CIL entering into Power Generation : An unfortunate step..

Unreliable coal supply to the thermal plants has emerged as one of the major bottlenecks affecting the availability of power in India. For the year 2009-10, anticipated generation from coal based utility thermal power stations was estimated to be525 Billion Unit (BU). To meet this generation and build stock up to reasonable level, 404 MT of coal was required. However, against the total requirement of 404 MT, availability of coal from Coal India Limited (CIL) was 313 MT. Taking into account 30 MT from captive mines, total indigenous coal availability was 363 MT, leaving a gap of 41 MT. This brought a number of power plants in the country's power stations under critical coal stock position.  As a result of shortages of coal, thermal plants are forced to operate at a low PLF factor. The PLF for thermal plants average only around 75% in India. This adversely impacts the power supply in the country.

However, the important question that emerges here is that despite having fourth- largest coal reserves in the world, why does the country fail to meet the coal demand? If we look at the other side of the story, the fact is that CIL (India’s largest coal producer) has stockpiles of coal which it is not able to supply. Though CIL has been growing over 6% over the last 2 years, it has been stocking huge piles of coal stock. The company currently has stockpiles of roughly 53 million tons. Now, if the country has stockpiles, why the same is not supplied to power plants? CIL blames it on infrastructure constraints. The company says it has not been able to get enough rail wagon combinations or rakes to transport the mined coal. Shortage of rail wagons has also resulted in imported coal lying idle in ports. CIL also blames inadequate railway unloading infrastructure for the difficulty in meeting supply targets. The company falls short of rakes by 15-20% of its requirement.

Therefore in order to utilize the coal stockpiles, CIL has planned to foray into power generation with the help of power giant NTPC. CIL has decided to set up a 2,000mw power plant involving an investment of Rs. 2,000 crore and has already signed memorandum of understanding with NTPC, the thermal energy generating giant in this connection. CIL has been arguing that power plants were unable to lift the stocks and coals are lost due to rains and other problems. The 53million tonnes of coal stocks in different subsidiaries would lead to otherwise wastage of valuable fuel sources.

However, the entry of CIL into power generation is not a good idea because it is the custodian of the prime fuel (coal) in the country and its entry will slow the pace of coal sector reforms. Moreover, if the supplier becomes the consumer of a national resource like coal, it will only exaggerate the coal shortage to other power plants in the country. CIL has argued that the huge stocks of coal would help ease the otherwise fuel problems for CIL’s plan. But the critical situation due to coal shortage of power plants for more than 25 power stations tells a different story. Infact, this move would backfire for CIL and would add to the criticism of CIL. CIL has been falling short of its commitments in terms of FSA and LOA executed with user industries and resort to coal import to meet the shortfall. In this scenario planning for a coal based thermal power plant based on huge coal stocks reserved by CIL would lead to speculation and questions the very intention of CIL.

During the ongoing year (2010-11), the coal requirement for the indigenous coal based thermal units is expected to be 440 MT vis-a-vis coal availability from indigenous sources is estimated to be around 388 MT. As a result, shortfall of 52 MT is anticipated in the availability of indigenous coal. The coal requirement for power sector by the end of Eleventh FYP is expected to further increase to approximately 488 MT by 2011-2012. Looking at the present coal shortages, it becomes certain that India would not be able to achieve any improvement in the power availability in the near future despite ambitious capacity addition plans.

In this backdrop, the country needs to make sure that the existing thermal capacity is utilized at the optimal PLF to meet the power deficit in the country. Being the monopoly in coal sector in India, CIL enjoys an upper hand in coal production and coal distribution. Huge coal demand from different sectors would demand CIL to increase its production by improving on technology and production efficiency. The government needs to develop connectivity infrastructure in coal fields on immediate basis rather than supporting CIL in establishing its own power plants.

The Country also needs to explore as to what extent waterways and roadways could supplement the railways in transporting coal to the power stations. The rising demand for coal and supply gap also highlights the urgency of removing restrictions on domestic production of coal by private parties, and steps to facilitate imports.  India does not permit commercial extraction of coal by private companies, but gives producers the power to access “captive blocks” for their fuel requirement.

However, allowing private companies to mine coal can also be helpful in tackling coal shortages. The alternative solution is to make the stockpiles available for selling in e-auction platform so that the SME (Small and Medium Enterprises) sector gets adequate coal for their operations.CIL will also benefit in terms of revenue realization as it gets on an average 50% more price than the notified price in e-auction platform

New report from my desk on Coal washery in India

Coal washery in India: A $5 billion business oppurtunity  is the new offering from Infraline Energy and written by me and my collegue ravi kumar.

The oppurtunity is much beyond the figure quoted above.The trend for coal washing is just picking up in India after CIL inviting private palyers to set up coal washeries in its land with provision for funding and coal linkage.

Apart from that the growing pressure from environment community coupled with huge demand from power sector would see a tremandous growth in this business segment.The early entrant to this sector would reap the benefit as coal industry is slowly but steadily picking up and moving towards reforms.

The competitive bidding for coal blocks along with governmnet thinking to allow private miners to divert resources would enhance the chance of washing business in India.

Infraline in its study predicts that with in 5 years, all coal produced in India will be washed and supplied to end users of coal which would not only help the environment but also help remove the stress from railway network.Also, the operational efficiency will be increased to around 30% by using washed coal.

My expert comments on coal sector appeared in Dow Jones terminal

12 May 2010 09:29 GMT =DJ FOCUS: India's Coal Imports To Rise As Home Supply Growth Lags
By Eric Yep

Of DOW JONES NEWSWIRES
MUMBAI (Dow Jones)--India's efforts to become self-reliant in coal are failing and imports of the fuel it relies on for over 70% of its electricity will have to rise massively in the next two decades.

It has the world's third-largest coal reserves after the U.S. and China, most of it thermal coal used for power generation. And while dominant miner Coal India Ltd. has been boosting output by 5%-6% a year, this has lagged economic growth--in March, Standard & Poor's forecast India's economy would grow 8% in the current financial year.

Efforts to use more alternatives, like domestic natural gas or imported liquefied natural gas, renewables or nuclear power, and to boost coal output through regulatory reforms have been too hesitant to prevent a surge in coal imports.

Coal imports mushroomed to 81 million tons in the financial year ended March 2010, from 59 million tons a year earlier.

The International Energy Agency's world energy outlook 2007 estimated India's hard coal imports at 28% of demand by 2030. With estimates of coal demand exceeding 2 billion tons by 2030, this implies imports of at least 560 MT. Late in 2009, Coal India said it expected a tenfold jump in its imports in the next two to three years.

These import needs pit India against rivals like China, and has underpinned the ambitions of India's coal companies in snapping up stakes in foreign coal assets in Africa, Indonesia and Australia. A string of large power projects on India's west coast have been designed to run solely on imported coal.

Traditionally, India has long had seasonal and temporary supply shortages but "in the last decade coal shortages have become a round-the-year phenomena," said S.K. Chand, senior fellow at The Energy and Resources Institute.

State-run Coal India produces over 80% of India's coal and sits on over 60% of its estimated 106 billion tons of reserves. India used 612.6 million tons of coal last year.

Indian governments' failure to ensure supply keeps up with demand is rooted in an inability to resolve land ownership, community displacement, technical and environmental issues, and to deal with black market and other illegal practices.

"Coal India has improved operating efficiency and performance a great deal, but they still lag international standards in many ways. Their technology is antiquated and their workforce has thousands of redundant employees, even after cutting more than 180,000 employees in the last decade," said Jeremy Carl, research fellow at Leland Stanford Junior University.

India's richest coal reserves are concentrated in its most underdeveloped areas, like the eastern states of Jharkhand and Chattisgarh, where extremist political movements and illegal mining activities making mining difficult.

Coal India says to meet government output targets, it needs 185 goods trains a day to transport the fuel, but average availability is only 155.

"The coal is there but you can't move it efficiently and that's a big problem. The rail infrastructure has problems...and there doesn't seem to be a clear solution to that in the short term," Tom Price, commodity analyst at UBS Securities said.

The government has long recognized the limitations of having a single company to meet India's colossal coal needs.

Over the years it has allocated 210 coal blocks that couldn't immediately be developed by Coal India to companies for their captive use, but only 10% of these are being exploited so far due to administrative and political inefficiencies.

There are instances where companies with no knowledge or interest in coal wound up with valuable blocks, while others simply waited for changes in rules to allow them to sell coal in the open market.

Talking about reaching peak production for captive coal blocks is a distant dream, R.K. Tripathy at energy research firm Infraline Energy said.

These problems have been exacerbated by environmental and forestry clearance rules, which have tightened following claims coal companies have been ignoring such regulations.

The environment ministry recently decided to make nature reserves, including areas where India's dwindling tiger population lives, as "off-limits" for mining, and in so doing blocked off 35% of the country's coal reserves.

Unleash the potential of Captive Power;says InfralineEnergy in its business report

The potential of captive power in India is huge but till date it is not utilised to its optimum due to policy and state constraints.The high power deficit in States forced it to think of an alternative way to utilise the captive power.

Odisha shows the way to India by buying around 400MW captive power from the state captive units.

The average demand for power in Orissa is hovering around 2600 Mw to 2650 Mw.Hydro generation stepped up to about 800 Mw from 490 Mw and captive generation plants (CGPs)contributing about 400 Mw to the state grid.

The leading CGP contributors are ICCL (31 Mw), Nav Bharat Ventures (70 Mw), JSL (138Mw), Nilachal Ispat Nigam (9 Mw), INDAL (40 Mw), Vedanta (295), Nalco (17 Mw) and Bhushan Steel (2 Mw).

Gridco is buying this power from state captive units at an average rate of Rs3 per unit ( OERC fixed rate).

In its business report on " Captive power plants in India", InfralineEnergy says that to meet the burgeoning demand of power sector and to scale down the deficit, India should explore innovative way to harness the CPP potential in the country ( estimated to be around 40,000MW).

Foe more information, visit store.infraline.com

The World Cheated at Copenhagen..

It is to inform you that the world once again cheated by the big fats of world economies.Just to save the face at last moment, they came out with a 5 page Copenhagen accord and the crux is nothing; no time limit;no pledge;no assurance from the developed countries and yes throwing some money to the poor nations to suffer much at the expense of carbon.

Voluntary targets ( non sense..as if all are disciplined and will not allow any development to take place in their country at the behest of saving the environment)..non sense.

Role of India is still doubtful as it succumbed to pressure and signed the accord at the last moment.Alas! we could have bargained better.

The face saving attitude will never do any good to the country and the world at large..My sayigs at last came true ..it is carbon Carbon everywhere..truely it is

Carbon for All at Coenhagen.............

Developed country voters don’t care about moral CO2 arguments

Here’s something for the world leaders attending the Major Economies Forum today in London to think about. US and UK voters, to be specific, don’t care much about responsibility for historical emissions, according to a survey by Harris Interactive commissioned by the FT.

Only a minority of respondents in those countries believe that developed countries should help developing countries meet the cost of reducing their greenhouse gas emissions. And there is strong support across all the countries surveyed for the view that China should make the most emissions cuts, thanks to its recently-attained status as the biggest emitter:

Check the wording of that first question, though - it’s rather stark and makes no mentioned of historical emissions. But as the second table above shows, making that point in the question only seems to hold sway with mainland Europeans, who are a lot more supportive of rich countries contributing to the cost of poorer countries than Britons or Americans.

There’s also a large number of apparently undecided respondents on these questions, which was evident in many of the answers to other questions in the survey (more on those below).

Reaching agreement at Copenhagen requires participation from developing countries, who after all are going to contribute most of the growth in greenhouse gas emissions for decades to come. Those developing countries don’t see why they should have to pay for a low-carbon development when the developed world grew rich while consuming cheap fossil fuel with abandon. This, as Fiona Harvey alludes in the FT, is why some developed world leaders have been keen to praise China’s efforts to reduce emissions in recent months.

Either way, the moral/historical argument actually seems to be detrimental, at least in terms of persuading Americans that their government should be helping out developing countries. Look at the “Net agree” figures for US respondents in the breakdown for two questions (the first of which is illustrated above) on whether developed countries should contribute to poorer countries’ carbon-reduction efforts:

“How much do you agree or disagree with the following statements? – Developing countries have not caused as much climate change, so developed countries should be prepared to give more aid to them to deal with the consequences.”

Versus this:

“How much do you agree or disagree with the following statements? – Developed countries, such as the US and EU member states, should help fund developing countries, such as China, in their efforts to reduce emissions.”

Yep - slightly more Americans (and Spaniards) were supportive of rich countries funding poor countries when the topic of historical emissions was not mentioned. Brits gave similar responses on both questions. The differences aren’t huge, but it’s slightly counter-intuitive that some people think that rich countries should provide funding, but not because they are more responsible for historical emissions.

Another interesting result is that energy security actually rated lower as a concern for UK and Italian respondents than it did three years ago:

Coutsey:

http://blogs.ft.com/energy-source/2009/10/19/developed-country-voters-dont-care-about-moral-co2-arguments/

Coal Price increase : Power sector feels the pinch..

Coal price hiked last was December12, 2007 ......

• The Union Government allowed Coal India to hike prices by 11 per cent on an average with effect from October 16, 2009. The price rise comes after nearly two years. The hike in prices may leave a positive impact of Rs 4,600 crore on the company’s bottomline on an annualised basis. Without the price hike, the company would have ended the year with lower profits due to negative impact of a wage hike . The Union Government has also allowed CIL to implement a remunerative pricing mechanism to remove the fundamental weakness of two of its perennially sick subsidiaries — Bharat Coking Coal (BCCL) and Eastern Coalfields (ECL) — despite owning the country’s best coal reserves.
• The prices of coal produced by all other subsidiaries have been increased by 10 per cent. According to a CIL release, BCCL will have a higher price rise of 15 per cent for its 30-million-tonne raw coal production which include the country’s only source of prime coking coal. ECL is allowed to charge import-linked prices for A and B grade thermal coal production, accounting for over 30 per cent of the approximately 31 mt total production.
• The coal price hike would leave a maximum of 0.16 per cent inflationary pressure on the economy. It is estimated that for the power sector, the cost of coal would increase by Rs 77 a tonne and the price of electricity would go up 5 paise a unit. The price of cement is expected to move up by Rs 20 a tonne.
• The price hike was long overdue and after the wage revision of CIL, it became impossible for the coal companies to maintain a healthy profitability ratio. Some projects became unviable due to financial implications of the wage revision.
• But on the other hand, it directly impacts the coal consuming sectors, particularly power sector the most. The power sector already started lobbying the regulatory commission to pass through the price hike to the consumers. Gujarat State Electricity Corporation Limited (GSECL) has already expressed its concerns on coal price hike.
• The revival of economy is a good sign for the industries. Coal production which has weightage of 3.2% in the IIP (Index of Industrial Production) registered a growth of 6.5% (provisional) in September 2009 and electricity generation (weight of 10.17% in the IIP) registered a growth of 7.5% (Provisional) in September 2009.Thogh the signs of improvement in growth is quite encouraging, the price increase may send a wrong signal to the market which is already struggling to come out of global recession. The steel sector may absorb the price hike but it would be very difficult for the cement sector to absorb the cost. Currently the cement sector is not increasing the cement price and watching the market movements but they will definitely pass on the increase in coal price hike to consumers.
• On one hand when the country is under severe power shortage scenario, it is to be seen that how consumers behave to a hike in power sector tariff due to price hike by the major input for the sector (i.e) coal.

Carbon for All at Copenhagen!! Is anybody listening?

What to expect at Copenhagen! A complete disaster and a big failure..

The big guns in term of carbon emissions( read US and Australia) with their big kitty will never bow down to so called G77 Countries and never take a global target of reducing emissions.

It is clear now when US is all set to take a domestic legislation for carbon reduction not a global commitment as others perceive.

The Targets:

Global Consensus: 40% reduction over 1990 levels for industrialized countries

US Tagets: 20% below 2005 levels by 2020..no where near the global consensus and joining its chorus Australia, one of the major emitters of CO2.

US has increased its green house emissions by at least 16% between 1990 and 2005 and never committed to Kyoto protocol.

Take a look at its global share, having 5% of world’s population, releases 18% of total global emission and have a share of 30% of the global stock of carbon emission.

Australia at the other hand increased its carbon emission by 40% after 1990 and was not a party to Kyoto protocol. It is a loyal ally to the US at this front.

I am never convinced at carbon credits being introduced by Kyoto protocol. No doubt carbon emission a global phenomenon and how could buying certain credits help reduces the overall carbon emission.

It is nothing but weighing the carbon emission in terms of money. It clearly indicates that there is compensation to virtually everything and if you have the money keep going polluting environment and buy carbon credits with your bucks and name them as green bucks.

What a solution!! This is just an eye wash and at best US will buy carbon credits to showcase its concerns for global emission.

The real criminals are no doubt the US and Australia who despite their large share in carbon stocks is reluctant to take carbon reduction target.

What best we can expect, an internal target for US and it will keep pressurize other nations to buy their point or perish.

India and China may resist it but I sincerely doubt their capability in bringing US to the negotiation table to discuss for a global emission reduction target. The US now pressurizing India to pay heed to what they say and pressure mounting on to break the G77 countries and it may take any course to break this grand alliance. And if it happens, it will be a global disaster.

It’s high time to differentiate US at least on carbon emission front and make it abide by the global emission target. Is it possible? The question remains to be answered and all eyes will be set for Copenhagen!!

Coal Reserve Of World And India

Check out this SlideShare Presentation:

Coal Reserve Of World And India

View more presentations from rajan lanjekar.

Proposed Modification to the Mega Power Policy

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.

CERC capped short term power price to a max of Rs 8 for 45 days..

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.

A shortfall of Rs 5 lakh crore slows down the pace of capacity addition

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.

100 days action plan of coal ministry: the road so far…

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.

BSES Rajdhani and BSES Yamuna violating code of conduct; power situation worsens……..

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 to cap short term power price: Is it a good idea?

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.

60% generation target achieved by Ministry of Power for its “100 days program”; nothing to cheer about

Out of 5653MW target commissioning set by the power ministry for its 100 days agenda, only 3378MW commissioned. In a review meeting, analyzing further, it was said that 550MW capacity under firm feasible for commissioning. 1145MW capacity already synchronized on designated fuel and about to commissioning and 415MW capacity is to be followed up for synchronization.

1. Projects under firm feasible for commissioning :

a. Budge Budge U-3, West Bengal (250 MW)

b. Turangullu U-2, Karnataka (300 MW)

2. Synchronized projects but not commissioned:

a. Giral U-2, 125 MW

b. Kota TPP U-7 , 195 MW

c. Kutch Lignite U-4, 75 MW

d. Vijayawada ST-4, U-1, 500 MW

e. Suratgarh TPP-IV, U-6, 250MW

3. Followed up projects for synchronization:

a. Chandrapura U-7, DVC, 250 MW

b. Konaseema ST, 165 MW

RGGVY:

· Target: 5000 villages and 12 lakh BPL families

· Achieved: 4000 village and 13.5 lakh families

R-APDRP:

· Target: Rs 925 crores to be sanctioned for projects

· Achieved:1614 crores sanctioned.