Rewa Ultra Mega Solar Power Project receives sub Rs 4 per unit bids
Madhya Pradesh government’s Rewa ultra mega solar park has received the lowest bid of Rs 3.59 per unit. The tariffs are set to reduce further as the reverse e-auction for the 750-mw solar project are set to start on Thursday. Manu Srivastava, principal secretary, new and renewable energy, Madhya Pradesh government told ET that Rs 4 per unit barrier has been breached by Rewa project even before auction. According to the bidding rules, the lowest initial tariff would be the base price for the reverse auction. Rewa ulta mega solar, a 50:50 joint venture of Madhya Pradesh Urja Vikas Ltd and Solar Energy Corp of India will sell the electricity produced to Madhya Pradesh utilities and Delhi Metro Rail on an open access basis. Mark Gastineau Jersey
Renewable energy companies’ viability under threat as Maharashtra discoms fail to pay Rs 2300 cr dues
Maharashtra State Electricity Distribution Company (MSEDC) has failed to pay dues worth R2,300 crore to renewable energy companies hitting their viability, people familiar with the development told FE. A spokesperson for MSEDC said some payments had been made in April. “However, we have R2,300 crore worth of payments pending as the financial health of the discom has deteriorated in the last one year on account of non payment of dues by customers,” the spokesperson told FE. Continuum Wind Energy, which has not received its dues since November 2015 was on the verge of default, Arvind Bansal, CEO and founder told FE. “The non- payment of dues by discoms created a near-default situation for us. But we were saved by our shareholders,” Bansal said. Renewable power producers such as Renew Power, ACME Solar, Hindustan Cleanenergy, Indo Rama and Panama Wind Energy, among many others, were not paid since April, the Maharashtra state discom spokesperson confirmed. The Power Finance Corporation’s report on the performance of state utilities noted that MSEDCL had accumulated losses worth R7,087 crore as of March 31, 2015. Wind energy projects have been the worst affected among the lot of power producers where the payments have been delayed by over one year, said Parag Sharma, COO at Renew Power, which has around R400 crore worth of dues pending with MSEDC. “We have a presence in eight states and have hedged our revenues in such a way that not more than 20% comes from any one state. This helps us to meet our debt obligations on time,” Sharma added. Marcus Allen Jersey
Grid integration impeding solar power segment
Solar power producers in Telangana urged the government to resolve the issues such as grid integration and inter-state transmission system. Such measures will enable the state to achieve solar photovoltaic power generation capacity of 5,000 MW by 2018-19. Telangana energy department has assured the solar power segment that all the possible help from the government. Several representatives from the solar power industry and government departments participated in a seminar on ‘solar power’ organized by Federation of Telangana and Andhra Pradesh Chambers of Commers and Industry (FTAPCCI) here on Wednesday. In this context, Kishor Nair, COO, Avaada requested Telangana government to invest more into transmission system and also build inter -state transmission system/green corridor to generate solar power in Telangana and export to other states. “Improving grid stability to evacuate solar power would need large investment in utility infrastructure,” said Nair. Matt Bryant Womens Jersey
India’s Solar Power Capacity Crosses 9 GW With Tamil Nadu, Rajasthan, Gujarat As Leading States
India’s solar power generation capacity has crossed 9 GW as on December 31, 2016 and Tamil Nadu is the leading state with largest solar capacity (1.6 GW) followed by Rajasthan (1.32 GW) and Gujarat (1.16 GW), Union power minister Piyush Goyal said on Monday. India’s total solar power generation capacity stood at 9,012 MW as on December 31, 2016. Tamil Nadu led the chart followed by Rajasthan and Gujarat, Goyal informed the Rajya Sabha. “As on December 31, 2016, Gujarat (1.16 GW), Rajasthan (1.32 GW), and Tamil Nadu (1.6 GW) have crossed 1 GW solar installations…, while Andhra Pradesh (0.98 GW), Telangana (0.97 GW) and Madhya Pradesh (0.84 GW) are close to these states,” he said in written statement. The minister said solar power development varies from state to state depending on solar irradiance, availability of conducive state policy for the sector, availability of land, cost of financing and business environment such as willingness of DISCOMS to purchase the solar power, power evacuation infrastructure, etc. On falling solar tariff, the minster stated in another statement to the Rajya Sabha that the tariff determined by the Central Electricity Regulatory Commission (CERC) in case of solar photovoltaic projects is Rs 5.68 per kWh and Rs 5.09 per kWh without and with accelerated depreciation benefit, respectively. He further said that in Rajasthan, the tariff after bidding came to Rs 4.34 per kWh. The government is promoting solar energy through fiscal and promotional incentives such as capital and/or interest subsidy, tax holiday on the earnings for 10 years, generation- based incentive, accelerated depreciation, viability gap funding (VGF), financing solar rooftop systems as part of home loan, concessional excise and custom duties, preferential tariff for power generation from renewables, and foreign investment up to 100 per cent under the automatic route, etc. Cordrea Tankersley Authentic Jersey
Power companies tap smart meters to change consumer behaviour pattern
Consumers will soon start getting messages from local power utility companies to switch off an air-conditioner or any other high power consuming appliance to avert a power cut during peak hour. For instance, Tata Power Delhi Distribution Ltd (TPDDL), which supplies power in the north and north-western parts of the national capital region, is set to install smart meters for 20 lakh customers that will detect their usage pattern and help in managing the load. TPDDL has selected Landis + Gyr Ltd., a unit of Toshiba Corp. for building the communication network and to install smart meters on the premises of customers, said TPDDL chief executive officer and managing director Praveer Sinha. The investment in smart metering will help the company save 25 mega watt (MW) peak power requirement, said Sinha. To meet the peak demand in mornings and early evenings, distribution firms have to get into ‘take or pay’ deals with power generation companies and have to pay a part of the power tariff even if the agreed power is not lifted. With data on usage pattern of consumers, distribution firms will be able to modulate the load and flatten the peak power demand by requesting consumers to use some of their appliance at non-peak hours. A mall, for example, could be requested to switch off some of its escalators for some time, explained Sinha. “Smart metering will facilitate two-way communication between the consumer and the utility, reduce losses and help in delivering better service,” Sinha said. It will also help in detecting attempts at tampering with the meter and address the issue of power pilferage. TPDDL will make an initial investment of Rs200 crore, which will cover roughly 2 lakh smart meters. The cost will get built into the power tariff to the consumer. For consumers, shifting some of the power consumption to non-peak hours will bring savings as utilities will charge a lower tariff in those hours. At present, this facility is available to large consumers who use 10 kilowatt per hour (kwh) is expected to be extended to those using 5kwh or more, said Sinha. Sandip Mukherjee, chief executive officer of Landis + Gyr Ltd. India, said the company is in discussions with other utilities too to install smart meters and to build the wireless communication network required to operate it. That include Reliance Power Ltd-owned BSES Yamuna Power Ltd and BSES Rajdhani Power Ltd, which supply electricity to about 3.5 million residential, institutional and business consumers in Delhi and some of the state-owned utilities which are able to invest in smart metering, he said. The BSES companies are in the process of covering consumers who use more than 500 units a month by the end of this year in the first phase installing smart metering. The government’s revised power tariff policy announced in January 2016 recommends use of smart meters. Jim McMahon Womens Jersey
UDAY discom revival plan: States not able to meet targets
Though Tamil Nadu, the latest state to sign on to the UDAY discom revival package, is confident of being able to break even in FY18 without increasing tariffs, the performance of most signatory states is disappointing. According to an analysis by Motilal Oswal, based on data for 12 states in H1FY17 on the power ministry’s UDAY website, ATC losses have widened for 10 of the 12 states—ATC losses, by and large, are the fulcrum of the UDAY package since, if these fall fast enough, even without a significant hike in electricity tariffs, state electricity boards (SEBs) can start breaking even; at an aggregate level, ATC losses were projected to fall over 3 percentage point every year to reach 15% by FY19 from the current level of 22% . While it is early days yet, as Motilal points out, the gap between the cost of supply and the revenues earned has increased in seven states and could go up even more with the increase in cess and Railway freight on coal (the two would add 15-20 paise per unit of power). In the case of Gujarat, from an already low 14.9%, ATC losses fell further to 13.7% (the target was 14%) and, as a result, the SEB generated a profit of 94 paise per unit of power as compared to the baseline of 3 paise and the target of 2 paise. Things were hardly as rosy in other states—for Uttar Pradesh, one of the biggest loss-making states, the data is not even available on the UDAY website, presumably due to the poor progress in achieving targets. In the case of Rajasthan, the state has more or less achieved its ATC target of 28.26%—it achieved 28.79%—but the gap between costs and revenues was as high as 83 paise as compared to the target of 35 paise. Punjab’s gap rose from the baseline of 60 paise to R1.05 per unit while the target was 37 paise. All of which means the states will need to do a lot more to achieve their goal of financial stability. In the case of Rajasthan, for instance, to use Motilal’s term, Uday’ing the gencos will be important—once NTPC acquires the state’s Chhabra power plant, financing costs will reduce considerably and this will reduce fixed costs from R1.64 per unit to R1.39. A larger challenge for all states is that, with demand slowing down in most states and new capacity coming up, the gap between costs and revenues will only increase. While renewable energy obligations are important from the point of view of the environment, they represent a higher cost for SEBs, a cost that can be prohibitive when, in any case, the utilities have a lot of catching up to do in terms of tariff. While the onus of this lies on the states since, over a period of time, SEB losses will have to be taken onto their books, PSU banks—and RBI—need to be careful to ensure that they don’t end up financing bankrupt SEBs all over again; had banks not been so willing to lend in the past (possibly due to political pressure as well), SEBs would never been able to build up the kind of debt they have. Ben Bishop USA Authentic Jersey
Government unable to recover cost of electricity from Baglihar II
The Jammu and Kashmir State Power Development Corporation (JKSPDC), a fully-owned government company, is facing a tough time in getting buyers for electricity produced in its 450-MW Baglihar II power project. The rate of its power unit is much higher than the available market rate in India, Kashmir Reader has learnt. One of the top officials of JKSPDC, wishing anonymity, told Reader that the power project has been getting rates not more than Rs 3.5 from buyers while its production cost, which includes taxes and water charges, is more than Rs 4 per unit. The official said that amid the ongoing slump in markets, the company is selling the project’s entire power to the Power Development Department (PDD) since September 2015 at Rs 3.6 per unit. He said that although the power plant is set to sell electricity in the open market from March this year as per the agreement, the company has failed to lure any buyer. “As of now, we sell the entire power to PDD, but the company cannot afford to continue it. As per the agreement, we are ready to give 40 percent of the generation to PDD, but for the 60 percent we have to find buyers in the open market,” he said. “Although selling the entire power to PDD seems good, but there are issues involved. PDD cannot pay us at a time because it does not generate revenue in one go. In such circumstances, it suits us to sell electricity to another buyer. But if we cannot get the rate as per our requirement, we have to sell it anyway and bear the losses. There is no alternative,” the top official said. The 450-MW Baglihar II is one of the main assets of the company that is the second largest producer of energy in the Valley after National Hydroelectric Power Corporation (NHPC). The state-run company that is set to become the second listed company from the state also produces revenue from other small projects and the 450-MW Baglihar I. Director of JKPDC Shah Faesal told Kashmir Reader that the company is handling the issue with dexterity. “It is not a very serious issue because there is a slump in the market right now. I am aware that rates are going down but hydropower has one advantage over other sources of energy, which is that it gives quality power during peak demand,” Faesal said. Asked how the company will tackle the slump if it continues, Faesal said that the company will be exempted from many taxes and water charges. “If this is done, I am sure the cost of power will come down and we will have effective buyers,” he said. Johnny Unitas Womens Jersey
Petroleum: Why two governments ruled against mega merger
In the Budget for 2017-18, Finance Minister Arun Jaitley said the government proposes to create an integrated public sector oil major which would be able to match the performance of international and domestic private sector oil and gas companies. That’s something two previous governments have taken a look at twice in the last 25 years. At the start of the UPA’s term in 2004-05, Mani Shankar Aiyar, the then petroleum minister, approved the setting up of a committee headed by former steel secretary and BHEL chairman, V Krishnamurthy, to take a broad look at the energy sector and to recommend an appropriate structure for India’s state-owned companies engaged in both refining and exploration. The committee had as its members two former petroleum secretaries, G V Ramakrishna and Vijay Kelkar, the former ONGC chairman, B C Bora, the former chief of Bharat Petroleum, U Sundararajan, and the former finance secretary G K Arora. It came to the conclusion that rather than creating a mega entity in the sector, it would be better to strengthen the structure of the state-owned oil companies, as it was then in 2005, through policy measures and improvement in managements. That would work rather than a merger, they said, when given the mandate to examine the core competence of these companies in the petroleum sector and to assess their competitiveness on the global scenario given the kind of changes which were underway. And the recommendation that it wouldn’t make sense to opt for a mega merger was based on cases of restructuring or mergers and acquisitions in the global oil industry. The rationale then for such mergers was to achieve operational synergies and to pare costs in a competitive industry — which would mean cutting on jobs and boosting profitability. But the committee then felt that going by the case studies and data, only 29 per cent of all mergers and acquisition transactions led to higher returns for shareholders in those firms. An interesting finding was that one of the major causes of the failure of mergers was the handling of people working in many of these firms. Then there was the danger of monopolies and cartels being created in the industry. India’s PSU oil companies, the committee said, operated in distinct areas across the hydrocarbon value chain — be it refining or exploration — and in areas of competence, building a case for not rocking the boat. There were other worries to be taken into account. A merger — or the emergence of a monolith would have meant reduction of staff in these firms — which would not have been politically feasible as all the committee members recognised, having worked with the government for decades. It would also have inhibited competition for sure. The presence of any mega entity dominating the energy market has ambiguous implications and it is the considered opinion of the committee that merger of oil PSU’s may not be an advisable opinion at present. The Krishnamurthy committee’s recommendations in many ways mirrored the views of another group constituted by the petroleum ministry towards the fag end of the Narasimha Rao government. In 1994-95, the balance of payments crisis had been overcome with a fair measure of macro economic balance and unveiling of reform measures in many areas including the financial sector. By 1995, the government had started looking at the prospect of carrying out reforms in the oil industry. The ministry, then headed by Captain Satish Sharma, formed a R group (signifying reforms) driven by the then petroleum secretary, Vijay Kelkar, and the chairman of Bharat Petroleum, Sundararajan. Over a few weekends, they and many of the industry stakeholders and experts often met in Mumbai and the capital to discuss various proposals, with a report being prepared in over six weeks involving several youngsters from the industry. Then too, the view was that a giant entity in the sector wasn’t something desirable given the Indian context. It could mean destabilisation of some of the companies and the industry besides creating problems for consumers. In short, the costs far outweighed the benefits which could arise from a possible merger, many of them felt. There could also be a collateral damage to ONGC too, policymakers felt. Yet, when Kelkar moved from the petroleum ministry to North Block as finance secretary during the NDA government headed by Vajpayee, the proposal which went through was that of the big oil companies buying into each other. So under a cross-holding plan worked out by the government, oil exploration firm ONGC bought 9.1 per cent in IOC with the refining company in turn picking up 9.6 per cent in ONGC and 4.83 per cent in GAIL, the gas transportation company. The move came in for much criticism then, but over five years later, IOC sold part of its holding for over Rs 3,600 crore — a substantial return on its original investment. Again in 2014, another committee headed by Kelkar, tasked with working out a road map for reducing India’s import dependency in the hydrocarbon sector by 2020, although it did not directly address the issue of a merger given its mandate, made out a case for empowering and strengthening national oil companies and to strengthen the board processes with greater accountability and autonomy. Given this backdrop, it will now be interesting to see the approach which this government adopts for a potential merger. Josh Malone Authentic Jersey
Petrol prices lower now than in 2013-14, says Government
The prices of petrol are lower than the 2013 level and the money collected through taxes on petro products was being used to develop infrastructure and creating educational facilities, government said on Wednesday. Union Minister Rajyavardhan Singh Rathore, who was replying to questions in Rajya Sabha on behalf of his colleague Petroleum Minister Dharmendra Pradhan, said the price of petrol had come down from what they were in 2013. In July-August 2014, the price was 73.60 paise whereas in January 2017 it is 71, he said during the Question Hour. Read Also: Indian govt plans to merge state oil firms to take on global giants Increase in excise duty and depreciation of the Rupee are among reasons due to which the slide of petroleum products in international market are not reflected in the retail selling price, he said. The revenue collected is spent on infrastucture, public schemes and education, which is increasing, Rathore said, adding “we are using that money to provide for the country”. In the written reply, the government said the price of petroleum in international market started sliding in July 2014 but the retail selling price has not witnessed a similar decline due to some factors. Read Also: Spike in oil prices may impact growth: Economic Survey 2017 One of the factors was that the element of excise duty has been gradually increased by Rs 12 per litre on petrol since November 2014, it said, adding that depreciation of the rupee vis-a-vis the dollar was another reason. Another factor for the domestice prices not showing as much slide as global petrol prices was the increase in VAT and other local levies by the state governments from time to time. It also said that elements like dealers’ commission and marketing cost do not vary with the increase or decrease in global price. Robyn Regehr Womens Jersey
Diesel Price Cut: After Airtel & Idea, Reliance to target IOCL, HPCL, BPCL?
Reliance Industries, which started giving a discount of Re 1 on every liter of diesel sold through its pumps in January, has now started advertising the offer in Kerala. The discount was first noticed in January in North and West Indian towns. The move was, at the time, not taken very seriously by players such as Indian Oil Corporation and Hindustan Petroleum Corporation, who felt that it was a response to the discounts offered by state-owned companies to promote electronic payment. In the aftermath of demonetization, state-owned players including Bharat Petroleum Corporation, had started giving a 0.75% discount when customers paid electronically. That translates to a saving of about 45 paise per liter, and that too in the form of a cash back at a later date. However, Reliance Industries is offering an instant discount of Re 1 at the pump with no terms and conditions or limits. But the expansion of the offer could pose concerns for the incumbents. TIME TO WORRY? The move could set the cat among the pigeons of Indian petroleum retailing business and Reliance could disrupt the fuel retailing market like it disrupted the telecom market. The state-owned companies, BPCL, IOCL and HPCL, control over 90% of the petrol and diesel retail sales in India. To prevent competition amongst themselves, they also have identical prices. This ensures that their profit margins are not hit by competitive pressures, and consumers often choose their pumps purely by looking at the quality of fuel they get. This is very similar to the Indian telecom market before the entry of Reliance Jio into it. There were three players — Bharti Airtel, Idea Cellular and Vodafone — and their tariffs, especially for data — was very similar. As a result, consumers chose their provider on non-tariff factors such network coverage and advertising and there was no price-based competition. MALPRACTICES Due to the monopolistic nature of the existing petroleum retailing market in India and the high costs of setting up petrol pumps, the sector has seen the rise of malpractices such as adulteration of fuel and rigging of pump equipment. Moreover, the public sector companies charge a profit margin of around Rs 2 per liter, irrespective of market conditions. Reliance Industries, which has its own sources of petrol and diesel and is not dependent on state-owned oil companies, is trying to bring forces of competition by cutting the price of fuel. Even though the price cut is not as high as in telecom — where Reliance Jio’s prices were about 80% cheaper that those of rivals — in petrol and diesel retailing, even a 1.7% cut in price can result in a huge saving. Many lorry and bus operators, for example, spend millions of rupees on fuel per day and a 1-rupee discount can save them thousands of rupees each day. It remains to be seen how Indian Oil, Bharat Petroleum and Hindustan Petroleum react to the move by Reliance. Reliance owns only around 1,100 pumps, and many of its pumps are non-operational, but each pump can serve a huge customer base, especially those situated on highways and in busy junctions. Bryan Witzmann Jersey