October 2014

Volume 3 | Issue 6 | `100

www.InfralinePlus.com

The Complete Energy Sector Magazine for Policy and Decision Makers

Modi govt prepares blue print

for Solar Power industry

Supreme
Court scraps
allocation of 214 coal
blocks out of 218

Changing Paradigm in
Indo-China
Business Relations

S L Rao Narendra Taneja SP Kansal R N Nayak

former Chairman energy cell convener CEO-Coal Division, Chairman & MD
CERC at BJP Videocon Industries Ltd Power Grid Corp

The current model of We are committed to All allocations of natural The JVs with steel
power generation is transforming the Indian resources should be companies will be for
broken, with inefficient energy sector to global made through open manufacturing of tower
utilities standards auction parts
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9
2014
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Interestingly, exploration of unconventional resources such as shale gas in India would one of the top agendas for discussion
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For more details and to get registered,

Contact Details:
Ankit Gupta, InfralineEnergy Monika Mongia, InfralineEnergy
Mobile: +91 9718944234 Mobile: +91 8800550580
Email: ankit.gupta@infraline.com Email: monika.mongia@infraline.com
InfralinePlus
The Complete Energy Sector Magazine for Policy and Decision Makers
October 2014 | Volume 3 | Issue 6

Editorial

Editors Letter Shashi Garg, Editor

Neeraj Dhankher, Deputy Editor
The sight of industry unequivocally supporting
News Team
governments initiatives has not been a common
scene especially in the recent past. But Prime Pankaj Bhagat
Minister Narendra Modis Make in India Ankit Bhatnagar
initiative saw industry brimming with renewed Analysts
vigour to surpass neighbouring China and Ashima Tyagi
become the global manufacturing hub. Industry Prerna Singh
titans including Reliance group Chairman Gaurav Sharma
Mukesh Ambani, Tata Group Chairman Cyrus
Pallonji Mistry, Chairman of the Aditya Birla Content Consultants
Group, Kumar Mangalam Birla came forward to StratSol Consultancy
extend all possible support to make this dream
come true. To achieve sustained healthy single digit growth, any nation Design
needs robust manufacturing industry. We bring you a detailed analysis www.solutionsfaktory.com
of how India can achieve the ambitious goal considering the fact that
at present manufacturing only contributes 17 percent of countrys GDP.
Our cover story offers a detailed account of what went wrong in coal
blocks allocation and what future lies ahead of India on account of
energy security. In one of the strongest verdict delivered in the history of Business Development
India, the Supreme Court showed no mercy and scrapped allocations
of 214 coal blocks out of 218 allocated since 1993. The bench observed Manoj Narang, Director
Tel.: 0120-4979706
that the Screening Committee has never been consistent, and there Email: manoj.narang@infraline.com
was no proper application of mind in allocating coal blocks. Do read.
We have had a turbulent relationship with neighbouring China, yet Advertisement
we find ourselves enamoured by the rapid progress the dragon land Rakesh Ranjan
has made in last few years. Our team has attempted to analyse the Tel.: 0120-4979757
importance of President of China Xi Jinpings India visit. Why is the visit Mobile: +91 9560626589 1
important for India and how can India benefit from Chinese firms which Email: rakesh.ranjan@infraline.com
have superb ability to build large projects, including nuclear-power
stations, new cities and railways. A growing India needs a competent Circulation & Subscription
partner. Will China be the partner, our country needs? Our story will help Nupur Bhardwaj
you find answers to these questions. Tel.: 0120-4979772
Mobile: +91 9953226526
In the Renewable Energy section, we share insight as to how would Email: nupur.bhardwaj@infraline.com
India help ailing local manufacturers use their idling capacities and get
more orders under mandatory local content purchase rules. Our article
gives a detailed account of the plans that are underway to increase the
solar-power target under the solar mission.
Our OffBeat section shares with you initial glitches in Vistaras launch. Form IV
The new airline is likely to miss the Diwali deadline - the peak season Periodicity of its Publication: Monthly
for air travel in the country when airlines are known to mint money. The Printers / Publishers /
Mrs Shashi Garg
launch has been pushed back by at least two months as a number Editors / Owners
of regulatory clearances are yet to come. Our wait perhaps stretches Nationality Indian

little longer when we get a taste of the renowned hospitality of the Tata Address
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Group and Singapore Airlines.
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For all this and much more, turn over the pages now. New Delhi - 110001
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Name and address of individuals who own the newspaper and partners
or shareholders holding more than one percent of the total capital Owner:
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SHASHI GARG 1, Tolstoy Road, New Delhi - 110001
Managing Director and Editor Shareholders holding more than one percent of total Capital of the
InfralineEnergy Research and Information Services owner Company
1. Mrs Shashi Garg, 60, Siddhartha Enclave, New Delhi-110014
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Signature of the Publisher
 October 2014
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InfralinePlus

Contents
Editors Letter
1

Cover Story 43
Will SC verdict on coal
blocks ruin the power
sector?
The countrys highest court said
control over almost all coal blocks
allotted since 1993 will have to
be returned, saying they were
granted illegally. The decision
could aggravate a coal shortage in
the country. The cancellation puts
at least $47 billion of investments
in such industries as power, steel

43
and aluminum at risk

Power Coal
4 30
News Briefs: National p4 News Briefs: National p30
News Briefs: International p5 News Briefs: International p31
In Depth: India, China Redefining ties in Trade, In Depth: Power crisis may increase as SC
Infrastructure p6 scraps coal blocks allotment p32
In Depth: Power grid eyeing Joint Ventures for
next round of growth p10 In Depth: Coal block de-allocation leads to
$10-12 billion bad loans p34
In Depth: US, India agree to cooperate on
major issues facing the two nations p13 Expert Speak: SP Kansal, mining engineer working
In Depth: BSES develops cloud based Consumer with Coal Division, Videocon Industries Ltd p38
Portal to help save energy p14 Statistics p41
In Conversation: Chintan Soni Chief Executive
Officer, Ecolibrium Energy p16
Expert Speak: Ms. Ashima Tyagi, Senior Consultant
Metals and Mining, InfralineEnergy p18
In Conversation: Bruce Davis, Sales-Director
Power Generation, Wyman-Gordon p21
Expert Speak: Lajpat R. Shrivastav CEO, Topics Covered
Jindal India group p24
Statistics p28 Corruption in block allocation
Banks exposure in energy sector
Topics Covered
Transmission and distribution network Coal imports
Power crisis Coal mining

Cover Design by: www.solutionsfaktory.com

 October 2014
www.InfralinePlus.com

Oil and Gas Renewable

48
News Briefs: National p48
News Briefs: International p49
In Depth: ONGC puts in place new
tendering process p50
In Depth: BJPs roadmap for Indias
energy sector p54
Expert Speak: Madhura Joshi - associate fellow,
and Anjali Ramakrishnan - research associate
at TERI p58
Statistics p62
64
News Briefs: National p64
News Briefs: International p65
In Depth: Clean energy revolution,
the buzzword p66
In Depth: With govt efforts underway
Solar Power gets a new lease of life p69
In Depth: Modi launches mega initiative to make
India a global manufacturing hub p71
Statistics p73

Topics Covered Topics Covered

Hydrocarbons Solar technology 3
LPG, Kerosene subsidies Domestic manufacturing industry
Gas price
Anti-dumping duty

Expert Speak / In Conversation Off Beat 75

Vistara set to miss October-launch date

Lajpat R. Shrivastav Chintan Soni

CEO, Jindal India group Chief Executive Officer,
Ecolibrium Energy

75
Anjali Ramakrishnan Bruce Davis
Infrawatch
Research associate, TERI Sales-Director, Power Generation Policy push to stalled road projects p79
Wyman-Gordon
 October 2014
www.InfralinePlus.com
NewsBriefs | Power National
4000Mw Pudimadaka power plant
Project to get fast-track status
The first mega investment cleared by the Andhra
Pradesh after bifurcation 4000 MW power plant by
NTPC at Atchutapuram, about 40 km from here will
get fast-track project status. After 1200 acres allotted
to the power major with the issuance of GO on
September 4, which is under possession of APIIC,
NTPC is hopeful of commissioning the entire project
using super critical technology within five years.
Chief Minister N. Chandrababu Naidu has instructed
the officials to accord all clearances without any
delay. Sources said the project would involve a total
investment of `20,000 crore.
Hinduja power plant
NTPCs 520 Mw first unit ready
The steam blowing activity of 520 MW unit of
Hinduja National Power Corporation Ltd was made
successfully at Palavalasa. With this the stage is set
for commissioning of the first unit. The coal-fired
power plant has two units each with a capacity
of 520 MW. Steam blowing activity is a process
of cleaning of pipelines from boiler to turbine by
passing steam at high pressure and temperature.
This will be the second power plant in the district.
NTPC Simhadri Super Thermal Power Station at
4 Parawadasupplies 1,000 MW from stage-I and 33
per cent of 1,000 MW from stage-II to Andhra.
6,720 MW Pancheshwar project
Nepal, India approve charter
In a very significant development in the power
cooperation sector, Nepal and India have agreed to
develop the much touted bi-national Pancheshwar
Multipurpose Project and endorsed the charter for
the Pancheshwar Development Authority. With the
signing of the charter for the PDA, the two sides have
renewed hopes of the 17-year-long bilateral project
being implemented. The project has an installed
capacity of 6,720 MW and is expected to be a boon
for development of Nepal and northern India. The
multi- billion-dollar projects costing will be revised
after a cost analysis later.
Power Grid Connectivity
Cabinet clears agreement with Nepal
The government cleared the agreement on power
grid connectivity with Nepal which will facilitate and
strengthen cross-border electricity transmission,
grid connectivity and power trade between the two
countries. The Union Cabinet gave its approval for
the India-Nepal Agreement on Electric Power Trade,
Cross-Border Transmission Interconnection and Grid
Connectivity, said an official statement after the
meeting of the Cabinet.
Bharat Heavy Electricals
Telangana govt awards two EPC contracts
The Telangana government has awarded contracts
for 800 MW Kothagudem project and 1,080 MW
Manuguru unit to Bharat Heavy Electricals Ltd
(BHEL). Chief Minister K Chandrasekhar Rao agreed
to give the EPC (Engineering, Procurement and
Construction) contract on the request of top BHEL
officials, including CMD B P Rao; Director (Power)
Atul Sobti and Executive Director (Marketing) S
Gopalakrishnan, who called on him at the Secretariat,
a CM office statement said. The Chief Minister said
the execution has to be time bound and targeted.
Hydro Power Project
Jaiprakash, Reliance Power call off deal
Jaiprakash Power Ventures attempts to monetise
its hydro power assets to cut debt have fallen flat
again after Anil Ambanis Reliance Power terminated
discussions to buy the assets for around 12,300
crore. The deal was called off a day before the
exclusivity of the memorandum of understanding
between the two companies expired. The assets
were the 300-MW Bapsa II and 1,091-MW Karcham
Wangtoo projects in Himachal Pradesh and the 400-
MW Vishnuprayag plant in Uttarakhand.
Zambia
Signs 300Mw power agreement with GMR
Zesco Ltd., producer of most of the electricity used
by Zambian copper mines, signed a power-purchase
agreement with the local unit of Indias GMR Group,
the African nations Mines Minister Christopher
Yaluma said. The agreed tariff with EMCO Energy
Zambia will be in the range of Zescos deal with
Maamba Collieries, the Nava Bharat of India unit
thats building a 300-megawatt coal plant in the
country, Yaluma said in an interview in Lusaka on
Sept. 18. The GMR units 300-megawatt coal-fired
plant will cost about $700 million, Chief Executive
Officer Ajit Mishra said by phone.
Larsen & Toubro
Wins `18.85 bn order from NTPC
L&T-MHPS Boilers Private Ltd, a joint venture between
Larsen & Toubro Ltd and Japans Mitsubishi Hitachi
Power Systems, secured an order worth `1,885 crore
from NTPC. The contract includes setting up of two
units of 660 MW each supercritical steam generators
for Tanda Thermal Power Plant Stage-II on an
engineering, procurement and construction basis. This
is LMBs first order for supercritical steam generators
from NTPC. The order was won through competitive
bidding involving several national and international
players. The project is scheduled to be completed in
46 & 52 months for the units.
900 Mw Upper Karnali Hydro Power Project
GMR Group signs PDA with Nepal
GMR Infrastructure Ltd., said is Group had signed
the Project Development Agreement (PDA) for the
900 MW Upper Karnali Hydro Power Project with
the Government of Nepal. The agreement, which is
a major milestone for the project, was signed after
due approvals of the Board of Investment Board
of Nepal and the Cabinet of Govt. of Nepal. The
Upper Karnali Hydro Power Project was awarded to
the GMR Group on BOOT basis. The project, with a
capacity of 900 MW, is being developed as an export
oriented project, to be constructed in a period of
around five years.
Kalinga Power
Drops `65 billion project in Odisha
Kalinga Energy & Power Ltd, a subsidiary of Kolkata-
based Shyam Group, has withdrawn is its 1,320 Mw
coal-fired power plant proposal in Odisha, citing
delays in obtaining financial closure for the project.
Following the companys request, Odisha Industrial
Infrastructure Development Corporation (Idco) has
asked the Collector of Jharsuguda to stop land
acquisition process for the power plant developer.
The client company has submitted withdrawal
proposal for the private land measuring 120.85
acre because of the delay in implementation of
their project.
75 MW hydropower plant
Alstom bags contract from Vietnam
Engineering major Alstom has bagged a contract
worth around 13 million from Electricity of Vietnam
for the extension project of the Thac Mo 75 MW
hydropower plant in the country. The aim of this
project is to increase peak load capacity to support
the existing 150 MW Thac Mo power station with 75
MW of additional power, Alstom said. The scope of
the contract includes design, manufacturing, testing,
supply, erection and commissioning of electro-
mechanical equipment, consisting of one vertical
Francis turbine of 75 MW, generator, control systems
and electrical balance-of-plant equipment.
Power Transmission Scheme
Govt okays `47.54 billion for Arunachal, Sikkim
The government approved a scheme for
strengthening power transmission in Arunachal
Pradesh and Sikkim at an estimated cost of
`4,754.42 crore. The CCEA approved this scheme.
The intra-state transmission and distribution
systems in the North-Eastern states are very weak.
Presently, 5 out of 20 districts in Arunachal Pradesh
are connected to the transmission network, a
statement said. The project would be implemented
by Power Grid with its consultancy fee of 12 per
cent of the execution cost. After commissioning, the
projects would be owned, maintained by the state.

4800Mw Medupi power plant
S.Africas Eskom to start plant on Dec 24
South African state-run power utility Eskom said the
first unit of its new coal-fired Medupi plant would
link up with the grid on December 24, a clear signal
that the much-delayed project is finally on track.
Eskom has never given a precise date for when
Medupi would synchronise with the grid, beyond
saying it would do so by the end of 2014, a full year
after its previous deadline. Eskom says that when
plant is fully operational, the unit will feed almost
800 MW to the grid and when the other five units
come online, Medupi will generate almost 4,800
MW of power.
Tanzania
IPTL signs 2,000mw power contract
A grand power project to benefit both Tanzania
and Kenya will be implemented by the Pan African
Power Solution, with its subsidiary company the
Independent Power Tanzania Limited. Completion
of logistical arrangements follows conclusion of
discussions and an agreement between the company
administration and the Kenyan government for
production of 2,000MW. Confirming immediate
plans for implementation of the project in Dar es
Salaam, Kenyan Petroleum and Energy Principal
Secretary, Eng Joseph Njoroge said a letter of
agreement was signed on August 19, 2014.
United States
To provide $1m aid for power plant in Pakistan
The United States will provide $1 million grant to
Khyber Pakhtunkhwa for feasibility of a 400-435
megawatt gas fired electricity plant in the province.
An agreement in this regard was singed by US
Consul General in Peshawar Escobar Gabriel and
general manager, thermal of the Pakhtunkhwa Hydel
Development Organisation Syed Zainullah Shah. It is
the first-ever US-Pakistan energy related partnership
in Khyber Pakhtunkhwa, according to a press release
issued by the US Consulate.
Nigeria
Lafarge to build $400m power plant
African cement giant, Lafarge Africa has partnered
with the IFC and Finnishs Wartsila manufacturing
company to build a 220 megawatts gas-fired power
plant in Nigeria. The plant will cost an estimated
$400 million. This will enable Lafarge to more than
triple the power output in its Ewekoro power plant in
Nigeria and also give about 1.4 million households
access to electricity in a country of about 170
million people. The project is Lafarges first major
outlay since the merger of its South African and
Nigerian assets to form Lafarge Africa.
1320Mw coal-fired power plant
Dhaka-Kuala Lumpur to sign deal
Dhaka and Kuala Lumpur are finally set to sign a
Memorandum of Understanding for setting up a
1320-MW coal-fired power plant in joint venture
on Monday. As per the proposal, a consortium of
Malaysian state-owned Tenega Nasional Berhad and
Powertek Barhad and Bangladeshs state-owned
Power Development Board will set up a joint-venture
company on 50:50 equity basis at Maheshkhali,
Chittagong. Bangladesh and Malaysia earlier
agreed to implement the project at Maheshkhali,
and a contract was supposed to be signed in
October last year.
Siemens
Wins Suez power plant contract
Siemens has received an order to supply, install and
commission major electrical components for the
East Delta Electricity Production Companys Suez
Thermal Power Plant in Egypt. The oil-fired thermal
power plant is located at Suez is located on the
north coast of the Gulf of Suez, on the Red Sea. The
scope of Siemens supply covers the whole electrical
package including key electrical components such
as an uninterruptable power supply and all types of
cables. In addition, Siemens is responsible for the
installation, testing and commissioning of equipment
supplied by EDEPC.
Nigeria
IFC, others commit $400m to power generation
The International Finance Corporation, Lafarge
Nigeria Limited, and Wartsila Development and
Financial Services Company based in Finland have
concluded arrangement to construct 260MW power
plant in Ewekoro in Ogun State. The cost of the
project put at $400 million, according to the Minister
of State for Power, Mohammed Wakil is borne out
of the realisation that a lot of resources would be
required in the power sectors new direction, which
is private sector driven.
Britains 19 bn euro nuclear plant
EU regulators set to clear project
European Union state aid regulators are set to
approve Britains 19-billion-euro plan to build a
nuclear plant with French utility EDF, several people
familiar with the matter said. The case is important
for Britain, which wants to replace a fifth of its ageing
nuclear power and coal plants over the coming
decade, and for France, whose nuclear sector would
benefit from the major export contract. Other EU
countries such as Germany, which is phasing out
nuclear energy, and pro-nuclear Lithuania and Poland
are also following the case for guidance on the level
of state aid allowed for such projects.
October 2014
www.InfralinePlus.com
International
Brazil
Suspends auction of 6.1GW hydro plant
The Brazilian government has suspended the auction
of the 6.1 GW So Luiz do Tapajs hydroelectric
plant earmarked for December. The Mining and
Energy Ministry cited a need for changes to a
study into the impact on indigenous communities,
according to state media service Agncia Brasil.
A new date for the auction was not given. The
announcement comes a day after environmental
lobby group Amazon Watch accused Brazil of
flouting international law by failing to properly
consult local communities about the project.
Sembcorp
Inks power plant deal with China
Sembcorp Industries has signed a joint venture
deal with a state-owned enterprise in China in a bid
to grow its energy business there, it said. The deal
involves investments in coal-fired power plants in
Chongqing, a city in south-west China. Sembcorp
will buy a 49 per cent stake in an existing plant
owned by Chongqing Songzao Coal and Power,
a unit of Chongqing Energy Investment Group.
Chongqing Energy Investment Group is owned by the
Chongqing municipal government and is the largest
energy production and supply group in the huge city, 5
which has a population of about 30 million.
Zimbabwe join hands with China
Inks MoU for $4bn energy deal
Energy secretary Partson Mbiriri signed a
memorandum of understanding with a Shanghai
Electric (Shanghai)-led group for electricity
generating projects countrywide. This comes as
Zimbabwe grapples with an acute power shortage
and the consortium has unveiled plans for the
construction of a $4 billion coal-fired plant in north
western Zimbabwe. Shanghai chairman Zheng
Jianhua said that the plant will begin at a 300 MW
capacity and increase to 1 200 MW, and beyond as
the phases progress,.
Bangladesh
To come up with second Nuclear power plant
State Minister for Science and Technology Yeafesh
Osman has said that a nuclear power plant will be
set up in Labanchhara in south-western district
of Khulna. He said the Chinese government has
shown their interest to build the nuclear power
station in Bangladeshs south-western region. The
government has already taken a decision to establish
the countrys second nuclear power station in Khulna
and Labanchhara has primarily been selected as the
site of the plant, he said.
 October 2014
www.InfralinePlus.com

InDepth
India, China Redefining ties in
Trade, Infrastructure
China promised India cooperation in developing industrial parks, railways & smart cities
Chinese firms have superb ability to build large projects

Chinese President Xi Jinping, with Prime Minister Narendra Modi spins charkha at Sabarmati Ashram in Ahmedabad

Infraline Bureau

Cultural exchanges and trade through
the Silk Route dominated the
relationship between Indo and China
since time immemorial. In the 1950s,
Indias first Prime Minister Jawaharlal
Nehru embarked on a political
relationship with China, based on the
five principles of peaceful co-existence
(Panchsheel). But the association
between the two powerful Asian giants
soured in the 1960s, and a war ensued
over border issues. Six decades later,
Prime Minister Narendra Modi wants
to play down mutual problems and
emphasise on prospects for economic
cooperation, while at the same time
bluntly warning Indias northern
neighbour that small incidents (border
skirmishes) can impact bilateral ties.
During 1991-2010, while the
world economy grew at 2.7 per cent,
China and India grew at 10.5 per cent
and 6.5 per cent respectively despite
the economic slowdown. With large
domestic markets, rising middle class
and high investments, today India and
China together amount for 10 per cent of
world exports.
Chinas infrastructure firms have
superb ability to build large projects,
including nuclear-power stations, new
cities and railways. PM Modi who
unlike his predecessors is giving much
more emphasis on business diplomacy
seems to have grasped Indias gains in
trade tie-ups with China. To take Indias
economy on a rapid growth path, he
is thus looking for foreign capital and
technology both from the West and East.
 October 2014
www.InfralinePlus.com

Overseas investments by Chinese investment, infrastructure development, equipment and expansion of Reliances
firms can be seen in every sector and in energy conservation and environment 2G and 3G networks. Several other
every form; although the takeover bids protection, high-tech industry, clean MoUs were also signed in sectors such
of publicly listed targets by Chinese energy and sustainable urbanisation. The as wind energy, seafood, chemicals,
majors only make headlines. Having SED will also explore designing joint cotton and pharmaceuticals.
the worlds largest forex reserves of demonstration projects and initiatives in Wang Hejun, Economic Counsellor,
$3.95 trillion, China has plans to invest smart cities. Chinese Embassy said, These
$500 billion overseas in the next five Deals worth $3.43 billion were agreements are an effort by our
years, and India undoubtedly is an signed between Indian business houses companies to address the issue of trade
attractive destination. and the Chinese business delegation deficit. Besides, with our expertise in
The New York Times wrote recently, accompanying the President. Indias infrastructure development, China wants
China has the ability to channel billions domestic low-cost carrier IndiGo to cooperate with India in developing
of dollars into Indian infrastructure and Airlines signed a $2.6 billion deal with its infrastructure. It may be noted that
manufacturing projects, allowing Mr the Industrial and Commercial Bank of trade deficit between India and China
Modi to pursue the jobs-creation agenda China (ICBC) for leasing and financing was $36.2 billion in 2013-2014. While
that was at the heart of his campaign. 30 aircraft. Reliance Communications India exported goods worth $14.8
signed two memorandums of billion, its imports stood at $51 billion.
President Xi Jinpings understanding (MoUs) worth about
India visit $150 million each, with Chinese Enhancing Cooperation in
The Indian Prime Minister and Chinese telecommunications firms ZTE and Infrastructure
President Xi Jinping met for the first Huawei Technologies, respectively, for Chinas investment in infrastructure
time in June this year on the sidelines is $3,228 billion (more than 31 times
of the sixth BRICS (Brazil, Russia, of India). Similarly, its investment in
India, China, South Africa) Summit, China has plans to logistics is 13 times more than that 7
which was followed by Chinese Foreign of India ($1,241 billion). According
Minister Wang Yis visit to India the
invest $500 billion to reports, India will need $1 trillion
same month. Commerce and Industry overseas in the next for investments in infrastructure as
Minister Nirmala Sitharaman had also five years, and India per the Twelfth Five Year Plan and is
visited Beijing in June and firmed up undoubtedly is an certainly looking at China as a potential
many investment plans. partner. China has also shown interest
The investment plans took a concrete
attractive destination for investing in Indias railways, roads,
shape as Chinese head of the state came
on a visit to India this September. India
and China inked 12 pacts in a range
of areas including railways and outer
space as Beijing promised investments
of $20 billion over five years, though
there was an anticipation that China
would swear investments of $100 billion
in India. Nevertheless, the Chinese
President Xi Jinping said that China
would invest billions of dollars over the
next five years in railways, industrial
parks and nuclear power in India. We
(India-China) can bring prosperity to
Asia, and we can create opportunities
for the world, said Xi Jinping during
the ceremonial welcome at the
Rashtrapati Bhawan.
The leaders dispensed the Strategic
Economic Dialogue (SED) to explore
new areas for collaboration in industrial
 October 2014
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InDepth
telecom, nuclear and solar power, ports
and river-linking plans.
China is building a 3,200 km
highway project from its north-east to
Thailand through Myanmar. This will
complement its effort to build a road
link to Bangladesh through Myanmar.
China has plans to link Nepal by the
Qinghai Tibet Railways, which would
help to do away with the geographical
barrier among South Asian countries
because of the Himalayas. Further China
has plans to double its high speed rail
network to about 16,000 km by 2020
and also plans to sell its high speed
trains globally. Today, it has the fastest
passenger train in the world (486 kmph).
All this are indicators that India can
greatly benefit from Chinese technology.
Several avenues of cooperation
in infrastructure development were
discussed between the leaders of both
countries. Those include:
8
Industrial Parks
China announced the establishment of
two industrial parks in India, one in
Gujarat and one in Maharashtra. Both
countries agreed to facilitate companies
of the other country to invest and
operate in their country. The two sides
will work together to forge production
and supply chain linkages, which will
help develop a more broad-based and
sustainable economic partnership.
Railways
China agreed to develop and upgrade the
640 km railway line between Bangalore
and Mysore (through Chennai). The
leaders agreed that India and China
will cooperate to identify the technical
inputs required to increase speed on
the existing railway line from Chennai
to Mysore via Bangalore; China will
provide training in heavy haul for
100 Indian railway officials; the two
countries will cooperate in areas such
as redevelopment of existing railway
stations and establishment of a railway
university in India; and India will
actively consider cooperating with the
Chinese side on a high speed rail project.
India and China inked
12 pacts in a many
areas, including
railways and outer
space and Beijing
promised investments
of $20 billion in India
over five years
Energy
Cooperating on promotion of the use of
clean energy, India and China expressed
unanimity that expansion of civil nuclear
energy programmes is an essential
component of national energy plans to
ensure energy security. There will be
bilateral cooperation in civil nuclear
energy in line with their respective
international commitments, including
working level consultations between the
Department of Atomic Energy of India
and the China Atomic Energy Authority.
Smart Cities
Agreements on establishing a
provincial partnership between
Gujarat and Guangdong Province
and Sister-City relationships between
Mumbai-Shanghai and Ahmedabad-
Guangzhou were signed. According to
the agreement, a city or state from one
country will have close ties with a state
in the other country.
Disaster Management
India admired China for providing
flood-season hydrological data and the
assistance in emergency management.
Expert-level mechanism on the
provision of flood-season hydrological
data and emergency management, and
exchange views on other issues of
mutual interest was decided upon.
Tourism
The leaders decided to designate 2015
as the Visit India Year in China and
2016 as the Visit China Year in India.
Under this, the two sides will carry out a
series of promotional activities to boost
two-way tourism flows and strengthen
people-to-people bonds. China also
decided to open a new route through the
Nathu La Pass for the Indian pilgrims
going on Amarnath Yatra.
Measures to Boost
Economic Ties
The two countries have set up a services
trade promotion group for greater
market access and job opportunities for

professionals in both countries through a
relaxed visa regime.
In the financial services sector, China
also plans to offer credit lines worth
billions of dollars, through EXIM Bank
of India. Bank of China, Chinas state-
owned bank, is also likely to open a
branch in Mumbai.
The two countries are looking
into the progress made in promoting
cooperation under the framework of
the BCIM (Bangladesh, China, India,
Myanmar) Economic Corridor and
also agreed to hold the Seventh India-
China Financial Dialogue in New
Delhi this year to enhance cooperation
between Indian and Chinese financial
regulators. Both countries have agreed
to initiate a dialogue mechanism
between the Department of Economic
Affairs of the Government of India
and the Development Research Centre
of the State Council of the Peoples
Republic of China.
Looking Ahead
According to a knowledge paper
prepared by KPMG, India-China
bilateral trade is likely to reach $100
billion by 2015. Being two large
economies with rising domestic demand,
India and China have tremendous scope
of leveraging from each others markets.
As per estimates by PHD Chamber of
October 2014
www.InfralinePlus.com
partner excluding European Union,
Hong Kong and ASEAN. At present
Chinese projects worth more than $60
billion are being implemented in India.
It is a fact that Chinas economy is
now four times the size of India and
Beijing sees the United States and not
India as its competition. But areas of
economic cooperation are too many. If
India is increasingly importing Chinese
electrical and telecom equipment, China
too has a huge population with large
purchasing power which gives scope
for Indian industry to gain from the
Chinese market. There is tremendous
scope where India and China can
make use of each other in taking their
economies further. Hindi-Chini can
Commerce, bilateral trade between India certainly be bhai-bhai eyeing success in
and China is expected to go up to over business together.
$80 billion by March 2017. Since 2008,
China is Indias biggest partner, while
India is Chinas fifth largest trading For suggestions email at feedback@infraline.com
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 October 2014
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InDepth
Power grid eyeing Joint Ventures
for next round of growth
10
Investing in new technologies in the field of Transmission, Smart Grid, and Energy Efficiency
Has set up centralised monitoring system for better operations, maintenance of sub-stations
Infraline Bureau
Envisaging an all round inclusive
growth, Power Grid Corporation of
India, leading power transmission
company in the country is looking at
strategic alliances with prime steel
manufacturing companies to achieve
backward integration for manufacturing
key transmission products as well
as successfully competing in the
Tariff Based Competitive Bidding
(TBCB) regime including export of
quality products.
The JVs with steel companies will
be for manufacturing of tower parts
including research & development
facilities and also for manufacturing
transmission line conductor and
Polymer Insulators companys
Chairman and Managing Director
R N Nayak said.
Moreover, the Company is actively
involved in implementation of a Solar
Power Project of 4000 MW, in phases,
beginning with 1000 MW in first phase,
through a JV with strategic partners
for development of its transmission
infrastructure. Formation of JV
for development of pilot off-shore
wind project and its transmission
infrastructure is also envisaged, Mr
Nayak further said adding that it has
also signed MoU with Delhi-Mumbai
Industrial Corridor Development
Corporation Limited (DMICDC) &
Gujarat Industrial Corridor Company
(GICC) to form a JV to undertake
development of transmission and
communication network including
smart grid and other associated
system at Dholera Special Investment
Region in Gujarat.
Power Grid has established two
JVs with States of Bihar and Odisha
for developing subtransmission
projects in these States. In addition,

discussions are under progress with
other States for development of their
sub-transmission system.
Initiatives for future
preparedness
Power Grid is putting continuous
efforts in Research, Development
and Demonstration (RD&D) of
new technologies in the field of
Transmission, Smart Grid, Energy
Efficiency, Quality Power, which are
key to sustain the leadership position.
Some of the initiatives taken with a
view towards long term sustainability
and future preparedness are:
a)Technology & Inclusive
Innovation
Power Grid is pursuing for indigenous
development of 1200kV Ultra-High-
Voltage AC system, 800kV HVDC
system, FACT devices, Gas Insulated
Switchgear, 765kV equipment including
transformers/reactors, demonstration
of High Temperature Super Conductor
cable system in grid, Superconducting
Fault Current Limiters (SFCL), Large
Scale Battery energy storage etc. In
its quest to achieve fully digitized
substations, the company is also
introducing Process Bus technology.
The companys initiatives of
establishing National High Power Test
Laboratory under Joint Venture (JV)
route and Transmission Line Research
Lab at Bina in central part of India,
to undertake testing of EHV & HV
equipment, are in advanced stage of
completion and will be operational
shortly, a senior company official said.
Towards improvement of operational
performance, Power Grid has
established a State-of-the-Art National
Transmission Asset Management Centre
(NTAMC) at Manesar for centralised
monitoring and control including virtual
manning in operation & maintenance of
the sub-stations.
For monitoring of transmission lines
spread over Pan-India, Helicopter based
aerial patrolling using high resolution
Camera has been introduced for the first
time in the country by the company.
Moreover, the company is setting up
POWERGRID Advance Research &
Technology Centre (PART) at Manesar
complex at a cost of about `200 crore.
The centre is being equipped with multi-
disciplinary advanced RD&D facilities
and shall be operational in the current
financial year.
b)Smart Grid
Recognizing the need and utility
of Smart Grid in the country in the
entire electricity value chain, Power
Grid has taken pioneering steps in
bringing Smart Grid technology. It is
implementing a State-of-the-Art Wide
Area Measurement System (WAMS) as
part of smart transmission for real time
monitoring and control of very large
Power Grid is putting
continuous efforts
in RD&D of new
technologies in the
field of Transmission,
Smart Grid,
Energy Efficiency,
Quality Power
October 2014
www.InfralinePlus.com
Indian Grid. It includes installation of
more than 1700 Phasor Measurement
Units (PMU) at all inter-State and intra-
State extra high voltage substations,
which will have milli second (msec)
visualization and real time event
monitoring/ analysis tools at NLDC,
RLDCs and SLDCs.
In the distribution area, upon
successful implementation of Pilot
Smart Grid project at Puducherry
covering various attributes of
Smart Grid viz.
Advanced Metering Infrastructure,
Outage Management System, Demand
Response, Power Quality Management,
Net Metering, Electric Vehicle
Integration etc., Power Grid has been
assigned, as an Advisor-cum-Consultant
for the implementation of a number of
smart grid projects in the country.
It has also filed patent on
technological product i.e. Field
Programmable Gate Array (FPGA) 11
based Microgrid control and monitoring
system in the field of smart grid.
Development of four other technological
products is also under pipeline.
With the BJP government bullish on
smart cities, Power Grid is being already
involved in Dholera, Gujarat is also
looking forward to getting associated
 October 2014
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InDepth
in the development of other Smart
City projects.
c) Renewable Integration
The company has taken a lead initiative
and developed a comprehensive master
plan for grid integration of renewable
generation capacity addition of about
33GW, envisaged during the XII Five
Year Plan through Green Energy
Transmission Corridors across India.
The estimated fund requirement for
development of Green Energy Corridors
is about `25,000 Crore comprising intra-
state strengthening (~ `12,000 Crore)
and interstate strengthening including
control infrastructure (~ `13,000 Crore).
Power Grid has been assigned
the implementation of Inter-State
Transmission System portion of the
scheme, setting up of Renewable
Energy Management Centres and
control infrastructure with the funding
assistance from KfW/GIZ, Germany
12
and the Asian Development Bank.
Recognizing the need for increased
transmission capacity to address the
growing penetration level of renewables,
the Company is also developing second
report of Green Energy Corridor. Power
Grid has also evolved a comprehensive
integrated plan viz. DESERT POWER
INDIA 2050 for harnessing the
huge solar and wind energy potential
utilizing waste land in countrys desert
regions of Kutch, Thar, Lahaul & Spiti
and Ladakh. It envisages a potential
of about 300GW of renewables and
transmission infrastructure requirement
for its integration with National
Grid, balancing and spinning reserve
requirements and challenges in the
area of RD&D as well as indigenous
manufacturing, etc. The report
envisages an investment of about `43.75
lakh Crore including transmission
Power Grid has also
developed plan for
installation of rooftop
Solar Photo Voltaic
system for residential,
commercial buildings,
metro stations &
tracks and solar
street lights for Delhi
towards sustainability.
infrastructure of about `4.50 lakh Crore
for development and grid integration of
these renewables.
Power Grid has also developed
plan for installation of rooftop Solar
Photo Voltaic system for residential,
commercial buildings, metro stations &
tracks and solar street lights for Delhi
towards sustainability.
A comprehensive report Green
Delhi has been prepared by the
company covering about 2300
MWp solar capacity and submitted
to Government of Delhi and
other concerned departments of
Government of India.
International
interconnections
Continuing to strive for development of
South Asian Association for Regional
Cooperation (SAARC) Grid, which
shall go a long way in harnessing
resources for mutual benefit, the
company has established international
interconnection between India and
Bangladesh through commissioning of
Bheramara (Bangladesh) - Baharampur
(India) 400kV Double Circuit line along
with 500 MW High Voltage Direct
Current (HVDC) back-to-back terminals
at Bheramara, Bangladesh, enabling
power exchange between the countries.
In addition to the existing
interconnections with Bhutan & Nepal,
a 400kV Double Circuit line each
between Bhutan & India and India
and Nepal are under construction,
which will be completed by 2015/16.
With the completion of these lines, the
international power transfer capacity
would be enhanced to over 4,000MW.
Further, feasibility study for HVDC
interconnection through under-sea
cable between India and Sri Lanka is
under finalization.
In the international arena, Power
Grid has emerged as leading global
consultant and has already made foot
prints in 18 countries.
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 October 2014
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InDepth
US, India agree to cooperate on major
issues facing the two nations
Two sides agree to resolve issues on civil nuclear energy cooperation
US in to help India develop smart cities in Allahabad, Ajmer, Visakhapatnam

Infraline News Service

Prime Minister Narendra Modis US

visit was importent for more reasons
than one. After all it was a meeting
of two significant democracies of the
world. In their first Summit meeting
spread over two hours at the White
House, the two discussed a broad
range of issues covering cooperation in
energy economic and space, defence,
security. The significant that the two
sides took was to break the impasse on
implementation of civil nuclear deal.
We are serious about resolving
issues on both sides in civil nuclear
energy cooperation. This is important
to India for meeting energy security
needs, Modi said.
Both of us are committed taking
forward the civil nuclear partnership
agreement. We are serious about
resolving at the earliest issues relating
to civil nuclear energy cooperation.
This is important for India for meeting
energy security needs, he said.
The two sides are serious about the
issue and have decided to set up an
inter-agency contact group to address
the issues of liability, administrative
and technical issues.
We are setting up an inter-agency
contact group to be able to resolve
all issues that are outstanding and
hindering the rapid deployment of
US-origin nuclear reactors in India,
that includes by liability, it includes
administrative issues and it includes
technical issues, Vikram Doraiswami,
Joint Secretary in the Ministry of
External Affairs said after the meeting
US President Obama with Indias PM Narendra Modi at a function in the United States
between Modi and Obama. This is a
very major issue for us, he said.
Underlining the fact that India and
the US are natural global partners, the
official said that the two countries have
agreed to extend defence cooperation
for another 10 years. India has recently
raised the FDI cap in defence sector
to 49 percent from 26 percent earlier.
Modi invited US companies to
participate in defence manufacturing
sector in India. The US will also
cooperate as knowledge partner for
Indias planned National Defence
University as well as technology
partner in the Indian Navy.
During the meeting, Modi asked
Obama to take steps to ensure easier
access to Indian companies in services
sector in the US markets. While Obama
said India meets the standards of the
13
Missile Technology Control Regime
and is now ready for the membership
of Nuclear Suppliers Group (NSG),
a 48-member elite body that controls
global nuclear trade.
Obama also reaffirmed US
support for Indias membership of
the expanded UN Security Council
and backed it for voice and vote in
international financial institutions like
IMF and World Bank.
Furthering Indo-US cooperation on
terrorism, Prime Minister Narendra
Modi and President Barack Obama
on Tuesday agreed to make joint and
concerted efforts to dismantle safe
havens for terror and criminal networks
like LeT, JeM, D-company, al Qaeda
and Haqqani network.
For suggestions email at feedback@infraline.com
 October 2014
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InDepth
BSES develops cloud based
Consumer Portal to help save energy

14

To handle the shortage, govt plans to reduce demand by 1000MKW via DSM measures
Cloud based Consumer Portal helps track energy consumption on a real-time basis

Infraline Bureau

Energy costs hit everybody with
equal force. Be it home, business,
municipality and industry, the multi-
faceted problem has tentacles that
reach into every unit. Considering the
rising input cost of energy generations,
BSES has taken up the cause in
partnership with technologists to
provide relief to its consumers.
Countrys demand for power as been
increasing at nearly 6-8% annually,
Gopal Saxena, Director, BSES said.
Even the cost of fuel has been rising,
which is steadily leading to an increase
in electricity prices.
Adopting the next generation DSM
measures can help consumers, not only
reduce their energy consumption, but
also their power bills
Speaking on the occasion,
R.K. Verma, Chief Engineer,
Central Electricity Authority said,
Government has a target for 24X7
power supply. To handle the shortage,
government has planned to reduce
demand by 1000MKW in each state by
adopting DSM measures.
DSM is a win-win situation for all.
If implemented properly, it will help
customers reduce their energy bills
and improve availability of supply.
For discoms, DSM will reduce stress
on the network, Rajesh Bansal, Vice
President, BSES said.
The company has developed a
cloud based Consumer Portal that
can helps consumers track their energy
consumption on a real-time basis and
recommend measures that can help
 October 2014
www.InfralinePlus.com

Bank surplus power with BSES and withdraw

at your own sweet will
BSES has also started a new initiative where consumers can bank their surplus power and draw
the same power without any cost. A BSES official responds to InfralinePlus on related issues.
What is the current demand and
supply gap in power sector in India
and how much of it can be plugged
by methods currently available to us?
Presently, the total generation capacity
in India is around 227 GW, out of which,
approximately 28GW is renewable. As
per the forecasted data, the expected
shortage is around 8 to 10 %. The
government has planned to control the
demand using DSM methods at around
1000MW per state.
Kindly share the concept of Power
Banking and its advantage. How
can one generate power from clean
resources and bank the same?
The concept of Net Metering is to
popularize distributed generation, which
is based on renewable energy at the
consumer premises. As a consumer
cannot consume all the power
generated by him/her at all times,
therefore the surplus generation can be
fed back to the grid. The consumer is,
therefore, billed on the net of import and
export of energy. Roof Top Solar Energy
or Micro Wind Mill are a few options,
which a consumer can opt for, to
generate electricity at his/her premises.
What all benefits would one have
by adopting this idea? Who would
maintain the infrastructure installed
for power generation?
For generating power at the consumer
end, either Roof Top Solar, Micro Wind
or even a Biomass based (say large
farm houses ) system can be installed.
The infrastructure has to be maintained
by consumer. The basic benefit to the
consumer is that his/her dependence
on the Grid electricity reduces and in
many cases, it will be also be cheaper.
What are the challenges in
implementing this concept on a wider
scale. As we understand generation
of clean power would need huge
open spaces, which unfortunately is
not available to many people living
in metros. Does that mean, this
concept would not see success in
metro cities?
On the face of it, it looks as if large open
spaces are required for solar generation
and that is not available in metro cities.
But even if we consider the available
Roof Tops, shed tops, we can expect
substantial generation of power. It is
important to know that the bulk of power
will still be generated from mega plants.
Distributed/ Roof Top type of generation
is only to ensure that there is no further
increase in the peak demand.
What is the quantum of gap in the
best technology available in Delhi,
NCR in next two years. How would
you quantify the probable benefits?
In around one sqkm area, one can have
upto 60 MW (approx) worth of solar
systems. Delhi has an area of 1500
sqkm and thus, we can expect plenty
of Roof Top based Solar generation
in the coming days. Following are
few benefits:
a) Generate Clean energy
b) As Delhi power transmission
corridor is already congested, it will
help in overcoming this
c) At various places in Delhi, there is no
right of way to lay down additional
infrastructure for distribution.
Distributed Roof Top system is
one of the solutions to overcome
this constraint.
What is the quantum of gap in the
best technology available in the
world and what is available in India.
How can we optimize drawing of
power on our investments?
Now the best of Roof Top Renewable
energy generation systems are
available in India. MNRE, CEA have
already published various standards
to ensure quality of performance of the
systems. The consumer has to select 15
the right vendor and technology. This
will optimize the generation of power,
commensurate with their investment.
What do you feel should be done
to bring the cost of technology
affordable so that it can be used by
general public for their day to day
work? Is government supporting
enough to help this cause?
We feel as on date the technology
is affordable for various categories
of consumer. Once there will be an
increase in the volumes and the
government will come out with new tariff
directives and policies, the technology
will be affordable without any external
support/ subsidy etc.

save anywhere between 8-20 percent, the company

The benefits of Consumer Portal
Track energy consumption on a real-time basis
Give alerts on critical parameters
Reduce inefficiencies, prevent leakages and help in
reducing electricity bills
Give recommendation for reducing energy consumption
Energy consumption during various Time of the Day periods
Monitoring of diesel generators and roof-top solar systems
Comparison of energy consumption with similar type of
consumers
recently unveiled the initiative.
The Consumer Portal, will actively serve as a
bridge between the consumers and the suppliers of
renewal energy equipment. This will help consumers
take advantage of DERCs guidelines on solar
power generation and reduce their energy bills in
the process.
For full version of the interview, visit www.infraline.com
For suggestions email at feedback@infraline.com
 October 2014
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InConversation
Combating Power Loss with
Ecolibriums Smart Grid
The company which is managing more than 700 MW of power
through its demand side management programme is helping
customers save 5-25 per cent of energy cost and focusing on
energy management solutions, demand response programmes
for distribution companies, and renewable energy integration
in the grid. Chintan Soni, Chief Executive Officer, Ecolibrium
Energy, in an interview with InfralinePlus, spoke at length how
his company is helping commercial, institutional and industrial
organisations use energy intelligently. Excerpts:

India needs quality power for its
economic growth. Can you throw
light on the possible solutions
16 which can reduce the challenges
related to power loss?
Indias official figures of transmission
and distribution (T&D) losses is close
to 30 per cent. The first step towards
reducing the losses is to figure out
where are the losses, how much and
why. Once we know where and how
much, the next step is to fix the losses.
The only solution to this is to have a
real time energy audit system. This
will bring a lot of transparency in
fixing the losses.
What kind of market do you
see for smart grid solutions in
India especially considering that
there are cases of power misuse
and theft in some pockets of
the country?
Smart grid in a sense is an absolute
necessity for India where power theft
and misuse is very high. Smart grid
makes the entire system transparent
and real time. This allows the
distribution companies to act in the
high theft areas, right when the theft is
taking place and not wait for months.
In a country like India where there
are millions of un-employed youth
in the country, this technology
would minimise the involvement
of people. Do you think India is
ready to adapt this technology?
Without the involvement of end
customers, technology never succeeds. In
this case as well, consumer participation
is a must. Rather this will increase the
participation of customers. We have more
than 450 customers who are able to view
their energy consumption on a real-time
basis. This enables them to act on the areas
where there are leakages on real time.
Can smart grid be used in systems
that use power from different
sources, i.e. conventional or
clean energy?
Absolutely yes. This is the main purpose
of Smart Gridsto combine all different
sources and optimally use each source so
as to reduce the carbon footprint.
How cost effective is the
technology. Can you share a case
study to help us understand the
benefits the technology offers?
SmartSense, our demand side
management platform, provides return
Chintan Soni
Chief Executive Officer, Ecolibrium Energy
on investments (ROI) of less than
eight months. To give you an example:
at Harsha Engineering Ltd, a global
solution provider of Bearing Cages
as well as special purpose stamped
components, based in Ahmedabad,
we installed the SmartSense in August
2010. Analysis and verification was
done on data which we received from
our SmartSense on the server. Our
analyst team and energy experts along
with Harsha Engineers team carried out
leakage and free air delivery (FAD) test
on-site. During the investigation, we
estimated that leakages in compressed air
line were more than 50 per cent. Hence
leakages at many locations were closed
off and the leakage test was made a
regular practice thereafter.
After arresting the leakages, power
consumption in the compressors
went down drastically. A compressor
efficiency evaluation: FAD test was
carried out to evaluate the efficiency of
individual compressors. Efficiency of
two compressors was found to be lower

than normal. After maintenance, again
FAD test was conducted. There was
improvement in the efficiency of the
compressors after maintenance. FAD
test was also made a regular practice
thereafter. Considering 320 days of
annual operation and unit cost `6.5, it
was estimated that there would be annual
savings of `6,83,920.
Harsha Engineers now saves about
10 per cent on energy and breakdown
costs through its real time monitoring
and alerts on critical situations
across three plants, preventive and
predictive maintenance, plugging
in compressor leakages by real time
monitoring leading to savings of nearly
`7,00,000 annually. The company is
now expanding the Advanced Energy
Management Solution (AEMS)
installation to its plant in China too.
Kindly share how does this
technology of remote monitoring
work. What all benefits
would it offer?
SmartSense provides real-time daily
15 minutes power consumption data,
bid optimisation strategy and analysis
for maximising benefits of trading, user
configurable alert management system
for SMS/e-mail alerts, daily net benefit
analysis report for tracking profit/losses
due to bidding on the energy exchange
and demand side management in case of
digression from the bid.
Our solutions include SmartSense
Advanced Energy Management Solution
(AEMS), SmartSense Energy Trading
(ET), Smartsense Meter+, Smartsense
Furnace and Boilers (F&B), SmartSense
Load Manager, etc. Smartsense ET is a
solution for open access consumers who
buy/sell power from power exchanges
or perform bilateral trading. SmartSense
AEMS is for geographically distributed
industries or Commercial Establishments.
SmartSense Meter+ solution is designed
to replace manual reading for sub-meters.
SmartSense Furnace and Boilers is an
advanced energy efficiency solution
which monitors and controls the air hi
into the combustion chamber by blower
control using a feedback loop from
an O2 analyser.
We have more than
450 customers who
are able to view their
energy consumption
on a real-time basis
Can you share the details of the
current projects your company is
handling. What difference have
smart grids made to the clients?
Our main projects include Indias
rst pilot Automated Demand
Response project for the Maharashtra
State distribution company in Pune,
Maharashtra; Pioneer Smart Micro-Grid
project for the Solar Energy Centre,
Gurgaon; Wireless Energy Management
October 2014
www.InfralinePlus.com
Solution for the Delhi Metro Rail
Corporation; Indias rst comprehensive
Smart Grid Demonstration project in
association with Torrent Power and
GEDA, etc.
Here are a few case studies of our
successful projects:
At Esteemed Engineering based at
Faridabad, which manufactures sheet
metal components, tubular components,
assemblies and sub-assemblies for the
global automotive industry, Ecolibrium
installed SmartSense ET comprising
of ABT 0.2s class energy metre with
wireless communication unit, NBA
tool and bid strategy matrix on August
22, 2013. We gave them a solution for
improving bidding efficiency on energy
exchange and increase the net benefits
derived from bidding on the power
exchange as compared to purchasing
power from the distribution company.
SmartSense ET is being currently
used in over 70 companies across 17
India, with an average savings of over
`10,00,000 annually.
The installation of Ecolibriums
SmartSense Furnace solution in XYZ
Engineering Limited, a Hi-Chrome
producer based in Ahmedabad, on
October 15, 2013, has resulted in annual
savings in fuel costs to the tune of ~15
per cent and generated a payback period
of ~seven months.
Another case study I would like to
mention is that of a Gujarat-based client
of ours which was very conservative
in its bidding for power at the energy
exchange which lead to an opportunity
loss of nearly `1,29,000 for a period of
seven days. This matter was presented
to the management and they took note
of the problem and gave more emphasis
on installing and using SmartSense ET.
By using optimal bid strategy matrix, the
client started bidding aggressively hence
reducing the gap between consumption
and net bid units.
For full version of the interview, visit www.infraline.com
For suggestions email at feedback@infraline.com
 October 2014
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ExpertSpeak
Power capacity addition to
boost CRGO demand
Limited capacity in India to
produce Cold Rolled Grain
Oriented (CRGO) steel has been
a cause of concern especially for
power sector. While India has been
importing lower grade CRGO steel
because of pricing, the power
sector bore the brunt of low quality
equipments. CRGO steel is a
critical input for the manufacturing
of transformers which is key for
generation, transmission and
distribution of electricity to end-
users. Senior consultant - metals
18 and mines at Infraline Energy -
Ashima Tyagi takes us through
the issues that power generation
industry has faced for long.
Indias tryst with CRGO (electrical grade
steel) for manufacturing transformers has
at best been an imbroglio. When CRGO
supply was constricted globally decades
back, India imported sub-grade material
for manufacturing the core of power
and distribution transformers. This was
partly on account of zero indigenous
manufacturing capabilities as well as a
balance of payment crisis, which made it
impossible to import prime grade CRGO.
Even today, import of prime grade
CRGO costs three times more than the
non-prime grade one. As a result, cost
over quality mantras seeped into the
DNA of transformer manufacturing
in India and the power sector suffered
adversely. While the life span of a
transformer with prime grade CRGO
is around 25-30 years, the one with
non-prime material barely lasts for 5
years. At the same time, the failure
rate of distribution transformers in
Ashima Tyagi, Senior Consultant Metals and
Mining, InfralineEnergy
India is estimated at 10-15 per cent
(in stark contrast to the less than 2 per
cent in developing countries). Apart
from inferior technical parameters, the
transformers are afflicted with higher
losses, increased carbon emissions,
greater oil consumption, larger size of
core and noise pollution.
In contrast, cost incurred for
manufacturing transformers became
competitive, for sub-grade material
generated from scrap was way cheaper
than the prime grade material. This is on
According to Indian
Electrical & Electronics
Manufacturers
Association, the size
of Indian transformer
industry is likely to
grow to about `30,000
crore ($5.1 bn) by 2017
account of the fact that cost of CRGO
can contribute to around 35-50 per cent
of a transformer manufacturing cost,
depending on the design capabilities and
its nature. State electricity boards in India
historically follow L1 vendor selection
criteria. This has led to proliferation of
many small players, who compromise on
the quality of transformers manufactured.
Low-entry barriers in the distribution
transformer market saw more such
unorganized players entering the arena,
and further competing on the price factor.
At the receiving end of these
developments was the power industry
as well as the end consumers, who
suffered on account of high maintenance
and recurrent replacement of such
transformers. India manufactures both
power and distribution transformers,
wherein CRGO is mostly used as a
core material except in cases where
amorphous metal is used. In India,
power transformers account for 40-45
per cent of the total installed capacity
while distribution transformer accounts
for the remaining 55-60 per cent. In the
power transformer segment, step-down
transformers account for 75-80 per cent
of the total installed capacity while
step-up transformers comprise the rest.
Indias power generation installed
capacity at the end of 11th Five-Year
Plan (FYP) stood at approximately
200 GW. Thereafter, the government
announced that the target for power
sector capacity addition during the 12th
FYP would be a record 88,537 MW
(comprising 72,340 MW Thermal,
10,897 MW Hydro and 5,300 MW
Nuclear). It seemed the government bit
off more than it could chew, considering
past trends of 60-70 per cent achievement
 October 2014
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steels has seen an upward swing over the

past several years, as given in the figure
below. The demand for such steels will
present an opportunity for international
players in the coming years as well,
given the massive expansion plans of
the nation.
Inadequate supply of prime quality
CRGO steel is the biggest challenge
faced by transformer manufacturers in
the country. The country continues to
rely on imports till date in the absence
of domestic capabilities. Since CRGO
requirement is completely met through
imports; it is difficult to assess the
true quality of the material used by
transformer manufacturers in India.
of such targets. However, the first year for transformers would grow to an Over the years, Japan, Korea and Russia
of the 12th FYP (2012-13) bought in estimated 16 lakh MVA, pushing the have dominated CRGO exports to India.
high optimism as against the targeted need for CRGO to approximately 1.8 The import share of Japan and Korea
17,956 MW, India added 20,622 MW, MT as against the current 0.25-0.3 MT. has risen, primarily because India cuts
reflecting an overachievement of target The import of both CRGO and CRNO tax on steel from these countries after
by 14.8 per cent.
With a majority government 19
anointed in May 2014 under the
leardership of Prime Minister Narendra
Modi, ambitious plans for expediting
investments in the power sector shall
be de rigueur, in view of significant
power deficit, continued T&D losses
and a need for bringing forth economic
growth momentum. With huge power
capacity being envisaged, the need for
transmission will drive demand for
transformers. According to the 12th FYP
targets, around `13,00,000 crore ($2.2
tn) is likely to be invested in the power
sector. This spending on the power sector
is expected to be equally distributed
between generation and T&D. Spending
on power T&D infrastructure shall in
Country-wise Import of CRGO by India during FY12 14 (in tons)
turn boost demand for transformers.
2011-12 2012-13 2013-14 (Apr - Dec)
As per the estimates of Indian JAPAN 44,872.60 49,009.38 47,988.41
Electrical & Electronics Manufacturers KOREA RP 19,078.16 39,157.71 35,306.91
Association (IEEMA), the size of Indian RUSSIA 28,803.10 39,002.28 30,273.52
transformer industry at the end of FY12 POLAND 13,732.20 17,766.96 6,305.23
will be approximately `12,400 crore USA 23,912.58 11,555.36 6,852.70
($2.1 bn), which is likely to grow to CHINA RP 8,499.43 2,670.19 1,149.09
about `30,000 crore ($5.1 bn) by the GERMANY 8,993.00 4,394.61 1,731.09
end of the 12th FYP in 2017, implying a Others 27,369.58 19,533.57 10,790.65
tremendous CAGR growth of 19 per cent Total 175,260.65 183,090.06 140397.6
during the five-year period. Requirement Source: Infraline Research
 October 2014
www.InfralinePlus.com
ExpertSpeak
signing free trade pacts in 2010 and
2011, respectively.
Only 15 steel mills, including Nippon
Steel, JFE Steel, Arcelor Mittal, Posco,
US Steel, Baosteel, Tata Corus and
ThyssenKrupp, across the globe have
CRGO manufacturing capability. JFE
was the foremost company to supply
CRGO to the Indian market, followed
by Nippon Steel, which was granted
in-principle approval in February 2012.
JSW Steel, one of Indias largest private
steel producers and Japans JFE Steel
Corporation had also signed a joint
agreement wherein JFE was to provide
technology for production of CRGO at
the formers existing plant. In August
2013, it was reported that state-owned
Rashtriya Ispat Nigam Limited is in
talks with Russias Novolipetsk Steel
Company (NLMK) to enter into a
technical collaboration in setting up a
steel plant for producing silicon steel.
20 In spite of several announcements of
collaborations for transfer of technology,
the same have not fructified into real
projects. In May 2014, CSIR-National
Metallurgical Laboratory, a government-
enterprise, proclaimed that it shall take
the lead to develop a technology to
produce CRGO in the country soon
jointly with the Ministry of Steel and
domestic steel makers, Tata Steel and
Rashtriya Ispat Nigam. Work on the same
is expected to begin by the end of 2014.
In view of increased imports, the
country has been cautious in terms of
quality of CRGO steel being imported,
so that the quality of transformers,
especially distribution transformers,
manufactured domestically does not
suffer. The Ministry of Steel released
the first Steel Quality Control Order
in September 2008, which made
certification of CRGO mandatory. The
same was rolled back on the behest of
vested interests, which were against
the move. Later, nonetheless, the Steel
Quality Control (Second) Order in March
2012 made BIS certification mandatory
for CRGO under IS:3024. The stated
objective of this order was to prevent
Specifications of CRGO under mandatory Bureau of Indian Standards
certification
Indian Title HS Code Date of coming into force of the product
Standard in the standard to the extent given below
number
3024 Grain 72251100 (a) Domain Refined Grain Ori- 1st July,
oriented 72261100 ented Electrical Steel Sheets and 2014
electri- Strips with minimum polarization 1st
cal steel of 1.85 Tesla at a field strength of October,
sheet 800 A/m and maximum specific 2013
and strip core loss of 0.90 Watt/Kg (1.70
(CRGO) Tesla/50 Hz) for nominal thick-
ness of 0.23 mm and 0.95 Watt/
Kg (1.70 Tesla/50 Hz) for nominal
thickness of 0.27 mm.
(b) For products excluding
(a) above
Source: Infraline Research
import and use of seconds, defective In view of the orders, it has been
and recycled CRGO. This order was noted that 13 of the 15 companies
notified again for amendment in March worldwide, with CRGO technology,
2013, giving it an extension till October have already got themselves registered
1, 2013. In April, this order was again as per the appropriate BIS certification.
amended with further extension for a At the same time, Indian steel companies
particular grade of CRGO: are expected to up the ante to grab a
Indian Transformer Manufacturers piece from the CRGO pie, which they
Association (ITMA) has championed have been losing out to international
the cause of prime grade CRGO usage companies. With huge investments
and welcomed the quality control orders, pouring into power and infrastructure
especially for promotion of energy- sectors, the transformer market in India
efficient practices. According to the is slated for robust growth; and so will be
association, a 0.5 per cent increase in the case with CRGO import market.
efficiency of distribution transformers
would result in an annual saving of 4-5
billion KwH together with reduced CO2 The views in the article of the author are personal
emissions to the tune of 4 MT a year. For suggestions email at feedback@infraline.com
 October 2014
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InConversation
Wed start manufacturing in India
if we get tax incentives
Wyman-Gordon is a company that designs and manufactures
complex metal components. It has a long history of making
forged metal components, particularly for general industrial
applications and power generation. The company is now a
subsidiary of Precision Cartsparts Corporation (PCC), and
is based in Houston, Texas, United States. Wyman-Gordons
Sales-Director, Power Generation, Bruce Davis speaks to
InfralinePlus on its plans to enter India and issues faced
thereof. Excerpts.

The range of products which alloys which we produce, most of the

your company has, how are
they applicable in the Indian
industrial market?
Our parent company is PCC, Precision
Cartspart Corporation, PCC Energy
and there are two groups within India
that participate. One of them is Special
Metals and the other one is Wyman
Gordon. PCC Energy, Special Metals
and Wyman Gordon deal with materials,
deal with metals. Special Metals is a
developer, pattern holder of nickel based
metals that are used in the chemical
processing within the oil and gas, power
and also within airspace. Wyman Gordon
deals with carbon steel, stainless steel,
ferritic alloys that are utilized in the
transfer of steam, hot pressure steam.
So you are in India since when?
We had our first order in India in 2004
with BHEL and from there it kind of
launched. Wyman Gordon started the
business supplying pipes to BHEL in
their Trichi manufacturing board. As far
as Special Metals goes, started in 1995,
the Indian operations. Before that it was
handled by Greaves Cotton, Thapar
Group. They were the agents for Special
Metals. Previously it was called Inco
Alloys International and most the nickel
alloys carries our trademark.
Bruce Davis, Sales-Director
So since 1995 we are Power Generation, Wyman-Gordon
in India. Before that We see
it was a trading the market to build a power plant, fuel, 21
agreement growing very power purchase agreements,
with Greaves strongly, whether environmental and contracts were
Cotton. But it be the elections all in place and the market was
or continued
after establishing development of very strong. Since then in the
office in India power plant 2010-2011 time frame the market
our relationship projects has fallen off a bit and struggled
with Greaves Cotton somewhat. But we see the market
cut off and we started with continuing very strongly in India,
the customer directly. As Bruce was whether it be the elections or continued
maintaining, Wyman Gordon started the development of power plant projects, we
operations in 2004, and we started with see a good market in India.
sales representation, as agents. And as From the Special Metals point, we are
per we have evolved over the last ten in all the industries not just power. We
years we have staff of three employees are in chemicals, aerospace, automobile,
for Wyman Gordon and two employees oil and gas. So we have a steady market.
for Special Metals. We have locations Whenever oil and gas goes we also grow.
in Trichy, Chennai, Bangalore and Now most of the Indian companies are
also in Mumbai. concentrating on exports, we deal mostly
with fabricators. They are concentrating
Having worked in India for the on exports particularly for Middle-East
last ten years how has your so there is also lot of Special Metals
experience been regarding the equipment which goes into Middle East,
business environment? Far East. Companies like Larsen and
When we came in 2004 2005, the Tourbo and Godrej, they concentrate on
business environment was very strong. exports because Middle East is booming
A lot of the power plants were being now. So we also get our good share of
constructed, a lot of elements required ferret metals like nickel alloy. In fact
 October 2014
www.InfralinePlus.com
InConversation
there is another group called Titanium
Metals Corporation which also belongs
to PCC. Even in titanium, we are
doing very well with all the fabricators
concentrating on petrochemicals and
oil and gas.
Coming to the power sector,
you have seen a slowdown. So
what kind of strategy have you
adopted to survive in this gloomy
scenario? What are the options
you are looking at to diversify and
expand?
The option that is available to us is to
broaden the products we offer to the
market place which we have done. We
have further penetrated the Indian market
defining new customers and products. We
are a global company so we may have
a small depth in the market in India. We
may see an increase in China, European
or African markets, we look at it from
a global stand point where India maybe
22
down but another part of the world
maybe up.
How much is India contributing to
your overall business?
Indias contributing probably 30 per cent
on a global basis.
Is that the target that you are
looking at?
We are looking at something much above
50 per cent. We are comfortable with our
customers, partnerships and clients that
we have in India. We have some very
good established relationships. As the
market dips and grows, we will dip and
grow with the market itself and adjust our
staff in India to affect that growth.
Talking about the demand-supply
scenario, do you think India has
more demand as compared to
China or South-East Asia?
I think India has the potential for more
demand. The way we typically look at
the market is fuel source and population
and the largest fuel source in India is
coal and the fuel source in China is coal,
the populations are basically the same.
Whereas China has built their markets
very quickly, we see a longer sustained
growth coming out of India. So it wont
be a quick 4 to 5 years growth, it will
be sustained over two decades, maybe
even three decades.
We dont see any
organic growth here
other than possible
personnel to grow as
the market grows with
us. We have grown in
India. From the Wyman
Gordon side the staff
was zero. Now there
is a staff of three.
And from the Special
Metals side it has gone
from one to three.
How much have you invested
in the last ten years in Indian
operations?
None, zero. We have made attempts to
make investments in processing and we
have looked at it from the standpoint
of seeking benefits from the Indian
government for having indigenous
manufactures. To our disappointment,
there have not been any indications
from the Indian government that
they are receptive to any tax benefits
as other companies have offered to
Wyman Gordon.
Since these incentives are
not coming forward, isnt
it a roadblock? How do you
sustain your operations in this
country then?
One of the things which makes Wyman
Gordon and Special Metals unique is that
we are capital intensive company. One
of the benefits of having operations in
India would be speedier markets for our
customers .And once the tax advantages
and benefits are made available, we
would pursue having an investment
within the Indian market. We have
looked at Gujarat to make an investment,
we have looked at Tamil Nadu but it has
to make sense. The product has to be
produced in India more economically
than it could be produced any place else.
That is what our customer tell us.
The titanium company, they are trying
to trying to get into an agreement with
Kerala Investial Group for titanium
sponge. They wasnt to do a tie up with
them for making titanium sponge in India
along with Kerala government and some
private partners. The talk is going on.
Apart from tax issues which are
the policy issues which you think
need a twist to help your business
grow in India?
Number one, you have to look at it
from an economical standpoint of
production. And number two is demand
for the product and right now a lot of
products are getting stalled in giving
clearances. The higher demand in India
the more the drive to have indigenous
manufacturing here. So there are two
things we would look at; the cost basis
and the demand cycle.
Any policy issues where you
would need support from the
government?
Incentives to set up indigenous
manufacturing. Probably we are thinking
of finishing line first. It would start on
the finishing but if the demand is in the
market and if the incentives are provided
by the government, the state government
or the federal government then we
would very seriously consider placing
operations here in India.
Could you specify the incentives
you are talking about?
Tax benefits would be for any products
that are indigenously produced, if tax
credits are available to the company

for national projects, we are looking to
manufacture, process within India and
when those incentives are available
we want to produce for the Indian
market. We are not looking to export,
we want those incentives to be made
available for indigenous processing for
indigenous projects.
When you say 30 per cent of
your business comes from
India, it basically comes from
exports. Which is your nearest
export centre?
The nearest export centre is Texas in
United States.
You are looking at setting up a
base in India?
We would start with a processing centre.
We would look for a partner, we would
look for a processing facility. We would
go from the processing facility to the
next level up which would be the light
manufacturing and then depending on the
demand we would do full manufacturing.
The segment that you are in is
highly competitive. In India there
are already lot of players which
are well established. How do you
think you are different?
We are very unique in the size of the
pipes and the fact that the pipes are
custom, there is a lot of commodity
type manufactures located in India. But
there are very few of any custom mills
within India that are manufacturing
products that we have. The technology
that we have to manufacture these pipes
is a hundred years old and we still have
challenges everyday in manufacturing.
We have been through the learning
curve and what we do is to provide non
standard custom pipes for power plants.
Commodity, piping, mills are available
and useful in the Indian market do not
compete with us.
Indian consumers are quite
sensitive to price. And when you
talk about technology, it comes at a
price. A problem which companies
face is of pricing. How do you plan
to beat that aspect of it?
A lot of the equipment that we use is
capital intensive so we do not use a lot
of labour on the manufacture of our
product. And that being the case because
of the equipment that we have and the
investment that we have made in the
capital we are very competitive. And
I would say that of the mills that are
supplying those custom products to the
Indian market, Wyman Gordon would be
number one or number two.
Considering the elections which
are going one, as an investor
what kind of signals does it send
to you?
Growth will come from a more pro-
active government. And whichever party
provides that pro-active environment
would be the one Wyman Gordon would
enjoy as others would.
Talking about your growth plans,
you have any plans to get involved
in inorganic growth?
We dont see any organic growth here
other than possible personnel to grow
as the market grows with us. We have
grown in India. From the Wyman Gordon
side the staff was zero. Now there is
a staff of three. And from the Special
Metals side it has gone from one to three.
So PCC Energy with Wyman Gordon,
Special Metals has grown by nearly 200
per cent during the course of the time
we have been here. We would continue
to grow as the demand grows and as our
products more and more utilized within
the market place.
Do you plan to partner with any of
the India players?
Yes, if we get a processing facility we
would certainly look for partner to work
with. I have felt that the best partner would
be a customer who would be able to utilize
products that we manufacture together.
October 2014
www.InfralinePlus.com
Talking about oil and gas
applications, you have those
applications, right?
We do have an oil and gas application.
We do not pursue it as heavily as we
do the power sector other than the
materials, the nickel materials. We are
just now making a stronger push into
the Indian market.
Right now in the Indian market they
do not go for nickel, the reason is that
oil and gas if three tier it is not sour gas
so right now they are managing with
low grade alloy steel and other things.
In Middle East and North America
they use a lot of nickel alloys. It is
not the situation here in India. It may
change. The company is PCC Energy,
Wyman Gordon and Special Metals,
as the name special metals implies we
are more custom, more specialized,
more at the higher end of the product
range whether it be metallurgy, we
are not a commodity operation at 23
all. We are highly specialized with
targeted marketing going after specific
customers in specific regions.
And PCC as a group has
a shareholding in one of the
Indian companies.
So as you have some policy
initiates you are all set to enter
the market?
Yes, we have tried to enter and we have
found that processing our product here
under the current environment with
providing an economic benefit to the
Indian market and if that is the case
then there is no reason to pursue the
capital investment but if the incentives
were there we would definitely pursue.
We have done it in other countries.
You have a presence in China?
Yes, we do. We have setup a processing
facility there with our customers which
provide economical and speed benefits.
For full version of the interview, visit www.infraline.com
For suggestions email at feedback@infraline.com
 October 2014
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ExpertSpeak
Coal Crisis will stall growth unless
dealt with on war Footing Basis
Lajpat R. Shrivastav, CEO with Jindal India group, has worked with
some of the most reputed top companies including NTPC, L&T, Tata
Power, Bechtel and Atomic Energy over a period of four decades at
senior level positions. Before joining Jindal Group, he was working as
Chief Executive Officer for Moser Baer Power & Infrastructures Limited
for six years. He was recently honoured with Fellowship by All India
Management Association for his significant contributions in the field
of management and his chosen field Power Sector. A a Mechanical
Engineer by qualification, Mr Shrivastav has been working as a Member
of National Power Committee of CII for the last two years.

Power sector saw huge surge of stagnation to the capacity addition

investment from private sector and
foreign direct investment from 1992
onwards when the reforms were first
24 taken up in power sector under the
Prime Minister Shri P. V. Narasimha
Rao and his cabinet colleague & Finance
Minister Mr Manmohan Singh. However
despite lot of hype & euphoria soon
there came a time when sentiments
of investors were at low ebb because
of prolonged delays in clearances,
development and land acquisition etc.
This resulted in withdrawal of almost all
off shore companies and only few Indian
companies continued their efforts and
eventually could realise their projects.
In 2003 after the Electricity Act-
2003 was implemented sector saw some
activity again. Since then there has
been significant investment by private
sector in the power sector, mainly in
generating capacity addition. In the last
five year plan, first time the contribution
of private sector in capacity addition
was close to 40%. Although there
may be scope for improvement in the
provisions of the EA-2003, but it has
significantly improved the investment
environment in the sector.
However over last 3 to 4 years, coal
shortage has hit the sector badly and
has almost brought about complete
program and only few projects are
going ahead because they were already
committed, but no one is prepared to take
Lajpat R. Shrivastav
risk of starting a new project. CEO, Jindal India group
Post Mr Narendra Modi taking
charge as Prime Minister, demand was projected to be around 315
the country is bullish Modi to 335 GW by 2017 as per various
about achieving govt. institutions (CEA estimates were
double digit has started around 213 GW). However as per
economic growth the process of CEA published data, the capacity
in coming years. creating positive at the end of 12th five year plan
impact through
His government i.e. 2017 will be at approximately
policy framework
has started to attract 220 GW which is significantly
the process of investment. short of demand projections. There
creating positive are four major factors which drive
impact through policy demand for electricity, namely growth
framework to attract investment. of manufacturing sector, residential
With this back drop it is absolutely consumption growing @ almost 14 to
certain that India is poised to grow faster 15%, increase in demand when the 30%
than ever before. odd population of India gets connected
This will mean all round development to grid/electricity and lastly realisation of
and construction in infrastructure projects demand suppressed due to load shedding.
like railways, highways, ports, power One can easily conclude from the above
plants etc. Further he has been laying lot logic that demand which was projected
of emphasis on having manufacturing by CEA is likely to be more realistically
base in India to provide cheaper & around 315 to 335 GW due to Indias
quality goods to the world and has been growing aspirations under the dynamic
trying to attract foreign companies and visionary leadership of Mr Modi.
engaged in manufacturing to come to A quick look at what is happening
India and set up manufacturing facilities. in power sector will immediately cast
This will further increase power demand. gloom and nervousness to anyone who
Prior to General Elections, electricity is bullish and optimistic about achieving

the vision set by Modi. The reasons are
not far to seek:
1. More than 12000 odd MW capacity
already commissioned is stranded &
further 30000 odd MW will become
stranded by the end of 12th Plan
period due to non-availability of coal/
gas. This is creating non-productive
assets and causing stress in the
banking sector and creating serious
setback for further investments in the
generating assets.
2. The projects expected to come up by
March2015 have only been granted
coal linkage but the remaining
capacity planned in the balance period
of 12th Plan does not have fuel tie
up. Further beyond 12th Plan period,
CIL or MoC has not assured any fuel
supply or linkage.
3. Coal demand for power sector is
expected to be around 765 MTPA at
the end of 12th Five Year Plan based
on the capacity addition expected as
above, whereas by the end of 12th
Plan period the total coal availability
is projected to be around 615 MTPA
based on most optimistic estimates
of CIL. Out of this only around 586
MTPA will be power sector and
rest will be for other industries and
E-auction. This will leave a gap of
close to 150 MTPA which can only be
met through import.
4. Even though revised National Coal
Distribution Policy stipulates supply
of 100 % coal requirement by CIL,
provided CIL is mandated to import
coal on behalf of developers and
supply of imported coal on cost plus
basis to meet the gap. However as
it stands now, CIL has not come
out with any plans or policy to
There are four major
factors which drive
demand for electricity,
namely growth
of manufacturing
sector, residential
consumption growing
@ almost 14 to 15%,
increase in demand
when the 30% odd
population of India
gets connected to grid/
electricity and lastly
realisation of demand
suppressed due to load
shedding.
October 2014
www.InfralinePlus.com
offer imported coal and is limiting
its obligation to only supply of
indigenous coal (which may vary
from 65% in first year of 12th Plan to
80% in final year of 12th Plan). Added
to this CIL is not offering to pay any
significant penalties for failure to
meet their commitment of supply of
coal, leaving developers exposed to
fuel risks. Further under most PPAs,
imported coal cost is pass through
only if it is imported & supplied by
CIL. Hence cost of imported coal by
developer may not be allowed as pass
through unless it is facilitated through
policy change.
5. The recent decision of Supreme Court
to cancel all coal blocks except few,
will aggravate the situation. Many
projects were operating or under
construction with coal linked from
captive mines. Now these will also
require linkage coal which is already
in short supply. 25
6. The problems being caused because
of policy frame work are not
proposed to be discussed here in this
article. However one most critical
is urgent need to revise Standard
Bidding Guidelines for Case-1 for
procurement of power.
7. We have an excellent example of
China where most reputed suppliers
of Boiler and Turbine were allowed
to set up shop in China only through
joint ventures with local companies
to ensure technology transfer and
avoid foreign exchange outgo. This
needs to be emulated in India to create
equipment manufacturing capacity.
These are just a few examples of
where the country is headed in terms
of capacity addition beyond 12th Five
Year plan. The pipeline is completely
dry beyond 12th plan.
Considering the fact that a coal based
power project takes 6 to 7 years from
concept to commissioning in India, there
is a scary scenario that there may be very
little or no capacity addition beyond 31st
March 2017 i.e. end of 12th Plan period
 October 2014
www.InfralinePlus.com
ExpertSpeak
due to following reasons:
No Gas available for based capacity
addition & imported LNG is not
viable as of now
Nuclear capacity can provide only
few thousand MWs
Capacity addition through Hydro and
other non-conventional sources will
also be restricted to a small fraction of
our total demand
Hence coal based capacity will
continue to be main stay source of
meeting demand. If Government does
not find ways to assure coal supply
to prospective developers, even
if from imported sources and fuel
charge being allowed as pass through
in tariff, projects will not come up
beyond 12th plan period.
This presents a very scary scenario
for the country, because India is
now aspiring to achieve double digit
GDP growth under the dynamic and
26 visionary leadership of Mr Modi, but
such dreams will remain unfulfilled
unless power situation is handled with
lot of foresight and care.
The situation demands an all-out effort
on the part of government. In this
article an effort has been made to offer
possible alternate solutions or options
which can be converted in to solutions
if concerted efforts are made. It is not to
be misunderstood as if the situation is
sought to be over simplified but if any
of the suggestions made here are of any
use in addressing this grim situation, this
article would have served its purpose.
Before I delve in to options, let me
provide some startling facts about coal
sector /mining sector in India, as below:
As per Planning Commission, the
achievements have been average
50.5% of target coal production from
1992 to 2007.
In India mining sector contributes
only 2 to 2.5% of overall GDP
growth as compared to other coal rich
countries like South Africa (8.5%)
and Australia (8%) and China (4%).
India has explored only 75000SqKms
of area bearing mineral potential out
of 575000 Sq Kms available. This is
significantly less as compared to other
coal rich countries.
Demand for coal grew by almost
100% more as compared to
production of coal in the same period
during 10th and 11th Plan periods.
In India predominantly exploration
is still in the hands of government
agencies such as CMPDIL,
GSI and MECL etc who have
limited capability.
Proven reserves of coal in India
are at 118 Bn Tons as compared to
estimated reserves of 293 Bn Tons.
Per capita income in coal rich states
is among the lowest in the country as
also lowest as compared to coal rich
Per capita income
in coal rich states is
among the lowest in
the country as also
lowest as compared
to coal rich countries
in the world. This
partially explains the
opposition & resistance
to exploration and
developments in coal
rich states.
countries in the world. This partially
explains the opposition & resistance
to exploration and developments in
coal rich states.
While the reserve estimation is done
based on exploration up to 1200
mtr depth, but actual coal mining
is limited only up to 300 mtr depth.
While CIL is sitting on huge pile of
cash but has not invested enough to
adopt latest technologies in mining
leading to poor performance &
u/g mining.
Coal blocks allotted to NTPC &
other state governments & PSUs
have not made any progress which
has added to this grim situation
being created. Now of course these
blocks stand cancelled.
These are some of the major factors
which have resulted in current coal crisis
and situation. The only way country can
come out of it quickly and not allow
such problems to derail the growth of
economy is to embark upon multiple
actions on war footing basis with a
time bound implementation program to
responsible agencies.
It is pertinent to note that a power
project takes almost 5 to 6 years
minimum to become operational and
if coal supply is assured to prospective
developers (but the criteria for selection
has to be such that only those who have
the real capability to make it happen are
selected for coal linkage) projects can
be developed to prevent a complete dry
period after 31st March2017. 5 to 6
years period is good enough to ensure
coal production is augmented through
implementation of various suggested
measures on war footing basis.
It is therefore very important for
Ministry of Coal to prepare an aggressive
plan to increase production on war
footing basis. Some of the suggestions
in this direction are as follows some
of which may already be under active
consideration of CIL;
1. One excellent step already taken
by Modi government is to merge
all three ministries dealing
with conventional power, Non-
conventional power and coal.
2. Drilling for establishing the reserves
to be increased from 400000
meters pa to 1500000 per meters.
Attract private & reputed off shore
companies for this.
3. Private sector including reputed
foreign companies to be attracted to
mineral exploration sector through
policy initiatives.
4. Private sector companies including
reputed foreign companies to
be attracted in coal mining to
implement latest technology and

The only way country can come out of it quickly
and not allow such problems to derail the
growth of economy is to embark upon multiple
actions on war footing basis with a time bound
implementation program to responsible agencies.
particularly for u/g mining through
policy initiatives.
5. A separate special cell must be
created in Railway Ministry
OR better still in PMO to
monitor speedy development of
infrastructure to support fast increase
in productionby opening new mines
or augmenting current producing
mines. Such a Cell can also monitor
speedy clearances for starting
production from mines.
6. Coal Regulator has been set up,
but with limited scope & authority.
Coal regulator with wide ranging
scope & authorities need to be
activated on urgent basis. This will
help evolve mechanism for to bring
transparency & regulation in coal
sector & cost being allowed as pass
through in Tariff.
7. Instead of completely restricting
allotment of coal blocks to private
companies because of recent
developments, create a proper &
transparent frame work for allotment
of mines to private sector. The
progress of development of such
mines must be monitored strictly
and defaulters penalised without any
fear or favour.
8. CIL should fast track award of
more coal blocks on MDO basis to
off shore companies and reputed
Indian companies & demand speedy
exploration through deployment of
modern technology.
9. Through policy initiatives GoI
should allow up to 30% surplus
production from captive mines to
be allowed to be given on E auction
rates to CIL for distribution through
linkage. This will increase coal
availability in the pool.
10. For a limited period of time, till
situation improves, MoP may allow
imported coal cost as pass through
in tariff even under already signed
PPAs through suitable policy frame
work. This will prevent assets from
becoming non-productive.
11. Output per man shift for open cast
mining is at 10to 15 tons in India
which is very low as compared
October 2014
www.InfralinePlus.com
to 65 tons plus in Australia.
This will improve if modern
technology is deployed.
12. The coal produced through
under-ground mining only
should be allowed to be sold
through E auction.
13. Speedy implementation of
Coal Procurement and Pricing
Mechanism (CPPM) through which
coal import can be easier to meet the
deficit in coal availability.
14. CIL should set up a separate
wholly owned SPV to carry out
import of coal and distribute
through FSA. This will allow them
to comply with NCDP & remove
hurdles for use of imported coal.
15. CEA had published a Paper
on pooling of prices of Indian
and imported coal but it never
got implemented. GoI should
give serious consideration
in implementing the same or 27
any modified version to serve
the purpose.
16. The process of forest clearance for
land to be acquired for coal block
development should be simplified
and time lines should be set for
MoEF to clear the proposals. This
will facilitate speedy production
from new coal blocks.
17. Mine closure expenditure to be
considered for tax exemption.
18. If more blocks are given to CIL
which is already stretched, it is
not going to serve the purpose
of increasing the production in
near term future, which is the
demand of time. Hence it would
be important to attract private
sector in coal block development
and production.
These are some of the major
suggestions/steps which have the
potential to help increase availability of
coal in near term future.
The views in the article of the author are personal
For suggestions email at feedback@infraline.com
 October 2014
www.InfralinePlus.com

StatisticsPower
List of Thermal Power Projects Pending for Environment Clearance
(As on 31.08.2014)
Sr. No. Project Details Received on Status
Andhra Pradesh
1 Dr. Narla Tata Rao Thermal Power Station (Dr. NTTPS) Stage - V (1x800 8/8/2014 Will be placed before EAC (Thermal Power).
MW) at Ibrahimpatnam (M), Krishna, Andhra Pradesh
Company: Andhra Pradesh Power Generation Corporation Ltd. (APGENCO)
Gujarat
2 GIPCL-SLPP Station-III: 2x300MW Expansion Power Project at village Nani 29/04/2013 Was placed in the the EAC (T) meeting held during 19-20 September 2013. Project deferred.
Naroli, Taluka Mangrol, District: Surat, Gujarat. Addl. Information Additional information sought from the Project Proponent has been recently received. However,
Company: Gujarat Industries Power company Limited 08/07/2014 certified compliance report from MoEF R.O. for the existing EC is awaited.
3 Expansion by addition 2x830 MW (Phase-II) Supercritical Imported Coal 1/5/2014 The proposal was considered by the EAC (Thermal Power) in its meeting held during 31st July &
fired Based Thermal Power at Village Tunda Wand, in Mundra Taluk, in 1st August, 2014.
Kutch Distt., in Gujarat Project deferred and additional information sought from the PP is awaited.
Company: Coastal Gujarat Power Ltd.
Jharkhand
4 1x66 MW Imported Coal, Dolochar and Middlings Based Group Captive 03.01.2012 Since the PP has started construction prior to EC, directions were issued on 15.07.2014
Thermal Power Plant at village Kuchidih, in Saraikela - Kharsawan Distt., Addl. Information under Section 5 of the Environment (Protection) Act, 1986 in accordance with the O.M.s dated
in Jharkhand 24.02.2014 12.12.2012 and 27.06.2013. The same were complied and the file is under submission.
Company: Kohinoor Power Private Ltd.
Karnataka
5 Expansion by addition of 1x660 MW Imported coal based TPP at Village 4/3/2014 Was placed in the 8th EAC (T) meeting held during January 9-10, 2014.
Toranagallu, Sandur Taluk , District Bellary in Karnataka Project deferred.
Company: JSW Energy Ltd. Additional information sought from the Project Proponent has been received.
The proposal was re-considered by EAC (Thermal Power) in its meeting held on 1st & 2nd July,
2014. EC recommended.
File under submission.
Madhya Pradesh
6 Expansion of Sasan UMPP by addition of 2x660 MW at Singrauli in Madhya 10/12/2013 The proposal was considered in the 56th Meeting of the EAC (Thermal Power) held during
Pradesh September 3-4, 2012.
Company: Sasan Power Ltd. Proposal deferred.
On submission of the information sought, the proposal was again considered in the 11th EAC (T)
meeting held for February 13-14, 2014. EC recommended.
MoEF has sought a clarification at the earliest from MoP and State Government whether a stand-
alone thermal power plant can be set up in the same land allotted for UMPP and by using the same
28 water allocation. The same is awaited.
7 Mixed Fuel (Coal & Pet Coke based) Captive Thermal Power Plant of 2x30 9/4/2014 The proposal was re-considered by EAC (Thermal Power) in its meeting held on 1st & 2nd July,
MW at Budhui Industrial Area, Distt. Sehore (MP). 2014. EC recommended.
Company: Trident Corporation Ltd. File under submission.
8 Request for Environmental Clearance Unit II of 2x660 MW Coal-based 28/03/2014 The proponent requested for deferment, will be placed before EAC (Thermal Power) accordingly.
Super-critical Power Plant at Deosar, Singrauli Distt., Madhya Pradesh Further, the certified compliance report from MoEF, Regional Office for the EC of Unit 1 needs to be
Company: DB Power (Madhya Pradesh) Ltd. submitted. Shall be delisted.
Maharashtra
9 5x660 MW Dondaichal Coal Based Thermal Power Plant at village Vikharan, 8/5/2014 The proposal was considered by the EAC (Thermal) in its meeting held during 31st July & 1st
Methi 8s Varjhadi, in Sindhkheda Taluk, in Dhule Distt., in Maharashtra August, 2014.
Company: Maharashtra State Power Generation Co. Ltd. Project deferred and additional information sought from the PP is awaited.
10 Expansion of Nasik TPP by addition of 1x660 MW coal based TPP at Village 6/3/2014 Firm coal linkage is not submitted along with the EIA/EMP. Hence, will be considered only after
Eklahare, Nashik Taluk in Nashik District in Maharashtra submission of the same and shall be delisted from the pendency.
Company: MAHAGENCO Ltd.
Odisha
11 2x660 MW coal based TPP at villages Ghantbahal, Mohda and Bhalegaon, 10/09/2013, Was considered in the 6th meeting of the Expert Appraisal Committee (Thermal Power) held during
Tehsil Titilagarh, District Bolangir, Orissa. 26/02/2014 December 5-6, 2013.
Company: Sahara India Power Corp. Ltd. Addl. Infor Project deferred. Additional information sought from the Project Proponent has been received.
19/08/2014 The proposal was placed before EAC (Thermal) meeting held on 1st & 2nd July, 2014. Project
deferred.
Additional information sought from the PP was received on 19.08.2014 and will be placed before
EAC (Thermal Power).
12 2x800 MW Thermal Power Project District. Sundargarh, Odisha 7/2/2014 The proposal was considered in the 13th meeting of the Expert Appraisal Committee (Thermal
Company: Mahanadi Basin Power Ltd Power) held during March 25-26, 2014.
Project deferred and additional information sought from the PP is awaited.
13 (175 + 3x27) 256 MW CFBC Imported Coal based Thermal Power Plant at 1/7/2014 The proposal was considered by the EAC (Thermal) in its meeting held during 31st July & 1st
Meramandali, Distt. Dhenkanal, in Odisha. August, 2014.
Company: Bhushan Steel Ltd. Project deferred and additional information sought from the PP is awaited.
14 (165 + 20) 185 MW CFBC Imported coal based TPP of Meramandali, 1/7/2014 The proposal was considered by the EAC (Thermal) in its meeting held during 31st July & 1st
Distt. Dhenkanal in Odisha. August, 2014.
Company: Bhushan Energy Ltd. Project deferred and additional information sought from the PP which is awaited.
Rajasthan
15 Environmental Clearance for Chhabra Second unit of Supercritical Coal 31/01/2014 The proposal was placed before EAC (Thermal) meeting held on 1st & 2nd July, 2014. EC recom-
Based Thermal Power Plant Stage-II (2x660 MW Unit 5 & 6) at village mended subject to the submission of Board of Directors Resolution for closure of four older Kota
Chowki-Motipura at Chhabra, in Baran Distt., Rajasthan TPPs and for diversion of coal allotted to Kota units for the Unit 6.
Company: Rajasthan Rajya Vidyut Utpadan Nigam Ltd. The same is awaited.
Uttar Pradesh
16 1980 MW Ghatampur Thermal Power Station (3x660MW) in Ghatampur, 17/09/2013 Was considered in the 6th meeting of the Expert Appraisal Committee (Thermal Power) scheduled
Kanpur, Uttar Pradesh 29/01/2014 during December 5-6, 2013. Project deferred.
Company: Neyveli Lignite Corporation Ltd. The additional information sought by EAC was submitted by the PP on 29.01.2014. The proposal
was again considered in the 11th EAC (T) meeting held for February 13-14, 2014.
Project deferred and additional information sought from the PP is awaited.
17 2x660 MW Bilhaur Super TPP at Bilhaur, Kanpur, Uttar Pradesh. 8/8/2014 Will be placed before EAC (Thermal Power)
Company: NTPC Ltd.

List of Thermal Power Projects Pending for TOR
(As on 31.08.2014)
Sr. Project name Received on
No.
1 5x800 MW Pudimadaka Super Thermal Power Project at Lalamkoduru, Rambilli,
Veduuruvdda & Pudimadaka District:- Visakhapatnam, Andhra Pradesh
Company: NTPC Ltd.
2 Expansion by addition of 2x660 MW (Phase-Ill), Super Critical Coal based Thermal 14/02/2014 The proposal was considered in the 18th meeting of the Expert Appraisal Committee (Thermal
Power Plant Village: Tamminapatnam & Mommidi, Taluk: Chillakur District: Nel-
lore, Andhra Pradesh
Company: Simhapuri Energy Limited
3 3960 MW Thermal Power Project in three phases 2x 660 MW in each phase at
Vempadu and surrounding villages of Nakkapalli Mandal comprising Kagitha, DL
Puram, Nellipudi and Vempadu, District Visakhapatnam, Andhra Pradesh
Company: Yeswanth Industrial Infrastructure Projects Pvt. Ltd
4 250 MW Coal based Captive Thermal Power Plant at Madpal and Markel vVillage, 27/05/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
Distt. Bastar, Chhattisgarh
Company: NMDC Limited
5 4000 MW UMPP of at Usainabad, Devipur Division, District Deoghar State:
Jharkhand
Company: Deoghar Mega Power Ltd.
6 Expansion project of 8 MW Power Plant within its existing premises at village
Nawagaon, O.P., West Singbhum, Jharkhand
Company: Sai Sponge (India) Ltd
7 Proposed 16MW coal/solid fuel based co-generation power plant at existing bulk
drug and formulation Manufacturing site at Village Sejavta Tehsil & Ratlam District
in Madhya Pradesh.
Company: Ipca Laboratories Ltd.
8 1600 MW (2x800 MW) coal based Super Critical Bansagar Thermal Power Project 22/06/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
in Sakhi Village in Shahdol Distt.
Company: Bansagar Thermal Power Company Ltd.
9 Proposed 2000MW combined Cycle Power Plant at Guhagar in Ratnagiri District,
Maharashtra.
Company: Synergy Li Power Resources India Pvt. Ltd
10 2640 MW Coal based Thermal Power Plant Village: Rohana, Tehsil: Mohadi
District: Bhandara, Maharashtra
Company: Bhandara Thermal Power Corporation Ltd., Hyderabad
11 3x300MW coal based Power Project at village Parsodi, Taluk- Selu, District
Wardha, Maharashtra
Company: Vidarbha Industries Power Ltd.
12 660 MW Captive Power Plant (Coal based) at JSW Steel Ltd. Villages Geetapuram, 25/08/2014 Will be placed before EAC (Thermal Power).
Dolvi, Taluka: Pen, District: Raigad Maharashtra
Company: JSW Steel Ltd.
13 2x660 MW Taleha Thermal Power Project at Angul Distt., in Odisha
Company: NTPC Limited
14 2x660 MW Super critical TPP at Jamuchakada, Dist. Dhenkanal, Odisha
Company: Chambal Infrastructure Ventures Ltd.
15 4x660 MW Super Critical Coal based Thermal Power Plant Village: Athiyakurichi,
Taluk: Tiruchendur District: Thoothukudi, Tamil Nadu
Company: NC Energy Ltd.
16 Proposed to augment the capacity from 1x60 MW to 1x180 MW and additional
1x300 MW coal based Captive Thermal Power Plant at Sithurnatham, Sirupulalpet-
tai and Eguvarpalayam Village, in Gummidipoondi Taluk, in Thiruvallur District, in
Tamil Nadu.
Company: ARS Metals Ltd.
17.. Alathiyur Cement Plant - ProposedAddition of 6 MW Turbine to existing 2x18 MW 24/04/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
Captive Power Plant for Operational Advantage-Alathiyur Village, Sendural Taluk,
Ariyalur Distt. Tamil Nadu.
Company: The Ramco Cements Limited
18 3x21 MW Natural Gas Based Thermal Power Plant of at Village Rokhia, District:
Sepahijala, Tripura
Company: Tripura State Electricity Corporation Ltd.
19 Expansion of Rose Thermal Power Project 2x660 MW Stage-Ill at village Choud-
heer District Shajehanpur, Uttar Pradesh
Company: Rosa Power Supply Company Ltd.
20 1x660 MW Coal Based Supercritical Panki extension Power Project at Panki, Distt.
Kanpur, UP
Company: Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited
21 Proposed 1320MW (2x660) Coal based TPP at near village Char Bhabanipur,
Balagarh Taluk, District-Hoogly, West Bengal
Company: CESC Ltd.
22 Extension project of 1x40MW Thermal Power Plant by addition of 20 MW at
Sarishatali- Alanson in West Bengal
Company: Crescent Power Ltd.
October 2014
www.InfralinePlus.com
Status
Andhra Pradesh
1/1/2014 The proposal was considered in the 13th meeting of the Expert Appraisal Committee (Thermal
Power) held during March 25-26, 2014.
Proposal was deferred. Additional information sought from the PP is awaited.
Power) held during on 31st July & 1st August, 2014.
ToR recommended and proposal is being processed.
12/8/2014 Will be placed before EAC (Thermal Power).
Chhattisgarh
Power) held during on 28th-29th August, 2014.
Minutes under preparation.
Jharkhand
17/10/2012 Was considered in the 60th Meeting of EAC (T) held during November 5-6, 2012.
TOR Recommended. File under review.
4/6/2014 The requirement of EC for the project needs to be examined.
Madhya Pradesh
22/01/2014 The proposal was placed before EAC (Thermal) meeting held on 1st & 2nd July, 2014. Proposal
deferred.
Additional information sought from the Project Proponent has been received and was reconsidered
by the EAC (Thermal Power) in its 20th meeting held during on 28th-29th August, 2014.
Minutes under preparation.
Power) held during on 28th -29th August, 2014.
Minutes under preparation.
Maharashtra
22/01/2014 The proposal was considered in the 13th meeting of the Expert Appraisal Committee (Thermal
Power) held during March 25-26, 2014.
Proposal was deferred for visit of the proposed site (s) by a sub-group of EAC. 29
6/2/2014 The proposal was considered in the 18th meeting of the Expert Appraisal Committee (Thermal
Power) held during on 31st July & 1st August, 2014.
ToR recommended and proposal is being processed on file.
15/01/2014 The proposal was considered in the 13th meeting of the Expert Appraisal Committee (Thermal
Power) scheduled during March 25-26, 2014.
Upon the request of the PP, the proposal was deferred. Shall be delisted.
Odisha
27/05/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
Power) held during on 28th-29th August, 2014.
Minutes under preparation.
17/07/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
Power) held during on 28th-29th August, 2014.
Minutes under preparation.
Tamil Nadu
11/2/2014 The proposal was considered in the 18th meeting of the Expert Appraisal Committee (Thermal
Power) held during on 31st July & 1st August, 2014.
ToR recommended and proposal is being processed on file.
3/3/2014 The proposal was considered in the 18th meeting of the Expert Appraisal Committee (Thermal
Power) held during on 31st July & 1st August, 2014.
ToR recommended and proposal is being processed on file.
Power) held during on 28th-29th August, 2014.
Minutes under preparation.
Tripura
9/4/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
Power) held during on 28th-29th August, 2014.
Minutes under preparation.
Uttar Pradesh
3/12/2013 Was considered in the 11th EAC (T) meeting held for February 13-14, 2014.
Project deferred and additional information sought from PP is awaited.
9/5/2014 The proposal was considered in the 18th meeting of the Expert Appraisal Committee (Thermal
Power) held during on 31st July & 1st August, 2014.
ToR recommended and proposal is being processed on file.
West Bengal
13/01/2014 The proposal was considered in the 13th meeting of the Expert Appraisal Committee (Thermal
Power) held during March 25-26, 2014.
Upon the request of the PP, the proposal was deferred. Shall be delisted.
27/01/2014 The proposal was considered in the 20th meeting of the Expert Appraisal Committee (Thermal
Power) held during 28th-29th August, 2014.
Minutes under preparation.
 October 2014
www.InfralinePlus.com
NewsBriefs | Coal National
Apex court scraps 214 coal blocks
Allotted since 1993
In a major blow to companies involved in coal
mining, the Supreme Court ordered the cancellation
of 214 of the 218 coal blocks that were allocated
between 1993 and 2011. It also imposed a penalty of
295 per tonne on the coal illegally extracted by 42
companies which had commenced production. The
verdict evoked strong reactions from the corporate
sector. Most companies hoped the Government
would have a Plan B that would, among other things,
make clear on what happens to the investments
already made. A three-judge Bench Joseph rejected
the argument made on behalf of coal companies.
Coal import bill
To shoot up by `180 billion
Indias coal import bill is likely to go up further by
around `18,000 crore due to the cancellation of
coal blocks by the countrys apex court, according
to a report. The Supreme Court quashed the
allocation of 214 out of 218 coal blocks allotted
to various companies since 1993. Around 40 of
them were operational. In the event of complete
de-allocation of the coal blocks, the import bill
of India would jump by $3 billion. The two most
impacted companies are Jindal Steel and Power and
30 Hindalco, Macquaire had said in a recent report.
Indias coal import rush
Leads to port congestion
Indian power and steel companies are importing
shiploads of coal due to a severe shortage at home,
leading to heavy congestion in one of the countrys
busiest ports that now has twice the number of
vessels waiting than its available berths. The over-
crowding at Paradip port in eastern Odisha could
derail Indias efforts to prevent a shutdown of more
than half of its power plants which are running on
stocks of less than a week in the worst deficit since
a massive blackout in 2012. Govt has urged power
firms to import coal, but the countrys ports are
finding it difficult to deal with the swelling traffic.
WBMDTC coal mining project
Panel recommends green nod
A high-level panel has recommended environment
clearance, with some riders, for the coal mining
project of West Bengal Mineral Development and
Trading Corp Ltd. The Expert Appraisal Committee,
after detailed deliberations, recommended for
granting EC with...Specific conditions, said an
official document. The conditions include regular
monitoring of methane and other air quality
parameters alongwith the subsidence, avoiding the
dumping of coal and building materials on forest
land, continuous monitoring of subsidence and
taking mitigation measures, it said.
Government to auction
Coal blocks within 6 months
The government will auction coal blocks within six
months to raise output and is likely to ask Coal India
to take charge of the 40 operational captive coal
mines. Coal blocks, which have acquired land and
obtained regulatory clearances, will be auctioned
first. However, the government will have to work out
ways to compensate the present captive coal block
owners for the blocks and modalities to take the land
back from the companies, a senior coal ministry
official said. The coal ministry official said it will be
easy to auction five de-allocated coal mines that
were expected to begin production this financial year.
CIL to be part of new SPV
For ICVLs first buyout
Coal India is likely to be part of a new special
purpose vehicle set up by International Coal
Ventures, a consortium of five state-run companies,
to spearhead its maiden $50 million acquisition
in Mozambique. NTPC may not join the new SVP,
although a top ICVL official clarified that there are no
immediate plans to restructure the consortium which
was formed in 2009 to secure overseas coal assets.
SAIL and CIL hold 28% stake each in the consortium
while NMDC, NTPC and RINL have 14% share each.
We are yet to make the payment to Rio Tinto, ICVL
chairman CS Verma said.
Coal India may raise prices
Of lower-grade coal by 10pc
Coal India may raise prices of lower-grade coal,
used to generate power, by a little over 10%, a move
that will help offset the fall in miners revenues from
selling smaller volumes through e-auctions, reports
Indronil Roychoudhury in Kolkata. A CIL director
said, on the condition of anonymity, a proposal
to rationalise prices of coal had been mooted by
Eastern Coalfields (ECL), given the huge disparity
in cost per kcal/kg between higher and lower grades
of coal. The director said coal and power minister,
Piyush Goyal, had, in principle, agreed to the idea of
rationalising prices and CIL was awaiting a go-ahead.
Overseas Coal Mines
NTPC eyes stake
NTPC is scouting for coal assets overseas and has
invited proposals form coal miners interested in
offloading stake. The move is aimed at ensuring a
steady supply of imported coal which the power
producer needs for its plants. NTPC, which generates
43,128 MW of power through its 38 power stations,
imports coal to meet its fuel requirement. The
company plans to use 17 million tonnes of imported
coal this fiscal. The company has floated an EOI
seeking to acquire strategic stake in coal mines
against which the mining company will offer a
longterm commitment for off-take of coal.
SC levies fine
Govt to get `800 billion
The Government is set to be richer by `80,000
crore as according to the Supreme Courts order, all
the 40 operational blocks which have been given
six months time to wind up their operations, are
to pay a fine of `295 per tonne on the quantity of
coal extracted by them date. Also with the court
having further directed that the fine be levied on the
quantum of dry fuel which the companies holding
these blocks will mine till March 31, 2015, the
Government ultimately is likely to receive much more
than the aforementioned amount.
CIL has so far signed 161 FSAs
For a capacity of 73,675 MW
Coal India (CIL) has so far entered into fuel supply
pacts with 161 power units for a capacity of 73,675
MW. Out of 78,000 MW capacity as on date,
CIL (Coal India Ltd) has signed 161 FSAs (fuel
supply agreements) for a capacity of 73,675 MW,
according to a Coal India document. The Cabinet
Committee on Economic Affairs (CCEA) had earlier
directed for coal supplies in respect of power
projects worth 78,000 MW capacity, it said. As many
as 172 FSAs are to signed in this regard. The status
of the pending 11 FSAs was reviewed in the meeting
of the standing linkage committee held last month.
GVKs Oz partner seeks
More time for investment
GVKs Australian partner Aurizon has decided
to postpone its commitment to their coal mine
development project till early next year. This will
delay the projects timeline by two years as coal
prices keep falling and make it less viable to mine
coal in the near future. This is bad news for the
Hyderabad company as it will have to incur $90
million of interest and operating cost per annum
with no revenue in sight for two years. And to make
matters worse, GVK will have to shell out $560
million by this month-end to Hancock Prospecting
as payment for the takeover of the mine.
Galilee Basin rail line
GVK Hancock advances development
GVK Hancock has commenced a Material
Change of Use application for the approximate
310 kilometers of its rail corridor in the initial
phase, following years of extensive planning and
hydrological assessments in development of
infrastructure to connect its Galilee Basin coal
deposits with export markets. The development of
the Galilee Basin will give Queensland, one of the
most significant pieces of regional and economic
development and this application will allow meeting
all regulatory requirements to support such a
significant development.

Adanis $2.2 billion rail line
Gains Federal approval
Adanis plans to build a new $16 billion coal mine
are a step closer after the Federal government
approved a new 310km railway that will link the
operation to the port. The North Galilee Basin
Rail project was given the green light by Federal
Environment Minister Greg Hunt, who placed 23
conditions on the proposal. The rail line will link
Adanis yet-to-be-built Carmichael mine to already
established rail lines in the Bowen Basin. Capable
of carrying 60 million tonnes of coal per year, the
commodity will then be exported through Abbott
Point coal terminal.
Brazilian mining company Vale
To double coal production in Mozambique
Brazilian mining company, Vale says it is doubling
its coal production in Mozambique as it launches
the second mining phase which is expected to see
output hit 17 million tons. The mining group plans
to double production to about 17 million tons of
metallurgical coal and 5 million tons of thermal
coal over the next two years, an official with
Mozambiques Tete Province said. Vale launched
operations at the Moatize coal mine in the interior
province of Tete in August 2011 and also started
rehabilitating existing, and constructing new railway
tracks the Nacala Railway Corridor to transport coal.
Peabody Says Its Encouraged
By Metallurgical Coal
Peabody Energy Corp. (BTU), the largest U.S. coal
producer, said its encouraged by the outlook for
coal used by steelmakers following supply cuts and
rising Chinese demand. The company estimates 25
million to 30 million tons of worldwide output cuts
have been announced this year, almost 10 percent
of global seaborne supply, St. Louis-based Peabody
said in a statement. It estimated in July that there had
been almost 20 million tons of cuts.
Vickery coal mine
Whitehaven Coal gets greenlight
The NSW Department of Planning and Environment
has approved Whitehaven Coals Vickery coal
project in the Gunnedah Basin. The approval comes
as Whitehaven ramps up operations at its nearby
Maules Creek coal mine, and was welcomed
by Whitehaven CEO Paul Flynn who called it a
significant positive step for the company. This
provides another growth option for the company
following the development of Maules Creek, he
said. Whitehaven can now seek to form a joint
venture for this long life development which will
produce Maules Creek quality coal.
ICVL approaches steel ministry
With restructuring proposal
International Coal Ventures Ltd (ICVL) has
approached the steel ministry with a proposal to
restructure itself as NTPC and CIL are no longer
willing to stay put in the special purpose vehicle
(SPV) as promoters. Government sources said the
proposal would be taken up soon for consideration
and if the inevitable happens SAIL, RINL and
NMDC, three firms under steel ministry, would share
among themselves NTPCs and CILs combined 42%
stake in ICVL. ICVL was set up in 2009 for acquiring
coal mines abroad with an initial authorized capital of
about `10,000 crore.
Dart Energy surrenders
Stake in Indian CBM blocks
Oil and Natural Gas Corp. (ONGC) has been hit by
news Dart Energy has surrendered it stake in the
companys coalbed methane (CBM) exploration
project. In June 2013, ONGC had offered a 10 25%
stake in four of its CBM blocks to Dart. However,
Dart Energy has cited tough conditions of doing
business in India as a reason for its decision to exit
the country and surrender its interests in the CBM
blocks. In line with the groups re-focused strategy,
it is seeking opportunities to farm-out and/or sell
or exit all of its activities in India, Dart said in its
annual report.
New coal mines uneconomic
As China demand growth slows
A potential $112 billion of coal mine expansion and
development to 2025 is uneconomic at current spot
coal prices, a report by non-profit financial think
tank Carbon Tracker Initiative said. CTI, which works
to highlight how investment in fossil fuel resources
might be affected by the global drive to curb climate
change, said many of the worlds future coal mines
are not economic as Chinese demand growth slows.
China, which represents around half of the global
thermal coal market, plans to cut coal use to below
65 % of energy by 2017 to tackle air pollution, which
CTI said will cascade through the seaborne market.
Waratah Resources continues
Indonesian coal push
Waratah Resources has updated on the progress
of a proposed sale to an international coal trading
company of trial 55,000 tonnes of thermal coal from
South Kalimantan, Indonesia. An initial total of 9,000
tonnes of coal has been delivered to the customer
however commercial difficulties experienced by
Waratahs supply partner have prevented delivery and
implementation of the full amount. The buyers ship
is concluding the current cargo with coal sourced
from elsewhere, while Waratah is arranging an
alternative buyer for its remaining 46,000 tonnes.
October 2014
www.InfralinePlus.com
International
China will hit peak
Thermal coal demand by 2016
Chinese demand for coal may peak as soon as this
year, hurting a world market already suffering from
oversupply and low profits, the Carbon Tracker
Initiative said. Investments in coal assets may be hit
by falling costs for renewable energies and tighter
regulation to combat global warming, said the group,
which promotes the idea that the world cant burn
all the fossil fuels its investing in while meeting
its climate goals. There are a host of signals that
Chinese demand for coal is close to peaking which
will cause a seismic shift in the market, Anthony
Hobley, chief executive officer, wrote in a report.
We Energies aims to double
Coal storage capacity
We Energies plans to spend $62 million over the
next couple of years to double coal storage capacity
at the 2,400-MW Oak Creek baseload power plant
in Wisconsin, partly so it can burn more low-sulfur
Powder River Basin coal. Oak Creek, located on
Lake Michigan near the town of Oak Creek, currently
burns a blend of PRB and Appalachian coal. Test
burns, some still underway, indicate the plant
could increase its use of PRB coal and save the
Milwaukee-based utility on fuel costs. Since PRB
coals heat content is lower than Eastern high-sulfur 31
coal, more storage would be needed.
Coal of Africa sells
Mooiplats thermal underground coal mine
Coal of Africa has offloaded its Mooiplats thermal
underground coal mine, as it looks to dispense of
non-core assets. The coal mine has been sold for
US$ 23.5 million to a wholly-owned subsidiary
of Blackspear Holdings. Blackspear must prove
evidence of funding before the end of October
2014. The Mooiplats mine, in the Ermelo coalfield
in the Mpumalanga province of South Africa,
has been placed on care and maintenance since
October 2013.
Central Queensland mines
BMA cuts 700 jobs
A major mine operator in Central Queensland
says it plans to cut 700 jobs from its Bowen Basin
coal operations, in order to stay profitable. BHP
Billiton Mitsubishi Alliance is the largest employer
in the Bowen Basin, with more than 10,000 staff
and contractors. The company says a review of
its operations in the region found the mines are
overstaffed, and can operate more efficiently with
fewer workers. BMAs asset president, Lucas Dow,
says the coal industry is at a crossroads and tough
decisions needed to be made.
 October 2014
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InDepth
Power crisis may worsen as SC
scraps coal blocks allotment

32

The sector which is already reeling under shortage of coal may have to wait longer
Only solace for power companies is the fact that coal prices in intl market are low

Infraline News Service

The Supreme Courts decision to cancel
all the coal blocks allocated during 1993-
2010, may further plunge the countrys
power sector into darkness.
The power sector which is already
reeling under shortage of coal may have
to wait longer to get access to domestic
coal, and may have to import more coal
till the issue gets resolved.
A special bench of the Supreme Court
(SC) has declared all the 218 coal blocks
allocation between 1993 and 2010 as
illegal. According to the court, these were
allocated in an arbitrary, unfair and non-
transparent manner without following
any objective criteria.
These 218 coal blocks have geological
reserves of about 5,000 crore tonne.
After 2010, coal blocks were allotted
based on auction and hence these
allocations remain safe.
Out of 218 coal blocks, the power
sector had received the maximum of 95
blocks, followed by iron and steel which
received 69, and cement industry which
had received eight. As many as 41 blocks
were offered for commercial mining.
The major listed private companies
which received coal blocks since 1993
include Jindal Group (11 out of which
seven were for Jindal Steel and Power
Limited (JSPL)), Bhushan Group of
companies (5), Hindalco Industries (4)
and Tata Group (6).
The power sector which accounted
for 76 per cent of the total coal demand

in India during 2013-14, has been forced
to import coal due to acute shortage. The
coal shortage situation has come to such
a pass that on September 1, 2014, as
many as 56 hydel power units had coal
that would last for less than a week.
However, the power companies
may take solace from the fact that
international coal prices are trading
at their five-year low due to a
glut-like situation.
It is quite likely that the problems of
the power companies will aggravate if
the Supreme Court cancels all the coal
blocks allocated since 1993. This would
also hurt the profitability and margins of
power, metals and mining companies as
they have invested billions of dollars in
setting up coal blocks.
Naveen Jindal, Chairman, Jindal Steel
and Power, said recently in a summit on
mining and metal in New Delhi that the
company had made a total investment
of Rs 4 lakh crore for developing
coal blocks.
According to the Central Electricity
Authority (CEA), the power sector
imported 80.30 million tonnes (MT)
of coal in 2013-14. The Coal Ministry
has estimated that the demand-supply
gap would further increase in 2014-15.
According to the Ministry, demand for
coal from the power sector is estimated to
be 551.60 MT against supply of 466.89
MT during 2014-15.
Power, mining and metal sector
stocks have reacted negatively to the
news. The BSE Power index has shed
three per cent between August 25 and
September 16, 2014. The BSE Metal
index also dropped two per cent during
the same period.
Among the power stocks which
reacted sharply on the day of the court
verdict included JSPL (-14 per cent),
Reliance power (-4 per cent), Tata
Power (-3.5 per cent), KSK (-3 per cent),
JP Power.
JSPL is among the worst-hit of the lot
which is down by 26.5 per cent from its
August 25 opening of Rs 297. Reliance
Power is down 17 per cent, while Tata
Power is 11 per cent since its August 25
Of the 218 coal blocks,
the power sector had
received the maximum
of 95 blocks, followed
by iron and steel
69, cement industry
eight and 41 blocks
were offered for
commercial mining
October 2014
www.InfralinePlus.com
opening till September 16.
The uncertainty over Supreme Courts
final decision on cancellation of the coal
blocks will keep putting pressure on the
performance of power sector stocks. If
indeed the court cancels the coal blocks
(except the 46 operational ones), it would
depend on how quickly the government
is able to re-allocate the blocks.
According to a Kotak Securities
report, the process of reallocation, which
involves conduct of auctions, transfer
of assets to the government and the
new owner post the auction and restart
of mines under new ownership and
management, will take time.
We also do not rule out legal
challenges by companies who may have
felt aggrieved by the Supreme Courts
uniform judgment, it adds.
However, some brokerage houses
are of the opinion that given the power
situation in the country, SC may not
cancel all the allocations. An Emkay 33
Global report opines that in the case
of tangible asset such as coal blocks,
location relevance of mines and
power plants (or users) would make it
imperative to reallocate the mines to the
same power plant owner/user. While the
committee will undertake a case-by-case
approach in disposing the illegal mining
cases, it is likely that majority of the
cases will be dealt by imposing penalty.
Indias coal import increased by 18
per cent to 171 MT in 2013-14 compared
with 145 MT in 2012-13. Coal India
Limited (CIL), which accounts for 80
per cent of the domestic coal production,
has been producing less coal than its
target. It mined only 462 MT against the
output target of 482 MT in 2013-14. In
2012-13, CIL produced 452.5 million
tonnes of coal, short of its goal of 464
million tonnes.
India imports 76 per cent coal (non-
coking) from Indonesia and South Africa,
while the remaining (coking coal) comes
from Australia.
For suggestions email at feedback@infraline.com
 October 2014
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InDepth
Coal block de-allocation leads
to $10-12 billion bad loans
De-allocation of coal blocks since 1993, banks loans to the tune of $10-12 billion could go bad
Analysts expect that about 9-10% of banks loans released to the overall power sector

34

Infraline News Service

Finally the Supreme Court decides
to go ahead with de-allocation of
coal blocks since 1993, a similar
judgement to the 2G spectrum case.
The move is certainly bad for power
generation industry but it is collateral
damage for banks too. Exposure
to power sector in terms of banks
loans could hit the banking sector to
the tune of $10-12 billion, industry
watchers told Energy Infraline.
Analysts expect that about 9-10%
of banks loans released to the overall
power sector would be in trouble with
the verdict of captive mines being
de-allocated. This pertains to nearly
17,000-18,000 mw of thermal power
plants. In other words, more than
50% of the total coal-based power
plants in the country. Both private as
well as public sector banks would be
equally hit by such a move.
According to data available with
Reserve Bank of India, the Indian
banks have lent 14.4% more to the
power sector as against previous
year at `5.08 lakh crore (8.8 per cent
of non-food credit) as on Q1FY15.
Of this, about `2.65 lakh crore have
been provided to state electricity
boards or discoms.
The Supreme Court has said that
allocations of more than 200 coal
blocks are illegal. However,
countrys biggest bank SBI, which
has `4,000 crore exposure to captive
 October 2014
www.InfralinePlus.com

coal mines, feels that de-allocation

of these blocks would not hurt the Analysts expect that about 9-10% of banks
banking sector much. loans released to the overall power sector
The economics of these things would be in trouble with the verdict of
will change to some extent but not
drastically so much that the entire
captive mines being de-allocated. This
amount has to be written off, SBI pertains to nearly 17,000-18,000 mw of
Chairperson Arundhati Bhattacharya thermal power plants. In other words, more
was quoted saying by PTI. than 50% of the total coal-based power
According to Bhattacharya, Even plants in the country.
if these blocks get de-allocated that
does not mean the companies will
not get coal. It will mean that coal Dangerous Exposure
that they use will be a little more Company Project Capacity (MW) Key Lenders
expensive. So their margins may Adani Power Tiroda-I 1980 SBI, PFC, REC, ICICI
shrink. That is all that it means. It JSPL Tamnar-I 1000 SBI, Canara
JPVL Nigerie 1320 ICICI, PNB, IDBI, United
doesnt mean that my `4,000 crore
KSK Wardha 1800 PFC, RC, PNB, Axis
has gone down the drain.
KSK Wardha expansion 1800
She is hopeful that the government
Lanco Babandh 2640 IDBI, ICICI
would make the right intervention GMR Kamalanga 1400 IDBI, ICICI
considering the impact on power GVK Goindwal Sahib 540 Axis, IDBI
generation industry and Indias Essar Mahan I 1200 ICICI, PFC, REC, PNB
humungous power requirement. Essar Tori I 1200
Again as I said it is not the end of Essar Tori II 600 35
the world, and we will see ourselves DB Power Bara Darhaa 1320 SBI, Union, L&T Infra
go through this. I am sure that the Abhijeet Banka 1320 SBI, PNB, Axis
authorities will take the right decision, Total Capacity 18120
Bhattacharya was quoted saying. Source: Company data, Credia Suisse estimates

The colagate scam, as has been

commonly known, has been at the
centre since the previous Manmohan
Singh-headed UPA government
was in power. In 2012, the national
auditor Comptroller and Auditor
General (CAG) said that government
exchequer may have lost to the tune
of $33 billion for not auctioning
coal blocks.
Switzerland-based Credit Suisse
Group said in one of its recent reports
that the fact that the allocations have
been declared illegal makes the risks
quite high for these projects.
As the SBI Chairperson has
pointed out, in a scenario where
captive mines are de-allocated, the
power firms would have to buy
expensive coal through e-auctions
from Coal India Ltd. It is to be seen
of the PSU miner has substantial
RBI governor Raghuram Rajan deliberating on issues relating to Indias financial strength volumes to feed nearly 17,000-18,000
 October 2014
www.InfralinePlus.com

InDepth

mw of power stations. Generally, the

cost of production from a captive
coal mine hovers around `800 per
tonne. On the other hand, coal
procured through e-auction costs
anything upto `3,500 a tonne of the
same calorific value. Other option is
to import expensive coal.
Australia-based Macquarie Group
said that the move would increase
Indias import bill by $3 billion.
The government will impress
upon the Court about coal shortages,
power cuts and derailment of the
investment process, Macquarie said.
There are more concerns for
captive mines where on-ground
mining is yet to be started. The
Supreme Court observed that Industry watchers also point out that if a power
allocations to state mineral plant uses expensive coal (bought through
development corporations (SMDC) e-auction or imported), the tariff would go-high.
in 2001 were not legal. Some of these On the other hand, most of these stations have
state PSUs had formed joint ventures
with private power producers
signed long-term power purchase agreements
36 (PPAs) with state-run discoms, which are
and handed over the coal mining
operations. If these mines stop unlikely to agree for a higher tariff. As has been
producing it could hurt several power the case with Tata Powers Mundra UMPP and
plants that are either operational or Adani Powers plant at the same location in
about to be commissioned. Gujarat, the discoms would approach regulators
Industry watchers also point out
that if a power plant uses expensive
to not pay a higher tariff.

coal (bought through e-auction or

imported), the tariff would go-high.
On the other hand, most of these
stations have signed long-term power
purchase agreements (PPAs) with
state-run discoms, which are unlikely
to agree for a higher tariff.
As has been the case with Tata
Powers Mundra UMPP and Adani
Powers plant at the same location
in Gujarat, the discoms would
approach regulators to not pay a
higher tariff. Moreover, state polls in
Maharashtra and Haryana on October
15 and other states in the later part
of the year or early next year may
play spoilsport.

For suggestions email at feedback@infraline.com

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 October 2014
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ExpertSpeak
Auction of Coal Blocks Have
we made the right choices?
SP Kansal, a mining engineer by qualification, is working with the Coal
Division for Videocon Industries Ltd since 2010 and has been engaged
in developing two coal concessions in Central Kalimantan Province of
Indonesia. He was part of the new Coal Industry initiatives that followed
large scale private sector participation in power sector. He had earlier
worked with Hinduja National Power Corporation and Lanco Infratech
Limited in their Coal Divisions. He worked with Coal India for over two
decades before moving to private sector.

Distorted government policies and Despite of acute shortage of coal

half hearted attempts at deregulation
created conditions that were exploited
by unscrupulous actors in allotment
of coal blocks that led to the present
38 mess in the industry. New and
radical initiatives are needed to get
the industry out of this log jam.
These reformative policy initiatives
have to ensure:
A. Process for allocation of mineral /
coal resources to entrepreneurs to
be made impartial, transparent and
objective;
B. Massive increase in domestic
coal production and making coal
available to public utilities at
economical prices
There is widespread acceptance to
the idea that all allocations of natural
resources should be made through
a process of open Auction. The
Mines and Minerals (Development
and Regulation) Act 1957 has been
amended to provide for Auction
of Prospecting Licenses (PL) and
Mining leases (ML). Rules laying
down procedure for the process for
conducting auctions have also been
notified. True to its character the Indian
bureaucracy has retained enough
maize of procedures, dos and donts to
ensnare prospective bidders.
first attempt at auction three coal blocks
failed to attract significant interest and
had to be aborted. Something must
be seriously wrong with the process
or fundamental assumptions. Instead
SP Kansal, mining engineer working with Coal
of rushing headlong into suggesting Division, Videocon Industries Ltd
remedial measures
let us understand There over the find. Most of the searches
how does rest is (PL) do not end up in finding the
of the world widespread mineral resource. Failing to find
do it? Mining
acceptance to mineral resource would result
the idea that all
after all is one in termination of PL. Successful
allocations of natural
of the oldest resources should be find over the concession
industries. made through a authorizes the PL holder first
For a number process of open right to award of ML.
of countries like Auction.
Australia, South How are the Prospective
Africa and Canada License (PL) awarded a
it contributes a dominant share of nd what are the financial
their GDP. Let us understand how payouts to government?
these countries allocate mineral / PL are awarded to any applicant
coal resources. A number of Indian (including foreigners) that meets
companies have acquired coal / mineral minimum financial/technical criteria
concessions in these countries. laid down for the purpose and is
Prospecting License (PL) awarded on first come first served
authorizes the holder to carry out basis. The geographical area for PL
search operations within a defined is selected by the applicant and is
geographical area for specified accepted by the government as long
minerals within a specified time as it does not superimpose over an
period. On successful completion of existing PL or ML and the area is
exploration PL can be upgraded to a within the maximum permissible area
Mining Lease (ML). ML authorizes for a PL. The concessionaire has to
the holder to develop and operate mine commit to a minimum annual work

program and adhere to it. All geological
data created as result of the search
is to be shared with the government
and can be accessed by public. Only
administrative fee is charged for award
of the PL. Concessionaire can be
penalized by revocation of PL and / or
forfeiture of Bank Guarantee if there is
deviation from minimum exploration
program. Failure to find mineral would
result in loss of investment for the
Concessionaire. An annual Land rent is
charged on the basis of land area of the
PL. This is done to discourage squatters
who lock up the area for the duration
of the PL. The government gains by
securing geological data for the PL area
at the cost of the Concessionaire.
How is Mining lease (ML)
awarded and what are
the financial payouts to
government?
Upon successful completion of
exploration Concessionaire has a right
to award of ML should he meet the
minimum eligibility criteria laid down
in the law and obtains prerequisites
like Environmental Clearance, Forest
Clearance etc. Only administrative
fee has to be paid to the government
for processing of the ML application.
As the mineral is owned by the State
the Concessionaire is required to pay
for the right for its extraction. The
ML holder is required to pay Royalty
on the coal / mineral extracted from
the mine. The ML holder pays either
the Royalty or Dead Rent whichever
is higher on annual basis. The dead
rent is a punitive tax imposed on such
Concessionaire who fails to extract
mineral / coal after allocation of ML. It
is designed to act as a deterrent.
How are ML issued over
such area that have been
explored in the past through
PL but no ML were granted
over them
Often with passage of time lean
mineral resources which would have
been uneconomical earlier would
turn economical. In past although
exploration work was done ML was not
obtained on lean resource. For award
of PL or ML on such concessions
the principle of First Come First
served continues to be applied. The
geological information available with
the government can be accessed by
public on payment of prescribed fee.
The government assigns priority list to
multiple applicants and disposes their
applications in order of priority.
Upon successful
completion of
exploration
Concessionaire has
a right to award
of ML should he
meet the minimum
eligibility criteria laid
down in the law and
obtains prerequisites
like Environmental
Clearance, Forest
Clearance etc.
What is the difference
between Royalty payment
and Auction Proceeds?
The argument given in public discourse
that National resources have been
given away for free is not true. The
state levies tax in the form of Royalty
for the mineral mined by the Lessee.
However the rate of Royalty is
uniformly applied and is notified by
the government. Royalty rates are not
case specific and Royalty is levied post
mining and is linked to the quantum of
coal/mineral extracted.
In India there is an underlying
assumption that the royalty does
not adequately tax the Coal Mine
allotees and that they are making /
likely to make windfall profits by
being Captive consumers of the coal
allotted to them. There is little faith in
October 2014
www.InfralinePlus.com
India for any procedure that is not a
hands free process (free of subjectivity
on part of bureaucracy or government
like selection amongst the applicants
through screening committee). Through
Auction the lessee would make
payments in addition to the Royalty
accruals. There is little to differentiate
between the two taxes/payments accept
that the Royalty rates are fixed by the
government and are case neutral while
payments committed under Auction
would be those bid by the lessee and
would be case specific. Government
could have included the components of
Auction process into Royalty regime
also thereby obviating the need for
amendments to MMDR Act, but that is
beside the point.
Problems associated with
Auction Process
PL grants an exclusive right on the
lessee to search for a coal / mineral 39
resource in a defined geographical
location which is expected to contain
such coal /mineral resource. A PL
holder does not possess a defined or
measured mineral resource but only
a promise of such resource. Auctions
of a License (PL) which holds only
a promise of resource is not likely to
fetch good returns. Prerequisite for a
proper auction of a coal block would
be adequate exploration, economical
coal resource estimate and minimum
approvals like Forest and Environment
being in place. Although there is wide
consensus but WHO is going to do the
exploration and take approvals, HOW
much time will it take and WHEN
would the coal blocks be available
for auction? The track record of
government agencies in this respect has
been dismal and it would take those
years if not decades to get coal blocks
ready for auction. A few coal blocks
that have been explored and have been
reasonably developed and are being
canceled may fit the bill and may
come up for Auction in near future.
But once these low hanging fruits are
 October 2014
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ExpertSpeak

auctioned we would again be staring at

another logjam.

How Do Developed Mining

Countries carry out
Exploration?
Exploration is primarily carried out by
private entrepreneurs. To encourage
them a conducive system of reward for
locating new mineral / coal resource
has to be in place. This is done by
making PL and ML freely transferable
between business entities. No
unreasonable restrictions are imposed
on sale of minerals / coal by the ML
holder at market determined price and
allowing access to capital markets
to PL holders for finding funds for
exploration work. Such liberal works
in a country with good governance
in place. These countries allow little
subjective authority to the bureaucracy
and they are expected to respond to
40 each application in a well laid out
procedure in well defined time frame.
The Government agencies are seen
to be handling award of PL and ML
in fair and transparent manner. This
is not the case with India. Our laws
provide a lot of subjective discretion to
the bureaucracy and the government.
True to human nature such subjective
authority leads to misuse and
thereby lack of faith in government
agencies. The ill effect is the lack
of private initiative in exploration
activity in India.
Junior Mining companies
Exploration for minerals is a high risk
area with majority of initiatives ending
in failures. This is an area where
large mining companies avoid getting
involved. This work is done by small
mining companies that operate on
shoestring budgets and are manned by
motivated geologists. They use basic
geological data available in public
domain and secure multiple PL. They
search for minerals on a number of PL
in hope that a few of them would result
in good finds. Soon after they have
Auction may seem to
be a panacea for coal
block allocations in
the present vitiated
atmosphere. It would
work for a small number
of coal blocks which
can be auctioned as
they would meet the
essential prerequisite
criteria required for a
fair Auction process.
This process would not
work for unexplored
coal blocks.
made mineral discovery they sell their
licenses to bigger mining companies
who have the financial wherewithal
to obtain ML and subsequently
develop coal / mineral mines. The
Junior Mining Companies start their
operations with small seed capital
contributed by the promoters. They
are able to raise further capital either
through private placements or through
Alternative Stock Exchanges which
allow raising of equity capital for
exploration companies. Once economic
viability of the mineral resource has
been established and big mining
companies get involved they are able to
secure project finance through formal
banking institutions.
Conclusion
Auction may seem to be a panacea for
coal block allocations in the present
vitiated atmosphere. It would work
for a small number of coal blocks
which can be auctioned as they would
meet the essential prerequisite criteria
required for a fair Auction process.
This process would not work for
unexplored coal blocks. In the long
run such policies that encourage
private sector entrepreneurship in
exploration and development of coal/
mineral resources have to be put in
place. We do not need to go far to
find such policies being successfully
implemented in many countries and
need to draw lessons for us. The
solutions would have to be unique to
our situations but we must learn from
how others are succeeding where we
are faltering.
The views in the article of the author are personal
For suggestions email at feedback@infraline.com
 October 2014
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StatisticsCoal
Coal Blocks likely to come into production during 12th Plan and early 13th Plan
Sl. Coal Block Utility GR Ultimate Date of EC Granted Status of forest clear- End use Project (TPS)
No. (Million capacity ance
tonnes) (MTPA)
Central Sector
1 Pakri-Barwadih NTPC 1436 15 19-May-09 Forest clearance Granted Lara Ph-I (2x800 MW) Darlipalli Ph-I ( 2x800
MW)
2 Kagra Joydev Damodar Valley Corporation (DVC) 196 3 22-Jun-09 under process Mejia Ph-II (2x500 MW) (Commissioned)
3 Talabira II &III Mahanadi Coalfield Limited MCL/Neyveli 589 20 under process under process Orissa TPS (4x500 MW) Hindalco CPP (900
Lignite Corporation Limited(NLC)/ Hindalco MW)
4 Gondulpara DVC and Tenughat vidyut nigam limited (TVNL) 166. 185 4 8-Jan-14 Subject to Forest Forest clearance under Power project in Jharkhand
clearance process
5 Talaipali NTPC 1267 18 2-Jan-13 Forest clearance Granted Lara Ph-I (2x800 MW)
6 Kerandari NTPC 285 6 31-Mar-10 Forest clearance stage-I Barh St-II TPP (2x660 MW) Unit-1 (Commis-
Granted sioned) Tanda Expn. (2x660 MW)
7 Chatti Bariatu NTPC 194 7 19-Apr-10 Forest Barh St-II TPP (2x660 MW) Unit-1 (Commis-
clearance sioned) Tanda Expn. (2x660 MW)
Granted
8 Dulanga NTPC 196 7 3-Mar-14 Forest clearance stage-I Darlipalli Ph-I ( 2x800 MW)
Granted
Total 4329.185 80
State Sector
1 Tara Central Chhattisgarh mineral development corporation 317.39 6 23-May-12 Forest clearance stage-I IFFCO Chhattishgarh (2x660 MW)
(CMDC) Granted
2 Badam Tenughat vidyut nigam limited (TVNL) 144.63 3 13-Mar-08 Forest clearance stage-I Tenughat TPS Extn. (2x660 MW)
Granted
3 Gidhmuri CSPGCL 350 5.6 under process under process Bhaiyathan TPP 2x660 MW
4 Paturia Chhtisgrah state power generation company under process under process
ltd (CSPGCL)
5 Tadicherla-I APGENCO 47.93 2.5 under process under process Kakatiya TPP Stage-II (600 MW)
6 Amelia MPSMCL 393.6 8.4 27-Mar-08 Forest clearance under Existing & proposed TPS of MPPGCL
process
7 Machhakata and GSECL/ MSPGCL 140 0. 65 30 under process Forest clearance under Koradi Ext. (Unit 8,9,10) 3x660 MW
Mahanadi process Chandrapur (unit 8,9) 2x500 MW
Parli (unit 8) 1x250 MW
Bhusawal (Unit 6) 1x660 MW
Ukai (unit6) 1x500 MW (Commissioned)
Wanakbori 1x800 MW Sinor 1x800 MW
8 Dongrital -II MPSMCL 175 2.9 22-Feb-12 No forest land Jaypee Nigree STPP (2x660 MW)
U-1 (Commissioned)
9 Chendipara & 1811.96 40 under process Forest Obra extn C 2x660 MW
Chendipara II clearance under process Jawaharpur TPP 2x660 MW
Dopaha TPP- 3x660 MW
Meramandali - 2900 MW
Dondaicha TPS St-1 2x660 MW
10 Manoharpur OPGCL 181.68 8 21-Feb-14 Forest clearance stage-I Ib TPS (Unit 3&4) 2x660 MW
Granted
11 Parsa CSPGCL 184 5 under process Forest clearance under Marwa TPP 2x500 MW U-1 (Commissioned)
process
12 Gare Pelma GIDC 210.2 5 23-May-13 Forest clearance Granted KSK Mahanadi 3x600 MW
Sec-III U-1&2 (Commissioned)
Total 5217.04 116.4
Private Sector
1 Tokisud North GVK Power 92.92 2 24-Sep-08 Forest clearance Granted Goindwal Sahib TPP 2x270 MW
2 Mahan ESSAR Power / Hindalco/ 144.2 8.5 23-Dec-08 Forest clearance Granted Mahan TPP (Essar) 2x600 MW U-1 (Commis-
sioned) Mahan CPP (Hindalco)-900 MW
3 Chakla ESSAR Power 83.1 4.5 recommended subject to Block recommended for Tori TPP 2x600 MW
Forest clearance deallocation by IMG
4 Tubed Hindalco/ Tata Power 189 6 under process Block recommended for Tata Power Tiruldih Power Project ( 3x660
deallocation by IMG MW) Hindalco CPP (6x150 MW) of Jharkhand
Aluminium Project
5 Durgapur II/Sarya DB Power 91.67 2 5-Jul-13 Forest clearance Granted 2x600 MW TPP U-1 (Commissioned)
6 Mandakini-A Monnet Ispat/ Jindal Photo/ Tata Power 322.52 7.5 17-Jan-11 Forest clearance stage-I Derang TPP 2x600 MW Monnet TPP 2x500
granted Block recom- MW Tata Power 2x660 MW
mended for deallocation
by IMG
7 Fatehpur East JLD Yavatmal/ RKM Powergen/ Vis Power / 330.87 10 1-Jan-14 Subject to Forest Forest clearance under JLD Yavatmal Energy Ltd 1215 MW TPP
Athena Chhattisgarh/ Vandana Vidyut clearance process Block recom- R.K.M. Powergen Pvt. Ltd 1440MW
mended for deallocation Visa Power Ltd 1200 MW TPP
by IMG Athena Chhattisgarh Power Ltd 1200 MW
Vandana Vidyut Ltd. 540 MW TPP (2x135, U-1
Commissioned+1x270MW)
8 Ganeshpur Tata Steel/Adhunik Power 137. 88 4 24-Jan-14 Forest clearance stage-I 2x270 MW Adhunik TPP (commissioned) 600
granted Block recom- MW CPP of Tata Steel
mended for deallocation
by IMG
Total 1392.16 44.5
Total No. of Grand Total 10938.38 240.9
Blocks = 28
Note: Considering coal requirement of 4.5 MTPA per 1000 MW the above coal blocks can cater to about 53500 MW capacity.
 October 2014
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StatisticsCoal

Coal Blocks which are producing coal and likely to be affected by Supreme Courts decision

42 S. Coal Block Utility GR (MT) Ultimate Name of linked EUP Capacity of linked EUP Investment in Investment
No. capacity coal block (INR in EUP (INR
(MTPA) Crore) Crore)
Central Sector
1 Barjora (North) DVC 85 3 Mejia TPS Ph-II 2x500MW 283.36 5000
Total 85 3 1000 MW 283.36 5000
State Sector
2 Pachwara Central PSEB 562 7 PSEB plants under operations 2620 MW 540.82 13100
3 Tara (East) WBSEB 84.47 4 Existing thermal power plants Bakreshwar 5x210 MWSagardighi 2x300 MW 320.04 13000
under operations andSantaldih2x250 MW expansion Unit 450 MW
4 Tara (West) WBSEB 125.71
5& Integrated Gangaramchak & WBSEB 13.68 1 42
6 Gangaramchak Bhadulia
7 Barjore WBPDCL 3 0.5 65.54
8 Pachwara North 609.35 15 297.33
9 Baranj-I KPCL 68.31 5 Bellary TPS Stage-I 1x500MW 609.49 5000
10 Baranj-II
11 Baranj-III
12 Baranj-IV Bellary TPS Stage-II 1x500MW
13 Kiloni 39.51
14 Manora Deep 44.7
15 Talabira -1 Hindalco - - Hirakud CPP 367.5 MW - 2000
Industries
16 Parsa East* RRVUNL 532.86 10 Chhabra Phase II U:3&4 2x250 MW 961.16 13055
17 Kante Basan* Kalisindh U:1 & 2, U-2 not 2x600 MW
commissioned
18 Amelia (North)@ MPSMCL 123.54 2.8 Jaypee Nigree STPP, U-2 not 2x660 MW 573.73 3000
Commissioned
Total 2207.13 45.3 9607.5 3410.11 49155
Private Sector
19 Sarisatolli RPG Indus- 140.47 2.9 All power plants under Budge Budge (2x250 MW) Titagarh (4x60MW) 52.23 4375
tries / CESC operation Southern Generating Stations (2x67.5 MW) (All power
plants under operation)
20 Gare-Palma-IV/2 Jindal Power 123 5.25 Raigarh TPP 4x250 281.25 4057.14
21 Gare-Palma-IV/3 Jindal Power 123
Total 386.47 8.15 1875 333.48 8432.14
No. of Blocks = 21 Grand Total 2678.6 56.45 12482.5 MW 4026.95 62587.14
*Started production in 2012-13 and yet to achieve full capacity
@ Under commercial categories but coal supply to power plants. Started production in 2013-14 and yet to achieve full capacity
 October 2014
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CoverStory
Will SC verdict on coal
blocks ruin the power sector?
Power plants operators will have to pay penalties, which has implications for power prices
Delays in decision making will lead to more policy uncertainties

43

Infraline Bureau

In what could be a big jolt to power
generation industry, the Supreme
Court has deallocated 214 coal blocks
out of the 218 coal blocks allocated
since 1993. Four blocks for which the
Apex Court was little lenient and are
exempt from the verdict belong to the
Central government and those blocks
are not mined under any joint venture
agreement. While two belong to NTPC
and SAIL, the other two were allocated
under competitive bidding for ultra
mega power projects.
"The entire allocation of coal
block as per recommendations made
by the Screening Committee from
July 14, 1993 in 36 meetings and the
allocation through the government
dispensation route suffers from the vice
of arbitrariness and legal flaws. The
Screening Committee has never been
consistent, it has not been transparent,
there is no proper application of mind,
it has acted on no material in many
cases, relevant factors have seldom
been its guiding factors, there was
no transparency and guidelines have
seldom guided it," a bench headed by
Chief Justice RM Lodha had said in its
163-page verdict.
 October 2014
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CoverStory

The Court has accepted CAG's of the coal sector once for all. may strike down the policy on which he
estimation of the loss while giving its The order on the one hand adds to [based] his investment decision."
strong verdict. The former Comptroller policy uncertainties of doing business, It's not just the power companies
and Auditor General Vinod Rais report but on the other hand it also paves that have to worry after this verdict.
of 2012 on the coal block allocations way for some clarity on coal mining Even banks are going to bear the brunt
computed the undue gains at `1,86,000 in India, something which business of the apex court's decision to cancel
crore. The report suggested that country leaders were seeking to make big the allocation of 214 coal blocks.
suffered loss as the government did not investment plans. State-run lender IDBI Bank Ltd has
follow transparency in allocating coal The country's highest court on close to `2000 crore loan exposure
blocks to private players. The CBI, Wednesday said control over almost to companies affected by a Supreme
which is investigating the multi-crore all coal blocks allotted since 1993 will Court order scrapping coal blocks but
scam, has alleged that for several have to be returned, saying they were not all of it will be problematic, the
years, mining licences were given granted illegally. The decision could lender's head said. "We are assessing
arbitrarily to private companies without aggravate a coal shortage in the country, (the quantum of loss)," MS Raghavan,
a transparent bidding process. analysts said. chairman and managing director of
The Court said that there was The cancellation puts at least $47 IDBI Bank.
no reason to show leniency as the billion of investments in such industries Ajay Bhatt, the finance chief at
allocations were arbitrary. The as power, steel and aluminum at risk, Monnet Ispat & Energy Ltd., said
companies involved have also been said Ashok Khurana, director general at his company has invested close to $2
penalised at `295 per mega tonnne the Association of Power Producers. "It billion in building steel and power
for the loss (to the country). The does create uncertainty in the mind of plants in the last five years with the
government is now free to hold auctions an investor," he said. "He will think that assumption it would have a stable
or give them to Coal India. Though the even after 10, 15 or 20 years, a court supply of coal from blocks it had been
44 government is preparing an action plan
post Supreme Court's verdict on the For the blocks which are already operational will
issue, experts believe most of the coal
blocks would be given to Coal India
get 6 months to wrap up their operations, as per the
as giving it to private companies may court order. But the power producers dependent on
again delay the process of coal mining these coal blocks will not suffer as even after Coal
from the blocks. India takes them over, it will continue to provide
For the blocks which are already coal to the power producers.
operational will get 6 months to
wrap up their operations, as per the
court order. But the power producers
dependent on these coal blocks will not
suffer as even after Coal India takes
them over, it will continue to provide
coal to the power producers.
On August 25, the Supreme Court
had said that the coal block allocations
were illegal since 1993. It had said that
the government did not adhere to proper
guidelines and no objective criteria
were being followed either. However it
has not deallocated coal blocks yet and
said that would require further hearing
to see if it needed to deallocate 218 coal
blocks. The Court verdict potentially
created uncertainty about coal supplies
for the industries using the fuel, but also
giving an opportunity to the Narendra
Modi-led government to clear the mess Power Minister Piyush Goyal addressing a gathering in National Capital
 October 2014
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De-allocation of operating coal mines to

severely impact metal players: CRISIL
Supreme Court de-allocates all Players with operational coal blocks in the iron & steel sector
but four captive coal blocks
Captive therm al coal
On September 24, 2014, the Supreme Production
Peak
Production in production as a % of annual
Com pany Nam e Block Nam e capacity
Court de-allocated almost all captive Start Month
(MTPA)
2013-14 requirem ents at the
sponge iron plant in 2013-14
coal blocks (allotted to government
Jindal Steel and Pow er
and private companies), which it had Limited (JSPL)
Gare Palma IV/1 Feb-99 6 5.999 100%

earlier termed as illegal. Of the 46 Monnet Ispat Limited (MIL) Gare Palma IV/5 Jun-04 1.1 0.919 65-70%

blocks which are either producing (40 Jayasw al Neco limited

Gare Palma IV/4 Sep-06 0.48 0.444 100%
(JNL)
blocks) or about to start production Prakash Industries limited
Chotia Jul-06 1 1.001 100%
(6 blocks), it cancelled 42 blocks (PIL)
Surana Industries Limited
(37 operational and 5 about to (SIL)
Belgaon Dec-07 0.27 0.149 100%

be operational). For these cancelled Usha Martin Limited (UML) Kathautia Dec-08 0.8 0.763 78%

blocks, the court granted six months Electrosteel Castings

Parbatpur Dec-08 1.24 0.462 75-80%
Limited (ESCL)
to shut down operations. Moreover, Sarda Energy Limited
Gare Palma IV/7 Mar-09 1.2 1.164 85-90%
players with operational blocks have (formerly RAPL)
B.S.Ispat Marki Mangli-I Mar-11 0.33 0.08 NA
been asked to pay a penalty of `295
0.318 (For Marki
per tonne of coal mined upto 2014-15, Shree Virangana Steel
Limited
Marki Mangli-II Dec-11 0.21 Mangli-II and NA
which will translate to `100 billion. Marki Mangli-III)

The four coal blocks which have Shree Virangana Steel

0.318 (For Marki 45
Marki Mangli-Ill May-13 0.3 Mangli-II and NA
Limited
not been de-allocated pertain to NTPC Marki Mangli-III)

(Pakri-Barwadih), SAIL (Tasra) and Sova Ispat Limited & Jai

Ardhagram Nov-12 0.4 0.277 50%
Balaji Industries
Reliance Powers Sasan Ultra Mega
Power Project (UMPP) (Moher and Source: Ministry of Coal, CRISIL Research
Moher Amlohri Extension. Moreover,
Players with operational coal blocks in the Aluminum sector
in its ruling on August 25, 2014, the
SC had held that blocks allocated to Profitability of players in the operational coal blocks on 7-8 GW
Com pany Nam e Block Nam e Peak capacity Production in
UMPPs through competitive bidding metals sector to witness a sharp of linked power projects will be
(MTPA) 2013-14 (MTPA)
would not be de- allocated. decline limited as these operate under a
Hindalco Industries Limied Talabira-I 3.0 2.5
Of the 218 coal blocks allotted so Players who have operational coal fixed return model. Moreover, we
far, only 40 blocks have commissioned blocks
Source: will witness
Ministry a sharp
of Coal, CRISIL Researchdecline expect alternate domestic coal
as of 2013-14, with a production of 39 in profitability post 2014-15, as they supply (albeit at a higher price as
million tonnes. would have to substitute captive compared to captive coal) to be
The sector-wise status of coal with imported
Deallocation of minescoal to havewhich is impact on
limited operational
provided powerprojects
to these projects as most
operational blocks is given in the about four times more expensive (as
The impact of de-allocation of operational coal blocks on of7-8
these
GW ofare operated
linked by state
power projects will be limited as these
following table. Coal India may not supply domestic
operate under a fixed return model. Moreover, we expect owned utilities.
alternate domestic coal supply (albeit at a higher price as
coal to these players given its FSA
compared to captive coal) to be provided to these projects We as most of these arepower
operatedpurchase
by state owned utilities.
Sector-wise captive coal commitments to the power sector). expect the
production in 2013-14 We expect the power
In 2015-16, purchase
impacted cost for utilities
players in cost for utilities to rise, particularly
to rise, particularly in West Bengal and Punjab, where it would
Sector Peak Production increase by Rs. 0.5-0.8
the sponge iron andper unit given that a these plantsinaccount
aluminum Westfor Bengal and of
a large share Punjab, where However,
power purchase. it at a
capacity in (MTPA) pan-India level, we expect the impact to be negligible aswould
sectors are expected to witness these plants account for less than
increase by `0.5-0.8 per unit 5 per cent share of total
(MTPA) 2013-14 generation.
a 900-1,000 bps and 300-400 bps given that a these plants account
(MTPA) decline, respectively, in operating for a large share of power purchase.
profitability. However, at a pan-India level, we
Power 70 25
Iron & Steel 17 11 2 Deallocation of mines to have expect the impact to be negligible
Aluminium 3.5 2.5 limited impact on operational as these plants account for less
Total 91 39 power projects than 5 per cent share of total
Source: Ministry of Coal, CRISIL Research The impact of de-allocation of generation.
 October 2014
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CoverStory

allotted. "Who will compensate me?" to the government.

he asked. "I have paid taxes, paid
royalty and dividends. There is huge
shadow of uncertainty."
The deallocation followed a
ruling by the court last month that
allocation of the blocks was arbitrary
and nontransparent. The Comptroller
and Auditor General in 2012 said the
government lost as much as 1.86 lakh
rupees ($30 billion) in potential revenue
because it gave the blocks without
competitive bidding.
The Supreme Court deallocated
214 of the 218 coal blocks allotted
since 1993. The decision took effect
immediately for the 172 blocks not
in production. It will take effect in
six months for 42 blocks already
producing; to ensure that coal supplies
aren't affected as the government
decides what to do with the coal blocks
it has got back. It is likely that most of
them will be auctioned while others will
46
remain with state-owned Coal India
Ltd., analysts said. The few that were
producing coal from the blocks will
have to pay 295 rupees a tonne for the
coal that they have extracted so far and
will continue to do so until it is handed
The four mines spared were for two
blocks granted to Reliance Power Ltd.
for a 4,000 megawatts, Ultra Mega
Power Project and one each granted
to NTPC Ltd. and Steel Authority of
India Ltd.
While the mines comprise about 7%
of the country's coal output, there are
billions of dollars of investment riding
on their future.
"Our main concern is on the kind of
negative impact on the economy, which
has just been showing signs of recovery
after over two years of slowdown,"
It's not just the power
companies that have to
worry after this verdict.
Even banks are going
to bear the brunt of the
apex court's decision to
cancel the allocation of
214 coal blocks. State-
run lender IDBI Bank Ltd
has close to `2000 crore
loan exposure
Possible after effects of
SC's verdict
1. The government is likely to
constitute a committee of
secretaries to review the
judgement
2. The committee is expected to
study the judgement and see
if there's any need of seeking
clarification from the Supreme
Court on aspects including
penalty payment of `295 per
tonne.
3. The committee will also suggest
to the government how it should
move ahead on allocating the
coal blocks. The decision of the
committee is expected to be
tabled before the cabinet before
moving forward.
4. In all likelihood, the government
will auction most of the coal
blocks while also hold back
some of the producing mines
with Coal India Ltd.
5. As per the court order, the 42
coal blocks which comprise,
producing mines as well as
those about to start production,
will be handed to Coal India Ltd.
within next six months. The time
frame is crucial as it gives the
government enough room to
gear up for auctioning the coal
blocks.
6. Meanwhile, the CBI will continue
its investigations into allocation
of the coal blocks even though
the Supreme Court has de-
allocated them.

said Rana Kapoor, managing director

of YES Bank and president of the
Associated Chambers of Commerce and
Industry. Before the ruling, the industry
group said cancellation could shake
the confidence of domestic and foreign
investors and lead to huge losses and
loan defaults.
As companies have waited to learn
the fate of the coal-mining rights and
get some clarity about government
plans for the heavily regulated sector,
 October 2014
www.InfralinePlus.com

in production. But still the ruling will

lead to some increase in coal imports
as government policy for new mode
of alloaction, which will be in all
likelihood an open competitive bidding,
shall take time.
Global investment bank Goldman
Sachs said the deallocation will have
a muted impact on the power sector,
but there can some increase in power
tariffs. Possibly as temporary coal
shortage may lead to rise in input cost.
Out of the 42 coal blocks that have
been permitted to operate for about six
months, 22 are from the power sector.
Rating and research firm Crisil
said that metal companies will
witness a sharp decline in profits
in the next financial year as they
have to import coal to substitute
Global investment bank Goldman Sachs said the the coal they were getting from the
deallocation will have a muted impact on the power deallocated coal blocks. Crisil notes
sector, but there can some increase in power that imported coal is about four times
tariffs. Possibly as temporary coal shortage may more expensive. In the next financial 47
year, the impacted companies in the
lead to rise in input cost. Out of the 42 coal blocks sponge iron and aluminum sectors
that have been permitted to operate for about six are expected to witness a drop in
months, 22 are from the power sector. operating profit of 9-10 percentage
points, and 3-4 percentage points,
the country has faced a severe coal respectively, it added.
Possible after effects
crunch. The country needs to produce Salil Garg, director of India
more coal if it wants economic growth Power plants operators will have Ratings said that the deallocation is a
to reach 10% again, economists to pay financial penalties, and short-term negative which has positive
have said. this will have beering on power potential for the south Asian nation in
Roughly 70% of the country's prices. the long-term. The court ruling paves
electricity is generated by burning The Supreme Court will take the way for the government to make a
coal. The country is the world's third- some time to decide on the transparent coal allocation policy that
reallocation process. It will lead
largest producer of coal, behind China would attract more investment.
to delays and more uncertainties
and the U.S. Yet it relies heavily on over the policy. Only time will tell how the
imports because of mismanagement Domestic coal prices are likely Narendra Modi government uses the
and an onerous bureaucracy in coal to rise, while global coal prices opportunity to bring in key reforms in
exploration, production and power are falling. the coal sector and revive its growth,
generation. As a result, nearly a The banks will have to rework which is key to India's economic
quarter of India's 125 crore people their bad loan balances as more growth. Private sector needs to enter
have no electricity, according to the loan accounts will go awry. the sector for commercial mining and
World Bank. The government may want a say time is just ripe for the government,
The ruling also hurts hopes of in how coal blocks are allocated, which has number on its side in
traders who were hoping that mass since this is a policy decision Parliament, to amend the archaic coal
that cant be left just to the
cancelation may lead to a massive surge law and throw open the gate for big
courts. This can lead to more
in coal imports as the Supreme Court delays if executive and courts private investors and companies.
has given the window of six months are fighting over the issue.
for the operational mines to continue For suggestions email at feedback@infraline.com
 October 2014
www.InfralinePlus.com
NewsBriefs | Oil & Gas National
Centre defers decision
On new gas price
For the second time the Modi-led Government
has shied away from taking a decision on the new
price of domestically produced natural gas. The
decision has been deferred to November 15. Earlier,
the Government had deferred the decision by three
months on the grounds that it had just come to
power and the subject needed more discussion. This
time, the Government did not give any official reason
barring the one given by Law and Justice Minister
Ravi Shankar Prasad, who said: Life doesnt revolve
around gas price..
Natural gas production falls
8.3percent in August
Domestic natural gas production fell 8.3 per cent
in August, primarily due to lower production from
onshore fields as production from offshore fields
grew marginally. During the month, natural gas
production was 2.729 billion cubic meters against
2.977 billion cubic meters in the same month last
year. Crude oil production also fell in August by 4.8
per cent. During the month, crude oil production was
3.024 million tonnes against 3.179 mt in the same
month last year. Falling domestic production also led
48 to lower refinery throughput. Refinery throughput was
4.3% lower in August at 18.550 mt (19.387 mt).
RIL KG-D6 gas output
Likely to improve
Reliance Industries eastern offshore KG-D6 gas
output is likely to improve to 15 million standard
cubic meters per day by second half of current
fiscal as it completes work-overs on the main fields,
UBS said. Gas production from KG basin block has
dropped to just over 12 mmscmd and RIL is carrying
out workover on main Dhirubhai-1 and 3 gas fields.
In research note, UBS said it expects RILs core
petrochemical, refining and domestic exploration and
production businesses to improve over the next two
years. RILs $13 billion capex including $8.5 bln for
petrochemical units was on track.
India-Nepal oil pipeline
IOC to lay network
In a major step towards strengthening the oil and gas
infrastructure of Nepal, the Centre has decided to set
up an oil pipeline from Raxaul in Bihar to Amlekhganj
in the Himalayan kingdom. The pipeline which is
to be constructed by IOC will be an environment-
friendly initiative, which will replace the current
arrangement where oil is supplied through hundreds
of trucks plying to that nation on a daily basis. PM
Modi during his visit to Nepal on August 3-4 had
announced that India will help lay pipelines in Nepal,
and the 43 km long Raxaul-Amlekhganj pipeline has
been proposed subsequently.
Farzad-B gas field on auction list
To pressurise India
In a bid to pressure India to invest in a Persian Gulf
gas field, Iran has put ONGC-discovered Farzad-B
gas field on a list of fields it plans to auction citing
delays by the Indian firm in its development. ONGC
Videsh Ltd, the overseas arm of state-owned ONGC,
had in 2008 discovered the Farzad-B gas field in its
Farsi exploration block in the Persian Gulf. In August/
September, 2010, it submitted a revised Master
Development Plan (MDP) for producing 60 per
cent of the 21.68 trillion cubic feet of in-place gas
reserves but had not signed the contract because of
threat of being sanctioned by the US..
TAPI gas pipeline
US firms drop out of race
Top US energy companies Chevron and
ExxonMobil have dropped out of the race to
become a consortium leader in financing the
Turkmenistan, Afghanistan, Pakistan and India
(TAPI) gas pipeline following dismissal of their
demand for an equity stake in the project, a report
in the local media said. The two companies were
seeking shareholding in the field from where
Turkmenistan would supply gas to energy-starved
Pakistan, Afghanistan and India in response to their
commitment to providing funds for laying the gas
pipeline, officials say.
BPCL to reserve
$2 billion for Mozambique
Bharat Petroleum Corp. Ltd (BPCL) says it will
reserve over $2 billion for oil and gas exploration in
Mozambique in the next four years. The investment
had been planned so that assets in Mozambique and
Brazil could enter the production phase at the end
of the 2019 financial year, BPCL group chairman
S. Varadarajan. Between 2010 to 2012, over 4,200
billion cubic metres (150 trillion cubic feet) of
natural gas reserves were discovered in the Rocuma
Basin, off the coast the northern Cabo Delgado
Province in Mozambique.
Aegis Logistics forms JV
With Japans Itochu Petroleum
Aegis Logistics Ltd, one of the Indias leading oil,
gas, and chemical logistics companies, has sold
40% stake in its Singapore based wholly owned
subsidiary, Aegis Group International Pte Ltd, to
Itochu Petroleum Co (Singapore) Pte Ltd, a wholly
owned subsidiary of Itochu Corporation for a
total consideration of $ 5.85 million (about `35
crore). In order for Aegis Logistics to strengthen
its competitive position in LPG sourcing, supply
and shipping and also to support the company in
building new LPG import terminal capacity in the
future, management wish to ink JV with Itochu Corp.
ONGC to begin oil production
From KG-5 block in 2019
ONGCs significant oil discovery in Bay of Bengal
will begin production in 2019, with a peak output of
4.5 million tonnes a year, 20% more than previous
estimates. The oil discovery in Krishna Godavari
basin block KG-DWN-98/2 or KG-D5 will be the first
large oil production from the east coast. The block
also has 10 gas discoveries. We are moving fast
on KG-D5 development. First gas from the block
is planned for 2018 and first oil in 2019, Oil and
Natural Gas Corp (ONGC) Chairman and Managing
Director Dinesh K Sarraf said.
RIL gas pricing dispute
SC appoints arbitrator
The Supreme Court appointed retired judge Michael
Kirby of Australia as chairman of a three-member
arbitral tribunal to decide the disputes between
the government and Reliance Industries on various
aspects of the Krishna-Godavari basin gas pricing.
Senior counsel Harish Salve for RIL suggested the
name and judge J S Khehar accepted it. Solicitor
General Ranjit Kumar did not raise any objection.
The court hoped the chairman-nominee would not
disappoint us and accept the post. The other two
members of the panel are retired Supreme Court
chief justices V N Khare and S P Bharucha.
GNRL Oil & Gas Limited
Strikes oil at Dholasan field
GNRL Oil & Gas Limited (formerly Heramec Limited
and a subsidiary of Gujarat Natural Resources
Limited) has announced a new oil discovery in
Mehsana formation in the newly drilled well North
Dholasan-1A in the Dholasan field, onshore India.
Presently, the well is under production testing to
determine whether the discovery is of potential
commercial interest. GNRL 0il & Gas Limited
holds 30 per cent participating interest and is the
operator for Dholasan field where two new wells
North Dholasan-1A and South Dholasan-1A have
been drilled.
ONGC to commission
Dahej petrochem plant by June 2015
Oil and Natural Gas Corps (ONGC) long-delayed
mega petrochemical plant at Dahej in Gujarat will be
commissioned by June next year but at 27 per cent
higher cost of `27,122 crore. ONGC had in 2006 set
up ONGC Petro-additions Ltd (OPaL) for building a
mega petrochemical complex at Dahej in Gujarat.
The plant was originally planned to come on stream
by end 2012 but delays have led to two revisions
in completion dates. Pre-commissioning activities
have started at Dahej. Commercial operations will
start by June 2015, ONGC Chairman and Managing
Director Dinesh K Sarraf said.

NewsBriefs | Oil & Gas International
Pakistan plans to sell stake
In oil & gas development
Pakistan said it plans to sell a stake in the countrys
biggest oil-and-gas exploration business, mostly to
foreign investors via the London Stock Exchange, in
a test of international financial appetite as the nation
begins to emerge from a political crisis. The planned
sale of as much as 10% of the governments share in
Oil and Gas Development Company Limited, slated
for early next month, will be the largest divestment
since Prime Minister Nawaz Sharif came to power
in June 2013 with promises of a large-scale
privatization program and economic revival.
Iran gas trunklines
To be built by Russian companies
Russian companies have voiced their readiness to
complete or construct Iran gas trunklines (IGATs),
Asghar Soheilipour director of the specialized
committee of investment at NIGC said. Soheilipour
stated the Russian firms are ready to handle IGAT-6,
IGAT-7, IGAT-9 and IGAT-11, all destined to export
Irans gas. He added that a memorandum has been
signed with a Russian company for the construction
of a pipeline stretching from Iranshahr to Chabahar
in southeastern Iran, noting that the implementation
of the pipeline needs $700 million. The Russian
delegation will travel to Iran, Soheilipour said.
Norways Statoil signs deal
Russias OAO Rosneft
Norways Statoil AS A signed a deal with Russian
state oil company OAO Rosneft to develop Russias
mostly untapped offshore energy resources in the
Arctic, in a venture that could require an investment
of as much as $100 billion over decades. Statoil
joined U.S.-based Exxon Mobil Corp. and Italys Eni,
which have signed similar deals, in the scramble
for the Russian Arctic, following Moscows approval
of long-awaited tax breaks for the potentially rich
offshore fields. Russia faces declining production
from its traditional oil regions and is eager to attract
Western energy companies with money & expertise.
PTT Exploration and Production
Expands its presence in Brazil
PTT Exploration and Production (PTTEP) announced
the 20 per cent acquisition in an oil and gas
exploration project in Brazil, a month after it struck
the first deal in the South American country. In a
statement, CEO and President Tevin Vongvanich
said that PTTEP Brazil Investments in Oil and Gas
Exploration and Production Limitada (PTTEP BL), a
subsidiary, has entered into an agreement to acquire
a total 20 per cent participating interest from Shell
Brasil Petroleo Ltda in Concession BM-ES-23. This
agreement is subject to approval of Brazils National
Agency of Petroleum, Natural Gas & Biofuels.
GE launches new gas turbine
Signs MoU with TransCanada
GE announced at the Turbomachinery Symposium in
Houston the launch of a new 16.5 megawatt (MW)
gas turbine (NovaLT16) for mechanical drive and
power generation applications in the oil and gas
industry. Developed by GE Oil & Gas to meet the
industrys evolving challenges, NovaLT16 combines
the best technology from industry-proven GE
turbines and benefits from the industry insights of
TransCanada Corporation. The 16.5 MW NovaLT16
gas turbine will provide up to 37% mechanical
efficiency, which raises the standards of efficient and
reliable pipeline compressions, etc.
ExxonMobil not to withdraw
Far-Eastern LNG project
US energy giant ExxonMobil will not withdraw from
the Far-Eastern LNG plant project, even though
recent reports in the media suggested otherwise.
The vice president of Russias Rosneft, Vlada
Rusakova said that she received no information
about the alleged withdrawal of ExxonMobil,
adding that she has several meeting scheduled
with the US companys management, reports RIA
Novosti. Rusakova also noted that building the
Far-Eastern LNG plant within the Sakhalin-1 project
is the best option, adding that the Sakhalin region
administration supports integration of $8 bln project.
National Iranian Gas Company
In talks over gas investments
The National Iranian Gas Company (NIGC) has
entered into talks with 17 domestic and foreign
companies for investment in gas industry, managing
director of NIGC, Hamidreza Araqi said. Araqi told
that NIGC has changed its investment procedures,
adding that in the past, the contractors and investors
tasked with providing necessary funds for investment
received the funds for implementation of the
projects, Irans SHANA news agency reported. He
added based on the new changes, investors and
contractors should join together for funding and
implementation of the projects.
Total to sell more assets
Cuts oil output target
Total will step up asset sales and overhaul
exploration after cutting its oil output targets and
the French oil company also said it was seeking
European funds to deliver a Russian gas project on
time despite international sanctions. Total, which
has struggled with production outages in Libya,
Kazakhstan and Nigeria, cut its 2017 output goal
to 2.8 million barrels of oil equivalent per day from
a previous 3 million. Frances biggest company
by market value and the Wests fourth biggest oil
and gas group launched a high-risk, high-reward
drilling strategy two years ago.
October 2014
www.InfralinePlus.com
US tight oil technology
May add upto 3 mb/d by 2030
There continues to be great potential for surprises
to the upside in production of US tight oil according
to Wood Mackenzies latest integrated analysis.
Growth in US tight oil continues to impress as
development technology and techniques have yet
to mature beyond adolescence, says Phani Gadde,
senior North America upstream analyst for Wood
Mackenzie. To better illustrate, Gadde says additional
volumes from Enhanced Oil Recovery (EOR) will
come on stream after 2020, and could add 1.5 to 3
million barrels per day (mb/d) by 2030, up to 25%
more oil than is being forecasted.
Frances Total sells Utica assets
To Korean companies for $450 million
Frances energy giant Total plans to sell its 25
percent interest in Cardinal Gas Services, a
midstream company in Ohios Utica shale play, to a
group of Korean companies for $450 million. Total
is selling its stake to Korean energy companies E1
Corp. and a consortium led by Samchully, for about
$400 million, plus an estimated price adjustment
of $50 million. The sale of this non-strategic asset
reflects the groups active portfolio management and
enables us to unlock value while continuing with the
development of our resources in the Utica basin as 49
planned, said Olivier de Langavant.
Siemens splurges $7.6 billion
On Dresser-Rand Group Inc
Germanys Siemens AG has agreed to buy U.S.
oilfield equipment maker Dresser-Rand Group
Inc for $7.6 billion (4.65 billion pounds) in cash,
paying a relatively rich price to belatedly beef up
its presence in the U.S. shale oil and gas industry.
The acquisition, which ranks among the biggest in
the history of the industrial group, will strengthen
Siemens position in the United States, its weakest
region, and bring it nearer catching up with rival
General Electric Co (GE.N). Siemens oil and gas
revenue will increase to around $11 billion, including
the acquisition of Rolls-Royce Holdings Plc.
KoPT looking to build
FSRU near Kolkata
Kolkata Port Trust invited Expression of Interest (EOI)
for setting up of non-jetty based Floating Storage
and Regasification Unit (FSRU) or Floating Storage
Unit (FSU) for import, storage and transfer of LNG.
Located in the open sea within KoPT limits, the
Floating Storage and Regasification Unit would be
connected via a subsea pipeline to a landfall point.
The FSRU/FSU would be a Common User facility
where users and marketers of natural gas will source
LNG from various suppliers, stands in the KoPT
invitation document.
 October 2014
www.InfralinePlus.com

InDepth
ONGC puts in place
new tendering process

50

ONGC plans to simplify, streamline material management processes

Had employed Boston Consulting Group to suggest the new strategy

Infraline Bureau

In a strategic move that is expected
to massively cut down delays in
project implementation and increase
oil and gas output, state-run oil
and gas major ONGC has decided
to overhaul its entire procurement
process. The Maharatna firms board
has given a go-ahead to implement
recommendations by the Boston
Consulting Group (BCG) that would
help to select the most economically
advantageous tender instead of
just lower cost, which has been the
practice so far.
Many international service
providers find the current practices
relatively cumbersome when
compared to those of other global oil
and gas majors. BCG has objectively
looked at multiple criteria and come
up with a set of re-designed processes
to help ONGC attract service
providers with proven technical
expertise and global repute. This
should help the countrys largest
explorer ONGC to get access to the
right technology and, consequently,
improved performance.
Petroleum Minister Dharmendra
Pradhan has raised concerns
about in-ordinate delays in project
implementation by ONGC that has
obstructed the firms hydrocarbon

output to increase. A review done by
the government early this year on
performance of 41 ongoing projects
of ONGC worth `78,265 crore
brought to limelight that nearly half
the projects, amounting to `41,259
crore, are behind schedule, with
delays in some cases being as large
as 9-10 years. Most of these delays
are because of contractors not able
to complete the job on time owing to
cost over-run, arbitrations and change
in scope of work.
ONGCs initiative for
simplification and
streamlining of material
management processes
include these steps:
Quality and Cost based selection
(QCBS) process: Adoption of QCBS
to take into account the quality and the
cost of the proposal in the selection
of the vendor. The procurement to
be classified into categories based
on degree of technical influence,
value impact of tender. Degree of
technical influence to be determined by
considering degree of differentiation
of offerings, importance of technical
DK Sarraf, ONGC Chairman
competence and importance of service
levels and value impact of tender
to be decided based on net present
value of benefits to accrue from said
procurement. The benefits would
be selection of most economically
advantageous tender instead of just
lowest cost, improved quality of
vendors in critical categories and
improved effectiveness in procurement.
Category Management: To create
well defined procurement strategy
and decommissioning costs being a
Many international
service providers find
the current practices
relatively cumbersome
when compared to
those of other global
oil and gas majors.
BCG has objectively
looked at multiple
criteria and come
up with a set of re-
designed processes
to help ONGC
attract service
October 2014
www.InfralinePlus.com
and methodology for each category
leading to efficiencies. Effectiveness
in rate negotiations and reasonability
due to accurate cost estimates. Conduct
vendor management. Benefits will be
category management brings a strategic
view to procurement, improved
vendor management and accuracy
in budgeting.
Life Cycle Costing: Life cycle
costing methodology for long life
cycle equipments with operations,
maintenance and commissioning
significant proportion of life cycle
costs. Create life cycle cost model for
equipments based on the ONGCs
system data of the equipment. External
consultants could also be used for one
time creation of life cycle cost model
for high spend capital equipment.
Evaluation of proposals for capital
equipment based on life cycle costs 51
will consider costs in acquisition,
operations and decommissioning.
Benefits will be most economic offer
over entire life cycle of procurement
and the right contracting strategy
Vendor Management (Registration,
Empanelment & Ratings): Vendor
Management System to increase the
efficiencies in effectively managing
the process right from Vendor
Identification to the Performance
ratings. It involves Vendor Registration,
Empanelment and Ratings. All
vendors inputs will be stored at ONGC
data server and that can be access to all
work centers. The vendors will have to
register themselves to portal providing
basic information and indicating the
category of goods they want to supply.
Vendors to upload standard documents
that can be used throughout the year
across tenders and quote the unique
document reference number while
submitting bids. Documents to be
picked up by ONGC from the system
and once approved, can be used for
other procurements directly. Vendors
 October 2014
www.InfralinePlus.com
InDepth
empanelled annually on fixed criteria
through open ICB tender during
opening of empanelment window for a
52 fixed duration Tenders in the category
floated only to empanelled vendors
with just price quotes or price quotes
with additional technical/quality
checks.Vendors to be rated objectively
on their performance on delivery on
milestones (during tender process and
performance of contract) and rating
impact future technical/quality scores
of vendor in subsequent tenders.
Benefits will be long term supplier
relationship, efficient data sharing
of vendors between work centers,
better vendor selection and vendor
performance, limit multiple submissions
of same documents by vendor, limits
multiple approvals of same documents,
vendor ratings give an objective view
to ONGC and the vendor of their
performance, inclusion of vendor ratings
in future tenders motivates vendors to
perform well in current tenders and
continuous vendor feedback process to
facilitate execution / delivery without
delays and actively work with quality
vendors to further improve.
Budgeting & Forecasting:
Forecasting on a three year rolling
Evaluation of
proposals for capital
equipment based on
life cycle costs will
consider costs in
acquisition, operations
and decommissioning.
Benefits will be most
economic offer over
entire life cycle of
procurement and
the right contracting
strategy
period will be input to budget which
will be prepared line item wise. Line
item wise budgeting with required level
of diligence to be carried out to obtain
Financial concurrence at budgeting
stage itself. Benefits will be forecasting
leads to economies of scale, reduction
in procurement effort, increased ease
of contracting and reducing tender
finalization time, among others.
Financial Criteria (LSTK and
Civil works): The criterion
has been developed to select
financially capable bidders.
Stringent criteria for JVs/
Consortiums: Only incorporated joint
ventures or consortiums to be allowed
to bid (services, rigs LSTK, FMS).
The use of technical collaborators to
be restricted and allowed if market
structure dictates it (for example
vessels).The financial and experience
criteria linked to scope of work to
be performed by specific partner and
also financial criteria to be considered
by converting roles/responsibilities
to value terms based on such split in
ONGCs cost estimates
Disposal: Rate contracts for disposal
of proposed scrap. A single standing
disposal board formed at each work
centre for condemnation and disposal
action. There is no requirement to
assess value to decide level of board
for condemnation. Fixation of reserve
price can be dispensed with. However
reasonability of disposal price needs
to be ascertained by the disposal
committee. System value to be used
as reserve price for surplus stores
and spares.
For suggestions email at feedback@infraline.com
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 October 2014
www.InfralinePlus.com

InDepth
BJPs roadmap for
Indias energy sector
Integration of policies for coal, power, gas, oil and bio-fuel to be priority
Private players may be allowed to commercially mine coal

54

Home Minister Rajnath Singh and Prime Minister Narendra Modi displaying commitment in making India self reliance in energy

Infraline Bureau

Aiming to provide 24x7 power to
all within its tenure of five years, the
Narendra Modi led BJP government is
stepping up efforts and is seen working
at multiple levels to ensure Indias
energy security.
From working on an integrated
energy policy which takes an umbrella
approach to looking at power, coal,
oil and gas and bio fuels to bringing
related energy departments under one
fold, the government is also planning
to put in place a robust infrastructure
catering to the needs of power and oil
and gas sector. It is planning a massive
pan-India gas pipeline infrastructure
of another 15,000 km criss-crossing
the length and breadth of the country
besides new power transmission lines
carrying electricity from regions surplus
in power to those facing shortages.
All these measures are aimed to fight
energy poverty and ensure energy
security to the country in times to come.
Besides working on reforms in
the coal and power sector in order
to increase the countrys oil and gas
production and reduce dependence on
imported fuels, the government is also
seen talking tough with its cash rich
PSU such as ONGC and Coal India Ltd
(CIL) and has asked them to submit
detailed roadmap to increase domestic
production of oil and gas as also coal.
Sharing the Bharatiya Janata Partys
governments roadmap on energy and
its chief priorities on this front, partys
energy cell convener Narendra Taneja
said: The energy sector we inherited

from the UPA government is in a very
bad shape. They did almost nothing
particularly during their last three
years. The entire oil and gas sector is
in a mess. Production of oil and gas
has gone down, and the overall picture
does not appear very encouraging at
the moment. Luckily, the fundamentals
are all still intact. We have a huge task
in our hand from reassuring investors
to revamp, rejuvenate and modernize
the entire sector. We are committed to
transforming the Indian energy sector to
global standards.
While public sector oil marketing
companies (OMCs) such as IOC,
BPCL and HPCL have the potential
to be world-class players, they are
not in a very healthy shape today as
their financial fundamentals have been
heavily compromised. They were not
allowed to realise their full potential -
the UPA government controlled these
companies so tightly that they could
hardly breathe. The NDA governments
first priority is to put these companies
on the recovery path and help them
build a robust health. Our oil and gas
companies are central to Indias energy
security We want our companies to
increase production of oil and gas from
domestic basins so that we can reduce
our dependence on imported oil and
gas, he said. The new government
has set out many priorities to revamp
and revitalize the energy sector. The
government aims to be more efficient
in dealing with policy issues and
implementing them. All the pending
decisions will be taken in time and
projects will be started.
Domestic oil production
In the oil and gas sector, there was
very little interest in the NELP (New
Exploration Licensing Policy) due to
poor administration and lack of specific
policy under UPA, a source claimed.
There are several issues relating to
NELP bidding rounds and uncertainty
on several fronts. The MoPNG
(Ministry of Petroleum and Natural
Gas) under UPA was pushing for
changing the licensing regime from
one form to another which could have
created lot of confusion, he said. The
aim of the new government is to first
establish clear principles and objectives
of the government policies and follow
that in letter and spirit.
The aim of the new dispensation is
to incentivize the domestic oil and gas
production. The priority is to first put
the house in order. The government
plans to streamline the working of
the downstream oil companies as
well as power companies so that gas
is available for power production
and other requirements. We will fix
accountability and responsibility to
create a favourable environment in the
oil and gas sector, a source said.
Energy is a
commercial commodity
and it will be good
that people appreciate
that, be it wind power,
oil and natural gas or
coal. Today we import
80 per cent of our oil
requirements and 30
per cent of our natural
gas. We are importing
coal, uranium and
equipment for
solar plants.
National Energy Policy
The national energy policy will focus
on balancing power generation through
conventional and non-conventional
sources. The new government wants
to have an umbrella approach when
it comes to energy issues relating to
oil, gas, coal, hydro power or nuclear
energy sector. The aim is to take a
holistic approach and put up a national
policy and vision and road map so
that helps the country realise its full
potential in each and every segment.
October 2014
www.InfralinePlus.com
India is a home to 1.26 billion people
and energy poverty is widespread.
Over 30 crore people have no access
to electricity. The country needs every
single source of energy. It does not have
the luxury to pick and choose. It needs
oil, gas, solar, wind, hydro, shale, coal,
nuclear, bio-mass or anything else.
Basically the new energy policy will
be such that it will target and seek to
adopt every single source of energy.
The government will actively engage
with the various state governments
so that they become stakeholders
and partners in energy security. Two
third of un-electrified houses in India
are located in just five states Uttar
Pradesh, Bihar, Assam, Odisha and
Jharkhand. Nearly 22 per cent of
worlds population with no access
to energy is in India. The challenges
are enormous.
In renewable energy sector the
central government plans a revolution 55
by making it economical and self
sustaining. Grid connectivity with
regard to renewable energy will
be taken up. At the same time, the
authorities will develop plans and
policies for off grid plants.
The UPA government talked
about integrated energy policy but it
never became a reality. The integrated
policy was not run in an integrated
manner. How an integrated energy
policy could be run without developing
your policy, formulating contours of
your policy, putting together a policy
infrastructure and executing it? The
BJP led government will have an
integrated approach. The bringing
together of various ministries will help
in developing an integrated approach.
We wish to integrate every state, city,
town and village in the energy agenda
of the country, a source close to the
government said.
Big investments needed
The country needs big investments
in the oil and gas sector especially
international investments for
 October 2014
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InDepth

exploration and production in deep the diplomatic relations which would energy security and ambitions. We
water basins. Besides this the country help ease out contentious political want to bring certain reforms in the
also needs international expertise and and business issues between the sector which will help the country
technology. International players should two countries, including a tripartite realize its full potential, modernize coal
come here and explore and help Indian deal between India, Pakistan and production and bring best available
companies in deep water and ultra deep Iran for supplying of gas from the practise in the sector to boost coal
water basins. We also need investments Persian country. production so that we could reduce
to build pan India gas pipelines from We are very keen but Pakistan first dependence on imported coal, sources
Mizoram to Gujarat and from Jammu needs to give us trust so that we are said. The Narendra Modi government
and Kashmir to Kerala. The aim is able to put our money into the project. will soon initiate efforts for allowing
that at least most of the population These pipelines are important for private companies to commercially
from urban and semi urban areas are countrys long term energy security. mine coal. The move may end the
able to source gas from these pipelines Given the political situation in Pakistan, monopoly of PSU Coal India Ltd
and not from LPG cylinders. These our companies and investors are not (CIL), they said.
pipelines would, in turn, be connected able to generate sufficient confidence in The new government is keen to
with LNG terminals and trans-national investing in pipelines in Pakistan, the allow private firms into commercial
gas pipelines. source close to the government said on coal mining to increase supply of
Iran-Pakistan-India gas pipeline: condition of anonymity. the fuel in the country. But we are
After Pakistani prime minister Nawaz not opening too many fronts at this
Sharief visited India for the swearing in Coal sector reforms moment. We will start discussions with
ceremony of prime minister Narendra The other important area is the coal stakeholders on commercial mining
Modi a positive note was prevalent in sector which is central to Indias only after Coal Indias public offer,
a senior coal ministry official was
56 quoted as saying in a media report. A
The new government is keen to allow private roadmap to allow private commercial
firms into commercial coal mining to increase mining of coal will be prepared after an
supply of the fuel in the country. But we are in-principle nod from all stakeholders is
not opening too many fronts at this moment. secured, he said.
We will start discussions with stakeholders The CIL has over the years facing
on commercial mining only after Coal Indias fire over not being able to increase
coal production to match the surge in
public offer.
demand although the country has huge
coal reserves. Private companies like
Tatas and Adani among others have
mined coal in India and abroad but
legally in India they cannot sell their
mined coals in the open market but can
only use them for their captive power
plants or production units.
Allowing them to sell coal in the
market will give a big boost to industry,
particularly power plants, and cut
imports that amount to almost `1 lakh
crore a year, the media report said.
Sources are saying that the central
government will engage with trade
unions of coal companies on the issue
of public offer of the CIL which is
slated for later this financial year. The
trade unions are reportedly opposed
to the move, and they are against
an amendment to the Coal Mines

Nationalization Act that seeks to allow
commercial coal mining since 2000.
According to media reports, the
amendment bill was introduced in
April 2000 and a group of ministers
was constituted in 2001 to engage
with the trade unions. The panel was
reconstituted in August 2009 but the
Manmohan Singh government was not
successful in getting the bill cleared.
The trade unions of Coal India Limited
are against the governments move to
offload 10 per cent in the behemoth.
The public offer could fetch
`23,000 crore, over half of the `43,425
crore that the government proposes to
mop up in 2014-15 from equity sale in
state-run companies, the report said.
The coal ministry has sought the law
ministrys comments on amending
the Coal Mines Nationalization Act.
This comes in the backdrop of the
recently amended Mines and Minerals
Regulation and Development Act that
provides for coal block allotments
through auction for captive use.
The Mines and Minerals
(Development and Regulation)
Act was amended only recently to
auction coal blocks. Now, we have a
challenge in opening the coal sector as
the amended act doesnt provide for
bidding blocks to commercial purposes.
We are very keen but
Pakistan first needs
to give us trust so
that we are able to
put our money into
the project. These
pipelines are important
for countrys long
term energy security.
Given the political
situation in Pakistan,
our companies and
investors are not able
to generate sufficient
confidence.
We have approached the law ministry
for comments, the official was
quoted as saying.
There was an urgent need to fast
track entry of the private sector in
commercial coal mining to augment
countrys coal production and reduce
imports of the fuel that cost `95,175
crore in 2013-2014, the government
said in the Economic Survey
released on July 9.
Merging of ministries
On the issue of combining and
October 2014
www.InfralinePlus.com
merging of three ministries Coal,
Power and Renewable, BJP Energy
cell convenor Narendra Taneja told
Infraline Plus: People are getting it
slightly wrong. These are different
ministries. They have been put under
the command of one senior minister
so that the decision making becomes
quick and fast. Otherwise the ministry
of coal is separate. Should there be
one integrated energy ministry
well, that is something that is being
thoroughly studied by experts and
the government.
The Gujarat energy model is an
inspiration for everybody in the country.
Gujarat has shown what can be done in
the fields of solar, wind, hydrocarbon
or power. The state has 24x7 power
supply. The state is being closely
studied by the central government and
wherever found necessary it would
be replicated.
57
Price of power
Energy is a commercial commodity and
it will be good that people appreciate
that, be it wind power, oil and natural
gas or coal. Today we import 80
per cent of our oil requirements and
30 per cent of our natural gas. We
are importing coal, uranium and
equipment for solar plants. Last
year we imported fuel worth USD
190 billion. It is important that we
communicate with the people and help
them understand that bulk of what we
consume is imported.
On the issue of acquisition of
assets by Indian companies, Taneja
said that So far the government was
mainly supporting the public sector
companies when it comes to acquiring
energy assets overseas. We are open
to supporting anyone and everyone
public private or state level companies
whosoever needs our support as long
as the company is registered in India.
They will get our full support in terms
of diplomatic push.
For suggestions email at feedback@infraline.com
 October 2014
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ExpertSpeak
Reforming LPG and Kerosene Subsidies:
Short term priorities & long term ambitions
A detailed study on the impact
of re-alignment of subsidies
on fuels used by the masses
revealed that the move did help in
eliminating hoarding and black-
marketing of the subsidised fuels,
but it also brought out the level
of dissatisfaction among the
beneficiaries with regard to the
scheme as a whole. Madhura
Joshi - associate fellow, and
Anjali Ramakrishnan - research
associate at TERI are sharing the
whole picture on fuel reforms.

Anjali Ramakrishnan Madhura Joshi

58 Around 31% of the population of the
country uses kerosene as its main source
of lighting and more 67% are still
dependent on biomass for their cooking
needs. Subsidies were introduced on
kerosene and LPG with the aim of
providing basic lighting and cleaner
cooking options at affordable rates for
the poorer sections of the rural and urban
population. However, the significant
difference between the (non-subsidized)
actual price and the (subsidized) retail
selling price (RSP) of kerosene/LPG
encourages diversion to black-markets,
irregularities and leakages from the
distribution system.Consequently, those
who need the subsidies the most are not
the ones who benefit the most. Theres
a need to ensure that these subsidies
are better targeted to ensure maximum
benefit to the intended population and to
reduce spurious consumption.
Under the PDS, kerosene is made
availableby the Central Government
available to the States and Union
Territories based on the coverage of
liquefied petroleum gas (LPG) and
pipednatural gas (PNG), the per capita
allocation of kerosene in the state and the
Research associate, TERI
previous years lifting by the respective
states. The OMCs supply kerosene to
the state delivery systems through fair
price shops (FPS) andoil depots. This
PDSKerosene is sold through a network
FPS and Kerosene Oil Depots (KODs) to
the final consumers.
As of March 2014, the under-recovery
of OMCs stood at `33.98 per litrefor
PDS kerosene and `499.52 per cylinder
Figure 1: Supply chain of PDS kerosene
Fiscal Subsidy
Refinery
PDS
gate/Sea OMCs
Kerosene
port
At import parity prices
Source: TERI (2012)
Associate fellow, TERI
for Domestic LPG. For the year 2013-14,
the annual reported under-recovery
was `30,575 per crore and `46,458 per
crorefor the fuels respectively. At the
same time, the fiscal subsidy offered
from the government budgets amounted
to `0.82 per litre for PDS Kerosene and
`22.58 per cylinder for Domestic LPG.
With the rising fuel prices over the years,
the subsidy amounts have also mounted.
Under-recovery
Ration
Wholesale FPSs/
card
Dealers KODs
holders
At discounted prices
 October 2014
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Table 1: Per-Litre/Cylinder Subsidy and Under-Recovery on Kerosene and LPG and fertilizers. In December 2011, the
Year PDS Kerosene (`/ Litre) Domestic LPG (`/Cylinder) Government of Rajasthan launched
From By Public Total From By Public Total
a pilot scheme in Kotkasim, Alwar
Govt. Sector Oil Subsidy Govt. Sector Oil Subsidy
to test a system of direct transfers of
Budget Companies Budget Companies
2002-03 2.45 1.69 4.14 67.75 62.27 130.02
cash subsidies to bank accounts of
2003-04 1.65 3.12 4.77 45.18 89.54 134.72 beneficiaries. In the case of LPG, the
2004-05 0.82 7.96 8.78 22.58 124.89 147.47 DBT was launched in 20 districts in July
2005-06 0.82 12.10 12.92 22.58 152.46 175.04 2013.As per the scheme, the subsidy
2006-07 0.82 15.17 15.99 22.58 156.08 178.66 amount under centrally funded social
2007-08 0.82 16.23 17.05 22.58 214.05 236.63 protection schemes would be transferred
2008-09 0.82 24.06 24.88 22.58 234.88 257.46
through an electronic payment system
2009-10 0.82 14.85 15.67 22.58 178.13 200.71
2010-11 0.82 17.39 18.21 22.58 249.94 272.52 (National Electronic Funds Transfer,
2011-12 0.82 26.46 27.28 22.58 320.30 342.88 NEFT). Under the proposed system, the
2012-13 0.82 31.16 31.98 22.58 427.14 449.72 fuel would be bought from the ration
2013-14 0.82 33.98 34.80 22.58 499.52 522.10 shop or LPG distributer (on delivery)
Source: PPAC
at the full (unsubsidised) market price,
after which the subsidy amount would
be electronically, transferred to the
beneficiary bank accounts.
The DBT scheme for LPG functions
under the framework of a (nominally
voluntary) national identify program
(Unique Identification [UID], or
Aadhaar )which would link the 59
individual banks accounts with UID
numbers. The PDS kerosene operates
with the bank accounts linked with
the ration card details held by the
consumers. The receipt of subsidy
continues to be contingent on fuel
consumption and, as with the current
system of subsidized fuel supply, no
forms of targeting is applied.

The Table 1 below gives a decadal Pilot Projects in Alwar

growth of the total subsidy for Kerosene
and LPG.
To reduce the inefficiencies present in
the distribution mechanism, there have
been longstanding demands to look at
new methods for delivering subsidies
to the intended population.One such
method towards reforming the subsidy
delivery mechanism is the direct transfer
of subsidies to the bank accounts of
the intended households who consume
the fuel(s).
The Direct Benefits Transfer (DBT)
was first announced in the 2011-12
Union Budget. It statedthe Governments
aim to move towards direct transfer
of cash subsidy for kerosene, LPG,
To reduce the
inefficiencies present
in the distribution
mechanism, there have
been longstanding
demands to look at new
methods for delivering
subsidies to the
intended population.One
such method towards
reforming the subsidy
delivery mechanism is
the direct transfer of
subsidies to the bank (banking officials, oil market company
accounts
and Mysore
With the aim of testing the impact
and efficacy of the schemes launched,
TERI and IISD undertook evaluation
the pilot launched forPDS Kerosene
in Kotkasim, Alwar; for LPG, Mysore
was selected.The study covered four
villages in Kotkasim and five taluks
in Mysore andcomprised of a primary
survey of 160 beneficiary households
for PDS Kerosene and 120 for LPG.
This was supported by structured
interactions with different stakeholders
coveringdistrict officials, key personnel
officials),dealers/local distributers, and
affected households. The survey ensured
 October 2014
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ExpertSpeak

geographic spread of the sample across Observationsof the study especially by poorer households, and
the district, with a mix of APL and BPL Domestic LPG, Mysore often on an interest-paying basisin
households; Antyodaya Ann Yojana A major requirement of the scheme was order to facilitate purchase of LPG
(AAY) households were also included in the seeding of the bank accounts to cylinders at the new decontrolled price
Kotkasim. The respective studies were Aadhaar numbers. While the intention (which increased to over INR 1,100)
undertaken with the aim of assessing of the process was to streamline and which aggravated the problem. These
the performance of the pilot project monitor purchases effectively, the entire budget constraints also forced households
against its stated objectives of subsidy process was often tedious and demanded to limit LPG consumption and shift back
access and fuel expenditure, as well as too much paperwork.Respondents to biomass-based cooking that essentially
highlight lessons on the implementation often reported an inability to qualify worked against states policy objective
process and potential challenges faced for subsidy payment due to their of promoting increased adoption of
before nationalising the scheme. gasconnection being in a relatives name, cleaner fuels. This is despite the fact that
However, it is important to note that, with delays in the processing of changes households (and particularly women)
while the scheme for PDS Kerosene to connection details leading to denialof valued LPG as a clean, efficient and
is in its third year of implementation, subsidy. There was also a persistent lack cost-effective fuel, and were keen to
DBT-for-LPG was suspended in all of clarity among the beneficiaries on continue to use it.
districts on January 30, 2014 pending the subsidy transfer system. Concerns
formation of a committee to examine were also raised regardingthe distance PDS Kerosene,
the extensive problems reported to banking locations for subsidy Kotkasim, Alwar
with the program, with LPG supply withdrawal. There was also an increase With the onset of the scheme in
reverting to the previous system. in short-term household borrowing December 2011, the kerosene sales
dropped drastically (from 90.8 kilolitres
(kl) from December 2011 to June 2012to
Subsidies on kerosene and LPG were aimed at 35.4 kl between July 2012 and January
60
providing basic lighting and cleaner cooking 2013) at the FPS. The price of kerosene
options at affordable rates for the poorer sections increased from the subsidised rate of
of the rural and urban population. However, `17.5 per litre to `51.22 per litre (retail).
the significant difference between the (non- The declining up-take by the FPS dealers,
subsidized) actual price and the (subsidized) led to a reduction in the overall allocation
retail selling price of kerosene/LPG encourages of Kerosene by the OMCs. This decline
diversion to black-markets, irregularities and could be majorly attributed to success in
leakages from the distribution system plugging diversion of kerosene for non-
household purposes, and the usage being
limited to those who actually used it for
lighting or at times cooking purposes.
One of the most affected parties of this
scheme, however, were the FPS dealers.
They faced a decline in revenues on
two counts: a fall in sales affecting their
earning from the commission, and the
complete removal of the opportunity
to earn by diverting even marginal
quantities of kerosene.
Some issues in implementation were
also identified in the study. While most
accounts were opened prior to the launch,
the coverage was not complete. New
accounts for the remaining beneficiaries
were also opened gradually after the
launch, leading to a delay in transferring
the subsidy into accounts. A major gap
in the implementation process was the

lack of full and correct information
about the scheme and the awareness
of related banking mechanism among
the beneficiaries. Misconception on the
delayed transfer of subsidy taken as
no-transfer altogether dissuaded many
households from purchasing kerosene at
all, for fear of not receiving the subsidy.
On the other hand, while the upfront
cost of purchasing kerosene may have
increased, the impact on household
expenditure and budgets was limited
primarily due to the rapid decline in the
uptake of the fuel.Therefore, there was
no visible increase in fuel expenditure.
However, in the case of kotkasim,
electricity access stood at an average
of 12-14 hours a day. Thus, it implied
a relatively high price elasticity of
kerosene as a source of energy. This led
to changes in consumption as soon as the
prices were increased. Moreover, since
kerosene was not used as a primary fuel
for cooking or lighting, the reduction in
its consumption cannot necessarily be
linked to an increase in consumption of
other fuels.
Recommendations and
Way Forward
The findings of the two studies, while
The suspension of the
DBT for LPG program
and constitution
of a committee to
examine the scheme
represents an
important opportunity
to reconsider both the
objectives and methods
of implementing
subsidy reform.
conveying successful achievement
in eliminating hoarding and black-
marketing of the subsidised fuels, also
brought out the level of dissatisfaction
among the beneficiaries with regard to
the scheme as a whole. Based on the
detailed evaluation results, the following
recommendations have been drafted
setting the policy context:
Adequate planning time and
preparation of structured systemfor
information dissemination must
be assured well before launch of
the scheme.
Ensure that the registration of
Aadhaar Numbers/ opening of
bank accountsfor all beneficiary
October 2014
www.InfralinePlus.com
households take place before launch
of the scheme.
Access to banking facilities must
be extended in villages must be
improved in order to avoid multiple
trips and additional costs borne by
the households. A possible adoption
of the Baking Corresponding (BC)
Model can be deliberated.
Conducting concurrent reviews
of the scheme that along with
scheme-related documents that
must be made publicly available for
better evaluation.
Provide higher incentives to the
FPS dealers in case of kerosene
(timely increase in commission and
regular communication) inorder to
ensure optimal penetration of the
scheme.Involving local stakeholders
in the implementation process
provides the necessary impetus to
better awareness among households
Overtime digitisation of fuel 61
purchases (through ration card or
LPG cards) and dealer transactions
to ensure permanent and tamper-
proof maintenance of records.
The suspension of the DBT for
LPG program and constitution of a
committee to examine the scheme
represents an important opportunity
to reconsider both the objectives and
methods of implementing subsidy
reform. This in turn ensures that
any future proposals to reform LPG
subsidies at a national level reflect
the lessons learnt from the pilot
districts. At the same time, lessons
from the ongoing scheme in Kotkasim
put implementation priorities in
perspective while ensuring efficient
delivery and subsidisation of kerosene
subsidies. Sharing of experiences
between the stakeholders, as well
as learning from implementation
experiences in other states.
The views in the article of the author are personal
For suggestions email at feedback@infraline.com
 October 2014
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StatisticsOil & Gas

Crude Oil and Gas Production under the PSC Regime for August, 2014
FIELD/BLOCK Average Oil / Condensate Production (BOPD) Average Gas Production (MMSCMD)
CB-OS/2 8,336 0.34
KG-DWN-98/3 6,169 12.45
M&S TAPTI 632 1.35
PANNA-MUKTA 20,521 5.66
RANIGUNJ SOUTH 0 0.37
RAVVA 20,907 0.46
RJ-ON-90/1 144,037 1.40
Production Increase/Start-up

Crude oil production under PSC regime during August, 2014

(000 Ton)
AREA/STATE OPERATOR FIELD BLOCK ANNUAL TARGET PRODUCTION DURING PRODUCTION DURING
(2014-15) AUGUST, 2014 AUGUST, 2013
A. OFFSHORE
EASTERN OFFSHORE
CEIL RAWA 1024.040 87.485 93.327
GSPC KG-OSN-2001/3 33.746 0.000 0.000
HARDY PY-3 0.000 0.000
HOEC PY-1 0.000 0.283 0.000
RIL KG-DWN-98/3 370.012 22.521 21.407
EASTERN OFFSHORE TOTAL 1427.798 110.289 114.734
GUJARAT OFFSHORE
CEIL CB-OS/2 336.515 32.959 31.087
GUJARAT OFFSHORE TOTAL 336.515 32.959 31.087
WESTERN OFFSHORE
ONGC+BG+RIL M&S TAPTI 23.647 2.338 2.773
ONGC+BG+RIL PANNA-MUKTA 934.211 81.965 78.793
WESTERN OFFSHORE TOTAL 957.858 84.303 81.566
A. OFFSHORE TOTAL 2722.171 227.551 227.387
62 B. ONSHORE
ARUNACHAL PRADESH
GEOENPRO KHARSANG 83.992 6.084 7.580
ARUNACHAL PRADESH TOTAL 83.992 6.084 7.580
ASSAM
CANORO AMGURI 0.000 0.000
ASSAM TOTAL 0.000 0.000
GUJARAT
ESSAR CB-ON/3 3.448 0.070 0.056
GSPC CB-ON/2 3.839 0.200 0.297
GSPC CB-ONN-2000/1 48.046 3.296 4.257
GSPC CB-ONN-2002/3 1.131 0.026 0.000
GSPC CB-ONN-2003/2 1.743 0.061 0.000
GSPC UNAWA 0.562 0.000 0.068
HERAMEC ALLORA 0.893 0.000 0.000
HERAMEC DHOLASAN 2.893 0.062 0.000
HKRAMEC KANAWARA 10.823 0.433 0.516
HERAMEC NORTH KATHANA 0.766 0.057 0.066
HOEC ASJOL 0.872 0.073 0.084
HOEC CB-ON/7 4.795 0.516 0.556
HOEC N.BALOL 0.000 0.000 0.000
HRDC SANGANPUR 0.300 0.007 0.007
INTERLINK BAOLA 0.000 0.000
JTI DHOLKA 36.120 3.851 3.425
JTI WAVEL 2553 0.306 0.311
NIKO HAZIRA 0.610 0.287 0.543
OILEX BHANDUT 0.000 0.000 0.000
OILEX CAMBAY 1.855 0.157 0.054
OILEX SABARMATI 0.180 0.029 0.042
ONGC CB-ONN-2002/1 0.996 0.000 0.000
SELAN BAKROL 7.916 0.990 0.932
SELAN INDRORA 1.320 0.102 0.067
SELAN LOHAR 8.500 0.679 0.721
GUJARAT TOTAL 140.161 11.200 1Z003
RAJASTHAN
CEIL RJ-ON-90/1 8703.334 621.274 752.281
FOCUS RJ-ON/6 4.050 0.301 0.165
RAJASTHAN TOTAL 8707.384 621.574 75Z446
B. ONSHORE TOTAL 8931.537 638.858 772.029
GRAND TOTAL 11653.707 866.410 999.416
 October 2014
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Natural gas production under PSC regime during August, 2014

(in Million M3)
AREA/STATE OPERATOR FIELD BLOCK ANNUAL TARGET PRODUCTION DUR- PRODUCTION
(2014-15) ING AUGUST, 2014 DURING AUGUST, 2013
A. OFFSHORE
EASTERN OFFSHORE
CEIL RAWA 292.872 14.217 41.519
GSPC KG-OSN-2001/3 517.206 0.000 0.000
HARDY PY-3 0.000 0.000
HOEC PY-1 31.965 3.344 6.374
RIL KG-DWN-98/3 4619.296 385.898 434.541
EASTERN OFFSHORE TOTAL 5461.339 403.459 482.434
GUJARAT OFFSHORE
CEIL CB-OS/2 95.238 10.596 8.779
GUJARAT OFFSHORE TOTAL 95.238 10.596 8.779
WESTERN OFFSHORE
ONGC+BG+RIL M&S TAPTI 532.811 41.756 71.254
ONGC+BG+RIL PANNA-MUKTA 2027.486 175.430 170.643
WESTERN OFFSHORE TOTAL 2560.297 217.186 241.897
A. OFFSHORE TOTAL 8116.874 631.241 733.110
B. ONSHORE
ARUNACHAL PRADESH
GEOENPRO KHARSANG 14.203 1.816 2.031
ARUNACHAL PRADESH TOTAL 14.203 1.816 Z031
ASSAM
CANORO AMGURI 0.000 0.000
ASSAM TOTAL 0.000 0.000
GUJARAT
ESSAR CB-ON/3 0.000 0.000 0.000
GSPC CB-ON/2 6.342 0.606 0.584
GSPC CB-ONN-2000/1 1.478 0.115 0.087
GSPC CB-ONN-2002/3 0.060 0.000 0.000
GSPC CB-ONN-2003/2 0.000 0.002 0.000
GSPC UNAWA 0.111 0.000 0.012 63
HERAMEC ALLORA 0.000 0.000 0.000
HERAMEC DHOLASAN 0.000 0.000 0.000
HKRAMEC KANAWARA 6.222 0.464 0.240
HERAMEC NORTH KATHANA 0.000 0.000 0.000
HOEC ASJOL 0.000 0.000 0.000
HOEC CB-ON/7 0.304 0.039 0.040
HOEC N.BALOL 8.030 0.797 0.750
HRDC SANGANPUR 0.096 0.006 0.006
INTERLINK BAOLA 0.000 0.000
JTI DHOLKA 9.125 1.658 1.074
JTI WAVEL 0.000 0.000 0.000
NIKO HAZIRA 44.861 4.983 6.078
OILEX BHANDUT 3.302 0.000 0.000
OILEX CAMBAY 1.082 0.000 0.000
OILEX SABARMATI 0.000 0.000 0.000
ONGC CB-ONN-2002/1 0.000 0.000 0.000
SELAN BAKROL 2.345 0.546 0.628
SELAN INDRORA 0.000 0.005 0.003
SELAN LOHAR 0.000 0.011 0.012
GUJARAT TOTAL 83.358 9.231 9.513
RAJASTHAN
CEIL RJ-ON-90/1 616.485 43.330 40.973
FOCUS RJ-ON/6 378.675 28.371 15.439
RAJASTHAN TOTAL 995.160 71.701 56.412
B. ONSHORE TOTAL 1092.722 8Z748 67.957
C. CBM
JHARKHAND
ONGC JHARIA 3.378 0.228 0.269
JHARKHAND TOTAL 3.378 0.228 0.269
MADHYA PRADESH
RIL SOHAGPUR EAST 3.000 0.012 0.332
RIL SOHAGPUR WEST 1.140 0.032 0.038
MADHYA PRADESH TOTAL 4.140 0.044 0.371
WEST BENGAL
ESSAR RANIGANJ EAST 368.785 6.676 2.720
GEECL RANIGUNJ SOUTH 196.316 11.424 10.074
WEST BENGAL TOTAL 565.101 18.100 11794
C. CBM TOTAL 572.619 18.372 13.433
GRAND TOTAL 9782.215 732.360 814.500
 October 2014
www.InfralinePlus.com
NewsBriefs | Renewable National
200Gw Renewable Energy Plants
India seek investment from US
Indian PM Narendra Modi will seek U.S. investment
and technology to build 200 gigawatts of renewable
plants over 10 years. Thats roughly equal to the
total power-generating capacity of the Middle East
combined and would require about $210 billion,
based on current benchmark capital costs in India.
State-run companies NTPC Ltd. (NTPC), the biggest
power generator, and Coal India Ltd. (COAL), the
biggest producer of the fuel, will be responsible for
implementing the project, according to the report.
2500 MW solar plant in AP
Govt inks pact for projects worth `800 bn
Piyush Goyal said that the countrys first ultra mega
solar power park with a capacity of 2500 MW will come
up in AP. He announced this after nine memoranda
of understanding were inked, majority of them in the
power sector, coinciding with the 100 days rule of N.
Chandrababu Naidu as the CM of Andhra Pradesh.
The Union Ministry of New and Renewable Energy and
Andhra Pradesh Government and the Solar Energy
Corporation of India, AP Genco and New and Renewable
Energy Development Corporation of Andhra Pradesh
64 entered into agreements to develop ultra mega solar
park in the State.
Neyveli Lignite
To invest over `5 bn in clean energy projects
Power producer Neyveli Lignite Corporation has lined
up renewable energy projects worth over `500 crore.
The company plans to set up over 80 MW of wind
and solar energy projects. The board has approved
the 25 MW solar power project at Neyveli, Tamil
Nadu, the company informed. The Navratna company
said that of the 25 MW, 10 MW will be installed in
an area of about 54 acres in first phase and another
15 MW as an expansion in the second phase. The
project is scheduled to be completed within 9
months from the date of LOA.
Tata Power Solar
To supply modules to L N Bangur Group
Tata Power Solar, one of the pioneering solar
manufacturers in the world, announced that it has
won a significant DCR order under JNNSM phase-2
batch-1. The company will supply the entire module
requirement for the 10 MW project to be built by
Palimarwar Solar Project Private Limited in Rajasthan
which belongs to the L N BANGUR Group and is
held under under its renewable energy arm, LNB
Renewable Energy (Pvt) Ltd. The 45,000 modules
needed for the project will be manufactured at Tata
Power Solar state-of-the-art manufacturing facility
in Bangalore.
Coal India
Plans building $1.2 bn of solar projects
Coal India Ltd, the biggest producer of the fuel, is
considering building 70 billion rupees ($1.2 billion)
of solar projects to compensate for carbon pollution,
said people familiar with the plan. The company is in
talks with the Ministry of New and Renewable Energy
for a combined capacity of 1,000-megawatts, said
the people, who asked not to be identified before an
announcement. Earlier this month, coal and power
minister Piyush Goyal described Coal India and
power producer NTPC Ltd. as massive polluters
and said they must give back to the society.
Bharat Heavy Electricals
To develop 20 Mw solar power plant
BHEL will develop a 20 Mw solar power plant at
Manamunda industrial estate in Boudh district. A
letter of intent has been issued to BHEL which will
develop the proposed solar plant. It will also operate
and maintain the plant for a period ten years, said
an official of GEDCOL. BHEL is currently engaged in
the design, engineering, manufacture, construction,
testing, commissioning and servicing of a wide
range of products, systems and services for the core
sector companies in the field of power, transmission,
transportation, renewable energy, oil and natural gas
and defence.
Asian Development Bank
To provide $150-m loan to Rajasthan
The Asian Development Bank has agreed to give
$150-million loan to the Government of India to
help build transmission lines for renewable energy
in Rajasthan. The Government of India and ADB
have signed two loan agreements. The loans form
the first tranche of the $500-million Rajasthan
Renewable Energy Transmission Investment
Program approved by ADB in 2013. The loans will
be used to finance high-voltage transmission lines
and sub-stations to be built by Rajasthan Rajya
Vidyut Prasaran Nigam Ltd.
Telangana
To give licenses to build 500Mw of solar capacity
Indias newly formed state of Telangana announced
plans to auction licenses to build 500 megawatts
of solar capacity. Solar installations are set to
accelerate in India, including Telangana, carved
out of Andhra Pradesh state in June, as Prime
Minister Narendra Modis government pledges to
extend photovoltaic power from irrigat ion pumps
supplying farmers water to village huts and mall
rooftops. Companies must submit bids by Sept. 26
to Telanganas Southern Power Distribution Co., the
state-run utility that plans to sign 25-year power
purchase contracts with the solar plants.
Rajasthan
IFC to give `2.02 billion for solar project
The IFC will provide about `202 crore loan for a
100-MW solar project being devweloped by ACME
Solar Energy in Rajasthan. Overall cost of the plant is
about `808 crore. IFC, which is a part of the World
Bank Group, had earlier extended funding for ACMEs
solar project in Madhya Pradesh. The proposed
IFC investment consists of an IFC A Loan of up
to `2,019 million (approximately USD 34 million)
and possible syndication of up to `3,883 million
(approximately USD 66 million), according to the
global lender.
Offshore wind policy
India to target 1 Gigawatt by 2020
India is set to introduce an offshore wind policy
targeting 1 gigawatt by 2020, seeking to mimic
Europes success in generating power at sea. The
Ministry of New and Renewable Energy will seek
cabinet approval for the policy shortly, according to
Joint Secretary Alok Srivastava. Development of the
technology has made offshore wind projects viable
now, Srivastava said by phone. By 2018, the cost of
electricity from offshore windmills will equal that of
land-based projects in Asias second-biggest turbine
market, he said. Wind farms in some states in India
are generating power cheaper than new coal plants.
Rays Power
To set up 50 MW solar farm
Rays Power Experts announced its plans to set up 50
mw solar power generation park within six months
in Andhra Pradesh. Rahul Gupta, Director, Rays
Power Experts, in a statement said, Independent
Solar Power Parks are a brand new vertical we are
entering into and this project marks the first step
towards this direction. We aim to complete this
project by January 2015 and then gradually move on
to establish similar solar parks in other parts of the
country. The company has invested `20 crore of the
`300 crore overall project cost.
Punjab
L&T commissions 7.52 MW rooftop solar unit
L&T Construction said it has commissioned a large
rooftop solar plant of 7.52 MW at Amritsar. More
than 30,000 panels have been erected on the rooftop
of a shed spread over 94,000 sqm. The energy
generated from the unit is being fed to the local grid
through PPA with the state distribution company
under the New and Renewable Sources of Energy
Policy.L&T said it has used the multi-crystalline
module technology and central inverters to optimise
efficiency. Since the modules were to be placed on
fragile asbestos roof sheets, lightweight aluminium
structures were used for mounting the modules.

Japan
To build 60MW in Floating Solar Plants
Japanese solar panel company Kyocera Corp is
teaming up with Century Tokyo Leasing Corp to
construct a pair of gigantic floating solar energy
plants which could be operational by as soon as
April 2015. The two plants, both of which will be
built in collaboration French renewable energy firm
Ciel Terra, will be situated in ponds in the Japanese
prefecture of Hyogo just west of Osaka. The first will
possess 1.7 megawatts of capacity and the second a
capacity of 1.2 megawatts, with work on the project
set to commence next month.
UK wind farms
Abu Dhabi to invest 525m
High quality global journalism requires investment.
Please share this article with others using the link
below, do not cut & paste the article. Abu Dhabi
is investing 525m in one of the UKs largest
wind farms, in a deal that will see it buy part of a
stake held by Statoil of Norway. Masdar, owned
by Mubadala, Abu Dhabis state investment fund,
is purchasing a 35 per cent stake in the 1.5bn
Dudgeon project off the Norfolk coast from Statoil,
the Norwegian state-controlled oil company.
110-MW Texan Wind Turbine
Vestas wins order
Vestas Wind Systems A/S said it won a
110-megawatt wind turbine order from Duke Energy
Corp. (DUK)s renewables unit in Texas. The order
for 55 V110 2-megawatt machines is for the Duke
Los Vientos V wind farm, Vestas said in an e-mailed
statement. The farm is due for completion late next
year, and the deal includes a three-year service
agreement, Vestas said.
Alstom
Lifts Brazil wind production to 900MW
Alstom has announced the third shift of its wind
turbines factory located in Camaari, State of Bahia,
Brazil, which will now reach a total manufacturing
and assembly capacity of up to 900 MW per year.
When the factory was inaugurated in 2011, its
total production capacity was 300 MW. This was
enhanced in 2012 to 600 MW. Three years after its
inauguration, the factory has thus tripled its capacity.
As a consequence, the additional investment in
Camaari unit will be worth 3 million ($A4.3
million) in the next four months.
100MW Moroccan wind farm
GE to support construction of plant
GE has been awarded a contract to deliver 56 1.7-
100 wind turbines for the 100MW Akhfennir wind
farm in Morocco. Being developed near Akhfennir
in southern Morocco by Energie Eolienne du Maroc
(EEM), a subsidiary of Nareva, the wind facility will
help meet Moroccos renewable energy goals while
the electricity generated will support local industrial
firms. The project is part of a 720MW first phase of
the Morocco Governments plan to generate 2GW
of energy from wind by 2020 with an investment of
MAD31.5bn ($3.62bn).
Renewable energy
Azerbaijan invests over $120 mn
Over 100 million AZN has been invested in the
development of alternative and renewable energy
sources in Azerbaijan from public funds so far,
the head of the State Agency for Alternative and
Renewable Energy of Azerbaijan Akim Badalov
told reporters Sept.23 within the framework of
the regular business forum organized by Caspian
European Club.
California solar power plant
Google to invest $145mn
Google is providing $145m in equity financing for
the Regulus solar plant in Kern County, California,
US. The project can produce enough energy to
completely power over 10,000 homes. Being built
by solar energy services provider SunEdison on
an abandoned gas and oil field in North America,
the power plant will provide power to Southern
California Edison through a 20-year power
purchase agreement. The 737-acre 82MW DC solar
photovoltaic power plant will feature over 248,000
SunEdison mono-crystalline solar PV modules.
EDF Renewable Energy
To sell 57 MW of solar projects
California-based EDF Renewable Energy has agreed
to sell two solar projects with a combined 57 MW to
U.S. energy company Dominion. The two California
projects include the 32.6 MW Cottonwood Solar
and 24.3 MW Catalina Solar 2. Cottonwood consists
of three sites, two of which are ground-mounted
installations located on private land in the central
California counties of Kern and Kings totaling 31.6
MW of capacity. The third site is a 1 MW carport
structure to be built in Marin County. The project has
secured a 25-year power purchase agreement.
October 2014
www.InfralinePlus.com
International
Duke Energy
Buys 40 MW Elm City solar power project
HelioSage Energy, a national developer of utility
scale solar projects, has announced the sale of a
40 megawatt AC solar PV project to Duke Energy,
the largest electric holding power company in the
United States. The project, known as the Elm City
Solar Facility, is presently under development in
Elm City, North Carolina. When commissioned, it
will be one of the largest solar PV facilities east of
the Mississippi and will be owned and operated by
Duke Energy.
West African solar project
EIB to finance 23 million euros
The European Investment Bank has agreed to
provide 23 million euros to support investment in
one of the largest photovoltaic power stations in
sub-Saharan Africa. The 70.5 million euro project
will be constructed at Zagtouli on the outskirts of
Ouagadougou, the capital of Burkina Faso, where
it will be operated by the national electricity utility
Sonabel. The new plant is expected to act as a
benchmark for future solar investment across the
continent.
65
1800 Mw renewable energy
Jordan to commission capacity by 2018
Middle Eastern countries are rapidly working
towards strengthening renewable energy
infrastructure, and Jordan is the latest one to
announce plans to add substantial capacity over
the next few years. The energy minister of Jordan
recently announced that the country is expected
to commission about 1,800 MW of wind and solar
power capacity by 2018. This includes 200 MW
of solar power projects, for which power purchase
agreements have already been signed.
Mainstream Renewable Power
Wins deal to develop $525m wind farm in Ghana
Mainstream Renewable Power, the wind energy
company established by the Airtricity founder Eddie
OConnor, has reached an agreement with a Swiss
company to buy a $525 million (405 million)
coastal wind farm project in Ghana. MRP says it
will co-develop the Ayitepa project, located about
40km from the African nations capital, Accra,
alongside the Swiss vendor NEK Umwelttechnik until
the deal closes next year. The company said the
225-megawatt wind farm will supply about 10 per
cent of all electricity generated in Ghana, once the
project is completed.
 October 2014
www.InfralinePlus.com

InDepth
Clean energy revolution,
the buzzword

66

India embarks on power revolution building on the Gujarat model

Challenges galore as Modi prepares blue print to power economy

Infraline News Service

Expectations are high from the
Narendra Modi government, which
came to power on the development
plank. Though Modi has not said
much about how he plans to end
the policy paralysis, especially
true in the power sector, he seems
to have embarked on a clean
energy revolution.
The BJPs manifesto indicated a
countrywide solar power revolution,
building on the model successfully
implemented in Gujarat.
As chief minister of Gujarat, Modi
pioneered the first incentives for
solar power in 2009, a year before
UPA-II launched the Jawaharlal Nehru
National Solar Mission (JNNSM).
We need a saffron revolution that
focuses on renewable energy sources
such as solar energy, to meet Indias
growing energy demand, Modi
had said after taking the reins of the
newly-formed government at the
Centre. A boost to solar industry, he
feels will drive the economy and cut
the number of blackouts.
In his Presidential Address,
outlining the new governments
plans, President Pranab Mukherjee
too stressed development of energy-
related infrastructure, human resource
and technology. The government
will come out with a comprehensive
National Energy Policy. It will expand
the national solar mission and connect
households and industries with gas-
grids, he said.
At the opening of Indias biggest

photovoltaic plant, Modi called for
more environment-friendly ways to
power the economy. The Japanese
announcing the launch of a feasibility
study by Japan International
Co-operation Agency (JICA) for
setting up of a 10 MW canal-top grid
connected solar photovoltaic (PV)
power plant in Gujarat as a model for
next generation infrastructure seems
to be a step in that direction.
India has suffered a power deficit
since 1984. According to Central
Electricity Authority, the country is
expected to see a power shortage of
5.1 per cent this fiscal even as the
deficit is projected to be very high
in the southern region. The shortfall
is hampering efforts to revive the
economy of the country.
Challenges
Over 40 per cent of rural and 6 per
cent of urban Indian households dont
have electricity, while load shedding is
still common across India. Blackouts
may spread to Delhi, Haryana and
Maharashtra as slash in consumer
bills, a populist move before elections,
has jeopardized a $31 billion
government bailout of the industry.
According to S L Rao, head of
central electricity regulator from
1998-2001, the current model of
power generation is broken, with
inefficient utilities and fuel subsidies
skewing the market.
State electricity boards are
incurring heavy losses because of
costly fuel and little pricing power.
Moreover, the sector barely
grew in the fiscal year ending in
March as delays in clearances
and funding issues stalled many
infrastructure projects.
The power sector needs tough
politics, and the only person in politics
today who might be capable of that
kind of toughness is Modi, said Rao,
according to his website.
He thinks nuclear power can
displace coal in the energy mix, but
If these renewable resources
were exploited properly,
we wouldnt have required
mining coal or spending so
much on importing crude
and petroleum products
Narendra Modi
Prime Minister
fears plans for more reactors will
get caught up in red tape. We have
a lot of potential for solar and wind,
particularly in parts of Rajasthan,
Gujarat and Karnataka, he said.
Rao, who was appointed to the
regulatory body by an independent
committee, said he has no
political affiliation.
Over 40 per cent
of rural and 6 per
cent of urban Indian
households dont
have electricity, while
load shedding is still
common across India
Modis vision
Addressing a gathering after
dedicating to the nation 765 KV
Solapur - Raichur transmission
lines, Modi said, The dream of my
government is to provide electricity all
seven days a week, 365 days a year,
24 hours a day to every village.
The Prime Minister stressed
reducing Indias dependence on
coal, which generates 68 per cent
of electricity. We have to focus
on generating more power from
our abundant renewable energy
resources, Modi said.
Promoting solar power, wind
energy, geothermal and conventional
hydropower can enable India to
October 2014
www.InfralinePlus.com
meet its future energy demand. If
India switches from coal and oil, it
is possible that 70 per cent of the
electricity and 35 per cent of its total
energy can be derived from renewable
resources by 2030.
If these renewable resources were
exploited properly, we wouldnt have
required mining coal or spending
so much on importing crude and
petroleum products, he said. 67
The Prime Minister pledged
an energy overhaul with saffron
revolution. The colour of energy is
saffron, he said, referring to so-called
green and white revolutions in the
1900s that turned India into a major
agricultural exporter and the worlds
top milk producer.
To achieve energy security for
all, the government is exploring the
countrys coastline to set up nuclear
power plants. Gas-based power plants
are proposed in Uttar Pradesh, Odisha
and Madhya Pradesh and thermal
power plants in coal-producing
states of Bihar, Jharkhand, West
Bengal, Chhattisgarh and Andhra
Pradesh. Hydro power plants have
been planned in Jammu & Kashmir,
Himachal Pradesh, Uttarakhand,
and the northeasten states. Solar
energy will be harnessed in Rajasthan
and Gujarat.
Industry executives believe
Modi will act in favour of solar.
Mr. Modi has already articulated
his wind and solar vision, said
Vineet Mittal, managing director of
 October 2014
www.InfralinePlus.com

InDepth

Welspun Energy Limited, adding, from solar energy by 2020. aided by a plunge in solar prices and
I wouldnt be surprised if he came Carrying it forward, the Modi higher costs for oil, gas and coal,
out with a 200,000-megawatt target government has doubled the target according to Tarun Kapoor, the joint
by 2025. The company owns the of the upcoming phase of JNNSM. secretary at the Ministry of New and
countrys largest solar power plant Piyush Goyal, the minister for coal, Renewable Energy.
at Bhagwanpura. power and renewable energy, in his
100-day address, said the current States dominance
Staying on track targets of clean energy would be kept Modi has been talking of his big
Modi had accused the Manmohan intact; their achievement period would ideas during rallies across the country,
Sing-led UPA government of pushing be expedited to bridge gap in energy but he has been very, very frugal with
the country into dark age by security and accessibility. specifics, said Satish Misra, senior
mismanaging the power sector. Singhs administration intends fellow at the Observer Research
But it is no denying the fact that to more than triple Indias solar Foundation think tank in New Delhi.
solar power capacity reached 2,444 capacity to 10,000 megawatts by His doubts are genuine as the state
MW, from practically nothing in 2017, enough for about 40 million administrations wield more power in
2009, backed by UPAs flagship solar Indian homes. It wants photovoltaic the sector than the central government.
power programme JNNSM. The working as cheaply as coal by 2022. States control the power grids and
Mission, divided into three phases, Its on track to surpass those goals supply free or below-cost electricity to
envisages 20,000 MW of electricity five years earlier than expected, farmers, thereby increasing the debt.
In Gujarat, Modi split electricity for
agriculture from the rest of the market
To achieve energy security for all, the as a viable answer to the problem.
government is exploring the countrys coastline Farmers get cheap power only for
68 to set up nuclear power plants. Gas-based a few hours in a day. Uninterrupted
power plants are proposed in Uttar Pradesh, supply is guaranteed to businesses,
Odisha and Madhya Pradesh and thermal households and industries at a cost.
An A-plus rating to Gujarats
power plants in coal-producing states of
distribution utilities from the Ministry
Bihar, Jharkhand, West Bengal, Chhattisgarh of Power speaks volumes of effective
and Andhra Pradesh. Hydro power plants management of resources, which is
have been planned in Jammu & Kashmir, seconded by the fact that it is one
Himachal Pradesh, Uttarakhand, and the of the two states that didnt suffer
northeasten states. a power deficit in the 10 months
to February, according to Central
Electricity Authority data.
The renewable sector is very much
driven by state chief ministers more than
the central government, Sumant Sinha,
chief executive officer of Goldman
Sachs Group Incs ReNew Power
Ventures Pvt., said in an interview.
Even if the central government gives
the right policies, when it doesnt flow
down, its a problem.
Even as the Centre plans to roll out
3,000 MW project under JNNSM in
Andhra Pradesh, it expects more states
to expressed intention to be part of
this central mega programme, official
sources said.

For suggestions email at feedback@infraline.com


InDepth
With govt efforts underway Solar
Power gets a new lease of life
Solar is key to Indias energy security plan and goals to cut the its import dependence
Plans are afoot to help ailing local manufacturers use their idling capacities
Infraline News Service
The government has dropped a plan to
impose antidumping duty on solar cells
imported from the U.S., China, Taiwan
and Malaysia as the South Asian nation
looks to give a boost to its solar-power
ambitions and cut dependence on
imported fossil fuels.
But will this be enough for the
holistic development of the countrys
solar power sector that comprise both
solar power developers and solar
equipment manufacturers.
Solar power generation has risen
from almost nothing in 2010--when
India launched the Jawaharlal Nehru
National Solar Mission to build a solar
power generation capacity of 20,000
megawatts by 2022--to 2,753 megawatts
now on the back of government
subsidies and programs to promote the
use of solar power in the country. Such
an ambitious plan also called for local
manufacturing and assembling of solar
cells to feed the power ambitions.
But in the last four years solar power
generators multiplied their presence in
October 2014
www.InfralinePlus.com
69
the country while local manufacturers
suffered against imported equipment.
Local solar power companies preferred
using cheaper imported gear compared
to the one made locally as the overseas
equipment also supported by attractive
foreign loans.
As local manufacturers lost a lot
of business to rivals in U.S, China
among others, they complained to the
government in 2012 for dumping of
cheaper solar cells in India at below
market price. The Directorate General
 October 2014
www.InfralinePlus.com
InDepth
of Anti-Dumping and Allied Duties,
a part of Commerce and Industry
Ministry, initiated its investigations
in November 2012 and concluded
in May 2014 that indeed dumping
happened in the country, injuring the
local manufacturers. It recommended
imposing duties ranging from 11 to
81 U.S. cents per watt of electricity
produced on solar cell manufacturers
such as First Solar Inc and Trina
Solar Ltd.
But after taking a considerate view
about Indias energy security plan
and goals to cut the countrys import
dependence, the Ministry of Finance
rejected the recommendation.
The decision comes as a relief to
domestic solar-power generators who
have planned huge investment in the
sector as well as the policy makers who
plan to expand the use of solar energy in
the country. But manufacturers cry foul
and there are murmurs of a bias or short-
70
termed vision.
Indias imports of oil, gas and
coal have ballooned in recent years,
contributing to a chronic trade deficit
that has shaken international confidence
in its future. To help reduce import
dependence and limit carbon emissions,
India had launched the national solar
mission. That would bring solar to about
5% of its power mix from nearly 1%
now. India currently meets more than
75% of its energy needs from imports.
The rare rejection of a
recommendation also underscores the
emphasis Prime Minister Narendra
Modi has put on the future of solar
power in energy-hungry India. Mr. Modi
is said to be the pioneer of the solar-
power boom in the state of Gujarat,
where he was its chief minister before
becoming the countrys prime minister.
But then Mr Modi is the one who
on August 15 gave the call for Make
in India to boost manufacturing in the
country. India has set a target of raising
the share of manufacturing to 25% of
gross domestic product by 2025, from
15% now, as it looks to boost the ailing
economy and generate thousands of jobs
A senior official from the Ministry
of New and Renewable Energy said
plans are under way to increase the
solar-power target under the solar
mission, something that would also
help ailing local manufacturers use
their idling capacities and get more
orders under mandatory local content
purchase rules.
Indias imports of oil,
gas and coal have
ballooned in recent
years, contributing
to a chronic trade
deficit that has
shaken international
confidence in its
future. To help reduce
import dependence
and limit carbon
emissions, India had
launched the national
solar mission. That
would bring solar
to about 5% of its
power mix from nearly
1% now.
Analysts cheered the move to drop
the antidumping tariff plans. They
said access to sophisticated foreign
technology and cheap overseas loans,
which come along with the equipment-
import deals, is key to Indias solar
plans. Also, antidumping duty would
render solar power expensive for
consumers, who mostly use coal-fired
electricity, analysts added.
But Indian Solar Manufacturers
Association, which represents
manufacturers, said they want
to expand and enhance domestic
manufacturing and need governments
assistance. Till date, nearly a dozen
of local solar equipment or cells and
modules manufacturers have shut
shops or are running at extremely low
capacities. They have put on hold
investment plans and are awaiting
suitable government policy that would
uplift their business.
Sector experts say that
manufacturers need a regular flow
of orders from domestic solar power
generating companies as well as help
from government in lowering customs
duty and altering the inverted duty
structure so that their input cost goes
down and they can compete well with
overseas suppliers.
International trade expert says that
the move to drop the plans to levy
anti-dumping duty could also help
in improving upon a trade dispute
with the U.S. India and the U.S. are
already battling it out at the World
Trade Organization, where U.S has
charged India of indulging in unfair
practice of a mandatory local content
rules for solar power developers. India
maintains that the rules which helps
local manufacturing does not violate
any international law.
Piyush Goyal, the renewable-energy
minister, in August, also said the
government is committed to supporting
local manufacturers, but didnt say how
the government will be doing it.
Some analysts say bad economics
can not support the growth of any
industry and government should rather
invite overseas local equipment makers
to change the dynamics of domestic
manufacturing, something that will meet
governments manufacturing goals as
well give solar power developers access
to quality technology.
But some in the government argue
in favor of hand holding the young
Indian manufacturers against unfair
international competition or unfair trade
practice and dumping.
But for now, it seems Mr Modi has
overruled as he aims for power for
all by 2025.
For suggestions email at feedback@infraline.com
 October 2014
www.InfralinePlus.com

InDepth
Modi launches mega initiative to make
India a global manufacturing hub

71

Manufacturing contributes 17% of countrys GDP v/s 69% that comes from services
Modi says, My definition of FDI for the people of India is First Develop India

Infraline News Service

Just as Modi was about to leave for
the US, he launched the mega Make
in India initiative as industry titans
including Mukesh Ambani, Cyrus Mistry
and Kumar Mangalam Birla and others
keenly heard the Prime Minister. Though
he didnt announce any incentives for
industry to invest in manufacturing,
Modi stressed that besides the Look
East policy, we must also Link West.
Many believed that the message was
directed towards international businesses,
especially those in the US.
Inviting global companies to India,
Modi said, I do not have to waste time
to inviteI need to give the address. For
the world, FDI is an opportunity. My
definition of FDI for the people of India
is First Develop India.
While the government strongly
displayed its intent to make India a global
manufacturing hub, it is the business
houses and not the government that will
have to be in the drivers seat. The intent
behind launching such an initiative is to
make India a global manufacturing hub.
To sharpen the process involved
in making this dream a reality, the
government is setting up a dedicated cell
to answer queries of business entities
within 72 hours. The government also
plans to closely monitor all regulatory
processes to simplify issues involved and
lessen the regulations of compliance.
Industry experts highlight the fact
that in a long time, the government has
promised to ease the process of doing
business in India. It has assured to clear
investment proposals in a time bound
 October 2014
www.InfralinePlus.com

InDepth

manner; to make labour laws more

flexible; to trust businesses enough to
allow them to self-certify documents; and
so on. These are indeed morale booster
for business houses and would encourage
investments towards the cause.
Manufacturing contributes 17% of
countrys GDP compared to 69% that
comes from services and 14% from
agriculture. In terms of employability,
only 100 million do manufacturing
Reliance group will create 1.25
lakh new jobs and invest `1.8-
lakh crore in the next 12 to 15
months as part of the movement.
Indias long-term GDP growth
potential is 8-10 per cent
Mukesh Ambani
Chairman, Reliance Industries

Manufacturing
jobs, while 232 million work on working 14 hours a day and motivates
contributes 17% farms and 142 million in the services a billion Indians to dream and do,
of countrys GDP businesses. About 474 million people Ambani said adding, You have
compared to 69% in the country are gainfully employed, inspired the whole India to dream and
that comes from as per official statistics. do. He said that the group will invest
services and 14% In recent years, investment in `1.8-lakh crore in the next 12 to 15
manufacturing has been hindered by months. Indias long-term GDP growth
from agriculture. In
many factors inflexible labour laws; potential is 8-10 per cent, Ambani said.
terms of employability, complex tax regime; depressed market. The first speaker among the
only 100 million do Describing Make in India campaign industrialists, Cyrus Mistry said his
72 manufacturing jobs, as a historic day for Indian industry, Tata Group remains fully committed to
while 232 million work Mukesh Ambani, Chairman Reliance investing in India. Generating 12 million
on farms and 142 Industries said that RIL will create jobs from manufacturing was a challenge
1.25 lakh new jobs over the next 12-15 and that employability has to be
million in the services
months as part of the movement. improved through skilling, Mistry added.
businesses. PM Modi dreams and does, He also highlighted the need for
sound infrastructure, balanced tax and
duty structure and efficient logistics.
Pre-requisites for Make in India initiative to see success Our aspirations on the global
Administrative machinery has to be efficient for healthy business environ- manufacturing arena will be fulfilled
ment. The country suffers from an image where people believe the country if we address certain challenges on
has too much of red tapism when it comes to allowing companies to do priority, Mistry added.
business. A business-friendly environment can be created with easier ap- Pointing out senior officials of
proval processes and a hassle-free clearance mechanism. the biggest defence firms, prominent
The systems should be created to iron out elements that adversely affect American pension funds and
manufacturing competitiveness. Focus should also be on offering tax investment banks would attend the
concessions to companies who plan to invest in India session, USINPAC Chairman Sanjay
System must recognize and respect novelty and innovation. Small and Puri said, These are the kind of people
medium-sized enterprises need to be encouraged as they can help coun- who provide the building blocks of
try take next big leap in manufacturing. The government has to chart out Make in India.
plans to give special sops and privileges to these sectors.
The industry lauded the initiative
Having a huge manufacturing industry in neighbouring China, India by and felt that the government now looks
default will be compared with Made in China campaign. Indian industry serious to address some of the factors
should continuously build its strength so as to outpace Chinas envious
by doing away with the controversial
position in the manufacturing sector.
retrospective tax, but there are other
To achieve desired success in Make in India initiative, India needs to
fundamentals that have to be addressed
encourage research and development and high-tech imports. The country
also needs to be better prepared to do world class R&D. The government
by businesses themselves.
should ensure conducive environment for R&D
For suggestions email at feedback@infraline.com
 October 2014
www.InfralinePlus.com

StatisticsRenewableEnergy
Tentative domestic manufacturing capacity of solar cells and modules (Till June 2014)
Companies Cells (MW) Module (MW) Companies Cells (MW) Module (MW)
Installed Capacity Installed Capacity Installed Capacity Installed Capacity
capacity under capacity under capacity under capacity under
Operation Operation Operation Operation
as on date as on date as on date as on date
Access Solar - - 18 - Surana Ventures 130 - 60 -
Ajit Solar - - 20 4 TATA Solar 180 70 200 200
Alpex - - 75 50 Titan Energy - - 140 -
Bharat Heavy Electricals 8 8 8 8 UPV Solar Udhaya Energy 12 5 7 -
Limited (BHEL) Photovoltaics
CEL 3 3 10 2 USL Photovoltaics - - 7 -
EMMVEE Photo Voltaic - - 135 135 Vikram Solar - - 150 75
Power Pvt. Ltd. Waaree Energy - - 250 -
Euro Multivision Ltd. 40 40 - - Websol Energy System 120 - 100 100
Evergreen - - 20 20 XL Energy Ltd. 80 - 210 -
Enfield Solar - - 20 - Gautam Solar - - 25 25
Green Brilliance - - 45 - Modern Solar - - 25 25
HHV - - 50 50 Shan Solar - - 60 30
Indosolar Ltd 450 80 - - Sova Power - - 50 50
Jupiter Solar 70 70 - - Jain Irrigation - - 55 55
KL Solar - - - - Andromeda - - 30 20
Kotak Urja Pvt. Ltd. - - 25 25 PV Power - - 14 14
Lanco - - 75 75 SunShine Power Products - - 10 3
Maharishi Solar Technology 10 - 20 - Krishma Solar - - 20 20
Micro sol - - 14 - Aggarwal Renewable Energy - - 15 15
Moser Baer 200 - 230 80 Pvt. Ltd.
Photon Energy Systems - - 45 40 HBL Power Systems Ltd. - - 20 20
photonix - - 25 - Topsun Energy - - 40 40
PLG Power - - 50 25 JJ PV Solar Pvt. Ltd. - - 25 25
Premier Solar Systems (P) 20 20 75 40 SLG Solar - - 8 -
Rajasthan Electronics & - - 20 - Plaza Power & Infrastructure - - 20 20 73
Instruments Ltd. Company
Reliance Industries Ltd - - - - Sun Energy Solar Solution - - 30 10
Shurjo - - 5 - Bharat Electronics Ltd. 3 1 5 3
Solar Semiconductor 60 - 195 - Total 1386 297 2756 1304
Source: MNRE

State wise Biomass Tariff Determined by CERC (Till 2015)

S. State Tariff Order Fixed Variable Net
No. Date Cost Cost Applicable
Tariff
1 Andhra 28-02-2013 2.21 3.34 5.55
Pradesh
15-05-2014 2.91 4.19 7.10
2 Haryana 28-02-2013 2.25 3.80 6.05
15-05-2014 2.97 4.77 7.73
3 Maharashtra 28-02-2013 2.26 3.89 6.15
15-05-2014 2.98 4.88 7.85
4 Punjab 28-02-2013 2.27 3.98 6.25
15-05-2014 2.99 4.99 7.97
5 Rajasthan 28-02-2013 2.20 3.32 5.52
15-05-2014 2.91 4.16 7.07
6 Tamil Nadu 28-02-2013 2.20 3.29 5.49
15-05-2014 2.90 4.12 7.02
7 Uttar Pradesh 28-02-2013 2.21 3.40 5.61
15-05-2014 2.92 4.26 7.18
8 Others 28-02-2013 2.23 3.57 5.80
15-05-2014 2.94 4.48 7.42
Source: CERC
 October 2014
www.InfralinePlus.com

StatisticsRenewableEnergy
Status of Target Vs Achievement of Channel Partners for the year 2013-14 in SWH Systems
Sl. Channel Partner name Target Achieved %age Sl. Channel Partner name Target Achieved %age
No area (M2) area (M2) No area (M2) area (M2)
1 Akson Solar Equipments Ltd 5000 2114.09 42.28 37 Savemax Solar Systems P Ltd 20,000 17,973 89.87
2 Alfa Interiors Pvt. Ltd. 5,000 2,996 59.92 38 Shriram Green Tech 5,000 1,205 24.10
3 Anu Solar Power Pvt. Ltd. 60,000 23,961 39.94 39 SLT Energy Ltd 5,000 2,327 46.53
4 Bipin Engineers Pvt Ltd 40,000 17,776 44.44 40 Solar Hitech Geysers 8,000 3,358 41.98
5 Bosch Limited 20,000 0 0.00 41 The Standard Products 15,000 6,204 41.36
6 Choice Solutions Ltd. 5,000 1,147 22.94 42 Star Coating Services 10,000 10,002 100.02
7 Dheemanth Solar Industries Pvt. Ltd 9,000 2,112 23.47 43 Steam Power Enertech 15,000 9,076 60.51
8 Divya Industries 10,000 9,359 93.59 44 Sudarshan Saur Shakti Pvt. Ltd. 1,40,000 86,477 61.77
9 Eagle Technologies 20,000 6,705 33.52 45 Sun Tech Industries 5,000 5,000 100.00
10 Ecosun Energy Company 7,000 6,377 91.10 46 Sunrise Engitech Pvt. Ltd Pune 20,000 2,563 12.82
11 Electrotherm Renewable 55,000 15,017 27.30 47 Sun Zone Solar Systems 12,000 12,030 100.25
12 EmmVee Solar Systems Pvt. Ltd. 1,00,000 37,292 37.29 48 Supreme Solar Systems 30,000 30,007 100.02
13 Greentekindia Pvt Ltd 60,000 3,851 6.42 49 SVL Trading Corporation 5,000 1,374 27.47
14 Honeywell Automation India Ltd 7,000 7,017 100.24 50 Tata Power Solar Systems Limited 1,20,000 52,446 43.70
15 Hykon Solar Energy Pvt. Ltd. 7,400 1,127 15.23 51 Velnet Non Conventional Energy 30,000 28,216 94.05
Systems
16 Inter Solar Systems Pvt. Ltd 35,000 18,000 51.43
52 V Guard Industries Ltd 15,000 15,002 100.02
17 Jain Irrigation Systems Ltd 1,02,053 56,554 55.42
53 Vijaya Industries 8,000 1,189 14.86
18 Jay Renewable Energy Pvt Ltd 15,000 3,247 21.65
54 Ados Renewable Pvt Ltd 5,005 1,030 20.57
19 Just Accura 5,000 2,542 50.84
55 Farmson Enviro Care 5,000 3,599 71.98
20 Kaushal Solar Equipments Ltd 6,800 5,820 85.59
56 Glazaer Solar Energy P Ltd 5,000 0 0.00
21 Kosol Hiramrut Energies Pvt. Ltd. 50,000 22,384 44.77
57 Helious Clean Energy Pvt Ltd 15,000 3,303 22.02
22 Kraftwork solar pvt.ltd 7,500 0 0.00
58 Kotak Urja Pvt Ltd 5,000 3,882 77.63
23 Laxmi Agro Energy Pvt. Ltd 10,000 10,003 100.03
59 NRG Technologies Pvt. Ltd 5,000 0 0.00
24 MM Solar Pvt. Ltd 5,000 0 0.00
60 Proficient Energy Pvt Ltd 10,000 0 0.00
25 Machinocraft Pune 6,000 3,003 50.05
61 Rashmi Industries 10,000 0 0.00
26 MG Rama Energy Pvt.Ltd. 10,000 7,592 75.92
62 Shri Solar System 5,000 0 0.00
27 Nucifera Renewable Energy Systems 13,500 3,353 24.84
74 63 Standard Engineering Company 5,000 3,423 68.46
28 Nuetech Solar Systems Pvt. Ltd. 50,000 26,214 52.43
64 Suntek Energy Systems 5,000 1,622 32.43
29 OM Energy Equipment Rajkot 22,000 13,132 59.69
65 Sun Brio Energy Pvt. Ltd 5,000 0 0.00
30 Orb Energy Pvt. Ltd 50,000 28,290 56.58
66 Waaree Energies Pvt Ltd 25,000 0 0.00
31 Photon Energy Systems Ltd 15,000 8,621 57.47
67 Zodiac Energy Pvt Ltd 5,000 1,026 20.51
32 Powertroniks solar pvt ltd 12,000 3,046 25.39
68 Redsun Solar Industries 5,000 4,656 93.11
33 Prachi International Ltd 5,000 0 0.00
69 Akshar Technology 5,000 4,954 99.07
34 Racold Thermo Limited 1,50,000 69,544 46.36
70 Jay Khodiyar Manufacturers 5,000 1,690 33.81
35 Redren Energy Pvt. Ltd. 65,000 30,001 46.16 71 Siddhakala Renewable Energy 5,000 3,315 66.29
36 Roop Arinna Fabricators Pvt Ltd 7,000 2,150 30.71 Systems
Source: MNRE

Solar water heating systems (SWHS) in India

Year Solar water heating systems
(million sq. m Collector area)
Potential Annual Cumulative
Addition
Upto Dec 2004 140 1 1
Till Mar05 140 0 1
REC Trading Volume and Price for September 2014 Till Mar06 140 0.5 1.5
REC Type Buy Bid Sell Bid Price Volume Till Mar07 140 0.4 1.9
(No. of (No. of (INR/ (No. of Till Mar08 140 0.4 2.3
certificates) certificates) Certificate) certificate) Till Mar09 140 0.6 2.9
Qty (MWH) Till Mar10 140 0.63 3.53
PXIL 13,656 50,20,166 1,500 13,656 Till Mar11 140 0.94 4.47
1,099 2,08,717 9,300 1,099 Till Mar12 140 0.51 4.98
IEX 8,994 43,42,307 1,500 8,994 Till Mar13 140 2.0 6.98
264 1,61,260 9,300 264 Till Mar14 140 1.12 8.1
Source: PXIL and IEX Source: MNRE

OffBeat
Vistara set to miss
October-launch date
Vistara is still to get a number of clearances from the aviation regulator
A December or January launch seems more plausible
Infraline Bureau
Vistara, Indias most-awaited airline
will have a delayed take-off. According
to the original plan, Vistara the Tata
Group-Singapore Airlines backed full
service carrier was scheduled to get
airborne by mid-October.
The launch had been strategically
timed to coincide with Diwali one of
the biggest Indian festivals and tradi-
tionally the peak season for air travel in
the country when airlines are known to
mint money.
Vistaras launch, said sources,
has been pushed back by at least two
months as a number of regulatory
clearances are yet to come dashing
hopes of the airline management to
make hay while sun shines during the
festival period and also the passengers,
who have been eagerly awaiting to get
a taste of the renowned hospitality of
the Tata Group and Singapore Airlines.
The Glitch
The official version goes that Vistara is
still to get a number of clearances from
October 2014
www.InfralinePlus.com
75
the aviation regulator, the Directorate
General of Civil Aviation (DGCA). The
first hurdle was caused apparently by
the airline not obtaining approval for
the ferry flight.
Vistaras first aircraft, a brand
new Airbus A320, was to fly from
the Airbus headquarters in Toulouse,
France to Delhi. The airlines engineers
and crew along with a senior DGCA
official had flown to Toulouse to take
the delivery of the aircraft and fly it
to India. While Vistara had obtained
 October 2014
www.InfralinePlus.com
OffBeat
the approval from DGCA for the ferry
flight similar flight clearances from
countries over which the aircraft would
have flown had not been obtained. So
the ferry flight had to be delayed. The
team returned empty handed.
A number of clearances are yet to
be given. The entire process is going
to take some time. There is no chance
of an October launch. A December or
January launch seems more plausible,
a DGCA official said.
Vistara is going the AirAsia India
way. Getting an air operators permit is
an arduous task in India, said Subhash
Goyal, chairman of the STIC Travel
Group, one of the countrys biggest
travel companies.
The History
While a delay in getting a licence is no
big deal but when it comes to Tatas
one should keep their fingers cross.
Tatas and Singapore Airlines have a
76
jinxed history as far as aviation in India
is concerned despite the fact that Tatas
are the pioneer of aviation in India. In
1932, JRD Tata started Tata Airlines,
which was later renamed as Air India.
This is their third bid to enter the
Indian domestic aviation market.
In 1995, Tata and SIA had made
the first attempt to launch a domestic
carrier but the project could never take
off due to a change in civil aviation
policy that barred foreign carriers from
holding stake in domestic airlines. In
2000, the two had bid for a stake in Air
India but the offer was withdrawn later.
TATA-Singapore Airlines venture
was long overdue, should have started
15 years back. Hope, this JV doesnt
become a victim of the negative
aviation politics like in 90s, said Kapil
Kaul, South Asia chief executive of
aviation consultancy firm Centre for
Asia Pacific Aviation.
October-December quarter
a saving grace for airlines
Operating an airline is considered one
of the toughest things in the world.
British business tycoon, Sir Richard
Branson had famously said the easiest
way for a billionaire to become a
millionaire was to start an airline.
Branson himself owns Virgin Atlantic
considered one of the worlds
best airlines.
In India it is even tougher to operate
an airline due to the high operating
costs involved vis--vis airlines across
the globe. Indian carriers operate in an
exceptionally high-cost environment.
The single largest element contributing
to airline costs is Aviation Turbine
Fuel (ATF), which accounts for
40% of the operating cost of Indian
carriers, as against a figure of only
20% for international carriers. ATF in
India is priced, on an average, almost
60% higher than internationally,
said Goyal.
While a delay in getting
a licence is no big deal
but when it comes to
Tatas one should keep
their fingers cross.
Tatas and Singapore
Airlines have a jinxed
history as far as
aviation in India is
concerned despite the
fact that Tatas are the
pioneer of aviation in
India
The widening differential in ATF
prices and its huge negative impact on
airline balance sheets are eroding its
competitiveness. In the backdrop of
higher oil crude prices, there is a severe
risk of dampening of passenger market
growth by quickly making air travel
out of reach for a significant portion
of the market, which was fuelling its
growth. The losses being registered by
Indian carriers may result in reduced
connectivity thereby affecting growth
in this sector, he said.
Tata Group
Founded by Jamsetji Tata in
1868, the Tata group is a global
enterprise headquartered in India,
and comprises over 100 operating
companies with operations in
more than 100 countries across
six continents, exporting products
and services to over 150 countries.
The revenue of Tata companies,
taken together, was $103.27 billion
(around `624,757 crore) in 2013-14,
with 67.2 percent of this coming
from businesses outside India. Tata
companies employ over 581,470
people worldwide. There are 32
publicly-listed Tata enterprises
and they have a combined market
capitalisation of about $132.35 billion
(as on August 1, 2014).
Singapore Airlines Limited
When Singapore Airlines was formed
in 1972, it operated a modest fleet
of 10 aircraft to just 22 cities in 18
countries. Today, Singapore Airlines
operates a modern passenger fleet
of more than 100 aircraft and its
network, including Singapore Airlines
Cargo and SilkAir destinations,
covers a total of 109 destinations
in 40 countries. In October 2007,
Singapore Airlines, a member of the
Star Alliance, made aviation history
again as the first to fly the worlds
largest passenger aircraft, the
Airbus A380.
To add to the high cost of ATF is the
service tax that is killing the industry.
India is amongst a few countries in
the world that levy service tax on air
tickets. Service tax during the financial
year 2012-13 had been increased four
times and at present, service tax is
levied upon 40% of gross ticket value
while earlier it used to be 10% on
gross ticket value or `100 per journey
whichever was lower for domestic
passengers and 10% of gross ticket
value or `500 per journey whichever
was lower for international passengers.
So, this brings us to the point
why October-December is such an
important period for airlines. Starting

with Durga Puja, the quarter sees a
number of festivals which make it the
most travelled period for Indians. A lot
of them working outstations visit home
while schools are shut for vacations.
Air travel picks up drastically during
this period and this is one quarter when
all airlines make a profit.
Airlines make a killing during this
period. Air fares are sky high. Last
minute fares can be upwards `50,000.
Even at those prices tickets get sold so
one can imagine the rush, Goyal said.
It was with this background in mind
that Vistaras management was eyeing
an October launch. The buzz around
the airline was so strong that it would
have been an instant hit. Moreover,
there are just a handful number of
business class seats in the domestic
market, a senior official of the airline
said. Only Jet Airways and Air India
offer the super luxurious business class
seats. The launch had been so planned
that business class seats would have
been sold out. Also, the economy class
would have got a great response as the
airline will offer complimentary meals
and passengers have been waiting
to see what Tatas will offer, the
official said.
Any airline, across the globe, is
profitable if it has a decent occupancy
in the business and first class. Thats
where airlines make money. Premium
class passengers get the moolah, no
doubt, Goyal said.
The October launch would have
ensured full business class occupancy
till mid-January when people get back
from holidays. Having made money in
the first four months would have been
fantastic for the airline and would have
helped it gear up for the lean travel
months that would follow, admitted an
Air India official.
Domestic air travel in the country
dips in February with annual
examinations in schools and foggy
weather. It picks up again in June as the
summer breaks kick in.
Vistara, derived from the Sanskrit
word, Vistaar, which means limitless
expanse, enters the Indian aviation
market when all except one airline is
bleeding. The Tata-backed Vistara will
take on Naresh Goyal-promoted Jet
Airways and government-owned Air
India in the full service segment. Both
Jet and Air India have been posting
huge losses. Tatas, a known name in
the hospitality industry, have promised
October 2014
www.InfralinePlus.com
that the airline will have unprecedented
luxury on board, in terms of comfort
and passenger handling. Very aptly,
the airlines philosophy would be
athithi devo bhav or guest to be
treated as God.
Advantage lost
With that advantage lost, Vistara would
now like their first aircraft to arrive
as late as possible. Or as nearer to the
launch as possible. Having an aircraft
on the ground adds up to your cost. The
airline would unnecessarily have to
bear all kinds of maintenance expenses
while continue to paying the parking
charges while getting zero revenues
in return. Already, the hiring is on in
full swing.
Thats actually not a good thing
for the new airline, said Saj Ahmad, a
London-based aviation expert. Hiring
people means you have to pay for
their salaries. And in airline business 77
the salaries contribute a lot to cost of
operations. Pilots earn upto `6 lakh a
month on an average. Engineers make
around `3-4 lakh a month. So, if you
have 200 employees, that means a lot
money, Ahmad said.
The airline is expected to have
staff strength of 400 at launch. That
Vistaras hiring is on in full swing is
no secret. The airline has managed to
poach top executives from rival airlines
which would mean adding to cost
before the first Rupee is earned.
It has already hired at least a dozen
senior staff from rival carriers Jet
Airways and Indigo to join its crew.
Employees are excited. Few can match
a brand like Tata-Singapore Airlines.
Ashutosh Verma, who was a senior
commander with IndiGo has joined
Vistara where he will head the safety
wing. Verma will be joined by Deepak
Joshi, who was a quality manager
with JetLite.
Niyat Baru has been appointed as
the Chief Financial Officer (CFO) of
the start-up, in which Tata Sons has
a 51% stake while the rest is held by
 October 2014
www.InfralinePlus.com

OffBeat

SIA. Baru is an old Tata hand and 2009-10.

was formerly CFO of Tata Realty The airline has a three member
and Infrastructure Limited. He board, which consists of Chairman
has also worked with The Indian Prasad Menon, Mukund Rajan
Hotels Company Limited (IHCL). and Singapore Airlines executive
IHCL and its subsidiaries are vice-president Mak Swee Wah.
collectively known as Taj Hotels In early June, Vistara began
Resorts and Palaces. by hiring its senior cabin crew.
A Directorate General of Civil It picked up Priyanka Singh, as
Aviation (DGCA)-approved cabin-crew in-charge. Singh has
examiner, trainer and instructor over 6 years experience as an
has come in from Indigo. For route air hostess spanning across Jet
planning and aircraft deployment, Airways and Indigo. The airline
Vistara has selected some key is currently holding walk-in
members from Tata Tele Services interviews for cabin crew through
and Docomo, both sister concerns the week at its Gurgaon office.
of the airline. Tata-SIA would jointly invest
As senior manager planning, $100 million initially to set up
Vistara has hired Ashish the airline with Tatas investing
Maheshwary, who has been a $51 million.
network planning analyst for SIA
since 2008. To head its facilities Break-even by fourth
management, Vistara has chosen year
78 Kamal Satsangi, who has joined Vistara aims to break even in the
the airline from Tata Teleservices. fourth year of its operations. The
S Varadarajan has been airline, sources said, has projected
appointed as the Chief Human a profit of $16 million in the
Resource Officer of Tata-SIA. fourth year of its operations. As
He was previously with per internal estimates, Tata-SIA
Tata Teleservices. is likely to incur a loss of $37.6
Singapore Airlines ace pilot, Captain million in the first year, $23.1 million
Roshan Joshi has joined as vice- As per internal in the second year and $6.2 million in
president and Chief Pilot at Tata-SIA. estimates, Tata-SIA is the third year of its operations.
To officiate as nodal officer-cum- likely to incur a loss The Tata-SIA projected profitability
manager safety training for its crew, date seems modest compared to
Vistara has chosen former Kingfisher
of $37.6 million in the AirAsia India, another Tata Group-
Airlines Juanella Colaco. She joined first year, $23.1 million backed start-up airline. Mittu
the airline in February helping it draw in the second year and Chandilya, CEO, AirAsia India plans
up a high safety standards plan and get $6.2 million in the third to break even within four months of
it approved by the DGCA, where she year of its operations. launching operations.
worked on a year-long deputation in The airline plans to start with 87
flights connecting nine cities to Delhi
Vistara Birth of a Brand and gradually increasing to over 300
September 2013 Tata Sons and SIA sign agreement to announce joint flights in four years. It plans to acquire
venture and apply for FIPB approval up to 16 aircraft from 2014 through
October 2013 TATA SIA Airlines receives FIPB approval. 2017, with planned deliveries of five
November 2013 The TATA SIA Airlines Limited board is formed and the aircraft in 2014, four aircraft each in
company gets incorporated 2015 and 2016 and three aircraft in
December 2013 Applies for no objection certificate from aviation ministry 2017. The aircraft will be configured
April 2014 Receives NOC from Civil Aviation Ministry and applies for
with between 145 and 175 seats.
airline operators permit
August 2014 Brand Vistara is unveiled
For suggestions email at feedback@infraline.com

InfraWatch
Stalled road projects get
policy push
More power to states, the fast track to clearances and approvals
Govt to implement road project in EPC mode instead of PPP
Infraline News Service
A journey of a thousand miles
begins with a single step. Roads
infrastructure is at murky stage with
current logjams in projects. It is a
tough road ahead for the newly-
formed government as it has to put in
place correct policies and reforms to
ease the situation.
Road sector is crucial for economic
growth. Realizing this, the BJP-led
government is giving priority to
development of road transportation.
Business leaders attribute the slack
in this sector to lack of political will,
which didnt allow policies to take off
in recent past.
The Indian road sector continues
of becoming Prime Minister, he
Prerna Singh
Sr. Analyst, Roads Infrastructure, InfralineEnergy
October 2014
www.InfralinePlus.com
79
to face multiple challenges this
financial year with high interest
rates, sluggishness in awarding road
contracts, reduced availability of
funds, slowdown in execution, and
increased competitive intensity.
However, many projects awarded
over the last one year are hanging fire
because of delay in land acquisition,
clearances, and financial closure.
Expectations are fairly high from
the Narendra Modi-led government,
which won a clear majority in
the elections. After a few days
said, A nation that gives impetus
to infrastructure, be it roads, rail,
 October 2014
www.InfralinePlus.com
InfraWatch
airport, that is where chances of
development increase. We have to
take ownership to build a strong
nation. Business sentiments are
improving and corrective actions are
being taken to lift the sector from the
prolonged sluggishness.
The public-private-partnership
(PPP) model of awarding road
projects has proved to be a complete
failure in India, leading to a dip in
road construction to a mere 3 km a
day. Challenges are many - overall
economic downturn, lack of equity
in the market, difficulty in arranging
debt, highly-leveraged balance sheets
for highways developers and land
acquisition, approval and clearance-
related issues. Blaming the UPA
regime for the present situation,
Union Minister for Road Transport
and Highways Nitin Gadkari said the
previous government awarded projects
80 without acquiring even 10 per cent
of land, which resulted in delays and
cost overruns. In a major policy shift,
the NDA government has decided to
implement projects on Engineering
Procurement and Construction
(EPC) mode.
At present, 437 projects, entailing
an investment of around `21 lakh
crore, are delayed due to various
issues across infrastructure sector.
Bumpy Ride
260 projects, involving about
`60,000 crore, implemented
in PPP mode, delayed due to
various reasons
From 2004 to 2014, the road-
making activity declined from 20 km
a day to 3 km a day on an average
189 projects worth `1,80,000 crore
in limbo because of difficulties in
land acquisition and clearances
Road building cost has increased
from `5 crore a km in 2004 to `13
crore a km in 2014
The PPP model proved to be a
complete failure in the sector
Since 2009, only 350-odd km
added to Indias national and
state highways
Around 260 road projects worth
`60,000 crore are stuck, owing to
clearances and approvals. All efforts
are being made to club road transport
and railway ministries for faster
implementation of projects. Also in
an important decision, the process
of clearing road bridges has been
simplified with online application.
The NHAI would bear construction
and maintenance costs of the projects.
Some of the decisions are:
MoEF to allow state governments
to give permission for sand mining
up to 20 hectare as against the
existing norm of 5 hectare
State government and regional
office MoEF will be allowed to
clear linear projects, involving
forest land up to 40 hectare
National Board of Wild Life
approves projects, falling within
5-10 km radius of various
sanctuaries
Railways to standardize ROB
& RUB designs & to put the
mechanism online
The NHAI board has given in
principle approval for creation of a
body, Asset Reconstruction Company,
which would try to make stalled and
non-commercially viable projects
feasible. Indian Bankers Association
has already given its consent as
most of the roads are turning non-
performing assets (NPA). The entity
would have two options: Either to take
over an entire project, according to the
clause of the concession agreement,
or complete a small portion of the
delayed work. This is a welcome
move as it will help improve the
situation in the cash-starved sector.
There are numerous disputes,
involving arbitration cases amounting
to `26,556 crore investments between
developers and NHAI. The NHAI has so
far settled `10,550-crore projects with
concessionaires. At least 49 pending
claims, involving 26 contractors, has
been cleared (See the Graph).
For ending corruption, the
Amendment in Motor Vehicle
Act is proposed in next session of
parliament. Some of these changes
would be based on best practices
of the world like e-governance.
The RTOs would be linked to
e-governance to bring transparency in
the system, plagued by malpractices.
The government would have to
work on a policy framework to assure
at least 16 per cent internal rate of
return for infrastructure projects. This
would safeguard developers from
foreign exchange fluctuations and
boost investment in the sector.
India has to soon embark on the
next wave of economic growth, which
will encompass some fundamental
shifts in growth model as well as
larger and bigger social reach to
benefit its vast population. Being one
of the fastest growing economies
of the world requires physical
infrastructure facilities to continue the
pace of development process. The new
government at the Centre has to build
and expand its key infrastructure to
global standards and road sector plays
an important role in it.
Prerna Singh, Sr. Analyst, Roads Infrastructure,
InfralineEnergy
For suggestions email at feedback@infraline.com
 Coal Import
Outlook 2025:
Strategizing Coal Supply
for India
September 2014

Key Highlights
Coverage on international coal market
Domestic coal market- resources, production,
distribution and demand-supply trend
Coal import trends in India: type-wise, country-wise
and port-wise major importing companies, etc.
Indias coal demand and domestic supply
projections till 2025
Major coal exporting nations:
Latest statistics- production, consumption and
exports
Future Supply Forecasts
Indias Port infrastructure (existing and upcoming):
Coal importing ports
Coal handling capacity, traffic, connectivity and
future plans, etc. Rep
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domestic vs. imported coal

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RNI No: DELENG/2012/45441