• Rescuing power sector: Does IBC relief dilute RBIs strict NPA solution? Heres what experts say

    •    Source: Pragya Srivastava, The Financial Express / 19th June 2018 Published on : 19th June 2018


      India’s power sector is potentially staring at Rs 2.6 lakh crore of NPA (non-performing asset). A Parliamentary Standing Committee has identified stressed coal-based thermal power plants operated by even big names such as Adani, Essar Power and Jaypee Power.

      Under the new framework laid down by the Reserve Bank of India (RBI) on February 12 for NPA recognition and resolution, banks are left exposed to Rs 2.6 lakh crore of NPAs from power sector alone, a Bank of America-Merrill Lynch (BofA-ML) report said.

      The new RBI framework set a strict 180-day deadline for debt resolution, failing which accounts having exposure more than Rs 20 billion (Rs 2,000 crore) will undergo insolvency process under the Insolvency and Bankruptcy Code (IBC). However, earlier this month, Allahabad Court granted an injunction against RBI NPA framework in favour of Independent Power Producers Association of India and asked Finance Ministry to hold a meeting, but it did not grant any interim relief or stay.

      Relief or precedent?

      Experts say that even as there was no interim relief, an injunction like this could propel more sectors moving court demanding relief against the order. “If the interim injunction granted in this case remains for a prolonged period of time, then entrepreneurs engaged in other industries will be increasingly likely to seek similar relief from the High Court. If the order is confirmed then I am afraid it would definitely have an adverse impact on the NPA resolutions,” Punit Dutt Tyagi, Executive Partner, Lakshmikumaran & Sridharan Attorneys told FE Online.

      The Allahabad High Court referred to the 37th Report of Standing Committee on Energy presented in Lok Sabha which observed that “the projects under electricity sectors have suffered due to many factors like fuel shortage, sub-optimal loading, the absence of fuel supply agreements (FSA) or lack of power purchase agreement (PPA).

      Welcome move but…

      Since high NPAs in the power sector were due to genuine business failures, the injunction by the court is a welcome move which ruled out the mechanical implementation of the RBI framework, Daizy Chawla, Senior Partner, Singh & Associates said.

      However, it also leaves the room open for other “stressed sectors to try and get such a relief from courts, which will lead to dilution in the efforts of RBI to resolve the NPA situation”, Daizy Chawla told FE Online.

      No special status?

      Last week, the Finance Ministry and Power Ministry held a meeting to discuss the stress in the power sector and the shortage of coal supply. The power ministry has reportedly asked the RBI to some leniency to the power sector but so far the central bank has refused to do so. The Narendra Modi government, however, is not in favour of giving any special status to the power sector against RBI’s order.

      The government said that the Rural Electrification Corp under the Power Ministry is working on a scheme, SAMADHAN to resolve the crisis. Under SAMADHAN (Scheme of Asset Management and Debt Change Structure, or Samadhan), the bankers’ consortium shortlisted 11 power plants with an overall capacity of over 12 GW, which are either complete or nearing completion, to take over their unsustainable debt of stressed power plants to avoid their liquidation.

  • Warning by Reliance Energy May snap power supply to Mumbai colony for dues

    •    Source: IANS, The Financial Express / 19th June 2018 Published on : 19th June 2018


      Reliance Energy on Monday warned that it would disconnect power supply to the Siddharth Colony in Chembur here for non-payment of bills. According to a spokesperson, the 3,250 consumers from the locality have defaulted on their electric bill dues for over 10 years which has now accumulated to Rs 63 crore. “Disconnection will be undertaken under the Electricity Act, 2003, Sec. 56(1), for non-payment of dues, probably within a day or so,” the spokesperson said.

      The bills have remained uncleared as repeated warnings went unheeded, but supply was continued on humanitarian grounds despite the fact that 70 per cent of the economically weak but honest consumers are effectively subsidising such non-paying consumers.

      As a distribution licensee, Reliance Energy said it is empowered to disconnect power supply, but assured it would restore the electricity connections immediately after its outstanding dues are cleared.

  • New Electricity Act changes a big boost Here is why

    •    Source: Abhimanyu Ghosh, The Financial Express / 19th June 2018 Published on : 19th June 2018


      The Electricity Act, 2003, empowers the Union government—in consultation with the states and the Central Electricity Authority—to formulate a national tariff policy from time to time that serves as a guideline for the central and state electricity regulatory commissions while framing their regulations.

      The ministry of power (MoP), on May 30, released the draft amendments to the existing National Tariff Policy (NTP) that was notified in 2016 and has invited comments from stakeholders by June 20. The NTP 2016 mandates that all future requirement of power (with some minor exceptions) will be procured by distribution licensees through competitive bidding. However, the draft amendments have sought to exempt Central public sector undertakings from this requirement of carrying out the bid process, and have proposed to allow such entities to sell power by way of a cost-plus power supply arrangement.

      Considering this will be an advantage to Union government power companies, it is likely that private players will seek to challenge this amendment. Many changes in the draft amendments are pro-consumer, and if the changes are notified, will certainly bring cheer to the consumers. A key change in this regard is that the draft amendments have proposed that in case of power cuts, other than due to force majeure conditions or technical faults, an appropriate penalty will be levied on the distribution company and credited to the account of the respective consumers. In another major change, the draft amendments have proposed that the benefit of reduced tariffs after assets have fully depreciated should be mandatorily passed on to the consumers. Typically, these benefits are retained by the generating companies, and do not result in a lowering of tariff, and therefore, it will be interesting to see what approach the power industry takes with respect to this proposed change.

      If the changes in the draft amendments are notified, the tariff policy will make it mandatory for all distribution companies to purchase power via long-term or medium-term power purchase agreements to meet the annual average power requirement in their area of supply, failing which the distribution company’s licence may be suspended.

      This change will thus ensure better quality, stable power for consumers in every region and is also welcome news for stranded power assets which will have a chance to sell power through these arrangements. In the same spirit of benefiting consumers while at the same time encouraging distribution companies to be efficient, the draft amendments have proposed that inefficiencies of the distribution companies should not be passed on to the consumers, and as a result, the relevant commissions shall not be allowed to pass on more than 15% of the technical losses into the tariffs after March 2019.

      This figure is proposed to be further reduced to 10% by 2022. The draft amendments also require the state commissions to notify the standards of performance of licensee with respect to quality, continuity and reliability of service for all consumers within 60 days of the issue of the amended tariff policy. In addition to the above, the draft amendments aim to align the changes in the electricity sector, among other things, by requiring the appropriate commission to shift to pre-paid smart meters (thus ensuring better billing recoveries) and providing trajectory for progressively reducing cross subsidies for consumers.

      The draft amendments appear to be a worthy successor of NTP 2016 with many positive changes. If the amendments are notified, they will surely benefit both, the consumer in terms of stable and reliable power at possibly lower costs, and the industry, considering the promotion of long/medium term power purchase agreements, improving billing recoveries and the like. The wrinkles in the Draft Amendments stated before may get resolved by the time the final amendments are issued.



  • Tata Power to grow RE business three-fold

    •    Source: Ksenia Kondratieva, The Hindu Business Line / Mumbai, 19th June 2018 Published on : 19th June 2018


      As thermal power sector is undergoing disruption from the renewables, Tata Power, one of the oldest and largest utility companies in the country is seeing further growth coming from renewable business as well as consumer-oriented services in the energy saving space.

      Tata Power is planning to expand its renewable portfolio three times, from current 2,272 MW to around 7,500 MW in next 5-6 years, Praveer Sinha, Tata Power MD and CEO, told BusinessLine. “Today renewables account for around 30 per cent of our business, it may become about 45 per cent. Largely it will be organic (growth), but we keep on examining the assets,” Sinha added.

      According to him, tendering activity in the renewable sector has improved with around 9000 MW expected to be tendered in next 3 months while about 3,000 MW has already been auctioned in the past one and a half months.

      While the company will focus on solar energy generation the most, both utility-scale and rooftop solar, it will also actively participate in floating solar and offshore wind projects, Sinha said.

      When asked about investments the company is planning to make to support its further growth in these areas, Sinha said it could be up to $1 billion in next 5 years.

      “Our main investment is in renewable (space). The services business is asset-light, it doesn’t require large capex requirement, instead there is value for technology and knowledge,” Sinha said adding that the company has “enough internal accruals and profits” to take care of renewable capacity extension of another 5,000-7,000 MW in next 5-7 years.

      Home automation

      Tata Power is also venturing into consumer market with a branded product for home automation that is being designed by the company at the moment. The product will help consumers optimise use of electrical devices in their homes, it will also provide people an option of controlling their devices and equipment remotely through WI-FI network.

      “We are coming out with product and software attached to it, we are now in the process of putting a pilot project in next 3-4 months,” Sinha said. “It will be simple, user-friendly and low-cost solution”, he added.

      Russian opportunity

      While Tata Power is trying out coal blending as well as sourcing coal from various location to optimise costs at Coastal Gujarat Power Limited (CGPL) operating the Mundra plant, it is also working on developing a coal mine in Russia’s Far East. “It is a good prospect, unlike in many other parts of the world, preliminary studies here indicate very good quality coal, so we are definitely examining this opportunity. We are looking at 2021-22 deadline (to start operations),” Sinha said adding that apart from the coal block itself the entire infrastructure for delivering coal form the mine has to be developed and this is taken care of by the Russian government. According to Sinha, the company is yet to work out the final structure of the project.

      “The total investment on infrastructure, as I am told, would be about $250 million, there is another $500 million on the mine development. We still have to structure this, we are looking for funding support from the Russian government and it should be able to get banks, also some of the other countries, Belarus for example (to participate). It’s little premature at this stage, in next one year we will be on top of it,” Sinha said.

  • Strong winds push wind power generation in Gujarat to 4,280 MW

    •    Source: TNN, ETEnergyWorld / Ahmedabad, 19th June 2018 Published on : 19th June 2018


      High wind velocity in coastal areas of Saurashtra region has increased state’s wind power generation which reached a record level of 4,280MW Friday last. Electricity generation from wind remained above 3,500MW on Saturday and Sunday as well.

      The higher generation of electricity from wind has also helped state-run Gujarat Urja Vikas Nigam Limited (GUVNL) reduce its dependence on open market to meet power demand in the state. As against the 5,574MW installed capacity, wind power generation stood at 3,000MW on Monday evening.

      “Increased wind power will reduce burden on electricity consumers as less power is sourced from Indian Energy Exchange (IEX), where rate of electricity ranged from Rs 4.25 to 4.70 per unit. As against this, wind power in the state costs Rs. 3.76 per unit,” said KK Bajaj, a city-based energy and regulatory expert.

      With no resumption of contracted power supply under power purchase agreements by two private sector companies, GUVNL has been forced to manage power from open market. The apex utility had to purchase upto 72 million units on June 1 from IEX. However, with higher contribution from wind energy, GUVNL’s electricity purchase from the exchange stood at around 23 million units on June 17.

  • Bengaluru international airport could switch to total solar power by 2020

    •    Source: TNN, ETEnergyWorld / Bengaluru, 19th June 2018 Published on : 19th June 2018


      The Bangalore International Airport Limited (BIAL) has set itself an ambitious target of running Kempegowda International Airport (KIA) completely on solar power by 2020.

      Currently, power demand at KIA is 11MW per day and airport authorities estimate it to increase to about 20MW after completion of the second terminal. The airport now generates 3.44MW from solar energy daily and the proposed capacity enhancement project will add another 8.35 MW in two phases, taking the total to about 12MW. While the 12MW would be from on-site energy generation, BIAL plans to source another 8MW of solar energy from off-site.

      “Currently, solar energy is harnessed from both roof-top and ground-mounted panels. Our aim is to make the airport 100% renewable-energy powered by 2020. We also plan to increase our consumption through on-site and off-site solar power purchase agreements,” said S Lakshminarayanan, vice president (engineering & maintenance), BIAL.

      He said BIAL plans to install a solar power plant with a total capacity of 12MW, of which work has begun on installation of a 3.35MW capacity plant. The other plant with 5MW capacity is in the planning stage. Authorities at Cochin International Airport Limited, Kerala has set up a 12MW solar power project within the airport complex to cater to power requirements.

      Stating that conserving energy and generating renewable energy are two different areas of energy management, Lakshminarayanan said: “At BIAL, energy conservation efforts have been taken up and implemented. These include installation of LED lights, use of solar power, installation, modification and adoption of energy-efficient fittings and fixtures.”

      More LED lights

      BIAL also plans to convert all lighting, except airfield ground lighting systems, to LED to reduce energy consumption. As of now, all streetlights and 50% of those at the terminal are LED. Energy saved from use of LED lights is equivalent to 1.7 million units per year.

      “A combination of solar power, rainwater harvesting and water conservation and LED lighting could ensure the airport achieves “3+ carbon neutrality”, the highest level of environmental impact achievement for airports. A solid waste management plant which is under construction will be operational in 2019, making BIA the first in Asia to have an in-house solid waste management facility,” said Hari Marar, CEO, BIAL.

  • Ludhiana railway station set to garner huge savings with solar rooftop project

    •    Source: TNN, ETEnergyWorld / Ludhiana, 19th June 2018 Published on : 19th June 2018


      In a move which will annually save crores of rupees of the railway authorities, the Ludhiana railway station is all set to get a solar power system for generating 2 megawatt of power to fulfil its massive power requirement.

      Presently, the electricity demand of the station is being fulfilled by a hotline of Punjab State Power Corporation Limited, with an average of Rs 25 lakh monthly bill being paid by the railway station. Once the solar power plant on the rooftop of the railway station is fully operational, the bill will be cut by about 60%.

      The plan to introduce rooftop solar panel technology for electricity generation at 8,000 railway stations, a massive project of the railway ministry, will provide the Northern Railway with around 20 Megawatt of solar power generation capacity, of which, Ludhiana railway station will receive around 2 Megawatt of solar energy system.

      For the speedy implementation of the project, a team of Azure Power Company, which has signed a contract with the railway ministry for the solar plant installation, visited the Ludhiana station to identify the suitable sites where the rooftop solar energy system would be set up.

      Giving more information about the project, Ludhiana station director Abhinav Singla said, "Around 2 MW of power generating system will be received by the Ludhiana railway soon. It will cater to half of its present electricity needs. The solar photovoltaic cells will be installed on the rooftop of the main building and provide power to all the offices, power cabin, waiting hall, etc. It will also be installed on the roofs of the guest house and carriage and wagon (C&W) buildings. One of the major reasons behind the commencement of this project is to bring down the monthly energy bill and to reduce the dependence on power utilities."

      Senior section engineer (Powers) Brijraj said that last month, the railway authorities have paid Rs 26 lakh to the Punjab State Power Corporation Limited for using their utility. In summer, the energy consumption is high as compared to winter. "The installation of solar energy system will definitely help in saving a huge amount," he said.

      Earlier, the Railways had planned to set up 500 Megawatt of solar energy system to meet the energy requirements of over 8,000 stations and the Railway Energy Management Company Limited (REMCL) had first auctioned 67.38MW of rooftop solar project in August, 2017. Then in November last year , the firm tendered 32 MW rooftop solar photovoltaic (PV) projects, which will be installed at offices, buildings and railway stations at the zonal level.