Transcript No Slide Title

Hydro Sector
Development in India
Growth & Investment Opportunities
R.V. SHAHI
SECRETARY
MINISTRY OF POWER
GOVERNMENT OF INDIA
Montreal (Canada)
June 19, 2003
1
Indian Power Sector
 Power in Concurrent List :
•
Both Central & State Governments have jurisdiction
 Power Sector in States
•
Vertically integrated State Electricity Boards
(being restructured)
 Central Public Sector Undertakings
•
Own 30% of the capacity
2
Power Infrastructure in India
 Generating Capacity
Hydro
Thermal
Nuclear
Wind
(May ‘03)
27,010 MW
76,607 MW
2,720 MW
1,870 MW
108,207 MW * * In addition Captive
capacity of about
25,000 MW
Hydro
25.0%
Wind
1.7%
Nuclear
2.5%
Thermal
70.8%
Contd...
3
Power Infrastructure in India
 Sectorwise Installed Capacity
Central
State
Private
Private
Sector
11%
(May ‘03)
Cont...
32,816 MW
63,291 MW
12,100 MW
108,207 MW
Central
Sector
30%
State
Sector
59%
4
Power Supply position in the country
Power Shortages (%)
20.5
Peak Shortages (%)
18.0
13.0
11.5
7.3
1992-93
1996-97
12.2
7.8
8.8
2000-01
2002-03
5
The target ahead
Power development - projections for next ten years :
 Target to add more than 100,000 MW by year 2012
• 41,000 MW planned by 2007
Peak
requirement in
(MW)
157107
115705
81492
975
Energy
requirement in
(BUs)
545
Mar.'03
719
Mar.'07
Mar.'12
(act.)
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Hydro development : Rationale
67%
59%
54%
60%
33%
41%
46%
40%
'50
'60
'70
'80
Fuel
Mix
71%
75%
29%
25%
'90
2003
Years
Hydro
Thermal + Others
7
Hydro - A good power source
 Clean power
 Cost effective option in the long term
 Meets peaking requirements
 Development of underdeveloped areas
 Optimum use - Drinking water, Power and
Irrigation
8
Hydro development in the country
•
•
Plans based on five year period block
At present 10th five year Plan : 2002-07
(actuals in MW)
20000 +
14393
Act
Tar.
3812
2873
3828
V
VI
VII
1057
Plans
IV
(end Mar’.) (‘74)
(‘79)
(‘85)
(‘90)
VI to IX Five Year Plans
2427
VIII
(‘97)
4538
IX
(‘02)
X
(‘07)
XI
(‘12)
- 13,666 MW
(20 years)
X Five Year Plan
- 14,393 MW
Contd...
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Hydro development ……..
Cont...
 10th Plan target - 14,393 MW
•
Capacity under execution 12,000 MW
Central 7,800 MW
State 3,500 MW
Private 700 MW
 Another 12,000 MW in Central Sector under Stage I & II
development
•
Stage I covers
Survey & Investigations /
F.R. preparation
•
Stage II covers
Detailed investigations /
DPR preparation and
Infrastructure development
10
Thrust on hydro development
The Selection Process
Potential
assessed
(845 Schemes)
Ranking Study
R anking St ud y
of unharnessed
399 schemes
Hydro Initiative
(162 schemes)
150,000 MW
107,000 MW
50,000 MW
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50,000 MW Hydroelectric Initiative

Initiative launched in May 2003

Consultants identified to undertake Feasibility Studies
•
Preparation of Preliminary
Feasibility Reports
- Dec.’03 - Sep.’04
 Detailed Project Reports
- Jan.’04 - Jan.’06
For promising projects, depending on PFRs results
• DPR preparation also through reputed International
Consultants
• Process of selection of Consultants for DPR of large
projects through ICB
Contd...
12
50,000 MW Hydroelectric ……..

Clearances / sanctions
- Sep.’04 - Jul. ‘06

Implementation
- 2007 - 2017
•
Contd…...
An enormous task requiring huge investments
-
to be undertaken through Central / State
undertakings and Private Investments
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The Opportunities
 Consultancy firms having expertise in planning and
design of hydro projects : Preparation of DPRs
•
Selection
through
a
transparent
International Competitive Bidding.
process
of
 EPC/ Construction companies
•
Implementation of the projects through Central and
State PSUs and Private promotors.
-
Contracts to be finalised through ICB.
Contd...
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The Opportunities
……..
Contd. ….
 Investment firms/ Project Developers
-
In consultation with the State Govts., projects to be
implemented through the IPP/ Joint Venture route
-
Projects upto 100 MW can be awarded by State Govts.
through the MOU route
(being reviewed)
-
Larger projects to be awarded through a transparent
process of ICB
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Areas of Concern & Focus
in hydro development

Quality & Reliability of Investigations

Optimizing inputs for reducing cost

Compressing Construction cycle time

Setting bench marks in Project Management

State of Art Technology during construction
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Facilitating measures for investment
in hydro sector
 100% foreign equity participation
 Investment policy made attractive
Debt : Equity ratio up to 4 : 1
 Liberalized rates of depreciation in respect of assets
 Customs Duty & Excise exemption for Mega projects
(500 MW & above)
 16% Rate of Return on equity
 Two part tariff
Contd...
17
Facilitating measures ……

Contd. …...
Softer norms for incentive for hydro stations
• Availability factor threshold reduced from 90% to 85%

Ceiling limits for TEC for hydro projects revised :
• 53 million US$ for projects awarded through MOU
route
• 213 million US$ for projects awarded through
competitive bidding
• 532 million US$ for projects where tariff is determined
by CERC/ SERC.
Contd...
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Facilitating measures ……
Contd. …...
Electricity Act 2003 notified 10th June ‘03
#
Objectives
• Accelerate reform process
• Harmonize the provisions in existing law
• Obviates need for individual States to enact their own
reforms laws
• Introduce competition
• Power for all areas
• Consumer interests : the focal point
Contd...
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Facilitating measures ……

Contd. …...
Main features of the Electricity Act 2003 :
• Creates liberal framework for power development
• Facilitates private investment
• Delicenses generation : Captive further liberalised
• Multiple licencess in Distribution
• Creates competitive environment
• Stringent provisions for controlling theft of electricity
• Empowers States to restructure Electricity Boards
• Mandates creation of Regulatory Commissions
• Open access on Transmission & Distribution
• Power marketing / trading
Contd...
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Facilitating measures ……
Contd. …...
Distribution Reforms
Commercially viable Distribution Business alone can lead
to sustainable investment in Generation, Transmission &
Distribution
Distribution Reforms – Three Dimensional Challenge
•
Governance
•
Technology Upgradation
•
Tariff Rationalisation
Contd...
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Facilitating measures ……
Contd. …...
Distribution Reforms to focus on :
 System upgradation
 Loss reduction
 Theft control
 Consumer orientation.
 Commercialization
 Decentralized distributed generation and supply for
rural areas.
 Introducing competition.
 I.T. to replace human interfaces
Contd...
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Facilitating measures ……
Contd. …...
Distribution Reforms through
Accelerated Power Development & Reform Programme
(APDRP) :
A strong instrument for effecting improvement &
reforms in sub-transmission & distribution
#
APDRP has two components
i.
Improve Distribution Network / system
ii. Incentivise Loss Reduction
Contd...
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Facilitating measures ……
Contd. …...
 Turnaround plan for State Utilities : APDRP funding :
•
During five years period, plan to invest more than
8500 million US$ :
50% for upgradation of system and 50% to be given as
incentives for loss reduction
#
Aggregate Technical & Commercial (AT&C) losses in
majority of identified circles have started showing
reduction
#
Stringent provisions in Electricity Act 2003 for
controlling theft of electricity
Contd...
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Facilitating measures ……
Contd. …...
Payment Security / Assurance
 Power Purchase Agreement
 Letter of credit
 Escrow cover
 State Government guarantee
 Open access :
•
Third party sale to consumers allowed
•
Direct sale to Distribution utilities
Commercially viable Distribution is the best payment
security
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WITH
SUCCESSFUL REFORMS
UNDERWAY,
THE
REQUIRED TURNAROUND IN INDIAN POWER SECTOR
HAS BEGUN
THE OPPORTUNITIES OFFER GROWTH AND PROSPERITY
FOR ALL STAKEHOLDERS
•
CONSULTANTS
•
EPC AGENCIES
•
CONTRACTORS
•
INVESTORS
•
LENDERS
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Thank you
Ministry of Power
Website
http://powermin.nic.in
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