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Power Sector -Overview
Measures Undertaken IDBI’s Exposure in Power Sector Top Private Players Announcements Investment Opportunities Issues & Concerns Suggestions
44KV SSI Houses LT Consumers Distribution Transformers SSI HT Consumers Large/Medium Industries .Power Sector Overview Indian Power System Fuel Input 400/220KV AC Transmission Lines Grid control (Load Dispatch Centre) Boiler R + Turbine Y + Generator B Power Generation Power Transformer Service lines Reactive Power Control High voltage Substation switchgear 132/110/66KV Distribution Lines 33/11/0.
Natural gas. Naphtha. Diesel) • Hydel Power Plant (Water) • Nuclear / Atomic Power Plant (Radio-active fuels) • Non-conventional Power Plant (Wind. Solar.Power Sector Overview Technology • Thermal Power Plant (Coal. Integrated Gasification Combined Cycle) – Nuclear Power Based (Pebble Bed Modular Reactor) 4 . Co-generation) • Emerging Technologies – Coal based (Circulating Fluidized Bed Combustion. Lignite. Biomass. Tidal.
Power Sector Overview Global Scenario 5 .
transmission & Distribution Losses including unaccounted energy Consumption CPSUs PGCIL Agriculture Domestic Commercial Industries Others IPPs & Private Licenses Private Utilities Captive open Power Trading Companies Captive . Licensee Energy sold = Energy available – Energy lost Transformation.Structure of the Indian Power Industry Generation SEBs Transmission SEBs/ STUs Input (KWh) Distribution SEBs Discoms Pvt.
Power Sector Overview .Present Indian Scenario • Power Segment wise break-up 7 .
Power Sector Overview Contractual Structure of a Power Project 8 .
323 MW Coal .96.988 MW 17% State Sector 76.917 MW Thermal .200 MW Sector-wise Installed Capacity Private Sector 184.108.40.2066 MW Diesel .13.459 MW Gas .16.364 MW 50% Central Sector 48.50.971 MW 33% 9 .Power Sector Overview .1.120 MW Renewable .Installed Capacity • Installed capacity increased from 1362 MW in 1947 to 1.242 MW Sector-wise Installed Capacity Total 1.50.044 MW Nuclear .323 MW at end of June 2009 Hydro .78.
2 Kwh • Power Supply Position (2008-09) Energy (in MU) Demand Availability Shortage % shortage 7.001 11.1% Peak (in MW) 1.785 13. 2008-09) • Average Plant Load Factor (PLF) 10 .Power Sector Overview Demand-Supply Gap • Per Capita Consumption : 704.038 86.039 6.09.77.9% : 77.809 96.024 11.91.19 % (Thermal.
Power Sector Overview Demand Supply Position 11 .
245 41.110 78.716 MW added during last two years 12 .Power Sector Overview Capacity Addition • Target & Achievements Five year plan Eight plan Ninth plan Tenth plan Eleventh plan Twelfth plan Year 1992-1997 1997-2002 2002-2007 2007-2012 2012-2017 Target 30.538 40.180 (51%) - * 12.423 (54%) 19.700* 82.200 Achievement 16.025 (47%) 21.
Present Scenario • Unsatisfactory Financial health of SEBs – Poor quality of Supply – Un-scheduled load shedding. low voltages.265 billion (for 2008-09) • Slow progress in T&D reforms • Subsidies • Escrow Cover • Political involvement 13 . voltage and frequency fluctuations – High T&D losses – Metering.Power Sector Overview . Billing & Collection – Energy audit – Average tariff lower than cost of supply – Commercial Losses without subsidy of SEBs – Approx. Rs.
5% with FX pass through – Guaranteed Off-take by SEBs – Counter guarantee by Central Government for 8 fast track IPPs 14 . Two part tariff structure . CGUs & CEAs • Amendment to Electricity (Supply) Act 1991 – – – – – Private sector participation in generation Awarding the IPPs through “Pass Through Cost Basis route” 100% foreign Equity participation: full dividend repatriation .16 % return on equity at PLF of 68. incentives for PLF above 68.5%.Power Sector Overview Policy Initiatives • Indian Electricity Act 1910 – – Technical & Operating Standards – Licenses for supplying power in specific areas • The Electricity (Supply) act 1948 - – Development of State sector – Creation of SEBs.
1998 • Mega Power Policy. 1999 • The Accelerated Power Development and Reform Programme (APDRP). Creation of CTUs & STUs 100% Customs duty waiver PTC to buy power from Mega Projects & supply to SEBs Financial assistance/ incentives for T&D upgrades & SEB profitability • Electricity Regulatory Commission Act.Power Sector Overview Policy Initiatives • Competitive Bidding Process (tariff) for IPPs was adopted since 1995 • The Electricity Laws (Amendment) Act. 2000 Availability based tariff (ABT) notified by CERC 15 . 1998 – – – – – – – • Transmission of Electricity Granting of transmission license Establishment of CERCs & SERCs.
No license required – Removal of provision for elimination of cross subsidy 16 .Power Sector Overview Policy Initiatives • • Montek Singh Committee . of India to undertake reforms • The Electricity Act. 2007 – Access to Electricity to all areas – Sale from captive units .Securitisation of SEBs over dues by CPSUs However. 2003 enacted • The Electricity Amendment Act. capacity creation through private sector participation did not happen as desired mainly due to the following: – – – – SEBs reforms tardy SEBs financial health continued to be poor Dishonoring legally binding agreements Pulling out by number of foreign utility companies • MOAs with Govt.
2003 • Delicensing of generation including captive but excluding hydro and nuclear • Captive generation freely permitted • Non-discriminatory open access to network subject to surcharge: No surcharge for captive use • Private transmission licensees allowed • Generation companies can undertake distribution activities and vice versa for distribution licensees • Open access – consumers permitted to purchase electricity from generators and other distribution licensees • 100% metering made mandatory • CERC and SERCs would be the licensing authorities for T & D and trading 17 .Power Sector Overview The Electricity Act.
Power Sector Overview The Electricity Act. 2003 • Power trading is recognized as a regulated activity • Preparation of National Electricity Policy and Tariff Policy • An appellate tribunal would be set up for appeals against decisions of CERC and SERCs • Setting up SERC made mandatory for all states • T & D surcharges are permitted but subsidies would be required to be phased out gradually • Stringent penalty for power theft 18 .
Power Sector Overview Impact of Electricity Act • Entry of more private players in generation • Captive power capacities by industrial players • Entry of few private players in transmission segment (JV with PGCIL) • 16 states have unbundled the distribution (May 2009) – – • • • • • Orissa & Delhi privatized Bhiwandi. Nagpur . Pirthipur – Franchise route Progress in reduction of T&D losses Improvement in the system efficiency Grid discipline in the system Cross subsidization of consumers still continuing Implementation of open access at retail level would take some more time (being tested in Mumbai) 19 .
200 crore Maximum 3 projects can be awarded to a bidder Developed on BOO basis Use of Super Critical Technology Dedicated captive coal blocks for pithead projects (4 projects) Imported coal for coastal projects (5 projects) Co-ordination from Ministry of Power – Power Finance Corporation – identified as the nodal agency 20 .000 crore Minimum Net Worth – Rs. approx.Power Sector Overview Measures undertaken • Ultra Mega Power Projects – – – – – – – – – Large sized projects.16. 4000 MW Estimated investment – Rs.
800 crore to Rs.5500 crore to Rs.2080 crore • The allocation for RGGVY has been increased from Rs. 1 lac crore) • The budgetary allocations for the APDRP has been increased from Rs.5 per cent to 5 per cent 21 .7000 crore • Customs duty on permanent magnet used in wind power generation reduced from 7.Power Sector Overview Budget Impact 2009-10 Union Budget Impact on Power Sector • Take-out financing of 60% of bank loan by IIFCL ( up to Rs.
– Include sale of power under short-term PPAs and on spot basis – Can generate higher returns (vis-a-vis selling power through long term PPA) – Can sell power to the power trading companies (like the Power Trading Corporation).Power Sector Overview Merchant Power Plants (MPP) – MPPs generate electricity for sale at market driven rates in the open wholesale market. the SEBs and industrial and bulk customers – Sale Price & Volume of Electricity Traded by the Trading Licensees (12 licensee holders) are given in next slide 22 .
Power Sector Overview Top Private Players Announcements Total Top private players Announcements MW Reliance Power JSW Energy IndiaBulls Power Services (JV) 28195 15000 11000 CRISIL estimates Balance of total announcements expected in Twelfth Plan MW 27295 15000 11000 Eleventh Plan MW 900 0 0 Tata Power Lanco Adani Jaypakash Power Videocon Jindal (JSPL+JP) Torrent Power CESC Essar power GVK Power GMR Energy Sterlite Energy Visa Power Top players Power 10000 10000 10000 5275 5000 4670 4500 4250 4000 3660 3440 2400 1200 122590 250 970 0 700 0 1000 1100 250 0 600 0 0 0 5770 9750 9030 10000 4575 5000 3670 3400 4000 4000 3060 3440 2400 1200 116820 23 .
74 Gas 2.50 – 4.00 2.263 417 163 2008-09 7.805 2.70 6. Per Kwh) 2.510 Transmission Target 37.241 876 Source: CRISIL Research Distribution investments Total 73 653 61 553 63 571 100 885 95 848 392 3.18 24 .00 2.00 – 5.663 570 215 2011-12 12.120 545 207 Total 49.014 361 147 2010-11 12.50 – 4.750 MW) Cost Fuel Coal Naphtha Capital Cost (Rs.crore/MW) 4.00 Levelised Tariff (15 years) (Rs.Power Sector Overview Fund Requirement Year wise investments in power (Eleventh Plan) Total capacity (MW) Generation Transmission 2007-08 9.150 MW (Present 20.745 349 143 2009-10 8.
• Projects are contract driven leading to a lot of legal complexities • Sponsors • Technology • Fuel & Transportation • Evacuation • Market • Off takers (Financial health of SEB) • Payment Security • Approvals & clearances • Foreign Exchange risk 25 .Power Sector Overview Issues in Financing Power Projects • Large Capital Costs • Long gestation period • Sector vulnerable to regulatory and policy changes.
demand for free power by states need to be appropriately addressed for all power projects • There is an urgent need of a Regulator in Coal Sector. needs to be introduced Delay in securing clearances.Power Sector Overview Suggestions • • • • • • Enforcement of implementation of the reform process by SERCs High level of cross subsidy surcharge to be progressively reduced/eliminated Effective implementation of the restructured APDRP in distribution sector in all States Critical review and rationalization of duties & taxes Single window clearance/ automatic clearances. which will be responsible for domestic coal pricing • Opening up of coal sector to private sector participation to promote competition • Open access to the Gas network should be ensured to promote competition in gas sourcing Role of Regulator in Oil & Gas sector needs to be expanded to include gas pricing. The Union coal ministry has initiated work on setting up a regulatory body. commitments from state utilities for power purchase. 26 . resistance from environmentalists.
Power Sector Overview Suggestions • Augmentation of capital base of the banks • Raising of tax-free infrastructure bonds by FI/Banks. • Effective take-out financing mechanism [In the recent budget. • Review of ECB guidelines including allowing banks/institutions to extend guarantees for financing infrastructure projects to make available cheaper foreign funds. • Reduction and harmonization of state level taxes and duties 27 . FM has announced a scheme for take-out financing of 60% of bank loan by IIFCL]. • Softer provisioning norms for infrastructure projects. RBI has recently permitted a 2- year period (originally COD) for determining asset classification of infrastructure projects • Reintroduction of benefit of sec 10(23G) of IT Act 1961 (tax exemption on net interest income in respect of infrastructure projects).
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