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8/3/2019 India's Power Sector DB Jan0910
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Power Sector Opportunities and Issues
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Power Sector -Overview
Policy Initiatives
Measures Undertaken
IDBIs Exposure in Power Sector Top Private Players Announcements
Investment Opportunities
Issues & Concerns
Suggestions
2
Contents
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PowerTransformer
400/220KV ACTransmission Lines
PowerGeneration
Boiler+
Turbine+
Generator
R
Y
B
Fuel
Input
HT Consumers
Gridcontrol(Load
DispatchCentre)
ReactivePower
Control
Substation
132/110/66KV
High voltageswitchgear
Distribution Lines33/11/0.44KV
Distribution
TransformersLarge/Medium
Industries
Service lines
Houses
SSI
SSI
LT Consumers
Power Sector Overview Indian Power System
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Thermal Power Plant (Coal, Lignite, Natural gas, Naphtha, Diesel)
Hydel Power Plant (Water)
Nuclear / Atomic Power Plant (Radio-active fuels)
Non-conventional Power Plant (Wind, Solar, Biomass, Tidal, Co-generation)
Emerging Technologies
Coal based (Circulating Fluidized Bed Combustion, Integrated GasificationCombined Cycle)
Nuclear Power Based (Pebble Bed Modular Reactor)
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Power Sector Overview Technology
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Power Sector Overview Global Scenario
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SEBs
CPSUs
IPPs &Private
Licenses
Captive
SEBs/ STUs
PGCIL
Private Utilities
SEBsDiscoms
Pvt. Licensee
Energy sold =Energy available
Energy lost
Transformation,transmission &
DistributionLosses including
unaccountedenergy
AgricultureDomestic
CommercialIndustries Others
Captive
Power Trading Companies
Generation Transmission Distribution Consumption
Structure of the Indian Power Industry
open
Input(KWh)
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Power Segment wise break-up
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Power Sector Overview - Present Indian Scenario
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Power Sector Overview Contractual Structure of a Power Project
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Installed capacity increased from 1362 MW in 1947 to 1,50,323 MW at endof June 2009
Central Sector
48,971 MW33%
Private Sector24,988 MW
17%
State Sector76,364 MW
50%
Hydro - 36,917 MWThermal - 96,044 MW
Nuclear - 4,120 MWRenewable - 13,242 MW
Total 1,50,323 MW
Coal - 78,459 MWGas - 16,386 MWDiesel - 1,200 MW
Sector-wise Installed Capacity
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Power Sector Overview - Installed Capacity
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Per Capita Consumption : 704.2 Kwh
Power Supply Position (2008-09)
Energy (in MU) Peak (in MW)
Demand 7,77,039 1,09,809
Availability 6,91,038 96,785
Shortage 86,001 13,024
% shortage 11.1% 11.9%
Average Plant Load Factor (PLF) : 77.19 % (Thermal, 2008-09)
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Power Sector Overview Demand-Supply Gap
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Power Sector Overview Demand Supply Position
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Target & Achievements
Five year plan Year Target Achievement
Eight plan 1992-1997 30,538 16,423 (54%)
Ninth plan 1997-2002 40,245 19,025 (47%)
Tenth plan 2002-2007 41,110 21,180 (51%)
Eleventh plan 2007-2012 78,700* -
Twelfth plan 2012-2017 82,200 -
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Power Sector Overview Capacity Addition
* 12,716 MW added during last two years
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Unsatisfactory Financial health of SEBs Poor quality of Supply Un-scheduled load shedding, low voltages, voltage and frequency fluctuations High T&D losses Metering, Billing & Collection Energy audit Average tariff lower than cost of supply Commercial Losses without subsidy of SEBs Approx. Rs.265 billion (for
2008-09)
Slow progress in T&D reforms
Subsidies
Escrow Cover
Political involvement
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Power Sector Overview - Present Scenario
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Power Sector Overview Policy Initiatives Indian Electricity Act 1910
Technical & Operating Standards Licenses for supplying power in specific areas
The Electricity (Supply) act 1948 -
Development of State sector Creation of SEBs, CGUs & CEAs
Amendment to Electricity (Supply) Act 1991
Private sector participation in generation Awarding the IPPs through Pass Through Cost Basis route
100% foreign Equity participation: full dividend repatriation . Two part tariff structure - 16 % return on equity at PLF of 68.5%,
incentives for PLF above 68.5% with FX pass through Guaranteed Off-take by SEBs Counter guarantee by Central Government for 8 fast track IPPs
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Power Sector Overview Policy Initiatives Competitive Bidding Process (tariff) for IPPs was adopted since 1995 The Electricity Laws (Amendment) Act, 1998
Transmission of Electricity Granting of transmission license
Electricity Regulatory Commission Act, 1998
Establishment of CERCs & SERCs. Creation of CTUs & STUs
Mega Power Policy, 1999 100% Customs duty waiver PTC to buy power from Mega Projects & supply to SEBs
The Accelerated Power Development and Reform Programme (APDRP), 2000 Financial assistance/ incentives for T&D upgrades & SEBprofitability
Availability based tariff (ABT) notified by CERC
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Power Sector Overview Policy Initiatives
Montek Singh Committee - Securitisation of SEBs over dues by CPSUs
However, capacity creation through private sector participation did not happen asdesired mainly due to the following:
SEBs reforms tardy SEBs financial health continued to be poor Dishonoring legally binding agreements Pulling out by number of foreign utility companies
MOAs with Govt. of India to undertake reforms The Electricity Act, 2003 enacted
The Electricity Amendment Act, 2007 Access to Electricity to all areas Sale from captive units - No license required Removal of provision for elimination of cross subsidy
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Power Sector Overview The Electricity Act, 2003
Delicensing of generation including captive but excluding hydro and nuclear
Captive generation freely permitted
Non-discriminatory open access to network subject to surcharge: No surcharge forcaptive use
Private transmission licensees allowed
Generation companies can undertake distribution activities and vice versa fordistribution licensees
Open access consumers permitted to purchase electricity from generators and other
distribution licensees 100% metering made mandatory
CERC and SERCs would be the licensing authorities for T & D and trading
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Power Sector Overview The Electricity Act, 2003
Power trading is recognized as a regulated activity
Preparation of National Electricity Policy and Tariff Policy
An appellate tribunal would be set up for appeals against decisions of CERC and
SERCs
Setting up SERC made mandatory for all states
T & D surcharges are permitted but subsidies would be required to be phased out
gradually Stringent penalty for power theft
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Power Sector Overview Impact of Electricity Act
Entry of more private players in generation
Captive power capacities by industrial players
Entry of few private players in transmission segment (JV with PGCIL)
16 states have unbundled the distribution (May 2009)
Orissa & Delhi privatized Bhiwandi, Nagpur , Pirthipur Franchise route
Progress in reduction of T&D losses
Improvement in the system efficiency
Grid discipline in the system
Cross subsidization of consumers still continuing Implementation of open access at retail level would take some more time (being
tested in Mumbai)
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Power Sector Overview Measures undertaken
Ultra Mega Power Projects
Large sized projects, approx. 4000 MW
Estimated investment Rs.16,000 crore
Minimum Net Worth Rs.200 crore
Maximum 3 projects can be awarded to a bidder
Developed on BOO basis
Use of Super Critical Technology
Dedicated captive coal blocks for pithead projects (4 projects) Imported coal for coastal projects (5 projects)
Co-ordination from Ministry of Power
Power Finance Corporation identified as the nodal agency
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Power Sector Overview Budget Impact 2009-10 Union Budget Impact on Power Sector
Take-out financing of 60% of bank loan by IIFCL ( up to Rs. 1 lac crore)
The budgetary allocations for the APDRP has been increased from Rs.800
crore to Rs.2080 crore The allocation for RGGVY has been increased from Rs.5500 crore to
Rs.7000 crore
Customs duty on permanent magnet used in wind power generation reduced
from 7.5 per cent to 5 per cent
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Power Sector Overview Merchant Power Plants (MPP) MPPs generate electricity for sale at market driven rates in the open
wholesale market.
Include sale of power under short-term PPAs and on spot basis
Can generate higher returns (vis-a-vis selling power through long term PPA)
Can sell power to the power trading companies (like the Power Trading
Corporation), the SEBs and industrial and bulk customers
Sale Price & Volume of Electricity Traded by the Trading Licensees
(12 licensee holders) are given in next slide
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Power Sector Overview Top Private Players Announcements
Total CRISIL estimates Balance of totalannouncements
Top private players Announcements Eleventh Plan expected in TwelfthPlan
MW MW MW
Reliance Power 28195 900 27295
JSW Energy 15000 0 15000
IndiaBulls Power
Services (JV) 11000 0 11000
Tata Power 10000 250 9750
Lanco 10000 970 9030
Adani 10000 0 10000
Jaypakash Power 5275 700 4575
Videocon 5000 0 5000
Jindal Power(JSPL+JP) 4670 1000 3670
Torrent Power 4500 1100 3400
CESC 4250 250 4000
Essar power 4000 0 4000
GVK Power 3660 600 3060
GMR Energy 3440 0 3440
Sterlite Energy 2400 0 2400
Visa Power 1200 0 1200
Top players 122590 5770 116820
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Power Sector Overview Fund Requirement
Total capacity (MW) Generation Transmission Distribution investments2007-08 9,263 417 163 73 6532008-09 7,745 349 143 61 5532009-10 8,014 361 147 63 5712010-11 12,663 570 215 100 885
2011-12 12,120 545 207 95 848Total 49,805 2,241 876 392 3,510
Year wise investments in power (Eleventh Plan)
Fuel Capital Cost(Rs.crore/MW)Levelised Tariff (15 years)
(Rs. Per Kwh)
Coal 4.00 5.00 2.70
Naphtha 2.50 4.00 6.74
Gas 2.50 4.00 2.18
Transmission Target 37,150 MW (Present 20,750 MW)
Cost
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Power Sector Overview Issues in Financing Power Projects
Large Capital Costs Long gestation period Sector vulnerable to regulatory and policy changes; Projects are contract driven leading to a lot of legal complexities
Sponsors Technology Fuel & Transportation Evacuation Market
Off takers (Financial health of SEB) Payment Security Approvals & clearances Foreign Exchange risk
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Power Sector Overview Suggestions Enforcement of implementation of the reform process by SERCs High level of cross subsidy surcharge to be progressively reduced/eliminated Effective implementation of the restructured APDRP in distribution sector in all States Critical review and rationalization of duties & taxes Single window clearance/ automatic clearances, needs to be introduced
Delay in securing clearances, commitments from state utilities for power purchase,resistance from environmentalists, demand for free power by states need to beappropriately addressed for all power projects
There is an urgent need of a Regulator in Coal Sector. The Union coal ministry hasinitiated work on setting up a regulatory body, which will be responsible for domestic
coal pricing
Opening up of coal sector to private sector participation to promote competition Open access to the Gas network should be ensured to promote competition in gas sourcing
Role of Regulator in Oil & Gas sector needs to be expanded to include gas pricing.
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Power Sector Overview Suggestions Augmentation of capital base of the banks
Raising of tax-free infrastructure bonds by FI/Banks.
Effective take-out financing mechanism [In the recent budget, FM has announced
a scheme for take-out financing of 60% of bank loan by IIFCL] .
Softer provisioning norms for infrastructure projects. RBI has recently permitted a 2-year period (originally COD) for determining asset classification of infrastructure
projects
Reintroduction of benefit of sec 10(23G) of IT Act 1961 (tax exemption on net
interest income in respect of infrastructure projects).
Review of ECB guidelines including allowing banks/institutions to extend guarantees
for financing infrastructure projects to make available cheaper foreign funds.
Reduction and harmonization of state level taxes and duties
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Thank You