Secretary-level meeting of the MoC and MoP-I: H.C. Gupta says tapering linkage facility to be phased out

Nov 20: The coal ministry has warned that it will no longer accommodate tapering linkage requests from utilities that have been allocated captive coal blocks, for their envisaged 11th Plan power projects, if they fail to start production during the stipulated time. The Coal secretary, H.C Gupta, issued this warning in a recent review meeting after it turned out that some of these utilities had not yet initiated development activities at allocated captive coal blocks, causing wider concern that they might fail to comply with the stipulated production schedule, so as to coincide with the commissioning of their end-use power projects. Gupta argued that coal production has been unable to match demand. In this context, non-adherence to  production schedule for the allocated captive coal blocks will not be acceptable, and projects with captive mines should make every effort to match the development of their coal and power project, the Secretary emphasized.
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Secretary-level meeting of the MoC and MoP-II: No LoA without imports, says Gupta MoC

Nov 20: The pressure to meet the burgeoning demand of coal from all quarters of the industry is certainly showing on the coal ministry. But the good thing is that it has also found a way to tackle the mounting strain on its resources. During a recent meeting, the coal secretary H.C. Hupta made it clear that Letters of Assurance (LoA) for the supply of coal will only be granted to power projects if they agree to meet a portion of their requirement through imports. This move is likely to take some pressure off Coal India Limited (CIL), which has already over-committed its supplies to meet demand from the power and other sectors. The coal ministry, power ministry and the CEA will now jointly work out the coal requirement on a yearly and half-yearly basis, and the availability of coal from CIL sources. Following this analysis, the differential will then have to be met by imports.
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Secretary-level meeting of the MoC and MoP-III: Few tapering linkages recommended

Nov 20: Despite a stern warning that tapering linkages should be curtailed by the coal secretary at a recent meeting with power secretary Anil Razdan, there was finally a consensus that some tapering linkages have to be given. Among those which have been recommended for grant of tapering linakges in the meeting are:
West Bengal Power Development Corporation Limited`s (WBPDCL) Sagardighi project: The 600 MW project has been commissioned. West Bengal plans to produce around 15 MTPA of coal from its allocated blocks, starting from 2009/2010. Keeping this mind, the tapering linkage has been accorded for a capacity of 100 MW only.
WBPDCL`s 420 MW Bakreshwar project: The project has been granted tapering linkage for a generation capacity of 100 MW for similar reasons.
DVC`s 1200 MW Raghunathpur project in West Bengal: The thermal venture has already been allocated a tapering linkage for 500 MW. Since production from DVC coal mines is expected to start from March 2009, tapering linkage for another 100 MW has been recommended.
DVC`s 1000 MW Mejia II project in West Bengal: Tapering linkage for 500 MW capacity has been recommended on similar grounds.
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Secretary-level meeting of MoC and MoP-IV: Details of long-term linkages recommended

Nov 20: During the recent secretary-level meeting held by the coal and power ministries, a number of independent power projects (IPP) were recommended for the grant of Letters of Assurance (LoA) for coal linkage. These projects are:
8Dheeru Powergen Private Limited`s 3x350 MW project in Korba, Chhattisgarh: Since a number of coal blocks have been allocated to the Chattisgarh government, only one unit has been recommended for linkage. Coal supply assurance for another unit is already available with the company.
8R.K.M. Powergen Private Limited 4x350 MW project in Janjgir Champa, Chhattisgarh: The MoC has recommended one unit for assured coal supply, while coal for another unit had been allocated earlier.
8Dhariwal Infrastructure (P) Limited 2x300 MW project in Chandrapur, Maharashtra: While the LoA has been awarded for the first unit, additional linkage has been endorsed for the second unit as well.
8TRN Energy Private Limited`s 600 MW project in Bilaspur district of Chhattisgarh: The LoA has been awarded for the entire project capacity.
8Adani Power Limited`s 3x660 MW Phase-III expansion project at Mundra: Since this is a coastal plant, only 70% of the capacity has been assured of coal supplies through linkage.
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Secretary-level meeting of MoC and MoP-IV: Projects discussed

Nov 20: The website carries here, a list of power projects that were considered for coal linkage during a recent secretary-level meeting of the coal and power ministries. The information has been collated here in terms of the name of the project developer, the capacity of the project, the capacity for which linkage had been accorded earlier, remarks of the ministries and the present capacity recommended for coal linkage. While some of the projects have been accorded tapering linkages, some have also been recommended for long-term linkages in the course of this meeting. For instance, a Letter of Assurance (LoA) has been provided to Sophia Power Company Limited`s 4x660 MW project at Amravati in Maharashtra, whereas GMR Energy Limited`s 3x350 MW at Kamalanga in Orissa has been awarded tapering linkage for 550 MW of capacity. However, linkage has been deferred for some projects. The cumulative capacity of projects that were on the table was 27043 MW.
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Regulatory Briefs

Nov 20: 8The Maharashtra Electricity Regulatory Commission (MERC) has invited public comments on the proposed amendment to the existing regulations on standards of performance of distribution licensees, and the period for granting of supply and determination of compensation. The regulations were first circulated in 2005, and MERC has sought written suggestions and objections from the public and stakeholders on the draft version of the amendment. The comments need to be submitted by December 12, 2008.
8MERC has also postponed the deadline for the submission of public comments on the draft prepared by MERC for amending the electricity supply code and the conditions of supply regulations, 2005. Now, comments can be submitted until November 27, 2008.
8The Karnataka Electricity Regulatory Commission (KERC) is due to conduct a hearing on the draft version of the Load Forecast Regulations, 2008, issued by the commission on August 18, 2008. The commission has received comments, solicited earlier, from seven stakeholders, including the state government. The hearing is scheduled for November 28, 2008. All interested stakeholders and individuals can participate in the hearing and can also make written submissions on the matter.
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BOP contract summary for 11th Plan TPPs (as on October 24, 2008)

Nov 20: 8For reference purposes, the website carries here, a synopsis of the contracts awarded for the major balance of plant (BOP) packages for the thermal power plants (TPP) which are due to be commissioned in the 11th Plan period. This also includes TPPs which are conceived as additional and/or best effort projects.
8The data is segregated here in terms of the name of the BOP, the number of BOPs required for the TPPs, the number BOPs for which letter of award (LoA) is pending, the total number of different BOPs required for the TPPs, the number of BOP orders placed, and the number of BOPs for which orders are yet to be placed.
8Notably, out of a total 596 BOP orders, 352 stand awarded as of October 24, 2008. 244 BOP orders are yet to be placed.
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NHPC's Teesta Low Dam-III and Teesta Low Dam-IV HEPs: A status update (as on October 2008)

Nov 20: For reference purpose, the website carries here the latest implementation status of the Hydro Electric Projects (HEP) being executed by NHPC in the state of West Bengal under the 11th Plan capacity addition programme. The progress of the two HEPs -- Teesta Low Dam-III and Teesta Low Dam-IV as on October 31, 2008 has been summarized below:
8Teesta Low Dam-III HEP (4x33 MW):
--59,310 cum, out of a total of 67,315 cum, of the dam cellular wall has been concreted
--Excavation work for barrage blocks III to VII has been completed.
--1,68,487 cum, out of a total of 1,69,473 cum, of the barrage has been concreted.
--Excavation of the intake structure has been completed.
--Penstock excavation work has been completed and erection is in progress.
--54,931 cum, out of a total of 78,000 cum, of the Power House has been excavated.
--7,92,506 cum, out of a total of 8,35,000 cum, of the Tail Race Channel (TRC) has been excavated
8Teesta Low Dam-IV (4x40 MW):
--8,30,042 cum, out of a total of 8,82,317 cum, of the Dam Spillway has been excavated.
--45,682 cum, out of 1,41,600 cum, of the Concreting in spillway glacis and piers has been completed.
--2,282 cum, out of a total of 34,000 cum, of excavation for the cellular wall has been completed.
--37,772 cum, out of 1,18,000 cum, of the concreting of Power House has been completed.
--5,57,485 cum out of 6,36,325 cum, of excavation for the TRC has been completed.
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EIA reports

Nov 20: 8Basudha Udyog Private Limited (BUPL) has submitted the Environment Impact Assessment (EIA) report, for the proposed expansion of its existing coke oven plant and for setting up of a 12 MW washery reject- based power plant at Thandalachery village in the Thiruivallur district of Tamil Nadu, to the Ministry of Environment and Forests (MoEF).
--As per the EIA report, the project is due to be developed over a total area 24.64 acres.
--The power plant will use heat retrieved by the waste heat recovery boilers (WHRB) for the generation of electricity. The metallurgical coke requirement for the proposed project is estimated to be 1,58 ,760 tonnes per annum.
--The water requirement for the project will be met from the available ground water resources.
8Jaiprakash Associates Limited (JAL) has submitted the EIA report, to the MoEF, for its proposed Mandla north underground coal mine project in Chhindwara district of Tamil Nadu.
--As per the EIA report, JAL has acquired the mining lease for 10.41 square kilometers, mostly forestland. The block is intended to be developed as two separate mine units.
--The rated capacity of the project is estimated to be 1.5 million tonnes per annum of non-coking coal.
--The gross geological reserves of the coal mine are pegged at 199.315 million tonnes, while mineable reserves stand at 143.014 million tonnes, out of which 84.125 million tonnes is expected to be extractable.
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List of NTPS under 11th Plan programme

Nov 20: 8For reference purposes, the website carried here a list of the nuclear thermal power stations (NTPS), which are under construction and expected to be in operation during the 11th Plan, as part of the Plan's capacity addition programme. The data is collated here in terms of the name of the project, the state in which the project is being executed, the capacity for which construction is underway and the anticipated commissioning schedule of the projects.
8A total of seven NTPS, with a total capacity of 3,380 MW, are envisaged for the plan period. Out of these, the 220 MW Kaiga Atomic Power Plants (APP) in Karnataka had been commissioned in April 2007, while five more NTPS, with a total capacity of 2,260 MW, are due to be commissioned in the year 2008-09. The exception, Kalpakam NTPS in Tamil Nadu, is scheduled for commissioning in 2011.
8The beneficiary states for these projects include Karnataka, Rajasthan and Tamil Nadu. In terms of capacity addition, Tamil Nadu tops the list with total 2,500 MW of potential capacity, followed by Rajasthan and Karnataka, with capacity of 440 MW and 220 MW under construction, respectively.
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Credit ratings for MeSEB & Ind Bharath group's Arkay Energy

Nov 20: 8International rating major, Fitch Ratings, has assigned an expected rating of 'BBB+ (SO)' to Meghalaya State Electricity Board's (MeSEB) proposed Rs 1,00 crore long-term unsecured non-convertible bond issue. In tandem, the agency has assigned a final rating of 'BBB+(SO)' to MeSEB's Rs 120 crore long-term unsecured non-convertible bond issue, allotted on 17 October 2007. The agency has also withdrawn the expected rating of 'BBB+(SO)' issued on 28 September, 2007, for the remaining Rs 100 crore non-convertible bonds.
--The expected rating assigned to these bonds is based on the unconditional and irrevocable guarantee provided by the Government of Meghalaya (GoME) against repayment of principal and interest, and is further supported by a predefined payment mechanism. The final rating follows the completion of the issue and receipt, and the review of transaction documentation confirming information already received.
8Alongside, the domestic credit rating agency, ICRA, has assigned an 'LBBB' rating, indicating moderate credit quality in the long- term, to the Rs 203 crore long term debt facilities and Rs 9.5 crore fund-based working capital facilities of Arkay Energy (Rameswaram) Limited (AERL). ICRA has also assigned an 'A2' rating indicating the above average credit quality rating to the Rs 5.5 crore non-fund-based working capital limits of the company.
--The ratings factor in AERL's track record of profitable operations, since its inception in FY 2006, arising out of a remunerative tariff structure and availability of natural gas at reasonable rates. The ratings also take into account the substantial energy deficit in Tamil Nadu, which will result in healthy offtake for the company's power output.
--However, these strengths are tempered by the fact that the company's past Plant Load Factor has been constrained by factors such as lack of adequate transmission facilities (although this has been rectified by creation of new transmission links in FY 2009) and lack of adequate gas supplies. Further, the profitability of the company would continue to remain vulnerable to increase in natural gas prices, as AERL's tariffs are linked to the state HT tariff, which may not move in the same proportion as increase in fuel costs. The ratings are also constrained by the significant support extended by the company to other Ind Bharath group companies by way of loans and advances, which has had an impact on its liquidity and capital structure.  Ability to source fuel at remunerative rates and policy towards funding of group companies would thus remain key rating drivers.
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Status update on total 6 coal blocks allocated to Monnet Ispat & Sunflag Iron separately

Nov 20: Monnet Ispat & Energy Limited (Monnet Ispat) and Sunflag Iron & Steel Company Limited (Sunflag Iron), either solely or jointly with some other company, have three coal blocks each allocated to them by the Ministry of Coal (MoC).  While Monnet Ispat has Gare-Palma IV/5, Utkal B-2 and Mandakini coal blocks, Sunflag Iron has been allocated the Belgaon, Madanpur (North) and Choritand-Taliaya coal blocks. The development/exploitation status of the six blocks, allocated between 1996 and 2008, has been listed below:
8Gare-Palma IV/5
Allocated solely to the Monnet Ispat long back in 1996, the block has already reached peak rated capacity.
8Utkal B-2
Again allocated fully to the Monnet Ispat, the coal production is due to be started by December 2008.
8Mandakini
Jointly allocated to Monnet Ispat with Jindal Photo Limited and Tata Power Company Limited on January 9, 2008, only the joint venture (JV) company, for mining the block, has been formed.
8Belgaon
Sunflag Iron has been able to start mining operations in the block even before schedule. The Belgaon coal block was solely allocated to the company.
8Madanpur (North)
The MoC had allocated this block to a group of companies along with Sunflag Iron in 2006. The JV company for mining the block has been formed and the bank guarantee has been submitted to the ministry. All other milestones are yet to be achieved.
8Choritand-Taliaya
Allocated jointly with Rungta Mines Limited on May 14, 2008, only the joint venture (JV) company, for mining the block, has been formed.
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Tender Briefs

Nov 20: 8The Delhi Electricity Regulatory Commission (DERC)  is looking for consultants to assist the Commission in the review and analysis of true-up petitions for the FY 2007-08, revised Aggregate Revenue Requirement for uncontrollable parameters for the FY 2008-09 & FY 2009-10 and corresponding tariff adjustments for the FY 2009-10, in cases of generation, transmission and distribution companies. The interested bidders will have to submit separate financial bids for generation, transmission and distribution companies.
8The Government of Puducherry is set to undertake reforms in the power sector and the restructure of the State Electricity Department into a corporate body. In this context, the state government has invited Expressions of Interest from experienced consultants for a comprehensive study of the performance of the power sector in the Union Territory and to submit a proposal for reforms and restructuring of the power sector.
8The Hindustan Newsprint Limited has invited bids for the supply of around 10,000 million tonnes (MT) of imported coal by December 2008. The company is also needs around 45,000 MT steaming (non-coking) imported coal of Indonesian origin by January 2009.
8The Tamil Nadu Newsprint and Papers Limited (TNPL) has invited bids for the design, manufacture, supply, erection and commissioning of coal handling plant. TNPL is presently embarking on a Mill Expansion Plan to increase its paper production capacity from 2,45,000 to 4,00,000 tonnes per annum.

Ravva consortium demands $5.3/mmbtu for gas: Consumers up in arms

Nov 20: The Ravva consortium has demanded a ceiling price of $5.73/mmbtu for gas supplied from the Ravva and Ravva Satellite fields. The prices are coming up for revision in December, 2008. The floor price for Ravva field is $1.75 and the ceiling price is $3.5/mmbtu. Pertinently, the entire gas from the field is supplied under APM nomination to APM customers. The current price for Ravva Satellite field is $3.3/mmbtu (floor price) and $4.3/mmbtu (ceiling price). The gas is sold to consumers at market price. The consortium wants to raise the ceiling price for both fields to $5.73/mmbtu.
8Consumers have protested the sharp hike in the price sought by the consortium. One of the first to protest is Andhra Pradesh Power Coordination Committee which is made up of companies like Lanco Kondapalli Power Pvt Ltd, Reliance Infrastructure Ltd, Spectrum Power Generation Ltd and GVK Industries among others. The Committee claims that the price sought is too high, particularly in the context of the fact that RIL's KG Basin gas is priced at only $4.2/bbl. What is more, the Committee had taken the Ravva consortium to court when the ceiling price was last revised to $4.3/mmbtu. The court is yet to pass a verdict on the writ filed by the consortium.
8Meanwhile, GAIL -- which is an intermediary here -- is keen that the petroleum ministry is involved in negotiations with the Ravva consortium. Particularly because an increase in the price of Ravva gas has implications for the gas pool account.   Details

Letter to Deora: RNRL lays claim to 81.6 mmscmd of gas at NTPC price

Nov 20: In a letter to petroleum minister Murli Deora, Reliance Natural Resources Ltd, an Anil Ambani Group (AAG) company, has accused Mukesh Ambani's Reliance Industries Ltd. of violating court orders restricting the supply of gas to third parties without first satisfying the Gas Supply Master Agreement for supply of gas between RIL and RNRL.
8The letter highlighted what it said were directives of the Mumbai High Court that restrained RIL from selling any gas from the 80 mmscmd that will be produced from the D-6 discovery. "There is clear identified distribution up to the first 81.6 mmscmd," the letter said. In other words, the argument goes, RIL stands restrained from committing the sale of any quantity of gas to any third party without first satisfying the interest of RNRL.
8The letter also puts up a cogent view to support its argument that the decision by the Empowered Group of Ministers (EGOM) on September 12, 2007 on the pricing of RIL gas was meant for valuation of gas to determine the government take of the gas from the KG Basin field and not the fixation of the sale price of gas to consumers.
8The letter goes on to establish that the price discovered through NTPC's ICB process indeed constitutes an arms length sale price for use as benchmark for similar sales. In other words, the argument is that NTPC's lower price should be recognized as a genuine price because that's price which the RNRL intends to pay for its share of gas as per the Gas Supply Master Agreement signed between RIL and RNRL. Taking the NTPC price as the benchmark price will be in accordance with government's gas price formula that says that the price of gas should be as per established market price, the letter has argued.
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Anil Ambani Group says Dadri power plant held up only for want of gas

Nov 20: In a letter to the government, the Anil Ambani Group has said that the progress in its 7480 MW Dadri power project has been stalled not on its account but due to the non-finalization of supply of gas from RIL`s D-6 discovery. The Group`s company, Reliance Power Limited, is setting what is the world`s largest gas based power project. The following is the status update:
8Reliance Power Limited has entered into a State Support Agreement with government of Uttar Pradesh on June 16, 2004 for implementation of Dadri project.
8Around 2200 acres of land has been acquired by government of UP and has been transferred to the company on 23rd November 2005.
8Water allocation to the project has been granted from Uppar Ganga Canal by Department of Irrigation, government of UP on 4th March 2005.
8Environmental clearance has been granted to the project by Ministry of Environment & Forest on 29th June 2005.
8A tender inviting international competitive bids for selection of EPC suppliers was issued in December 2005 and GE, Siemens, Alstom and BHEL were among the companies responded to the tender notice. The bidders have been raising their concerns regarding commitment of assured supply of gas for the project to enable them submit their final bids. The deadline for bid submission has been deferred from time to time for want of assured gas supply. The project is in very advance stage in all aspects but plant construction work could not take off for the last about 3 years
only for want of a firm commitment on gas supply.
8Due to the significant progress achieved by this project in all areas including acquiring land, securing water supply and obtaining all statutory approvals and clearances in a short span of time, the Central Electricity
8Authority recognized Dadri as an XIth Plan project.
In other words, what the Anil Ambani Group is trying to do is to counter the argument that RIL gas cannot be given to Dadri because the plant is not ready.   Details

EGOM price for RIL gas for valuation of government take only, asserts Amar Singh

Nov 20: Samajwadi party leader leader Amar Singh has fired off a letter to Pranab Mukherjee, chairman of the Empowered Group of Ministers set up to determine the allocation and pricing of gas from RIL's D-6 block, complaining about " blatant attempts" being made to distort the position that the $4.2/bbl price tag for RIL gas was for valuation of the government's take in terms of profit petroleum and the sale price of gas. Singh made the following points:
8EGOM had approved a formula leading to price of US$ 4.2 per mmbtu on 12.09.2007 for domestically produced natural gas which will be applicable for a period of 5 years from date of commencement of production. This price is for valuation and not for sale as clearly brought out in the Press Release issued by MoP&NG on 12th Sept 2007.
8As per the PSC signed by government under NELP, the operators have the freedom to market the gas in the domestic market on arms length basis. Government does not fix the price of gas. The role of the government is to approve the valuation of gas for the purpose of determining the government's take.
8The Committee formed by Ministry of Petroleum & Natural Gas to formulate transparent guidelines for approving gas price formula for giving government approval under PSCs has also spelt out very clearly that government's intervention in price approval/determination is only for the valuation of government take. The contractor is free to sell gas at a price other than price fixed by government for valuation.
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Meet on Integrated Energy Policy-I: PM roots for Kirit Parikh recommendations

Nov 19: The full Planning Commission -- under the chairmanship of Prime Minister Manmohan Singh -- on implementing the major recommendations of the Integrated Energy Policy prepared by Planning Commission member Kirit Parikh. The meeting was attended by key members of the cabinet. The PM made the following points in the meeting:
Energy pricing is a key component of energy policy, since appropriate energy prices must provide the incentives needed for efficient use of energy and also the incentive for investment in expanding supplies.
8Currently, policies relating to individual energy sectors are set by a number of different ministries reflecting historical evolution. This means the policies followed in different sectors are not always internally consistent.
8It is therefore critical that an Integrated Energy Policy is evolved based on a consistent application of economic principles across different energy sources. To this end, the Deputy Chairman, Planning Commission had been asked to constitute an expert committee to suggest such a policy. An expert committee was constituted under the chairmanship of Dr. Kirit Parikh, Member (Energy), Planning Commission and this group had submitted its report in August 2006.
8The report suggested a comprehensive energy policy for the country, with many specific recommendations. Subsequently, at the Energy Coordination Committee, the Cabinet Secretary had been directed to discuss with the concerned ministries the implementation of these recommendations. The recommendations were comprehensively discussed and some progress had been made in implementing some of the recommendations by the concerned ministries. Action had been initiated on other recommendations, but we are as yet far from complete implementation. This was not surprising since full implementation has far reaching implications and necessarily will take time.
8Although the approach of the Report on integrated Energy Policy has been reflected in the Eleventh Plan, there was merit in adopting an Integrated Energy Policy that can guide policy in individual energy sectors in the years ahead. The draft policy document, circulated for this meeting seeks to present such a framework indicating the principles which should guide energy policy in the years ahead.
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