Infraline Plus Nov2013

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November 2013
Volume 2 | Issue 7 | `100
www.InfralinePlus.com
The ComPleTe eNergy SeCTor magazINe for PolICy aNd deCISIoN makerS
Africa is better
source of coal than
Indonesia and
Australia said Mr
John Smelcer,
Director, Webber
Wentzel
With new reforms
& de-bottlenecking,
transparency has
increased,
says Satchidananda
Rath, Director, Oil
India Limited
India is our
number one
market and we
are very optimistic
about it,
says Patrick Plas,
Senior VP, Alstom
Water needs to be
moved towards
decit areas - S K
Jain, MD Ground
Water & Mineral
Investigation
Centre
ON THE MAT
OVER GAS
Government, RIL
N
O
T
I
C
E
sale of surplus coal to CIL
COAL AUCTION
POLICY TO PUSH
Anne McEntee,
CEO, Renewable
Energy, GE
Well make wind
power predictable
for the grid
Transmission Segment Distribution Segment
1.InadequateTransmission
InfrastructureandNational
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1.PowerQuality,Reliabilityand
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RegulatorStatustoPowerSystem
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2.DemarcatingPowerDistribution
BusinessandRetailSupply
Business
3.PointofConnection(POC)
MechanismandAncillaryServices
MarketinIndia
3.ElectricityDistributionFranchisee:
IdealWaytoEnhancePrivate
Participationtowardsan
efficientsystem
4.Growthin765kV,1200kVandHVDC
TransmissionSysteminIndia
4.OpenAccessinDistributionFar
fromReality
5.RoleofUnifiedRealTimeDynamic
StateMeasurement(URTDSM)
andDynamicCompensationin
SystemOperations
5.StatusofIntraandInterStateOpen
AccessandFormulationofNational
RegistryforOpenAccess
6.CompetitiveBiddingandPPP
FrameworkinPowerTransmission
6.ViabilityGapFundinginPower
DistributionSegment
7.ProjectfinancingofEHV
TransmissionProjectsandFinancing
forNationalGrid,IPTCsand
HCPTCs
7.TODTariffsandDemandSide
ManagementInitiativesinPower
DistributionSpace
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1
Editors Letter
As the Centre and state governments of Delhi, Chhattisgarh,
Madhya Pradesh, Rajasthan and Mizoram get into election
mode, the trouble for the government from all fronts seems
to be growing. First it was a spate of Controller and Auditor
General (CAG) reports in telecom licence case and coal
allocations, then came the damning directives from the
Supreme Court in coal case and now it is the Reliance
Industries and KG D-6 basin case where the Supreme Court
has sent notice to the government. Corporate world too
has been at the receiving end of this activisim for the past
several months and its latest victim is Chairman of Aditya
Birla Group, Kumar Manglam Birla. He has been named in
a First Information Report (FIR) filed by the Central Bureau
of Investigation (CBI) which states that he influenced the governments decision to award
a coal mine in Odisha in 2005 to his company Hindalco. According to CBI, Hindalco was
not qualified to receive stake in the coal block. The fact that not only is the entire corporate
world rallying behind Birla in this case but the Prime Minister himself has defended the
allocation saying there was nothing wrong in his decision, shows the extent to which the
investigating agencies have got it wrong and everybody is just trying to save their own
skin at the cost of others. Read our detailed coverage of who says what in support of Birla
group chief.
Our cover story focuses on the Apex Court notice to the government and Mukesh
Ambanis Reliance Industries Ltd on a public interest litigation (PIL) seeking cancellation
of contract for exploration of oil and gas in KG basins D-6 block. The bench, headed by
Chief Justice P Sathasivam, had earlier issued notice to the Centre on a PIL filed by CPI
MP Gurudas Dasgupta, asking the parties to submit their response within four weeks.
Even as RIL braces for this new challenge, it created history by becoming the first private
sector company to clock a turnover of Rs 1 lakh crore in just three months. We bring you
a separate story on that.
Do read our In-Depth on coal trading companies making a beeline for their share of
coal supplies to Indias growing power generation sector. It is ironical to see that chunk of
overseas funds are available only for clean energy, while on the services and delivery side
interest is coming from firms which operate in traditional fuels.
In power sector the entire chain is struggling with some issues or the other. While power
utilities are crying for assured fuel supplies both quantitatively and qualitatively, distribution
and transmission sectors have their challenges on the financial front. They are not allowed
to pass on the higher input costs to the consumer and there is also dearth of land to
lay wires for transmission. At least on the fuel front power minister Jyotiraditya Scindias
promise, on completion of his 300 days in office, that he would ensure supply of gas at
reduced rates to power companies augurs well for the sector.
Besides other issues, the uncertainty of exchange rate too adds on to the woes of
companies in energy space. Vice-President of GE Renewable Energy, Anne M. McEntee
shares how original equipment manufacturers are going through a rough patch on account
of rupee depreciation. May they all be able to fight it out like GE.
Our Off-Beat this time is on something which has been discussed on several occasions
in the country--privatisation of Air India. Read our analysis of why 2014 might be that year
when the new government may bite the bullet and give the national carrier back into private
hands to run. A bevy of foreign airlines as competitors, which are light, smart and market
savvy, may not leave it with any choice but to do that.
In our Photo Essay we bring you glimpses of Bharat Heavy Electricals Ltds contribution
in transmission sector. Since 1984 the PSU has been engaged in the design, engineering,
manufacture, construction, testing, commissioning and servicing of a wide range of
products and services for the core sectors. It has bagged numerous projects both within
and outside the country and has started venturing out to new areas to sustain its growth.
SHASHI GARG
Managing Director and Editor
InfralineEnergy Research and Information Services

Editorial
Shashi Garg, Editor
Alok Sharma, Assistant Editor
Deepak Sahu, Special Correspondent
Neeraj Dhankher, Principal Correspondent
Shakeb Ayaz, Business Editor
Ankita Sharma, Business Editor
News Team
Pankaj Bhagat
Ankit Bhatnagar
Analysts
Prapti Dutta
Naveenta Gautam
Piyush Arora
Himanshu Verma
Design Team
Gopal Thakur, Art Director
November 2013 | Volume 2 | Issue 7

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Manoj Narang, Director
Tel.: +91 11 4625 0038
Email: manoj.narang@infraline.com
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2
November 2013
Contents
Editors Letter
1
Cover Story 40
News Brief p4
In Depth: Scindia pitches for cap on gas price
for power plants p6
In Depth: Its all haywire in transmission with little
land to lay the wires p8
In Conversation: Patrick Plas, Senior Vice President -
Grid Power Electronics & Automation, Alstom p12
In Depth: Reliance Power chief Chalasani quits p16
Expert Speak: Alok Gupta , Member, MPERC p17
Statistics p20
Topics Covered:
Power transmission
Reliance Power
Gas prices
News Brief p22
In Depth: Exclusive power for coal producing states p24
In Depth: Captive mines may have to sell surplus
coal only to CIL p28
In Conversation: Mr John Smelcer, Director, African Mining
and Energy Projects and Mr Manus Booysen, Partner &
Head Mining, Energy and Natural Resources, Webber
Wentzel p30
In Depth: Coal soot on Birla now p32
Expert Speak: Abhinav Kumar Shrivastava,
Research scholar p36
Statistics p38
Topics Covered:
South African coal market
Coal scam
Surplus coal
Power Coal
4 22
InfralinePlus
40
COVER DESIGN By : GOPAL THAKUR
Second notice to govt on
gas price issue
Supreme Court sends notice
to government to cancel
production sharing contract of
RILs D-6 block.
InDepth: RIL only private rm to
clock 1 lakh crore prot in
a quarter
RIL has been slapped with a notice
by the Supreme Court (SC) for failing
on its production sharing contract for
gas supply from Krishna-Godavari
D-6 block. p45
3
November 2013
News Brief p48
In Depth: Barmer refinery remains a rose with
several thorns p50
In Conversation: Satchidananda Rath, Director -
Operations, Oil India Limited p52
Expert Speak: Rajeev Khanna, COO,
Infraline Technologies p54
Statistics p56
Topics Covered:
Barmer refinery
Shale gas
Deep water exploration
News Brief p58
In Conversation: Anne McEntee, CEO, Renewable
Energy, GE Power & Water p60
In Depth: Even the sun needs more
funds to glow p62
In Conversation: S K Jain, Managing Director,
Ground Water & Mineral Investigation
Consultancy Centre p65
Statistics p66
Topics Covered:
Solar financing
Generation-based incentives
Water crisis
InfraWatch: 9 projects cleared for phase-1 of
Delhi-Mumbai Corridor p74
Oil and Gas Renewable
48 58
78 Plus - Photo Essay
68
Off Beat
Interviews
BHEL: Powering Indias economic growth
78
Patrick Plas, Senior Vice
President - Grid Power Electronics
& Automation, Alstom
Satchidananda Rath, Director -
Operations, Oil India Limited
Anne McEntee, CEO, Renewable
Energy, GE Power & Water
Air India inches closer to moving in private
Mr John Smelcer, Director,
African Mining and Energy Projects,
Webber Wentzel
NewsBriefs | Power
4
November 2013
Myanmar dumps 2080 Mw
Hydro power initiative with India
Six years after India and Myanmar decided
to jointly develop two hydro power projects
of 2,080 Mw capacity in that nation, the
Myanmar government has shot down
the proposal on grounds of the likely
collateral damage from the projects. The
two projects, including 1,200 Mw Tamanthi
and 880 Mw Shwezaye hydro power plants,
involved a total expenditure of an estimated
`25,000 crore and were to be developed
as a key plank of bilateral engagement
between the two neighbors.
BGR Energy Systems
Signs $246 mn contract with Iraq
Indias BGR Energy Systems Ltd has signed
a contract for engineering, procurement
and construction of 4x125 MW gas-based
power project at Nasiriya with the Ministry
of Electricity, Iraq. The contract is valued
at $246 million and includes the scope of
engineering, procurement and construction
services of BOP, civil works and erection,
testing and commissioning of gas turbine-
generator sets supplied by General Electric,
as well as, operation and maintenance of
power project for six months.
Tamil Nadu Transmission Corp
Kalpataru Power bags `6.2 bln orders
Kalpataru Power Transmission has secured
orders worth about `620 crore. A major order
is for the supply and installation of a 171-km
400 kV D/C transmission line worth `463
crore from the Tamil Nadu Transmission Corp.
Another order, from HPCL, is for installation
of a 160 km LPG pipeline worth `94 crore.
Ranjit Singh, MD, Kalpataru Power, said, In
the first half we won orders worth `1,750 crore
and expect the momentum to continue in the
second half as many projects are in the final
stage of award.
NTPCs power generation capacity
Rises to 41,684 MW
State-owned NTPC said its installed power
generation capacity has increased to 41,684
MW with the commissioning of another 500
MW unit at its Rihand project in Uttar Pradesh.
Unit-VI, having generation capacity of 500
MW, of Rihand super thermal power project
was commissioned on October 7, NTC
said in regulatory filing. With this the total
installed capacity of Rihand Super thermal
power project has become 3,000 MW and
the total installed capacity of NTPC group has
become 41,684 MW, it said.
IL&FS Engineering bags
`1.5 bn rural electrification project
IL&FS Engineering and Construction
Company Ltd has received a Letter of Award
from Paschimanchal Vidyut Vitran Nigam Ltd
for execution of rural electrification works in
Bulandshahr district of Uttar Pradesh. The
`149.68-crore project is to be executed within
18 months on a turnkey basis. The project is
funded by Rural Electrification Corporation.
According to a statement, IL&FS Engineering
Services recently won a rural electrification
project from Madhyanchal Vidyut Vitran
Nigam Ltd in Uttar Pradesh.
Neyveli Lignite Corp
Plans to up power output by 4240 Mw
Neyveli Lignite plans to take its installed
power generation capacity to 4,240 MW by
the end of the current fiscal. The lignite miner
has an installed capacity of 2,740 MW at
present. With the implementation of 1,000
MW power project at Tuticorin and 500 MW
of TPS-II expansion by the current year, the
company shall have installed capacity of
4,240 MW, a company official said. The TPS-
II expansion project, being implemented at a
cost of `2,030 crore is likely to be functional
by March 2014, the official added.
Avantha Power Raigarh project
Synchronises 600 MW first unit
Avantha Power and Infrastructure Ltd has
synchronised the first unit of 600 MW in
its Raigarh, Chhattisgarh project, through
its wholly-owned subsidiary Korba West
Power Company Ltd. The companys
generation capacity stands at 626.19 MW
with the commissioning. Avantha Power and
Infrastructure Ltd is part of the `25,000-crore
Avantha group. APIL began construction in
August 2010 and executed the project within
38 months. BHEL supplied the boiler, turbine
and generator for the plant.
Gujarat Industries Power Company
Cancels LoIs for two 300 MW projects
Gujarat Industries Power Company said it
has cancelled LoIs with Lanco Infratech for
implementing two 300 MW projects as the
EPC firm failed to furnish 10 percent contract
performance bank guarantee. The Letter
of Intents were issued to Lanco on June 1
for implementing 2 X 300 MW lignite-based
projects adjacent to GIPCLs existing Surat
Lignite Power Plant. Due to LITLs inability
to furnish the required 10 percent contract
performance bank guarantee, the company
has cancelled LOIs, GIPCL said.
Surguja Ultra Mega Power Project
PFC withdraws RFQ
The government has withdrawn the the tender
inviting preliminary bids for the proposed
4,000 MW ultra mega power project at
Surguja in Chhattisgarh. The Request for
Qualification for 4,000 MW Chhattisgarh
UMPP issued on March 15, 2010 is
withdrawn, PFC said. PFC is the nodal
agency for UMPPs. According to sources, the
proposal to set up the UMPP in Chhattisgarh
has been dropped as the coal blocks for the
proposed project fall under dense forest area
and will adversely impact the environment.
NCC Power stake sale
Sembcorp to purchase majority stake
Singapore global utility services company
Sembcorp will purchase a majority stake
in NCC Power Projects for roughly `500
crore. The deal, signed nearly at par of the
investments made so far, signals foreign
strategic investors renewed interest in
Indian power companies with all regulatory
clearances. Sembcorp, owned 49.5% by
Singapores sovereign investor Temasek
Holdings, however, has agreed to pay
premium amounts based on milestones over
the next few years.
`200 billion power projects
Government plans global bids
The government plans to invite global bids for
a dozen interstate transmission projects worth
over `20,000 crore in the next two months to
connect power generation projects in states
including Chhattisgarh, Haryana, Rajasthan
and Tamil Nadu. The standing committee
for power system planning has cleared the
projects and just a nod from the empowered
committee on transmission is awaited. The
govt expects companies such as Power
Grid Corp, L&T Infra, Tata Projects, to evince
interest in the projects.
UP Power Corp banks consortium
Agrees to buy `130 billion bonds
The Uttar Pradesh governments efforts of
to bail out the ailing Uttar Pradesh Power
Corporation have finally borne fruit. The 20-
bank consortium has agreed to buy bonds
worth R13,097 crore from UPPCL under
the Centres financial restructuring plan at a
coupon rate of 9.68%. Senior UPPCL officials
who were camping in New Delhi for last few
days said the bonds were being allotted to
the banks and financial institutions. Of the
R13,097.32 crore, R8,060.95 crore will be
used to pay the loan UPPCL had taken.
6
InDepth
November 2013
The country will enter a new gas regime
from April next year when gas prices
will go up from $4.2 per million metric
British thermal units (mmbtu) to $8.4 per
mmbtu but power minister Jyotiraditya
Scindia has vowed to provide this
essential raw material at a cheaper
rate, than what it would cost next year
onwards, to power plants. At a recent
press meet on the occasion of completion
of his 300 days in offce as minister of
state for power, he announced that he
was working on mitigating the problems
of the sector by approaching the Cabinet
with a proposal to cap gas prices for
power plants at $5 per mmbtu.
Besides problems on the price front,
the sector also faces the challenge of
shortage of gas. Though the government
has recently decided to allot additional
gas produced in the country to power
sector after meeting the requirements
of urea plants, at least 7,800 mw of
generation capacity remains stranded for
want of gas. The decision on additional
allocation is also silent on the price front.
Explaining the rationale behind his
move, Scindia has said that doubling
of gas prices to $8.4 per mmbtu would
make power sector unviable. Anything
beyond $5 per unit is unviable for
the power sector and a mechanism
to address this issue will have to be
worked out by the government ...for
which I will be taking this issue shortly
to the Cabinet, he said.
While the government has already
agreed that power projects should get
surplus gas produced domestically
until March 2016, the cost at which
gas is supplied to this sector is of
utmost importance, said an industry
While gas is set to cost $8.4 from April 2014, power minister seeks cap at $5 per mmbtu
Announces slew of measures to put power sector back on track
Scindia pitches for cap on
gas price for power plants
by Alok Sharma
7
November 2013
expert. Earlier, the power ministry had
sought parity of power generating units
with fertilizer units. The move was
initiated when gas output had dropped
from Reliance Industries KG-D6
block, which had resulted in reduced
domestic supplies.
By March this year, power units
seized to receive gas supplies from
KG-D6. When the basin was producing,
gas-based fertiliser plants had the
topmost priority in the allocation of gas,
followed by LPG-extraction units, power
projects, city gas, steel and refneries.
Listing the achievements of his
ministry, Scindia said he was confdent
that the revised Standard Bidding
Documents (SBDs) will receive better
response as fuel risks and land related
issues had been taken care of. The
government believes there would be a
positive response from the companies
for the upcoming ultra mega power
projects (UMPPs) in Odisha and
Tamil Nadu. As per 12th Five Year
Plan (2012-17) targets, 88,000 mw of
capacity addition is to be done in the
current plan, of which 69,000 mw will
take place in thermal sector.
Meanwhile, Power Finance Corp,
which is the nodal agency for such
projects, has started the process of
inviting preliminary bids for setting
up UMPPs of 4,000 mw at Bedabahal
(Odisha) and Cheyyur (Tamil Nadu).
By November 11 we will receive the
initial bids for Odisha and Cheyyur
UMPPs, Scindia said.
The government is targeting January
2014 for selection of successful
developers and award of projects, a
senior power ministry offcial said.
According to him, the new SBD is a
complete document and should evoke
positive response from the industry. Till
date, four UMPPs have been awarded of
which Reliance Power has bagged three
projects -- Sasan (Madhya Pradesh),
Krishnapatnam (Andhra Pradesh) and
Tilaiya (Jharkhand), while Tata Power is
operating the Mundra UMPP in Gujarat.
On the transmission front, the
For suggestions email at feedback@infraline.com
ministry targets to lay over 1-lakh
circuit kilometre of transmission lines
and erect over 2.8 megavolt ampere
(MVA) capacity during the current
Plan period. The government is also
considering extension of fnancial
restructuring programme for electricity
distribution utilities (discoms) of four
more states Jharkhand, Bihar, Andhra
Pradesh and Karnataka.
Peaking power policy
Considering the gap between demand
and supply of power during peak time,
the government is working on a peaking
power policy whereby distribution
companies would be encouraged to
invite bids from generation utilities for
bridging power demand and supply gap
between peak hours. The policy aims
at including all forms of fuel such as
hydro, gas, coal and renewable, under
the proposed policy.
We are working on a peaking
power policy, and proposing that the
gas plants should be used as peaking
power plants The policy will be for all
input sources. It will be an all-pervasive
policy, Scindia said.
Independent Posoco
Working towards preventing a repeat
of the massive grid failure which had
left half of the country in darkness
in July 2012, the power ministry is
contemplating to offer independent
regulatory status to Power System
Operation Corporation Ltd (Posoco).
The frm currently looks after the
cross-country transmission grid and is
a wholly-owned subsidiary of PGCIL.
The autonomous status would help it take
strong actions against over-drawal of
electricity by the States.
The move is aimed at bringing grid
discipline in the country. Besides giving
independent regulatory status to Posoco,
the ministry also plans to encourage
private companies in the transmission
sector. In order to maintain grid
discipline there is a need to have greater
private sector investment in building
transmission systems, he said.
Doubling of gas prices
to $8.4 per mmbtu
would make power
sector unviable.
Anything beyond $5
per unit is unviable for
the power sector and a
mechanism to address
this issue will have
to be worked out by
the government ...for
which I will be taking
this issue shortly to
the Cabinet,
Scindia said.
Done in 300 days
1601 un-electrified villages
electrified
Intensive electrification carried
out in 28,837 partially electrified
villages
10,25,257 below poverty line
households provided with free
electricity connections
66 DDG projects based on
solar photovoltaic technology
commissioned
Award for additional 31 DDG
projects placed
Another 49 DDG projects ready
for award
Over 15,000 mw power generation
capacity has been commissioned
between 1st November, 2012 and
31st August 2013.
Sector Fuel Capacity
(mw)
Central Thermal 2863.3
State Thermal 2832
Private Thermal 8992.5
A. Sub-total Thermal 14687.8
Central Hydro 176.0
State Hydro 72.0
Private Hydro 99.0
B. Sub-total Hydro 347.0
Total (A+B) 15034.8
8
InDepth
November 2013
Power shortages in India accounted for
a gross domestic product (GDP) loss
of $68 billion (0.4 per cent of GDP) in
2012-13 which impacted agriculture,
manufacturing and other services,
according to a report by the Federation
of Indian Chamber of Commerce and
Industry (Ficci). Despite having an
installed generation capacity of 225 gw
and demand of only 135 gw, as of May
2013, India faced a peak power defcit
of 12 gw which has adversely affected
the countrys economy. The blame for
this goes on the transmission sector, the
critical triad in the power value chain
along with generation and distribution.
Insuffcient attention towards
improving power transmission
capacity threatens to jeopardize the
countrys efforts to raise economic and
manufacturing growth and improve the
well-being of the people. In the past
fve years, power generation capacity
has grown by more than 50 per cent but
transmission capacity has increased by
only 30 per cent. As per the 12th Five
Year Plan, Indias generation capacity is
expected to increase by about 88 gw. In
order to be able to utilize this increased
output, investment in the transmission
sector also needs to be raised.
According to power consultants,
Booz & Co, overall an addition of
90,000 ckm of 765-220kV lines,
154,000 mva of substation capacity and
27,350 mw of national grid capacity is
required in order to meet the 12th Five
Procuring land for laying wires poses biggest challenge in transmitting power
Extra power generated going waste due to absence of corresponding transmission setup
Its all haywire in transmission
with little land to lay the wires
by Ankita Sharma
9
November 2013
Year Plan target. For this, an investment
of $35 billion is planned in the power
transmission sector of which about $19
billion is planned to come from the
Power Grid Corporation of India and the
remaining $16 billion, or 46 per cent of
the total investments, need to be secured
from private players.
Hurdles in laying wires
While investments are relatively easy
to secure, procuring land for laying
transmission wires is not. As many as
120 transmission projects face delays
because of the inability of developers to
acquire land and get timely clearances
from all stakeholders. There have
been instances of transmission lines
being forced to take a different route
than planned because of dispute over
land, resulting in the entire project
budget going out of control. Due to
transmission constraints it is also
diffcult to evacuate excess power and
channel it to regions that face shortages.
Projects have had to purchase power
from costlier sources while others
remain under-utilized. Hence, there is
an urgent need to address the underlying
issues in the transmission sector to
ensure that power demand is effectively
met in the future.
According to Arbind Prasad,
Director-General, Ficci, With a planned
generation capacity addition estimated
at 88 gw in the 12th Plan and improved
generation with fuel issues getting sorted
out for existing capacity, a corresponding
increase in transmission capacity is
needed to ensure that power generated
reaches the end consumer. More than
46 per cent of the total investment
required (in excess of `2 lakh crore)
has to come from the private sector.
Successful public private partnerships
(PPP) in transmission would be vital to
meet the huge investment and capacity
enhancement target in transmission. The
report highlights various reasons which
affect the pace of private investments
in the transmission sector along with
measures to address them.
Mr. Pratik Agarwal, Chairman of the
Ficci Task Force on Power Transmission
says, Right planning can reduce time
taken from concept to commissioning
by over 30 per cent. It will also
encourage the use of technology in
project execution which will result in
high capacity transmission corridors in
much lesser time and resources.
India is one of the few countries
where transmission sector has been
opened up for private participation and
has garnered signifcant interest from
private players. The bidding framework
is fairly comprehensive with provisions
for majority of situations which may
occur during the term.
Introduction of Point of Connection
(PoC) regime is a step in the right
direction and has been appreciated
by lenders and investors alike. Still,
the success of other sectors, like
generation, is yet to be replicated. Key
policy changes which can pave the
way for robust capacity creation in the
sector, based on experiences gained
so far have to be incorporated into the
agenda of the sector.
Lengthy processes
In India it takes fve to six years for
projects to go from conceptualisation
to commissioning stage. This duration
is much longer than global standards
of about 40 months and needs
optimization. Effcient planning can
help reduce this duration and attract
greater private investment in the sector.
The regulatory process for award of
projects needs to be streamlined. At the
same time, incentives must be given to
a developer for faster project execution.
At present, even if a developer is
able to commission lines before
the contractual COD (commercial
operation date) revenues are realized
from the contractual COD only. To
ensure faster execution, provision for
early commissioning of incentives
should be made in the Standard
Bidding Documents.
Also, state owned utilities, such
as PGCIL, whose order book is
of `120,000 crore, have reached a
saturation point. There is a need to
focus on fast track execution of projects
during the next three-four years, and
refrain from accepting new orders.
Innovation missing
The level of innovation and technology
in the industry must be upgraded to
improve quality, speed and health and
safety standards. There are no guidelines
on the use of technology at present
and the focus is on lowest price for
competitive bidding. This doesnt help
incentivise developers to innovate and
suggest new ways of working as they
are at a disadvantage compared to a
cheaper alternative. Policies need to be
realigned to focus on output parameters
While investments
are relatively easy to
secure, procuring land
for laying transmission
wires is not. As many
as 120 transmission
projects face delays
because of the inability
of developers to
acquire land and get
timely clearances from
all stakeholders. There
have been instances
of transmission lines
being forced to take
a different route than
planned because of
dispute over land,
resulting in the entire
project budget going
out of control. Due
to transmission
constraints it is also
difficult to evacuate
excess power and
channel it to regions
that face shortages.
10
InDepth
November 2013
rather than input factors in order to
extract maximum results from projects.
When new transmission systems are
conceptualised by CTU and various
standing committees, they must exhaust
all possibilities to optimise existing
transmission corridors by deploying
best available technologies, before
embarking on creating green-feld lines
and substations which occupy extremely
valuable farm and forest land.
Qualifying criteria for bidders
Qualifcation requirements must be
critically evaluated and reformed so as to
screen out non-serious players from the
bidding process. Due to inadequate due
diligence at the pre-bid stage, projects
end up getting awarded to bidders
who place unviable bids. When they
retrospectively realize the actual costs,
projects get stalled. Only 50 per cent of
the awarded projects so far have actually
taken off. Qualifcation requirements
must be tailored to attract only serious
participants, which can be achieved by
giving higher weightage to technical
qualifcation rather than project cost and
acknowledging same sector experience.
In addition, for projects that
have already been awarded, it is
recommended that concessionaire
be allowed for players to completely
exit the project at any point in time
(before/after COD) by selling equity
to an equally qualifed substitute
concessionaire. Post-commissioning,
the projects may even be sold to
fnancial investors who are willing
to provide adequate operation and
maintenance (O&M) undertaking
through third parties.
Clearances and redressals
Another crucial factor is handling
eventualities in clearance process
and redressal mechanisms available
thereafter. Current clearance and
redressal policies have not been able
to get private players to actively
participate in the power transmission
sector. The Planning Commission
Transmission Services Agreement
(TSA) and the TSA specifed by the
ministry of power have different
clauses with respect to force majeure
events. The TSA, as notifed by
the ministry of power, has a clause
in addition to that specifed by the
Planning Commission. It restricts
consideration of any revocation or
refusal to renew consents, clearances
and permits as a force majeure event.
The additional clause mandates
approval of force majeure claims by a
competent court of law. Dealing with
the judiciary system in India makes
the process time consuming and deters
private players from participating.
Considering the number of risks
assumed by a developer during project
execution, robust redressal mechanisms
should be available to developers
in case of unforeseen events. It is
recommended that a material adverse
effect clause be inserted allowing
parties to seek relief, as opposed to
choosing to terminate the agreement.
Level playing eld
An independent nodal body should be
set up to facilitate clearances, address
grievances, track project status and
enforce quality standards. In order to
promote greater private participation in
the power transmission sector to meet
capacity requirements, it is important
that private players be given a level
playing feld along with state owned
players such as PGCIL. Power Grid
currently plays a dual role transmission
planning (as CTU) and executing inter-
state transmission projects; thereby
becoming privy to commercially
sensitive information. In the course of
discharging above duties, as a CTU
and as a member of Empowered
Committee (EC), CTU is privy to certain
material non-public & cost-sensitive
information apart from having rights
to infuence decision making in EC. It
is recommended that CTU be hived off
from PGCIL in order to ensure fairness
in the bidding process. An independent
and impartial Empowered Committee
without any representation from PGCIL
should decide whether projects should
be done by tariff based bidding or under
the cost-plus route.
State entities and private players
should be treated at par with similar
land acquisition requirements for
securing forest clearances. PGCIL and
private players should both be entitled
to similar commercial benefts such as
custom duty benefts etc.
All this requires immediate policy
action from the ministry of power and
the Central Electricity Authority (CEA)
for reinvigorating the transmission
sector. There is an urgent need to
synchronise the policy framework with
a new reality of wider participation
by private players under competitive
bidding regime. Earlier rules were
designed to only cater to government
companies under the cost plus regime.
PPPs are a much needed catalyst in
reviving this sector and in order to
make this successful, policy reforms
are necessary. Once PPPs are able to
thrive successfully, India will be able
to achieve the common objective of
building the grid, meeting demand
requirements and optimally utilizing
generation capacity.
An investment
of $35 billion is
planned in the power
transmission sector of
which about $19 billion
is planned to come
from the Power Grid
Corporation of India
and the remaining
$16 billion, or 46
per cent of the total
investments, need
to be secured from
private players.
InConversation
12
November 2013
Grid in the coming years. So, there is
going to be extension in Champaproject
as well as other projects. Our pioneering
technologies in the feld of HVDC
transmission systems and Network
Management Solutions (NMS) have
been playing a vital role in addressing
the new challenges related to the
growing complexity and volatility of
the grid.India has started installing
HVDC projects and more such projects
are being planned. The country is also
revamping its control systems. Last
years blackout
caused by a
grid failure
has given
the country
additional
impetus to
make sure
that the best
technology is
available. We are
going to execute
several of these
projects and
then
Can you just brief about your
India plans, be it power or
infrastructure amidst the policy
roadblocks here.
India is our number one market and
we are very optimistic about it. The
Indian market accounts for 15 per
cent of Alstom Grids global sales, the
largest among all countries. With the
inauguration of the Digital Substation
Automation Competence Centre we
are convinced that we are seizing a
new opportunity for participating in the
development of Indias future energy
landscape. This Competence Centre
is another cornerstone that showcases
Alstoms continued commitment to
participating in the development of the
Smart Grid in India.
Some of the key words are digital
and competency centre. It is digital
because this is the new version of the
substation which offers more compact
footprint, safer because it is based
on fber optics and also offersmore
complexity in terms of automation but
simplicity in terms of wiring. So,
this is going to help the grid in
India and we will continue to add
sub stations and more intelligence
into the network.
So that is the frst important work.
Second work is linked to competence.
In Chennai it is not only a factory but
a place where we have built a group
of dedicated team members trained
in Digital Substation Technology to
impart training at the local level.
This group comprises of
experts from NCIT
(Non-conventional
Instrument
Transformer),
Automation &
Protection and
Solutions.
Secondly we
will continue
to develop
additional
lines for
Power
Bullish on prospects about the domestic power sector,
transmission solutions provider Alstom T&D plans to secure a
major share in the Indian market. The company plans to increase
the investment in the coming years to meet increasing demand
in the country. Moreover, entry of Chinese
and Korean companies in this sector makes
no difference to the French transmission
major. Alok Sharma and Deepak Sahu of
InfralinePlus spoke to Patrick Plas, Senior
Vice President - Grid Power Electronics &
Automation, Alstom and companys India
President and Managing Director Rathin Basu.
Excerpts.
We will transform the technology
here, says Alstom India chief
Patrick Plas, Senior Vice President - Grid Power
Electronics & Automation, Alstom
We
have been
partnering
in Indias
growth story
by providing
a range of
products
13
November 2013
we will hop on to the next phasei.e.
Statcoms, which is a kind of technical
evolution beyond HVDC. In future we
expect around 13 Statcom projects.
Statcoms are highly dynamic voltage
source converter-based compensators
which, compared to SVCs, offer
improved range of operational voltage, a
faster response and a smaller site area.
In view of the anticipated growth and
evolution in Indian power sector and
infrastructure, there is huge potential
for adopting Smart Grid Technologies
and designs in big way. Our endeavor
is to continue pushing all the players
in India, SEBs towards faster smart
grid development.
Has the technology been tested
elsewhere or this is the rst
time you are using it in India. Is
there any tailor made or specic
changes in these technologies
taking into account the
Indian market.
If we talk of specifc technologies
for India, we are using the same
technologies that we are using outside.
We have a worldwide portfolio and
we are using this portfolio in India as
well as to other countries. We have
been partnering in Indias growth
story by providing a range of most
comprehensive offerings suited for
all industries: from utilities and large
electro-intensive industries (such as
railway) to O&G and M&M.
Our Chennai factory is producing
exactly the same products as the ones
manufactured in the Stafford, UK. Our
teams collaborate with each other across
the globe and work hand in hand with
our customers to develop pioneering
tailored and competitive solutions. So,
I am not having specifc products for
India. That is not our approach. And the
technologies that we provide to India are
our latest technologies. So, for me there
is no difference in the way we manage
our customers in India.
In another example of Alstoms
technological leadership, we are
working with Power Grid for its
network management system that
will help monitor and control Indias
electricity supply network and provide a
foundation for the evolution of a smart
grid. These projects are modernization
of Southern Region and Western Region
Load dispatch Systems. The system
will provide a better visibility of power
system to operators, and in turn improve
reliability, fault analysis capabilities.
This will also be a strong platform for
future SMART Grid Applications in
Transmission.We are also pursuing few
SVC (Static Var Compensator) tenders
worth 60 million Euro by Power Grid
for Wanpoh, Kankaroli and Ludhiana.
SVCs manage dynamically variable
sources of reactive power to stabilize the
voltage, damp system instabilities and
reduce ficker for both transmission and
industrial applications.
And I would say that Powergrid is
probably one of the advanced customers
we have in the world in terms of
software, in terms of SCADA and the
various tools they are using to manage
the sub stations. I think that there is
not much difference. Yes, India is
sometimes complex. It is a big country.
At the end of the day these are same
technologies and solutions that we offer
in other parts of the world.
States were overdrawing from
the grid despite repeated alert. So
how will you ensure that states
would not overdraw despite
restrictions on it.
We do not operate the grid. We are
just providing the tools in this case to
Power Grid to operate the grid. And
maybe it is the lack of discipline, that
some states make the requirement of
drawing more. For this Power Grid
needs more software and mechanism
to compensate the lack of discipline.
But we as a company can provide only
tools to Power Grid. No doubt the states
are not disciplined, but in Europe it
is a collection of very small grids and
they are inter-connected. So, no need to
complain, there are ways out.
Your views on power generation
side and various other issues like
fuel issues which is impacting the
power scenario in the country.
How do you see the entire
scenario.
Yes, India needs more power. I am not
going to object to this. I am using the
example of wind power in Tamil Nadu.
If there is too much wind available
in this region then maybeit can be
distributed to some other place once
the grid is fully connected. The more
the grid is connected, the better you
circulate the fows from one place to
another. And it helps to compensate the
lack of power because you dont need
power at the same time at the same
place and at the same moment. India
is a big enough country, so building
and reinforcing the grid and allowing
more exchanges is the right answer.
And this is why we are pushing for the
development of smart grid. For doing
this we need to have better quality grid
management, peak load management
Rathin Basu,
President & Managing Director, Alstom India
InConversation
14
November 2013
and all these software tools will help
making better use of the existing
infrastructure.
Any plans to employ more such
sub stations in the near future in
the country.
We are participating in building a
smart city pilot project. The Smart
Grid pilot project at Puducherry, frst
such kind of Project in the country
has made signifcant progress. Power
grid has successfully implemented
smart grid control centre integrating
various smart grid technologies. Some
of the components are already in this
project like better quality management,
distribution management, peak load
management and demand response.We
are obviously impatient to go beyond
that to roll out this commercially. But
at the end of the day, we need to make
it sure that SEBs are ready to buy these
kind of tools.
But we know the nancials of
many of the SEBs, would they be
in a position to buy these tools.
for two years or a short period. So
whenever we invest we are here to
stay. For example we are here in this
country since 1911 - partnering in
nation building by providing the most
advanced electrical grid solutions to
meet the electricity demands.We are
developing many innovative solutions
for projects in India, the most notable
being the National Transmission Asset
Management Centre (NTAMC) project
of Power Grid. Through this project
a total of 192 Power Grid substations
will be managed and controlled from
9 Regional and one National Asset
Management Centre. We have also
delivered the Advanced Visualization
and situational awareness software for
monitoring and control of Maharashtra
Grid. It will help operators to take
quicker decisions and enhance the grid
stability and security.
Can you share about your
nancials. How have been
your revenues growing in the
Indian market over the Last
two- three years.
Well we have invested in these
technologies and I am selling it
successfully in other parts of the world.
I am participating in the smart city
pilot project in Puducherry, but now
I am waiting for clear signals from
the utilities to buy these. With rising
demand of power in the country, I
am confdent that utilities will buy
this product. We are the provider
of technologies and they have to
make use of them.
Whatever you will manufacture
from two plants here in India, will
it cater to domestic market or
other markets as well.
Its obviously used for India, but it is
also used for other markets as well. So, I
am using them for Asia, some countries
of Middle East.
Does it make nancial benets
to introduce technologies when
economy is slow.
Not per say, but every business has
a business. You always invest on
a longer frame. You dont invest
15
November 2013
For full version of the interview, visit www.infraline.com
Well we have improved our market
share signifcantly over the last six
years. We continue to retain our
leadership position for ffth year in
a row. We became market leader in
2008 and have grown consistently.
The company continued to maintain a
healthy backlog of 63 BINR by winning
7 BINR orders during the last quarter.
Despite the challenging economic
environment, the company succeeded in
winning new Orders at better margins
during Q1 of this fscal. It is good
enough for almost two years of our
operation in a market which is already
struggling. Yes, the margins are not
good because the economy is depressed
and overall demand is depressed. Not so
much in Power Grid and NTPC but it is
depressed in the industry and in certain
SEBs because of lack of money. So,
we believe the fnancial restructuring
of electricity boards plan which is on
the plate is happening in some states
would bring life to the SEBs. So
therefore they badly need to invest in
the grid infrastructure because as you
know Power Grid has been the solid
grid backbone at 765 kV but the states
backbone is at 220 kV. So they need to
be upgraded to at least 400 kV to match
the power fow and for power exchanges
when the grid is connected. So the states
are fve years behind in my opinion in
grid T&D infrastructure. So they need to
invest and we have all our technologies
in automation as well as switchgear to
support this.
With Alstom so much bullish in
the Indian market, how much
investments lined up in next
couple of years.
We have followed our investments since
2007. We invested roughly around 1000
crores during 2007-2008 None of our
competitor did that. On a continuous
basis we do investments as needed. Of
course, we dont invest if there is no
market. Ongoing investment is on the
HVDC transformer at Baroda. Because
we are into 2600 crore HVDC contract,
so we will build several transformers
over there. For digital automation and
digital sub stations as you know we did
couple of projects recently. We strongly
believe post the black out the digital
automation and digital sub stations
would be the theme of tomorrow for the
security and safety of our sub stations
and to run it more reliably and more
effciently. We are also investing in
people, fnding them and training them
for our digital automation centres. Out
of the 19,000 employees globally, 4,000
are based in India. We are building
our control systems for high-voltage,
direct current (HVDC) in India. We are
also building additional capabilities in
India, which will be deployed across
the world. We have started hiring team
last year for HVDC technology here
and increasing their skills. We plan to
invest in Product R&D in India as part
of Product Line Strategy after good
response from R&D Centre at NOIDA
for System Activity. A team of 50
people have been developed to provide
local engineering support for power
electronics. A back offce engineering
support team at Noida has been also
formed to provide global engineering
support on automation.
What are your plans regarding
R&D over here in India.
We continueto invest inseveral
R&D programs across the product
categories from time to time.ALSTOM
T&D India benefts from Global
R&D effort of Alstom worldwide.
The Company derives the beneft of
global value engineering efforts,which
among others helps in reduced
lead time and is adaptive ofspecifc
customer requirement.
How is China factor coming
into play.
If I touch the generation side, then I
believe, as per CII study, 28 power
power stations are with Chinese
equipment and 30 power stations
with BHEL equipment. The study is
very negative on Chinese machines.
Whether this will infuence buyers
mind is to be seen, because Chinese
defnitely bring two advantages, they
are cheaper by 15 pc and they can
deliver in three years or even less than
three years. On the T&D domain we
have seen invasion from Korea and
China over the last three years. China
and Korea were predominantly on the
765 kV transformers. Koreans went
too aggressive on prices, so over the
last two years both Korean companies
have reported signifcant losses not only
because of India, but I guess rest of the
world. So the net result is that in the last
18 months they do not quote anymore
in India. Among the Chinese there were
actually three or four very active. All of
them had the guarantee that they would
produce locally a transformer or will
have a set up locally to do local repair.
They failed in both. Consequently they
could not collect the last 25 percent of
the payment from the Power Grid. So,
imagine they own a transformer order
with 10 to 15 percent lower prices
than ours. So, again these companies
are out. Only company that has stayed
and is seen in India is TBA who
hasbuilt a factory here.
We strongly believe
post the black out the
digital automation and
digital sub stations
would be the theme
of tomorrow for the
security and safety of
our sub stations and to
run it more reliably and
more efficiently.
16
InDepth
November 2013
The Chief Executive Offcer (CEO)
of Reliance Power JP Chalasani has
quit the company. The company
comes under the fold of Reliance
Anil Dhirubhai Ambani Group and
Chalasani was one of Chairman Anil
Ambanis major troubleshooters.
He has reportedly quit to pursue his
entrepreneurial ambitions.
Spearheading the companys
aggressive plans in the power
generation sector, Chalasani played a
pivotal role in the company bagging
three of the four ultra mega power
projects (UMPPs) awarded to private
sector players under the tariff-based
competitive bidding route over the
past fve years. According to industry
experts, his decision to leave could
have been partly due to project
delays related to fuel availability,
land acquisition and environment
clearances, among others. The junior
Ambani is said to be unhappy over
several of the companys mega projects
such as the ultra mega power projects
in Tilaiya and Krishnapatnam and the
gas-based power project in Samalkot
being stranded.
The CEOs exit is a blow to
the company as he has been the
mouthpiece and face of the company at
investor and analyst interactions over
the past several quarters, JP Morgan
said in a recent report. He was a man
Friday and a key regulatory expert for
his promoter. After Ashwin (Kumar)
left the company to join L&Ts power
development arm in January, there
will be a big void with Chalasani also
deciding to walk away from R-Power.
No one can fll that place, an industry
executive close to him said. He was
a key person for the growth of the
company, he added.
Chalasanis exit comes at a time
when R-Power is planning to expand
its generation capacity. Analysts
say one of his achievements at the
company was to build its operational
capacity to 2,500 mw despite various
challenges faced by the sector.
R-Power has been trying to recruit
a person in the leadership role for the
company for more than three months
now. This is not a surprise exit,
said a top power sector executive on
condition of anonymity.
Ambanis Man Friday
Chalasani played a major role during
the gas controversy between the two
Ambani brothers some years back. As
a representative of the RNRL board, on
January 11, 2006, he had objected to
the draft gas sales agreement approved
by the RIL board. From then on, the
engineering graduate from Nagpur had
kept up a steady supply of ammunition
in Anil Ambanis gas battle. While
Anil Ambani and his close associate
Amitabh Jhunjhunwala formulated
strategies, Chalasani worked closely
with in-house legal experts like
Venkatarao Ponnada to compile
documents that would support the case.
Chalasani also led the privatisation
of Delhi distribution and was CEO
for the early period of Reliance
distribution companies.
Formerly with National Thermal
Power Corporation (NTPC), Chalasani
joined the Reliance group in 1995
with over 27 years of experience in
the power sector. After the group was
split by Mukesh and Anil Ambani,
Chalasani chose to go to with the
Anil Dhirubhai Ambani group, where
he became the director of business
development of Reliance Energy (now
called Reliance Infrastructure).
Delay in implementation of mega projects said to be the reason behind exit
Search has been on for a head of the organization for past three months, say experts
Reliance Power chief
Chalasani quits
by Deepak Sahu
JP Chalasani
ExpertSpeak
17
November 2013
of renewable with the grid on an
urgent basis.
Grid connectivity: CEA is
coming out with a regulation
on technical standards on grid
connectivity for both larger
systems to be connected to 33KV
and above (amendment to their original
regulations) and for smaller systems
to be connected to below 33KV level.
These regulations deal with technical
aspects like under / over voltage
protection, under / over frequency
protection, anti-islanding features,
faults ride-through characteristics
for wind turbines, harmonics,
voltage fuctuations, unbalance,
reconnection and safety.
Optimising generation: Better
forecasting of renewable generation
and monitoring of load and grid
performance would enable grid
operators to dispatch a better mix of
generation that could be optimized
to reduce cost. The coordinated
operation of energy storage, distributed
generation, or plug-in electrical
Alok Gupta
Member, MPERC
Renewable sources of energy are
being promoted all across the globe,
as they are in India, but still the sale
of Renewable Energy Certifcates
(REC) by various electricity regulatory
commissions to meet the Renewable
Purchase Obligations (RPO) has not
been on expected lines due to low
priority accorded by distribution
companies. In April this year the
sluggish buy side environment
prevailed. Clearance ratios for non-
solar stood at 1.6 per cent and 4.2 per
cent at Indian Energy Exchange (IEX)
and Power Exchange Indian Limited
(PXIL) and prices softened in solar
REC. Strict enforcement still remains
an area of concern.
Only 13 per cent of Indias installed
power generation capacity of 223.62
gw, excluding 34 gw from captive
power plants, comes from renewable
sources. As on 31 March 2013 the
grid-interactive renewable power in
India was 28 gw. Out of this wind is
67.87per cent, small hydro 12.94 per
cent, bagasse cogeneration 8.32 per
cent, solar 6 per cent and biomass is
4.5 per cent.
The challenges faced in integration
of renewables are metering,
formulation of standards for grid
interface, Central Electricity Authority
(CEA) regulations on technical
standards on grid connectivity,
normal voltage variation and control,
optimizing generation operation,
market for ancillary services, volt /
var management, grid congestion
and the role of aggregator.
The variability in solar
and wind creates
distinct challenges
of integration
such as non-
dispatchability and
their abundance in
various parts of the
country.
Metering: For measuring generation
and consumption from renewables
either one meter or two meter
scheme can be used. CEA is revising
its regulation on installation and
operation of meters to cover renewable
generation metering.
Standards for grid interface:
Countries like Japan, Korea and China
are formulating their own standards for
integration of renewables with the grid.
There are no comprehensive standards
available except for series of IEEE-
1547 documents. In India, there has
recently been a communication from
the Ministry of New and Renewable
Energy Sources (MNRE) to the
Bureau of Indian Standards (BIS) for
formulation of standard for integration
Integration challenges in
renewables big concern
The
variability
in solar and
wind power
creates distinct
challenges of
integration.
Till two years back the concerns in renewable energy sector were largely
to do with grid connected issues of photovoltaic (PV) roof-top system.
Today a number of developments have taken place in not only solar PV
but also in other renewables and the challenges are of a different nature
now. Alok Gupta, member of Madhya Pradesh Electricity Regulatory
Commission (MPERC) discusses the issues in creating market for
ancillary services, operational aspects, policy and standards.
18
ExpertSpeak
November 2013
vehicles could also result in completely
avoiding central generation dispatch.
Operations: Operations (day-ahead)
planning has to account for variability
of renewable resources and demand-
responsive loads. Accuracy can
be maintained if good forecasting
techniques are used. Market designs
must assure adequate business
incentives for new generation while
providing suffcient opportunities for
compensation of embedded generation
owners. Dynamic load control for
balancing generation with load will
require much higher levels of demand-
responsive loads. There is no market
for large energy storage devices due to
their high cost. There is need to carry
out R&D in this direction. For plug-
in vehicles the market has not picked
up, so the grid interconnectivity is not
there at all.
Ancillary services: At present there is
no market for ancillary services, which
needs to be created. To begin with,
pre-defned generators can be run on
say 85 per cent load and leave 15 per
cent for meeting any contingency of
fall in frequency. There is need to bring
regulation for pricing of such power for
various ancillary services.
Operating reserves: Operating
reserves are, in some respects, the
supply-side analog of load-following
service. While load following matches
generation to load based on the time-
varying nature of demand, operating
reserves balance generation to load
in response to unexpected generation
or transmission outages. In practice,
the spinning portion of reliability
reserve also includes the load-
following service.
Black start services: When there is
large system collapse, it is not possible
to draw power from the grid. Some
generating units can restart on their
own without taking power from the
grid. Once these black start units start,
they can be used to start other units and
to energize the complete transmission
grid gradually. These units should be
appropriately located on the grid. Black
start is a vital but inexpensive service.
Its cost is primarily the capital cost of
the equipment used to start the unit,
the cost of the operators, the routine
maintenance and testing of equipment,
and the cost of fuel when the service is
required. Because the system requires
this service to be viable, all customers
require this service. It can be included
in the basic transmission charge and
not itemized. However, generators
should be compensated explicitly for
this service.
Volt / var management: In power
system, the network is divided into
several nodes. At each node the
reactive import and export must be
balanced to maintain the voltage
at that node. Any drawl of reactive
power from the node would reduce
the node voltage. On the other hand,
reactive injection in node would lead to
higher voltage.
Variable output from renewable
energy generation can impact supply
voltage levels for utility customers,
and in turn affect power quality. Volt /
var optimization technology can help
address such voltage swings in real
time by optimizing voltage profles for
all distribution feeders served by a sub-
station. Such solutions also incorporate
sensing that can give utilities greater
visibility into how renewable
distributed generation is impacting
the grid, so utilities can better manage
its effects. Enough reactive power
(capacitive) must be available to avert
a system collapse.
Utilities in developed countries
deploy high quality capacitor banks,
highly reliable and safe vacuum
capacitor switches with advance
software tools which facilitate the
system to maintain a predefned
voltage profle in order to manage
transmission and distribution system
var fow to minimize technical losses.
In India also some of the utilities
are using automatic power factor
controller (APFC) to control the
distribution voltage.
Under smart grid, conservation
voltage reduction (CVR) strategies
which reduce demand and energy
consumption while maintaining
customer voltage power quality as per
established standards shall be adopted.
The benefts are a greater percentage of
energy delivered to paying customers,
deferment in investment in peaking
generation plants and charges, and a
reduction in the environmental impact
of energy delivery.
Grid congestion
The least-cost dispatch may not be
possible because of transmission
constraints (i.e., voltage, thermal, or
stability limits), sometimes referred to
as congestion. Least-cost production
may come from a remote plant whose
energy must be imported into the load
center over long-distance transmission
lines. If the transmission system is
composed of a few high capacity lines,
loss of one of these lines may limit
the import capacity to the point that
service reliability may be unacceptable.
To resolve this problem, a utility may
reduce output from low-cost but remote
generation units (said to be constrained
off) and, instead, operate more
expensive units near the load center
(said to be constrained on) to provide
Black start is a vital
but inexpensive
service. Its cost is
primarily the capital
cost of the equipment
used to start the
unit, the cost of the
operators, the routine
maintenance and
testing of equipment,
and the cost of fuel
when the service
is required.
19
November 2013
backup for the transmission system.
Capacity addition does not
always mean energy generation has
increased. Even after record number
of new generation plants added in
2013, power crises in the country
has worsened due to combination of
factors like transmission bottlenecks in
southern states, inability of distribution
companies to purchase power and
shortage of coal and gas which has left
large number of power plants idle.
In some parts of country, over-
burdened power lines make it diffcult
to transmit the entire energy. There
could be cases where wind generation
could be forced to shut down even
when the wind is blowing. Smart
technologies such as HVDC, FACT,
sensor and controls to switch power to
other lines can help provide maximum
energy to fow in the lines and
alleviate congestion.
Role of aggregator
In a competitive market, customers
may entrust the responsibility of sale,
purchase of electricity to an agent
known as an aggregator. An aggregator
represents a group of customers
who have banded together through
their resident welfare associations,
Views expressed in this article are personal.
neighborhood association, or employer.
By managing groups of people and
their electricity loads, aggregators
can provide a valuable service.
They compare offers and contract
terms and negotiate rates with power
producers / retail service providers /
distribution licensees.
An aggregator joins two or more
customers into a single purchasing
unit to negotiate the purchase of
electricity. They conduct research on
electricity prices, contract terms and
conditions and other services which
their customers want. The potential
benefts of aggregation as a public
policy tool, therefore, extend beyond
bringing savings to residential and
small business consumers. It can in
fact stimulate the residential market,
by making it more attractive to retail
electric suppliers.
Energy storage
Storage is an essential part of the
solution for renewable energy
integration. It can address problems
such as smoothing rapid variations
in output from renewable energy
generation, leveling output from
renewable energy plants to align actual
output with scheduled output, and
storing electricity for use.
In some countries, integration of
zigbee certifed electrical vehicle (EV)
charger with the grid vis-a-vis smart
meter has been demonstrated using
zigbee home area network and the
charging cost has been reduced to half.
The drivers were provided information
through the web/smart phone and via
e-mail/text message. In India since
only few electrical vehicles are on
road the concept is pre-mature but in a
few years from now the EV charging
infrastructure would be required to be
in place at shopping malls, spacious
petrol pumps and industrial complexes.
The challenges of integrating
renewables are not unique for India.
System-wide analysis of how the
deployment of large-scale renewables
physically affects conventional thermal
power plants, the limits of their
capabilities for such accommodation
and the degree to which such
integration is changing the physical and
economic operation of power system,
needs to be carried out in detail. Large
amount of intermittent generation
from wind and solar would have to
be compensated with large-scale
economical energy storage capacity
and demand responsive loads.
In some parts of
country, over-burdened
power lines make it
difficult to transmit the
entire energy. There
could be cases where
wind generation could
be forced to shut
down even when the
wind is blowing. Smart
technologies can help
provide maximum flow
to prevent congestion.
20
StatisticsPower
November 2013
State-wise Achievement of Electrication under RGGVY (September 2013)
Sr. No. State Revised Coverage Cumulative total (up to September 15,
2013)
UEV PEV BPL connec-
tions
Un-electri-
fied
PEV BPL connec-
tions
1 Andhra Pradesh 0 26628 2766614 0 26628 2766614
2 Arunachal Pradesh 2081 1526 53337 1825 1094 43297
3 Assam 8234 12907 1229992 8051 12393 1012464
4 Bihar 24894 18717 5552867 22876 5320 2433476
5 Chhattisgarh 1736 16099 1220281 1127 12923 1000706
6 Gujarat 0 16337 834495 0 16269 834495
7 Haryana 0 6593 250409 0 4676 199279
8 Himachai Pradesh 95 12734 17215 83 10534 16373
9 Jammu & Kashmir 234 3247 79991 190 2978 62967
10 Jharkhand 18912 6368 1473109 18110 5749 1306823
11 Karnataka 62 25288 917153 62 24708 862575
12 Kerala 0 1272 117504 0 181 89970
13 Madhya Pradesh 886 49327 1840904 614 25850 1017876
14 Maharashtra 0 41921 1218140 0 36763 1203013
15 Manipur 882 1378 107369 616 585 29658
16 Meghalaya 1866 3239 109697 1682 2394 90177
17 Mizoram 137 570 30917 94 346 18644
18 Nagaland 105 1168 72861 89 1075 41694
19 Odisha 14725 29329 3047561 14391 25512 2839571
20 Punjab 0 6454 102176 0 5904 100404
21 Rajasthan 4238 34403 1435167 4150 33386 1154233
22 Sikkim 25 413 12108 25 383 9832
23 Tamil Nadu 0 10402 525571 0 9673 501202
24 Tripura 148 658 117163 143 622 112541
25 Uttar Pradesh 28006 22973 1988574 27750 2982 1044933
26 Uttarakhand 1512 9263 269560 1511 9221 269560
27 West Bengal 4202 24256 2286122 4185 23112 2178051
Total 112980 383470 27676857 107574 301261 21240428
21
November 2013
Status of State-wise Funds Released under R- APDRP
Sr. No State/UTs Projects sanctioned under
Part-A
Projects sanctioned under
Part-B
Funds released for Part-A &
Part-B (INR Crore)
1 Andhra Pr. 505.62 1294.67 406.51
2 Arunachal Pr. 37.68 0 11.3
3 Assam 195.6 644.05 251.89
4 Bihar 216.62 1155.21 140.9
5 Chhattisgarh 163.51 710.24 155.58
6 Chandigarh 33.34 0 0
7 Goa 110.74 0 31.47
8 Gujarat 369.23 954.02 343.01
9 Haryana 165.63 673.58 49.68
10 Himachal Pr. 96.41 338.97 155.16
11 J&K 204.88 1665.27 561.05
12 Jharkhand 160.61 0 48.18
13 Karnataka 391.14 786.59 327.92
14 Kerala 297.55 1078.3 251
15 Madhya Pradesh 378.57 2034.6 456.94
16 Maharashtra 486.04 3468.74 763.46
17 Manipur 31.55 398.87 129.13
18 Meghalaya 33.98 0 10.19
19 Mizoram 35.12 0 10.54
20 Nagaland 34.58 0 10.37
21 Puducherry 41.42 84.78 4.5
22 Punjab 325.21 1509.73 381.56
23 Rajasthan 466.83 1536.07 406.52
24 Sikkim 26.3 68.46 28.43
25 Tamil Nadu 599.17 2190.88 671.7
26 Tripura 35.18 165.09 60.09
27 Uttar Pradesh 931.49 5093.77 911.92
28 Uttarakhand 142.37 584.09 189.13
29 West Bengal 196.71 683.11 231.78
Total 6713.08 27119.09 6999.91
NewsBriefs | Coal
22
November 2013
US coal miner offers ICVL stake
In three operating mines
Southern Coal Corporation, the largest
privately held coking coal producer in the
US, has offered ICVL equity participation
in three operating mines. A confidentiality
agreement has already been signed
between the two parties and detailed
due diligence has been commenced, a
source in the know said. Southern Coal
Corporation, owned by The Greenbrier
Resort owner Jim Justice, operates mines
in Alabama, Kentucky, Tennessee, Virginia
and West Virginia.
ICVL eyes Rio Tintos stake
In Riversdale Mining
International Coal Ventures Ltd has
evinced interests in buying Rio Tinto-
owned Riversdale Minings coal mines in
Mozambique. ICVL is also open to acquire
some stake in the Africa-focused miner, an
official said. Rio Tinto took over Riversdale
Mining in 2011 for USD 4 billion by buying
out Tata Steels over 24 per cent stake and
Brazilian Companhia Siderurgica Nacionals
entire 19.35 per cent holding in Riversdale.
ICVL had hired Citigroup to assess the
potential of a counter bid.
`3 bln project of Bharat Coking Coal
Sadbhav Eng emerges as the bidder
Sadbhav Engineering said it has been
declared the successful bidder (L1) by
Bharat Coking Coal, a subsidiary of Coal
India, Dhanbad for contract value of `3.02
billion. Hiring of HEMM for removal of OB
and extraction and transportation of coal
from IV (B), III,II l(T) & |(B) seams of Patch-J
of Dhansar Colliery of Kusunda Area, it
said. The total quantity for the removal
of over burden (OB) is 265.39 LCM and
extraction of coal is 70.14 LM I, it added.
De-allocated coal blocks
NTPC knocks on Power Ministrys door
NTPC has requested Ministry of Power to
work in tandem with Ministry of Coal for
reviewing the decision of de-allocation of
Brahmini & Chichro-Patsimal coal block
and restoring to JV Company of CIL and
NTPC i.e. CIL-NTPC Urja Pvt. Ltd. NTPC had
earmarked coal produced from these mines
for expansion of Kahalgaon (1500 MW) and
Farakka (500 MW) Power stations, which
have already been commissioned but are
running at lower capacity (PLF of around
65%) for paucity of coal.
Gujarat NRE Coking Coal
JSPL to acquire majority stake
Jindal Steel and Power (JSPL) will acquire
a majority stake of 53.63% in Gujarat NRE
Cokes loss-making Australian subsidiary
through a complex deal, which involves
issue of convertible notes, placement of
shares and option to acquire shares at
a later stage. The deal, announced last
month, by the shareholders of Gujarat
NRE Coking Coal Ltd -- the Australian
subsidiary of Kolkata-based Gujarat NRE
Coke-- in a general body meeting held in
New South Wales.
Overseas coal assets
Neyveli shortlists 18 proposals
Neyveli Lignite has shortlisted 18 odd
proposals - out of 89 it has received from
companies in various nations such as
Indonesia, Australia, Mozambique and the
US - for buying coal assets overseas. The
company is looking to acquire 2-3 assets
for supply of 2-10 million tonne (MT) of
coal in a year to secure long- term fuel
linkages to its upcoming power projects.
The 89 proposals are under five different
categories, including joint ventures,
he said.
Coal-bed methane exploration
Coal India is not an expert: Moily
Oil minister Veerappa Moily has rejected
a draft note for the Cabinet proposing
exploration of coal-bed methane (CBM)
rights to state-run Coal India without auction
and directed bureaucrats to re-draft it to
encourage competition and efficiency,
officials said. Moily rejected the proposal
saying Coal India should not get automatic
rights of over CBM exploration only because
most of coal blocks are held by the public
sector firm, which is the single largest coal
producing company in the world.
Govt delaying allocation approvals
Forced to sell CBM gas at $13/unit: RIL
Reliance Industries has told the government
it would start selling gas from its coal bed
methane (CBM) blocks at $13 a unit, and
will not wait endlessly for official approval
because the contract says the market-
discovered price is deemed to be approved
in 60 days. It has accused the oil ministry
of trying to delay the approval of the
price of CBM blocks in Madhya Pradesh
although the company had invited bids in
February 2012 and discovered the price of
$12.93 per unit.
Use of coal from captive mines
Flexible norms on course
The government will relax the rules on the
use of coal from captive mines as it prepares
to auction 22 blocks by December. On the
agenda is a mechanism allowing firms to
divert coal from captive mines used in a
particular steel or power unit to another
owned by the same group. At present, this
is not allowed under rules framed during the
tightly controlled era of the 1970s over fears
of coal being sold in the black market. With
coal being available in the open market, such
rules have become irrelevant.
Blocks allotted may be scrapped
JSPL, Tata Power at risk
Within days of the CBI naming Aditya Birla
Group chief KM Birla and former coal
secretary PC Parakh in its 14th FIR in the
blocks allocation case, the coal ministry is
preparing to cancel the allotment of some
mega blocks including those of JSPL, Tata
Power, NTPC and SAIL. The inter-ministerial
group (IMG) looking into the case has
shortlisted 30 blocks. Show cause notices
have already been served a month ago to
the allottees of each block pointing to the
defaults in meeting milestones.
CIL to import coal
Through PSU agencies
Coal India has decided not to take on
the responsibility of importing coal itself
but use the services of state-owned
cross-border trading corporations (public
sector undertakings). Under the current
plan for import of coal for meeting the FSA
commitments, CIL has decided that such
import of coal will be made through PSU
agencies like MMTC, STC, PEC and MSTC.
Selected agencies will be required to import
through international competitive bidding as
per Govt of India guidelines.
Underground coal gasification
Govt to come out with a policy soon
The govt is likely to come out with a policy
on underground coal gasification soon,
according to a top Coal Ministry official. We
are working on it and very shortly we will be
coming forward with a policy on underground
coal gasification, the official said. There
have been so many things which have
been happening that somehow we could
not carry this policy forward. Underground
coal gasification is definitely an area we
need to work upon it as open cast mining is
becoming difficult, he added.
24
InDepth
November 2013
The Centre has stepped up efforts to
address concerns regarding power supply
to coal producing states and is making
exclusive allocation from National
Thermal Power Corporation (NTPC)-
run power stations to Andhra Pradesh,
Chhattisgarh, Madhya Pradesh, Odisha
and Bihar, according to sources. The
government will allocate 40-50 per cent
power from ultra mega power projects
(UMPP) to the respective coal producing
Corp. Ltd (APgenco) and NTPC, will
invest `10,360 crore over the 12th Plan
period (2012-17). The investment will
lead to expansion of production, opening
of new mines and building a 1200 mw
coal-based power plant in the states
Adilabad district.
In Madhya Pradesh, the power
capacity of NTPC is 4260 mw and the
government has allocated 2600 mw
exclusively for the state which is rich
states to check power shortages there.
Besides this the government has planned
massive revamp of state electricity
boards (SEBs) in the country.
In Andhra Pradesh, NTPC has
an installed power capacity of 4600
megawatt (mw), out of which 2646 mw
has been exclusively allocated to the
state. Singareni Collieries in the state,
which supplies most of its coal to the
state-owned Andhra Pradesh Generation
Exclusive power for
coal producing states
NTPCs ultra-mega projects to ensure 50 per cent power for home state
Competitive bidding being encouraged for procurement of power
by Shakeb Ayaz
25
November 2013
in coal and has mines in Singrauli and
other regions.
In Chhattisgarh, NTPCs capacity
is 5580 mw out of which 1029 mw has
been allocated to the coal-rich state
for its exclusive use. In West Bengal,
the capacity of NTPC is 2100 mw and
substantial allocation has been made for
exclusive use of the state, which boasts
of Raniganj coal felds.
In Bihar, the capacity of NTPC
is 2340 mw and 1500 mw has been
allocated for the exclusive use of the
power-starved state. NTPCs power
capacity in Odisha is 3460 mw out of
which exclusive allocation for the state is
1508 mw. In Jharkhand, NTPCs power
capacity of 1,980 mw is yet to come
up at North Karanpura but substantial
allocation will be made for the coal-rich
state to take care of its power woes.
In Maharashtra, the capacity of
NTPC is 1000 mw but the state is getting
substantial share of power3847
mwunder Gadgil Formula. Under
the formula, 10 per cent of power
goes to the home state, 15 per cent
remains un-allotted while 75 per cent is
distributed to other states.
The nodal agency for UMPPs, Power
Finance Corporation (PFC) has awarded
four such projects. Reliance Power has
bagged three - Krishnapatnam in Andhra
Pradesh, Tilaiya (3960 mw) and Sasan
(3960 mw). Tata Power has set up a 4000
mw plant at Mundra in Gujarat. Another
UMPP is likely to come up in coal
producing state of Odisha but the project
is stuck because of land acquisition issues
and usage of surplus coal.
The government has come up with the
concept of UMPPs in order to meet the
growing gap between demand and supply
of power. The main feature of UMPPs is
that they are low cost projects but with
large capacities. They are awarded to
developers on tariff-based competitive
bidding on a build-own-operate basis.
Tilaiya UMPP is a pit-head power
project and has been allocated two
captive coal blocks Kerandari B and
C having reserves of almost 1.3
billion tonne. To push for improving
energy supplies to the home state and
the surrounding region, authorities
plan to mine 40 million tonne of coal
annually from these mines for the
Tilaiya power project.
Recast of SEBs
Besides ensuring power to coal-
producing states from the nation grid,
the Central government is also working
on a major overhaul of SEBs. In Uttar
Pradesh, Rajasthan, Haryana and
Himachal Pradesh, the restructuring is
almost complete. To be done at a cost of
`98,000 crore, half of the restructuring
amount will be taken over by the state
government while the rest will be made
by the utility, according to sources.
Special dispensation has been taken
up for another four statesJharkhand,
Bihar, Andhra Pradesh and Karnataka
to extend the beneft of fnancial
restructuring plan (FRP), the power
ministry said in a statement recently.
As a part of the conditions of FRP,
Model State Electricity Distribution
Responsibility Bill is under fnalization
in the ministry of power. The objective of
the Bill is to provide for responsibilities
of the state government to ensure
fnancial and operational turnaround and
long-term sustainability of the state-
owned distribution licensee to enable
adequate and affordable electricity
supply to consumers through fnancial
restructuring, according to an offcial.
The government is also working on a
model for power tariff rationalization. It
is facing a challenge on this issue as the
private sector is pitching for increasing
the cost of power while the public is
against it. Most of the states in the
country had increased electricity tariffs
last fscal. Five Union territories and 23
states had increased power rates ranging
from a 2 per cent to 73 per cent. There
was a 2 per cent increase in tariff in
Karnataka while Tripura had seen a jump
of 73 per cent. Punjab, Gujarat and Bihar
are among the eight states which have
hiked power tariff in the current year.
Procurement of power
The government has stepped up efforts
to ensure competitive procurement
Sr. No. Project (Thermal coal based) State Inst.Capacity
1 NTPC Korba Chhattisgarh 2,600 mw
2 NTPC Ramagundam Andhra Pradesh 2,600 mw
3 Farakka Super Thermal Power
Station
West Bengal 2,100 mw
4 NTPC Vindhyachal Madhya Pradesh 4,260 mw
5 Kahalgaon Super Thermal
Power Station
Bihar 2,340 mw
6 NTPC Talcher Kaniha Odisha 3,000 mw
7 Talcher Thermal Power Station Odisha 460 mw
8 Simhadri Super Thermal Power
Plant
Andhra Pradesh 2,000 mw
9 Sipat Thermal Power Plant Chhattisgarh 2,980 mw
10 NTPC Mouda (1 unit 500 mw is
commissioned in April 2012)
Maharashtra 1,000 mw
Source: NTPC
The government has
come up with the
concept of UMPPs to
meet the gap between
demand and supply
of power. They are
low cost projects but
with large capacities.
They are awarded to
developers on tariff-
based competitive
bidding basis.
26
InDepth
November 2013
of power. Case 2 bidding has already
been fnalized. The ministry of power
has observed that even while there is
requirement of power in the states,
distribution utilities are not coming
up with tenders for procurement
even though uncontracted capacity is
available with the developers. Based on
the latest report by Central Electricity
Authority (CEA), out of the 80 gw
capacity required to be tied up through
bids, about 63.5 gw is to be tied up by
states like Haryana, Rajasthan, Uttar
Pradesh, Madhya Pradesh, Maharashtra,
Andhra Pradesh, Karnataka and Tamil
Nadu. Even though some of the states
have signed many power purchase
agreements (PPAs), they may not
fructify during the 12th Plan as they
have issues with input tie-up, especially
fuel and land. States must make
informed procurement planning and tie
up available power, according to an
offcial of the power ministry.
The state governments should ask
their discoms to take steps for long-term
procurement of power by inviting bids
and refrain from buying short-term
power at exorbitant rates. Discoms of
Rajasthan have come out with 1,000
mw Case I bidding and discoms of Uttar
Pradesh with 6,000 mw Case I bidding
which have been partly fnalised.
Additional generation target during
12th Plan is 88537 mw comprising
26182 mw in central sector, 15530
mw in state sector and 46825 mw in
private sector. With this level of capacity
addition, the projected demand for
power on an all-India basis is likely to
be met by the terminal year of 12th Plan.
To meet the power requirement, state
governments / discoms need to tie up
procurement of power through tariff-
based bidding, depending upon their
anticipated demand-supply scenario.
While the private sector has tied up
25129 mw capacity with state discoms,
about 21696 mw remains to be tied up.
States must make informed procurement
planning and tie up available power.
Revamp of infrastructure
As the government has planned massive
overhaul of power infrastructure, there
would be a need for electric power
equipment such as transformers, power
stations and state-of-the-art machinery.
The government had at one point
imposed high tariffs on imports as local
manufacturing units were suffering. But
this had led to slowing down of quality
electric products from the international
market in the Indian market, hitting the
distribution sector hard.
To improve the fow now, the
government wants investment in the
sector and is encouraging international
giants to tie up with Indian frms for
production of such equipment in the
country. Several companies (international
manufacturers forming joint ventures
with Indian companies) have already
set up or are in the process of setting up
manufacturing facilities in India. These
include L&T with Mitsubishi Heavy
Industries, Japan; BGR with Hitachi,
Japan; Alstom France with Bharat Forge;
Toshiba Japan with Jindal Steel; Thermax
with Babcock; Ansaldo of Italy with
Gammon and Doosan of South Korea.
Third party sampling
NTPC and state electricity boards have
been grappling with the problem of
allegedly poor quality of coal supplied
by government-run monopoly Coal
India Limited. To check the problem,
the Central government has introduced
the concept of third party sampling
from October 1 in which the coal will
be tested by a third party after it comes
out of CIL-run coal mines.
The government has issued Letter of
Assurance to three successful bidders
for performing third party sampling.
There are eight subsidiaries of CIL,
Eastern Coal Fields, Bharat Coking
Coal Limited, Central Coal Fields,
Mahanadi Coal Fields, South Eastern
Coal Fields, Northern Coal (NCL)
Fields, Western Coal Fields (WCL) and
North Eastern Coal Fields.
The government had
at one point imposed
high tariffs on imports
as local manufacturing
units were suffering.
But this had hit
the distribution
sector hard.
Sector wise-Fuel Capacity Addition Target for 12th Five Year Plan (In MW)
Sector Hydro Thermal Breakup Total
Thermal
Nuclear Total
Coal Lignite Gas/LNG
Central 6004 13800 250 827.6 14878 5300 26182
State 1608 12210 0 1712 13922 0 15530
Private 3285 43270 270 0 43540 0 46825
All-India 10897 69280 520 2539.6 72340 5300 88537
Garima Singh, Sr. Associate - Business Development
Ph. +91 11 4625 0027 (D) 4625 0000 (B), Mobile: 8010712843
Email: garima.singh@infraline.com
For exhaustive
September 2013
Natural Gas-The Growing Relevance:
Indias Energy Landscape

Operator wise Natural gas Production
Cost of gas based power generation
vis-a-vis Coal based
Impact of gas price hike on:
Power Sector
Fertilizer Sector
CGD Sector
Existing & Planned LNG import
terminals
Capacity & Length of Gas pipelines
in India
Evaluation of LNG sourcing options
for India
US LNG terminals with FTA export
authorization
Global LNG Market updates
LNG pricing regimes
Unconventional sources of natural
gas in India
Growth of CNG vehicles in India
City-wise CNG infrastructure in India
Key Highlights
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28
InDepth
November 2013
With coal auction policy now in place,
the government is all set to fnalise a
policy for sale of surplus coal also
which stipulates that captive block
holders will dispose of their surplus
coal to Coal India Limited (CIL) and
its subsidiaries at notifed prices. The
move is aimed at bridging the gap
between demand and supply of coal in
the country and the Union Cabinet is
going to approve it soon.
We have circulated the draft
Cabinet note regarding the usage of
/ captive collieries and washeries. The
need for such a policy has arisen as
the basic concept of captive mining
by private companies permitted in
pursuance of section 3(3) of the Coal
Mines (Nationalisation) Act 1973 is that
the coal obtained from a captive block
shall be used entirely and exclusively
for the specifed and approved end use
by the allocated company. However,
the ministry of coal had received
several representations from captive
coal companies regarding disposal
surplus coal from captive mines and
sought comments from all concerned
stakeholders. It would be sent for
Cabinet approval soon, a senior coal
ministry offcial told InfralinePlus.
However, the Planning Commission has
called for fexibility in prices at which
companies will sell their surplus coal to
CIL, sources said.
The matter deals with formulation
of a policy for disposal of surplus coal,
coal rejects, washery by-products and
other carbonaceous material by private
Captive mines may have to
sell surplus coal only to CIL
Cabinet working on policy for disposal of surplus by captive mines
Coal banking proposal of power producers likely to be rejected
by Deepak Sahu
29
November 2013
of coal rejects, washery products and
surplus coal.
According to a report, the
government admitted in Parliament
that coal rejects and middlings after
washing of coal are disposed of as per
provisions of Colliery Control Rules,
2004 and Coal Mines (Taking Over
Management) Act 1973. By its own
admission, the coal ministry permitted
Tata Steel to sell 30.53 lakh tonnes
(lt) of middlings on July 14 and 16,
2009 and June 8, 2009, 32.54 lt on
May 6, 2011 and 32 lt on April 27,
2012 while Jindal Steel & Power Ltd
(JSPL) was permitted to sell 2.48 lt
coal middlings as renewal of earlier
unsold quantity and another 19.05 lt of
middlings on July 28, 2009. On April
22, 2010 JSPL was again permitted
to sell 7.86 lt. Similar permissions
were granted to ICML (an RPG Group
company) for 3 lt for 2009-10 and
2011-12, SEML (a Chhattisgarh-based
frm) and Electrosteel Castings Ltd (no
specifed quantity) in 2011-12. Even
the Comptroller and Auditor General
(CAG) in its report had found diversion
of surplus coal from the Sasan project,
resulting in a beneft to Reliance Power
Ltd of `29,033 crore.
The decision of the Union
Government on the Sasan surplus coal
matter was in fact challenged by Tata
Power Co (TPC) in the High Court of
Delhi, and that petition has been thrown
out and dismissed, with strictures
against TPC for suppression of facts.
The use of surplus coal from the Sasan
UMPP coal blocks for power generation
has been approved by the government,
through Empowered Group of Ministers
on two separate occasions, once in 2008
and again in 2012.
Looking at the coal balance defcit,
it is the need of the hour to augment
domestic coal production to keep the
output price affordable and reduce
strain on current account defcit (CAD).
For this, it is imperative to have a
liberal surplus coal policy regime to
enable investors to invest in recovery
enhancement measures and improve
technical recoverable ratio to 85 per
cent from current CIL average of about
70 per cent. There is no rationale in
leaving the coal in mother Earth when
it can be recovered, Director-General,
Association of Power Producers (APP)
Ashok Khurana told InfralinePlus.
We have suggested pricing which
gives reasonable proft to miner, as
every mine is different and there
cannot be any predetermined price. The
regulator can be asked to determine
price on the basis of pre-announced
return on equity and return on
capital, he added. If investors fnd
it worthwhile, they would invest,
said Khurana.
Demand-supply gap
The government has been forced to
import costly coal as there has been
a mismatch in output of dry fuel and
its domestic requirement. Indias
coal consumption stood at 772.84
million tonne against the production
of 557.60 million tonne in 2012-13.
This demand-supply gap is mainly met
through imports from countries such as
Indonesia, South Africa and Australia.
The defcit of over 200 million tonne,
met through imports, resulted in
doubling of the coal import bill to $18
billion in 2012-13. It was to meet this
twin problem of diversion of excess
coal by block holders and to bridge the
demand-supply gap that the government
has decided to come out with the coal
surplus policy.
Coal banking
Power producers, on the other hand,
had come up with the idea of banking
of surplus coal from captive mines
with CIL, a measure which they felt
could increase domestic supply of coal
and reduce its imports. According to
Khurana, coal banking would reduce
companies reliance on imports by
25 million metric tonne by 2016-17,
equivalent to nearly a ffth of Indias
total coal imports. But, according to
sources, Coal India has rejected this
proposal saying it would not return the
mineral deposited by them in view of
the huge demand for the fuel.
Sources close to the development
say Coal India is willing to take surplus
coal from captive mines and give it
to other consumers, but would not
be able to give any commitment on
returning the fuel to the entities which
have banked with it. For one, there is
the issue of how would Coal India store
and keep track of the coal it is supposed
to bank for power companies.
Operationally its going to be quite
challenging, says a senior industry
executive. Then there are issues of at
what rate do you bank (the coal) and at
what rate you take it back. What is the
duration for banking, what happens if at
that point of time there is an additional
shortage, would Coal India then
deprive its existing customers and give
it to them, sources add. A committee
headed by Planning Commission
Member BK Chaturvedi is likely to
come out with its recommendations
soon on this matter.
The ministry is also said to be
opposed to this idea as it feels that
surplus coal policy and coal banking
are two different things and should not
be mixed. It is rather keen to go ahead
with fnalising the surplus coal policy.
The ministry of coal
has received several
representations
from captive coal
companies regarding
disposal of coal
rejects, washery
products and surplus
coal over the past
several years. This
necessitates a policy
for disposal of surplus.
InConversation
30
November 2013
market with established infrastructure.
What kind of advantages does
South Africa offer over other coal
exporting nations?
We are not a competitive market but we
give a better regulatory regime which is
stable and neutral around exports. And
South Africa is incredibly favorable
in terms of exports. When you look at
recent developments in Indonesia and
Australia, it makes us more competitive.
South Africa already exports huge
volumes of coal to India; around 30 per
cent of South African coal exports go to
India. We are not the closest producer,
probably Indonesia is the closest one.
Columbia and even Australia might be
equidistant than South Africa. But Indian
investment in power generating assets
in South Africa is further co-owned by
utilities. That is changing and the South
African government is embarking on a
procurement programme for independent
power producers (IPPs) for both coal
What is the scope of coal imports
from Africa by Indian companies?
There is a huge coal shortage in India
for electricity generation which is being
partly met by Indonesia, Australia and
South Africa. Now we have technology
to burn lower quality coal, so more coal
is available to export from South Africa.
One also has to strike a balance between
meeting local demand and exporting
coal for foreign exchange earnings and
the regulator in South Africa is trying
to strike that balance. Apart from that
balance there is a huge opportunity for
India to source coal from South Africa
and the rest of Africa. South Africa is the
biggest coal producer at the moment.
What options does South Africa
offer to Indian companies in terms
of picking up stake in mining
companies to source coal?
Indian electricity companies are
already buying up and outsourcing coal
production facilities in South Africa.
Jindal Steel and Power, for instance, is in
the process of acquiring more production
capacities in South Africa. There are
some other companies looking at the
same kind of scenario, Dalmia Cement is
one of them. There are Indian companies
in other sectors such as steel, apart from
coal and energy, which are partly looking
for coal and iron ore and other minerals
such as manganese, chrome, vanadium
for making steel. So a lot of trade is going
on between South African producers and
Indian consumers. There is an established
With Indonesia turning tough
on coal exports and prospects
looking dull in Australia, Indian
power and steel companies are
looking for alternative sources
of coal as well as iron ore and
manganese. From that point
of view, South Africa can be
a safer and better option for
Indian companies to explore,
says South Africa-based
industry consultant Webber
Wentzel. Mr John Smelcer,
Director-African Mining
and Energy Projects and Mr
Manus Booysen, Partner &
Head Mining, Energy and
Natural Resources spoke to
Deepak Sahu of InfralinePlus
about the plans of Tata Power,
Reliance Power, Jindal Steel &
Power, JSW Steel and Vedanta
to secure long-term raw
material supplies in Africa for
their projects. Excerpts.
Africa is better source of coal
than Indonesia and Australia
Mr Manus Booysen, Partner & Head Mining,
Energy and Natural Resources, Webber Wentzel
Mr John Smelcer, Director, African Mining and
Energy Projects, Webber Wentzel
31
November 2013
and gas. The tariff structure has not been
fnalized yet. We have to see what kind
of pass through can be offered, whether
cost plus or some other. There will be
clarity on this point by the frst or second
quarter of next year. So the message
there is clear. The process is in place and
all the projects are taking off. There is
expectation in the South African market
both among private and the government
players that this procurement policy
which will lead to much larger mix
of generating assets and it will be IPP
driven. There is a real opportunity for
Indian investors and a number of Indian
players are looking at that. Tata has a
subsidiary which has a joint venture with
Synergy which will be quite active in
that programme.
How will this change propel
investments from Indian power
generators to set up capacities
over there as every producer
would like to have an equity
in the mine to set up a power
generating unit?
We would leave it to the IPPs to come
in with their own supply solutions.
There will still be an opportunity to
invest in coal production. This will
establish the terms for procurement for
the generating assets itself and part of
the competitiveness one builds will be
around sourcing the thermal products
whether it be coal or gas.
Today one has to source coal from
South Africa itself if one wants to
get into power generation.
That is not a requirement. But
the economics drives that. I dont
think it will be economical to mine
coal here and generate electricity
elsewhere. Perhaps mining coal
in Botswana could be feasible for
generating assets in South Africa but
economics is going to determine that.
Regulations dont forbid that as far
as I am aware. South Africa has huge
coal reserves of 30-50 billion tonne
and maximum is not mined as of now.
What is the current scenario in
terms of supply of coalis it more
towards spot or medium and long-
term off take agreements?
Exports are not for long term, but if the
supply if for a power generation plant
then it is normally a long-term supply
because of the huge capital investment
involved in it. Coal to liquid (CTL)
will be similar.
Who are your big Indian clients?
We are doing a lot of work with Jindal
Steel and Power. They have invested in
coal producing facilities and are moving
into iron ore and manganese. They have
made two major acquisitions in Namibia.
Vedanta is a big client for us. The
company made a signifcant investment
in zinc production in South Africa. In the
region there is huge coal potential, but
there is enormous constraint in transport
in order to export that coal and there are
several projects in process which will
unlock that obstacle in the near future.
So there will be more market across
East and South Africa which will be
open for business in terms of export of
coal to India. I think there will be lot of
regulatory regimes more sophisticated
and more neutral compared to Indonesian
and Australian regimes in terms of
exports. In Africa the biggest limiting
factor is the infrastructure. Investment in
mining and production would need to go
parallel with investment in infrastructure
as well. The government has embarked
on an infrastructure development plan
realizing that it is inevitable for the
economic growth in the country.
What kind of opportunity do you
see in the oil and gas space?
There is a huge opportunity in the oil
and gas space, particularly in liquefed
natural gas (LNG). Lot of Indian
companies are keen to explore the oil
and gas sector in the African nations. If
you look at the Mozambique project,
the scale of upstream is historic. The
Mozambique gasoline is about third the
Qatari reserves. Already ONGC Videsh
(OVL) and Oil India (OIL) have taken
20 per cent stake in a giant Mozambique
gas feld which is estimated to hold as
much as 65 trillion cubic feet of gas.
Videocons 10 per cent stake has been
sold to them, while OVL, on its own, will
acquire Andarko Petroleums 10 per cent
stake. So, there is already an investment.
But, I think that for a company like GAIL
this is an opportunity to sign long-term
LNG supply contract and given the US
shale gas story, there is likely to be a
downward pressure on pricing. So, not
only will there be long-term supply for
GAIL but also at better prices.
Does the South African
government also want
Indian companies to invest in
infrastructure development?
Yes, defnitely. There are no constraints
for foreign companies and the
government is aware of that fact that
we need foreign investment to grow our
economy as well as for the beneft for
both the parties.
At what stage are your
discussions with GAIL in terms of
investment?
Discussions have just started with various
gas buyers for purchase of gas from these
gas projects, all your typical competition
for GAIL, including Japanese, Korean,
and Chinese etc. Actually gas discoveries
only happened in the past 18 months.
There is a huge
opportunity for India
to source coal from
South Africa and the
rest of Africa. South
Africa is the biggest
coal producer at the
moment.
32
InDepth
November 2013
India Inc is rallying behind him,
ministers are standing by him and
his shareholders are cheering him,
but for now the Central Bureau of
Investigation (CBI) has done the
damage. The government agency
investigating the coal scam has fled
a frst information report (FIR) and
registered a case against Aditya Birla
Group Chairman Kumar Mangalam
Birla for his alleged role in the
C Parekh, to push for the allocation of
the Talabira II coal block in Odishas
Jharsuguda district in the second half
of 2005, according to sources.
The investigating agency has found
that the block was allocated to Neyveli
Lignite and Mahanadi Coalfelds,
both PSUs, in 2005 but sometime in
the middle of that year Birla had met
Parekh after which the earlier decision
of the screening committee was
allocation of a coal block in 2005. The
then coal secretary P C Parekh has also
been named in the FIR which was fled
on 15 October on charges of conspiracy
and corruption in coal block allocation.
The case relates to the allocation of
a captive coal block Talabira II in
Odisha which was primarily meant for
public sector units (PSUs). The CBI
has discovered that Kumar Mangalam
Birla had met former coal secretary P
Coal soot on Birla now
CBI registers case against chief of Birla Group for irregularities in coal block allocation
Former coal secretary also charged with criminal conspiracy; corporates condemn move
by Deepak Sahu
33
November 2013
overturned and Birla Group company
Hindalco was also accommodated
along with the two.
The agency claims that Hindalco did
not meet the criteria for being awarded
a mining lease. It alleges that the Birla
company was accommodated in the
said coal block though the provisions
allowed allocation only to public-sector
companies. The screening committees
recommendations were overturned to
give favours to Hindalco, add sources.
The Birla Group has denied the
charges stating that every process
stipulated under the coal allocation
policy by the government was
followed. This relates to media reports
on an FIR naming Hindalco and our
chairman on the coal issue. Apparently,
this seems to be part of a larger case
entailing coal allocation to companies,
and being one of the companies, we
are being investigated also. We wish
to state unambiguously that we have
followed every process required for
allocation of coal completely, as
The Birla Group has denied the charges
stating that every process stipulated under
the coal allocation policy by the government
was followed.
PC Parekh
Former coal secretary
Sitaram yechury
CPI (M) chief
Ravi Shankar Prasad
Deputy chief, BJP, RS
yashwant Sinha
BJP leader
PM is also responsible, says Parekh
There is absolutely nothing wrong with the decision. It was a very fair and
correct decision that we took. I dont know why CBI thought that there is a
conspiracy. But, if there is a conspiracy, then there are different members
in this conspiracy. There is K M Birla who made the representation, he is
one conspirator. I, who examined the case and made a recommendation,
I can be another conspirator and the Prime Minister (PM), who as the coal
minister, took the final decision, he is the third conspirator. If CBI thinks
there is a conspiracy, why did they choose and select Birla and me and not
the PM? If a conspiracy is there, then everyone is part of the conspiracy.
If ultimately the case goes to the court and the court finds that there is
something wrong, I cant say I am not responsible. But I am only as much
responsible as the PM if there is something wrong, Parekh said in a
statement.
Demand for probe
Parekhs contention has led to the main Opposition party BJP demanding
a probe into the matter. His statement merits serious consideration, BJP
deputy leader in Rajya Sabha Ravi Shankar Prasad has said. Describing
Parekh as an upright IAS officer, BJP leader yashwant Sinha has said, The
time has come for Parekh to speak up. He has spoken little, he should
come out clean now, make public statements of how files were disposed
of at that time (when the PM was in charge of the coal ministry)... how chits
were received from Congress party headquarters in the Prime Ministers
Office (PMO) and it transmitted those instructions to the coal ministry for
allotment of coal blocks, he says. BJP spokesperson Prakash Javadekar
has also slammed CBI for having filed an FIR against an honest officer
and demanded that the PM take the responsibility for the scam and quit
immediately.
Communist Party of India (Marxist) leader Sitaram yechury has said the
country needs a thorough and a complete probe in the coal scam to ensure
that the guilty are punished. He says the CPI (M) has been demanding a
complete and a thorough investigation into the entire scam on the basis of
what the CAG report has said.
While the ruling Congress says the matter is under investigation and is
being monitored by the Supreme Court, unnecessary speculation,
should be avoided says Union minister for information and broadcasting
Manish Tewari, adding that the government has been fully cooperating
on the issue. Congress general-secretary Digvijay Singh has said while
Parekh was a free man, whatever he has to say on the matter should be
before the CBI.
The PM received a letter on
7.5.2005 from Kumar Mangalam
Birla requesting allocation of
Talabira-II coal block in Odisha
to his company Hindalco for its
650 MW captive power plant in
its Integrated Aluminium Project
in Sambalpur District, Odisha
and for a 100 MW captive plant
for the expansion of its Hirakud
Aluminium plant in Odisha. The
letter was acknowledged by the
Prime Minister who noted on the
letter Please get a report from
Coal Ministry.
The State Government of
Odisha has strongly recom-
mended allocation of Talabira-II to
Hindalco and supported it in the
Screening Committee. Chief Min-
ister, Odisha had reiterated this
position assigning topmost pri-
ority to the allocation of Talabira-II
in favour of Hindalco.
PMO says
34
InDepth
November 2013
Shareholders unperturbed
The shares of Aditya Birla-
promoted firms such as
Hindalco Industries and AB
Nuvo ended on a mixed
note the day CBI registered
a case against Kumar Birla.
Hindalco Industries scrip
that had tanked 4.97 per
cent to `105.10 in intra-day
trade, recouped the losses
and finally ended 15 October
with a gain of 1.45 per cent
at `112.20 on the Bombay
Stock Exchange. Similarly,
Aditya Birla Chemicals was
up 1.93 per cent. Shares
of Aditya Birla Nuvo ended
2.02 per cent lower, while
Idea Cellular was down 0.08
per cent. Among others,
shares of Grasim fell by 0.33
per cent, and Aditya Birla
Money shed 4.79 per cent.
stipulated by the government policy,
Hindalco said in a statement.
Hindalco managing director
Debu Bhattacharya, clarifed that
the application for the Talabira II
mine was made in 1996 by Indal,
the Indian subsidiary of Alcan, the
Canadian aluminium major. Indal
was acquired by Hindalco in 2000,
which subsequently pursued the
matter. To imply that our chairman,
Kumar Mangalam Birla, managed to
overturn the decision of the screening
committee is preposterous. The truth
of the matter is that the Talabira II and
III mines together have been fnally
allotted jointly to Mahanadi Coal
Fields and Neyveli Lignite, both public
sector undertakings, with Hindalco
having only a 15 per cent stake in
the joint venture, said Bhattacharya.
The project for which this mine was
allocated is ready to be commissioned
later this month, while the clearances to
permit mining have not been received
so far, he added.
The Talabira II coal block has
reserves of about 153 million tonne. It
was allotted to Hindalco, along with
the other two PSUs, for captive power
production of 900 mw for its greenfeld
aluminium project in Orissa. Talabira
II is crucial for Hindalcos Aditya
Aluminium, which has investments in
lodged 14 cases against individuals
and frms including other high profle
industry captains such as Naveen
Jindal and his company Jindal Steel
and Power Limited (JSPL), Congress
parliamentarian Vijay Darda and his
brother Rajendra Darda, JLD Yavatmal
Energy Limited, AMR Iron & Steel
Private Limited and Vini Iron & Steel
Udyog among others.
They all back Birla
Meanwhile, industry captains and
Union ministers alike have come out
in defence of Kumar Birla. Commerce
and industry Minister Anand Sharma
said the CBI should not play to the
gallery and create an atmosphere of
sensation and shock. At a time when
the country was facing an economic
slowdown and the government was
working round the clock to boost
growth, if every decision was contested
The investigating
agency has so far
lodged 14 cases
against individuals and
firms including other
high profile industry
captains such as
Naveen Jindal and his
company Jindal Steel
and Power Limited.
The FIR
against Kumar
Mangalam Birla
is deplorable.
The company
(Aditya Birla
Group company,
Hindalco) has
only 15 per
cent stake in the coal block. Just
because it is a coal block reserved
for a PSU, it does not mean some
allocation cannot be made. Hope
CBI will quickly reverse its action.
Adi Godrej,
Chairman, Godrej Group
The Prime Minister is satisfied that the final decision
taken in this regard was entirely appropriate and is
based on the merits of the case placed before him,
the PMO said in a statement.
However, PMO said that the Talabira coal block
(allotted to Kumarmangalam Birlas company
Hindalco) allocation is a case where the final
decision differed from the earlier recommendation
of the Screening Committee, and this was done
following a representation received in the Prime
Ministers Office from one of the parties, which was
referred to the Ministry of Coal.
It is recognized that this allocation is subject to
an ongoing investigation. No impediment is being
placed on the CBI to continue the investigation and
seek fresh information which may have a bearing on
the case, the PMO added.
PMO says
a 4.2 million tonne bauxite mine, 1.5
million tonne alumina refnery and a
359,000 tonne smelter.
The investigating agency has so far
35
November 2013
and every person questioned, it would
create a fear psychosis and the country
would suffer, added Sharma.
In a similar vein, industry chamber
CII has joined others in slamming the
FIR. In a nuanced press release that
while CBI had the right to proceed
against anyone, it should be careful
before taking action against reputed
industrialists to avoid creating a
sense of fear, CII President Kris
Gopalakrishnan said, It is desirable
to ensure that all facts of the case are
laid upfront before proceeding against
respected and reputed individuals.
He said reputations of institutions
and individuals took years to build and
extreme caution needed to be exercised
before any action was taken which
jeopardised reputation that institutions
and individuals built for themselves.
Capable and highly regarded
offcers and business leaders cannot
be made scapegoats of mere suspicion
and misconstrued actions, said Ficci
President Naina Lal Kidwai. According For suggestions email at feedback@infraline.com
saying that such developments dent
the national psyche and also dampen
investor confdence; both domestic
and foreign. There is also a feeling
that with repeated episodes of a trust
defcit between industry and the
government, the business sentiment
and the investment environment would
be vitiated and India could slip further
from the growth trajectory that is so
necessary for us to maintain.
She added that there was a need
to bring back a regime of courageous
decision-making. Decisions made in
the interest of progress, when made in
a transparent manner with no personal
gains and without malafde interest
are critical for growth. Capable and
highly regarded offcers and business
leaders cannot be made scapegoats
of mere suspicion and misconstrued
actions, she said.
Minister Sharma said there was
nothing wrong in industrialists pleading
their case before ministers. It is their
right, he said referring to the meeting
Birla had with the Prime Minister in
2005 for grant of mining licence. We
have a system which is transparent
and open. We have due process which
is followed in decision making. The
institutions or the various authorities
who have some constitutional duties to
discharge should not go for overreach
or play to the gallery, he said.
Corporate affairs minister Sachin
Pilot said it must be ensured that
such actions are based on hard facts
as these incidents dampen business
confdence and investor sentiment.
Pilot also called for ensuring that such
actions did not create an atmosphere of
fear and uncertainty. Recent incidents
will certainly dampen business
confdence and investment sentiment,
both domestic and foreign; and perhaps
also negatively affect decision making
by bureaucrats and policy makers,
he added.
Actions
like these
are scaring
businesses out
of the country.
Deepak Parekh,
Chairman,
HDFC
We swing from
one extreme
to another. We
have rules and
regulations
to ensure
conformance
and compliance.
Witch-hunting is
an extreme step.
Kiran Mazumdar Shaw,
Chairperson, Biocon
In India entrepreneurship should command more
respect. Everybody knows that it is a wrong step to le
an FIR against Birla who has a very good reputation.
Kishore Biyani, Chairman,
Future Group
to her, In the recent past, we have
been witness to some very unfortunate
developments. We fnd that cases are
being registered against top bureaucrats
and industry icons. It goes without
36
ExpertSpeak
November 2013
The most economic way of saving
people from this hazard is to harvest
coal-bed methane (CBM) before the
underground mines are explored and
converted to open-cast projects.
The Gondudih Colliery at BCCL
has been identifed as having possibly
Asias largest coal-bed methane
reservoir of 7 billion metric tonne as per
a publication brought out by the Indian
Institute of Coal Management, Ranchi,
in December 2012.
CBM harvesting
To harvest CBM, frst only the upper
layer of the coal bed should be tackled
so that there is no leakage through
cracks. If a leakage does happen
then not only does the environment
get polluted but the crust of the
upper mantle of the mining feld also
becomes useless.
Care must also be taken to do CBM
harvesting before coal mining activities
begin so that miners do not come to any
harm. It is only when CBM has been
harvested for utilization that the mine
should be made operational. In order to
successfully harvest CBM, it is essential
to exercise cadre coordination,
according to the International Journal
of Research in Commerce, Economics
and Management.
A variety of machines are also
required for CBM harvesting and they
have different parameters of handling.
For instance, several overburden-
removing Japanese machines have the
ampere system while the UK-made
machines for gas and mineral processing
are in metric of ampere. Similarly, the
German tunnel boring machines have
different parameters
compared to
heavy vehicles
manufactured
in the USA.
Proper
training of
workmen
at very
initial level is
mandatory for
swift handling of
these sophisticated machines. Multiple
training sessions are required for miners
so that no machine is left unused even
with a shift system of rotation of staff.
Timely action for exploration of
CBM reservoir and deployment of best
machines and workers is essential for
sustainable development of coal blocks.
Failure to do so would tantamount to
letting the earths gift go waste.
More than 4 feet below the underground
coal mines of Dhanbad in Jharkhand,
there is one natural phenomena which
has not ceased for the past more
than 150 yearsfre. Posing health
hazards and endangering the lives of
miners, these fres have been raging
underground for centuries because of
the presence of methane which lies
trapped in coal beds. In gaseous form
methane is found in different reservoir
but in coal beds it is mostly trapped in
the form of liquid. If harvested properly,
it can be of signifcant economic value
and every layer of the coal bed has vast
reservoir of this useful resource.
The coalfelds of Dhanbad, which
come under Coal India Limiteds (CIL)
subsidiary Bharat Coking Coal Limited
(BCCL), remain damp because of liquid
methane and residential buildings in the
vicinity often collapse because of this,
especially in the rainy season. Nearly
200,000 people living in this area
remain under threat because of these
fres and coal mining is doubly diffcult
as heat affects the legs despite shoes.
Methane gas trapped in coal beds
can be harvested these days with
the help of modern machines for
consumption as fuel. This would not
only make underground coal mining
safer by reducing fire hazards but
would also become an additional
source of natural gas and fuel.
Abhinav Kumar Shrivastava,
who is doing his research on Coal
India Limited and its coalfields, talks
about the intricacies involved in
extracting methane from coal beds
in Dhanbad.
Dousing fire by extracting
methane from coal bed
Abhinav Kumar Shrivastava
Research scholar
If
harvested
properly
methane, which
lies trapped in
coal bed, can be
of signicant
economic
value
Views expressed in this article are personal.
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38
StatisticsCoal
November 2013
Status of Execution of FSA as per Ministry of Power (As on September 30, 2013) (Provisional)
Sl. No.
Year of Commis-
sioning as per
MOC List
Name of TPS Company
Linked
Capacity
FSA Qty
(Mt)
Date of FSA
Acceptance of
Import Coal via
Schedule VII
Regular Linkage
1 2011-12 Bajaj Energy Private Limited (Khamberkhera Unit-I & II) CCL 90 0.39 11/21/2012 yes
2 2011-12 Bajaj Energy Private Limited (Maqsoodpur unit l&ll) CCL 90 0.39 11/21/2012 yes
3 2011-12 Bajaj Energy Private Limited (Barkhera Unit-I) CCL 45 0.195 11/21/2012 yes
4 2009-10 Rosa Power Supply Company Limited Phase-l( Unit-I) CCL 300 2.468 11/5/2012 No
5 2010-11 Rosa Power Supply Company Limited Phase-(Unit II ) CCL 300 11/5/2012 No
6 2011-12 Rosa Power Supply Company Limited, Phase Il( Unit-III) CCL 300 1.111 11/5/2012 No
7 2011-12 Jhajjar Power Limited (Unit I) CCL 660 5.21 6/7/2012 yes
8 2012-13 Jhajjar Power Limited (Unit 2) CCL 660 6/7/2012 yes
9 2011-12 Rosa TPP II Unit-4 CCL 300 1.11 11/5/2012 No
10 2011-12 Bajaj Energy Private Limited (Barkhera Unit- II) CCL 45 0.195 11/21/2012 yes
11 2011-12 Bajaj Energy Private Limited (Kundarki Unit-1) CCL 45 0.195 11/21/2012 yes
12 2011-12 Bajaj Energy Private Limited (Kundarki Unit-It) CCL 45 0.195 11/21/2012 yes
13 2011-12 Bajaj Energy Private Limited (Utraula Unit-1 & II) CCL 90 0.39 11/21/2012 yes
14 2012-13 Bina TPP U(1-2)/JP Power Venture Ltd.*
CCL
500
0.648 11/26/2012 yes
SECL 0.705 2/15/2013 yes
15 2011-12 Maithon Power Limited, Maithon Right Bank TPS U-lI CCL 525 1.975 9/18/2012 yes
16 2009-10 Chandrapura Unit-7 CCL 250 1.03 12/11/2012 yes
17 2011-12 Harduaganj U#8 CCL 250 2.057 1/9/2013 yes
18 2012-13 Harduaganj U#9 CCL 250 yes
19 2009-10 Suratgarh, Unit-6 SECL 250 1.204 4/24/2012 No
20 2009-10 Kota Unit-7 SECL 195 0.958 4/24/2012 No
21 2009-10 Chabra Unit-I SECL 250 2.312 4/24/2012 No
22 2010-11 Chabra Unit-ll SECL 250 No
23 2012-13 Amaravati TPS U#1 SECL 270 yes
24 2013-14 Amaravati TPS U#2 SECL 270 4.975 22/12/2012 & 19/03/2013 yes
25 2013-14 Amaravati TPS U#3 SECL 270 yes
26 2014-15 Amaravati TPS U#4&#5 SECL 540 yes
27 2012-13 Tiroda TPP-I (U # 1) Adani Power SECL 660 4.552 28/12/2012 & 19/03/2013 No
28 2012-13 Tiroda TPP-I(U # 2) Adani Power SECL 520 No
29 2011-12 Anapara C Unit -t NCL 600 3.833 4/24/2012 yes
30 2011-12 Anapara C Unit -II NCL 600 yes
31 2009-10 Budge Budge III Unit 3 *
BCCL
250
0.41 11/20/2012 yes
ECL 0.383 1/8/2013 yes
32 2011-12 Matthon Right Bank TPS Unit 1 BCCL 525 1.659 1/16/2013 yes
33 2012-13 Parichha Extn. Project Unit No.- 5 BCCL 250 1.863 11/22/2012 yes
34 2012-13 Parichha Extn. Project Unit No.- 6 BCCL 250 yes
35 2011-12 Mundra Adani Ph III Unit-1 MCI 660 2.135 2/12/2013 No
35 2011-12 Mundra Adani Ph Ill Unit-2 MCL 660 2.135 No
37 2011-12 Mundra Adani Ph III Unit-3 MCL 660 2.135 No
38 2010-11 Sterlite Energy Unit-2 MCL 600 2.57 8/27/2013 yes
39 2011-12 Kodarma Unit-1 MCL 500 2.31 12/6/2012 yes
40 2012-13 Kodarma Unit-II MCL 500 2.31 12/6/2012 yes
41 2010-11 Rayalaseema St-lll, Unit V MCL 210 1.01 12/19/2012 yes
42 2011-12 Kothagudam - Stage VI MCL 500 2.312 12/19/2012 yes
43 2009-10 Dr.N. Tata Rao TPP-IV MCL 500 2.312 12/19/2012 yes
44 2012-13 Mettur Ext Unit-1 MCL 600 2.315 12/21/2012 No
45 2012-13 Satpura TPP Ext Units 10 WCL 250 1.851 1/2/2013 No
46 2013-14 Satpura TPP Ext Units 11 250 No
47 2010-11 Wardha Warora Units 1-3 WCL 405 1.625 4/3/2012 No
48 2011-12 Wardha Warora Unit-4 WCL 135 No
49 2012-13 Korba West TPP III Unit-5 SECL 500 2.312 1/10/2013 yes
50 2013-14 Shree Singhaji (Malwa) TPP Units 1&2 SECL 600 4.994 1/24/2013 No
51 2013-14 Derang TPP Unit-1 MCL 600 0.319 1/24/2013 yes
52 2009-10 New Parli Unit-2 MCL 250 1.204 1/31/2013 yes
53 2009-10 Paras Ext Unit-2 MCL 250 1.204 1/31/2013 yes
54 2011-12 Khaperkheda Unit-5 MCL 500 2.312 1/31/2013 yes
55 2011-12 Bhusawal Unit-4 MCL 500 2.312 1/31/2013 yes
56 2011-12 Bhusawal Unit-S MCL 500 2.312 1/31/2013 yes
57 2014-15 AnparaD-Unit l&ll NCL 500 1.77 2/2/2013 yes
58 2012-13 EMCO Warora TPP Unit 1 SECL 300 0.866 2/22/2013 yes
59 2014-15 Jhabua TPP Unit-1 *
SECL
600
0.711 8/23/2013 yes
MCL 0.202 3/8/2013 yes
60 2010-11 Raichur Unit-8 MCL 250 1.011 3/22/2013 No
61 2014-15 Anuppur TPS(U# 1&2) SECL 600 1.498 3/26/2013 yes
62 2012-13 GMR Kamlanaga Energy # Unit-1 MCL 350 1.819 3/26/2013 yes
63 2013-14 GMR Kamlanaga Energy # Unit-2 MCL 150 yes
64 2013-14 Nabha TPP Unit-1 SECL 700 2.775 5/11/2013 yes
65 2013-14 North Chennai Ext Unit-1 MCL 600 2.315 6/5/2013 No
66 2012-13 North Chennai Ext. Unit-2 MCL 600 2.315 6/5/2013 No
67 2014-15 Painampuram TPP Unit-1 MCL 660 2.137 6/22/2013 yes
68 2010-11 Farakka Unit-6 ECL 500 2.312 7/11/2013 No
69 2009-10 Kahalgaon St.Il Unit-7 ECL 500 2.312 7/11/2013 No
70 2009-10 Dadri Ext Unit-5 ECL 490 1.667 9/7/2013 No
71 2010-11 Dadri Ext Unit-6 ECL 490 1.667 9/7/2013 No
72 2010-11 Korba III Unit-7 SECL 500 2.312 7/17/2013 No
73 2010-11 Simhadri Unit-3 MCL 500 2.312 7/17/2013 No
74 2011-12 Simhadri Unit-4 MCL 500 2.31 7/17/2013 No
75 2012-13 Mauda Unit-1 MCL 500 2.31 7/17/2013 No
39
November 2013
Sl. No.
Year of Commis-
sioning as per
MOC List
Name of TPS Company
Linked
Capacity
FSA Qty
(Mt)
Date of FSA
Acceptance of
Import Coal via
Schedule VII
76 2014-15 Bongaigaon TPP Unit-1 *
ECL
250
0.2 7/17/2013 No
NEC 0.625 8/8/2013 No
77 2014-15 Bongaigaon TPP Unit-2 *
NEC
250
0.625 8/8/2013 No
ECL 0.2 7/17/2013 No
78 2014-15 Barn TPP Unit-1 CO 660 3.333 7/17/2013 No
79 2010-11 Indira Gandhi Aravali/Jhajjar Unit-1 *
MCL
500
1.302 7/23/2013 No
ECL 0.333 7/18/2013 No
NCI 0.333 9/5/2013
80 2011-12 Indira Gandhi Aravali/Jhajjar Unit-2 *
MCL
500
1.302 7/23/2013 No
ECL 0.333 7/18/2013 No
NCL 0.333 9/5/2013
81 2012-13 Indira Gandhi Aravali/ Jhajjar Unit-3 *
MCL
500
1.302 7/23/2013 No
ECL 0.333 7/18/2013 No
NCL 0.333 9/5/2013
82 2011-12 Durgapur Steel Unit-2 BCCL 500 1.756 7/19/2013 yes
83 2011-12 Vailur Unit-1 MCL 500 2.31 7/24/2013 No
84 2012-13 Vallur Unit-2 MCL 500 2.31 7/24/2013 No
85 2013-14 Ind Bharat TPP (U#1)-(without PPA) MCL 350 0 8/8/2013 yes
86 2014-15 Ind Bharat TPP (U#2)-(without PPA) MCL 350 0 yes
87 2013-14 EMCOWaroraTPPUnit2 SECL 270 0.65 8/7/2013 yes
88 2014-15 Haldia TPP Unit-1 MCL 300 1.286 8/21/2013 yes
89 2014-15 Haldia TPP U-2 MCL 300 1.286 8/21/2013 yes
90 2013-14 Avantha Bhandar TPP U-1 (Without PPA) SECL 600 0 8/23/2013 yes
91 2014-15 Painampuram TPP Unit-2 MCL 660 0.406 8/23/2013 yes
92 2013-14 Nasik TPP-1U 1-2 (Without PPA) *
MCL
540
0 8/26/2013 yes
SECL 0 9/3/2013
S3 2014-15 Nasik TPP -1 U 3-4 (Without PPA) *
MCL
540
0 8/26/2013 yes
SECL 0 9/3/2013
94 2013-14 Vizag TPP (Hinduja) U-l MCL 520 2.312 8/27/2013 yes
95 2014-15 Vizag TPP (Hinduja) U-2 MCL 520 2.312 8/27/2013 yes
96 2014-15 Matrishi (Corporate Power Limited)U-1-2 (Without PPA) CCL 540 0 8/27/2013 No
97 2012-13 Bela Unit 1 (Without PPA)*
SECL
270
0 8/28/2013 No
MCL 0 8/26/2013 yes
98 2009-10 Pathadi (LANCO) Unit-2 (Without PPA) SECL 300 0 8/28/2013 yes
99 2014-15 Lanco Amarkantak U-3-4 (Without PPA) SECL 1320 0 8/28/2013 yes
100 2014-15 Bandakhar TPP (Maruti Clean Coal) (Without PPA) SECL 300 0 8/28/2013 yes
101 2014-15 KVK Niianchal U-1 (Without PPA) MCL 350 0 8/28/2013 yes
102 2013-14 Raigarh TPP (Jindal Power) U-l (Without PPA)*
MCL
600
0 8/28/2013 yes
SECL 0 8/29/2013 yes
103 2014-15 Raigarh TPP (Jindal Power) U-2 (Without PPA)*
MCL
600
0 8/28/2013 yes
SECL 0 8/29/2013 yes
104 2013-14 Balco Unit-1-2 (Without PPA) SECL 600 0 8/28/2013 yes
105 2013-14 DB Power Chhattisgarh U-1 (Without PPA) SECL 600 0 8/29/2013 yes
106 2009-10 RG TPS, Hissar U-1*
MCL
600
1.28 8/31/2013 No
ECL 0.364 8/29/2013 No
107 2010-11 RG TPS, Hissar U-2*
MCL
600
1.28 8/31/2013 No
ECL 0.364 8/29/2013 No
108 2014-15 Bara TPP U -1-2 NCL 1320 6.95 8/29/2013 yes
109 2014-15 Bara TPP U-3 NCL 660 8/29/2013 yes
110 2014-15 Nabinagar TPP U-1 CCL 250 1.25 8/29/2013 No
111 2014-15 Nabinagar TPP U-1 CCL 250 1.25 8/29/2013 No
112 2011-12 Sipat Unit-1 SECL 660 3.052 9/1/2013 No
113 2011-12 Sipat Unit-2 SECL 660 3.052 9/1/2013 No
114 2012-13 Sipat Unit - 3 SECL 660 3.052 9/1/2013 No
115 2013-14 VailurUnit-3 MCL 500 1.929 8/30/2013 No
116 2014-15 Thamminapatnam TPP U-3 (Without PPA) MCL 350 0 8/31/2013 No
117 2012-13 Vindhyachal TPP IV U 11,12 NCL 1000 3.189 9/2/2013 No
118 2012-13 Rihand TPP-III U-5 NCL 500 1.77 9/2/2013 No
119 2013-14 Rihand III U-6 NCL 500 1.595 9/2/2013 No
120 2013-14 Talwandi Sano Unit 1 MCL 660 9/4/2013 yes
121 2014-15 Talwandi Sabo Unit 2 MCL 660 7.72 9/4/2013 yes
122 2014-15 Talwandi Sabo Unit 3 MCI 660 9/4/2013 yes
123 2014-15 Nabha TPP U-2 SECL 700 2.775 9/4/2013 yes
124 2012-13 Mauda Unit-2 WCL 500 1.778 9/4/2013 No
125 2011-12 Durgapur Steel U-1 CCL 500 1.975 9/6/2013 yes
126 2013-14 Muzaffarpur Ext. TPP U3 CCL 195 1.604 9/6/2013 No
127 2014-15 Muzaffarpur Ext. TPP U 4 CCL 195 9/6/2013 No
128 2014-15 Damodaran Sanjeevaiah (Krishnapatnatn) Unit-1 MCL 800 2.5 9/6/2013 yes
129 2014-15 Damodaran Sanjeevaiah (Krishnapatnam) Unit-2 MCL 800 2.5 9/6/2013 yes
130 2010-11 Sterlite Energy U#1 MCL 600 2.315 09/10/2011 (50% Model)
131 2011-12 Sterlite Energy U#3 MCL 200 0.771 09/10/2011 (50% Model)
132 2009-10 Pathadi (LANCO) Unit-1 SECL 300 1.34 9/18/2013 yes
133 2014-15 Binjkote TPP U-l-2 (without PPA) SECL 600 0 23/08/2013 & 23/09/2013 No
134 2014-15 Uchpinda Unit -1 - 2 (without PPA) SECL 700 0 3/9/2013 & 23/09/2013 yes
135 2014-15 Uchpinda U-3 (without PPA) SECL 200 0 9/23/2013 yes
136 2014-15 Bokaro TPP A Exp U-1 CCL 500 2.312 9/23/2013 yes
137 2009-10 Bhiiai JV Unit-I SECL 250 1.204 9/24/2013 No
138 2009-10 Bhilai JV Unit-2 SECL 250 1.204 9/24/2013 No
139 2013-14 Tuticorin Unit-1 MCL 500 1.5 9/25/2013 No
140 2014-15 Tuticorin Unit-2 MCL 500 1.5 9/25/2013 No
Total 64685 205.915
40
CoverStory
November 2013
Just at a time when Mukesh Ambani-
led Reliance Industries Limited (RIL)
had become the frst private sector
company to clock a turnover of Rs 1
lakh crore in just three months for the
quarter ended September, it has been
slapped with a notice by the Supreme
Court (SC) for failure to honour its
commitment made to the government
under a production sharing contract
(PSC) for gas supply from Krishna-
Godavari D-6 block. On September 29,
the Supreme Court issued notice to the
Centre, Reliance Industries and others
on a public interest litigation (PIL)
fled by a non-government organisation
(NGO) Common Cause and others
seeking a direction to the Union of
Supreme Court notice to government to cancel production sharing contract of RILs D-6 block
Reliance should relinquish area, pay penalty of $4.1 billion, demands Gurudas Dasgupta
India to cancel the production sharing
contract (PSC) between Reliance
Industries and Niko Resources for
extracting gas in the KG-D6 block.
The petition sought a thorough
investigation by a separate
investigating team or the Central
Bureau of Investigation (CBI) under
the supervision of the Supreme
Second notice to govt
on gas price issue
by Neeraj Dhankher
41
November 2013
Court into the alleged high-level
collusion between RIL and the
political establishment, including lack
of action against RIL for hoarding
of gas, increasing the gas price to
$4.2 mmbtu amid a subsisting bid to
National Thermal Power Corporation
(NTPC) for 17 years at $2.34 mmbtu
and subsequently doubling the price
to $8.4 mmbtu, giving retrospective
tax beneft and not insisting that RIL
relinquish the area.
Ever since the Cabinet Committee
on Economic Affairs (CCEA) had
approved the doubling of domestic
gas prices from $4.2 to $8.4 per
mmbtu on June 28, there have been
growing murmurs of RIL being
favoured despite its failure to honour
previous commitments. A Bench
of Chief Justice P. Sathasivam and
Justice Ranjan Gogoi, after hearing
counsel Prashant Bhushan, has issued
a notice to the company returnable in
four weeks. The Bench, which had
earlier issued notice to the Centre on
July 29, on a PIL fled by member of
Parliament from Communist Party of
India (CPI) Gurudas Dasgupta, has
directed the present petition to be
tagged with that case. Dasgupta has
challenged the Cabinet decision to
raise natural gas prices. The higher
prices, to be effective from 1 April
2014, will adversely impact power,
fertilizers, minerals and steel sector
and beneft gas producers including
RIL and state-run Oil and Natural Gas
Corp (ONGC).
The petition questions the
acceptance of higher prices without
strict scrutiny of its impact on the
economy in general and the petroleum
and fertilizer sectors in particular. It
seeks an additional penalty of $4.1
billion on the stakeholders in the KG
D-6 block for alleged suppression of
gas output in anticipation of higher
prices. RIL has initiated arbitration
proceedings against the decision
saying its contract allows full cost
recovery and that output fell because
and complete the arbitration within
six months.
The CPI petition alleges that,
when the present petroleum minister
took charge he stalled the arbitration
thus preventing the recovery of this
amount from the sale of natural gas.
Suggesting that an exception had been
made in RILs case for the D6 block,
CAG had earlier said the explorer was
allowed to retain the entire 7,645 sq.
km area and enter the second and the
third phases without relinquishing
25 per cent each of the total contract
area at the end of phase I and phase II
in June 2004 and 2005, respectively,
in contravention of the production-
sharing contract.
Welcoming the courts decision
to send a notice to RIL, Dasgupta
said that in earlier discussions in the
Lok Sabha, he had pointed out that
when the failure of the executive was
bound to make room for the judiciary.
The manner in which arbitrarily
prices were fxed on (the basis of the)
Rangarajan Committee formula, is a
matter of grave concern, he said. He
added that he had already written a
letter to the Prime Minister, apprising
him of the increase but no assurance
was given (by the Prime Minister) to
review the decision. This insensitivity
of the government is undermining
the democracy.
A panel headed by C. Rangarajan,
head of the Prime Ministers
economic advisory council, had
suggested a pricing formula based
on which the controversial gas price
decision was taken.
In a press statement issued on
26 July, Union petroleum minister
Veerappa Moily had said, the
government needs to move ahead and
take bold decisions and should not be
bogged down by the fear of CBI or
CAG. He had also stated that there
was an urgent need to cut bureaucratic
delays, saying the process should not
dominate; instead the focus should
be on delivery.
of geological complexity. Arguing
for Dasgupta, senior advocate Colin
Gonsalves, has said that the new
minister had also put an end to
arbitration seeking recovery of huge
penalties from RIL. The petition
alleges that the Cabinet hastily raised
prices from next April as it would put
an unreasonable burden on the next
government after general elections.
Dasguptas petition
The KG-D6 controversy arose after
the Comptroller and Auditor General
(CAG) of India said in a report that
RIL had breached some terms of its
contract with the government. The
company had failed to meet its own
target for gas generation in the KG-
D6 felds, despite having claimed
associated costs as deductions before
estimating the proft to be shared
with the government.
The petroleum ministry has
proposed to deny RIL $1.24 billion
in costs. It wants to stop RIL from
recovering this cost from the
deepwater KG-D6 felds in the Bay
of Bengal for 2010-11 and 2011-12.
The issue is in arbitration. Dasguptas
petition also requests the court that
arbitrators, earlier appointed by the
government and RIL appoint a
third arbitrator (umpire) and proceed
with the arbitration expeditiously
Ever since the Cabinet
Committee on Economic
Affairs (CCEA) had
approved the doubling
of domestic gas prices
from $4.2 to $8.4
per mmbtu on June
28, there have been
growing murmurs of RIL
being favoured despite
its failure to honour
previous commitments.
42
CoverStory
November 2013
production from KG-D6 block.
Dasgupta, a Lok Sabha member
from West Bengal, also asked Singh
to direct the petroleum ministry to take
immediate steps to ensure that RIL was
made to pay $4.2 mbtu price for the
shortfall of gas from KG-D6 facility
even after April 2014.
In his letter Dasgupta, while
enclosing a copy of the report of
Gopalakrishnan Committee, set up to
study the decline in gas production
from the KG basin block, said
the report clearly nailed the lie of
geological uncertainty being used
by RIL. Since this report had been
accepted by both the Directorate
General of Hydrocarbons (DGH)
and the petroleum ministry, the
government should not succumb to
the devious ploy of the petroleum
minister to reopen the issue to give
undue beneft to RIL and weaken the
government case in arbitration.
You are aware that the government
had imposed a penalty of $1 billion
on RIL for deliberate default in
production. I had pointed out that
this amount works out to $1.8 billion
for 2012-13 and $2.4 billion for
the current year due to continuing
shortfalls. It is learnt that DGH
has agreed with my contention and
recommended penalty of $1.8 billion
for 2012-13. However, the petroleum
ministry has not issued a fresh notice
to RIL based on DGHs suggestion
and the petroleum minister is stalling
the matter. I would urge you to the
direct the petroleum ministry to issue
a fresh notice to RIL immediately,
both for last year and current year,
Dasgupta added.
CAG reported breach rst
At the heart of the controversies was
CAG report submitted in September
2011. The national auditor had
castigated the oil ministry for allowing
Reliance Industries to retain its
entire eastern offshore KG-D6 block
in contravention of the production
KG D6: A chequered history
The KG-D6 block of RIL has had a troubled history. In 2005, NTPC had
dragged RIL into the Bombay High Court claiming the private major
refused to honour a 2004 agreement to supply gas at $2.34.
Oct 2002: NTPC published Request for Qualification (RFQ) inviting
prospective bidders to submit their proposals for qualification for
supply of gas for its power plants at Kewas and Gandhar
May 14, 2004: RIL sends letter to NTPC in relation to its bid for
supplying gas accepting the provisions of RFP documents with
certain amendments
June 24, 2004: NTPC writes to RIL declining to accept the request for
amending clause 5 of the Letter of Intent (LOI) and expresses desire
that the GSPA (Gas Supply & Purchase Agreement) be executed within
30 days instead of 60 days
Dec 20, 2005: NTPC files a suit in the Bombay High Court seeking
direction for enforcement of its contract with RIL to supply KG
gas, claiming RIL refused to honour a 2004 agreement to supply
gas at $2.34
Oct 31, 2007: RIL files written statement before the high court
Jan13, 2009: Union of India filed its affidavit in the high court in RIL
vs RNRL case
April 22, 2009: Single judge bench of the high court allows RIL
application to amend its written statement
May 13, 2008: NPTC files appeal before the Division bench of the high
court challenging permission to RIL to amend its written statement
in its dispute
July 30, 2009: The Division bench allows RIL to amend its written
statement recording that the decisions of the EGoM on governments
gas utilization policy and gas pricing will have a bearing in
NTPC vs RIL case.
Sep 5, 2009: NTPC files Special Leave Petition in the Supreme Court.
September 14, 2009: RNRL becomes third party, seeks Supreme
Courts permission to be a party to power NTPCs case against
Reliance Industries for getting gas at a contracted price, saying its case
against the Mukesh Ambani-led firm was similar
In his letter Dasgupta,
enclosing a copy
of the report of
Gopalakrishnan
Committee, set up to
study decline in gas
production from KG
basin, said the report
clearly nailed the lie of
geological uncertainty
being used by RIL.
Dasguptas letter to PM
Dasgupta has alleged that Moily
helped RIL increase the price of gas
produced from the KG-D6 offshore
gas feld. Moily, on his part, has
alleged that import lobbies were
trying to exert pressure on India
even intimidating ministersnot to
raise the domestic prices of gas and
not to reduce overseas purchases. In
September, Dasgupta had written to
Prime Minister Manmohan Singh
seeking an immediate decision to
impose $2.4 billion penalty on RIL
due to deliberate hoarding of gas
43
November 2013
CAG had sought review of the production sharing
contract (PSC) signed under New Exploration
Licensing Policy (NELP), evolved by the BJP-
led NDA government in 1999, saying the regime
provided inadequate incentives to contractors like
Reliance to reduce capital expenditure.
sharing contract. It faulted the oil
ministry and DGH for allowing
Reliance to retain the entire 7,645 sq
km KG-DWN-98/3 (KG-D6) block
in the Bay of Bengal after the giant
Dhirubhai-1 and 3 gas fnds were
made in 2001.
As per the PSC, Reliance should
have relinquished 25 per cent of the
total area outside the discoveries in
June, 2004, and 2005, but the entire
block was declared as a discovery
area and the company was allowed
to retain it. CAG was also critical of
the government oversight, particularly
on high value procurement decisions,
and sought an "in-depth review" of
10 contracts, including eight awarded
to Aker Group by Reliance on a
single-bid basis.
On charge of gold-plating by RIL,
CAG gave a breather to the contractor.
Notably, CAG had sought review of
the PSC signed under New Exploration
Licensing Policy (NELP), evolved by
the BJP-led NDA government in 1999,
saying the regime provided inadequate
incentives to contractors like Reliance
to reduce capital expenditure. On
the contrary, it provided "substantial
incentive to increase capital
expenditure or 'front-end' capital
expenditure" so that government take
from the blocks is lower.
"Given similar conclusions that two
independent agencies have reached
as regards the adverse impact of the
proft sharing mechanism in protecting
Government of India's share designed
in the late 1990s, there does seem to be
enough ground to revisit the formula,"
it said. For future PSCs, CAG
recommended that the investment-
multiple linkage with the proft sharing
formula be removed.
Rangarajan committee
In the backdrop of the spat between
RIL and petroleum ministry, the
government on May 30, 2012,
announced the constitution of a
committee under the chairmanship
of Prime Minister's Economic
Advisory Councils (PMEAC)
Chairman C. Rangarajan to review the
existing PSCs.
The committee submitted its
report in December 2012, wherein it
recommended that production sharing
contracts with oil companies in future
should be based on the amount of oil
44
CoverStory
November 2013
The audit had hit a
roadblock in 2012
after RIL refused to
accept the exceptional
circumstances
argument advanced by
the petroleum ministry
for the performance
audit and sought an
assurance that it would
be kept completely
confidential and
done under the PSC
provisions.
or gas output that the company was
willing to offer to the government.
Under the new system of bidding, the
company that was willing to offer the
highest amount of oil or gas produced
from the feld would get the contract.
Issues over CAG audit
In September, Rajya Sabha member
from CPI, Tapan Sen, had also
sought Prime Minister Manmohan
Singhs intervention to enforce RILs
cooperation with CAG in the KG D-6
audit exercise, and impose penalty for
shortfall in gas production. In a letter
to Singh, the CPI (M) member had said
he was seeking corrective intervention
from the Prime Minister so that the
contractor (RIL) was disciplined
and made to act as per the approved
development plan and production
sharing contract, pay for its failure for
shortfall in gas production and allow
smooth audit of its KG D-6 block.
In case of failure to do so, the
national assets at its (RILs) disposal
be taken back for exploitation under
direct control of the government-
owned company in the larger
was linked with its strategy of scaling
down production in the name of
geological complexity on the one hand
and its gold plating cost estimate for
the feld-development on the other. The
entire game plan is to create pressure
on getting the natural gas prices
revised upward without any reference
to its actual cost of production to
ensure windfall gains out of handling
this national assets as well as natural
resources, he added.
It may be noted that the audit had
hit a roadblock in 2012 after RIL
refused to accept the exceptional
circumstances argument advanced
by the petroleum ministry for the
performance audit and sought an
assurance that it would be kept
completely confdential and done
under the PSC provisions. It has
also sought an assurance that the
audit would not adversely affect its
economic interests.
The audit had resumed in January
2013, only to be suspended once again
in February following differences
with RIL over scope and extent of the
scrutiny. RIL had claimed that CAG
cannot contractually do a performance
audit on it and that the PSC only
provides for a government-appointed
auditor to verify the reasonableness of
all charges and credits.
In April 2013, CAG had once again
agreed to resume the audit of KG D-6
block following assurances by the
petroleum ministry that the audit team
will have full access to all records,
documents and accounts as provided
under Article 25 of the PSC. The
KG-D6 block is, without doubt, the
biggest and most prolifc gas reservoir
in India. It is in everones interest that
gas available from this feld is brought
out to meet the staggering demand
in the country. It now remains to be
seen if the D-6 feld lives up to its full
potential, and expectation, or not.
national interest, the letter added.
Accusing RIL of stonewalling the
audit exercise, Sen referred to CAG
complaints that RIL had not been
cooperating in the audit process in the
KG-DWN-98/3 block since April /
May 2012, by not providing access to
relevant documents.
I had in my previous letter sought
to impress upon you that RIL's plan
to block the audit process by CAG
Vinod Rai, Former CAG of India
CoverStory | InDepth
45
November 2013
by Neeraj Dhankher
On October 14, the Mukesh Ambani-
led Reliance Industries (RIL) became
the frst private sector frm to report
revenues exceeding `1 lakh crore in a
quarter, joining its public sector peer
Indian Oil Corporation (IOC) which
is the only other Indian company with
this distinction so far.
RIL reported a 14 per cent growth
in revenues to `106,523 crore in the
July-September quarter. The growth
was mainly driven by higher exports
realisation due to a falling rupee.
Our diversifed and integrated
petrochemicals business captured
margins across segmentsdelivering
near record proft levels even as the
domestic economy slowed, said RIL
chairman Ambani.
Nevertheless, its proftability could
not keep pace with revenue growth
as RIL reported its slowest growth in
profts in the last four quarters due
to subdued refnery margins. But it
still beat market expectations with a
marginal 1.5 per cent increase in net
proft to `5,490 crore. It earned $7.70
for every barrel of crude it processed,
compared to $9.50 per barrel a
year earlier and $8.40 per barrel in
the June quarter.
Post announcement of second
quarter results, RIL received a
RIL only private firm to clock
1 lakh crore profit in a quarter
Growth of 14 per cent in revenues at `106,523 crore in July-September quarter
Slowest growth in prots in last four quarters due to subdued renery margins
46
CoverStory | InDepth
November 2013
on-year plus 3 per cent quarter-on-
quarter), in line with our estimates
and marginally above consensus.
Retail business maintained robust
growth with earnings before interest,
taxes, depreciation and amortization
(EBITDA) going up 36 per cent
compared to last quarter to `950
million. US shale gas EBITDA
contribution to RIL was $127 million
in second quarter and we estimate this
to increase to $1.5 billion in 2015-16.
We have raised our 2014-15 forecast
for earnings per share by 1-2 per cent
and target price by 2 per cent to `1,060
favourable response from fnancial
experts and brokerage frms. JP
Morgan has upgraded their
recommendation to Overweight
and revised target price from `800
to `1,000, while CIMB has changed
its recommendation to Neutral
from Underperform. Most other
brokerages have maintained their
current recommendation which is
either Buy/Outperform or Neutral.
The average target price is now
`1,024 per share. And the average
net proft estimate for 2013-14 is at
`22,900 crore.
This is an encouraging sign as the
core business has started contributing
more to proftability. Overall, this has
proved to be a very healthy quarter
from Reliance, said Jagannadham
Thunuguntla, strategist & head of
research, SMC Global Securities.
This is what leading brokerage
houses had to say on RILs second
quarter performance:
Deutsche Bank: Weaker
rupee and robust petchem
margins helped
RIL reported second quarter net proft
of `54.9 billion (+2 per cent year-
Most brokerages
have maintained
their current
recommendation
which is either Buy/
Outperform or Neutral.
The average target
price is now `1,024 per
share. And the average
net profit estimate for
2013-14 is at
` 22,900 crore.
Q2 Performance
Revenue (turnover) increased by
14.2% to `106,523 crore ($17.0
billion)
Exports increased by 34.9% to
`77,429 crore ($12.4 billion)
PBDIT increased to `9,909 crore
($1.6 billion)
Profit before tax increased to `6,871
crore ($1.1 billion)
Cash profit decreased by 1.5% to
Net profit increased by 1.5% to
Gross refining margin at $ 7.7 /bbl
Highlights of Half Years
Performance
Revenue (turnover) increased by
4.7% to `197,112 crore ($31.5
billion)
Exports increased by 19.3% to
PBDIT increased by 4.9% to
Profit before tax increased by 9.9%
to `13,533 crore ($2.2 billion)
Cash profit increased by 3.1% to
Net profit increased by 9.4% to
Gross refining margin at $8.0 /
bbl for the half year ended 30th
September 2013
47
November 2013
to factor in weaker Indian rupee,
partly offset by lower GRM estimate
($8/bbl in 2013-14). We reiterate
Buy on RIL on improving visibility
on monetization of exploration and
production (E&P) discoveries and
implementation of its $12 billion capex
in downstream business.
CLSA: Net prot in line with
our estimates
Lower petchem was offset by higher
other income and lower tax rate. While
ongoing tussle over gas price could
provide near term news fow overhang,
Reliance continues with its E&P capex
which should lead to bottoming of gas
production in 2013-14. It is also on
track to commission all its downstream
expansions by 2015-16. These should
drive doubling of EBITDA in four
years after three years of decline.
Credit Suisse: Headline
numbers in line, volumes
surprise
RIL reported second quarter proft
after tax in line with our estimates.
EBITDA rose 11 per cent sequentially,
driven primarily by better volumes
and an uptick in chemical margins.
The GRM at $7.7/bbl was marginally
below estimates. Higher depreciation
and lower other income (frst quarter
saw one-off gains) hurt proft. Petchem
EBIT is at a 10-quarter high. This is
driven by depreciating currency (11
per cent weaker compared to previous
quarter) and higher volumes (up 8 per
While E&P continues to dominate
headlines, we see RIL as attractively
priced for the long-term. Upgrade to
OW, with a Mar-15 PT of Rs1,000.
Barclays: A good quarter
after a long time
While in line, this masks strong
core operational performance with
EBITDA up 11 per cent compared
to previous quarter and 6 per cent
ahead of our forecast helped by strong
petchem and refning performance. A
strong re-rating may need to wait for
completion of key projects in second
half of 2016 but the near-term risk /
reward appears favourable too, helped
by the seasonal uptrend in margins,
weak rupee and supportive valuations.
We maintain our Equal Weight rating
and `900 PT.
Citi: Petchem stages a smart
recovery but rening muted
Second quarter proft is in in line
with our and consensus expectations,
though in a slight departure from
last two quarters trends, was driven
less by other income (-19 per cent
compared to previous quarter; 27 per
cent of EBITDA versus 34 per cent in
frst quarter) and more by operating
plus currency benefts.
Bank of America Merrill
Lynch: How GRM pan out
key to performance
We expect RILs earnings per share in
2014 to be up just 2 per cent compared
to previous year. Our estimate is 6 per
cent below consensus. Gross refning
margin (GRM) in the frst few days
of second half of 2013-14 is sharply
lower than even $8.2/bbl assumed by
us and rupee is also stronger than `63
assumed by us. Thus how GRM pans
out is key to RILs near-term earnings
outlook and stock performance. We
retain our Neutral rating on RIL.
cent compared to previous quarter)
while petrochemical proftability (in
$/t gross production) remains well
below 2011-12 levels. Quarterly
refning throughput is at an all-time
high (17.7 million tonne). Exports
have stayed elevated in second quarter,
likely on subdued domestic demand.
JP Morgan: Organic growth
near trough valuations, we
upgrade RIL to OW
We remain positive on RILs core
business expansion strategy, and we
expect resultant organic earnings
growth to drive stock performance.
View from brokerages
Deutsche Bank: Weaker rupee
and robust petchem margins
helped
Barclays: A good quarter after
a long time
Credit Suisse: Headline
numbers in line, volumes
surprise
Citi: Petchem stages a smart
recovery but rening muted
JP Morgan: Organic growth
near trough valuations, we
upgrade RIL to OW
Bank of America Merrill
Lynch: How GRM pan out key
to performance
CLSA: Net prot in line with
our estimates
NewsBriefs | Oil & Gas
48
November 2013
10th round of NELP
January date for oil hunt
The government plans to hold the 10th round
of oil and gas block auction in January and
expects a large number of global players to
participate to take advantage of the new gas
price regime that will come into effect from
April. The ministry was planning to offer 68
blocks, of which 25 would be deep water,
20 shallow water and 23 onland blocks. This
will be the second highest offering of blocks
since the introduction of Nelp in 1999. The
govt hopeful that the new price regime will
encourage global majors to invest in India.
ONGC finds rich reserves of oil
In KG Basin block
Oil and Natural Gas Corporation (ONGC),
facing a prolonged stagnancy in oil
production, has got a shot in the arm with
one of its blocks in the Krishna-Godavari
basin off the Andhra Pradesh coast, close
to Reliance Industries much-touted KG-D6
field, having been found to hold reserves
four times the previous estimate, at 100
million tonnes (mt). The PSU has stumbled
upon rich in-place reserves of oil in block
KG-DWN-98/2, earlier believed to hold
predominantly gas.
Oil and gas blocks in Bangladesh
ONGC Videsh and Oil India bag two
ONGC Videsh and Oil India have bagged
two shallow water oil and gas blocks in
Bangladesh. The 50:50 joint venture of OVL,
the overseas arm of state-owned ONGC, and
OIL has been awarded shallow water blocks
SS-4 and SS09 in Bangladesh, oil minister M
Veerappa Moily said. The PSC was initiated
in September. OVL which had gone into a
shell after its 2008 acquisition of Russia-
focused Imperial Energy was criticised, has
turned into an aggressive competition on the
international scene during past one year.
RIL, Cairn India eye city gas business
Cairn India keen to join hands with GAIL
Private sector energy companies are
firming up plans to venture into city gas
distribution (CGD) - supplying auto gas (or
CNG) for vehicles and piped gas (PNG)
into kitchens. While Mukesh Ambanis
Reliance Industries and its global partner
BP Plc are already working on plans to
foray into CGD business, NRI billionaire
Anil Agrawal-promoted Cairn India is also
said to be keen to join hands with state-
owned GAIL India Ltd - a leader in the
CGD segment.
More work on KG-D6
RIL, BP commit $8-10 billion
Reliance Industries (RIL)s chairman Mukesh
Ambani and British Petroleum (BP)s CEO
Bob Dudley, representing their joint venture
(JV) that operates the KG-D6 gas and oil
basin off the east coast, met the minister
concerned, Veerappa Moily to sort out
matters relating to the delay in getting a
higher price for gas produced from the basin.
Canadas Niko Resources is the minority
partner in the 60:30:10 JV with RIL and BP.
The two promised investment worth $8-10
billion over the next four years in India.
Videocon stake in Mozambique gas field
OVL, OIL to split equally
ONGC Videsh and Oil India will split equally
the 10 per cent stake they acquired in a giant
Mozambique gas field from Videocon Group
for $2.475 billion. The two had jointly bought
Videocon Groups 10 per cent interest in the
Rovuma Area-1 for $2.475 billion. This stake
was originally envisaged to be split in 60:40
ratio with OVL getting the larger share.But
with OVL on its own buying US energy major
Anadarko Petroleums 10 per cent stake in
the same block for $2.64 billion, the Videocon
stake will be split 50:50.
Paradip-Ranchi-Raipur pipeline
IOC gets forest clearance
The forest and environment department of the
Odisha government has given its consent for
diversion of 70.42 hectare (ha) of forest land
for the `1793-crore Paradip-Ranchi-Raipur
pipeline of Indian Oil Corporation Ltd (IOCL).
The pipeline will be used for evacuating
petroleum products from IOCLs upcoming
refinery at Paradip to Ranchi and Raipur. The
state governments approval follows the final
nod by the Union ministry of environment
and forest (MoEF) in September this year for
diverting forest land.
OMCs ethanol purchase
CCI refuses to stop project
Competition Commission of India has
dismissed a complaint which asked for
staying the ongoing process for procuring
ethanol from sugar companies for the
petrol blending programme. It had been
filed against BPCL and Indian Sugar Mills
Association, among others. It had been made
by Jubilant Life Sciences and Wave Distilleries
and Breweries. The complaint sought to
restrain OMCs and ethanol manufacturers
from implementing the contracts issued in
pursuance of the tender opened in January.
BHP Billiton exits India oil, gas blocks
Company surrenders all except one
BHP Billiton Ltd, the worlds largest
miner, has surrendered 10 oil and gas
exploratory fields it won at government
auctions because its permission to
explore was not cleared by Indias
defence establishment. An exodus of
overseas firms, because clearances
regarding blocks awarded to them under
the new exploration licensing policy
(Nelp) are delayed or denied, was feared
by the oil ministry as it would hamper
Indias quest for energy security.
Coal Gasification Project at Talcher
GAIL India to participate
GAIL board has provided its in-principle
approval for participation in the upstream
Coal Gasification Plant with a minor stake
in downstream fertilizer and ammonium
nitrate complex proposed to be setup for
revival of Talcher Fertilizer plant of Fertilizer
Corporation of India Ltd (FCIL). GAIL had
been pursuing opportunities for setting
up of an integrated Coal gasification
cum fertilizer ammonium nitrate plant
at Talcher in partnership with RCF and
Coal India Limited.
Downstream oil and gas projects
McNally to tie up with Engineers India
McNally Bharat Engineering Co Ltd
(MBE), B. M. Khaitan Groups industrial
engineering services company, is set to
enter into a technological collaboration with
construction major Engineers India (EIL)
for jointly executing downstream oil and
gas projects. According to sources, the
agreement is likely to be signed next month
after the boards of the two companies
formally approve the proposal. The State-
owned EIL is the countrys premier turnkey
contractor in oil and gas sector.
India, Finland in pact to produce ethanol
ONGC, Chempolis to set up pilot project
India signed an agreement with Finland to
produce indigenous ethanol to promote use
of clean technologies and cut down the oil
import bill. Oil and Natural Gas Corporation
(ONGC) and Finnish clean technology
firm Chempolis will set up a pilot project
to produce ethanol, bio-chemicals and
bio-coal from biomass residual matters. The
agreement was inked by Finnish Minister
for European Affairs Alexander Stubb and
Minister of State for Petroleum and Natural
Gas Panabaka Lakshmi.
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50
InDepth
November 2013
Setting up a refnery in the middle of
a desert is no mean achievement. But
Hindustan Petroleum Corporation
Limited (HPCL) has shown both
resolve and determination in doing
so against all odds. The company has
begun work on setting up a 9-mmtpa
well-head refnery at Barmer in
Rajasthan at an estimated cost of
`37,230 crore. HPCL will have a 74
per cent stake in the project and the
balance 26 per cent will be owned
by the government of Rajasthan. The
refnery will source its entire crude
domestically from Cairn Indias nearby
felds in Barmer.
After the discovery of oil and
commencement of production from the
Barmer oil felds in 2005, ONGC had
proposed a 4.5 mmtpa grassroot fuels
refnery in Barmer. The project was
found to be unviable on standalone basis.
Subsequently, the committee constituted
by the Rajasthan government and
headed by former petroleum secretary
S.C. Tripathi had recommended that
incentives be given by state to make the
project viable. The value of incentives
then approved by the state for achieving
a threshold IRR of 12 per cent for the 4.5
mmtpa refnery was `1,343 crore at 2005
prices. The same at current crude and
products prices (2011-12) would be equal
to `2,072 crore. However, ONGC did not
pursue the project because it wanted to
restrict its equity in the project to 26 per
cent and desired that an existing public
sector refning and marketing company
should take a lead role in establishing a
refnery at Barmer by taking up 26 per
cent equity. The government of Rajasthan
did not agree to the proposal of ONGC.
Moreover, the project could not proceed
at that point of time due to non-viability
of the refnery mainly on account of its
low capacity i.e. 4.5 mmtpa and also non-
receipt of adequate incentives by the state
government.
However, HPCL decided to explore
the feasibility of setting up a 9 mmtpa
refnery in Rajasthan considering the
current and future indigenous crude
availability from the Rajasthan feld
as well as the special characteristics
of Rajasthan crude in addition to
expanding / adding capacity in its
existing refneries at Mumbai and
Visakhapatnam.
The company has an installed crude
refning capacity of 14.9 mmtpa with
two refneries at Mumbai and Visakh.
Additionally, HMEL, a joint venture
between HPCL and Mittal Energy, has
commissioned the 9 mmtpa grass root
refnery at Bathinda in 2011-12. As
per a strategy developed by HPCL, the
projected sales volume of HPCL for
the year 2016-17 has been estimated at
42 mmtpa. To bridge the refnery and
marketing volume of projected
sales, the company decided to
venture into this project.
by Neeraj Dhankher
Barmer refinery remains a
rose with several thorns
Forex risks need to be mitigated, says petroleum ministry
Impact of change in pricing regime for petroleum products needs examination
51
November 2013
incentives by the Rajasthan government
after 15 years.
While concerns remain over viability,
the Barmer Refnery is an important
project for the country as well as the state
of Rajasthan. In its study on economic
benefts of putting up the Refnery and
its impact on the economy of the State
of Rajasthan, the National Council
of Applied and Economic Research
(NCAER) has noted that the refnery-
cum-petrochemical complex designed
to produce petrochemical products will
have a substantial impact on the economy
of the state of Rajasthan.
The proposed refnery has the
potential to become an anchor industry
for developing downstream and other
service sector industries in and around
the region. Due to its very nature,
petrochemicals is an enabler industry
playing a vital role in the functioning of
virtually all key sectors in the economy
including packaging, agriculture,
infrastructure, healthcare, textiles,
automobile and consumer goods.
Questions on viability
Since the frst day of inception, questions
have been asked on the viability of the
refnery project. The latest observation
in this regard has been made by the
internal fnance division of the petroleum
ministry in the context of changing
global economic scenario vis-a-vis rising
crude oil prices and devaluation of rupee.
It may be noted that the project cost of
`37,230 crore was estimated when the
exchange rate was `55 against dollar.
The rate has since shot up and hence the
foreign exchange cost component which
is 15 per cent of the total cost, is expected
to be higher.
The debt equity considered for the
project is 1.5:1. With this, the total
debt comes to `22,337 crore and total
equity to `14,892 crore. As per the
agreement signed between HPCL and
the state government, HPCLs equity
contribution works out to `11,020
crore at 74 per cent equity, and that of
the state at `3,872 crore at 26 per cent
equity. The project debt of `22,337
crore will initially be tied up as rupee
term loan (RTL) from domestic banks,
with an option for subsequent reduction
/ replacement of RTL to the extent
of 30 per cent to 50 per cent of it by
ECB, depending on prevailing market
conditions on availability and cost of
ECB funding.
Foreign exchange component will
play a signifcant role in the project
economics given that part of the debt
may be raised as external commercial
borrowing (ECB), the repayment of
which is only going to get costlier if the
Rupee continues to decline further. As a
result, the ministry has asked HPCL to
conduct a sensitivity analysis to factor in
cost overruns by at least 20 per cent or
more on account of forex risks.
The fnance ministry has also raised
concerns on the viability of the proposed
Rajasthan Refnery. The ministry has
asked HPCL to re-evaluate the project
economics in the light of a changed
pricing regime for petroleum products
from trade parity pricing to export
parity pricing. The ministry has also
asked HPCL to factor in the impact of
diesel price deregulation on the projects
viability, along with the withdrawal of
Some unanswered questions
Justification for setting up 9 mmtpa refinery in Barmer against the present
trend of setting up higher capacity refineries of 15 mmtpa or above as
economically viable
Comparison of cost of the project per mmtpa viz. a viz. other similar
refineries in India and abroad
Working out proposed interest rate of 6.5 per cent of external commercial
borrowing keeping in view the change in the market rate in recent times
Schedule of release of equity / loan by the government of Rajasthan for the
project as well as mechanism for ensuring timely release and safeguards
to be adopted in case the payments are not released in time
Confirmation on firm commitment from the government of Rajasthan
to fulfill the entire requirement of water for the project and alternate
arrangements in times of yearly closure of the canal for maintenance and
for other reasons.
1. Name of the
project
Rajasthan Refinery
Project (9-mmtpa
capacity)
2. Location of
project
Pachpadra,
Barmer district,
Rajasthan
3. Estimated
cost
`37,230 crore
(March 2013 level)
4. Expected
gross refining
margin
$15 per mmbtu
5. Annual
operating cost
`1,084 crore
6. Implementing
agency
HPCL Rajasthan
Refinery Limited
(a joint venture
company between
Hindustan
Petroleum
Corporation
Limited and the
government of
Rajasthan)
7. Proposed
date of
mechanical
completion
Four years from
zero date
Since day questions
have been asked on
the viability of the
project. The latest
observation has is
from internal finance
division of petroleum
ministry in the context
of changing global
economic scenario
vis-a-vis rising crude
prices and devaluation
of rupee.
InConversation
52
November 2013
were giving blocks on nomination
basis. Then lot of multinational
companies came to India, after
which we started the NELP
bidding round. So it has been a
learning process. In this learning
process, whatever perceived lacuna
was there is being addressed. As far
as our bidding is concerned, it remains
the same. Only thing is that with new
reforms, and removal of bottlenecks,
transparency has increased. So we will
be participating in the same way as we
have been doing before. And we will
participate more aggressively this time.
There is still some uncertainty
among E&P contractors on the
type of contractual regime to
be in place for future bidding
rounds. What are your views and
concerns on that?
Worldwide, both regimesproduction
sharing contracts (PSC) as well as
Satchidananda Rath
Director - Operations, Oil India Limited
Oil India Limited (OIL) is one of the few companies which
have been permitted by the government to explore shale oil
and gas in India. The company is optimistic about turning a
new leaf by replicating the success story of shale gas in India.
Speaking to Neeraj Dhankher, OILs Director (Operations),
Satchidananda Rath talks of the companys plans to go for
aggressive exploration of oil and gas assets in India as well as
overseas and its focus areas in future. Excerpts:
We want to be part of shale
gas success story in India
The government recently came
out with the shale gas and oil
exploration policy to give a
boost to production. As per
the policy, only public sector
companies like ONGC and OIL
have been permitted to explore
shale oil and gas initially. What
do you view this as?
The good thing is that shale gas
exploration in India is at least starting.
The government has taken a decision
and both ONGC and OIL will be in
a position to start drilling. We will
have all the permissions so instead of
just waiting for the policy to come;
we can start in the right perspective.
From a strategic perspective, last year
we acquired stake in a shale property
in Colaroda USA of Carrizo Oil and
Gas Inc. We are trying to gain insights
through participation in their project
and our people are posted there. Its
been one year now and that project
is successful. We are going to bring
some of that knowledge from the US
back to India and also collaborate
with Carrizos personnel. In the next
six months or so we will work with a
focused approach for exploring shale
oil and gas in our area of operation,
namely Assam, Rajasthan and partly
in Krishna Godavari onshore where
we have acreage. Already,
we have made an
internal task force
comprising
geoscientists
and drilling
engineers so
that we go in a
very systematic
way to produce
or explore gas at
the earliest. As an E&P
player we have all the hope. What has
been a game changer in the US, we
want to ensure that we also a part of
this success story in India.
The NELP-X bidding rounds are
scheduled to be announced in
January 2014. How do you look
at the forthcoming bidding round
in the backdrop of the recent
reform push by the government
to attract higher participation
and investments?
Overall the reforms have been quite
positive. Initially in pre-NELP era, we
With new
reforms
and removal
of bottlenecks,
transparency
has increased.
53
November 2013
royalty regimeexist. India had been
practicing a somewhat mixed regime.
We are now moving to royalty regime
so there is no problem. I dont think
this will impact our bidding plans
in any way. E&P is a high-risk and
high-reward game. We have to get
new acreage, we have to explore
and we have to take the risk and fnd
new oil and gas. We will continue to
participate. All these reforms that have
come are progressive. We are working
in more than 10 countries in the
world, both developed and developing
countries, which have different
regimes. There are only service
contracts in the Middle East. That
way, whatever is being done in India
is much better than some contracts
existing worldwide.
How is the decision to double
gas prices from $4.2 to $8.4
per mmbtu expected to help oil
and gas exploration as far as
OIL is concerned?
Since we are going to all frontier
areas, deep water and also in hilly
and rough terrains, the cost of drilling
and infrastructure has gone up by
signifcantly over the years. We have
to link gas prices to the cost of our
drilling. We are spending more than $3
onland for some of the gas which we
discovered much earlier. New gas fnd
is on and we need remunerative prices
and also enough cash to invest, else
cannot make new discoveries.
What are your overseas
acquisitions plans?
We have created assets in the US
and we are planning to incorporate
a new company just like OVL for
our overseas operations. It will stay
focused on overseas acquisitions. Right
now, OIL has a mixed focus, both
domestic and global. To give proper
focus and for energy security of the
country, our board has decided to have
a special division focusing on overseas
exploration activities. It is more on the
line of Bharat PetroResources Limited
(BPRL), BPCLs overseas arm.
Sharing under-recoveries has
always been a concern for
upstream companies. With gas
price hike, there
are reports
that ONGC and
OIL may have
to part with
their surplus
to subsidise
fertilizer and
power sectors.
What are your
views on this?
Our realization
over the years
should increase
and we need more money to go to
frontier areas. Drilling of one well in
deep water costs something around
$60 million, or Rs 200 crore, and for
that we need surplus money. Whatever
fuctuation is there in international
price, along with that, extra subsidy
should be fexible. Now it is fxed, so
when oil prices go down, our revenue
comes down. But it should be the
other way round whereby when oil
prices come down, our profts should
increase. Secondly, effciency should
be rewarded rather than curtailed. I
think we will welcome the decision
where effciency is rewarded.
How is OIL looking at LNG
opportunities in India
and abroad?
LNG is one of our strategic areas
for future. We have already engaged
one consultant and will go into
this area because this is one of the
upcoming industries. Since we are an
upstream company, we will look to
acquiring a property where there will
be opportunities for LNG just like in
Mozambique. In India, we are looking
to partner in processing facilities.
We have a vision for the North-East
whereby once the national grid is
there, LNG can be supplied to the
region which will bring prosperity and
industrial growth. The grid is being
planned by GAIL and the government.
There is lot of initiative from state
governments and
ministries and
once the national
grid is a reality,
it will be quite
benefcial.
There are plans
for some LNG
terminals on
the east coast,
like the one at
Haldia. Will you
be looking to
participate in the same?
Yes, we are interested in it and
negotiating with people for taking
stake in terminal and also upstream
assets overseas. But we also have to
think from a business perspective,
and look for opportunities
across the country.
What kind of support
are you looking from the
government in future?
First, a single window clearance is
required, especially for facilitating
environment clearances. It should be
a win-win situation for all. When you
are awarded a block, it is desirable
that we are provided with most of the
clearances. Else it takes lot of time and
leads to complications. So we need
cooperation both from stakeholders,
especially people around the area,
and Centre and state government and
ministries involved. We also need
a congenial working environment,
especially with respect to land
acquisition issues.
When oil prices come
down, our profits
should increase.
Efficiency should be
rewarded rather than
curtailed. We will
welcome the decision
where efficiency is
rewarded.
54
ExpertSpeak
November 2013
exploitation plans
(areas evaluated and
with data base)
Potential primary
energy resources
endowment (areas
yet to be evaluated/
partially evaluated,
analogy approach)
Geographical distribution in the
country (on land and offshore)
Their accessibility for commercial
exploitation to arrive at
exploitable primary energy
resources
Quantum of resources not
exploitable due to need for new
technology and operational
know-how
Quantum of resources not
exploitable due to other national,
social and environmental issues
To build and sustain energy security
any country must frst have a
clear understanding of its energy
resource endowment and fnancial,
technological, human skill sets and
business framework needed to:
Develop the known resources
effciently and have plans in place
for their most optimal exploitation
Prioritize systematic exploration to
continuously upgrade and derisk
the resources category so that
commercial enterprises can then
step in seeking licences
Create business and fscal
framework which is attractive
for private, including
foreign, investments
Give focused thrust on local
technology development
or joining international
consortiums in
technology development
programs or technology
transfer arrangements
Facilitate
development of local
capabilities for supply
of goods and services to
maximize local contents and
Build institutional framework for
development of human capital.
Coming to deep waters exploration
now, there are several steps which
India needs to take, sooner than later, to
address the hydrocarbons potential of
these vast areas. These include:
Access issues: Deep water
exploration in India will remain
a balancing act between energy
security and national security.
Nevertheless, it is important to be
clear about the areas which can be
made accessible on a long-term
basis. It is also important to know
India has emerged as the fourth largest
importer of oil over a period of time
and the share of re-gassifed liquid
natural gas (RLNG) in the gas basket
has reached over 25 per cent. The full
impact of NELP bidding rounds is still
hazy as the exploration activities have
been adversely impacted by a variety
of reasons. There are discovered oil
and gas reserves under development
and awaiting development and
contribution from such projects could
be from moderate to signifcant. The
operators in various blocks may have
developed exciting leads and many
of these could turn into successes in
coming years. One critical aspect of
exploration which stands out clearly
is the lack of activities in deep waters.
Vast tracts of sedimentary basins in
deep and ultra-deep waters have been
grossly under-explored while these
are the areas capable of yielding large
discoveries which India urgently needs.
Before dwelling on deep water aspects,
it will be in place to understand
about the important issue of energy
security facing the country and energy
resources link up. India is endowed
with moderately signifcant energy
resources however it must be clear in
its understanding of:-
Present energy resources
endowment and take all steps
necessary to develop more robust
Rajeev Khanna, Chief Operating
Officer of Infraline, shares his views
on deep water exploration and why it
is essential for India to venture in this
segment now.
The imperatives of deep
water exploration
Rajeev Khanna
COO, Infraline Technologies
One
critical
aspect of
exploration
which stands out
clearly is the lack
of activities in
deep waters.
55
November 2013
Any sustainable deep
water campaign will
essentially require a
robust service sector to
cater to its operational
and HSSE needs. The
existing service sector
In India is not fully
geared for deep far
from shore operations.
The views in the article of the author are personal
the hydrocarbon prospects of these
areas and they should be licensed
without conditions since no prudent
operator undertakes high-risk
investments under such conditions.
Upgradation of areas: Some level
of derisking or upgradation of
deep water offshore areas will be
helpful in generating interest from
reputed deep water players. MOPNG
/ DGH has been conducting
speculative surveys in the past and
more thrust is needed to increase the
speculative seismic survey coverage
of deep water areas.
OALP: The government of India
can consider selective introduction
of OALP for deep water areas.
Compared to other basins in
India, deep water offshore has
limited data and most of this will
be available with DGH. This data
base, combined with some focused
speculative survey data, could be a
good starting point for deep water
players to evaluate the opportunities
in India.
Business model: India may
consider a more practical business
model for deep water exploration
as the skill sets of national oil
with national oil companies as
partners. However, the operatorship
should stay with foreign companies.
Enhance capabilities of service
sector: Any sustainable deep water
campaign will essentially require
a robust service sector to cater to
its operational and HSSE needs.
The existing service sector In India
is not fully geared for deep far
from shore operations. An effcient
logistic support, operational
support and incident management
support will be the key to deep
water operations. Some reasonable
expertise in fabrication of deep water
structures (like containment systems
etc) would also be desirable.
Compensation: The deep water
accessible areas should be licensed
without any futuristic conditions for
commercial exploitation. However,
should it become necessary to
stop exploration in such areas or
alter the feld development plans
for shifting offshore facilities, the
operator should be compensated
for the expenses incurred on the
pre-approved program and for
additional development costs due to
other national requirements.
Energy sector comprises many
links and all links have to be robust to
create a complete value chain. Value
gets created at each link as well as
across the chain. Introduction of proper
policy and regulatory framework, and
its stability, thus becomes national
imperatives as energy markets grow
from nascent to more mature stages.
The petroleum sector is no exception.
The steps enumerated for deep
waters would enable experienced
international operators to achieve more
rational mitigation of risks associated
with Indian deep waters and give a
more serious consideration to such
project opportunities.
companies are rather limited . Deep
water exploration is an expensive
game and requires application
of cutting-edge technologies and
skill sets. The government may
consider a different exploration
and production regime whereby a)
deep water blocks continue under
the existing fscal mechanism-
-production sharing contracts
based on cost recovery b) the
selected deep water blocks are
offered to established international
deep water players with some
fexibility to negotiate the terms and
conditions on block by block basis
and c) foreign players may associate
56
StatisticsOil & Gas
November 2013
Crude Oil Processed by Reneries during April-August 2013-14 (000 Metric Tonnes)
Installed Rening Capacity (As on 1st April of the Year) (000 Metric Tonnes)
Oil Companies April May June July August Total
Indian Oil Corporation Ltd. (IOCL)
IOCL- Koyali, Gujarat 854 1222 1204 844 1035 5159
IOCL- Mathura, Uttar Pradesh 697 733 666 702 626 3424
IOCL- Panipat, Haryana 1127 1389 984 1165 1371 6035
IOCL- Haldia, West Bengal 651 676 553 709 688 3277
IOCL- Barauni, Bihar 464 447 552 550 563 2575
IOCL- Guwahati, Assam 84 86 89 83 77 420
IOCL- Digboi, Assam 53 45 51 60 60 268
IOCL- Bongaigaon, Assam 171 212 121 233 199 935
IOCL Total 4100 4810 4220 4345 4619 22094
Hindustan Petroleum Corporation Ltd. (HPCL)
HPCL- Mumbai, Maharashtra 591 475 668 696 661 3091
HPCL- Visakh, Andhra Pradesh 708 525 491 727 758 3210
HMEL- GGSR, Bhatinda, Punjab 560 839 789 854 663 3705
HPCL-Total 1858 1839 1947 2278 2083 10006
Bharat Petroleum Corporation Ltd (BPCL)
BPCL- Mumbai, Maharashtra 706 1124 1114 1096 1118 5157
BPCL- Kochi, Kerala 891 908 880 904 910 4493
NRL- Numaligarh, Assam 222 238.3 0 228.6 261.9 951
BORL- Bina, Madhya Pradesh 537 369.9 537.8 434 540.1 2419
BPCL- Total 2356 2640 2532 2663 2830 13020
Chennai Petroleum Corporation Ltd (CPCL)
CPCL- Manali, Tamil Nadu 920 936 874 881 922 4533
CPCL- Narimanam, Tamil Nadu 24 33 40 37 47 182
CPCL- Total 944 969 914 918 969 4715
Oil & Natural Gas Corporation Ltd. (ONGC)
ONGC - Tatipaka, Andhra Pradesh 5 5 4 3 5 22
MRPL- Mangalore, Karnataka 1235 968 1122 1173 1165 5662
ONGC Total 1239 973 1126 1176 1170 5684
Reliance Industries Ltd. (RIL)
RIL, Jamnagar, Gujarat 2652 2479 2666 2778 2760 13335
RIL- (SEz), Jamnagar, Gujarat 3113 3151 3050 3173 3173 15660
RIL Total 5765 5630 5716 5951 5933 28995
Essar Oil Limited
EOL- Vadinar, Gujarat 1698 1752 1687 1735 1743 8614
EOL Total 1698 1752 1687 1735 1743 8614
Grand Total 17962 18614 18142 19064 19347 93128
Refineries April 2008 April 2009 April 2010 April 2011 April 2012 April 2013
Public Sector (PSU)
IOC, Digboi 650 650 650 650 650 650
IOC, Guwahati 1000 1000 1000 1000 1000 1000
IOC, Koyali 13700 13700 13700 13700 13700 13700
IOC, Barauni 6000 6000 6000 6000 6000 6000
IOC, Haldia 6000 6000 7500 7500 7500 7500
IOC, Mathura 8000 8000 8000 8000 8000 8000
IOC, Panipat 12000 12000 12000 15000 15000 15000
IOC, Bongaigaon 2350 2350 2350 2350 2350 2350
IOC, Total 47350 49700 51200 54200 54200 54200
HPC, Mumbai 5500 5500 6500 6500 6500 6500
HPC, Visakh 7500 7500 8300 8300 8300 8300
HMEL,GGSR 9000 9000
HPC, Total 13000 13000 14800 14800 23800 23800
BPC, Mumbai 12000 12000 12000 12000 12000 12000
BPC, Kochi 7500 7500 9500 9500 9500 9500
BPC, BORL-Bina 6000 6000 6000
BPC, Total 19500 19500 21500 27500 27500 27500
CPCL, Chennai 9500 9500 9500 10500 10500 10500
CPCL, Narimanam 1000 1000 1000 1000 1000 1000
CPCL, Total 10500 10500 10500 11500 11500 11500
NRL, Numaligarh 3000 3000 3000 3000 3000 3000
ONGC, Tatipaka 66 66 66 66 66 66
MRPL, Mangalore 9690 9690 11820 11820 15000 15000
Total PSU 105470 105470 112886 122886 135066 135066
Private Sector
RIL, Jamnagar 33000 33000 33000 33000 33000 33000
RPL (SEz), Jamnagar 29000 29000 27000 27000 27000
EOL, Jamnagar 10500 10500 10500 10500 18000 20000
Private Total 43500 72500 72500 70500 78000 80000
All India Total 148970 177970 185386 193386 213066 215066
57
November 2013
Import/Export of Crude Oil and Petroleum Products April-August 2013-14
(000 Metric Tonnes)
Consumption of Petroleum Products during April-August 2013-14 (P)
(000 Metric Tonne)
Import/Export April May June July August Total
Import*
Crude Oil 16408 17180 14378 16415 17117 81499
LPG 524 608 353 401 519 2405
MS/ Petrol 0 15 115 76 0 206
Naphtha/ NGL 66 66 58 156 72 418
SKO/ Kerosene 0 0 0 0 0 0
HSD/ Diesel 3.4 16.7 11.0 11 11 53
LOBS/ Lube oil 105 205 122 122 138 691
Fuel Oil/LSHS 101 59 68 104 119 451
Bitumen 25 26 8 8 17 84
Others 347 501 399 402 412 2062
Total Import 17579 18677 15512 17695 18404 87867
Export
LPG 19 17 17 18 21 92
MS/ Petrol 1211 1403 1489 1278 1378 6759
Naphtha/ NGL 623 739 677 752 800 3591
Aviation Turbine Fuel 551 542 336 457 508 2395
HSD/ Diesel 1621 1813 1814 2292 2525 10064
SKO/ Kerosene 1.0 1.2 1.2 1 1 6
LDO 0 0 0 0 0 0
LOBS/ Lube Oil 4 0 7 1 0 12
Fuel Oil/LSHS 495 419 551 560 752 2778
Bitumen 5 6 5 16 0 32
Others 400 519 365 339 535 2159
Total Export 4930 5459 5263 5716 6520 27888
Net Import/Export 12649 13218 10248 11979 11884 59979
Product April May June July August
Sensitive Products
LPG 1232 1254 1214 1366 1325
SKO 593 610 594 603 601
HSD 6152 6393 5943 5406 5055
Sub Total 7978 8257 7751 7375 6980
Major Decontrolled Products
MS 1270 1696 1415 1402 1483
Naptha+NGL 937 880 937 1020 1037
ATF 451 461 439 440 440
LDO 27 35 41 30 39
Lubricants & Greases 179 311 226 231 236
FO & LSHS 526 529 481 530 540
Bitumen 558 590 364 188 148
Sub Total 3948 4501 3903 3840 3922
Other Minor Decontrolled Products
Petroleum Coke 758 1018 829 998 916
Others 476 472 538 499 536
Sub Total 1234 1490 1367 1496 1452
All Products Total 13159 14248 13021 12711 12354
58
NewsBriefs | Renewable
November 2013
Rays Experts
To execute 25Mw solar power project
Rays Experts, a turnkey contractor in the
solar power sector, will execute 25-MW
capacity solar power projects in the next
two months, a company official said. We
have already constructed 60 MW of solar
power plants for 34 industrial investors and
25 MW projects are due for commissioning
in the next two months for seven individual
investors, Rahul Gupta, Director at Rays
Experts, said. He added that these projects
for 34 investors are 1 MW, 2 MW, etc,
capacity projects totalling 60 MW.
Rajasthan
DLF sells 33Mw wind mill
The countrys largest realty firm DLF said it
has completed the sale process of its 33-MW
wind turbines project in Rajasthan to Violet
Green Power for `67.44 crore. DLF said
that its arm DHDL had signed a definitive
agreement with Violet Power to sell the 33MW
wind turbines at Rajasthan for `52.20 crore.
DHDL has transferred the wind turbines
including related assets and liabilities along
with relevant long-term loans on as is where
is basis by way of a slump-sale upon receipt
of a consideration of `67.44 crore.
Vikram Solar commissions
5 MW solar photovoltaic plant
Vikram Solar, global manufacturer of solar
photovoltaic modules, has commissioned
a 5-MW solar photovoltaic power plant at
Virudhunagar in Tamil Nadu. The company
has commissioned the plant for its client
JVS Exports under the renewable energy
certificate mechanism on turnkey basis.
The power plant was constructed within a
timeframe of 75 days, Vikram Solar said in
a statement. The plant is JVS Exports first
foray into the field of solar energy.
Phase II of solar projects
Local sourcing mandatory
Cocking a snook at the US, which had
objected to compulsory local sourcing
conditions imposed in the first phase of
Indias National Solar Mission, the country is
all set to extend similar norms to the second
phase as well. Domestic sourcing conditions
would, however, be imposed on just 50 per
cent of capacity earmarked for the second
phase, an official has said. But, this may
fail to pacify the Americans as MNRE has
decided to expand the coverage of local
sourcing norms to include solar thin films.
Gamesa Wind Turbines
Bags 27 wind turbine order from Andhra
Gamesa Wind Turbines has won an order
for the supply of 27 wind turbines of 2 MW
capacity each from a company that wants to
put up a wind farm at Tagguparthi, Andhra
Pradesh. On a ballpark basis, the order
is worth about `400 crore. Gamesa said
that the order would be executed by May
2014. Gamesa, a wholly owned subsidiary
of Spanish wind turbine major of the same
name, will erect all the 27 machines and also
be responsible for operating and maintaining
the machines for ten years.
Green corridor initiative
Govt to set up wind and solar farms
The government will set up wind and solar
farms in Rajasthan and Tamil Nadu in the
first phase of the `43,000-crore green energy
corridors project that aims to add 30,000 MW
to the national grid by 2020. The first phase of
the Indo-German project is expected to cost
`18,000 crore, of which `10,000 crore will be
invested in the two states, an official said. The
initial funding for the project will be finalised
by the month end and the first tranche of
`2,500 crore may come from Germany, the
official added.
39.2 Mw wind farm in Gujarat
Tata Power signs SPA
Tata Power Co. Ltd. said its subsidiary
Tata Power Renewable Energy Ltd. had
signed a Share Purchase agreement for
acquisition of 100 percent shareholding
in AES Saurashtra Windfarms Pvt. Ltd., a
subsidiary of AES Corporation based out
of the US. The acquisition is subject to
certain conditions, which are expected to
be addressed in a few months time, the
company said. ASW owns and operates
a 39.2 MW wind farm near Dwarka in
Jamnagar district of Gujarat.
Tamil Nadu solar corridor
To evacuate 3,000 MW power
Tamil Nadu is all set to establish first-of-its-
kind solar power transmission corridor to
evacuate 3,000 MW solar power it proposes
to add to grid by 2015. The Tamil Nadu
Transmission Corporations proposes to
establish a separate corridor of 400 KV
transmission line comprising three 400 KV
substations (SS) to evacuate solar power.
The three SS would come up in Thoothukudi,
Sivagangai/Ramanathapuram and Pudukottai
and it would be connected to Nagapatinam
765 KV SS, a senior TNEB official said.
65 MW project in Uruguay
Suzlon bags order
Wind turbine maker Suzlon said it has
bagged an order for setting up a 65
MW project in Uruguay. Suzlon Group
announced a new contract win in Uruguay
with a 65 MW project. The project is located
in the southern Department of Colonia in
the South American country, Suzlon said in
a statement. The project will be developed
by Rouar SA, a joint venture between UTE,
Uruguays state-owned utility, and Brazilian
utility Eletrobras. The wind farm will be
supplied with 31 units of 2.1 MW wind turbine.
Welspun Energys plan till 2017
To invest $1.6 bln in solar, wind projects
Welspun Energy, which will commission the
worlds second-largest solar power plant and
two other projects by December, will invest
an additional $1.6 billion in new projects over
three years, its managing director said. The
151 MW plant in Madhya Pradesh is a part
of Welspuns push to capture a slice of the
renewable energy market. Renewable energy
companies are free of some of the stumbling
blocks plaguing their peers in thermal power
industry, such as coal and gas shortages and
fuel transport hassles.
Waaree Group to generate
`7.5 bn revenue from solar power
Diversified solar energy solution company
Waaree Group expects revenues worth `750
crore from its solar power business this fiscal
and would add 35 MW capacity by March
2014, a top official of the company said.
Our current power generation capacity is
6 MW and about 35 MW capacity is under
construction which will be completed by
March 2014, Waaree Group CMD Hitesh
Doshi said. The company is setting up a 25
MW solar power plant in Tamil Nadu and
another 10 MW facility in Chhattisgarh.
Mytrah Energy
To double wind capacity to 548 Mw
Mytrah Energy Limited indicated that it
expects to nearly double its wind energy
generation capacity from 309.9 mw to 548
mw with a few months. The Hyderabad-
based power producer is a wholly-owned
listed entity on the AIM of London Stock
Exchange. The company indicated that
works on expansion and new projects
are now underway. These projects are
expected to be commissioned by the
end of the year. Vikram Kailas, Managing
Director of Mytrah Energy, said.
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InConversation
60
November 2013
industry incur with the
roll back of accelerated
decit (AD)?
It would not be right to call
them losses. There are benefts
that have come with GBI and
we support these benefts as they
help with generation, meeting the
peak demand and the power gap.
The way we work with independent
power producers (IPPs), supplying
products and taking extended scope
of the project, they would beneft
from GBI better.
With the fall in the rupee how
do you see the input cost
panning out?
That is a signifcant challenge and all
the original equipment manufacturers
(OEMs) in the region are facing
problems on account of this. This
uncertainty of foreign exchange is
a reality and we are working very
aggressively on where we could
Anne McEntee, CEO,
Renewable Energy, GE Power & Water
CEO, Renewable Energy, GE Power & Water, Anne M.
McEntee, is a GE veteran of 15 years. Based in Schenectady,
New York, Anne was Vice President of Flow & Process
Technologies, a division of GE Oil & Gas before assuming
the present position in April. On her recent visit to India, she
spoke to Ankita Sharma about the increased interest of GE
in India and its plans for localization. Excerpts.
Well make wind predictable
for the grid, says GEs Anne
What do you think is the state of
the wind industry in India?
I applaud the government for what
they have done to incentivise the
growth of renewable energy in India.
The reinstatement of generation-
based incentives (GBI) as well as
the provision of renewable purchase
obligation s (RPOs) are steps in
the right direction. The challenge
is to ensure that the policies at the
state and the Central level continue
to be enforced.
As a manufacturer, are you
facing any problems in India?
Right now wind makes economic
sense in India. We see success with
developers as well as getting into
new projects. If we can see the
implementation of RPOs it will be a
help to everyone.
GBI was reintroduced early this
year. But the policy notication
took six months. What kind of an
effect has that had on business?
Uncertainty in policy makes people
question motives and it delays things.
We are seeing some activity now and
it has provided some certainty to keep
projects going. Uncertainty leads to
pause in development but with GBI
being renewed, we are starting to see
opportunities emerge. We can now
see more confdence from
the developers.
Has the
reinstatement
of GBI
brought any
relief?
It helps with
the internal rate
of return (IRR)
of projects and helps
developers to stay committed. We
would want this to continue as the
market keeps growing and we see the
capacity requirement increase. We
hear from customers that the amount
is not enough, however, it is a good
start for them and if all the capacity
that is added gets GBI, it will be a step
in the right direction. There is some
uncertainty if all the funds will be
there when the capacity is added and
customers have to keep requesting the
agencies to support with funds.
What kind of losses did the
Uncertainty
in policy
makes people
question
motives and
it delays
things.
61
November 2013
localize and de-risk the foreign
exchange exposure and offer our
customers the best possible options.
We are excited about bringing more
content to the region, more capability.
Our goal is to drive a high percentage of
localized content and provide the most
competitive product in the industry.
We pride ourselves on both technology
innovation as well as having a leading
capacity factor that we offer across the
world in our turbines. We are looking
forward to bringing our technology to
Indian customers and help them be very
competitive in the market.
We have a signifcant manufacturing
base in India. We plan to balance
localization to meet the needs of our
customers and bring the best cost of
electricity. We will be driving this
percentage higher as we go forward.
What is the focus area in
India for GE?
We are excited about bringing our wind
portfolio to India with our leading
capacity factor unit here in our existing
facility in Pune in the next couple of
weeks. We are also exploring energy
storage opportunity in wind turbines
and lowering the overall cost of
generation. What we are trying to do
is to make wind predictable and make
it easier for the grid and operations all
over. With our analytics and algorithms
we are looking to predict power
production for 30-60 minute periods.
Will production from the Pune
unit be exported as well?
If it makes sense for the customer, we
will export from Pune. It all comes
down to the lowest cost of electricity
for the customer and we defnitely try
to leverage all our units to ensure the
same. We continuously try to leverage
our facilities. Whenever there is a
synergy to be had, we keep trying to be
cost competitive in the markets across
the world.
How will the wind turbines being
brought to India be different than
the global offering?
The unique thing about India is low
wind speeds and low air density. So
we have tried to optimize on that with
a low power price. For delivering the
highest IRRs for developers in these
conditions, we found that capacity
factor leadership is what matters most.
What is your current market
share and what is the growth
map for India?
Globally in 2012 we were named the
number one wind OEM by three-four
organizations. We pride ourselves on
our installed base of 22000 turbines
with over 98 per cent availability.
We have the leading factor capacity
position in the world. In India, we see a
huge potential for growth. Short-term,
we will make huge strides in gaining
market share in India. We do have an
extensive product road map, one of
which will be launched very soon.
We believe in the Indian market
and see India as a viable business
front. We have been in India for 100
years and hope to be here for another
century. Primarily we are working
closely with IPPs. We will bring the
technology and innovation. However
we see exciting opportunities with new
developers getting in the feld. We are
very optimistic about the government
policies and a number of new states
are also opening up with better
policies. GE is committed to helping
India go forward.
Our goal is to drive
a high percentage
of localized content
and provide the most
competitive product in
the industry. We pride
ourselves on both
technology innovation
as well as having a
leading capacity factor
that we offer across the
world in our turbines.
62
InDepth
November 2013
The economy and the power sector have
both been growing at 7.5 per cent over
the past 10 years. The installed power
capacity in the country has grown from
97,884 mw in March 2000 to 223,625
mw in April 2013, as per the fgures of
Central Electricity Authority (CEA) for
2013. About 68 per cent of this installed
capacity is from fossil fuel. According
to the Federation of Indian Chambers of
Commerce (Ficci), only 12.3 per cent
by Ankita Sharma
Solar power projects being left out of the nance race due to jostling by thermal players
Need to delink renewable energy from power sector for purposes of lending by banks
of this installed capacity or only 27,541
mw, comes from renewable sources
other than hydro power. In the 12th Plan
(2012-2017), the additional generation
target is of 75,000 -100,000 mw, which
requires huge funds.
Given this scenario, solar energy
acquires a critical place in Indias power
strategy due to its scalability, easy
deployability and abundant sunshine.
With declining costs and availability
of free fuel resource, solar power can
enhance Indias energy security, mitigate
carbon emissions and also improve
economic wellbeing. But some hard
challenges need to be addressed frst.
Solar projects require large upfront
investment and have long payback
periods. Despite favorable policies and
support being provided by the Central
government and state governments,
lenders are reluctant to provide funds for
Even the sun needs
more funds to glow
63
November 2013
solar power projects.
Lenders are wary about off-take
risk in a number of states given their
fnancial health. Also, banks in India
face structural challenges due to their
sectoral exposure limits. Financing of
solar projects falls within the power
sector which also includes large thermal
coal or gas-based plants. Bulk of the
investment from banks goes to these
plants which leaves very little scope
for them to fnance other kind of power
projects, including solar and other
renewable projects.
Given these challenges, the sector
needs additional policy and structural
reforms and assistance from the
government to empower the lending
community to fnance solar energy
projects. According to A Didar Singh,
Secretary-General, Ficci, Financing will
be an important pillar for the success
of solar energy in India and needs to
be addressed with a sense of urgency
to enable the objectives of the National
Solar Mission to be achieved. The Ficci
Solar Energy Task Force has embraced
this pillar with high priority and has
set up a Solar Financing Sub-group to
deliberate upon and recommend solutions
for channelling cost-effective fnance to
this sector of national importance.
Heading Ficcis Solar Energy Task
Force, V. Saibaba of Lanco Solar says,
If we can only restructure lending for
a longer period, a lot of problems will
be solved. Developed countries such as
Germany have a rate of interest as low
as 2-3 per cent. If Indian solar energy
generators can get such rates, this will
become an unstoppable sector.
Financing challenges
Power sector exposure limit: Most
banks have already reached their
exposure limits in power sector set by
them in pursuance of the Reserve Bank
guidelines. In addition, there is continual
asset liability mismatch due to the long-
term nature of the solar projects. These
factors cause tightness in liquidity and
borrowing costs.
to returns. On-ground solar insolation
data is sketchy and a database needs
to be developed for different locations
to give comfort to the lenders. Hence,
lack of insolation data results in lenders
insisting on P90 - P95 levels for energy
production and revenues.
High sensitivity to variable interest
rates and impact on fnancial viability:
Variable interest rates impact the cost
of the project to a signifcant extent
as all the investment is upfront and
projects are debt funded.
Evacuation arrangements: Evacuation
of power is not possible if the grid
is not available or if the evacuation
infrastructure is insuffcient.
Developers need to be compensated by
the distribution company by way of a
deemed generation clause in the power
purchase agreement (PPA). Lenders
typically look for a deemed generation
clause and if it is not there then this
results in higher interest rate. In view
of the above challenges, developers
of solar power projects are fnding it
diffcult to get their projects funded.
Addressing challenges
Renewable energy should be considered
as a separate sector for measuring
sectoral exposure limits by banks. Actual
exposure to the power sector varies in
banks from 7.5 per cent to 9 per cent of
the gross credit but banks have already
reached their respective exposure
limits based on their commitments.
Removal of renewable energy sector
from specifc caps for power sector
will channel funds to renewable energy
projects. Separate caps may be stipulated
for each renewable category such as
solar and wind.
Independent sector
The growth of credit (i.e. outstanding) in
power sector increased from `2,77,576
crore in April 2011 to `4,35,268 crore
in April 2013 (growth of over 57 per
cent in two years) whereas the credit for
overall Infrastructure sector increased
by 42 per cent during the same period
Lack of payment security: Though the
Centre has provided gross budgetary
support of `486 crore towards payment
security mechanism under Jawaharlal
Nehru National Solar Mission
(JNNSM) giving some comfort to
the lenders, deteriorating fnancial
health of the state utilities makes the
lenders uncomfortable in fnancing
state-sponsored solar power projects.
As a result lenders tend to place solar
projects in high-risk categories and that
increases the cost of borrowing.
Smaller size projects: To enhance
participation by more bidders
/ developers, solar projects are
fragmented into small capacities
compared to traditional power plants
and therefore, lenders are reluctant
to fnance small transactions. Even if
fnance is available, transaction costs
are higher.
Technology: Solar is relatively new
to India. Banks / development fnance
institutions (DFIs) are still reluctant
to invest in technologies that have
not been followed closely. Given the
perceived technology risk, project
fnance in solar is yet to take off on a
substantial scale.
Lack of on-ground insolation data:
Solar radiation is a raw material for
solar power and any error in solar
resource estimation adds uncertainty
There is a clear
thrust on building the
renewable energy
capacities in the 12th
Plan. Debt funding
of renewable energy
projects by banks
will be a major step
towards this direction.
This will also help in
conserving the limited
coal reserves of the
country.
64
InDepth
November 2013
(i.e. `5,34,340 crore in April 2011 to
`7,59,481 crore in April 2013). During
this period, the non-food credit increased
by only 33 per cent (i.e. `3,682,918 crore
to `4,888,435 crore).
Considering the importance of power
sector, it is evident that its credit growth
is higher than overall Infrastructure credit
growth. This has resulted in an enhanced
power sector portfolio with banks. It is
estimated that an investment outlay of $
320 billion is needed for the electricity
sector (approximately `14.5 lakh crore
at an average debt funding requirement
of `2 lakh crore per year) in the 12th
Plan (2012-2017). The funds available
for power sector will be inadequate to
support such expansion.
Separate limit for renewables
Advances to renewable energy
sector are also accounted in power
sector exposure limits. Taking this
into consideration, there may not be
enough headroom for accommodating
renewable energy sector under power
sector exposure ceiling norms, which
will affect the debt funding of renewable
energy sector. Thus this necessitates a
paradigm shift in banks treatment of
renewable energy sector as separate
from conventional power sector and
having separate exposure ceiling norms.
Policy initiatives
The government, both at the Central
and state level, has been providing
strong fllip for harnessing renewable
energy potential in India. The total grid
estimates, 100,000 mw of power
generating capacity is expected to
be added in the 12th Plan, of which
18,280 mw (18 per cent) will be from
renewable energy sources. Thus,
there is a clear thrust on building the
renewable energy capacities in the
12th Plan. Debt funding of renewable
energy projects by banks will be a
major step towards this direction. This
will also help in conserving the limited
coal reserves of the country.
Financing of renewable projects will
help banks reduce their carbon footprint
(from the thermal power projects being
fnanced at present) and hence will
promote green banking. Solar energy
possesses the ability to mitigate the
energy crisis which is slowly looming
over India. However, high rates of
interest and hesitant investors are
proving to be stumbling blocks in what
can otherwise be a huge success story.
Some remarkable policies have been
initiated lately but their implementation
remains a challenge. Tackling that part
will strengthen our energy security in
years to come.
Sunny Steps
Renewable Purchase Obligation of a minimum of 5 per cent on all
distribution utilities
Trading of Renewable Energy Certificates (REC)
10-year tax holiday in a block of 15 years for renewable energy projects
Generation-based incentive for grid-connected wind energy projects
Accelerated depreciation benefits for wind energy projects
Launching of Jawaharlal Nehru National Solar Mission (JNNSM) for
development of solar power projects
Gross budgetary support of `486 crore to Ministry of New and
Renewable Energy as payment security
Scheme to enable financial closure of projects under JNNSM
Not So Sunny
Most banks have already
reached their exposure limits
in power sector and have little
funds to spare for solar projects
Deteriorating financial health
of SEBs makes lenders
uncomfortable in financing state-
sponsored solar projects
Solar projects are broken into
small parts to include more
bidders and lenders are reluctant
to finance small transactions
Solar is a new technology in
India and banks perceive it as a
risk to fund it
Lack of insolation data results
in lenders insisting on P90 - P95
levels for energy production
and revenues
Variable interest rates impact the
cost of the project
interactive renewable energy power
during 2013-17 as projected by the
Ministry of New and Renewable Energy
(MNRE) is approximately 18,000 mw
requiring an investment in excess of
`1,20,000 crore. Some of the recent steps
taken by the government have resulted
in creation of a favorable business
environment for the development
of the renewable energy sector. As a
result, the total installed capacity from
renewable sources has increased from
approximately 2,000 mw in March 2000
to 27,541 mw in April 2013.
Priority in procurement
A distribution licensee is required
to meet Renewable Power Obligations
(RPO) for which it has to procure
renewable energy, the payment towards
power procurement is treated as an
operating expense and it is a higher
priority expense item. Therefore,
procurement of renewable energy
becomes a priority item for obligated
licensees. As per Planning Commission
Financing of renewable
projects will help
banks reduce their
carbon footprint
(from the thermal
power projects being
financed at present)
and promote
green banking.
InConversation
65
November 2013
For industrial areas the guidelines have
been clearly formulated and a majority
of the companies have already started
implementing them in their plants. The
power sector has been one of the early
adaptors of these guidelines and there
is now a strict check on
them by the Ground
Water Authority.
There are some
guidelines for
general public
also but there
is no regulatory
or enforcement
agency. For the local
populace, the policies are not
mandatory beyond certain cities. In some
cities 300 meter sq area has been made
compulsory for rain water harvesting but
this is peanuts compared to the total land
area, including urban, semi-urban and the
rural areas.
Who are the major culprits of this
water crisis?
One major culprit is the agriculture
sector which uses more than 70 per
cent of the water resources. So far there
are no guidelines, no regulations no
legislation for them. It is here that major
reforms are needed such as propagation
of crops which need less water, region-
wise soil characterization, water quality
and mapping of other such statistics.
Farmers are a major vote bank
and there are political reasons
which are a hurdle in this case. No
legislations are being passed to ensure
accountability of rural farmers.
How can the water crisis be
mitigated?
Strict legislations have to be made and
the rules have to be implemented without
caring for the vote bank. Water should
become Central subject instead of being
a State subject as at present. This will
help in the creation of a national grid
on water. Otherwise there will always
be state-level disputes and there will be
legal actions with no resolution. With a
national water grid, we can fnd out the
areas which are affuent in water, where
there have been foods and divert it to
water defcient areas so that droughts can
be avoided.
What are the major policies of
the government to mitigate water
crisis in India?
The government has come out with a
number of policies on this. Among the
major efforts is the promotion of rain
water harvesting techniques. Second is
desalination of sea water and providing
it in coastal areas for domestic use.
Third policy under consideration at
the moment is to do with transfer of
water from water affuent areas to
water defcient areas. These policies are
not being implemented on the ground
at the moment. There is no roadmap
with timelines but the government is
prioritizing and allocating some funds
for the same. Some funds for this
have been allocated in Chennai for
desalination. They will be taking up
more coastal cities in the coming months
for this. They have also made regulatory
provisions for rain water harvesting.
What are the regulations for rain
water harvesting?
There are some guidelines which have
been issued by the Central Ground Water
Authority basically on conservation and
optimization of ground water.
What are the main focus areas of
initiatives for the industrial and
local sector?
S K Jain, Managing Director, Ground Water &
Mineral Investigation Consultancy Centre
If
water
becomes a
Central subject
we can set up
a water grid to
service decit
areas.
Managing director of Ground Water & Mineral Investigation
Consultancy Centre, S K Jain, who was earlier a ground
water expert for the ministry of water resources, talks to
Ankita Sharma about the policies of the government and
the culprits in water conservation. Excerpts.
Water should become
a Central subject
66
StatisticsRenewableEnergy
November 2013
New & Renewable Energy Cumulative deployment of various Renewable Energy Systems /
Devices in the country as on 31/08/2013
REC Trading Volume and Price for September 2013
Benchmark Capital Cost for Solar PV Power Plant (2013-14)
Renewable Energy Programme/
Systems
Target for
2013-14
Deployment during
September, 2013
Total Deployment
in 2013-14
Cumulative
achievement up
to 31/08/2013
I. Power From Renewables:
A. Grid-Interactive Power (Capacities In MW)
Wind Power 2500 118 726.2 19779.15
Small Hydro Power 300 5 79.5 3711.75
Biomass Power 105 - - 1264.8
Bagasse Cogeneration 300 - - 2337.43
Waste to Power-Urban 20 3 3 99.08
Waste to Power-Industrial - - -
Solar Power (SPV) 1100 129.84 284 1968.84
Total 4325 255.84 1092.7 29161.05
B. Off-Grid/ Captive Power (Capacities In MWEQ)
Waste to Energy -Urban & Industrial 10 - - 115.57
Biomass(non-bagasse) Cogeneration 80 - 15.69 486.84
Biomass Gasifiers-Rural 1 0.032 0.132 16.924
Biomass Gasifiers-Industrial 9 0.05 1.8 143.38
Aero-Genrators/Hybrid systems 1 - 0.03 2.14
SPV Systems (>1kW) 40 - 7.19 131.86
Water mills/micro hydel 500 Nos. - - 10.65 (2131 nos.)
Bio-gas based energy system 2 - - -
Total 143 0.532 24.84 907.36
II. Remote Village Electrification
No. of Remote Village/Hamlets provided
with RE Systems
- - - -
III. Other Renewable Energy Systems
Family Biogas Plants (No. in lakhs) 1.1 0.06 0.06 46.55
Solar Water Heating - Coll. Areas
(Million m2)
0.6 0.09 0.16 7.16
Source: MNRE
REC Type Buy Bid (No.
of certificates)
Sell Bid (No.
of certificates)
Price (INR/
Certificate)
Volume (No. of
certificate) Qty
(MWH)
PXIL Non Solar 11,636 1,124,625 1,500 11,636
Solar 832 12,493 9,300 832
IEX Non Solar 38,195 2,325,171 1,500 38,195
Solar 5,880 37,028 9,300 5,880
Source: PXIL and IEX
Particulars Cost (INR lakhs/MW)
Land Cost 16.80
Civil and General Works 94.50
PV Modules 344.50
Mounting Structures 105.00
Power Conditioning Unit 60.00
Evacuation Cost up to Inter-connection Point
(Cables and Transformers)
105.00
Preliminary and Pre-Operative Expenses 80.00
Total Capital Cost 805.80
Source: CERC
67
November 2013
Target of Energy derivation from Urban & Industrial
Waste during 2011-17
Small Aero generators Manufacturers
Year Energy (MW)
2011-12 20
2012-13 25
2013-14 35
2014-15 45
2015-16 55
2016-17 60
Total 240
Source: MNRE
S
No
Name Capac-
ity range of
Aerogen-
erators
Website Address State Contact Details
1 Bharat Heavy Electri-
cals Ltd.
4 kW http://www.bhel.
com
BHEL House, Siri Fort, New Delhi
- 110049
Delhi Phone: +91 11 66337000
Fax: +91 11 26493021; +91 11
26492534
2 Auto Spares Indus-
tries
1 - 5 kW Wind Machine Division
No.4, Kalathiswaran Koil Street,
Pondicherry 605 101
Pondicherry T: 0413-2334554, 2338791
F: 0413-2333447
3 Jindesh International 72 W 6/8 Shanti Niketan, New
Delhi-110 021
Delhi T: 011-2462565
F: 011-26142930, 26144480
4 Auroville Wind
Systems
1.5 - 10 kW http://www.auro-
villewindsystems.
com
Auroshilpam, CSR, Auroville-605
101
Pondicherry T: 0413-2623384,85,
F: 0413-2622705
5 Unitron Energy Sys-
tems Pvt. Ltd.
1 - 10 kW Plot No. 25, Sanjay Park, Airport
Road,
Pune-411 032
Maharashtra T&F: 0206687006, 6684399
E: unitron@pn3.vsnl.net.in
6 Marut Energy Equip-
ments Pvt. Ltd.
72 W-10 kW http://www.
marutenergy.com
D-1/18, MIDC, Ambad, Nasik-422
010
Maharashtra Ph: 91-253-2307662 , 91-253-
6512439
Fax : 91-253-2307662
e-mail: marutengineering@
sancharnet.in
7 Machinocraft 1 - 10 kW http://www.machi-
nocraft.com
15/4A, Vasudeo Estate, Opp.
Shankar Maharaj Temple,
Pune-Satara Road, Pune-411043
Maharashtra T: 020-4371457
F: 020-4379529
8 Vistar Electronics
(P) Ltd.
52-630 W http://www.vistar-
electronics.com
42A/1B, Erandawana,
Nilgiri Apartment,
Karve Road, Pune 411 038
Maharashtra T: 020-5439267, 5431207
F: 020-5434704
9 Exide Industries Ltd. 46 - 3.2 kW http://www.exidein-
dustries.com
Exide Industries Limited
Exide House, 59E Chowringhee
Road, Kolkata-700020
West Bengal Tel No : 033-22832120/33/36/50
10 Lotus Solar Solutions
(P) Ltd.
C 366 C Sushant Lok - I, Gur-
gaon, Haryana India 122002
Haryana Telephone: 911245041309/1310
11 Square Engineering
Pvt. Ltd.ectronics
(P) Ltd.
5kW, 25 kW http://www.squa-
reengg.com/
SHRADDHA HOUSE
CTS No.1206-A/1, Plot no.887-A,
Shirole road, Off J.M. Road,Pune
- 411 004
Maharashtra Phone: +91 20 25512740/41
E-mail : admin@squareengg.
com
Source: CWET
68
OffBeat
November 2013
It was once a private airline, owned
and set up by Tata Sons in 1932.
In 1948 it was acquired by the
government and thereafter began its
journey as a national carrier. Now,
after almost 65 years of that takeover,
there are high chances of Air India
(AI) being given back to private
players again. According to experts at
the Centre for Asia Pacifc Aviation
(Capa), an aviation consultancy and
research frm, the alliance which
forms the next government in 2014 is
expected to privatize Air India as there
appears to be no reason to hold on to
the loss-making airline.
With the carrier expected to post
continued losses, we expect that the
by Team InfralinePlus
Air India inches closer to
moving in private hands
Aviation ministers recent comments indicate preparedness in
government to give management control to private players
Competition has intensified with other reform moves in the sector
next government which takes offce
in 2014 will fnally bite the bullet and
commence the privatisation of Air
India. If the government is prepared to
privatise all of the AirportsAuthority
of Indias proftable airports there
appears to be no reason in holding on
to the loss-making national carrier,
says Kapil Kaul, South Asia Chief
69
November 2013
Executive Offcer (CEO) of Capa.
According to him, AI needs to be
placed under a special administration
(like Satyam) with full authority to
determine its future.
It was almost eight years back that
Air India had started showing signs
of fnancial distress. Over the years
its problems have only grown. This
year, market dynamics have changed
drastically with foreign airlines
entering the fray and investing in
existing private carriers. Up to three
Indian carriers have secured foreign
strategic partners this year and Air
India faces increasingly strengthened
set of competitors on domestic,
regional international and long haul
routes. The international aviation
industry is adjusting to the impact of
a number of emerging phenomena
such as the growth of low-cost carriers
(LCCs) and the unfettered global
ambitions of Middle East carriers.
Aviation minister Ajit Singhs
recent comments that privatizing the
government-owned airline could be
one of the last options left to save
the bleeding national carrier also
lend credence to the fact that the
government is now actively thinking
in terms of disposing of the national
carrier. To keep running the airline
at the cost of taxpayers money is
ridiculous, says former aviation
secretary Sanath Kaul. You cant
sell the airline today when it is at
its bottom. No one will pay a good
price. The solution is to privatise
AI, get private management to run
it and allot shares to public sector
banks, he says. The solution lies in
examining the reasons which altered
the situation for AI from performing
well to not performing at all, says PC
Sen, former chairman and managing
director of AI.
Bag full of thorns
The government has already
committed a `30,000 crore bailout
for the bleeding airline but that is not
Aviation minister
Ajit Singhs recent
comments that
privatizing the
government-owned
airline could be one
of the last options left
to save the bleeding
national carrier
also lend credence
to the fact that the
government is now
actively thinking in
terms of disposing of
the national carrier.
Routes Number of Air Indias services
2010-11 2011-12 2012-13
Services not meeting cash cost 178 137 78
Services not meeting total cost 81 57 109
Services meeting total cost 10 1 14
Total 269 195 201
4131 Number of flights cancelled from April 2012-July 2013
going to solve its problems. It is still
battered by inadequate investment,
persistent political meddling, constant
leadership changes, network muddles
and gross over-staffng. From a
combined proft of over `75 crore in
2005-06 it has reached a state of losses
of more than `7,500 crore in fscal
2012. In the fve years from 2008-09
to 2012-13 AI accumulated losses of
close to $5.25 billion. This is estimated
to increase by a further $950 million or
more by the end of 2013-14.
Air Indias bank loans and aircraft
related debt total approximately
`25,000 crore, in addition to which
there are vendor-related liabilities,
such as to fuel suppliers and airport
operators, in excess of `5,500
crore. In fact Air Indias debt is
approximately twice that of all the
other carriers combined. The three
LCCs combined account for just 4-5
per cent of total industry debt and
this is largely aircraft-related. AIs
feet utilisation is very poor with only
around 100 operational aircraft out of
a total registered feet of 127 aircraft
(including Air India Express). And
even those aircraft which are in service
have daily utilisation rates below the
industry average.
The estimated loss for this year of
AI will exceed the governments entire
higher education budget. If the carrier
is to have any chance of success it
must be radically restructured both
fnancially and operationally. This will
require a level of political will to take
tough decisions, a feature which has
been absent to date. Singhs comments
have already created a political storm
with opposition parties baying for his
blood and that, in essence, has been the
Cash booster
Equity infused by government
2011-12: `1,200 crore
2012-13: `6,000 crore
2013-14: `4,500 crore
Total: `11,700 crore

`30,000 crore
Capital government will infuse
into Air India by 2020

Balance sheet
2007-08: Loss of `2,226.16 crore
2008-09: Loss of `5,548 crore
2009-10: Loss of `5,552 crore
2010-11: Loss of `6,865 crore
2011-12: Loss of `7,559 crore

Deep Red
`15,000 crore working capital
loans
`20,000 crore aircraft acquisi-
tion loans
70
OffBeat
November 2013
probably its more of an advantage
to have that benefciary not to be
owned by the government, he says.
According to him, You need someone
with a passion of JRD Tata to run the
airline if AI is to regain its past glory.
Unfortunately, we have none with that
kind of passion in India.
In 2002, a solution was found to the
problem to sell the majority stake in
the airline, says Kaul. Unfortunately,
Singapore Airlines backed out. Had
that sale gone through, things would
have been very different today.
A 2010 report by consulting
frm Booz and Co. says the airline
was slipping into a slow and silent
decline. Its current business model
is not self-sustaining and will
require infusion of funds, the report
states. The majority of fights are
not proftable, productivity is low
and the airline is overstaffed in
multiple areas.
Operating cash fows, the report
says, would be insuffcient to cover
the interest burden related to fnancing
the new wide-body feet, resulting
primary reason behind the sorry state
of the fag carrier, once considered
Indias pride.
AI, under the current management,
is surviving only with the backing
of the government, says Captain
Mohan Ranganathan, a Chennai-based
aviation expert. Other airlines need
load factor to survive. AI has the
dole factor to survive. Ever since
the top management went into the
hands of IAS offcials (Indian Airlines
in the early 90s and AI in 1998), the
slide has been downhill, he says.
Countries across the globe have
already done away with the concept
of government-owned airlines.
Majority of state-owned airlines are
not government entities any more
for example British Airways, Air
France-KLM, Alitalia and Lufthansa
group. The concept of national
carrier is an irrelevant and outdated
thinking, says Kaul.
National ownership does not
help, says Carsten Spohr, CEO,
Lufthansa German Airlines. Lufthansa
Europes largest carrier was
Countries across
the globe have
already done away
with the concept of
government-owned
airlines. Majority of
state-owned airlines
are not government
entities any more
for example British
Airways, Air France-
KLM, Alitalia and
Lufthansa group. The
concept of national
carrier is an irrelevant
and outdated thinking,
says Kaul.
privatized in 1997. The Indian culture
is very popular in Europe. So is it the
strength of an airline to be Indian? Yes.
But should it be owned necessarily
by government? I think the example
has been proved around the world
71
November 2013
short haul regional international
markets very tough for Air India for
which it does not have the appropriate
feet. Its feet is limited to 40 aircraft
with no further equipment on order
and it is dominated by an aircraft type
which is not competitive on most of
the routes which it operates.
The Etihad investment is expected
to accelerate Jet Airways domestic
and international expansion. Air India
incurs 80-90 per cent of its losses on
international routes. There does not
appear to be a clear domestic strategy
and it has hesitated in launching a
low cost subsidiary, partly for fear of
in net losses and a debt-trap where
the company will have to borrow to
simply pay interest. Predicting a bleak
future for the fag carrier, the Booz
report says that with no new mandate
from her shareholder, the airline will
soon have passed a point of no return
after which a successful recovery
of the airline, even through a severe
restructuring, will be highly unlikely.
New challenges
Bold and pragmatic action is required
to provide the airline with a fresh start
and a fghting chance to compete. For
the process to be successful it must be
led by a managing director who has
the full backing of the government to
make the necessary cuts, as was the
case at both Malaysia Airlines and
Garuda Indonesia. AI faces increasing
challenges in the coming months. The
aviation ministry is set to abolish the
fve year / 20 aircraft rule for domestic
carriers to fy abroad. The abolition or
Bold and pragmatic action is required to provide
the airline with a fresh start and a fighting chance
to compete. For the process to be successful
it must be led by a managing director who has
the full backing of the government to make the
necessary cuts, as was the case at both Malaysia
Airlines and Garuda Indonesia.
a change in the rule would mean that
new entrants like AirAsia India and
Tata-Singapore Airlines could start
international operations soon after
getting their operating permit.
Air India Express, AIs low-cost
subsidiary, could face a body blow as
a result of the lifting of restrictions.
AirAsia India could establish an
international base in Cochin operating
high density routes to the Gulf which
are dominated by price sensitive
expatriate labour traffc, a recent
Capa report says. The national carrier
is already bleeding on international
routes and the lifting of the 5/20 rule
will only compound the situation. On
its long-haul routes it does not have
the commercial strength to drive the
necessary yields and premium traffc
volumes. In the regional international
market it is focusing on routes to /
from Kerala but neglecting signifcant
opportunities elsewhere. Intense
competition from LCCs will make
Turnaround goals
Turn profitable by 2018
Create subsidiaries for:
Transport and ground-handling
Maintenance, repair and over-
haul (MRO)
While 7,000 staff would be
moved to the MRO subsidiary,
another 12,000 would be moved
into transportaion
What ails AI?
AIs employee-aircraft ratio is
243:1 compared to the industry
average of 150:1
How others compare
Jet Airways: 150:1
Kingfisher: 111:1
SpiceJet: 118:1
GoAir: 185:1
IndiGo: 102:1
Deep Red
The airline has been incurring
heavy losses for many years and
is on life support
`67,520 crore outstanding
loans and dues
Airlines no longer government-
owned
British Airways
Lufthansa
Korean Air
Qantas
Japan Airlines
Malaysia Airlines
72
OffBeat
November 2013
There is no harm in having
national carriers which are
professionally managed with
no government interference.
Some of the most profitable
airlines in the world are
government owned:
Singapore Airlines
Air China
Etihad Airways
Qatar Airways
Emirates
Vietnam Airlines
Thai Airways
Fleet
Air India 122
Jet Airways 113
IndiGo 70
SpiceJet 56
GoAir 16
cannibalising its parent operations.
However this means that it is the only
carrier which is not participating in the
fastest growing segment of the market.
And it has only a small regional feet
with no clear market proposition. It
requires a comprehensive review of its
business model.
Labour issues
The productivity of Air Indias bloated
workforce continues to be a major
challenge. And the airline carries the
historical baggage of unresolved issues
related to the integration of employees
during the merger of Air India and the
former Indian Airlines in 2007.
The implementation of
the recommendations of the
Dharmadhikari Committee set up to
look into this issue is likely to face
resistance. The prospect of industrial
action is always in the background,
especially for licensed staff such as
pilots and engineers, which could
be triggered by the introduction
of proposed wage restructuring
initiatives. Meanwhile, Air India
IndiGo Jet Airways (Including JetLite) Air India SpiceJet GoAir
That the national carrier invested
millions of dollars two years back
in preparation for members of Star
Alliance and was still knocked out in
the fnal leg in an indication of how
far had AI fallen in the estimation of
global airlines back in 2011.
Worse still, it casts its dark shadow
across the entirety of Indias airline
industry. No government in the past
two decades has had the courage either
to capitalize the airline suffciently to
allow it to be competitive or to put it
out of its misery. With subsidies worth
billions of dollars every year, Air India
in its present form is treading water,
diverting funds from much needed
public works and infrastructure.
The carrier continues to incur huge
losses on its international routes as
its feet is poorly matched with route
network and commercial capabilities.
Giving management control to private
players may be the only option left
for the government so that precious
money could be saved for other
pressing needs.
The implementation of
the recommendations
of the Dharmadhikari
Committee set up
to look into this
issue is likely to
face resistance. The
prospect of industrial
action is always in
the background,
especially for licensed
staff such as pilots
and engineers, which
could be triggered
by introduction of
proposed wage
recast initiatives.
Domestic market share (August 2013)
continues to lose B777 pilots and other
skilled personnel to foreign carriers,
and Air India Express is facing a
shortage of B737-800 pilots. A further
exodus of licensed staff, particularly to
the Gulf, is expected which will place
added pressure on turn-around plans.
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74
InfraWatch
November 2013
The Delhi-Mumbai Industrial
Corridor (DMIC) Trust last month
approved nine projects entailing an
investment of `1.2 lakh-crore. The
decision was taken at a meeting
chaired by Arvind Mayaram,
Secretary, Department Of Economic
Affairs; Saurabh Chandra, Secretary,
Department of Industrial Policy &
Promotion; Amitabh Kant, Chief
Executive Offcer and Managing
and 618,000 indirect jobs for the
Indian economy, according to Press
Information Bureau statement.
The $90 billion mega infrastructure
corridor will cover a length of 1,483
kilometre linking the political and
fnancial capitals of the country. It
will be spread across six states
Delhi NCR, Uttar Pradesh, Haryana,
Rajasthan, Gujarat and Maharashtra.
It aims to incorporate nine mega
Director, DMICDC and Saurabh
Garg, Joint Secretary, Department of
Expenditure. The approval includes
industrial townships and logistic
hubs. The projects would be funded
by the Centre, state governments and
the private sector. These projects
will bring in advanced technology
from Japan and drive manufacturing
growth. Combined, these projects
will generate 215,000 direct jobs
9 projects cleared for phase-1
of Delhi-Mumbai Corridor
Investment of `1.2 lakh crore to go in building the infrastructure
Land acquisition across six states may become a stumbling block
The $90 billion mega corridor will cover a
length of 1,483 kilometre linking the political
and nancial capitals of the country
by Ankita Sharma
75
November 2013
Like all big
infrastructure projects,
DMICDC faces the
challenge of land
acquisition. This
has proved to be a
stumbling block for
a number of projects
and is turning out to be
the biggest problem
for DMICDC. Under the
agreement, acquisition
of land has to be done
by the states that
are covered in the
programme: Haryana,
Gujarat, Madhya
Pradesh, Rajasthan,
Maharashtra and
Uttar Pradesh.
industrial zones of about 200-250
sq km, high-speed freight lines,
three ports, six airports; a six-lane
intersection-free expressway
connecting Delhi and Mumbai and
a 4,000 mw power plant. Several
industrial estates and clusters,
industrial hubs, with top-of-the-line
infrastructure would be developed
along this corridor to attract more
foreign investment. Funds for the
projects would come from the
government of India, Japanese loans,
investment by Japanese frms and
through Japanese depository receipts
issued by the Indian companies.
Land acquisition
Like all big infrastructure projects in
India, DMICDC faces the challenge
of land acquisition. This has proved to
be a stumbling block for a number of
major projects and is turning out to be
the biggest problem for DMICDC so
far. Under the agreement, acquisition
of land has to be done by the states
that are covered in the programme:
Haryana, Gujarat, Madhya Pradesh,
Rajasthan, Maharashtra and Uttar
Pradesh. The project has received
varied responses from different states.
In positive spirit, Madhya Pradesh
has come out with a legislation which
makes land buys less cumbersome for
the project. Procuring land in Indore
region has been diffcult because the
place is already industrialised and
land is scarce. For the Indore region,
DMICDC had to fnd state land.
Madhya Pradesh has shown support to
the project. SPVs have been created
to ward off legal hurdles that may
arise at a later stage due to political
expediencies in a region. These
vehicles will have the power to charge
a user fee on the infrastructure built in
a new city.
P
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According to Amitabh Kant,
many states didnt have the relevant
laws to meet the demands of a
project as intricate and complex as
this one. Though it is generally seen
as a project, in reality it is a vast
programme, driven by individual
special purpose vehicles [SPVs].
The Gujarat government has been
extremely prompt with acquiring
land, he says. The Narendra Modi
government brought in a new law to
facilitate land buys for this purpose
and has also allocated a huge chunk
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Rewari
Project: Integrated multi-modal logistic hub
The site is about 965 acres in Rewari district
of Haryana and is adjacent to the proposed
Western DFC to its north and NH-8 in the west
near Garhi Bolni on NH-8. The project will handle
1.4 million teus and will have a total container
handing in the range of `38,000-40,000 crore.
The site has provision for commercial office /
retail space to cater to businesses like those
of freight forwarders, operators, third-party
logistics companies, fourth-party logistics
companies. Supplementary facilities at the site
would comprise administration buildings, utility
areas and greens.
Vikram Udyogpuri near Ujjain
Project: Integrated industrial
township
The site for the proposed integrated
township Vikram Udyogpuri is
located about 8km from Ujjain
and 12km from Dewas and has a
total area of 443.79 ha (1096.63
acres). The total revenue (direct and
indirect) expected to be generated
by the project is `1,20,600 crore
by 2040. The project is expected
to generate employment for 78000
people directly and indirectly by
2040.
According to the press release,
among the projects approved,
the Vikram Udyogpuri project will
have sustainable economic base
driven by manufacturing industry
integrated with institutions (public
and semi-public use) and supported
by residential land use and
commercial activity.
76
InfraWatch
November 2013
the frst phase is 2019. Some offcials
feel the project should be expedited
so that it spurs manufacturing growth
in the country and helps the country
ride out the bad times. However, there
are views in the market which say
that DMICDC cant go as fast as its
political bosses expect it to. Being a
complex project, it has to proceed at
an appropriate pace.
People who criticise the so-called
slowness of the work in progress
dont understand how intricate and
complex this is. In fact, I dont want
to do what Kalmadi did. My team and
I have to go into the details of each
project and make sure that we meet all
international standards in setting up
new cities. I will say that, in scale, this
is the biggest city-building exercise
ever in the world, says Kant.
Aamer Azeemi, Managing Director
at Cisco Consulting Services (Asia-
Pacifc region), which won the global
bid to create the digital master plan
of four cities in the frst phase of the
DMIC programme, says they have to
closely study the services that people
It is difficult to get
DMICDCs plans
notified in every state.
The concept of vertical
cities based on transit
oriented development
is alien to the Indian
urban planner, who
are used to merely
sanctioning plans.
There needs to be a big
campaign to educate
them and to expose
them to best practices
around the world.
of land for the new city in Dholera, a
port town in the Gulf of Khambhat.
The fnal phase will see Dholera
becoming a new 550-sq-km city.
With Gujarat, Madhya Pradesh,
Maharashtra and Rajasthan acting
proactively, DMICDC might still
face dead ends in Uttar Pradesh
and also some hiccups in Haryana.
Uttar Pradesh is infamous for its
land issues and Haryana doesnt fare
any better either when it comes to
infrastructure projects.
Kant says it is diffcult to get
DMICDCs plans notifed in every
state. The concept of compact, dense
vertical cities based on transit oriented
development is alien to the Indian
urban planner, who are used to merely
sanctioning plans. And for the urban
and the town planners in states, Kant
says there needs to be a big campaign
to educate them and to expose them to
best practices around the world.
Pace of the project
DMIC in its frst phase has to set up
six cities each of 40-50 sq km and
one of 153 sq km. The deadline for
Khargone
Bhopal
Raisen
Rajgarh
Sehore
Vidisha
Morena
Sheopur
Bhind
Ashoknagar
Shivpuri
Datia
Guna
Gwalior
Barwani
Burhanpur
Dhar
Indore
Jhabua
Khandwa
Balaghat
Chhindwara
Jabalpur
Katni
Mandla
Narsinghpur
Seoni
Betul
Harda
Hoshangabad
Rewa
Satna
Sidhi
Chhatarpur
Damoh
Panna
Sagar
Tikamgarh
Anuppur
Dindori
Shahdol
Umaria
Dewas
Mandsaur
Neemuch
Ratlam
Shajapur
Ujjain
P
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Dadri, Greater Noida
Project: Integrated multi-modal
logistic hub
The hub has been planned in
congruence with DMICs objective of
creating strong economic base with
a globally competitive environment
and state-of-the-art infrastructure
facilities. The proposed site of the
logistic hub is part of the delineated
site for Dadri Noida Ghaziabad
Investment Region (DNGIR) and
is strategically located in close
proximity to the point of congruence
of the western and eastern DFC and
also the proposed freight corridor
of Eastern Peripheral Expressway.
The total area of 438.9 ha has been
earmarked for this project which
includes 293.8 ha which will be
developed in phase-1. The total
investment in the project will be
approximately `35,000 crore.
Greater Noida
Project: Integrated industrial
township
The township will act as a magnet
to promote R&D activity and will
subsequently promote industrial
development, in line with DMICs
objective of promoting industrial
and manufacturing activities in the
Dadri-Noida-Ghaziabad Investment
Region (DNGIR). The integrated
industrial township will also
support key sectors like telecom,
electronics, automobile, food,
pharmaceutical, healthcare, and
defence research sector. It will have
a total site area of 302.5 ha (747.5
acres). The total project size is in the
region of `33,000 crore.
Dhar, Madhya Pradesh
Project: Improvement of water
supply system for Pithampur
Industrial Area & Phase I
of Pithampur- Dhar-Mhow
investment region
The project will provide 90 million
litre per day water from Narmada
Kshripra Simhastha Link to meet
the future water requirements of the
project area. The project cost will be
in the range of `300 to `320 crore
77
November 2013
require in new cities. He and his team
have categorised services required
across segments: industries, residents
and people who maintain the city.
Their plan also includes an estimate
of the skills that people will require in
these cities
Among the technology partners,
IBM has completed the digital
plan for Dighi Port Industrial Area,
Maharashtra. Rahul Sharma, IBM
India-South Asia Executive Director
(Partner and Smarter Cities Leader)
is upbeat about the project and says,
This project provides the foundation
to use technology in new ways to
drive economic development, job
growth and improve the quality of life
for citizens.
A number of infrastructure projects
over the years have faced serious
issues with land acquisition, leading
to delays and sometimes derailment
of established plans. The DMIC is the
mother of all projects and will be a
game changer for India in a big way
in the years to come. Though there are
people optimistic about the project,
it remains to be seen if the untainted
reputation of Kant will have to bear
the brunt of an unsuspected failure of
the DMIC project in the near future.
P
h
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I

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t
P
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e

I

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Dahej, Gujarat
Project: Water desalination plant
The project envisages desalinating
seawater for industrial purpose.
With a capacity of 336 million litre
per day (mld) this will be Asias
largest desalination plant with an
outlay of `3,600 crore. The project
will be executed by Hitachi of Japan
and Hyflux of Singapore. DMIC
Trust will have 15 per cent equity in
the project.
Neemrana, Rajasthan
Project: Solar power plant
DMICDC in partnership with NEDO
and Hitachi is setting up 6.00
mw solar photovoltaic (PV) power
project and 1 mw diesel generator
power projects in Neemrana
industrial park, Japanese zone. The
project will bring in cutting-edge
Japanese invertor technology. It
has been conceived as the first
smart micro-grid project in the
country demonstrating the concept
of integration of solar power with
industrial diesel generator sets.
Project: Logistic data bank
For tracking container cargo
movement on integrated basis
The project has been developed
by NEC Corporation of Japan to
address the issue of tracking and
viewing the movement of containers
across the ports to the ICDs and
end users. The data bank would
also provide value-added services
including comparative metric
based analysis. This would enable
the Central government, state
governments, importers, exporters
and other stakeholders to assess
comparative performance; identify
inefficiencies and bottlenecks to
develop strategies to ensure the
development of the sector. The
project will be implemented through
a 50:50 joint venture between DMIC
Trust and NEC.
Dholera, Gujarat
Project: Construction of new rail line from Bhimnath to Dholera Special
Investment Region
Dholera Special Investment Region
(DSIR) will be connected to the Indian
Railway network through a new
Bhimnath-Dholera line and the existing
Bhimnath-Botad meter gauge rail link will
be converted into broad gauge. Botad-
Bhimnath (29.66) and Bhimnath-Dholera
(27.60) sections will have a total length
of about 57.26 km and will provide rail
connectivity between DSIR and the
rest of the country, including sea-ports.
The total cost of the project will be
approximately `250 crore..
People who criticise the
so-called slowness of the work
in progress dont understand
how intricate and complex this
is. In fact, I dont want to do
what Kalmadi did. My team
and I have to go into the details
of each project and make sure
that we meet all international
standards in setting up new
cities. I will say that, in scale,
this is the biggest city-building
exercise ever in the world,
Amitabh Kant
CEO & MD, DMICDC
78
PhotoEssay
November 2013
segments such as transportation, sewage
and water treatment plants. It has already
received few trial orders from Defence
Research and Development Organisation
(DRDO) to supply 50 thermal pressure
components for the battle tanks produced
by DRDO.
The company realizes that in times to
come there would be more competition
and the only way forward is to innovate.
The top management thereby puts
innovation and creative development
on top priority. The research and
BHEL: Powering Indias
economic growth
development efforts are aimed not
only at improving the performance and
effciency of the existing products, but
also at using state-of-the-art technologies
and processes to develop new products.
As on March, 31, 2012, the company
had a share of 59 per cent in the countrys
total installed generation capacity
contributing about 69 per cent to the
total power generated from utility sets
(excluding non-conventional capacity).
Headquartered at New Delhi, Bharat
Heavy Electricals Ltd (BHEL) has been
providing state-of-the-art equipment to
power industry for the past fve decades.
Enjoying a sizable market share in
power equipment business, the public
sector enterprise has footprints in over
75 geographies across the globe. The
cumulative overseas installed capacity
of BHEL manufactured power plants
exceeds 9,000 mw across 21 countries
including Malaysia, Oman, Iraq, the
UAE, Bhutan, Egypt and New Zealand.
Established in 1964, BHEL has been
engaged in the design, engineering,
manufacture, construction, testing,
commissioning and servicing of a
wide range of products and services
for the core sectors of the economy,
such as power, transmission, industry,
transportation (railway), renewable
energy, oil and gas and defence. It
has bagged numerous projects both
within and outside the country and has
started venturing out to new areas to
sustain its growth.
The company, in recent past, has been
very active in tapping newer business
1
79
November 2013
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3
4
80
November 2013
1. Phase-shifting transformer
2. Thyristor valve under dielectric test
3. 1200 kV CVT
4. Statcom
5. 498 MVA, +500 kV converter transformer
6. 400 kV GIS switchyard at North Chennai TPP
7. 1200 kV transformer
8. Statcom80 MVAr, 400 kV controlled shunt reactor
9. 500 MVA, 765 kV transformer
PhotoEssay
5
6
7
8
9
Garima Singh, Sr. Associate - Business Development
Ph. +91 11 4625 0027 (D) 4625 0000 (B), Mobile: 8010712843
Email: garima.singh@infraline.com
For exhaustive
Energy
Infrastructure
in India
October 2013
A Reference Book
Coal Infrastructure in India
Institutional Framework of Coal Sector in India
Information on coal and lignite resources of India
Key Statistics on Coal production and consumption
Coal dispatch by various companies
Insight of existing and upcoming coal
washeries in India
Country-wise coal import in India
Movement of coal- multi modal transportation
Power Infrastructure in India
Institutional Framework of Power Sector in India
Region Wise Power Maps of India
Information on Central Sector Thermal, Hydro and
Nuclear Power Projects
State wise information on:
State Sector Thermal and Hydro Power Projects
Private Sector Thermal and Hydro Power Projects
State wise information on Power Transmission lines
and substations
State wise information of Power Distribution
Yearly Approved Power Sales
All India Electricity Statistics
Oil and Gas Infrastructure in India
Institutional Framework of Oil and Gas
Sector in India
Key Statistics of Exploration and Production and
CBM Blocks in India (Maps)
Information on LNG/FSRU terminals
Information on Crude Oil refineries and Strategic
storage in India
Information on Crude oil, Product and Natural Gas
Pipelines in India
CGD Infrastructure in India
Unconventional Gas Resources (CBM, Shale
Gas, Hydrates)
Renewable Sector Infrastructure in India
Institutional Framework of Renewable Sector in India
Pan India Renewable Energy Profiles viz. Solar,
Wind, SHP and Bio Energy
State-wise Potential Estimate Map of Renewable
Energy Sources
State-wise Achievement Map of Renewable Energy
based Installations
Key Statistics for Solar, Wind, SHP, Biomass,
Cogeneration and Waste to Energy Domains
Growth Trend of Solar, Wind, SHP and Bio
Energy in India
Upcoming Renewable Energy Based Projects
Potential and Developments in Newer
RE Technologies: Offshore Wind and
Geothermal Energy
Key Highlights
F
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PRICE
Report Types Indian Clients Foreign Clients
Report- Hard copy
(courier charges extra for
international clients)
INR 30,000 USD 800
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(Single User License)
INR 25,000 USD 700
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INR 3,00,000 USD 8000
Transmission Segment Distribution Segment
1.InadequateTransmission
InfrastructureandNational
GridIntegration
1.PowerQuality,Reliabilityand
Affordability
2.IndependentTransmission
RegulatorStatustoPowerSystem
OperationCorporation(POSOCO)
2.DemarcatingPowerDistribution
BusinessandRetailSupply
Business
3.PointofConnection(POC)
MechanismandAncillaryServices
MarketinIndia
3.ElectricityDistributionFranchisee:
IdealWaytoEnhancePrivate
Participationtowardsan
efficientsystem
4.Growthin765kV,1200kVandHVDC
TransmissionSysteminIndia
4.OpenAccessinDistributionFar
fromReality
5.RoleofUnifiedRealTimeDynamic
StateMeasurement(URTDSM)
andDynamicCompensationin
SystemOperations
5.StatusofIntraandInterStateOpen
AccessandFormulationofNational
RegistryforOpenAccess
6.CompetitiveBiddingandPPP
FrameworkinPowerTransmission
6.ViabilityGapFundinginPower
DistributionSegment
7.ProjectfinancingofEHV
TransmissionProjectsandFinancing
forNationalGrid,IPTCsand
HCPTCs
7.TODTariffsandDemandSide
ManagementInitiativesinPower
DistributionSpace
International Exhibition
& Conference
12th - 13th, February, 2014
India Habitat Centre, New Delhi, India
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B
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For exhaustive
Phone:+911166250023,Mobile:+919560626589
Email:manoj.narang@infraline.com
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RNI No: DELENG/2012/45441
Registration No - DL (ND)-11/6162/2012-13-14
Posting Date: 27-28 of every month
Published on 26th October, 2013

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