Transcript Document

Presentation
on
Indian Power Sector
1
Government of India
April, 2006
Power Infrastructure in India
Generating Capacity
Hydro
Thermal
Coal
Gas
Nuclear
Renewables
TOTAL
Private
Sector
11%
(13,420 MW)
(Mar., 2006)
32,335 MW (26%)
82,507 MW (66%)
68,643 MW
12,663 MW
3,310 MW (3%)
6,158 MW (5%)
1,24,310 MW
Central
Sector
32%
(39,908 MW)
State
Sector
57%
(70,982 MW)
In addition captive generation capacity of appx. 41,000 MW.
2
Growth of Power Sector
Census Results
1990-91
2000-01
2004-05
PLF (%)
57.1
69.0
74.8
Energy Shortage (%)
7.9
7.8
7.3
Peaking Shortage (%)
16.7
12.3
11.7
Households Access to
Electricity (%)
42.0
56.0
-
Rural Households
Coverage (%)
31.0
43.8*
-
To Electrify these Rural Households ( 7.8 crore) in next five years, Rajiv
Gandhi Gramin Vidyutikaran yojana has been launched.
3
Year
9027
4653
2695
1362
124310
118420
107973
79470
42585
28448
Hydro
Nuclear
Thermal
16604
63290
104851
Growth of Installed Generating Capacity
(MW)
Dec- Dec- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar47
55
61
66
74
80
85
90
95
02
03
05
06
4
Per Capita Consumption of Electricity in
India (kWh/year)
592
606
606
408
238
15.6
34.8
1950
1960
83.5
1970
130.5
1980
1990
2001
2004
2005
In 1950 Electricity consumption per capita was 15 kwh
In 2012 it is projected at 1000 kwh.
Brazil
:
2070
China
:
1200
Thailand
:
2000
Malaysia
:
3000
5
Electricity Act 2003
The Act creates a liberal and transparent framework for
Power Development.
It facilitates investment by creating competitive
environment
and reforming distribution segment of
power industry.
Entry Barriers removed/reduced
•Delicensed generation.
•freedom to captive generation including group captive.
•recognizing trading as an independent activity.
•open access in transmission already in place.
 Open access to consumers above 1 MW within five years
commencing from 27th Jan 2004 (date of enforcement of
amendment to Electricity Act).
 Multiple licenses in distribution.
 Regulatory Commissions- to develop market to fix tariff.
6
Implementation of the Electricity Act
•
Most of the Rules (required to be framed by Central Govt.)
notified.
•
National Electricity Policy announced.
•
Electricity Appellate Tribunal : Operational.
•
Guidelines for determining tariff through competitive
bidding notified.
•
Regional Power Committees for all the 5 regions
established.
•
Tariff policy notified .
•
CERC has notified open access in transmission.
•
Several SERCs have initiated action on open access in
7
Distribution.
National Electricity Policy
 Total Village Electrification by 2010.
By year 2012 :
 Per capita availability 1000 units.
 Installed capacity over 200,000 MW.
 Spinning reserves 5% .
Minimum lifeline consumption of one unit per household
per day.
 Inter-regional transmission capacity 37,000 MW.
 Energy efficiency/ conservation savings about 15%.
 Quality and reliable power supply.
8
Tariff Policy
 Tariff of all Generation and Transmission Projects in Private
Sector through Competitive route- Public sector to complete
transition in five years.
 Reduction of cross subsidy to (+)(-) 20% in next five years.
 Emphasis on facilitating Open Access in Distribution; clear
formulation on cross subsidy surcharge.
 Transmission Tariff framework sensitive to distance and
direction.
 Strict Implementation of Performance Standards.
 Agriculture Tariff to leverage sustainable use of Ground Water
Resources.
 Time bound introduction of MYT.
9
Meeting the Demand

Peak demand by end of XI and XII plan is projected as
1,57,107 and 2,12,759 MW respectively.

Full Development of Hydro potential .
•
All Hydro is Renewable irrespective of size.
•
50,000 MW Hydro Initiative launched.
•
73 projects with capacity of 33,000 MW taken up for
DPR preparation.
10
Contd..
Meeting the Demand

Thermal power generation capacity is required to be
enhanced to meet the growing demand.
•
100,000 MW Thermal Initiative launched.
•
Under the Initiative, shelf of Feasibility Reports (FRs) for
setting up thermal power projects is to be prepared at
feasible sites with all clearances in place.
•
Projects totaling 60,000 MW have been identified.
11
CDM Projects
 India emerging as one of the largest potential source of
CRs.
 Designated National Authority fully functional.
 Focus areas in Energy sector :
• R&M of old plants.
• Conversion of LT to HT lines.
• Supercritical Thermal Power Projects.
• Hydro Projects.
12
12
Augmentation of National Grid

Intra – Regional expansion of transmission capacity is
linked to generation projects.

Inter- Regional connectivity has been planned with
hybrid systems, consisting of HVDC, Ultra- High Voltage
AC (765 kV) & Extra High Voltage AC (400 kV) lines.

Present Inter- Regional transfer capacity is 9,500 MW,
being enhanced to 17,000 MW by 2007.

37,000 MW by 2012.
13
Capacity Addition Programme During XI
Plan (MW)
Fuel- Mix
Thermal
Hydro
Nuclear
Total
Central
Sector
21,000
State
Sector
11,000
Private
Sector
12,000
Total
10,000
5,000
-
44,000
15,000
3,000
34,000
16,000
12,000
3,000
62,000

May be revised to 67,000 MW, depending on the
availability of Gas/ LNG in required quantities and right
prices.

In addition, 5000 MW through Non- Conventional Energy
Sources.

Captive capacity not included.
14
Investment Requirements During XI Plan

USD 50 Billion for Generation.

Another USD 50 Billion for transmission, distribution
and Rural Electrification.

Total USD 100 Billion.
15
Improving Investment Climate
 At present 40,000 MW generation capacity is already under
execution. Investment of USD 43 Billion committed.
 Public sector investments have been stepped up ; will need
to be supplemented through private investments.
 100 % FDI in all segments of
Power Sector has been
allowed.
 Recently Power trading also covered.
 The law does not distinguish between
domestic and
International Investors.
16
Private Participation- Generation
 Encouraging response of investors
 Financial closure of 4400 MW projects– investment of
about USD 3.6 Billion.
 Financial closures for 2200 MW is at advanced stage of
finalisation.
 Additional about 10,000 MW appraised. Fuel supply
availability critical for financial closure.
17
Ultra Mega Power Projects – A Major
Investment Initiative
 Section 63 of the EA, 2003, envisages procurement of power by
distribution licensees through competitive bidding.
 Tariff so arrived is to be accepted by Regulatory Commission.
 National Electricity Policy provides for “ Competition aimed at
consumer benefits” – Competition to determine the price as
apposed to cost plus exercise.
 Electricity Tariff Policy stipulates competitive procurement of
future power requirements by Distribution Licensees.
18
Contd..
Ultra Mega Power Projects contd..
 Will facilitate setting up of large sized projects of 4000 MW
each reaping economies of scale and quick capacity addition
leading to cheaper power.
 Utilization of latest highly efficient super critical technology.
 IPP experience highlights critical importance for Government
intervention to
• secure reliable fuel supply,
• obtain environmental clearances
• co-ordination with states & bulk power purchasers, for
achieving financial closure.
19
Criteria For Site Selection
 Pit head location with domestic coal,
 Coastal location with imported coal,
 Coastal location with domestic/blended coal,
 Through a preliminary scrutiny by CEA of a number of
potential sites available in the country, - 5 suitable locations
have been identified.
• Two pithead locations with indigenous coal.
• Three Coastal locations with imported coal.
20
The Shell Company Concept (SPV)
 Shell company to work independently to reach a stage where
major tie-ups, statutory clearances and linkages are in place.
 PFC nominated as the nodal agency for setting up five shell
companies.
 Each company headed by a Chief Executive.
 Selection of developer through a Tariff based ICB.
 Shell companies will be then transferred to the successful
bidders for execution.
 With a number of concerns addressed by Shell company, risk
factors minimised.
21
Formation of SPVs
 Shell companies (SPVs) for each project have been registered.
 A core group consisting of officials form PFC, CEA and NTPC
is facilitating the operationalisation of the SPVs.
 Chief Executives for these SPVs have been put in place.
 SPVs have already commenced activities on a time bound
action plan in consultation with the state Govts. and other
agencies.
22
Contd.
Formation Of SPVs. Contd…
 Initial expenditure on establishment and operationalisation of
SPVs being funded by PFC.
 Initial expenditure for above activities reimbursable to PFC
with interest at the stage of transfer of the ownership of the
SPV to the successful bidder.
23
Role of Shell Company
 SPVs to take actions for
 Preparation of project report.
 Land acquisition.
 Allocation of fuel linkages/coal blocks.
 Allocation of water by the state Govt.
 Appointment of consultants for EIA & Project Report.
 Appointment of consultants for International Competitive
Bidding (ICB) document preparation & evaluation.
24
Contd.
Role of Shell Company contd..
 Various approvals and statutory clearances.
 Off-take/sale of power – section 63 of EA2003 provision.
 Power Evacuation/ (Transmission) System.
 Rating of Projects (suggested by FI’s in the meeting on
06.01.06)
25
Role of Ministry of Power
 To be a facilitator.
 Co-ordination with concerned Ministry/ Agencies for ensuring:
• Coal Block Allotment/ Coal Linkage
• Environment/ Forest clearances
• Required support from State Govt. Agencies
• Financial Institutions towards financial closure.
• To facilitate PPA and proper payment security mechanism
- with State Govt./ State utilities
• Monitoring the progress of shell companies w.r.t.
predetermined timelines.
26
Present Status
 Proposed names for the SPVs are:
1. Sasan Power Limited (M.P.)
2. Akaltara Power Limited (C.G.)
3. Coastal Gujarat Power Limited (Mundra Port)
4. Coastal Karnataka Power Limited (Karvar)
5. Coastal Maharashtra Power Limited (Ratnagiri)
 Additional pit head site in Orissa and costal site in A.P. are
being explored.
27
Contd.
Present Status contd..
 Chief Executive of each Company has started functioning.
 Inter action with State Govts. by MoP for necessary support.
 Ministry of Coal has agreed In-Principle to allot coal Blocks.
 EOI advertised for projects at Sasan and Mundra on 31st Jan/
2nd Feb. 2006.
 Pre- Bid Conference held on 21.02.2006.
 Federation of Indian Chamber of Commerce and industry
(FICCI) selected Industry Partner.
28
Payment Security Mechanism
 As condition in PPA
 Letter of credit (LC) by distribution licensee.
 Escrow Account claims of receivables of distribution utility.
 Finally in the unlikely event of default direct supply to HT
consumers as per provision of the Electricity Act 2003.
29
Important Milestones For Selection
Process
1
EOI by SPV for enlisting qualified Jan’06 (2 sites) /
bidder
Feb’ 06(3 sites)
2
Selection of Qualified bidder
Mar’06/ Apr’06
3
Issue of bid document
Apr’06/ May’06
4
Closing date of receipt of bids
Sept’06/ Oct’06
5
Selection of Successful Bidder
Dec’06/ Jan’07
6
Transfer of projects of shell Dec’06/ Jan’07
company to the successful bidder
30
Private Participation in Transmission
 The Act provides:
• Dedicated transmission line can be set up by generating
company or captive plant owner without any license
• Transmission license for inter – State or intra- State
lines for grant of which recommendation of CTU/STU is
envisaged. It is not binding on the Regulatory
Commission.
 Policy frame work developed for facilitating Private
Participation through Empowered Committee.
 Advance Project formulation to speed up projects through this
route.
 Guidelines for competitive tariff determination being finalised.
31
Private Participation – Transmission contd..
 Perspective Plan for three five year plan periods will be
prepared by Central Electricity Authority(CEA).
 Short Term Plan corresponding with one five year plan period
will be prepared by CEA.
 Both these plans form part of the National Electricity Plan.
 Network Plan will be prepared by the Central Transmission
Utility based upon the National Electricity Plan.
 The Network Plan, Short Term Plan and the Perspective Plan
will be hosted on the websites of the respective organizations
32
Empowered Committee
 To be constituted by the Ministry of Power.
 Chaired by a Member of the Central Electricity
Regulatory Commission.
 Two Members from the Central Electricity Authority.
 Committee to have representatives from the Ministry of
Power,
the
Planning
Commission,
the
Central
Transmission Utility and two experts.
33
Contd.
Empowered Committee contd..
FUNCTIONS
 To identify projects to be developed under this Scheme.
 To facilitate preparation of bid documents and invitation
of bid through a suitable agency.
 To facilitate evaluation of bids.
 To facilitate finalization and signing of Transmission
Service Agreement (TSA) between the developer and the
concerned utilities.
34
Identification of Projects and Selection
 Identification of projects under this Scheme will be done in
such a way that it results in a balanced mix of both difficult
and less difficult projects.
 The nature of the terrain and issues relating to right of way,
land area to be acquired and issues involved in
environment and forest clearances would be material
factors in relation to difficult or less difficult projects.
 The selection of developer for identified projects would be
through tariff based bidding for transmission services.
35
Contd.
Identification of Projects and Selection contd..
 Under section 63 of the Electricity Act, 2003 this tariff will
be adopted by the Regulatory Commission.
 CTU/STUs and Joint Venture Companies will also be
eligible to bid, so that there is sufficient competition among
the bidders.
36
Payment Process
 The Transmission Service Provider( TSP ) will enter into a
Transmission Service Agreement (TSA) with the concerned
utilities.
 TSA will address:
• Risk allocation between parties;
• Inter - utility allocation of transmission charges;
• Force majure clauses as per industry standards;
• Default conditions and cure thereof, and penalties;
 Adequate payment security shall be made available to the
TSP by the user of transmission services through:
• Letter of Credit (LC)
• LC backed by credible escrow mechanism.
37
Private Participation- Distribution
 Old licensees working satisfactorily in Kolkata, Mumbai,
Ahmedabad and Surat.
 Orissa privatised in 1999.
• Turn around after initial difficulties. AT&C loss reduction of
over 4% in 2004-05. 11 to 14% loss reduction in 3 years.
AT&C losses still high.
• Estimated financial gain to Orissa USD 330 million between
1996-2003.
• No tariff increase since Feb. 2001.
• Slight reduction in higher slab for domestic consumers in
2005-06.
 Delhi privatised in 2002.
• AT&C loss reduction as per target by all companies.
38
Contd..
Private Participation- Distribution
 AT&C loss reduction:
• 48.1% to 40.6% (Zone-1)
• 57.2% to 50.7% (Zone-2)
• 48.1% to 33.8% (Zone-3)
 Financial gain to Delhi : Annual cash outgo of USD 260
million down to USD 35 million during 2005-06.
 Quality of supply better. Transformer failure rate reduced
to 1% from 15%.
 Load shedding has gone down from 2.32% of input to 0.85%
of input MUs.
39
Payment of Dues by State Utilities to
CPSUs

Since 2003-04, the realisation of dues by CPSUs
improved to about 100% of current billing.

• 2001-02
76%
• 2002-03
95%
• 2003-04
Almost 100%
• 2004-05
Almost 100%
Agreement on Securitisation of dues of CPSUs
were
finalised in 2002-03. States have issued bonds.

No NPA to PFC.
40
Commercial Losses of State Utilities as %
of Turnover (Without Subsidy)
45
40
41.29
37.17
33.00
35
30
28.32
25
17.60
20
15
14.69
10
5
0
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
Years
41
Revenue Gap (Cents/ kWh)
Difference between Average Cost of Supply (ACS) and Average
Revenue Realised (ARR)
1.8
1.6
1.4
1.61
1.55
1.47
1.30
1.2
0.97
1
0.86
0.8
0.6
0.4
0.2
0
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
Years
42
Tariff Rationalisation and Improved
Collection Efficiency
Average Revenue Realised (ARR) (Cents/ kWh)
4.7
4.6
4.57
4.45
4.5
4.4
4.3
4.2
4.11
4.1
4.0
3.9
3.8
2001-02
2002-03
Years
2003-04
43
Rural Electrification

Rural electricity infrastructure to cater to the
requirements of :
• Household needs
• Agriculture and irrigation pump sets
• Cold Chain
• Small and medium industries
• Social Services – Health, Education

Targeted to electrify - Access to all households in 5
years.

Decentralized distributed generation for such villages
where grid connectivity is either not feasible or not cost
effective .

Decentralised management by Franchises, Co-operatives,
44
Panchayats etc.
Rajiv Gandhi Gramin Vidyutikaran Yojana
(RGGVY)
In five years …

Electrify all villages and habitations.

Provide access to electricity to all households.

Give Electricity Connection to Below Poverty Line
(BPL) families free of charge.
45
Contd…
RGGVY contd…

The scheme covers the entire country.

Provides 90% capital subsidy and 10% loan.

Funds would be released on the basis of sanction of the
projects.

USD 3.6 Billion would be required for the entire scheme.

During the 10th Five Year Plan, USD 1.1 Billion has been
provided as Capital Subsidy.
46
Distributed Generation – Investment
Opportunities

Electricity Act 2003 provisions:
• No requirement of license for generation and
even
for distribution in notified rural areas.
• Very
large
private
investment
opportunity
in
unserved and poorly served rural areas.
47
Energy Conservation

Energy Conservation – one of the central issues in the
National Agenda to mitigate the problem of shortage.

Potential of reduction of about 23,000 MW of electricity
consumption.

Bureau of Energy Efficiency (BEE) has formulated
detailed action plans covering Industry, Buildings,
Agriculture.

Work started on Standards and Labeling of appliances,
developing Building Codes etc. a National awareness
Campaign Launched.
48
Captive Coal Mining – Investment
Opportunities

27 coal mines allotted for captive development.

Estimated coal reserves for captive coal mining- 3 billion
tonnes.

Strategic Joint Venture partnership opportunities for
foreign developers.
49
THANK YOU
50