life is ..............dont scare,i am not a philosopher who will tell you believe in positive attitude or will say u that it is a rough pitch.i waana tell u that take the life as it comes,expect some unexpected thing in life and march on.
Following are the modifications proposed to the Mega Power policy :
1.There shall be no mandatory requirement of privatization of distribution in the power purchasing states.
2.There shall be no mandatory requirement of inter-State sale of power.
3.The present dispensation of price preference available to the domestic bidders in case of PSU projects will continue for a period of five years or till competitive bidding for all new generation projects is introduced for public sector projects under the Tariff Policy, 2006 as amended from time to time, whichever is earlier. However, the price preference will not apply to tariff based competitively bid projects of PSUs.
4.The benefits of Mega Power Policy will also be extended to supercritical projects to be awarded through ICB with the mandatory condition of setting up indigenous manufacturing facility provided they meet all other eligibility criteria of Mega Power Policy.
5.There shall be no further requirement of ICB for procurement of equipment for these projects if the requisite quantum of power has been tied up or the project has been awarded through tariff based competitive bidding as the requirements of ICB for the purpose of availing deemed export benefits under chapter 8 of the Foreign Trade Policy would be presumed to have been satisfied. In all other cases, ICB for equipments shall be mandatory.
6.The mega power benefits would also be extended to such expansion unit(s), even if the total capacity of expansion unit(s) is less; than the threshold qualifying capacity, provided the size of the unit(s) is not less than that provided in the earlier phase of the project granted mega power project certificate. All other conditions stipulated while issuing the mega power status certificate to the earlier project will continue to be applicable.
7.Before, the power starts flowing into the grid, the mega power projects would be required to tie up power supply to the distribution companies / utilities through long term PPA(s). They may sell power outside long term PPA(s) in accordance with the National Electricity Policy (NEP), 2005 and Tariff Policy (TP), 2006, as amended from time to time. Where the developer has achieved financial closure (investment decision by the Board in case of Public Sector Company / Corporation /Authority) but has not tied up requisite long term PPA, developer could apply for mega power status by furnishing a legally enforceable undertaking / bond to the MoP.
8.MoP would issue guidelines for monitoring the above mentioned conditions of the Mega Power Policy through a monitoring Committee headed by Joint Secretary.
At last exercising its right under EA2003,CERC issued order capping short term power price in the range of Rs 0.10 to Rs 8 per unit for a period of 45 days.It is applicable only for interstate day ahead power market for power exchanges and traders.
The effect of such order to the power market would be studied in the time frame and further actions will be taken by the CERC after the time period.
India is targeting to achieve 350GW of power generation by 2017 with 27000MW capacity addition per year.
If MoP (state) is to be believed, India is currently facing a shortfall of Rs 5 lakh crore for financing power projects which keeps a tab on the momentum of power capacity addition in the country..
Though developers argue to enhance the exposure limit of the banks and financial institutions to power project financing but financing institutions are still skeptical about the financing of generation based power projects due to its inherent risks.
One solution the govt can think of (ie) the ECB (external commercial borrowing) by financial institutions like PFC and REC may be brought under the automatic route that does not require the approval of RBI.
Besides the funding problem, one of the major drawback to the power developers are fuel linkage. The power ministry should focus more on securing coal linkages, natural gas and LPG for power plants.
India should have a long term fuel map for securing fuel linkage to its power plants in advance and it should go all out to secure fuel for future needs of energy.
Unlike power ministry which could only add 60% generation target of its 100 days action plan, Coal ministry claimed to fulfill completely what it planned for its 100days action plan.
The coal ministry took a softer approach and did not take any coal production target as it was aware about the rainy season ahead and it knew that in monsoon season, coal production could not be paced up because of inherent problems. It targeted the other segment, basically the ongoing programmes and the policy initiatives.
The 6 point agenda that was set for 100days action plan and its status is given below:
Agenda1: Commencement of ‘Forward e-auction’ for actual consumers for meeting their long term requirement
Status: Achieved
The coal ministry planned to introduce “Forward e-auction” for actual consumers of coal only in order to ensure that certainty of availability of coal to the actual coal consumers for a reasonable period time at a competitive price. Under “Forward e-auction” only actual consumers can bid for their requirement ranging from one quarter (3 months) to the maximum of 4 quarter and the deliveries will be made accordingly to successful two highest bidders. CIL was in the process of launching this scheme after completing the registration and verification of actual consumers intending to avail this scheme
CIL started forward E-Auction in WCL on 17/18 August 2009 and ECL kicked off the same on 3rd of September 2009 and the rest are in the process of starting it in the month of September 2009.
Agenda 2: Publishing guidelines for Mine Closure for adoption by coal companies
Status: Achieved
Decommissioning and closure of mines is an important area at the end of mining activity from environmental and socio-economic points of view. A the time of taking this agenda, there were no specified guidelines for taking up closure of mines although it is mandatory under Mineral Concession Rules, 1960. Therefore, coal ministry had proposed to publish appropriate guidelines to enable coal companies to adopt the same for closure of mines.
The Ministry published the set of guidelines for mine closure for adoption and compliance by companies mining coal and uploaded on the ministry’s website in August 2009. The ministry in its release said that the land reclamation/ restoration activities and environment preservation are the requirement and responsibility of the mine owner towards the society at large.
Agenda 3: Commissioning of First Unit (125 MW) of the Barsingsar Mine-cum-Thermal Power project of NLC in Rajasthan
Status: Not Achieved
Barsingsar Lignite mine (2.10 MTPA) cum Power Plant (2x125 MW) was approved earlier by Government in December 2004 for a capital investment of Rs.1368.25 crore (lignite mine for Rs.254.07 crore and Thermal Power Station for Rs.1114.18 crore). The mining project was to be commissioned in June 2009 and the project was on schedule. The TPS got delayed due to the delay on the part of equipment contractor BHEL.
Unit-I is scheduled for commissioning in October 2009 and Unit-II in January 2010. The mining project has been commissioned in June, 2009 as per schedule. and the coal ministry taking all efforts to light of the First Unit of 125 MW on 11 September, 2009
Agenda 4: Securing CCEA approval for setting up of Empowered Committee of Secretaries to consider the proposals of Coal India Limited for investment abroad which are beyond its financial powers of Rs.1000 core
Status: Achieved
At the time of setting the agenda, the government was considering the proposal to set up an Empowered Committee of Secretaries constituted on the lines of the one set up for the consortium of SAIL, NTPC, CIL, RINL and NMDC to consider the overseas investment proposals of CIL, which are beyond CIL’s financial powers of Rs. 1,000 crore. The Committee of Secretaries had already recommended the proposal. After detailed discussion and suggestions from different ministries, coal ministry obtained CCEA approval for constitution of an Empowered Committee of Secretaries for quick decisions on the proposals for investment abroad which are beyond the financial power of Coal India Ltd., i.e. Rs.1000 crores
Agenda 5: Publishing guidelines for Underground Coal gasification projects.
Status: Achieved
Government notified coal gasification (both surface and underground) as end use under captive mining policy for allotment of blocks to potential entrepreneurs.It was felt at that time that being a new activity/ technology, operational guidelines were required to be framed for proper exploitation of coal blocks under UCG.
Fulfilling its promise, coal ministry prepared a set of guidelines to facilitate, benefit and guide the new entrepreneurs spearheading this technology in India.
Agenda 6: Satellite imagery based reports on land restoration/reclamation – posting on website (for 35 projects).
Status: Achieved
The coal ministry decided that in order to increase awareness about environmental consciousness in the coal sector, satellite imagery based reports depicting the status of restoration and reclamation of mined-out areas in respect of 35 projects to start with, would be released and posted on the website. The ministry decided to follow these up with Annual updates which would provide a mechanism for proper monitoring of the mined blocks.
For proper restoration/reclamation of mined-out areas, the satellite imagery-based report provides a very strong tool for the industry and administrative authorities to monitor its progress. Satellite Imagery reports on land restoration and reclamation for thirty five projects have been completed and the same has been uploaded on the website of the coal companies as well as in the website of Coal India Limited.
Conclusion:
The coal ministry has several challenges and it needs to find suitable solutions to bring forth the much awaited coal reforms to the sector. The MMDR amendment bill which would allow the coal blocks to be offered on competitive bidding basis has been discussed a lot. Despite regular monitoring and issuance of warnings, the coal production from captive blocks is not at all encouraging.
Though the coal ministry is plagued with lot of problems, it saved the face of UPA government on the basis that it delivered the promises made in its 100 days action agenda.
At the time of Delhi privatization in 2002, two separate companies ( BSES A Rajdhani and BSES Yamuna) were given two separate areas for distribution of power.As per the MOU with Delhi Govt, they were supposed to compete with each other so as to bring efficiency and competitiveness to the system. Even they were registered as two different companies.
But after 7 years of privatization, nothing seems to have been improved in power distribution in Delhi. People are always at logger heads with the discoms (specially with BSES discoms).
Massive load shedding, inflated billing, poor service are some of the major achievements of the private discoms. The customers are getting hugely inflated bills because of improper long term power projection by the discoms and the discoms resorting to high price short term power purchase. These anomalies can be well attributed to failure in administrative system. After several warning from DERC to have separate CEOs for the two companies, there seems to have no urgency in this matter.
Though it is well known that the parent company of these two discoms is Reliance but then they need to bring in efficiency by competing with one another.
Looking at the functioning of the two discoms, it is found that not only they share a common CEO but even they have a common customer care center. This is a complete violation of EA2003.
The two companies are having a combined base of 25 lakh consumers .It is the consumers who sufferer the most at the hands of the discoms. The poor functioning by the two discoms lead violent protests in some areas in Delhi.
It is high time that distribution companies pay heed to the consumers complaint and change their way of functioning so as to provide relief to the masses.
CERC constantly monitors the short term power purchasing price of traders and through exchanges. In its recent notification, it wants to cap the short term power price to be at a maximum level of Rs 11 per unit.
As per CERC, at peak time ( morning 9 to 10 AM and evening 6 to 7 PM) , the traded price of electricity is touching a high of nearly Rs 15 per unit at PXIL and IEX which is not at all desirable.
It finds that the volume cleared at higher price were in the range of 650MWh to 850MWh during August 10 to August 16, 2009.Rather than load shedding, the distribution companies are buying power at a higher rate and also drawing UI power from the grid.
The situation aggravates due to drought like situation in many parts of India , specially northern region. The high temperature in the northern region also drives huge demand for power in urban areas.
The higher price is just a reflection of high demand with supply deficit scenario and is completely unrelated to fuel price as the fuel prices are somehow stable in this period.
The purchase of power at this higher price not only affects the financial health of the distribution companies but also it will directly reflect at the retail tariff paid by the consumers.
Recently there were protests from Mumbai and some parts of Delhi due to unreasonable hike in retail prices for power. People even denied to foot for the power bills and registered cases in grievance redressal forum.
CERC which is custodian to protect consumers’ interest issued draft order to limit the price applying its power under the proviso to clause (a) of sub section (1) of section 62 of electricity act 2003.
It wants to fix the price for 45 days period under trial basis. Though CERC is empowered to cap for a period of 1 year, it chooses 45 days taking traders and exchanges concern.
The commission in its draft says that it is equally conscious of long term interest of investors, future investment plans and mostly reasonable rate of return.
Now the big question is that what is reasonable rate of return? Based on its calculation, CERC finds that the price of power could be at most Rs 10.94 taking naphta as fuel choice for power generation (including fixed charge at 60% availability).
The UI price of power including the additional 40% fine charge, the total price comes out to be Rs 11.03 per unit (includes transmission charge and transmission loss).
Thus, it is of opinion that distribution utilities can buy power at Rs 11 per unit without overdrawing from the grid, jeopardizing the whole transmission grid.
It also takes into consideration of CEA’s load generation balance report while formulating the price cap band. The load generation report forecasts that for 2009-10, the estimated energy shortage in the country would be 8.8% and the peak shortage to be at 18.1%.
Having all permutations and combinations, CERC is planning to have a price band from Rs 0.10 to Rs 11 per unit for 45 days period.
Though it brings cheer to the distribution farms who are buying at such a higher price, the traders are skeptical about this decision. They fear that it will affect the profitability of power selling companies and would be hindrance for proper power market development.
This kind of capping of traded power price gives wrong signal to power developers especially to merchant power developers who bears all the risk to gain in such a deficit scenario.
India is always in trouble as it wants to develop a middle path for power sector and is always critical how to treat power ( service or commodity), unlike in foreign countries where there is a power surplus scenario and customers have a wide choice to decide their power suppliers.
India needs to define and find out what would be the reasonable rate of return to the developers? There is a long queue of companies to enter into power generation segment. This kind of move by CERC may trigger bit of unrest among companies.
Some experts in the field of trading and power exchange believes that by capping the maximum price CERC gives an unwanted ammunition to the power sellers to bid at a higher price and as a result the average power purchase price at the exchanges will rise which would be of more harm than what is prevailing right now. It may possible that more volumes will remain unsold as it will not find any buyers at a higher price.
CERC in the mean time has also given permission to power exchanges to sell the extra power that remain unsold by a mutual negotiable rate between the seller and the purchaser on day ahead basis and it is feared that it may trigger a price rise in the short term power business.
On the other hand, CERC can not wash its hands off the responsibility towards power consumers. Ultimately, it’s the end users who suffer most when distribution utilities buy power at a higher cost.
There is an urgent need to control the spiraling short term power prices so as to safeguard the consumers from this type of situation. India is a country of uncertainty with delayed monsoon, drought like situation, floods, tsunamis and untimely elections etc. Anytime this kind of events crop up, power market behaves abnormally and companies make extra ordinary profits by taking advantage of calamities.
There is a need for self discipline and if it is not possible, there are always other means to make them fall in line. CERC’s controlling of short term power price is a right step taken at the right time.
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