Indian Power Sector

Chennai-based BGR Energy Systems has bagged a Rs 1,698-crore EPC (engineering, procurement and construction) contract from New Delhi-based TRN Energy Pvt Ltd for setting up a coal-based thermal power project in Chhattisgarh.

The turnkey contract is for setting up a 2×300-MW project at Nawapara village in Chhattisgarh, a company release said.

The first unit of the project is scheduled to be completed in 29 months and the second unit in 32 months, it said. The order value includes foreign currency content of $188 million at an exchange rate of Rs44.70, the company said, adding that the contract provides for foreign exchange variation protection to the company at the actual exchange rate.

The Power Ministry has reportedly banned global consulting firm Ernst & Young (E&Y) from taking up any further assignments in the sector after anomalies in the evaluation of bids for the Sasan project were highlighted in a report by power sector expert P S Bami.

According to a Power Ministry official, “We issued a show-cause notice to E&Y on their consultancy work on the Sasan project based on Bami Committee Report… It was almost two months back… It has nothing to do with the CAG report on the matter.”

It may be recalled that State-run Power Finance Corporation has already banned the global consulting firm after its internal committee found some discrepancies at the time of handing over the Sasan UMPP to the successful bidder.

The report of the committee led by P S Bami, an ex-NTPC Chairman and Managing Director and a sectoral expert, had raised questions over the evaluation of bids for the Sasan ultra-mega power project in Madhya Pradesh, which is being executed by Reliance Power.

Hyderabad-based engineering and construction company NCC Ltd has achieved financial closure for the 1,320 MW, Rs 7,000-crore greenfield thermal power plant coming up in Nellore district of Andhra Pradesh.

The project is being executed through a special purpose vehicle in a joint venture with Gayatri Projects, another Hyderabad-based infrastructure company. The power project mandate was secured from Nelcast Ltd, which had the permission to develop the project.

“The debt component of Rs 5,300 crore is led by a consortium of Rural Electrification Corporation with Rs 1,900 crore, Power Finance Corporation pitching in with Rs 1,700 crore along with ICICI Bank and others. We hope to announce this major milestone for project implementation during the month,” Y D Murthy, Executive Vice President, Finance, NCC Ltd, was quoted as saying by the Business Line.

The equity component has also been completed. While NCC will chip in with Rs 350 crore, Gayatri and other sources have closed in with the rest. The lenders had insisted that about 35 per cent of the equity component should come from the promoters and this objective has been achieved, Mr Muthy explained

Environment and Ecology Minister J Krishna Palemar has said the government will not give its nod for the proposed Unit II of the Udupi Power Corporation Limited (UPCL) at Nandikur in Udupi unless environmental issues related to the thermal power plant are completely addressed by the plant authorities.

“I have held a discussion with chief minister D V Sadananda Gowda personally. Since the chief minister is also from our district, he knows the issue very well and has taken it very seriously. The clearance given by officials of the Karnataka State Pollution Control Board (KSPCB) for the Unit II has already been cancelled,” he was quoted as saying by the Times Of India.

The Unit I of UPCL with 600 MW capacity, which was shut down for maintenance, is still not operational.

In the meantime, the government had appointed an expert committee led by Karnataka State Bio fuel Development Board executive chairman Y B Ramakrishna and assessor at the Centre for Ecological Studies of Indian Institute of Science (IISC), Bangalore, T V Ramachandra to look into the problems faced by residents in Nandikur and surrounding villages.

The committee will hold a public consultation with regard to the issue on November 19

Even as road connectivity issues rising concerns, Japan-based Toshiba Corporation is hopeful that its upcoming India manufacturing unit near Chennai to be ready by early next year.

The company hopes to commence full-fledged production of steam turbine generators for the coal-fired power projects in the country by middle of 2012.

In the meantime, it is also hopeful of securing orders of over 3,500mw worth of thermal projects of NTPC, besides an order from an independent power producer (IPP), in the immediate term.

“We have participated in NTPC’s coal-fired projects in Uttar Pra¬desh and Karnataka and hope to bag 3,720mw orders,” said Kenji Urai, MD of Toshiba India.

Toshiba under a 75:25 JV with JSW group is establishing a greenfield manufacturing unit at Ennore near Chennai to manufacture and market steam turbines and generators of size 500mw to 1000mw for supercritical thermal power plants. The JV had planned an investment of about Rs 800 crore

A fresh hurlde has come in the way of power major NTPC, which is setting up the Mouda thermal project near Nagpur.

The latest trouble is uncertainty over water supply from the Gosikhurd dam. As a result, the commissioning of the first unit of 500 MW, planned for June 2012, could get delayed.
Ups and downs

NTPC is setting up the 2,320-MW project using indigenous coal at Mouda village with an estimated investment of about Rs 16,500 crore.

In the last two and half years, the project has seen its ups and downs, affecting the pace of project implementation. It had to face issues like ‘stop work notice’ from the District Collector and giving additional compensation to farmers, whose land was acquired for the project.

The company has an agreement with the Maharashtra Government for drawing water from the dam, which has a design height of 241 meters. Water charges for NTPC have been fixed by the State Government.

According to officials, a system for drawing water from the dam, if it filled till 239 meters is under construction but the State Government is now saying that it cannot store water in the dam beyond 237 m. If dam authorities fill the dam to the full capacity (241 m) then four villages near the catchment area will get inundated, the official said.

In effect, the plant cannot draw water from the dam unless the system is reconfigured to draw water at 237 meters. Meanwhile, expensive pumps have already been ordered under a tender to draw water from 239 meters, and this mismatch is delaying the project.

Rating firm Crisil has suggested that blending liquefied natural gas (LNG) with gas can be a viable option to make up for the shortfall. These remarks come at a time when shortage of domestic gas production has raised concerns over fuel requirements of upcoming power plants.

In its recent report, Crisil said the current production cannot meet the requirements of the upcoming 8,000-10,000 MW gas-fired power generation capacity plants, which have an investment value of Rs 35,000- 40,000 crore and are expected to come on stream over the next few months.

Since availability of gas has created a challenge for the new plants that will add a substantial 70 per cent to the existing gas-based capacity of 16,000 MW, power producers will now have to explore a mix of domestic gas and LNG to stay afloat, it maintained.

“Power purchase costs of utilities in India have risen over the last few years. This makes LNG a viable blending option for them,” Crisil Risk and Infrastructure Solutions Head (Natural Resources) Singh Chugh said.

According to the report, large power consuming states currently buy 15-20 per cent of their electricity at a variable cost of Rs 2.5 per unit to Rs 4 per unit.

“Power purchase costs have shown a rising trend. Gas- based power plants can match the currently prevailing power purchase costs by blending domestic gas with imported LNG to the extent of 25-30 per cent,” Chugh said.

The projects that proactively tie-up LNG supplies will ensure that they remain financially healthy enough to service their lenders, while the question of domestic gas production sorts itself out.

The Andhra Pradesh government has decided to launch works on the prestigious Andhra Pradesh Rural High Voltage Distribution System (APR-HVDS) by next March.

According to reports, the government has asked distributors to complete the tendering process and agreements by January 2012 so that work can begin by March. Completion of the HVDS is expected to considerably reduce energy losses in the agriculture sector and improve the voltage profiles of agriculture pump sets.

Dinesh Kumar, Principal secretary (energy), was quoted as saying that steps should be taken for supply of seven hours of uninterrupted power to the agriculture sector. He said the government would be spending Rs 1,154.80 crore on the project over a span of the next five years.

Kumar said that completion of HVDS would pave the way for a reduction in energy loss, theft of energy, peak-power loss and transformer failures. Japan International Co-operation Agency (JICA) has sanctioned loan assistance for the project.

The Ministry of Power has asked the Ministry of Environment and Forests to fast-track the process of granting green clearance to coal mines attached to the 4,000-MW Sarguja ultra-mega power project in Chhattisgarh.

According to an official in the Power Ministry, “We have written to the Environment Ministry to speed up the process of granting clearance to coal blocks for the Sarguja UMPP.”

It is to be noted that initial bids for the Sarguja project have been postponed several times in the past eighteen months due to delays in the grant of environment and forest clearance for coal blocks attached to the project.

The Ministry of Environment and Forests (MOEF) had classified coal mines into two categories — “go” and “no-go” areas. As per the classification, mining in “no-go” areas was barred on the grounds that it would have an adverse impact on the environment.

Coal mines allotted to this project fall in the Hasdeo-Arand mining area, which was classified as a no-go zone.

Though the current last date for submission of preliminary bids for the Sarguja UMPP is December 5, it is expected that the date might be extended again.

It was more than 10 years before Jharkhand was created. But not a single state-run power plant could come up in the State since its creation in 2000.

As a result, Jharkhand had been depending much on private players with signing of MoUs, holding an idea that the proposed private-run power plants would meet the State’s power shortage by producing of over 5,000 MW of electricity.

But this idea could not be fulfilled because private players signed MoUs with the state could not set up plants as yet as the state could not allot land, water and infrastructures according to terms and conditions of the MoUs.

Jharkhand’s two power utilities – Jharkhand State Electricity Board (JSEB) and Tenughat Vidyut Nigam Limited (TVNL) have total installed capacity of 1,320 MW.at the beginning of 2005-06 which remained the same till the date.