,40,000 86,477 61.77
9 Eagle Technologies 20,000 6,705 33.52 45 Sun Tech Industries 5,000 5,000 100.00
10 Ecosun Energy Company 7,000 6,377 91.10 46 Sunrise Engitech Pvt. Ltd Pune 20,000 2,563 12.82
11 Electrotherm Renewable 55,000 15,017 27.30 47 Sun Zone Solar Systems 12,000 12,030 100.25
12 EmmVee Solar Systems Pvt. Ltd. 1,00,000 37,292 37.29 48 Supreme Solar Systems 30,000 30,007 100.02
13 Greentekindia Pvt Ltd 60,000 3,851 6.42 49 SVL Trading Corporation 5,000 1,374 27.47
14 Honeywell Automation India Ltd 7,000 7,017 100.24 50 Tata Power Solar Systems Limited 1,20,000 52,446 43.70
15 Hykon Solar Energy Pvt. Ltd. 7,400 1,127 15.23 51 Velnet Non Conventional Energy 30,000 28,216 94.05
Systems
16 Inter Solar Systems Pvt. Ltd 35,000 18,000 51.43
52 V Guard Industries Ltd 15,000 15,002 100.02
17 Jain Irrigation Systems Ltd 1,02,053 56,554 55.42
53 Vijaya Industries 8,000 1,189 14.86
18 Jay Renewable Energy Pvt Ltd 15,000 3,247 21.65
54 Ados Renewable Pvt Ltd 5,005 1,030 20.57
19 Just Accura 5,000 2,542 50.84
55 Farmson Enviro Care 5,000 3,599 71.98
20 Kaushal Solar Equipments Ltd 6,800 5,820 85.59
56 Glazaer Solar Energy P Ltd 5,000 0 0.00
21 Kosol Hiramrut Energies Pvt. Ltd. 50,000 22,384 44.77
57 Helious Clean Energy Pvt Ltd 15,000 3,303 22.02
22 Kraftwork solar pvt.ltd 7,500 0 0.00
58 Kotak Urja Pvt Ltd 5,000 3,882 77.63
23 Laxmi Agro Energy Pvt. Ltd 10,000 10,003 100.03
59 NRG Technologies Pvt. Ltd 5,000 0 0.00
24 MM Solar Pvt. Ltd 5,000 0 0.00
60 Proficient Energy Pvt Ltd 10,000 0 0.00
25 Machinocraft Pune 6,000 3,003 50.05
61 Rashmi Industries 10,000 0 0.00
26 MG Rama Energy Pvt.Ltd. 10,000 7,592 75.92
62 Shri Solar System 5,000 0 0.00
27 Nucifera Renewable Energy Systems 13,500 3,353 24.84
74 63 Standard Engineering Company 5,000 3,423 68.46
28 Nuetech Solar Systems Pvt. Ltd. 50,000 26,214 52.43
64 Suntek Energy Systems 5,000 1,622 32.43
29 OM Energy Equipment Rajkot 22,000 13,132 59.69
65 Sun Brio Energy Pvt. Ltd 5,000 0 0.00
30 Orb Energy Pvt. Ltd 50,000 28,290 56.58
66 Waaree Energies Pvt Ltd 25,000 0 0.00
31 Photon Energy Systems Ltd 15,000 8,621 57.47
67 Zodiac Energy Pvt Ltd 5,000 1,026 20.51
32 Powertroniks solar pvt ltd 12,000 3,046 25.39
68 Redsun Solar Industries 5,000 4,656 93.11
33 Prachi International Ltd 5,000 0 0.00
69 Akshar Technology 5,000 4,954 99.07
34 Racold Thermo Limited 1,50,000 69,544 46.36
70 Jay Khodiyar Manufacturers 5,000 1,690 33.81
35 Redren Energy Pvt. Ltd. 65,000 30,001 46.16 71 Siddhakala Renewable Energy 5,000 3,315 66.29
36 Roop Arinna Fabricators Pvt Ltd 7,000 2,150 30.71 Systems
Source: MNRE

Solar water heating systems (SWHS) in India


Year Solar water heating systems
(million sq. m Collector area)
Potential Annual Cumulative
Addition
Upto Dec 2004 140 1 1
Till Mar05 140 0 1
REC Trading Volume and Price for September 2014 Till Mar06 140 0.5 1.5
REC Type Buy Bid Sell Bid Price Volume Till Mar07 140 0.4 1.9
(No. of (No. of (INR/ (No. of Till Mar08 140 0.4 2.3
certificates) certificates) Certificate) certificate) Till Mar09 140 0.6 2.9
Qty (MWH) Till Mar10 140 0.63 3.53
PXIL 13,656 50,20,166 1,500 13,656 Till Mar11 140 0.94 4.47
1,099 2,08,717 9,300 1,099 Till Mar12 140 0.51 4.98
IEX 8,994 43,42,307 1,500 8,994 Till Mar13 140 2.0 6.98
264 1,61,260 9,300 264 Till Mar14 140 1.12 8.1
Source: PXIL and IEX Source: MNRE
October 2014
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OffBeat
Vistara set to miss
October-launch date
Vistara is still to get a number of clearances from the aviation regulator
A December or January launch seems more plausible

75

Infraline Bureau

Vistara, Indias most-awaited airline has been pushed back by at least two the aviation regulator, the Directorate
will have a delayed take-off. According months as a number of regulatory General of Civil Aviation (DGCA). The
to the original plan, Vistara the Tata clearances are yet to come dashing first hurdle was caused apparently by
Group-Singapore Airlines backed full hopes of the airline management to the airline not obtaining approval for
service carrier was scheduled to get make hay while sun shines during the the ferry flight.
airborne by mid-October. festival period and also the passengers, Vistaras first aircraft, a brand
The launch had been strategically who have been eagerly awaiting to get new Airbus A320, was to fly from
timed to coincide with Diwali one of a taste of the renowned hospitality of the Airbus headquarters in Toulouse,
the biggest Indian festivals and tradi- the Tata Group and Singapore Airlines. France to Delhi. The airlines engineers
tionally the peak season for air travel in and crew along with a senior DGCA
the country when airlines are known to The Glitch official had flown to Toulouse to take
mint money. The official version goes that Vistara is the delivery of the aircraft and fly it
Vistaras launch, said sources, still to get a number of clearances from to India. While Vistara had obtained
October 2014
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OffBeat

the approval from DGCA for the ferry British business tycoon, Sir Richard Tata Group
flight similar flight clearances from Branson had famously said the easiest
Founded by Jamsetji Tata in
countries over which the aircraft would way for a billionaire to become a 1868, the Tata group is a global
have flown had not been obtained. So millionaire was to start an airline. enterprise headquartered in India,
the ferry flight had to be delayed. The Branson himself owns Virgin Atlantic and comprises over 100 operating
team returned empty handed. considered one of the worlds companies with operations in
A number of clearances are yet to best airlines. more than 100 countries across
be given. The entire process is going In India it is even tougher to operate six continents, exporting products
to take some time. There is no chance an airline due to the high operating and services to over 150 countries.
of an October launch. A December or costs involved vis--vis airlines across The revenue of Tata companies,
taken together, was $103.27 billion
January launch seems more plausible, the globe. Indian carriers operate in an
(around `624,757 crore) in 2013-14,
a DGCA official said. exceptionally high-cost environment. with 67.2 percent of this coming
Vistara is going the AirAsia India The single largest element contributing from businesses outside India. Tata
way. Getting an air operators permit is to airline costs is Aviation Turbine companies employ over 581,470
an arduous task in India, said Subhash Fuel (ATF), which accounts for people worldwide. There are 32
Goyal, chairman of the STIC Travel 40% of the operating cost of Indian publicly-listed Tata enterprises
Group, one of the countrys biggest carriers, as against a figure of only and they have a combined market
travel companies. 20% for international carriers. ATF in capitalisation of about $132.35 billion
India is priced, on an average, almost (as on August 1, 2014).
The History 60% higher than internationally, Singapore Airlines Limited
While a delay in getting a licence is no said Goyal.
When Singapore Airlines was formed
big deal but when it comes to Tatas
in 1972, it operated a modest fleet
one should keep their fingers cross.
Tatas and Singapore Airlines have a
While a delay in getting of 10 aircraft to just 22 cities in 18
76 countries. Today, Singapore Airlines
jinxed history as far as aviation in India a licence is no big deal operates a modern passenger fleet
is concerned despite the fact that Tatas but when it comes to of more than 100 aircraft and its
are the pioneer of aviation in India. In Tatas one should keep network, including Singapore Airlines
1932, JRD Tata started Tata Airlines, their fingers cross. Cargo and SilkAir destinations,
which was later renamed as Air India. covers a total of 109 destinations
Tatas and Singapore in 40 countries. In October 2007,
This is their third bid to enter the
Indian domestic aviation market.
Airlines have a jinxed Singapore Airlines, a member of the
In 1995, Tata and SIA had made history as far as Star Alliance, made aviation history
again as the first to fly the worlds
the first attempt to launch a domestic aviation in India is largest passenger aircraft, the
carrier but the project could never take concerned despite the Airbus A380.
off due to a change in civil aviation fact that Tatas are the
policy that barred foreign carriers from pioneer of aviation in To add to the high cost of ATF is the
holding stake in domestic airlines. In service tax that is killing the industry.
2000, the two had bid for a stake in Air
India India is amongst a few countries in
India but the offer was withdrawn later. the world that levy service tax on air
TATA-Singapore Airlines venture The widening differential in ATF tickets. Service tax during the financial
was long overdue, should have started prices and its huge negative impact on year 2012-13 had been increased four
15 years back. Hope, this JV doesnt airline balance sheets are eroding its times and at present, service tax is
become a victim of the negative competitiveness. In the backdrop of levied upon 40% of gross ticket value
aviation politics like in 90s, said Kapil higher oil crude prices, there is a severe while earlier it used to be 10% on
Kaul, South Asia chief executive of risk of dampening of passenger market gross ticket value or `100 per journey
aviation consultancy firm Centre for growth by quickly making air travel whichever was lower for domestic
Asia Pacific Aviation. out of reach for a significant portion passengers and 10% of gross ticket
of the market, which was fuelling its value or `500 per journey whichever
October-December quarter growth. The losses being registered by was lower for international passengers.
a saving grace for airlines Indian carriers may result in reduced So, this brings us to the point
Operating an airline is considered one connectivity thereby affecting growth why October-December is such an
of the toughest things in the world. in this sector, he said. important period for airlines. Starting
October 2014
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with Durga Puja, the quarter sees a Any airline, across the globe, is that the airline will have unprecedented
number of festivals which make it the profitable if it has a decent occupancy luxury on board, in terms of comfort
most travelled period for Indians. A lot in the business and first class. Thats and passenger handling. Very aptly,
of them working outstations visit home where airlines make money. Premium the airlines philosophy would be
while schools are shut for vacations. class passengers get the moolah, no athithi devo bhav or guest to be
Air travel picks up drastically during doubt, Goyal said. treated as God.
this period and this is one quarter when The October launch would have
all airlines make a profit. ensured full business class occupancy Advantage lost
Airlines make a killing during this till mid-January when people get back With that advantage lost, Vistara would
period. Air fares are sky high. Last from holidays. Having made money in now like their first aircraft to arrive
minute fares can be upwards `50,000. the first four months would have been as late as possible. Or as nearer to the
Even at those prices tickets get sold so fantastic for the airline and would have launch as possible. Having an aircraft
one can imagine the rush, Goyal said. helped it gear up for the lean travel on the ground adds up to your cost. The
It was with this background in mind months that would follow, admitted an airline would unnecessarily have to
that Vistaras management was eyeing Air India official. bear all kinds of maintenance expenses
an October launch. The buzz around Domestic air travel in the country while continue to paying the parking
the airline was so strong that it would dips in February with annual charges while getting zero revenues
have been an instant hit. Moreover, examinations in schools and foggy in return. Already, the hiring is on in
there are just a handful number of weather. It picks up again in June as the full swing.
business class seats in the domestic summer breaks kick in. Thats actually not a good thing
market, a senior official of the airline Vistara, derived from the Sanskrit for the new airline, said Saj Ahmad, a
said. Only Jet Airways and Air India word, Vistaar, which means limitless London-based aviation expert. Hiring
offer the super luxurious business class expanse, enters the Indian aviation people means you have to pay for
seats. The launch had been so planned market when all except one airline is their salaries. And in airline business 77
that business class seats would have bleeding. The Tata-backed Vistara will the salaries contribute a lot to cost of
been sold out. Also, the economy class take on Naresh Goyal-promoted Jet operations. Pilots earn upto `6 lakh a
would have got a great response as the Airways and government-owned Air month on an average. Engineers make
airline will offer complimentary meals India in the full service segment. Both around `3-4 lakh a month. So, if you
and passengers have been waiting Jet and Air India have been posting have 200 employees, that means a lot
to see what Tatas will offer, the huge losses. Tatas, a known name in money, Ahmad said.
official said. the hospitality industry, have promised The airline is expected to have
staff strength of 400 at launch. That
Vistaras hiring is on in full swing is
no secret. The airline has managed to
poach top executives from rival airlines
which would mean adding to cost
before the first Rupee is earned.
It has already hired at least a dozen
senior staff from rival carriers Jet
Airways and Indigo to join its crew.
Employees are excited. Few can match
a brand like Tata-Singapore Airlines.
Ashutosh Verma, who was a senior
commander with IndiGo has joined
Vistara where he will head the safety
wing. Verma will be joined by Deepak
Joshi, who was a quality manager
with JetLite.
Niyat Baru has been appointed as
the Chief Financial Officer (CFO) of
the start-up, in which Tata Sons has
a 51% stake while the rest is held by
October 2014
www.InfralinePlus.com

OffBeat

SIA. Baru is an old Tata hand and 2009-10.


was formerly CFO of Tata Realty The airline has a three member
and Infrastructure Limited. He board, which consists of Chairman
has also worked with The Indian Prasad Menon, Mukund Rajan
Hotels Company Limited (IHCL). and Singapore Airlines executive
IHCL and its subsidiaries are vice-president Mak Swee Wah.
collectively known as Taj Hotels In early June, Vistara began
Resorts and Palaces. by hiring its senior cabin crew.
A Directorate General of Civil It picked up Priyanka Singh, as
Aviation (DGCA)-approved cabin-crew in-charge. Singh has
examiner, trainer and instructor over 6 years experience as an
has come in from Indigo. For route air hostess spanning across Jet
planning and aircraft deployment, Airways and Indigo. The airline
Vistara has selected some key is currently holding walk-in
members from Tata Tele Services interviews for cabin crew through
and Docomo, both sister concerns the week at its Gurgaon office.
of the airline. Tata-SIA would jointly invest
As senior manager planning, $100 million initially to set up
Vistara has hired Ashish the airline with Tatas investing
Maheshwary, who has been a $51 million.
network planning analyst for SIA
since 2008. To head its facilities Break-even by fourth
management, Vistara has chosen year
78 Kamal Satsangi, who has joined Vistara aims to break even in the
the airline from Tata Teleservices. fourth year of its operations. The
S Varadarajan has been airline, sources said, has projected
appointed as the Chief Human a profit of $16 million in the
Resource Officer of Tata-SIA. fourth year of its operations. As
He was previously with per internal estimates, Tata-SIA
Tata Teleservices. is likely to incur a loss of $37.6
Singapore Airlines ace pilot, Captain million in the first year, $23.1 million
Roshan Joshi has joined as vice- As per internal in the second year and $6.2 million in
president and Chief Pilot at Tata-SIA. estimates, Tata-SIA is the third year of its operations.
To officiate as nodal officer-cum- likely to incur a loss The Tata-SIA projected profitability
manager safety training for its crew, date seems modest compared to
Vistara has chosen former Kingfisher
of $37.6 million in the AirAsia India, another Tata Group-
Airlines Juanella Colaco. She joined first year, $23.1 million backed start-up airline. Mittu
the airline in February helping it draw in the second year and Chandilya, CEO, AirAsia India plans
up a high safety standards plan and get $6.2 million in the third to break even within four months of
it approved by the DGCA, where she year of its operations. launching operations.
worked on a year-long deputation in The airline plans to start with 87
flights connecting nine cities to Delhi
Vistara Birth of a Brand and gradually increasing to over 300
September 2013 Tata Sons and SIA sign agreement to announce joint flights in four years. It plans to acquire
venture and apply for FIPB approval up to 16 aircraft from 2014 through
October 2013 TATA SIA Airlines receives FIPB approval. 2017, with planned deliveries of five
November 2013 The TATA SIA Airlines Limited board is formed and the aircraft in 2014, four aircraft each in
company gets incorporated 2015 and 2016 and three aircraft in
December 2013 Applies for no objection certificate from aviation ministry 2017. The aircraft will be configured
April 2014 Receives NOC from Civil Aviation Ministry and applies for
with between 145 and 175 seats.
airline operators permit
August 2014 Brand Vistara is unveiled
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October 2014
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InfraWatch
Stalled road projects get
policy push
More power to states, the fast track to clearances and approvals
Govt to implement road project in EPC mode instead of PPP

79

Infraline News Service

A journey of a thousand miles to face multiple challenges this


begins with a single step. Roads financial year with high interest
infrastructure is at murky stage with rates, sluggishness in awarding road
current logjams in projects. It is a contracts, reduced availability of
tough road ahead for the newly- funds, slowdown in execution, and
formed government as it has to put in increased competitive intensity.
place correct policies and reforms to However, many projects awarded
ease the situation. over the last one year are hanging fire
Road sector is crucial for economic because of delay in land acquisition,
growth. Realizing this, the BJP-led clearances, and financial closure.
government is giving priority to Expectations are fairly high from
development of road transportation. the Narendra Modi-led government,
Business leaders attribute the slack which won a clear majority in
in this sector to lack of political will, the elections. After a few days
which didnt allow policies to take off of becoming Prime Minister, he
in recent past. Prerna Singh
said, A nation that gives impetus
The Indian road sector continues Sr. Analyst, Roads Infrastructure, InfralineEnergy to infrastructure, be it roads, rail,
October 2014
www.InfralinePlus.com

InfraWatch

airport, that is where chances of Around 260 road projects worth


development increase. We have to `60,000 crore are stuck, owing to
take ownership to build a strong clearances and approvals. All efforts
nation. Business sentiments are are being made to club road transport
improving and corrective actions are and railway ministries for faster
being taken to lift the sector from the implementation of projects. Also in
prolonged sluggishness. an important decision, the process
The public-private-partnership of clearing road bridges has been
(PPP) model of awarding road simplified with online application.
projects has proved to be a complete The NHAI would bear construction
failure in India, leading to a dip in and maintenance costs of the projects.
road construction to a mere 3 km a Some of the decisions are:
day. Challenges are many - overall MoEF to allow state governments
economic downturn, lack of equity to give permission for sand mining
in the market, difficulty in arranging up to 20 hectare as against the
debt, highly-leveraged balance sheets existing norm of 5 hectare
for highways developers and land State government and regional
acquisition, approval and clearance- office MoEF will be allowed to
related issues. Blaming the UPA clear linear projects, involving For ending corruption, the
regime for the present situation, forest land up to 40 hectare Amendment in Motor Vehicle
Union Minister for Road Transport National Board of Wild Life Act is proposed in next session of
and Highways Nitin Gadkari said the approves projects, falling within parliament. Some of these changes
previous government awarded projects 5-10 km radius of various would be based on best practices
80 without acquiring even 10 per cent sanctuaries of the world like e-governance.
of land, which resulted in delays and Railways to standardize ROB The RTOs would be linked to
cost overruns. In a major policy shift, & RUB designs & to put the e-governance to bring transparency in
the NDA government has decided to mechanism online the system, plagued by malpractices.
implement projects on Engineering The government would have to
Procurement and Construction The NHAI board has given in work on a policy framework to assure
(EPC) mode. principle approval for creation of a at least 16 per cent internal rate of
At present, 437 projects, entailing body, Asset Reconstruction Company, return for infrastructure projects. This
an investment of around `21 lakh which would try to make stalled and would safeguard developers from
crore, are delayed due to various non-commercially viable projects foreign exchange fluctuations and
issues across infrastructure sector. feasible. Indian Bankers Association boost investment in the sector.
has already given its consent as India has to soon embark on the
Bumpy Ride most of the roads are turning non- next wave of economic growth, which
260 projects, involving about performing assets (NPA). The entity will encompass some fundamental
`60,000 crore, implemented would have two options: Either to take shifts in growth model as well as
in PPP mode, delayed due to over an entire project, according to the larger and bigger social reach to
various reasons clause of the concession agreement, benefit its vast population. Being one
From 2004 to 2014, the road-
or complete a small portion of the of the fastest growing economies
making activity declined from 20 km
a day to 3 km a day on an average delayed work. This is a welcome of the world requires physical
189 projects worth `1,80,000 crore move as it will help improve the infrastructure facilities to continue the
in limbo because of difficulties in situation in the cash-starved sector. pace of development process. The new
land acquisition and clearances There are numerous disputes, government at the Centre has to build
Road building cost has increased
involving arbitration cases amounting and expand its key infrastructure to
from `5 crore a km in 2004 to `13
crore a km in 2014 to `26,556 crore investments between global standards and road sector plays
The PPP model proved to be a developers and NHAI. The NHAI has so an important role in it.
complete failure in the sector far settled `10,550-crore projects with
Since 2009, only 350-odd km concessionaires. At least 49 pending Prerna Singh, Sr. Analyst, Roads Infrastructure,
added to Indias national and InfralineEnergy
claims, involving 26 contractors, has
state highways
been cleared (See the Graph). For suggestions email at feedback@infraline.com
Coal Import
Outlook 2025:
Strategizing Coal Supply
for India
September 2014

Key Highlights
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Domestic coal market- resources, production,
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Coal import trends in India: type-wise, country-wise
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Indias coal demand and domestic supply
projections till 2025
Major coal exporting nations:
Latest statistics- production, consumption and
exports
Future Supply Forecasts
Indias Port infrastructure (existing and upcoming):
Coal importing ports
Coal handling capacity, traffic, connectivity and
future plans, etc. Rep
ort
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Solution Driven Ph. +91 120 4979747 Mobile: 9873422453
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