The article written by me can be found at Page 49 of the magazine. Other contributors include Mr. Subramanya, CEO of Tata BP Solar, Shaji John, Chief - Solar Initiatives, Hari Chereddi, MD of Sujana Energy

1. RNI No.:MAHENG/2010/39548 ` 100
Vol.2 s No.6 s February - March 2012 s Mumbai
Special Comments Will it boost the
power sector?
Ramesh Chandak
CEO & MD, KEC International
and President IEEMA
Anil Sardana
MD, Tata Power
M S Unnikrishnan
MD & CEO
Thermax Limited
Ramesh Kymal Gopi Krishna
Chairman and Managing AVP
Director, Gamesa India SBI Capital Markets Limited
Sector Focus: Renewable Focus:
Coal Solar
Coal scarcity marring shadow Jawaharlal Nehru National Solar
on capacity addition Mission & Its Success

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3. Editor’s Desk
Let’s Cross Fingers!
he Budget, as an event, is a great opportunity for the country to un-
T derstand the vision of the government. India’s power sector is the fifth
largest in the world. The sector is high on India’s priority as it offers
tremendous potential for investing companies based on the sheer size of the Editor-In-Chief: Pankaj V Chauhan
market and the returns available on investment capital. Hence, the industry Consulting Editor: Renjini Liza Varghese
has certain expectations from the Union Budget 2012-13 which is scheduled
Editorial Team:
to be presented in the parliament on March 16, 2012.
P Khode, Rahul Vyas, Devendra Mittal
Power sector is one of the main consumer of non-coking coal and nearly Research Team:
two third of the power generation in the country is coal based. It said that a Santosh Kaushik, Deepti Mishra
further reduction of customs duty from the imported coal is important as it Vipul Singh, Priya Nair, Sonal Shah
discourages power projects based on imported coal. The country’s power sec- Marketing & Sales:
tor, which is expected to see a capacity addition of about 100,000 MW in the
12th Five-Year Plan, is grappling with various problems including acute fuel Pankaj Chauhan – CEO
pankaj@vision-media.co.in
scarcity and spiralling of coal prices. The Association of Power Producers
(APP), a grouping of about 22 companies including Reliance, Tata, Lanco, Sudhakar Chittru – Head Marketing
Adani, Jindal... accounting for over 95 per cent of power capacity in the pri- sudhakar@vision-media.co.in
vate sector, presented a slew of proposals to be considered for the 2012-13 Sameer Shaikh – GM
Budget, in this regard. Ahead of the Budget, the apex body of the domestic sameer@vision-media.co.in
electrical equipment industry IEEMA sought extension of the tax exemp-
tion to all power projects, including generation, transmission and distribu- K. Pushpageetha – Regional Manager
geetha@vision-media.co.in
tion. Ramesh Chandak, IEEMA President, stated that the domestic electrical
equipment manufacturing industry suffers a substantial cost disadvantage of Naveen Bharadwaj – North Region
14% vis-a-vis imports while supplying to power projects due to many local delhi@vision-media.co.in
taxes such as VAT, entry tax / octroi; higher financing cost, etc. IEEMA has Subscription & Circulation Team:
recommended that either there should be mandatory exemption of CST/VAT Geetha, Sunil, Ajay, Vidya
for mega / ultra mega power projects or these levies should be excluded for
Creative Head:
the purpose of bid evaluation. In the past few years, there has been consider-
Prashant S. Kharat
able growth in power plants based on renewable sources of energy. Though,
MNRE through the Jawaharlal Nehru National Solar Mission (JNNSM) has Graphic Designer:
accelerated the growth of the solar industry; there are some challenges for G. Sanjay
the manufacturers and developers of solar energy and associated activities in Production Head:
India. There is a need to provide fiscal measures to the Indian solar industry to Shantanu Singh
enable a strong solar manufacturing base to develop in India. The import duty All right reserved while all efforts are made to
on raw materials / consumables for manufacturing the Solar PV Cells and ensure that the information published is correct,
Solar PV Modules in India is levied to the tune of 10 to 15%. This becomes Power Insight holds no responsibility for any
unlikely errors that might have occurred. The
an extra burden on the Indian manufacturers resulting in higher cost of indig- information on products & projects is being
enously manufactured cells, modules and collectors, concentrators compared provided for the reference of the readers.
to the fully imported complete solar products. The import duty exemption However, readers are cautioned to make inquires
& consult experts before taking any decision on
should be removed from imported finished PV cells and modules, so as to purchase of equipment or investment. Power
bring Indian manufacturers at par with the global players. The MNRE is also Insight holds no responsibility for any decision
seeking extension of existing incentives for the wind energy sector in the up- taken by readers on the basis of information
provided herein. All disputes are subjected to
coming Union Budget. This would ensure growth momentum in the coming Mumbai Jurisdiction only.
years after the sector added record 10,500 megawatt in the 11th five year plan.
Printed, Published, Edited and Owned by
PANKAJ V CHAUHAN, Printed at MAGNA
Let’s hope that the Budget 2012-13 can bring in huge opportunity in restoring GRAPHICS (INDIA) LTD.,101, C & D GOVT. IND.
investor sentiments in power sector, such that shelved projects are brought ESTATE, KANDIVLI (WEST), MUMBAI 400 067
back on track and the sector could get the required fillip along with offering and Published from G-3A, JUNGLEE PEER
DURGAH, K.A.GAFFARKHAN ROAD, WORLI,
necessary reforms to help electrical equipment industry in getting the level
MUMBAI 400 018.
playing field.
Editor: PANKAJ V CHAUHAN
Editor - in - Chief
RNI. NO. : MAHENG/2010/39548
Pankaj V Chauhan
Email : editor.scribe@gmail.com
Power Insight | February - March 2012 | 1

4. Renewable Focus: 44
Contents
Solar Power :
Energy for all
JNNSM & its success
18
Thrust on distributed generation to
make electricity available for the remot-
est village of the country and adding
solar capacity, a well learned lesson in
the first year of JNNSM....... more
While the previous year, it
was the equipment supply
and raising funds for the
projects were the key high-
lighted issues, this year,
Coloumn’s:
reduction in domestic coal
Budget
production and volatility in
imported coal pricing are
adding fuel to the fire. Head-
ing to another budget, the Need to Electrify Focus Power Issues needs to be
power sector players are Hemant Joshi
Sector addressed
expecting announcement,
2012-13
Sr. VP Finance – CLP Gopi Krishna Shaji John
which could translates into AVP – SBI Capital Chief - Solar Initiatives
an accelerated momentum 24 Market Ltd at L & T
in the sector. 22 46
Vol.2 s No.6 s February - March 2012 s Mumbai Cover Story JNNSM: the lessons
learned
JNNSM-Great begin-
ning or False Start?
Solar PV As A
Value Proposition
Hari Kiran Chereddi Madhavan Nambhoothiri K Subramanya
Managing Director, Founder & Director, RE CEO – TATA BP Solar
Sujana Energy Solve Energy Consultants L&T
Sector focus Interactions: 48 49 58
Coal scarcity In this issue
marring shadow on
Increasing energy
efficiency of Coal Press Releases: Thermal News 04
capacity addition
Peter Gunn
Director of Total Synergy Betagaurd MCB’s and DB’s from Siemens..................Pg 36 Nuclear News 05
International (TSI), Geo-
32 CoalTM Skintop @ Solar.............................................................Pg 36 T & D News 08
How far the PM’s intervention to
increase coal supply to thermal Results Updates 10
GE – Entelligaurd...........................................................Pg 37
power plants and Coal Ministry’s Exploring overseas Gas News 12
decision to reduce the quota of 30
supply to increase coal Largest Gas Turbine combined Cycle Project.............Pg 38
e-auction coal will help resolving e-auction: Mjunction Coal News 14
the severe shortage Alternative Energy Summit 2012..................................Pg 38
Vinaya Varma Wind News 42
Vice President
26
Maktoum Solar Park – Dubai........................................Pg 39 Solar News 43
Mjunction Services Limited
Events Updates 40
Ps.: Pictures are for reference only and bears no resembelance to any project or company.
2 | February - March 2012 | Power Insight Power Insight | February - March 2012 | 3

5. National News National News
Orissa to get 200 MW through
Thermal power banking
Anticipating power short- set to get 200 MW from
Govt for early start of environ- Legal tangle delays NTPC’s order
fall in the upcoming sum-
mer months, Grid Corpora-
northern states like Him-
achal Pradesh and Haryana
ment management fund placement
tion of Orissa (Gridco) is in through the power bank-
the process of striking pow- ing route. Gridco, the bulk
Concerned over possible contribution and to work er banking deals with other power purchaser, is also in
Mired in legal tangle, coun- Due to the dispute, NTPC
environment damage to out the maintenance and states to ensure uninterrupt- talks with other states like
try’s largest power produc- has not been able to place
be caused by working and expenditure of the fund. In ed availability of power and West Bengal and Gujarat to
er NTPC is unable to place orders worth about Rs
upcoming private thermal view of the above, you are tide over the deficit. procure power through this
equipment orders worth Rs 34,000 crore for four proj-
power plants, the state requested to kindly take mode.
34,000 crore for four super- ects spread across Maha-
energy secretary has writ- necessary actions to cre- From April 1, Orissa is
critical projects in the coun- rashtra, Bihar and Uttar
ten to the Forest and En- ate and manage the fund,”
try. The placement of these Pradesh. The orders were
vironment Department to said B G Mathi Vathan, the
take initiatives to start op- state energy secretary in a
orders have been stranded
since one of the participat-
to be placed for two units
each of Solapur and Mouda
JITPL to commission 600 MW by Dec
eration of an Environment letter to the Environment Jindal India Thermal Power Ltd (JIT- The company plans to operationalize monitoring the progress of the proj-
ing bidders -- Ansaldo Cal- projects in Maharashtra
Management Fund (EMF) Department. The state PL) has set target for commissioning its second unit of equivalent capacity ect. The company has expressed con-
daie Boilers (ACB) -- ap- and two units of Meja plant
in Odisha. has signed Memorandum of the first unit (600 MW) of its 1,200 by March 2013. “We had a meeting fidence in commissioning the first unit
proached the court after its in Uttar Pradesh. Each of
of Understanding (MoU) MW plant proposed at Derang village with top officials of JITPL recently. (600 MW) by December 2012,” said a
“Forest and Environment bid was rejected by NTPC these projects have a capac-
with 29 companies to pro- in Angul district by December this Their proposed coal-fired power plant senior official of state energy depart-
Department is the nodal citing non-fulfillment of ity of 1,320 MW. Another
duce about 37,000 MW year. is on the fast track and we are closely ment.
department for creating minimum criteria in the order was to be placed for
electricity by the end of
the EMF for receiving the tender. three units of 1,980 MW
2022.
Nabinagar plant in Bihar.
NTPC to follow WBPDCL’s rehabilitation Jharkhand to have sur-
Nuclear
package plus power in 5 yrs US approves first nuclear plant
Country’s largest power company NTPC Jharkhand could have been a surplus state in 3 decades
is expected to follow the rehabilitation in power sector if a section of locals had US has approved construc- The site for the proposed
package offered by West Bengal Power not resisted setting up of two major power tion of two atomic reac- plant already has two old
Development Corporation for land acqui- projects by the state-owned National Hy- tors in the country, making reactors. Only one mem-
sition for the proposed 1,600-MW Katwa droelectric Power Corporation (NHPC) them the first to be built in ber of the five-person
thermal power project in the state. and the National Thermal Power Corpora- America in more than three NRC, Chairman Gregory
tion (NTPC). decades despite objections Jaczko, dissented, citing
NTPC had decided to go ahead with land
acquisition directly from land owners, However, Jharkhand State Electric- from the nation’s top nucle- safety concerns following
after the state government said it will ity Board (JSEB) now intends to attain ar regulator. a triple meltdown last year
not acquire any land for any commercial a power surplus status within next five at the Fukushima Daiichi
Commissioners of the Nu-
project. “We have deployed our officials years. NHPC has struggled for over two plant in Japan. He argued
clear Regulatory Commis-
who are making a survey of land for the decades to set up one hydel power plant that the new licenses don’t
sion (NRC) voted 4-1 to
Katwa thermal power project and we — to the extent of 710 MW in the first go far enough in requiring
approve the construction of
will be following the West Bengal Power stage and 2,200 MW in the second stage the builders to incorporate
two 1,100 megawatt West-
Development Corporation (WBPDCL) — harnessing water from South Koel riv- lessons learned from the
inghouse-Toshiba AP1000
package for acquisition,” an NTPC of- er and its tributary stream, North Karo, in Japanese nuclear disaster
at power generator at Vog-
ficial said. Khunt and Torpa districts of the state. last year.
tle in Georgia.
4 | February - March 2012 | Power Insight Power Insight | February - March 2012 | 5

6. National News
Nuclear
Jaitapur nuclear plant mak-
ing progress
The Jaitapur nuclear “Progress is happening
US safety nod to Westinghouse power plant project, there. I am confident
reactors for Gujarat project which is going to be the project will take off
built as part of the India- soon. Ground breaking
Nuclear Power Corpo- tion report on the techni- France civilian nuclear is a matter of time. This
ration (NPC), which is cal review of the AP1000 cooperation agreement, project will take off as
operating plants with standard nuclear reactor would take off soon, soon as possible,” Bigot
4,780 Mw capacity in design. Westinghouse Bernard Bigot, chairman told reporters after his
the country, has got yet Electric Company had of the French Alternative meeting with Srikumar
another push, as it can submitted its application Energies and Atomic En- Banerjee, secretary, de-
now expedite talks with for the AP1000 design on ergy Commission said partment of atomic ener-
the US nuclear major March 28, 2002. The US here on Wednesday. gy and chairman, Atomic
Westinghouse Electric nuclear regulator’s certi- Energy Commission.
Company for the pro- fication would be ratified
curement of AP1000 re- in due course of time by
actors for the proposed the US Senate.
CII for more clarity in nuclear
project at Mithi Virdhi,
NPC has already initi-
damage law
Gujarat. This was pos-
ated pre-project activi- The Confederation of In- it said.
sible as the US Nuclear
ties in Mithi Virdhi with dian Industry wants clarity
Regulatory Commission “Section 46 states nothing
ground breaking planned in some clauses of the Civil
last week has released in the civil liability law will
in the current year or ear- Liability for Nuclear Dam-
the final safety evalua- prevent the operation of
ly next year. age Act, 2011. Welcoming
other laws in force in the
the notification of imple-
country and makes clear
mentation rules, the CII
India eyes US $100 bn FDI in said a framework is in place
that criminal liability in
nuke energy in 20 yrs for the first time, instituting
case of an accident remains,
as indeed do tort claims.
India is expected to get ter Anand Sharma. strict liability for the opera-
However, clarification is
foreign direct investment tor who has to pay damages
“In the coming two de- required to ensure that this
(FDI) of over $100 billion of up to Rs 1,500 crore. A
cades, India will see invest- provision does not alter the
in nuclear energy in the balanced legislation would
ments in excess of $100 exclusive channeling of
next 20 years, of which a send the right signals to
billion in the nuclear power any claims for nuclear dam-
quarter would come from investors and suppliers
sector alone and I am sure, age on a strict liability basis
France, according to Com- and expedite the country’s
at least, a quarter, will come only to the operator who
merce and Industry Minis- nuclear power programme,
from France,” Sharma said. owns the plant,” it said.
6 | February - March 2012 | Power Insight Power Insight | February - March 2012 | 7

7. National News
T&D
Action plan to reform distribution
In a bid to give a much methodology of utili- These steps are cru-
needed boost to dis- ties to enable them cial, as the cumulative
tribution reforms, the get loans, provide a losses of distribution
power ministry has reform-linked interest companies increased
launched an ambi- subsidy to utilities and sharply to Rs 1,06,347
tious action plan. It promote distribution crore as on March 31,
will revise Case I and franchises to reduce 2010 from Rs 79,339
Case II standard bid aggregate transmis- crore in the corre-
documents (SBDs), sion and commercial sponding period of the
introduce a rating (AT&C) losses. previous year.
Five states accounted Power Grid
for 80% of total dis- board okays two
com loss projects worth
Rating agency Fitch today said the Rs 1,682 cr
losses of power distribution compa- State-owned transmis-
nies in five states contributed to 80% sion utility Power Grid
of the total losses in the sector dur- Corporation today said
ing 2009-10. “[Losses of] Distribution its board has approved
companies [discoms] in the five states two projects entailing
-- Tamil Nadu, Uttar Pradesh, Madhya a total investment of
Pradesh, Jammu & Kashmir and Hary- Rs 1,682.13 crore. The
ana, constituted 80% of the total losses approvals were given
of all discoms in the country in finan-
cial ended March 2010,” Fitch said in
at the company’s board PFC issues draft guidelines
meeting. In a filing to
a statement. the Bombay Stock Ex- for power drawl
change (BSE), Power Distribution licensees er market presently
The weak financial profile of discoms
Grid said the board will now have to pro- comprises 10 per cent
is the primary cause of stress for state
has given green signal cure short-term power of the total electric-
power utilities. They posted Rs 29,500
for system strengthen- (less than or equal ity procured in India.
crore worth of losses in fiscal 2009-10
ing in Raipur-Wardha to one year) through PFC has convened a
against Rs 7,000 crore in fiscal 2005-
Corridor for IPP Proj- competitive bidding meeting with the rep-
06.
ects in Chhattisgarh, at say the draft guide- resentatives of distri-
“This means that under the “cost-plus” an estimated cost of Rs lines of the Power bution licensees on
tariff, generation and transmission com- 1,422.85 crore. Finance Corporation February 10 to discuss
panies are able to push their costs to the (PFC). This is expect- the modalities. Cur-
This project is expect-
discoms, which are unable to recover ed to reduce the over- rently, the per unit rate
ed to be commissioned
the same from their consumers,” Salil all cost of procure- of short-term power
within 36 months from
Garg, Director in Fitch’s Asia Pacific ment of power. procurement stands at
the date of investment
Utilities team said. Rs 3.80 to Rs 4.
approval. The short-term pow-
8 | February - March 2012 | Power Insight Power Insight | February - March 2012 | 9

8. National News
T&D
IPPs may have to pay central grid
DNE TRANSFORMERS
charges for state supply
Independent Power (Gridco) has objected with the state grid,
? Transformers upto 5000 KVA and 33 KV class are Computer Aided Design and
DNE
Producers (IPPs) to pay these charges. the state-owned util-
manufactured under strict supervision by our qualified and experienced Engineers to
in Orissa may have ity should not pay for
In a recent meet- comply with the requirements of IS : 2026, 1180, BSI: 171
to bear the cost of charges of transmis-
ing, Gridco officials
national grid trans- sion made through
pointed out that
mission charges for Power Grid Corpo-
since private power
providing electricity ration of India Ltd
producers have the
to the state, as Grid (PGCIL) network.
option to connect
Corporation of Orissa
Our Range of Products Oil Cooled Transformer
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?
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Tata Power Q3 net down 41% to PowerGrid Q3 net soars 37% to Voltage Class : 0.441 KV, 11 KV, 22 KV, 33 KV
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Tata Power Company Ltd with Rs 4,519.18 crore Central transmission utility a line of credit worth Rs Rating 63 KVA to 1,000 KVA
?
has posted a 40.6% de- achieved a year ago. PowerGrid Corp, which re- 5,000 crore to us. We ex-
cline in consolidated net ported 37% rise in Decem- pect to get the first tranche Application: Standard IS 2026 / IS 11171 / IEC - 726
?
On a standalone basis, the ? HT Consumers
All
profit for the quarter ended ber quarter net profit at Rs of the fund by the end of Temp. Class : 900C - 1150C
?
company’s net profit for the
December 31, 2011 at Rs 809 crore, aid it is likely to next month,” a company ?Power Calibration
262.67 crore, compared
reporting quarter stood at
get a Rs 5,000-crore line of official told PTI on condi- Voltage Class : 11 KV
?
Rs 422.88 crore, up almost ?Industrial Transformers
with Rs 442.37 crore in credit (LoC) from the State tion of anonymity here on Types : Resin Cast / Resin Impregnated
three fold from Rs 154.07 ?Domestic Transformers
the corresponding quarter Bank of India (SBI). the sidelines of result an-
a year ago.The firm’s total
crore a year ago. The
nouncement event. ?Multystory Complexes Special Features : No partial discharge, Low noise
firms total income was up “The State Bank has in- level, Maintenance free, Compact for indoor
income rose 57.45% to Rs ?Colonizers
53.26%, from Rs 1,737.12 principle agreed to extend
7,115.60 crore for the quar- Installation, Over loading
ter under review, compared
crore in December 2010 to ?Electricity boards
Rs 2,662.34 crore in 2011.
KEC Int’l keen to take more business abroad DNE Transformers
RPG group company, already has presence in whole world as a market. systems, water, railways Key Person
KEC International, is almost 40 countries, vows We are already present in and telecom to more Jagdish Chandra Joshi : Proprietor
planning to take more of to slowly expand more di- the transmission sector in countries,” said Ramesh Admin. Office Factory
its business overseas, in visions of its business, to most of the countries. Chandak, the managing R-1/11, Jay Shree Colony, 1st Street, Opp. Bhasker School, H-161, RIICO Ind. Area,
hunt of more orders. The more number of countries. director and chief execu- Udaipur - 313 001, Rajasthan, India Dhoinda, Infront of MIning Office,
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10 | February - March 2012 | Power Insight Power Insight | February - March 2012 | 11

9. National News
Results
NTPC pays Rs 2,886-cr divi- NPC net rises 110% to Rs 1,497
dend for FY12 cr in Apr-Dec
State-run NTPC today which is the promoter of The turnover of Nuclear 110 per cent
paid an interim dividend the company with 84.5% Power Corporation (NPC)
NPC, which has supplied
of Rs 2,885.92 crore for stake. during April-December
these provisional numbers,
the current fiscal. “NTPC shot up 42 per cent at Rs
The company has paid says the improved perfor-
paid the highest ever 5,517 crore compared to Rs
interim dividend of Rs mance of 20 plants with
interim dividend of Rs 3,885 crore during the cor-
3.50 per equity share be- installed capacity of 4,780
2,885.92 crore,” a compa- responding period last year.
ing 35% of the paid-up Mw was largely due to an
ny statement said. Interim The state-run company’s
equity share capital of the increase in the availability
dividend is a payment total income rose 33.5 per
company amounting to of fuel for both domestic
made before a company’s cent at Rs 6,129 crore com-
Rs 2,885.92 crore for the and foreign reactors, be-
final financial statements. pared to Rs 4,590 crore. Its
financial year 2011-12 on sides increased installed
NTPC paid this divi- net soared to Rs 1,497 crore
February 9, 2012, it said. capacity.
dend to the government, from Rs 715 crore, a rise of
Gas
Montek flays current gas pricing methodology
Planning Commission government. Liberalisation and Policy,” that (companies) must al-
Deputy Chairman Montek written by Anil K Jain, a se- locate gas according to the
“We should decide now ab
Singh Ahluwalia has criti- nior bureaucrat and former government’s priorities,”
intio what should be the
cised the current gas pric- joint secretary-exploration he said citing example of
price of natural gas. What
ing methodology where in the oil ministry. “On the fertilizer sector which can
should be the principles,
producers are asked to ‘dis- one hand, we (advocate) “bid for whatever price”
which should be applied,”
cover’ market price of the freedom to price gas on an because their input cost is
he said at the launch of the
fuel by calling bids from arm’s length basis. But on pass through.
book, “Natural Gas in India:
consumers identified by the the other hand we also say
Iran issues ultimatum to India over gas field
Iran has given a one-month month ultimatum to India Indian’s delays to develop
ultimatum to an Indian over its decision on partici- the field,” he said.
consortium over the de- pating in the development
Iran said the field’s in-place
velopment of a gas field of Farzad-B gas field,” Fars
gas reserves have been esti-
whose delay by India has quoted an unnamed oil of-
mated at 21.7 trillion cubic
been attributed to western ficial as saying.
feet (tcf), of which 12.5 tcf
pressure, the semi-official
“Possibly foreign pressures are recoverable.
Fars news agency report-
played a role in influencing
ed. “Iran has given a one-
12 | February - March 2012 | Power Insight Power Insight | February - March 2012 | 13

10. National News
Gas
Petronet in talks with Kerala govt for power plant at Kochi
Petronet LNG, the coun- the company’s upcoming company’s second termi- chase agreement before
try’s biggest natural gas im- regassification terminal at nal after Dahej in Gujarat. so that the anchor load is
porter, is in talks with the Kochi. “The Kerala government taken care of. Ideally, it
Kerala government to set wants us to set up a gas- should have a capacity of
Petronet is investing Rs
up a gas-based power plant based power plant in the 750 Mw,” said A K Baly-
4,500 crore in setting up
at an investment of around state under a joint venture. an, managing director and
the 5 million tonne terminal
Rs 3,000 crore. The plant We have asked the govern- CEO, Petronet LNG.
at Kochi. This will be the
may be set up adjacent to ment to sign a power pur-
NTPC in talks with GAIL for sourcing Govt rejects RIL demand
gas supplies for gas price revision
State-run NTPC today said pact for sourcing imported gas for its The government has rejected Reliance Indus-
it is in talks with GAIL for plants. The company is in initial talks tries’ demand for a revision in the KG-D6 gas
signing a long-term term with GAIL for sourcing gas, provided price, saying the $4.2 per mmBtu rate for five
it finds buyers for the electricity pro- years was not only agreed to by the Mukesh
duced from those plants. Ambani-run firm but also upheld by the Su-
“We are talking to GAIL for sourc- preme Court.
ing gas through long term agreement The Ministry on January 30 wrote to RIL
only if we find buyers,” NTPC CMD quoting from the May 7, 2010, Supreme
Arup Roy Choudhury told. “If we Court judgement in the gas row between the
have a long term buyer for electricity company and Anil Ambani’s RNRL to assert
from those gas-based plants ...say 25 that “any price revision proposal will be ex-
years then sourcing fuel through an amined by the government after expiry of five
agreement with GAIL is feasible,” he years from commencement of supply”.
added.
COAL
The coal crisis
With Prime Minister Man- have failed to develop their was originally expected to
mohan Singh’s office work- own captive coal reserves touch 680 mt by the end
ing on urgent measures to over the past two decades. of the current Plan period
address the ‘coal crisis’, the in March. This was scaled
Currently, India requires
private power industry’s down to 630 mt in the mid-
690 million tonnes (mt) of
hue and cry over the issue term appraisal and again to
coal a year to fire plants,
seems to have subsided for 554 mt at present, creating
largely in the infrastruc-
now. Experts, however, say a 136 mt gap between de-
ture sectors of power and
private developers have no mand and supply.
steel. Domestic production
right to complain, as they
14 | February - March 2012 | Power Insight Power Insight | February - March 2012 | 15

11. National News
COAL
Power sector exempted from coal block
auctions
In a landmark development, the than power sector companies, the
government has exempted pow- competitive bidding method would
er sector companies from going replace the current practice of al-
through the auction route for the locating blocks for notified captive
allocation of coal blocks for cap- use on the basis of recommenda-
tive use. The move comes even as tions of an inter-ministerial com-
the Supreme Court last week can- mittee. The new system is expected
celled 122 telecom licences for not to induce “transparency and objec-
following auction as the method tivity” in the overall coal block al-
for allocation of second-generation location process. In the first phase,
(2G) spectrum, another scarce 54 blocks would be offered to both
natural resource, used in mobile te- power and non-power users, under
lephony. However, for users other the new dispensation.
Fewer power projects may get
more coal in 12th Plan
The government seems to to more coal for a limited
Rules notified for competitive be preparing the power sec- number of projects. While
bidding for coal blocks tor for low fuel availability. reduction in the power ca-
In the next Five-Year Plan, pacity addition target might
The government today “In exercise of the pow- it is looking to reduce pow- be a dampener for the sec-
said it has notified rules for ers conferred by the Mines er capacity from Coal India tor, industry experts say if
allocation of coal blocks and Minerals [Develop- Limited (CIL)’s linkages. If befitting power projects re-
through competitive bid- ment and Regulation] Act, the plan is carried out, the ceive coal linkages, it could
ding process in order to 1957, the Central Govern- trend of huge capacity ad- be good news. A number of
bring transparency in al- ment hereby makes the ditions and low coal supply companies, including Ad-
lotment. The auction will following Rules... Auction would be checked. ani Power, Tata Power and
be done by the Centre after by Competitive Bidding of Larsen & Toubro, have said
fixing a minimum price for Coal,” the Coal Ministry The move is being cheered
they would plan more proj-
blocks on offer. said. by many in the sector, as
ects after there was more
reduced targets would lead
clarity on coal.
Forward e-auction coal may be reserved for power firms
The government is consid- for the smooth sailing of ing held by the PMO with six-seven million tonne
ering reserving forward e- power companies amid a representatives of infra- (mt) coal available for the
auction of coal, exclusively severe coal crunch that is structure sectors, including power sector. Forward
for the power sector. The hurting investments worth coal and power, for easing contracts account for 15
proposal could be part of thousands of crore. coal availability, according per cent of the 45 mt Coal
the detailed road map be- to sources. If implemented, India (CIL) sells through e-
The proposal is part of the
ing finalised by the PMO it could make an additional auction every year.
discussions currently be-
16 | February - March 2012 | Power Insight Power Insight | February - March 2012 | 17

12. Curtain Raiser Curtain Raiser
Budget 2012-13 Budget 2012-13
Will it boost the power sector? Renjini Liza Varghese
modernisation of existing network are Power Projects (UMPPs) have been Plan. While the situation on the fund-
eligible for exemption. exempted from central excise duty to ing side has improved considerably
bring them on an even platform with since the middle of 2008, companies
According to the rating agency Crisil,
foreign suppliers who have a cost ad- are stepping up on new projects with
“There were no major announcements
vantage and also enjoy a concessional utmost caution. This is especially
addressing the power sector in the
custom duty. However, this will have given that linkage for fuel (especially
Union Budget 2011-12. Sunset date
a marginally positive impact on do- coal and gas) is becoming a tough nut
for tax holiday under section 80IA for
mestic equipment manufacturers.” to crack. However, rural electrifica-
the sector has been extended by anoth-
er year to March 31, 2012, which will Some of the market analyst sees the tion continues to get a boost in each
encourage investments. The enhanced last year’s budget announcements to passing budget and so is the improve-
limit of USD 40 billion for Foreign be inadequate in all respects to give ment in the T&D network. Budget
Institution Investors (FIIs) investing the required lift up to the sector. Over 2011 was no different, as it allocated
in corporate bonds issued by infra- the past few quarters, the power sec- higher funds for the development of
structure companies and the creation tor has seen hard times given the se- the power sector with a view of speed-
of infrastructure debt funds with tax vere liquidity crunch that hit existing ing up the expansion of new genera-
benefits will improve availability of as well as new projects. And as such, tion capacities.
funds to the sector. Domestic equip- the sector once again saw capacity ad-
“The proposals in respect of the ener-
ment manufacturers for Mega Power dition that was way below the targets
gy sector - oil and gas, power and re-
Projects (MPPs) and Ultra Mega set out as part of the XIth Five Year
newables were as anticipated; the roll
Highlights of 2011-12 budget forward of the income tax holiday for
power by a year, denial of tax holiday
• Tax Exemption for power sector network.
for the ongoing round of NELP and
extended for an year more
• Higher allocation for infrastruc- indirect tax concessions for renew-
L
• Aims to boost capacity addition ture to aid the overall develop- ables. These were quite predictable.”
ike the previous year, power sector continue to be under performer this
year as well. While the previous year, it was the equipment supply con-
plans ment of the power sector. said BMR Advisors in their post bud-
cerns and raising funds for the projects were the key highlighted issues, • Higher allocation for rural elec- • Reduction in surcharge of 7.5% get analysis.
this year, one more got added to it, fuel supply constraints. Reduction in domestic trification on domestic companies to 5% Now when we are days away from the
coal production and volatility in imported coal pricing are adding fuel to the fire. to aid net profits of power com- D-day, all eyes are set on New Delhi.
• Excise duty exemption for UMPP
Heading to another budget, here we are trying to give an outline of what the power panies. The step taken by the Prime Minister
equipments to aid fast-track
sector players are expecting the government to announce, which in-turn translates recently to ensure coal supply even
creation of new large-scale • Tax incentives on foreign funds
into an accelerated momentum in the sector. before the budget was cheered by the
power generation capacities. for financing of infrastructure to
While extending the tax holiday for an year for power sector was last year’s budget aid the sector’s financing needs. industry. However, the expectation is
• Higher FII limit for investment in that there could be announcements re-
highlight for the sector. However, many of the economists and the industry experts
corporate bonds issued by in- • Customs duty on solar lanterns garding import duty on coal as the de-
rated the power sector announcements to be a neutral one. The tax holiday was
frastructure companies to pro- reduced to 5 percent from 10 pendency on imported coal are on the
announced with the aim of boosting the power generation in the country to meet
vide additional funding to the percent. rise. In a similar situation like that of
the growing needs and also bringing down the distribution losses.
power sector. a decade back, a section of the indus-
• Customs duty on few inputs
The power sector is entitled to tax exemption, under section 80-IA of the Income try feels that there could be potential
• Higher investment on rural in- used in the manufacture of so-
Tax Act. The announcement was beneficial for projects that took off in the last announcements to improve the health
frastructure to aid development lar modules/ cells reduced to
one year, including the Ultra Mega Power Projects. Projects that start power gen- of DISCOMS. So it is wait and watch
of the rural power distribution nil.
eration, distribution, transmission or that undertake substantial renovation and as of now.
18 | February - March 2012 | Power Insight Power Insight | February - March 2012 | 19

13. Curtain Raiser Curtain Raiser
Budget 2012-13 Budget 2012-13
Industry
“This budget should aim for a speedy Ensuring a level playing field to the Indian power equip-
Wish List “Even as the country’s power sector of improving the flow of funds by revising the sectoral
recovery from the policy paralysis ment manufacturers vis-à-vis Chinese imports. I expect
that has been troubling our econo- the government to introduce import duty which had been witnesses record capacity additions at lending limits of Banks, including the Power sector in any
my. It is time to move ahead with withdrawn earlier. Power projects need funds. High in- over 50 GW in the current Five Year take–out scheme floated by the Govt., relaxation in RBI
policies that stimulate infrastruc- terest rates have put most projects on hold. We are hopeful Plan, urgent policy initiatives are ECB guidelines for refinance of power projects by increas-
ture development. The Government that the government will have some stipulation made into needed to address some of the key is- ing the rupee debt percentage and raising the quantum of
needs to address power sector crisis the banking regulatory commission. Finally, we do hope sues that are hindering the growth of ECB funds for automatic approval. We urge the Govt to
as national energy security problem. post budget, the Government would pass the Act for land this sector. We hope the coming Bud- usher in Distribution reforms and include electricity under
Anil Sardana get will attempt to address the issue the purview of GST.”
M S Unnikrishnan As power availability impacts every acquisition. This will make land available for coal mine
MD, Tata Power
MD & CEO other sector, specific measures need opening as well as for setting up power plants.”
Thermax Limited to be initiated:
The Indian electrical are on an upward trend. Stiff competition in the domestic eign sources for critical inputs / raw material, etc.), as
equipment industry market from foreign suppliers and also in global markets well as subsidies / incentives provided to the Chinese
is currently facing is eroding the price competitiveness of Indian manufac- manufacturers by their government.
very challenging turers.
times. The indus- It is widely known that Chinese imports are relatively
Based on the projections of the government for capac- cheaper because equipment makers from China ben-
try has registered a ity enhancement in power generation, transmission and
moderate 9% growth efit from low interest rates and an undervalued currency,
distribution in the 10th, 11th and 12th Plans, the domestic
in the first half (H1) which in itself leads to cheaper exports. India now has
Ramesh Chandak electrical equipment manufacturing industry has made
of the current fi- huge investments in doubling and, in some cases, even adequate domestic capacity to fulfill the anticipated an-
CEO & MD, KEC International
nancial year, 2011- tripling its production capacity. However, this built-up nual demand for power generation capacity augmenta-
and President IEEMA
2012. The second capacity in the T&D equipment segment currently stands tion, which was not the case earlier. Therefore, the rec-
quarter (Q2) FY’12 under-utilised across several products due to lack of de- ommendation of the Maira Committee to impose import
growth has decelerated to just 4.14% from 13.82% mand and a surge in imports of electrical equipment in re- duty on foreign power generation equipment is a step in
clocked in the first quarter (Q1) of FY’12. cent years, especially from China, with uncertain lifecy- the right direction. In addition, even the T&D equipment
cle and quality.Sufficient capacity has now been built up sector needs to be provided a level playing field.
All product sectors have shown decline in their growth
also by domestic manufacturers of main plant equipment
momentum in the second quarter (Q2) from first quar-
(Boilers, Turbines, Generators) to meet the projected do- Absence of a level playing field for the domestic indus-
ter (Q1) of FY’12. The data that we are receiving from
mestic requirements (15-16 GW per annum). try to compete with imported electrical equipment, espe-
the industry suggests that the slowdown is getting in-
cially from China, is a clear and present threat. Therefore,
tensified and the third quarter (Q3) may witness even We need to provide a level playing field in the country
there should be no further reduction in the present level of
less than 4% growth. This indicates that the second for domestic manufacturers to compete with foreign, es-
half of the current financial year will show even lower pecially Chinese manufacturers. The price differential import duty on electrical products. On the contrary, there
growth than the first half, and this will translate into between domestic companies vis-à-vis Chinese manufac- is a strong case for increasing the duty in most cases. We
one of the lowest annual growths witnessed by our turers is mainly due to disadvantages faced by domestic have been also asking for protection of the domestic elec-
sector in recent years. Prices of key inputs / raw mate- manufacturers (State and local levies, higher financing trical equipment industry’s interests under different FTAs
rial, especially which are imported in large quantities, costs, lack of quality infrastructure, dependence on for- being signed.
(Continued on page 23...)
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