A sector in trouble

The Union government must get its act together on issues that continue to plague the power sector
Livemint First Published: Sun, Nov 11 2012. 08 36 PM IST

Illustration: Shyamal Banerjee/Mint

Power equipment maker Bharat Heavy Electricals Ltds chief B.P. Rao recently pointed out that there was a marked slowdown in private sector interest in electricity generation. Between 2008 and 2010, tenders for projects worth 30-40,000 megawatts (MW) were floated. Last year, this dropped sharply to 4,000 MW; this year, there have hardly been any deals, Rao said. This development should be seen in the perspective of the larger issues that plague the power sector. The slowdown will hurt a few years from now since coal and gas-based generation plants take three-four years to build and private plants have accounted for a sizeable 55% of incremental capacity in the past five years. As a result, one can expect the industry to establish captive units that, owing to their limited size, are not particularly efficient. The scars owing to inadequate power supply in the past are not insignificant currently, captive units account for as much as 17% of installed capacity in the country.

Part of the reason for the slowdown appears to be external to the sectorabsence of reforms in coal mining has led to a crippling inability to meet power sector demands. For the 12th Plan period, supply is expected to be short by a substantial amount. Shortages of natural gas are being felt acutely. In the case of hydropower, while large-capacity projects are entering the construction phase, it offers little relief in the medium term since projects take 7-8 years to complete. At the same time, power project developers are constrained from choosing expensive imported fuels since distribution utilities are financially fragile. The question then is: are power reforms aggressive and effective enough to improve the financial health in quick time to avert a slowdown in capacity addition of the kind currently being witnessed? On its part, the Union government has offered a restructuring package to state utilities to reduce their debt. In its recent India Economic Update report (September 2012), the World Bank has, in the context of this package, cautioned that bailouts create a moral hazard unless accompanied by strong monitoring mechanism. In the past, the Union government has failed to establish effective monitoring mechanisms in its reform prescriptions. Had these gone on track, the supply losses should have pared to 15%. However, if one looks at the situation in the six states that account for 70% of the losses of the sectorUttar Pradesh, Tamil Nadu, Madhya Pradesh, Punjab, Haryana and Rajasthanthe supply losses there are as high as 30-40%. These larger issues then continue to haunt power equipment manufacturers and other parts of the power sector. The Union government needs to get its act together, fast. How long will it take to fix the problems of the power sector?

Alstom T&D hit by payment delays

Friday, Nov 16, 2012, 9:04 IST | Place: Mumbai | Agency: DNA Rajiv Ranjan Singh Alstom T&D India on Thursday reported its first loss in a decade as sales fell and clients delayed payments, highlighting the challenges faced by transmission & distribution equipment makers in the slowing power sector. Alstom T&D India on Thursday reported its first loss in a decade as sales fell and clients delayed payments, highlighting the challenges faced by transmission & distribution equipment makers in the slowing power sector. The company posted a Rs1.8 crore loss for the September quarter as against Rs40 crore profit a year as it made a onetime provisioning of Rs30 crore towards doubtful receivables. The only notable factor in the quarter for Alstom T&D was a Rs2,500 crore High Voltage Direct Current (HVDC) order it bagged from Power Grid Corp. Rathindra Nath Basu, managing director, said on an analyst concall that poor financials of clients and bottlenecks faced by them led to drop in sales. Customers were not ready to accept our products due to their weak financial position, he said. Basu said delay in equipment procurement by clients led to a 34% rise in order backlog for the September quarter at Rs6,100 crore over the year-ago period. Current order backlog gives a revenue visibility for next 17 months, he said. Basu said the company would have clocked profit if customers would have paid on time. If situation with our customers changes and they take deliveries of equipment and services they have ordered on us then we would be able to increase our sales as we do not have any constraint in our factory or in our engineering capabilities to do so, he said.

The company also disappointed the street on year-on-year sales and operating income front where it showed a decline of 8.4% and 10.5% respectively. Sales stood at Rs740 crore. With the demand staying weak, Basu sees double-digit growth for T&D equipment manufacturers a distant reality. When the country is expected to grow at 5.5%, then how can you expect the electricity sector to grow in double digits, he asked. However, everything is not bad for Alstom T&D. The company is set to get the chunk of orders from the Rs1 lakh crore capex planned by Power Grid for the current Five Year Plan that runs till 2017. Majority of the orders would be for high-end products that will help companies like Alstom T&D that has technological advantage, said an analyst with a local brokerage. Winning of HVDC project from Champa to Kurukshetra that would carry 3,000 mw of bulk power again reiterates the companys dominant position in high-end product chain that has already executed 3 HVDC project, he said. Around 43% of the project will be done locally and the company is expanding localisation capacities. Also, transmission is the only segment in the power sector where investment is happening as electricity from the new generation capacities needs to be evacuated and carried across regions. Alstom T&Ds strategy is to capture the higher end of the market such as HVDC 765 kv, GIS and add to this basket, the analyst said.

APPCB and factory inspectors' role in question after Hetero unit blast
Sumit Bhattacharjee, TNN Jan 7, 2013, 05.24AM IST

VISAKHAPATNAM: Saturday's blast at a Hetero Drugs unit in Nakkapalli, located about 90 km from Vizag, raises the question that has often worried the denizens of the city: Are they sitting on a ticking time bomb? The blast at the C Block of the unit left two employees dead and four others severely injured. The people's concern is justified given the track record of the industry with respect to safety issues. The number of accidents that have taken place in the past one year alone is numbing. The series of industrial accidents began in May, 2012, when the blast furnace of Visakhapatnam Steel Plant blew up, leaving two employees dead. This was immediately followed by a blast in the oxygen plant in June in the same plant that left 19 dead and many others injured. An explosion of a similar nature at the Nagarjuna Agro Chemical, a pesticide unit, in Chilakapalem near Srikakulam in June 2012 had left over 20 injured. Here too the reactor that was processing Myco Butanil could not take the pressure and exploded. Again, on October 9, 2012, there was a massive fire at Auctus Pharma in the Ramky Pharma City at Parawada. All these incidents took place within a period of seven months, bringing into question the role of the two major government establishments __ the AP Pollution Control Board and the inspectors of factory. "Post HPCL vapour cloud blast in 1997 that left over 22 dead and many injured, we thought that the inspectors of factory would take things seriously, as most the heavy industries are either aging or are being newly set up," said former Union secretary EAS Sarma. According to a senior professor from chemical engineering department of Andhra University who has been consultant for many chemical and pharma companies, "Reactors are built to withstand high pressure and temperature. If an explosion takes place, it is either due to faulty design, compromise on quality of material used or because the men are not skilled enough to handle the operation or processing. It is the duty of the inspector of factory to look into all these aspects. It seems to be collusion between the management and the government bodies to make some fast bucks." When the HPCL blast took place in 1997, the ammonia storage tanks located in the neighbourhood posed a major threat. The naval firemen who rushed to douse the fire said that their main aim was to see that the fire did not spread to the ammonia storage tanks to avoid another Bhopal incident. Today, apart from the ammonia tanks, huge of quality of the highly inflammable ammonium nitrate is being stocked by private parties in the vicinity. Apart from all the major PSUs such as HPCL, Andhra Petrochemical, Eastern India Petroleum, Coromandel Fertilisers and VSP located almost in a cluster, to add fuel to the impending danger there are two nuclear submarines, INS Chakra and the much awaited indigenous INS Arihant, stationed within this cluster. Moreover, two huge thermal power plants __ NTPC and Hinduja __ are located next to each other here.

Experts also point to another worrying aspect __ Vizag city will be caught between three major nuclear facilities once the projects get going. The proposed 6000 MW nuclear power plant at Kovvada, the BAARC research centre near Atchutapuram and the NAOB (Naval alternate operating base) which is tipped to be the base for the country's nuclear submarine fleet. "The site selection committee report has said that there is a seismic fault line running through the Kovvada project. The committee has even predicted tsunami up to four metres in height in the event of an earthquake. But the observations seem to have fallen in deaf ears, despite the Fukushima incident in Japan, said Sarma.

Business chiefs call for emissions targets in power sector

Heads of major UK companies join calls for the government to introduce a target to cut power sector emissions by 2030

The letter to the prime minister criticised the split in the government over the future of energy supplies. Photograph: Oli Scarff/Getty Images

The heads of major UK companies joined calls on Monday for the government to bring in a target to slash emissions from the power sector by 2030. In a letter to the prime minister, the companies criticised the split in the government over the future of energy supplies, including possible questions over the UK's commitment to its targets to tackle climate change. The uncertainty over the government's plans was paralysing investment and undermining growth prospects in the country, they warned. The government's advisers on climate change have called on ministers to introduce a target to decarbonise the energy sector by 2030, so emissions are just a fraction of current levels, to drive investment in low-carbon infrastructure. But while the Liberal Democrat energy secretary, Ed Davey, has indicated support for a low-carbon target, backed by a range of environmental groups and businesses, the Treasury has been pushing an agenda to promote new gas supplies. The heads of Unilever, Doosan Power Systems, Anglian Water, Philips Electronics UK, B&Q owner Kingfisher, EDF Energy, Johnson Matthey and Heathrow airport have now joined the calls for a target to be introduced. The members of the Prince Of Wales's Corporate Leaders Group on Climate Change warned: "Attempts to set a strong economy at odds with effective policies on climate change are self-defeating.

"The only successful long-term plan to grow the UK economy will be one which takes account of climate change, both to reduce the risk of a changing climate to business and to support access for British business to the rapidly growing global market for low carbon goods and services." A low-carbon signal to investors is needed, they warned, and so an indicative emissions target should be introduced through secondary legislation to set the level of ambition for reducing greenhouse gases from the power sector. They also said the government needs to be be very clear on how low carbon investment will be delivered in a cost-effective manner. "This includes looking at the right incentives to support development of less mature low-carbon technologies and ensuring competitiveness impacts will be addressed, especially by securing comparable EU targets for 2030." The letter is being sent ahead of an expected meeting to discuss the issue of the prime minister, David Cameron, the deputy prime minister, Nick Clegg, the chancellor, George Osborne, Davey and the chief secretary to the Treasury, Danny Alexander. The letter follows a similar one last week calling for a decarbonisation target, signed by an usual coalition of the trade bodies representing the renewable energy, nuclear power.

Coal stocks at power plants dwindle to the level barely minimum

TUESDAY, 13 NOVEMBER 2012 07:24 HARIKUMAR B
Inadequate power supply has led to rising of spot power prices and is worrying officials at the ministry. Power prices in the India Energy Exchange have just doubled from 2 per unit a fortnight ago to 4 per unit now.

Coal stocks at power plants on the eve of Diwali have dwindled to the level barely enough to light the nation for five days. Nine generating stations with a total capacity of 14,100 mw have zero stocks, and nearly 40% of them have fuel for not even four days. The total number of stations with coal stock less than a week is about 60% although Coal India Ltd (CIL) has supplied 10% extra fuel to the power sector and eastern railways has announced the highestever coal loading. The total national coal stock in power plants is 7.3 million tonnes, against the norm of about 22 million tonnes. Some 35 thermal power stations have stocks to last for hardly four days while 52 have stocks that will not last a week. Inadequate power supply has led to rising of spot power prices and is worrying officials at the ministry. Power prices in the India Energy Exchange have just doubled from 2 per unit a fortnight ago to 4 per unit now. This has worried the power ministry. "We are constantly reviewing the coal stock position at power plants and have written a letter to CIL asking them to improve stock positions," Union Power Secretary Uma Sankar told ET. CIL chairman, S Narsing Rao said: "We are aware that stock positions have dwindled lately. However, we have supplied almost 98% of the annual contracted quantity of power plants. The deficit may be either due to higher consumption or less imports. There is also a possibility that some plants may have received more coal, some less but our overall supplies to the power sector is in line with the targets," According to the Central Electricity Authority, plants that have dwindling coal stock due to less imports include, Ramagundem Thermal Power plant (2600mw ) in Andhra Pradesh, Bokaro B TPS (630 mw) in Jharkhand,

Talcher SPTS (3000 mw) in Orissa as well as Mejia TPS (2340 mw) and Sagardighi TPS (600 mw) in West Bengal. As many 26 thermal power stations with a total installed capacity of 40,100 mw, about 41% of the total installed capacity in the country has received less coal from CIL, according to CEA. The entire capacity of Tamil Nadu has received less coal from CIL subsidiary Mahanadi Coalfields, CEA said in its report. Some 16,700 mw of capacity have used up more coal due to higher generation. These includes Suratgarh TPS (1,500 mw), Dardi TPS (1,820 mw), Singrauli TPS (2,000 mw), Unchahar TPS (1,050 mw), Rosa TPP (1,200 mw), Korba STPS (2,600 mw), Sanjay Gandhi TPS (1,340 mw), Chandrapur TPS (2,340) and Nasik TPS (630 mw) among others. Source - TOI

Dual Management at TCN, Threatens Power Sector Reform

Chineme Okafor The existence of two parallel Chief Executive Officers (CEO) of the Transmission Company of Nigeria (TCN) has been described as a threat to the Federal Governments reform exercise in the countrys power sector. In an assessment of current situation at TCN, some industry experts condemned the imbroglio that has stalled final processes of activating the management contract of TCN. TCN was in July handed over to Canadian firm, Manitoba Hydro International (MHI) in a N3.72 billion three-year management contract, which is expected to reposition TCN in anticipation of its responsibilities in Nigerias emerging power sector. According to these analysts in Abuja, progress made by the country in her effort to reposition the power sector as ensconced in provisions of the Electricity Power Sector Reform (EPSR) Act 2005 might as well be threatened by development in TCN which currently has two CEOs, Mr. Olusola Akinniranye, a Nigerian and Mr. Don Priestman, the expatriate CEO from Manitoba. Recently, at the Seventh General Assembly of the West African Power Pool (WAPP) in Abuja, the management impasse became obvious when Akinniranye and Priestman variously introduced themselves as CEOs of TCN, thus, raising suspicion amongst industry players that all was not well at the transmission company which responsibility is pivotal to the success of the power sector liberalisation exercise. Manitoba had edged out Power Grid of India to emerge as the preferred management contractor for TCN in a competitive selection process that was overseen by the Bureau of Public Enterprises (BPE), the company consequently signed a three-year contract with the Federal Government which kicked off on September 1, 2012 but is yet to fully commence operations at TCN owing to governments refusal to issue out a schedule of responsibility to MHI. Provisions in the management contract stipulate that eight positions in TCN will be reserved for the expatriate staff who will be assisted by Nigerians as deputies. In other words, all first line Nigerian executive officers in the eight positions at TCN are

supposed to become deputies to expatriate Manitoba staff but the situation is otherwise notwithstanding the September 1 management contract kickoff date. Accordingly, the ministry of power which ought to sign off the contract has remained reluctant in this regard, although it stated recently that the contract was been reviewed but sources in the presidency said that some government officials have expressed discontent with the contract which is expected to see Manitoba take charge of System Operations (SO), Market Operation (MO), ICT and National Control Centre (NCC) in Oshogbo amongst other portfolios at TCN. Meanwhile, the situation may have become compounded with the recent emergence of Akinniranye as the new Chairman of WAPP Executive Board in an election at the recentlyconcluded WAPP General Assembly. Elected on the strength of his position as the CEO of TCN, Akinniranye succeeds Mr. Joseph Makoju, former Managing Director of Power Holding Company of Nigeria (PHCN) and former Special Adviser on Power to Late President Musa YarAdua. In a press statement from the Assistant General Manager Public Affairs of TCN, Mr. Dave Ifabiyi, Akinniranye was elected by heads of power utilities and delegates from power utilities from the 15 member countries of WAPP comprising Benin, Cape Verde, Cote dIvoire, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger and Senegal as well as Sierra Leone, Togo, Burkina Faso and Nigeria. He is expected to pilot the affairs of WAPP alongside its Secretary General, Mr. Amadou Diallo of Guinea for tenure of three years. Tags: Business, Nigeria, Featured, Dual Management, TCN, Power Sector Rating:

Fuel supply issues, interest burden pose challenges for GMR Infra
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Business LineA. Subba Rao, Chief Financial Officer, GMR Group.

A GMR power facility

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Plans to sell some assets to reduce debt

BANGALORE, NOV. 15: GMR Infrastructures operations in the power sector have been facing several challenges, said GMRs Group Chief Financial Officer A. Subba Rao. Addressing a post-quarterly results conference, Rao said: The infrastructure sector, and particularly the power sector, is going through the toughest of times now. I have never seen such a situation in the sector in the last 13 years. The company has invested in significant power generation capacities, but unfortunately it is not able to put them to use because of non-availability of gas.
FUEL ISSUES

The power sector has been plagued with issues relating to gas availability, because of which our plants are under-performing, he said. In addition to non-availability of gas, the capital market has been posing many challenges in terms of the ability to raise capital in the given business environment, Rao said. To fund the equity we had to borrow in lieu of the equity, which has also put an additional burden on our balance-sheet, he further added. Right from the fuel (natural gas and coal) availability to discounts, distribution and realisation of receivables for the power supplied, we have been affected. Other sectors, however, are doing well, explained Rao. The company is planning a partial dilution of its assets. Rao said this has been planned to bring down the losses, debt level and interest burden. The GMR Group has a net debt of Rs 35,000 crore. Considering the groups commitment towards value creation, we have adopted this strategy which will build upon the expertise we have developed over the years to shore up revenues and improve business, Rao added.
ASSET DILUTION

The company had begun evaluation of its assets. In the next two-three months we will know the results of our endeavour to pursue this model. In addition to assets for dilution, we are planning to pick up minority stakes in a few sectors and back them up with our expertise, Rao said. We have not set a target yet. anil.u@thehindu.co.in
(This article was published on November 15, 2012)

Keywords: GMRs Group Chief Financial Officer A. Subba Rao

GE to invest in Kenya wind power sector

Written by MARGARET WAHITO // November 12, 2012 // Comment
NAIROBI, Kenya, Nov 12 General Electric Company (GE) a global manufacturer of large-scale industrial products has announced plans to invest over $100 million in generation of two wind power projects in Kenya starting next year. Africas GE President Jay Ireland said that the company is in the final stages of negotiations with Kenya Power on the issue of a Power Purchase Agreement (PPA). Ireland said the company plans to generate close to 150 Megawatts in the projects at Kinangop. I would say, the project is in the 100 million dollar range. We have started with two wind projects and we are now working with KPCL to finalize the negotiations on PPA. We will probably break ground next year, said Ireland. He added that if the company succeeds in the generation of the wind power in the two projects, it will invest in other power projects in the countries to produce up to 1,000 Megawatts. We cant produce huge power within two years, which may take time. But our dream is to eventually produce over 1,000 Megawatts over several years, said firms Africa president. He added that the company plans to finish the project in a year time if everything goes as plans. The project is in Kinangop area and we have been working on its development for the last two years. I am not sure we are going to finish late next year, if not, will be early 2014, but as soon as we can, the better, because its power that we need, he added.

The multinational firm has also announced plans to invest in the railway sector in the country during the same period. We are working with RVR (Rift Valley Railways), Kenya Railways to try and help them improve their capabilities, our focus will be to provide high class freight locomotives among other machinery, he said. Ireland was speaking on Monday after the launch of a new anaesthesia delivery system called Carestation 30 by the company. The Carestation 30 integrates the level of oxygen in the blood and other key measurements into its anaesthesia delivery system. Caregivers can now view patient data and alarm indicators on a colour display allowing efficient access to critical information. The machine which will cost close to Sh2 million. GE is has its footprints in 35 countries in Africa including, Angola, Congo, Ghana, Kenya, South Africa, Tanzania among others.

Gujarat's development is mainly roads, electricity, water'

Comment Share Text size: A A A Last updated on: November 19, 2012 16:35 IST

'Gujarat has learned from its mistakes,' economist Bibek Debroy tells Rediff.com's Sheela Bhatt in this eloquent interview.

Bibek Debroy is a distinguished economist whose

opinions expressed through his newspaper and magazine columns, papers and through Twitter matter. The outspoken and succinct Debroy is a professor at the Centre for Policy Research, a New Delhi think-tank. In 2005, he resigned as director (research) of the Rajiv Gandhi Institute for Contemporary Research. His colleague Laveesh Bhandari and he had then published a paper rating Gujarat on the top for economic freedom. Gujarat Chief Minister Narendra Modi made good political use of Debroy and Bhandari's paper. The Congress party found it discomforting that an institution attached to the Rajiv Gandhi Foundation had published a paper strengthening Modi's claims as an architect of development. Debroy travelled all over Gujarat this year to write a book, Gujarat, Governance for Growth and Development. In his book, Debroy reviews the issue of resource distribution, bijli, sadak and pani, infrastructure, health and education in Gujarat. He examines Gujarat's governance template to become an 'upper middle class' state by 2020. Interestingly, Debroy avoids mentioning Modi in his book while discussing development under the chief minister's tenure. He believes a mention of Modi would have made some readers subjective about

Gujarat's actual achievements! He makes a strong case for people to see Gujarat's data objectively and not through the prism of Narendra Modi. The first of a two-part interview with Sheela Bhatt: Congratulations on your book. Is Gujarat's template of governance, which you have discussed in detail, very different from the central government's template or the template of successful states like Tamil Nadu, Maharashtra, Karnataka and Delhi? If one is looking at it as a template for development, then this is a template for development that every state should be implementing. The question is how many states have implemented this kind of development template. I am not just talking about GSDP (Gross State Domestic Product) growth, because you can get GSDP growth even if you do a few things correctly. Take Bihar. It has phenomenal growth rates based essentially on services, and based essentially on construction, but Bihar has still got problems with agriculture, you have still got problems with electricity. So if you are talking about a development template, little bits and pieces have been implemented in other states also. There is a governance issue as well. But to the best of my knowledge, Gujarat is the only state where the development-oriented template has very largely been implemented, actually. How would you define the Gujarat development template? What are its main ingredients? I would probably say four or five elements make the Gujarat development template. Number one is private enterprise, the entrepreneur spirit, and linked to that, a degree of scepticism about the government. Gujaratis don't look to the government for handouts and this makes it very easy for the government to do various things that is in the nature of public-private partnerships.

When I say public-private partnerships, I am not just talking about the corporate sector. I am talking about the NGOs, even in the social sectors. One part of the Gujarat story is about entrepreneurship, which makes me wonder if this model is really completely replicable in every other state. Second, something that often people outside Gujarat don't appreciate is that Gujarat has a very long tradition of Panchayati Raj. And many of the social sector things we are talking about are actually implemented by the panchayats. The government involves the panchayats. Decentralisation exists here. Now to decentralise I need the capacity in the panchayats. In most Indian states, we don't have the capacity in the panchayats, which is why governance in India is so very bad. But Gujarat has had this since the 1960s. The third element, which, of course, is replicable in other states, is the improvement in governance defined as the bureaucracy's delivery capacity. And there are several elements that have gone into that. There is decentralisation, there is empowerment, and there is an attempt to insulate it from political inference... Now that part is certainly replicable everywhere else. The fourth one is difficult to replicate elsewhere. I think Gujarat has been a little lucky. Gujarat is favourably located. Its geography helps. It has got speed with liberalisation happening, with trade opening up, you have a reliance on ports. Of course, Gujarat has the foresight to recognise that it must do something about minor ports. Then, it got the Delhi-Mumbai trade corridor, the industrial corridor. These are favourable circumstances. I would add to it the road network. Roads in Gujarat have always been good. Yes, they have improved over the last ten years.

The final one I would say, we all know that there are problems with the rigid templates of centrally-sponsored schemes. The Centre is very rigid. You cannot do this, can't do that with the Centre's funds, and yes there are some broader issues of changing those schemes, making them flexible. Gujarat has been able to do many things because of the fiscal space it has created for itself. They are able to plug in their own money to make good use of central funds. It could supplement central sector schemes with state schemes. Now to be able to do that you need to be fiscally sound. Unfortunately, the problem is many Indian states are not fiscally sound. I found it very interesting that you hardly mention Gujarat Chief Minister Narendra Modi in your entire book even though you discuss the last ten years of development when he has been in power. Why are you shying away from Mr Modi? I am not shying away. Actually, he is mentioned by name in two places. Once in the prologue. There is a book that goes by his name which is mentioned. There is a reason for that (not mentioning Modi's name). If you look at the discussion on Gujarat, a lot of the discussion goes on, particularly outside Gujarat, which lacks certain objectivity. It lacks certain objectivity so people keep saying things without looking at the data. If they don't believe the data -- for whatever reason -- there is a great lack of objectivity. I didn't find a good book on Gujarat. And therefore I wanted to say that 'Hey look, first let us recognise objectively... this is what is happening in Gujarat. And then we can debate the cause...' Unfortunately, with the chief minister (Modi), when you mention him, everything gets very politicised. In any case, once I have written this book, I expect people will read the book. If I had kept him in focus, people would have said it is a great book for the wrong reasons or they would have said it is a terrible book for the wrong reasons!!

The reason I didn't want to mention him by name is that I didn't want the book to get even more politicised, unnecessarily. So that is the reason the book is a little distanced from him. Look, it is not a book about the chief minister; it's a book about the economy. You don't want yourself to be associated with Mr Modi as a writer, thinker or economist? No, it is not that. I recognise that many things that have happened in Gujarat, not everything, but several things that have happened in Gujarat are because of his intervention. However, I want people to read the book. I don't want them not to read the book simply because his name has been mentioned. Why has Gujarat's poverty level dropped more in the rural areas compared to the overall average between 2000-2005 and 2009-2010? Normally, poverty remains higher in the rural areas and the urban areas see growth of the middle classes. There are several reasons. One is that rural poverty really depends on what is happening to agriculture. In the Gujarat growth stories, there is a very strong agriculture growth story. Agriculture has been growing at 10 percent. So even if you go to the poorer parts, you will find agriculture diversification happening, you will find dairy happening, animal husbandry happening, horticulture happening, in all kinds of places. Second, since the 11th Five Year Plan, the state government has had a specific focus on the social sectors with several schemes implemented with force. Which is the reason I keep making the point that if you are looking at the social sector in

Gujarat, please look at what has happened after the 11th Five Year Plan. Don't look at earlier data. That is misleading. Why misleading? Because Gujarat's focus on health, education, began in 2007. So what's the point in looking at 2004-2005 data? I think another reason for the lower level of poverty in rural areas is something I mentioned earlier -- this I am sticking my neck out because I haven't exactly said this in the book. In Gujarat, the problem areas are small towns, the ones that have the proper municipal corporations. Rural areas look promising because of the panchayats. The problem areas in Gujarat, in my view, are the smaller cities. And I think, whichever government comes in now, the focus on poverty reduction should be in these smaller cities. How do you explain that the state government that improves the electricity sector, but the same template of governance and the force of governance are not applied in other sectors? I don't exactly agree with the question. Let me explain why. By the way, I should mention that the development in Gujarat is largely roads, electricity and water. Now water is synonymous with the Sardar Sarovar Dam. What they fail to appreciate is much of the Sardar Sarovar has not reached Gujarat yet. Gujarat boasts of water storage like check dams and smaller water storages. They have created the water grid, the state-wide grid, the intention behind that is to take the water from the surplus areas to deficit areas. Without that grid, Sardar Sarovar would not have happened. Similarly, in the electricity sector the real story is the Jyotigram scheme, the bifurcation

of (power) lines has done good. Domestic, agriculture and industrial supply lines are separated. Domestic supply is 24 hours. The improved distribution has made all the difference. The agro sector gets eight hours of ensured supply. Gujarat has learned from its mistakes. And you have used the same bureaucratic machinery to address that. So that was done in the course of the 11th Plan. During the 11th Five Year Plan, the dropout rates in schools has dropped phenomenally. I look at institutional deliveries that have improved phenomenally. So post the 11th Five Year Plan, I think that same government machinery is delivering in the social sectors too. Part 2: 'Gujarat will be one of the first places to implement FDI in retail'
Sheela Bhatt

Related News: Bibek Debroy, Narendra Modi, Sardar Sarovar, Gujarat, GSDP

Implementation a challenge for power sector reforms

Merchant power rates to go up

The governments two-pronged approach to set the power sector on the right track may not yield much result with India Ratingsmaintaining that the fuel risk in power sector will continue this year. The agency, however, expects merchant power tariffs to rise during 2013. The Fitch group company sees implementation of reforms at the state power utility (SPU) level as well as of those initiated to mitigate fuel shortages as key issues in the power sector growth. The agency expects that its rated entities will manage the key sector risks in 2013 considering a favourable tariff mechanism, their comfortable liquidity and support from the central and state governments. Therefore, India Ratings has maintained a Stable Outlook on its rated power sector entities for the year. India Ratings-rated power producers include NTPC (IND AAA/stable), NHPC (IND AAA/ Stable), Rural Electrification Corporation (IND AAA/Stable), Reliance Infrastructure Limited (IND AA/Stable). The stoppage of short-term credit from the banking system and pressure from the central government resulted in some reform measures at the SPU level in 2012 like tariff hikes and restructuring package. However, the ability to further increase tariff may have reduced, said Salil Garg, director, corporates, India Ratings & Research told Business Standard. A quarterly fuel adjustment translating to about 6-8 per cent increase in tariff annually should be politically feasible, he said. Tariffs hikes coupled with operational efficiencies (like lower aggregate technical and commercial losses and lower operating costs) and successful implementation of the restructuring package is a long-term solution for turnaround of the distribution companies (discoms). Without a multi-dimensional approach, the problems would have only been successfully deferred and not resolved, India Ratings said in a report released today. The tariff hikes might not be sufficient to cover the current revenue gap in some cases and might not result in full recovery of regulatory assets in others and thus cannot singularly lead to an operational turnaround. Moreover, most states have hiked tariffs steeply for industrial consumers, while sparing domestic consumers. As the ability of discoms to cross-subsidise is limited, consumers might push back. Therefore, continued tariff increases over a short period of time might not be a feasible option for the discoms. A presidential directive was issued to CIL to sign fuel supply agreements (FSAs) with power developers for 51GW capacity commissioned/likely to be commissioned over FY10-FY15. Power plants set up post-2009 will continue to face fuel problems, said Garg.

With the liquidity profile of the SPUs post the tariff hikes improving, their ability to buy from merchant power will improve. Cost of merchant power will, however, go up with increase in fuel prices, high energy and peak deficits, increasing percentage of imported coal in overall coal supply and low plant load factors for available capacity due to fuel shortage will also lead to.

NLC's new power plant in UP gets approval

Tiruchirapalli: Neyveli Lignite Corporation (NLC)'s proposed new power plant at Ghatampur in Uttar Pradesh has got approval from Public Investment Board. It will be putting up a 3x660 MW super critical thermal power station here. It had paid an advance of Rs 140 Crore for the land where the plant will be erected. According to NLC chairman, B Surender Mohan, the board will order its packages within six months and thereafter the centre will give sanction order to it. The NLC has already paid an advance of Rs 140 crore for land, for its proposed power plant at Ghathambur, he added. He said that efforts were underway to increase the NLC's power production up to 10,000 MW within ten years as against the present installed capacity of 2740 MW inclusive of output from Barsingsar project in Rajasthan. The NLC chairman pointed out that to achieve the goal, the Coprporation is also making efforts to launch its power projects at Tuticorin, Sirkazhi and the NLC has received project-based inquiry from the Tamil Nadu government on the proposed power plant at Sirkazhi. Now, the NLC will apply for coal linkage for Sirkazhi and Tuticorin projects. Referring to Tuticorin power plant, he said NLC will commission the first of the 2x500 MW power plants at Tuticorin during December 2013. The shore-based power plant will be run with 70 per cent coal supplied by Mahanadhi Coalfields Limited while the remaining 30 per cent of the coal will be imported, he added. Though the original cost of the Tuticorin project is Rs 5000 crore and might go up to Rs 6500 crore due to various reasons, including the excalation in the material price, he added. Replying to a question, he said NLC was not operating BHEL-supplied 250 MW power plant. The order was placed for 2x250 MW plants. Output from the first plant that was commissioned recently came down to 100 MW in first 20 days and subsequently there was a break down. There was a problem with design causing breakage of pipes. The BHEL was effecting change in the fluidised bed heat exchange system in association with its German consultant.

Probably, by June this year the first plant will be ready for commissioning again. The second will be commissioned within three months from June, he added.

No project in the implementation stage to suffer for want of coal

Debjoy Sengupta, ET Bureau Nov 15, 2012, 04.45PM IST

KOLKATA: The government has assured power project developers including states that no project in the implementation stage will suffer for want of coal. "On the recent issue of fuel shortage in power plants, we can assure power project developers, including the states, that none of their projects in the implementation stage would suffer for want of coal. The ministry of power has allowed electricity firms facing coal supply crunch to sign fuel supply deals with state-owned operator Coal India Ltd, even if no prior power purchase agreements (PPAs) exist with distribution companies," said power secretary P Uma Shankar. "Demand for energy in India has multiplied manifold in recent years on the back of rapid urbanization, industrialization and usage of water for irrigation in agriculture. Energy being the building block of economic development, the focus is now firmly entrenched on finding the right energy mix for propelling a high trajectory, sustainable and inclusive growth path for India", said Rajiv Mundhra, president, Indian Chamber Of Commerce. P Uma Shankar said: "The centre has approved budgetary support approximating around Rs 49,730 crore for the power ministry's flagship rural electrification programme called Rajiv Gandhi Grameen Vidyutikaran Yojana during the 12th Plan. We have also harnessed Information Technology for ensuring quality power supply to different parts of the country. I hope a multi-pronged strategy encompassing increased resource exploration & exploitation,

capacity addition, and energy sector reforms would soon enable us to reach the goal of "Power for all by 2012." "With a view towards meeting the burgeoning demand for energy, Government of India has initiated an integrated strategy for sectoral development with the objective of providing reliable, quality and adequate power at optimum cost towards achieving a GDP growth rate of 8 per cent, while side by side maintaining the commercial viability of the power industry. The Government of India in fact plans to add 18,000 Mw to generation capacity this year. Capacity addition is targeted to reach 80,000 Mw by the end of the 12th 5 year Plan. Considering the limited reserve potentiality of petroleum & natural gas in India, the eco-conservation restrictions on hydel projects and the geo-political perceptions of nuclear power, coal providing for 55 per cent of the country's energy needs continues to occupy the centre-stage in India's energy scenario", he said. India's primary energy consumption in 2011 was 4.6 per cent of the global energy consumption, vis a vis China, which with an almost equal population consumed 21.3 per cent. A projected 1.6 billion population base for India would entail an annual electricity generation of 8 trillion kWh, while India's current share is only one-tenth of the global annual electricity generation. In year 2012 installed power capacity in India had reached 200, 000 MW, with an annual capacity addition of 20, 000 MW, equaling a five year capability of the past. "However, in the past four decades, consumption of coal, lignite, crude petroleum, natural gas, and electricity in India had grown by 6 per cent annually vis a vis a 4.5 per cent annual growth in production. India's increasing dependence on crude and coal imports has opened the economy to global price volatility, with severe ramifications for our balance of payments", said Mundhra. While policy activism and accelerated farm output growth have raised the prospect of a gradual recovery of India's GDP to 6.1 per cent in FY 2014, the Union government decision to usher in timely debt restructuring for the power distribution companies has further cemented the expansionary vibes.

ICC welcomed the government move of providing the much needed financial relief to the power utilities and hopes for an early rollout of the proposed coal linkages to the power projects.

Oil, power sectors reform to trigger lending Q4

MONDAY, 12 NOVEMBER 2012 00:00 JOHN OMACHONU

Oil, gas and power sectors reform are expected to trigger lending by banks in the fourth quarter of this year, BusinessDay has learnt.

This optimism is coming despite low credit to the economy by banks in quarter three. The banks had an impressive outing in their Q3 financials. With milestones recorded in the privatisation of the power sector, banks have in the past weeks been fighting hard to receive the attention of prospective investors to finance the acquisition of power assets. Financing of the distribution aspect of the business seems lucrative, and the banks are offering attractive proposals to fund such acquisitions. It was reported that most of the first tier and second tier banks in the country are in pursuit of the designated distribution companies (DISCOs) and generation companies (GENCOS) created from the unbundling of the Power Holding Company of Nigeria (PHCN). The National Council on Privatisation (NCP) had recently unveiled 14 companies as the preferred bidders for the GENCOs and DISCOs. Banks had made cumulative profits of N362.2 billion in the last nine months of the year, but their loan books grew by 0.3 percent month/month in September and 4.9 percent year to date (YTD). The treasury manager of one of the banks said, the economy will witness a lot of activity next year, including initial public offerings (IPOs), and this will start from Q4 as banks will increase their lending to the economy. Analysts at Renaissance Capital, (Rencap), said in a note to BusinessDay: At the start of the year, banks were guiding to loan book growth of up to 20 percent in 2012. These hopes have long been dashed, although a modest pick-up is expected in Q4 on the basis of loans to the power, and oil and gas sectors. Analysts had predicated their optimism on the purchase of the bad loans from their books by the Asset Management Corporation of Nigeria (AMCON), hence the the prediction of 20 percent loan growth that would resuscitate the small and medium scale enterprises currently experiencing liquidity crisis. The selection of preferred bidders for the generation and distribution companies under the power privatisation programme, will change the rhythm of the game, as banks will be effectively involved, says Ken Iwelumo, former senior vice president, Investment , Bank of America/Merrill Lynch.

Orders for security, power, traffic control

TNN Nov 12, 2012, 03.28AM IST

LUCKNOW: Directing officials to ensure law and order remain under control on Diwali, chief minister Akhilesh Yadav on Sunday directed officials to make adequate arrangements to guard against disruptive elements. Instructing officials to ensure uninterrupted power supply and smooth flow of traffic, the CM also said the departments concerned must ensure the festival passes smoothly. On Sunday, the CM also instructed officials to ensure shops selling fire crackers operate in open spaces, away from crowded places to avoid accidents. An advisory note to stay away from high decibel firecrackers keeping in mind the environment and noise pollution was also issued. Yadav also asked hospitals to remain on stand-by to attend to burn cases, if reported, apart from directing officials to check adulteration of food products during the festive season. In spite of the busy day monitoring the administration's preparedness ahead of the festive season, the chief minister also met Canadian senator Asha Seth at his official residence in a bid to promote the state's industry. Seth, who expressed satisfaction with the efforts made by the state government to boost the state's economy, expressed hope that industry captains from around the world, including Canada, would take note and invest here. Calling for greater interaction between people and industry heads of UP and Canada, Seth said Canadian businesses were upbeat about making investments in food security, agriculture, cold chains, education and power. Saying India and Canada planned to double bilateral trade by 2015, Seth also said Delhi and UP were two big economies in north India since they lead the country in information technology and agriculture. Discussing detailed investment plans by the Canadian government, Seth said Canada could provide stable, permanent and green technology in the energy sector. In addition, tourism and education could be the other sunshine sectors that interest her country. Seth, part of the Canadian prime minister's delegation that visited India last week, said over 23,000 students from India were studying in different universities in Canada, returned to UP to visit her home district of Sitapur, Seth is the first Indian senator of Canada. Following invitation to visit Canada along with industrialists and investors, Akhilesh said a delegation from UP would visit Canada between May and September 2013, which the senator said she would coordinate and facilitate.

Pollution, health fears fuel protests at Tata power plant

HT Correpsondent, Hindustan Times Mumbai, January 16, 2013 First Published: 01:01 IST(16/1/2013) | Last Updated: 01:03 IST(16/1/2013)

The public hearing for Tata Power Companys proposal to replace gas with coal at unit 6 of the Trombay Thermal Power Station was halted on Tuesday afternoon by the state pollution control board following a ruckus created by various political parties that opposed the plan. They claimed that a conversion to coal will pollute the environment and affect the health of residents. As part of the modernisation plan, the company will invest Rs. 1,174 crore and use low sulphur and low ash imported coal for its 500 megawatt unit 6. At present, units 5 and 7 run on coal. The company has stated that it will use appropriate polllution control equipment such as Electro Static Precipitators (ESPs) and Flue Gas Desulfurisation (FGD) to maintain emissions at the current and controlled levels. With Chembur known as a gas chamber as it houses Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited and Rashtriya Chemical Fertilisers, representatives of various political parties spoke of how fly ash will spread even to Ghatkopar and Vikhroli apart from Chembur. When a project needs approval, a company always says that there will be no impact and everything will be taken care of. But nothing is done once the plant comes up, said Raja Chowgule, a chemical engineer and a corporator. There are efforts world over to discard coal because it is polluting. Chembur citizens must come on the streets to protest against this plant when it comes up. Questions were also raised over the environment impact assessment report. How can one expect the assessment report to be impartial if Tata Consulting Engineers has prepared the report? The report doesnt mention where water will be released after sulphur is washed and how will fly ash be transported to companies to make cement and bricks, said advocate Naina Pardeshi In order to get environment clearance, the Maharashtra Pollution Control Board will send the minutes and video recording of the public hearing to the environment ministry.

Poor power sector facing logjam for new investments

Tuesday, 13 November 2012 11:29 Posted by Imaduddin 350

MUSHTAQ GHUMMAN

ISLAMABAD: The countrys poorly managed power sector is reportedly facing logjam with respect to new investments as all the three options of funding have fizzled out, well informed sources told Business Recorder.

Background interviews with different officials revealed that the National Transmission and Dispatch Company (NTDC) had recourse to three kinds of investment in the power sector: (i) investment through tariff increase with the blessings of the regulator; (ii) GoPs funding from own resources; and (iii) funding from multilateral development agencies.

We have no funding for power sector projects as Nepra has not determined Discos tariff so far. GoP has no funds for power sector development projects due to financial crunch and funds from multilateral development agencies are negligible due to slow pace of reform and progress in projects, said an official on condition of anonymity.

The official further stated that Asian Development Bank (ADB) had recently threatened to review Pakistans portfolio for power sector as all the projects were delayed. This claim, however, could not been verified from the ADB office in Islamabad.

An insider told this scribe that power sector was about to collapse as circular debt had touched Rs 800 billions. Current circular debt is about Rs 400 billion, besides Rs 300 billion transferred in the books of Power Holding Company Limited (PHCL) and Rs 69 billion has been stuck up due to Islamabad High Court (IHC) verdict against fuel price adjustment, he added.

IHC ordered Discos to pay back this amount to the consumers as collection in the name of fuel price adjustment is illegal.

According to Secretary Water and Power, Nargis Sethi, energy sector was working on 55 percent efficiency, and Discos technical line losses were nine percent, generation losses three percent, theft accounted for 19 percent while recovery was 14 percent.

Performance of the power sector has deteriorated during the last four years as receivables of distribution companies escalated to Rs402 billion in 2012 from Rs183 billion in 2008, registering an increase of 119 percent.

According to official figures, receivables of Lahore Electricity Company (Lesco) increased to Rs34.548 billion in September 2012 from Rs76 billion in March 2008, showing an increase of Rs26.937 billion. The cumulative receivables of Hyderabad Electricity Supply Company and Sukkur Electric Power Company (Hesco/Sepco) have showed the highest increase of Rs 83.68 billion with the companies total receivables going up from Rs 21 billion in 2008 to Rs 105.501 billion in 2012 followed by Rs52 billion

increase in receivables of Peshawar Electric Supply Company (Pesco) and Rs 51 billion of Quetta Electric Supply Company (Qesco).

Pescos receivables went up from Rs 19 billion in 2008 to Rs 52.874 billion in 2012 and outstanding dues of Qesco increased from Rs 9.212 billion to Rs 60.952 billion during the period under review.

The data further revealed that receivables of Gujranwala Electric Supply Company (Gepco) have jumped from Rs1.92 billion in 2008 to Rs9.2134 billion in 2012, showing an increase of Rs7.293 billion, while receivables of Faisalabad Electric Supply Company (Fesco) rose from Rs2.371 billion in 2008 to Rs9.56 billion in 2012, reflecting an increase of 7.189 billion.

The outstanding receivables of Islamabad Electric Supply Company (Iesco) have gone up from Rs3.334 billion in 2008 to Rs18.037 billion in 2008, showing an increase of Rs15.072 billion. Similarly, outstanding Multan Electric Power Company (Mepco) were Rs5.033 billion in 2008 but increased to Rs 18.923 billion in 2012, registering an increase of Rs13.89 billion.

Power companies to get coal blocks at a discount

Sarita C Singh, ET Bureau Nov 16, 2012, 05.06AM IST

NEW DELHI: The government has decided to offer discount on coal blocks' prices being offered to power companies in the auction set to begin in a few months, coal secretary S K Srivastava said. The coal ministry is, however, yet to decide the rate at which discount will be offered and is holding consultations with state governments that will get the entire auction money. Srivastava said the decision has been taken to ensure low electricity tariffs and all stakeholders including state governments have agreed to it. "It has been decided to give a discount to power sector companies as otherwise the auction will result in higher electricity tariffs," he said. "The question is how much discount should be offered. The state governments have also been involved in the exercise since there should be a balance between state revenues and power tariffs." Blocks earmarked for power sector will be given to state governments, which will award the mines to companies that quote lowest tariff for electricity supply. Power companies will pay a 'reserve price' for each block on which the coal ministry plans to give discount. The decision to give discount to power firms follows a recommendation made by CRISIL Infrastructure Advisory, a consulting firm appointed to assist the ministry in fixing prices of captive coalmines. It has recommended that price for each block be determined by estimating cash flow projections of a project. The estimated cash flow should be adjusted against the estimated capital cost to mine the block over 30 years to arrive at its value. "India's power needs are rapidly rising," CRISIL had said in its draft report on methodology for calculation of price tags of coal blocks. "In 2011-12, the peak load demand-supply deficit stood at 10.6%. As any increase in electricity prices may have a cascading inflationary impact on India's economy, one of the key objectives that the government may set is to keep the electricity prices at an affordable level." A top coal ministry official said coal block allocation to government companies may begin before the end of this fiscal. The coal ministry has identified 54 coal blocks with over 18,000 MT reserves for allocation to private and government companies. While 45% of the blocks have been earmarked for the power sector, about 25% each have been earmarked for steel and state mining corporations.

Power Sector Privatization Strategy for PHCN Successor Distribution Companies Part 2
THURSDAY, 15 NOVEMBER 2012 00:00 AYODELE ONI We had stated in the last edition of this column that the Bureau of Public Enterprises (the BPE) and the National Council on Privatization (the NCP) chose to use the Aggregate Technical Commercial and Collection (ATC & C) Losses reduction value and the mechanism to achieve such reduction, provided by bidders, as key bid parameter. This week we continue our review of this efficiency bid parameter used by the BPE. The Aggregate Technical Commercial and Collection Losses Reduction As Key Bid Parameter For the privatization of the Discos, the BPE and indeed the NCP chose to go the way of a combination of highest financial bid and best service/ efficiency program. The efficiency bid parameter in this case, is the reduction of the ATC & C Losses; with premium placed on this bid parameter. The decision to place premium on reduction of ATC & C as a bid parameter was largely because Discos are to a large extent, natural monopolies whose privatisation does not immediately make the setting up of alternative firms by the private sector, viable. The privatisation of the Discos, as a result of their monopoly status in their operating areas, poses a different challenge from routine privatization programs, which would be difficult to address using the usual highest bidder parameter model, as the key bid parameter. This is particularly the case because it is not sufficient to provide the highest financial bid as that alone would not reduce the ATC & C. A bit more appeared needed. In designing the model for the selection of the preferred bidder for Nigerias distribution companies, therefore, the BPE and the NCP took into consideration, the fact that the ATC & C losses sustained by the various Discos had ranged between 40 and 50 percent of the power wheeled to them through the transmission system. This level of losses was regarded as unsustainable and if not halted will continue to render the Nigerian

Electricity Supply Industry absolutely unviable for full and unsubsidized private sector participation. Consequent upon the foregoing, the value of the service/efficiency parameters was considered viz-a-viz the investment proposals made by bidders aimed at reducing ATC & C losses over a five (5) or so year period. This option is aimed at catering to the identified principal needs of the distribution segment of NESI, that is, rapid reduction in the current levels of ATC&C losses and sustainable investment in system rehabilitation, upgrade and expansion. This is so because any challenge in terms of revenue by the Discos would affect the whole value chain of the NESI as the Discos are the participants on the value chain directly responsible for revenue generation. Under the proposed Disco privatisation strategy, a private sector operator will acquire controlling equity interest in any of the distribution companies with a view to rapidly improving its operational efficiency. So, unlike the traditional transaction approach where bidders merely bid on price for the equity shares, bidders bided on the basis of a trajectory of technical, commercial and collection loss improvements, especially during the first five (5) years of post-privatisation operation. Additional, this method was built around the Multi Year Tariff Order (MYTO) 2 issued by the Nigerian Electricity Regulatory Commission (NERC). The idea of a MYTO 2 was to ensure in the first place, that cost reflective tariffs are charged in the NESI, and came into effect in June 2012. MYTO 2 basically sets out the commercial and economic indices that provide the financial model for the entire NESI. MYTO 2 stipulates the yearly investment requirements, allowable operational expenditure, approved rate of return on equity and other allowable expenses for each Disco. The valuation of each Disco was obtained from the regulated asset base contained in the MYTO 2 assumptions. This method, NERC and the BPE believe, eliminated the problem associated with undervaluation or overvaluation of the assets. To emerge as a core investor, a bidder was required to submit a proposal aimed at reducing the ATC & C losses over a five (5) year period .The level of losses that a bidder proposes to reduce will be incorporated in the Multi Year Tariff Order (MYTO). MYTO will stipulate the annual investment requirement, allowable operational expenditure, approved rate of return on equity and other allowable expenses for each distribution company. The selection criterion sought to appoint an operator with the best technical, financial and managerial qualification for reducing ATC&C

losses. It is only through this approach, can the whole value chain of the electric power sector can be viable. The Final Selection The NCP approved on Monday October 29, the sale of sixty percent (60%) equity in ten (10) out of the eleven (11) Discos to nine (9) companies. The approved preferred bidders are expected to post a Letter of Credit of the amount of twenty-five percent (25%) of the Share purchase price of the Successor Company within fifteen (15) business days from Monday, October 29. That would be followed by the payment within fifteen (15) business days after signing of the Sale and Purchase Agreement or the Shareholders Agreement, of twenty-five percent (25%) of the Share purchase price. Failure to make this payment will result in the automatic drawdown of the full amount of coverage of the Preferred Bidders Bank Guarantee. Final Words I hope this clarification has assisted everyone get a better understanding of the NCP and BPEs privatization strategy for the sale of the Discos. We have never come this close to having an efficient power sector. Kudos go to Ms. Onagoruwa, Prof. Barth Nnaji the former Minister of Power, NERC officials, particularly Dr. Amadi and Eyo Ekpo, the members of the Presidential Task Force on Power, the Presidency, workers of PHCN and everyone who has played a role to help us get thus far. The power sector is working and we shall indeed get there and to an older friend whom I admire a lot, but who told me he felt the power sector privatization/ reform was a white elephant project; heres one Nigerian project that is obviously not an elephant at all, speak much less of being a white one. Ayodele Oni ( ayodeleoni@yahoo.com), a solicitor, specializes in international energy (oil, gas & power) investment law.

Property Headlines
Bangalore Property Market Grows 8 per cent growth Bangalore property market has surpassed other metros such as Mumbai, Delhi and Chennai with 8 per cent growth in the June quarter compared to the same period in the previous year. On the other hand, property sales in the bigger markets like Mumbai, NCR fell by 60 per cent and 57 per cent, respectively. Pirojsha Godrej, Managing Director (MD) and Chief Executive Officer (CEO) of Godrej Properties attributed this rise to higher off take as compared to other property markets in the country despite challenging times. Indian Real estate Forum, 16th Oct 2012

Increase in the Purchase of Property during Festivals With the onset of the festive season, housing sales are expected to improve by about 20 per cent in major cities as home loan interest rates witness a marginal fall, according to developers' body Confederation of Real Estate Developers' Association of India (CREDAI). Lalit, Jain, President, CREDAI pointed out that enquiries for property requirement have seen a hike in the last one month. He added that buyers who have been waiting for the last two years to buy homes are likely to buy property now as interest rates on home loans have come down and are expected to reduce further. Moneycontrol, 15th Oct 2012

Shriram to Clear Rs 600 Cr Debt with a Realty Firm in Germany The Bangalore-based real estate arm of Shriram Group, Shriram Properties, is believed to be closing a Rs 600 crore debt. The debt was raised from Germany-based Hypo Real Estate Group. It is reported that Shriram Properties might be using proceeds from selling one of its IT special economic zone (SEZ) in Chennai. Smartinvestor, 16th Oct 2012

Britannia To Join Hands With Bombay Realty Britannia Industries, bakery and dairy products maker, might come together with Wadia Group's real estate arm, Bombay Realty, to develop retail space on a six-acre plot of land in Bangalore, sources said. A spokesperson said that the company is looking at developing retail asset and is in the process of hiring a local architectural firm to design the project. realn3w, 16th Oct 2012

Puravankara Projects Shares Rise on Residential Project Launch Shares of Puravankara Projects rose over 5 per cent soon after news of a residential project launch worth Rs 300 crore in Bangalore. According to a

release sent by the company, the ultra-premium project was launched on Sarjapur Main Road in South Bangalore. The 4-lakh sq feet project includes 3 & 4BHK apartments ranging from 1,800 to 2,500 sq ft. Indian Real Eatate Forum, 17th Oct 2012

General News
Demand for office spaces picks up across India Commercial office space demand is picking up after witnessing a negative growth in the first two quarters of this year. The country's commercial office space supply witnessed a sequential growth of 188 per cent at 9 million sq ft, where Mumbai witnessed the highest growth at 449 pct. A report by DTZ, an international real estate consultancy highlights that Bangalore has been the main driver of this growth, with a 3 million sq ft uptake in the July-September quarter. Cholawealthdirect, 17th Oct 2012

Mumbai Realty Is Not For Middle Class Mumbai real estate market is one of the most expensive markets and primarily caters to the high end client. The investment in real estate has always been inter-linked with the stock market, since the stock market boom of the 2000s. First, between 2006 and 2011, the construction of flats which cost up to Rs 25 lakh fell from 21 percent in all of Mumbai to merely nine percent. Also, the construction of flats that were costing more than Rs 2 crore rose from 9 per cent to 22 per cent. In the present times, Mumbai is not within the reach of the middle class. Mumbai Realty Plus, 16th Oct 2012

Consumer Forum Fines Realty Firm Prominent builder, N Kumar and his associate society have been directed to pay penalty by the State Consumer Disputes Redressal Commission's Nagpur Circuit bench. They will be required to pay Rs 23 lakh to flat owners of Poonam Pride at Khamla Square for adopting unfair trade practices. In addition, they were also told to provide a club house as common facility to the flat owners or pay Rs 1 lakh to each of the 17 members of the complainants. Times of India, I4th, 19th Oct 2012

Land Bill Makes Aggregation Easier, Says Real Estate Industry A panel of ministers are proposing that only 66 per cent of land owners will be required to acquire land for developing projects to make land aggregation easier, said developer body NAREDCO. The final draft of LAND Acquisition Bill

now recommends consent of two-third of "land losers" (from whom land would be purchased) for acquiring land for public-private-partnership and private projects. Zee News, 18th Oct 2012

Tata Housing Buys a Bungalow In Delhi's Connaught Place For Rs 218 Crore Tata Housing has paid a whopping Rs 218 crore for a bungalow in Delhi's Connaught Place and has plans to build luxury apartments in a low-rise complex there. The bungalow has been bought on Hailey Road from a family who agreed to sell to the Tatas, a source involved in the deal said. Jagran Post, 18th Oct 2012

Public sector power firms capacity at a standstill

Anupama Airy, Hindustan Times New Delhi, November 14, 2012 First Published: 21:03 IST(14/11/2012) | Last Updated: 21:06 IST(14/11/2012)

Indias power capacity addition plans, by both central and state power utilities, are showing signs of a slowdown. As against the capacity addition target of 4,419 MW set for the second quarter of 2012-13, not a single mega watt of capacity addition has come from the central or state power utilities. Private sector power companies have performed well, and the entire capacity addition target of 2,370 mw for the second quarter has been achieved. According to the ministry of power (MOP), central PSUs were to add 1219 MW of power capacity while state utilities were to contribute 515 MW in the last three months. Private firms were to add 2685 MW. The MOP told the Planning Commission that the cumulative capacity addition during 2012-13, as on October 11, has been at 8236 MW (45.9%) against an annual target of 17956.3 MW. Documents are available with HT. The overall power capacity addition achieved in the first half of the year was 7636 MW, against a target of 8226 MW. Central utilities added 2391 MW while state utilities added 750 MW. The private sector scored even in the first quarter by adding 4495 MW. Also, the actual achievement of 7636 MW during the first six months includes 120 MW of capacity from private firms that was not a part of the Annual Plan 2012-13.

Sluggish power sector could hit economic growth: India Ratings

PTI | New Delhi | Updated: Jan 17 2013, 02:19 IST SUMMARYFuel

supply risks and precarious financial health of electricity distribution companies continue to pose challenges for the power sector, whose slow progress could impact the country's economic growth, a report said.

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Fuel supply risks and precarious financial health of electricity distribution companies continue to pose challenges for the power sector, whose slow progress could impact the country's economic growth, a report said on Thursday. India Ratings & Research, part of global major Fitch Group, also cautioned that expected investments worth Rs 1,75,000 crore in various power projects could turn into non- performing assets unless fuel issues are resolved. "Non availability of sufficient power as well as insufficient power generation capacity addition could impact the country's overall economic growth," India Ratings & Research Director (Corporates) Salil Garg told PTI here. For every one per cent increase in Gross Domestic Product (GDP), the power generation need to increase by one per cent. Otherwise, there would be inadequate electricity supply that can impact not just the power sector but also other industries. "The progress of reforms in the power sector is happening at a slow pace. The sector is expected to suffer this year (also) and investors are not likely to be enthused to put money into the sector," Garg noted. Indian economy is projected to grow at a slower pace, in the range of 5.7-5.9 per cent, this fiscal. India, which has an installed power generation capacity of over 2,00,000 MW, expects to add about 88,000 MW in the current Five-Year Plan ending March 2017. The report '2013 Outlook: Indian Power', co-authored by Garg and released today, said that fuel risks -- coal and gas-- along with uncertainties about financial viability of distribution companies (discoms) remain major issues. Huge tariff hikes - required to revive discoms - can't be expected this year as many states have already increased them significantly in recent times, Garg said. Tamil Nadu has raised tariffs by as much as 27 per cent. Acute fuel scarcity is already hurting power generation. Coal India, the largest supplier to power plants, has not inked any Fuel Supply Agreements (FSAs) since FY 2009. The report said: "The 114 FSAs for plants commissioned post FY09 and likely to be commissioned till FY15 have a total cumulative capacity of 51,000 MW and with letters of assurance quantity of 216 million metric tonnes (mMT). "Assuming only 65

Sluggish power sector could hit growth: India Ratings Comment Share Text size: A A A
January 16, 2013 16:05 IST

uel supply risks and precarious financial

health of electricity distribution companies continue to pose challenges for the power sector, whose slow progress could impact the country's economic growth, a report said on Wednesday. India Ratings & Research, part of global major Fitch Group, also cautioned that expected investments worth Rs 1,75,000 crore (Rs 1,750 billion) in various power projects could turn into nonperforming assets unless fuel issues are resolved. "Non-availability of sufficient power as well as insufficient power generation capacity addition could impact the country's overall economic growth," India Ratings & Research Director (Corporates) Salil Garg told PTI in New Delhi. For every one per cent increase in gross domestic product, the power generation need to increase by one per cent. Otherwise, there would be inadequate electricity supply that can impact not just the power sector but also other industries. "The progress of reforms in the power sector is happening at a slow pace. The sector is expected to suffer this year (also) and investors are not likely to be enthused to put money into the sector," Garg noted. Indian economy is projected to grow at a slower pace, in the range

of 5.7-5.9 per cent, this fiscal. India, which has an installed power generation capacity of over 2,00,000 MW, expects to add about 88,000 MW in the current Five-Year Plan ending March 2017. The report '2013 Outlook: Indian Power', co-authored by Garg and released today, said that fuel risks -- coal and gas -- along with uncertainties about financial viability of distribution companies (discoms) remain major issues. Huge tariff hikes -- required to revive discoms -- can't be expected this year as many states have already increased them significantly in recent times, Garg said. Tamil Nadu has raised tariffs by as much as 27 per cent. Acute fuel scarcity is already hurting power generation. Coal India, the largest supplier to power plants, has not inked any Fuel Supply Agreements (FSAs) since FY 2009. The report said: "The 114 FSAs for plants commissioned post FY09 and likely to be commissioned till FY15 have a total cumulative capacity of 51,000 MW and with letters of assurance quantity of 216 million metric tonnes (mMT). "Assuming only 65 per cent to be met through domestic coal, Coal India will have to increase its dispatch to the power sector to 436 mMT by FY15 (a Compound Annual Growth Rate of 12 per cent), which looks difficult." The total investment required for 51,000 MW, including debt and equity, would be around Rs 2,75,000 crore (Rs 2,750 billion).

With fuel risks, there is a possibility of debt portion -- of around Rs 1,75,000 crore (Rs 1,750 billion) -- becoming non-performing assets for banks and financial institutions, Garg noted. India Ratings said government's financial restructuring package for state-owned discoms is a positive step in the short term for the entire value chain of power sector. "However, its long term benefits would depend on the ability of discoms to lower Aggregate Technical and Commercial losses, hike tariffs and control operational costs such that the average cost of supply decreases and average revenue increases," it noted. Faced with mounting debts of discoms, which is over Rs 2.46 lakh crore (Rs 2.46 trillion), the Power Ministry in October came up with financial restructuring plan. Taking over of 50 per cent short term liabilities of discoms by respective state government is a major proposal in the Central government plan. "The package is voluntary and is currently being worked out by discoms in 10 states namely Rajasthan, Haryana, Uttar Pradesh, Tamil Nadu, Andhra Pradesh, Punjab, Karnataka, Jharkhand, Himachal Pradesh and Kerala," the report said. India Ratings also noted that if the discoms are unable to achieve operational efficiencies, the package would only have successfully deferred the problems and not resolved them. Meanwhile, the report said that merchant tariffs might rise due to "high deficits in energy and power, low Plant Load Factors (PLFs) for available capacities due to fuel shortages, low capacity addition, high fuel prices and increasing percentage of imported coal in overall coal supply".

 Copyright 2013 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.

Substation plan delay to hit power supply

Vibhor Mohan, TNN Nov 16, 2012, 03.13AM IST

CHANDIGARH: There will be no respite from power cuts in a large part of the city as the upgradation plan for substation in Sector 34 is set to get further delayed, this time due to administration's plans to come up with a City Centre in the area. UT has now woken up to the fact that overhead power cables will spoil the aesthetics of the future commercial hub, and the lines will now have to be laid underground. For the proposed substation, cables have to be taken from the existing network in Sector 32 but since the entire procedure will have to be reworked, residents of over a dozen adjoining sectors are set to face power pangs this winter as well when demand shoots up due to use of geysers and room heaters. The electricity department had mooted the plan to upgrade substations in sectors 34 and 52 around three years ago and work has already been running behind schedule. The existing substations are located in sectors 39, 52, 56 and 47. The plan to set to a new substation in Sector 34 to strengthen infrastructure got delayed as land could not be made available to the electricity department in time. It was touted as a futuristic, long term project as the existing set up cannot handle the growing load. The newly-developed sectors with high population density are being given step-motherly treatment by UT electricity department as is evident from the fact that only four 66KV stations have been installed to handle the growing load in these areas. While the entire load of elite sectors is immediately shifted onto an alternate supply line, the entire southern part of the city is solely dependent on the supply from Mohali. Whenever there is a problem with it, as many as 25 sectors are plunged into darkness.

Another site Le Corbusier had planned Sector 17 as the City Centre along with a Sub City Centre in Sector 34. The plan was never implemented. Now, UT administration has identified another site in Sector 43 and commercial activities will come up at the two sites. The centres will provide a world class shopping environment that Sub City Centre was planned with high-rise commercial establishments. The upmarket areas would provide the best of commercial facilities to Phase-II sectors and compensates for their distance from the main City Centre.

Tepcos power bidding plan raises warming concerns

KYODO

JAN 14, 2013

Tokyo Electric Power Co. plans to start a bidding process next month to secure longterm electricity supplies from thermal power sources. The plan is generating concern in some quarters about the effect on greenhouse gas emissions because the system implies the sole use of coal a major source of the carbon dioxide emissions thought to be driving global warming. Some experts also question Tepcos presumed need to increase power generation beyond fiscal 2019. This is because the population of its service area is expected to shrink. Since thermal power plants emit large volumes of carbon dioxide over the course of several decades, building new ones could waste much of the publics efforts to save power since the March 2011 core meltdowns crippled Tepcos Fukushima No. 1 power plant. Consumers may also have to shoulder the cost of building the costly facilities. Tepco, the nations largest utility, was effectively placed under state control in July to prevent its demise from the nuclear crisis. Its new business plan calls for securing an additional 2.6 million kw of electricity supply from fiscal 2019 to 2021. Financially crippled by the Fukushima disaster, Tepco plans to bid for extra power from suppliers building new generation facilities, instead of building new plants of its own. The bidding process is expected to start in February and the suppliers are expected to be selected by this summer. One of the issues drawing attention is the conditions for the bidding, which limit the per kilowatt power generation costs to just 9.53. This low threshold effectively limits all fuel choices to coal. While relatively cost efficient, coal is known as a major carbon dioxide generator. According to the Environment Ministry, the most advanced coal-fired plant discharges more than twice as much carbon dioxide as a gas-powered plant when generating just 1 kwh. Tepco says it is planning to curb emissions by purchasing carbon credits from other entities to offset the expected rise in discharges. But it will have a lot more to offset if coal is picked in place of cleaner-burning natural gas, for instance.

The utility has formulated a short-term plan to boost power supplies to offset shortages caused by closing all its nuclear plants in light of the Fukushima disaster following the Great East Japan Earthquake almost two years ago. A government source, however, questioned the need for the long-term plan. This coal-fired thermal power project has nothing to do with electricity demand for the immediate period and toward the future, and there should be no need to boost supplies by 2.6 million kilowatts, the official said. Tepco is assuming a sharp rebound in power sales, which slumped in the aftermath of the 2011 disasters. It even thinks demand will bounce back to prequake levels in 2020. Since the disasters, however, businesses and households have been reducing power use amid repeated blackout threats from the government and the utility. In the meantime, electricity generated by renewable sources, such as solar and wind power, have been growing thanks to a system that obliges utilities to buy that energy at fixed prices. It is also projected that the population of the Kanto region, which includes Tokyo and adjacent prefectures Tepcos core service area will peak around 2015. Tepco says that its demand forecast is based on the governments projections for gross domestic product and that it also took the publics power-conservation efforts into account. Perhaps they overestimated their projection because Tepco will collapse unless they devise a plan to boost sales by assuming growth in demand, the government source surmised. At the end of the day, consumers will end up paying for the cost of unnecessary capital investments. If Tepcos plan is adopted as is, it will have a serious impact on the greenhouse gas balance. According to an Environment Ministry estimate, even factoring in what Tepco is trying to cover with its emissions quota, there will be a net increase of around 9 million tons of carbon dioxide per year. This is far greater than the roughly 5.4 million tons of carbon dioxide emissions estimated to have been trimmed in fiscal 2011 via power-saving or other efforts that reduced household power demand. The government has set a long-term goal of reducing greenhouse gas emissions substantially by 2050. A power-plant normally has a life of around 30 years. If one is built under Tepcos long-term plan, it will be running at least until around 2050 and serve as an impediment to achieving the governments goal. It could also invite criticism from other countries where people are engaged in discussions on promoting measures to reduce the impact of global warming under the framework of the international convention on climate change.

Some countries have voiced opinions that industrial economies like Japan have not come up with convincing goals for emission cuts despite being the creator of the Kyoto Protocol. Japan has also lost credibility among developing economies after indicating that it will refuse to honor emission requirements under the Kyoto Protocol after this year. With Tokyo even considering lowering the medium-term goal of cutting 25 percent of emissions by 2020, if Japan is planning to increase coal-fired power generation, it may draw even stronger criticism. If we dont change infrastructure for energies now, we will see a large volume of emissions continue toward the future, and decisions in the next few years will be crucial, said Kimiko Hirata, of Kiko Network, an environmental conservation group. If we allow coal-fired thermal power generation, we will be considerably narrowing the path for curbing emissions toward the future.

The elephant in the power plant

Unless there is a way to improve fuel supply, power sector is likely to continue to underperform in the broader markets
Ravi Krishnan

First Published: Tue, Jan 08 2013. 12 38 PM IST

Updated: Tue, Jan 08 2013. 11 53 PM IST The BSE Power index has moved up by roughly half the gains in the broader market since the start of 2012. Those gains too were possible only because of the grand announcement of a reforms programme that has promised to restructure the debts of state electricity boards (SEB). Also, the fuel-supply situation improved marginally towards the end of the year. In the December quarter, electricity generation increased 4.25% from a year ago, after plunging to 2.49% in the three months ended September. Still, that is below the 6% growth seen in June and around 8% growth in the last fiscal year, indicating that the sector is not out of the dark, yet.
Coal India Ltd (CIL) has finally managed to boost its outputKarvy Stock Broking Ltd estimates that coal supply to the power sector rose by 12% in

April-October. That is reflected in the improving plant load factors (PLF) or capacity utilization of thermal power factories. PLFs improved to 71% in October and November compared with the lows of 61% in August and September. That, along with the decline in international coal prices, means power generation companies are likely to post decent earnings in the December quarter. Kotak Institutional Equities has forecast that the utilities it covers will, on an average, report sales growth of 12.8% and profit increase of 17.1% from a year ago. Will things improve from here on? That hinges, for one, on implementation of the SEB debt restructuring programme. For now, the silver lining is that many state discoms have increased tariffs in the past 15 months and, more importantly, some like Punjab and Delhi have already filed for rate increases for the coming financial year. Note that one reason for the generation decline, and also falling merchant power rates, is lower offtake by SEBs. Secondly, we come back to the elephant in the power plantthe question of fuel supply. India has added nearly 10,000 megawatt of capacity this fiscal year till November. Sure, CILs output has increased, but still falls far

short of demand. Karvy estimates that the gap will be 99 million tonnes (mt) this fiscal year and jump to 136 mt the next financial year as many of these factories are commissioned. Many factories are lying dormant and the fixed costs associated with these will start eating into earnings. This is also a disincentive to expand capacity in this sector, especially at a time when power supply falls short by some 10% of demand. Espirito Santo notes that about 58% of power projects are facing delays due to fuel availability issues, as a result of which new orders for equipment in this sector fell to a seven-year low in the December quarter. Unless there is a surer way to improve fuel supply, the power sector is likely to continue to underperform in the broader markets.

Tipping point for Kerala's power sector

Shenoy Karun, TNN Jan 14, 2013, 03.16AM IST

KOCHI: Kerala's power sector has reached a tipping point where cheaper alternative power generation methods like solar photovoltaic (PV) energy are gaining traction among consumers amid acute power shortage, hike in electricity tariff, and their growing awareness on renewable energy sources. Three major companies have entered Kerala market in last six months, aiming to cash in on the state's growing demand for solar energy, and scores of local electric-inverter manufacturers have come up with additional services in solar power. Kerala State Electronics Development Corporation (Keltron) is also foraying into the solar power market with solar inverters. "Power shortage and the policy of the state government to depend more on renewable sources triggered the boom," observes M Jayaraju, director of Thiruvananthapurambased Agency for Non-conventional Energy and Rural Technology (Anert). Subsidizing solar-power generation is the route the state government has taken to promote this energy form. Anert has received more than 5,000 applications from individuals willing to be solar-converts. "Our target is to convert 10,000 houses into solar-powered ones, and we have shortlisted 25 vendors to supply products to these customers," said Jayaraju. According to Sijo Joseph, chief executive officer of Bangalore-based Ronds Solar, media reports on the power crisis faced by the state could be the major reason for the increase in the sales of solar-powered products. "Our business relies mainly on the word-ofmouth publicity after the launch of solar inverters in Kerala August 2012," he said. Ronds Solar currently ships two to three solar inverters daily from its Thiruvananthapuram office. Varghese Mathew, chief executive officer of Solar Plus, has teamed up with two Mumbai-based partners to launch his office in Kochi in November. "While power shortage is the main reason for the growth of this industry in Kerala, the drop in solar PV panel prices has also contributed to the boost in sales," said Mathew. His company is in the process of opening branches in Thrissur, Kottayam, Kozhikode, Kollam, Thiruvananthapuram and Kannur in one and a half months' time. According to Mathew, educational institutions are also welcoming the 'green idea'. "We are installing solar inverters in three engineering colleges in the state," he said. Further, eyeing the sales potential of alternative power sources in the local as well as national markets, Dubai-based PTL Solar has started its operations in Aluva. PTL now plans to set up 50 Solar Marts, outlets for affordable solar products, in the state this year. "We will open 3-4 outlets in every district," said Prabissh Thomas, founder and group MD of PTL. In addition, Idukki and Kottayam districts have at the least 15 companies selling solar inverters to local clientele. With more than 80 lakh households in Kerala without any solar-powered products, it is a huge market the 'sunrise industry' could tap into.

Under Construction The World's Largest Thermal Solar Plant

by CLAIRE O'NEILL January 09, 201311:18 AM

According to photographer Jamey Stillings, the Ivanpah Solar Electric Generating System (ISEGS) will be the "world's largest concentrated solar thermal power plant" when complete at the end of this year. That's if we want to get all technical. In plain terms: There's a huge solar plant under construction in the middle of the Mojave Desert, and Stillings has been documenting the process since the very beginning. Did you know this was happening? I didn't. "What I found along the way is that this is a very complicated issue," he says over the phone, as I ask him to explain in simple terms what he's seen out there. The core complication is this: Solar power is meant to be a cleaner, more sustainable alternative to our major sources of energy. And yet the construction of a plant of this magnitude means forever altering the natural environment. "Every single large-scale solar project has encountered this intersection of trying to accommodate the environmental concerns of conservation," says Stillings, "along with the need of an industry that wants to build renewable energy projects. How do you find that middle ground?" According to his website, Ivanpah Solar will consist of more than 300,000 mirrors directing the sun's energy toward three towers, "creating 392 megawatts of electricity, enough to power 140,000 U.S. homes." (Though of course, the exact math can change over the course of construction.) Some opponents might argue that plants like Ivanpah could be constructed, for example, on land previously stressed by agriculture. Or that it's sprawling over the home of the desert tortoise, a threatened species, and "marring" a relatively untouched landscape. On the other hand, Stillings, says, "The Ivanpah Solar project has committed $56 million toward protection and relocation of the desert tortoise" as part of its project.Bottom line, he says, it's clearly a nuanced and complicated issue. "I want the images to raise questions," he says. "I want people to be inspired by something that is ... beautiful and fascinating the geometry of a man-made structure existing within the organic structure of nature. ... But I also want people to ask themselves the same questions as if we were siting a new subdivision or a new Walmart or a new coal-fire plant."

For most of us, the rule of thumb when it comes to our own energy consumption is: out of sight, out of mind. "We have lived in a world where our energy sources are invisible. We go to the gas station and liquid comes out and we drive away. We flip a switch and the light comes on," Stillings says. But he thinks that might be changing at least if there are more solar plants like Ivanpah in the works. "We are going to be moving toward a place where we see where our energy comes from: from that field over there. And that's a change that I think we need to accept as a part of moving toward a more sustainable model," he says. He thinks these photos might help get us there to that point of energyawareness. But also, he says, "I just love looking at this. Looking at the intersection of the hand of man and nature and what comes of that. And looking at it from the air gives us a perspective that most people don't get: It puts it into the landscape." His more encompassing, long-term photo essay, Changing Perspectives, documents "ongoing utility-scale projects in the West with a long-term goal of making it a global study." Above all, Stillings hopes to spark conversation. Join ours in the comments.

Under Construction The World's Largest Thermal Solar Plant

by CLAIRE O'NEILL January 09, 201311:18 AM

According to photographer Jamey Stillings, the Ivanpah Solar Electric Generating System (ISEGS) will be the "world's largest concentrated solar thermal power plant" when complete at the end of this year. That's if we want to get all technical. In plain terms: There's a huge solar plant under construction in the middle of the Mojave Desert, and Stillings has been documenting the process since the very beginning. Did you know this was happening? I didn't. "What I found along the way is that this is a very complicated issue," he says over the phone, as I ask him to explain in simple terms what he's seen out there. The core complication is this: Solar power is meant to be a cleaner, more sustainable alternative to our major sources of energy. And yet the construction of a plant of this magnitude means forever altering the natural environment. "Every single large-scale solar project has encountered this intersection of trying to accommodate the environmental concerns of conservation," says Stillings, "along with the need of an industry that wants to build renewable energy projects. How do you find that middle ground?" According to his website, Ivanpah Solar will consist of more than 300,000 mirrors directing the sun's energy toward three towers, "creating 392 megawatts of electricity, enough to power 140,000 U.S. homes." (Though of course, the exact math can change over the course of construction.) Some opponents might argue that plants like Ivanpah could be constructed, for example, on land previously stressed by agriculture. Or that it's sprawling over the home of the desert tortoise, a threatened species, and "marring" a relatively untouched landscape. On the other hand, Stillings, says, "The Ivanpah Solar project has committed $56 million toward protection and relocation of the desert tortoise" as part of its project.Bottom line, he says, it's clearly a nuanced and complicated issue. "I want the images to raise questions," he says. "I want people to be inspired by something that is ... beautiful and fascinating the geometry of a man-made structure existing within the organic structure of nature. ... But I also want people to ask themselves the same questions as if we were siting a new subdivision or a new Walmart or a new coal-fire plant."

For most of us, the rule of thumb when it comes to our own energy consumption is: out of sight, out of mind. "We have lived in a world where our energy sources are invisible. We go to the gas station and liquid comes out and we drive away. We flip a switch and the light comes on," Stillings says. But he thinks that might be changing at least if there are more solar plants like Ivanpah in the works. "We are going to be moving toward a place where we see where our energy comes from: from that field over there. And that's a change that I think we need to accept as a part of moving toward a more sustainable model," he says. He thinks these photos might help get us there to that point of energyawareness. But also, he says, "I just love looking at this. Looking at the intersection of the hand of man and nature and what comes of that. And looking at it from the air gives us a perspective that most people don't get: It puts it into the landscape." His more encompassing, long-term photo essay, Changing Perspectives, documents "ongoing utility-scale projects in the West with a long-term goal of making it a global study." Above all, Stillings hopes to spark conversation. Join ours in the comments.