Indian Power Sphere

Post Budget, around 5-10% hike in Electricity Tariff is expected

2015-03-03T17:46:00.001+05:30

On account of higher freight charges proposed in the Railway Budget 2015 and the doubling of clean energy cess in the Union Budget 2015 are expected to result in around 5% rise in electricity prices. Further 5% increase is expected to come from other input costs such as salary & wages, components & spares etc.

In addition, utilities that have power purchase agreements in place without the ability to pass on higher generation costs to consumers are expected to be affected.

Finance minister Arun Jaitley proposed to increase the cess on coal to Rs 200 per tonne to finance clean environment initiatives. Coal India passes on the cess to consumers, which means the effect will be felt by power companies that consume coal.

Generation costs may rise 5-6 paise per unit due to higher rail freight charges, according to officials at NTPC, the country's biggest power company. Along with the increased clean energy cess, the rise in cost works out to 12-14 paise per unit, which is 5% of the current cost of Rs 2.80 that NTPC incurs to produce a unit of power. The cost of generating electricity for NTPC, which is allowed to pass on higher input charges, is on the lower side and the impact on the utility's consumers will be less than for customers of other power companies.

Companies with older power plants have a higher cost of generation since they consume more coal to produce a unit of electricity. The effect of higher power costs will vary for customers.

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PGCIL seeks USD 500 Mn loan from World Bank to finance transmission projects for evacuation of Solar Power

2015-02-26T21:57:00.001+05:30

Power Grid Corporation of India (PGCIL) has sought $500 million loan assistance from the World Bank for financing projects.

Power Grid is engaged in building transmission projects across the country. It also provides consultancy services in the power sector.

According to PGCIL, discussions are undergoing with the Ministry of Power (MoP) and Ministry of Finance (MoF) and the World Bank regarding funding assistance of transmission systems for evacuation of power from the solar parks.

For funding of its other transmission projects, Power Grid has submitted a proposal to the Ministry of Power for recommending it for consideration of Finance Ministry for sovereign loan assistance of $500 million from the World Bank.

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Mytrah Energy secured Rs 853 Crs loan for its 150 MW wind projects

2015-02-26T12:05:00.001+05:30

London-based Mytrah Energy Ltd has secured an Rs 853 Crs long-term loan from an unnamed Indian bank to finance 150 MW of wind projects.

The company expects to completed the said capacity in the coming 12 months, before India's 2016 wind season kicks off.

According to the company, the proposed capacity will be completed within 12 months.

With the new wind farms, Mytrah’s nominal capacity will top 690 MW.

So far, the firm has installed 543 MW of wind parks across six Indian states and it has 3,500 MW of projects in the pipeline.

Last week, Mytrah agreed to construct a 220-MW wind park in the Indian state of Andhra Pradesh within 18 months under a deal with the local government.

India aims to boost its installed renewable plant capacity to a total of 170 GW by 2022, up from 34 GW at present.

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NTPC Board approves investment proposal of 1,320 MW thermal Project & 10,000 MW of Renewable Projects

2015-02-25T23:07:00.001+05:30

NTPC board has approved the investment proposal for 1,320 MW thermal power project in Madhya Pradesh.

The proposal involves setting up of Khargone Power Project in the State of Madhya Pradesh at an appraised current estimated cost of Rs 9,870 Crs.

However, the approval is subject to Environment Clearance of Ministry of Environment and Forests.

The Board of Directors has also accorded approval to the company's proposal to set up 10,000 MW of renewable energy projects during the next five years.

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Lanco seeks restructuring of Rs 1000 crore loan of Andhra Pradesh power plants

2015-02-23T23:16:00.001+05:30

Lanco Group has approached lenders for restructuring of Rs 1000 Crs debt of two of it gas based power projects in Andhra Pradesh and to reschedule the repayment till January 2018. It has also sought similar reprieve from lenders for some of its power plants under Reserve Bank of India's 5/25 formula.

Lanco Kondapalli Power Limited (LKPL), Lanco Group company, operates three gas based power projects in Andhra Pradesh. Of this, two plants, Unit-II and III, are not able to operate due to lack of gas supplies from KG-Basin. Unit-III is yet to declare Commercial Operation Date.

Between these two units the debt is around Rs 2400 Crs for a capacity of 1100 MW.

The Group is also in the process of approaching lenders to rescheduling of loans of some of its power plants under the Reserve Bank's 5/25 Rule.

This rule enables a bank to extend loans to an infra developer for 25 years with an option to rewrite or reset the terms of the loan or transfer it to another bank or financial institution after five years.

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India Signs Loan Agreement with ADB for $50 Million Loan To Boost Power Generation Capacity in Assam

2015-02-21T14:30:00.001+05:30

The Asian Development Bank (ADB) and the Government of India signed a $50 million loan agreement for the second Assam Power Sector Investment Program which aims to build up the capacity of power generation and distribution systems to meet the growing energy demand in the state of Assam.

The first tranche loan of the $300 million multi-tranche financing facility will fund generation capacity enhancement and distribution efficiency improvement subprojects in the state.

Shri Tarun Bajaj, Joint Secretary (Multilateral Institutions), Department of Economic Affairs, Ministry of Finance, who signed the agreement on behalf of Government of India said that more than a third of households in the State face daily electricity cuts of 5 to 6 hours, many important businesses, such as the tea gardens, still aren’t connected to the grid, and in peak periods Assam has to buy up to 15% of its power from independent producers at very high cost, said He added that the project will finance investments to augment and improve generation capacity through the replacement of an inefficient generating plant and construction of new hydropower plant.

Ms. Teresa Kho, Country Director of ADB’s India Resident Mission, who signed the loan agreement for ADB said that ADB has supported Assam’s power sector since 2003 with five loans totaling $450 million, which have helped the State enact key reforms and improve transmission and distribution systems. She further said that the new loan will further support Assam to increase capacity and efficiency of power generation to meet growing local and national demand.The project agreements were signed by Sh. V. B. Pyarelal, Additional Chief Secretary (Power) on behalf of the Government of Assam and Shri K. V. Eapen, Chairman, Assam Power Generation Company Limited (APGCL).

The project is expected to be completed by 31 December 2018.

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Rays Power Experts looks to raise Rs 400 Crs

2015-02-20T22:09:00.001+05:30

Rays Power Experts is planning to raise funds of Rs 400 Crs from private equity firms.

According to sources, company is in discussions with Blackstone & Gujarat Venture Finance among others.

Rays Power sets up solar parks and provides services ranging from land identification to acquisition, supplying of solar panels and accessories, site infrastructure and maintenance, as well as installation and commissioning of projects.

The company is now looking to build its own solar plants and has commissioned a 100-MW solar project at Bikaner in Rajasthan. Rays Power Experts reported profit after tax of Rs 10.7 crore and revenue of Rs 230 crore in the financial year ended March 31, 2014, according to documents filed with the Registrar of Companies.

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JSW Energy plans to raise Rs 5,000 crore via QIP

2015-02-15T22:29:00.001+05:30

JSW Energy is planning to raise Rs 4,000 crore to Rs 5,000 crore in several tranches through a qualified institutional placement or QIP programme, according to reports.

Report said that the money will help fund acquisitions after the company completes the purchase of three hydro power plants.

Earlier, the board approved a fresh fund-raising plan of up to Rs 5,000 crore to meet growth opportunities, capital expenditure requirements and general corporate purposes.

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SBI commit Rs 75,000 Crs loan for 15,000 MW of Renewable Energy Projects

2015-02-15T22:06:00.001+05:30

State Bank of India (SBI) committed Rs 75,000 Crs for the 15,000 MW capacity of Renewable Energy Projects to be executed in next 5 years.

Current exposure of SBI is Rs 1,78,000 Crs in the power sector including conventional energy projects as well as Distribution Utilities.

However, SBI has denied any concessional rate of interest for the Renewable Energy Projects as per the current norms. According to it the rate be reduced provided RBI classifies the renewable energy in the priority sector lending category which would provide incentives to banks for lending to this segment.

As per RBI norms, banks have to necessarily lend 40 per cent of the total loans towards priority sector category.

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IREDA plans to raise 1000 cr via bond issue; files DRHP…

2014-01-27T21:01:00.001+05:30

New Delhi based company "Indian Renewable Energy Development Agency Limited" (IREDA) has filed DRHP for its public issue of tax free, secured, redeemable, nonconvertible bonds in the nature of debentures of face value of Rs 1,000 each for an amount aggregating up to Rs 1,000 crores in fiscal 2014.

The bonds will be issued in one or more tranches. The company is a non-banking financial institution registered with RBI, engaged in extending financing services to projects and schemes for generating electricity and energy through renewable sources and conserving energy through energy efficiency.

The proceeds of the issue may be utilised towards financing renewable energy and energy efficiency projects and augmenting our resource base.

The bonds shall be listed on the BSE and NSE within 12 Working Days from the issue closure date. Karvy, AK Capital and RR Investors will be the lead manager, Link Intime India Private Limited will be the registrar to the issue.

However, SBICAP Trustee Company Limited has appointed as a debenture trustee to the issue.

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NTPC signs $430 m loan accord with Japan Bank…

2014-01-27T20:57:00.001+05:30

India’a leading power producer and state-owned NTPC Ltd on Monday announced it had entered into two foreign currency loan agreements with the Japan Bank for International Co-operation (JBIC) for around $430million (approx. Rs. 2,650 crore) loan for its Kudgi and Auraiya thermal power projects.

The loan agreements were signed by Kulamani Biswal, Director (Finance), NTPC and Mr. Hiroshi Watanabe, Governor, JBIC here on January 25, an official statement issued here on Monday said.

The company signed a term loan of $350 million with the JBIC to finance the supplies and services from Japan as well as India for the Kudgi Super Thermal Power Project Stage-I (3x800 MW) located in Karnataka. The facility consists of a CIRR based fixed interest tranche and a floating interest rate tranche, with a door to door maturity of about 15 years.

The second loan signed with the JBIC is for 8,021 million yen to finance the renovation and modernisation of gas turbines at NTPC’s Auraiya gas power station. This facility is a CIRR based fixed interest rate facility with a door to door maturity of over 12 years. Kudgi Power project is based on super critical technology which has lower carbon intensity compared to projects based on sub-critical technology.

In both the loans, 60 per cent of the facility amount is provided by JBIC and the balance by commercial banks. The loans are provided on a stand alone basis without any sovereign guarantee reflecting the NTPC’s strong credit quality. This is the first time JBIC has directly extended a direct loan facility to NTPC. JBIC previously extended guarantee for a untied loan of $380million for NTPC’s Barh Stage-I project.

With an installed capacity of 42454 MW through 16 coal based, 7 gas based, 2 solar renewable and 7 Joint Venture power stations, NTPC contributes nearly 28 per cent of electricity in the country, with about 19 per cent of India's installed capacity.

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Chhatrapur to be first smart grid town in Odisha…

2014-01-26T20:02:00.001+05:30

Chhatrapur, the district headquarters of Ganjam, will become the first 'smart grid town' in the state after it starts using an advanced technology in power supply that can withstand cyclones with wind speed of around 350 km/hour.

The technology will be implemented under a disaster- resilient power strengthening project funded by the Asian Development Bank (ADB) on an experimental basis.

The other towns in the district, Berhampur and Gopalpur, would also be included in the scheme at a cost of Rs 817 crore, energy secretary P K Jena said here on Saturday.

Energy minister Arun Kumar Sahu said the initiative was necessary as the power sector frequently bore the brunt of nature's fury.

Jena said under the scheme the towns will have underground power supply lines, apart from overhead cables.

Besides, consumers will be alerted about power cuts through SMSes. He was here to felicitate outstanding performers, who helped restore power supply in Phailin-hit Ganjam in quick time.

The government has also decided to set up a one megawatt solar power plant at Chhatrapur, chairman-cum managing director, Odisha Power Transmission Corporation Limited (OPTCL), Hemant Sharma, said.

The officials justified the selection of the three towns, saying Berhampur was the biggest commercial hub in the southern part of the state, Gopalpur, a seashore town, was a tourist place and Chhatrapur was the district headquarters town.

Power infrastructure in the district, particularly in these three towns, was severely damaged in cyclone Phailin in October.

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Moser Baer Solar first to achieve Rs 100 crore business in its segment within 9 months…

2014-01-23T12:39:00.001+05:30

Moser Baer Solar Ltd. (MBSL), country's largest integrated solar PV manufacturing and India's #1 Solar EPC company, a subsidiary of Moser Baer India Ltd. has crossed more than Rs 100 crore PV module sales in the highly competitive Japan market during April-December 2013.

MBSL has been exporting solar PV modules to Japan for last 4 years and the volume of shipments has increased significantly in last 9 months. Japan's solar market is growing exponentially, driven by their focus on using renewable energy.

Vivek Chaturvedi, Chief Marketing Officer, Moser Baer Solar said, "Japan traditionally is amongst the world's most quality conscious markets and we are proud to have established an Indian brand in high technology space here. This reiterates India's capability to develop, manufacture and deliver world class products across categories globally. The opportunity is big and we look forward to further our commitments in Japan's journey towards promoting clean energy. A strong quality focus, and our understanding of Japan market sensitivities in general and Japan solar PV business in specific has resulted in this significant growth in shipments."

The earliest installation in Japan using Moser Baer Solar PV Modules is now almost three years old, performing at consistently better levels than estimated by the owners. Moser Baer Solar Elite PV Modules are already popular with Japan's biggest Solar EPC companies and Developers.

MBSL Elite Series products today meet international standards including UL, IEC, CE, JIS Q8901, MCS, and having listing under CEC, etc required to sell products across the globe. Furthermore, the company expects to be able to continue to reduce its production costs further through improved system processes and increased efficiencies.

Shares of Moser Baer India Ltd was last trading in BSE at Rs.3.69, up by Rs.0.03 or 0.82%. The stock hit an intraday high of Rs.3.79 and intraday low of Rs.3.55.

The total traded quantity was 0.97 lakh shares as compared to 2 week average of 3.26 lakh shares.

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Chinese power firms in India under pressure due to rupee…

2014-01-21T18:34:00.001+05:30

Chinese power generations companies which rapidly expanded operations in India in recent years are complaining of pressure due to depreciation of rupee and appreciation of China's currency RMB, saying it has eroded their profits.

Indian rupee devalued about 20 percent at one stage in 2013, while the RMB appreciated five percent, eroding 25 per cent of the gross profit margin, Xu Huadong, Chairman of Chinese machine and generator manufacturer Power HF said.

"We are forced to improve management efficiency and lower operation costs. But there is a limit. Our price advantage is diminishing, and we are considering opening production plants globally," he told state run Xinhua news agency.

Power HF, based at Weifang City in east China's Shandong Province, has exported 38,500 engines to India for use in telecom base stations across the country.

If those base stations break down, more than 100 million Indian mobile users will be affected.

The firm has also set up a network of 174 service stations employing more than 1,500 local people across India to provide 24-hour maintenance services.

Its business in India started in 2007, when the Reliance Group, one of the top three telecom companies in India, ordered the engines.

The Indian market now comprises more than 30 per cent of the total revenue of Power HF, which now has bigger plans.

"Currently we mainly provide maintenance services for the engines of the telecom base stations. In future, we hope to offer maintenance of air-conditioners, antennas and other equipment at the stations, based on our established network," Xu said.

The firm is eying other countries and regions, with Africa as the next key market.

"We want to copy the successful model in India, but adjustments must be made according to the situation in different countries," Xu says.

When Power HF entered India, the enterprise redesigned its products according to the hot and humid environment.

Since India has stricter noise restrictions, it also adjusted their engines to reduce noise.

"Now we are entering Egypt and we must take the heat, wind, sand and dust into consideration," says Xu, adding skilled workers were harder to find in Egypt than in India. So training maintenance workers will be given priority.

"The quality of Chinese machinery is already world level. But Chinese machinery manufacturers must focus on service if they want to go abroad," Xu said.

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Suzlon to list REpower on LSE this year: Sources…

2014-01-21T18:27:00.001+05:30

Debt-ridden Suzlon Energy is looking to list its 100 percent owned German subsidiary REpower on the London Stock Exchange this year. IPO size is likely to be around USD 600-750 million, with Suzlon diluting 40-50 percent of its total stake.

This pegs REpower’s expected valuation at USD 1.2 billion. Sources say Suzlon Energy will use the proceeds from the IPO to repay German banks and domestic lenders. REpower owes as much as 750 million euros to German banks, who have ring-fenced the company’s finances.

This has been Suzlon’s biggest challenge as the wind turbine maker is unable to access the Germany subsidiary’s cash reserved to repay its debt. Suzlon's total debt stands at Rs 14,155 crore, of this, Rs 9500 crore is getting restructured under the Corporate Debt Restructuring (CDR) cell.

The company had repaid its first tranche of FCCBs worth USD 360 million in July 2012. It is understood that the company is now looking to settle another USD 500 million worth FCCBs with the bondholders.

Suzlon has been reporting losses for the past 3 years Suzlon Energy had acquired REpower in 2007 for Rs 8000 crore.

The German subsidiary accounts for nearly 40 percent of Suzlon’s total order book of USD 7.1 billon. Key bankers like SBI had earlier suggested that the company merge REpower with itself to reduce debt.

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TPG Growth cuts stake in clean energy producer Greenko Group…

2014-01-20T20:28:00.001+05:30

TPG Growth, an arm of global private equity major TPG, has sold around a quarter of its stake in clean energy producer Greenko Group plc nearly four years after its initial investment.

TPG Growth sold a little over 2 per cent stake over the last six months in London’s AIM-listed Greenko, reducing its holding to 5.96 per cent.

According to VCCircle estimate, the stake has been sold for $6 million to $8.5 million. A large chunk of the stake has been sold earlier this month as Greenko's scrip reached over 170 pence per unit.

In January 2010, TPG Growth led a $116-million round of funding in Greenko Group plc. The PE firm will pick up a little over 10 per cent stake for around $35 million. TPG's remaining stake is worth $26 million, according to Greenko's current trading price.

Shares of Greenko were trading at 178.75 pence, up 2.14 per cent on Monday morning in London.

Greenko Group plc reported a 74.6 per cent increase in operational capacity from 244 MW in March 2013 to 426 MW by end of September 2013.

The company, backed by a slew a private equity funds, reported an 18 per cent increase in revenues to €27.9 million for the six-month period. On a constant currency basis, revenues grew by 32.4 per cent.

Adjusted EBITDA increased 49 per cent to €24.6 million, despite being affected by adverse currency movements and lower generation from biomass assets, said the company. Adjusted profit after tax increased 151 per cent to €10.5 million from €4.2 million during the same period in 2012.

Greenko Group plc raised $150 million or £100 million from GIC

Singapore, one of the world’s largest sovereign wealth funds, last year. Greenko, one of India’s largest independent power producers in the renewable energy space, raised money through its Mauritius arm.

Other investors in Greenko include Aloe Private Equity, Standard Chartered Private Equity, GE Energy Financial Services and Capital Group.

Greenko has a portfolio of wind, run-of-river hydropower, natural gas and biomass assets. The company is now focused on building new utility scale wind farms and hydropower projects across India. Greenko's goal is to reach 1,000 MW of operational capacity in 2015 and approximately 2,000 MW in 2018.

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11 TN Hydro Power Dams to Get New Lease of Life Under WB Project...

2014-01-18T09:42:00.001+05:30

Eleven hydro power dams in the Tamil Nadu State would get a new lease of life under the first phase of the Rs. 745.49-crore World Bank project, a senior official from the Water Resources Organisation (WRO) said.

The official told that 104 of the 127 dams, including 38 Tamil Nadu Electricity Board dams generating hydro-power, would be covered under the funds to enhance them for irrigation and generation of drinking water and hydro-power.

The project would be implemented in four phases and would be completed by 2018. In the first phase, Adavinainar Koil dam, Vadakupachayar dam, Nambiar dam, Kodumudiyar dam and Manimuthar dam in Tirunelveli district, Poigayar dam in Kanyakumari district, Vidur dam and Gomukhinadhi in Villupuram district, Mordhana in Vellore district, Siddhamalli in Ariyalur district and Kodayanar in Dindigul district would be covered.

A total of Rs. 63 crore has been allocated for the purpose, a WRO official said. He added that the technical and administrative procedures had been completed and work was about to be started. The main aim is to enhance the strength of the dams to withstand floods. Most of the dams were scheduled to undergo maintenance as they were 40 to 50 years old. The project would adhere to World Bank procedures.

“First we will be studying the internal behaviour of the dam after which it will be strengthened to withstand natural calamities for a long period of time. A hydrology study is also being conducted simultaneously,” the WRO official said, adding, that steel shutter conditions to regulate floods will also be checked and re-strengthened or replaced depending upon the requirement.

Six hydro-electric dams will also be covered under the project. These include Avalanche dam, Glenmorgan dam, Mukurthy dam and Porthimund dam in Nilgiris district, Kadamparai dam in Coimbatore district and Servalar dam in Tirunelveli district. The WRO official said that the project would also cover the 107-year-old Pechhiparai dam besides 25 others in the second phase. The preliminary process has already been started, the official said.

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Korean power firm ties up with Jinbhuvish for Rs 3450-cr Maharashtra power project…

2014-01-17T22:39:00.001+05:30

Korean South-East Power Company (KOSEP), a subsidiary of Korean state-owned power generator Korea Electric Power Corporation, today signed an initial agreement with Mumbai-based Jinbhuvish Group for technical support for its Rs 3,450 crore project in Maharashtra.

The 600 Mw power plant, being set up in Yavatmal district, is likely to be commissioned in 2016. KOSEP holds a 40% equity stake in the coal-based project. Lenders for the venture include Rural Electrification Corp (REC) and Power Finance Corp (PFC) and PTC India Financial Services (PFS).

“The Yavatmal venture is one of the few thermal projects in India being set up in a JV with foreign investment. All major clearances have been received and the construction activities will commence soon,” Jinbhuvish Group Chairman Manish Mehta said.

Seoul-headquartered KOSEP owns and operates thermal projects with a combined capacity of 8,396 Megawatt, around 12% of total electricity sales in Korea.

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Solar energy ambitions take shape as costs tumble…

2014-01-15T20:34:00.001+05:30

Electricity-hungry India is flipping the switch on huge new solar energy projects to fuel its growing economy, using cheap -- mainly Chinese -- foreign technology to reduce once sky-high generation costs to competitive levels.

Since 2010, India has hiked installed solar power capacity from a meagre 17.8 megawatts to more than 2,000MW, official figures show, as part of Prime Minister Manmohan Singh's aim to make "the sun occupy centre-stage" in the country's energy mix.

Key to the progress has been a rapid fall in the cost per unit of solar electricity to close to what is known as "grid parity" -- the cost of conventional electricity generated by carbon-gas emitting coal.

"The world is watching the ability of Indian entrepreneurs to achieve grid parity for solar energy," India's World Bank country director Onno Ruhl said recently.

"India has the potential to be a world leader" and a showpiece for efforts to address climate change, he told an energy seminar in late December.

The drive to harness the sun's power began in earnest with the 2010 creation of the Jawaharlal Nehru National Solar Mission by the current left-leaning government led by the Congress party.

It set a target of generating 20,000MW of grid-connected solar power and 2,000MW of off-grid generation, such as roof panels, by 2022.

That would still represent just one-eighth of India's total installed power base, but the government believes the share will rise as prices for solar infrastructure keep falling.

Power from imported coal and domestically produced natural gas costs around Rs 4.5 a kilowatt-hour while solar energy costs are seven rupees -- down sharply from Rs 18 in 2010, the ministry of New and Renewable Energy says.

The next stage of expansion will see India build the world's largest solar plant to generate 4,000MW on the shores of a saltwater lake in the northwestern desert state of Rajasthan, which should drive solar power costs even lower.

Operators believe economies of scale from the Rs 280 billion ($4.4 billion) Sambhar plant to be constructed over the next seven years will reduce prices to Rs 5.0-Rs 5.5 a kilowatt-hour.

"This is the first project of this scale anywhere in the world" and "is expected to set a trend for large-scale solar power developments," said Ashvini Kumar, director of Solar Energy Corp, one of five public utilities that will run the plant.

The sprawling project makes it comparable with very large coal-fired power projects.

Greater economies of scale, better technology and progressively cheaper panels and modules that turn sunshine into electricity have hammered down prices.

The price fall was also greased by the global financial crisis, which cut demand for equipment in developed nations, and vast Chinese expansion that created an equipment glut.

All this wrought a transformation in the economics of solar power, making the infrastructure far more affordable, experts say.

India is also still significantly behind many nations in generating solar power. Germany, for instance, has 35,200MW of installed solar capacity, according to the regulatory German Federal Network Agency.

But trailing has proved a boon because it is significantly less costly to set up solar parks now than for the first-movers.

Charanka, in the salt plains of the western state of Gujarat, is currently Asia's biggest solar plant, producing 214MW. Other projects are under way in a string of states from Andhra Pradesh to Madhya Pradesh, Chhattisgarh and Tamil Nadu.

"The seeds have been sown for a rapidly scalable and a very large solar energy sector in the near future," said Arvind Mahajan, infrastructure partner at consultancy KPMG.

What excites solar energy experts about India's prospects is that it is geographically ideal to harness the sun's power because of its abundant sunshine.

India boasts more than 300 sunny days a year in some parts along with large tracts of desert while a big chunk of the nation lies near the equator.

Also, solar parks are far faster and easier to construct than nuclear plants. Charanka, for instance, took just 16 months to build.

With 40 per cent of rural Indian households without power there is a huge market. India also urgently needs to generate home-grown power with imports of oil, gas and coal contributing to a trade deficit that has alarmed international investors.

"Solar power could help India address its acute power shortage," Ruhl from the WTO said. India runs a peak-hour electricity shortfall of around 12 per cent.

But even though the market is booming, Indian solar-equipment companies have not been profiting.

To build the solar plants India has been importing equipment, mainly from China, but also from the United States and Taiwan. Indian companies say, however, that unless imports are curbed, the country will never develop an indigenous industry.

The commerce ministry has launched a preliminary inquiry into allegations of dumping.

This growth in solar power "should have been a heyday for Indian manufacturers," said Rao SYS Chodagam, managing director of Titan Energy Systems.

"Instead, there's bankruptcy, loan restructuring and pleas to the government for support against international competition," Chodagam added.

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Government looking at ways to reduce smart grid tech costs…

2014-01-15T20:18:00.001+05:30

Various options are being studied to reduce the cost of smart grid technologies, which will help in bringing down overall transmission and distribution losses in the power sector, a Planning Commission member said today.

Smart grid technologies would help in ensuring efficient power system and pilot projects in this regard have already been identified by the government.

Planning Commission Member B K Chaturvedi said that an exercise is underway to reduce the cost of smart grid technologies.

High capital and operating costs are among the major challenges in implementing smart grid technologies in the power sector.

"There is an eminent need to develop smart meters to meet the challenges of power theft," Chaturvedi said and added that the losses related to transmission and distribution of electricity should be reduced.

He was speaking at a conference on smart grids organised by industry body PHD Chamber of Commerce and Industry here.

Fourteen smart grid pilot projects have been shortlisted by the Power Ministry for funding.

Going by estimates, India's Aggregate Technical and Commercial (AT&C) losses are more than 20 per cent, among one of the highest in the world.

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GVK Power: Hopes of debt reduction priced in…

2014-01-13T20:56:00.001+05:30

GVK Power & Infrastructure has gained investors’ interest recently following news of the company’s plans to monetise assets in the coal and airport verticals.

The recent completion of the new terminal at the Mumbai airport has further fuelled hopes that the company’s debt burden will ease. Though a lot of this is driven by hopes, analysts are cautious because at present there are many issues and its resolution may not happen soon, which could have a bearing on GVK’s share price.

"Notwithstanding improvements in operating performance of airport and road assets, GVK’s cash flow concerns are expected to exacerbate due to incremental funding needs for financing cost overruns. High debt burden and the need to retire acquisition debt are other issues which GVK has to face," said Shankar K, who tracks the company at Edelweiss Securities in a research note.

In fact, analysts are not falling for the stock’s cheap valuations at this point in time as they believe some of the issues are far more risky from the investors’ perspective. "We highlight that higher leverage, Hancock (coal business based in Australia) and overhang in power vertical would continue to weigh on the stock despite attractive valuations," said Deepak Purswani, who is tracking the company at ICICI Securities.

After the completion of terminal 2 at the Mumbai Airport, the market has started to look for the monetisation of the adjourning land bank. Monetisation of the land bank would be crucial for retiring some of GVK’s debt, which has been the biggest concern for the investors for quite some time now. Earlier, the company received interest from about 23 parties for the monetisation of the 1.8 million square feet of land of Mumbai International Airport (MIAL). The analysts are expecting this monetisation to fetch around Rs 1,200-1,500 crore, which may not be sufficient given the huge debt of over Rs 18,500 crore in the company’s books. However, it could kick-start the monetisation programme and would provide the much required liquidity in the interim.

The company had earlier said that it plans to monetise assets in the coal, power and airport businesses. However, looking at the issues in the power and coal businesses, the Street is banking on the monetisation of airport-related assets, which now should be easier given that the asset has become operational. Also, this vertical is currently making profits and that will enable the company to get good valuations. The book value of GVK's stake in the airport business alone is estimated to be worth over Rs 3,000 crore, including Rs 2,200 crore for the Mumbai Airport. How much the company is able to command from investors for these assets will determine the quantum of debt reduction. Analysts though are still cautious.

"Even in airport business, considering the current valuations, it would not fetch much money and if the company sells a large stake, it will have nothing in its portfolio to talk about," said an analyst with the leading broking house.

The issue of debt reduction is crucial, especially in the light of tight liquidity and weak cash flows from the operations. In the September quarter, the company incurred interest cost of Rs 213 crore on an operating profit of Rs 299 crore indicating very less leeway in terms of disposable profits for repaying debt. Even then, the Street was worried about how the company was going to repay its debt and service interest cost in the light of losses in the power business and constraint cash flows.

The power segment employs Rs 10,755 crore of capital and generates quarterly sale of Rs 96.06 crore. It’s over 900 mw of gas-based power generation capacity is currently operating at about 20-30%, and is not even able to recover the costs and service the debt. The market has written off the equity invested in these projects, which are suffering due to the lack of gas availability and because of the losses. In fact, analysts worry if the problem of the gas availability is not resolved, the debt taken for the power projects could have their bearing on the overall business of the company. However, with news about a possible increase in India’s gas availability doing the rounds, there is a ray of hope. If things improve for GVK, these assets should see better output and consequently also see an improvement in financial performance and valuations.

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Power Grid Corporation of India - Consistency in capitalization remains the key…

2014-01-13T20:14:00.001+05:30

Power Grid Corporation of India is the country's central transmission utility and carries ~50% of the nation's generated electricity. The company has embarked upon an aggressive expansion plan over the 12th Five Year Plan (FY13-17) to augment India's power transmission and distribution infrastructure.

Power Grid over the last five years has managed to beat its guidance and is geared up to achieve its target set for 12th Plan. It recently increased its capex plans during the 12th Plan to ~INR1,100bn, higher than its earlier guidance of INR 1,000bn. The company has identified 27 transmission projects worth INR 483bn to be implemented in the near-term. With a secured business model earning 15.5% post tax return, we expect earnings to grow at CAGR of 17% over FY12-17e.

Capex and capitalisation for the 12th Plan

The company has revised its 12th Plan capex target to INR1,100bn from INR 1,000 bn earlier, of which INR 200 bn has been spent in FY13. This is due to an additional INR 100 bn on account of an increase in bidding-based projects, GoI contracts, green energy corridors, intra-state projects, and transnational interconnections. Yearly capex has been revised to INR221.5bn/224.5bn/225bn/225.5bn in FY14e/15e/16e/17e, respectively, as against an earlier INR200bn each year. To fund the increased capex, the company has successfully raised INR54bn, which will be deployed over the next two years.

Regulated business model with assured returns

Power Grid continues to earn a regulated RoE of 15.5% and incentives of 1.5% due to higher availability and income from consultancy and other segments. A regulatory order by the Central Energy Regulatory Commission in Nov-13 disallowed income from short-term open access, which lowered regulated RoE to 17.5% from 19%, impacting profitability by INR2bn. Book RoE for the company will increase to 14% in FY16 from 13% in FY14 due to a flat yearly capex of INR200bn and higher capitalisation in the years to come.

No further dilution required to fund capex for next five years

Power Grid has successfully concluded the follow-on public offer of 787m equity shares of INR10 each, comprising 17% of the existing paid-up capital, which comprises of: (a) Fresh issue of 601.8m shares (13% of existing paid-up capital); (b) Disinvestment of 185.2m equity shares (4% of existing paid-up capital). Post issue, the company is well capitalised to fund its capex requirements over the next five years and will not require to raise further equity.

Grid strengthening to help improve power sector volumes

Due to the grid collapse in Jul-12, thrust on grid security and strengthening schemes have taken precedence. Of the capex planned, INR180bn is for grid strengthening and INR90bn for ultra mega power projects. This will help in providing long- and medium-term open access to the consumers.

Valuations

At the current market price of INR99 per share, the stock trades at a FY15e P/E of 9.6x and P/B of 1.3x. We reiterate our Buy recommendation with a target price of NR124/share, (target P/BV multiple of 1.7x FY15e).

Source

GVK in dialogue with banks to fund $10-billion Hancock project...

2014-01-11T09:42:00.001+05:30

Infrastructure developer GVK Power & Infrastructure (GVKPIL) is keeping all options open to fund its $10-billion Hancock project and is in discussions with bankers.

“We have made significant progress towards realising this project. This milestone symbolises our common vision,’’ GV Krishna Reddy, chairman, GVK, said. “We are in discussion with many banks and are hopeful of achieving the financial closure for this project in a year’s time. The coal production is likely to start in another 1-2 years,’’ he said.

The company is currently doing the legal documentation and it is believed that the valuations have also gone up.

The company is also exploring equity participation and fund infusion through banks and export credit agencies to realise this mega project. In September 2011, GVK had bought a 79% stake in the Alpha and Alpha West thermal coal projects in Queensland’s Galilee Basin and 100% of the Kevin’s Corner coal project next to Alpha.

Source

Lanco said to consider sale of Australian Griffin Coal division...

2014-01-09T22:34:00.001+05:30

Lanco Infratech Ltd, India’s second biggest private power producer, is considering selling its Australian unit Griffin Coal Mining Co. to help repay debt, three people with knowledge of the matter said.

Lanco is examining options including a full sale of Griffin Coal, which it bought for 750 million Australian dollars ($665 million) in 2011, said two of the people, asking not to be identified as the deliberations are private. The company is also in advanced talks to divest a hydroelectric power plant in India, two people familiar with the matter said, without naming a buyer.

Lanco is seeking to sell the unprofitable Griffin Coal unit after agreeing with banks to restructure debt that ballooned to Rs.33,900 crore in September. It is among foreign companies whose coal acquisitions in Australia have soured as prices for the fuel fell for three straight years.

Nagaprasad Kandimalla, who ran Griffin Coal, said on Thursday in a phone interview that he quit to join a political party, without elaborating. He declined to comment on Lanco’s plans to sell the unit.

Power-station coal prices at Australia’s Newcastle port, an Asian benchmark, fell 1% to $85.41 per tonne for the week ended 3 January, according to data from Global COAL. Prices slid 6.5% in 2013, the third year of declines.

A. Narasimhan, a Lanco spokesman, declined to comment. The company’s shares have slumped 44% in the past year while India’s BSE Sensex advanced 5.2%.

Griffin loss
Griffin Coal’s loss before interest, tax, depreciation and amortization almost doubled in the fiscal year through March 2013 to Rs.105 crore, Lanco said in May without giving a reason. Its mines in Western Australia’s Collie Basin produce 4 million tonnes of coal a year, and Lanco plans to boost output to 18 million tonnes by fiscal 2018, according an August presentation.

Lanco approved a debt restructuring proposal from its banks, according to a December exchange filing that didn’t include details of the plan. Its lenders include State Bank of India and ICICI Bank Ltd, according to Lanco’s latest annual report. Lanco’s debt has swelled more than fourfold since March 2010, data compiled by Bloomberg show.

The company runs a 70-megawatt hydropower plant in Himachal Pradesh, according to its website. Philip Chacko, then director of investor relations at Lanco, said in January 2012 that the company was seeking to raise as much as $750 million by selling a stake in its power business to private- equity investors.

Lanco plans to sell stakes in other power projects besides the hydropower facility, two of the people said.

Source

Haryana discoms prepare a Rs 5,000-cr capital expenditure plan...

2014-01-08T09:54:00.001+05:30

The Hayana discoms (Dakshin Haryana Bijli Vitran Nigam and Uttar Haryana Bijli Vitran Nigam) have prepared a capex (capital expenditure) plan of Rs 5,000 crore for the next three years to strengthen power distribution system in the state, so as to ensure more power with greater reliability to meet the increasing demand.

Devender Singh, principal secretary (power) and chairman, Haryana Power Utilities, said here on Tuesday that power transmission and distribution systems have been planned to match the increase in demand. The discoms have planned a capex of about Rs 5,000 crore over the next three to four years, for which integrated planning has already been initiated.

Singh said that to meet the increasing demand of power in the state, the power utilities are likely to make arrangements for an installed generating capacity of 18,000 to 19,000 MW by 2016. The total installed power generation capacity (from all sources, including state's own projects and long term arrangements from other sources) in Haryana has increased to over 10,000 MW. Presently, the availability is more than the demand.

He said that the power transmission and distribution system was also being strengthened accordingly. The utilities would construct 146 new sub-stations of various levels and augment capacity of 182 existing sub-stations in the next three years at a cost of Rs 3,500 crore, so as to match the capacity of the transmission system in accordance with the increasing availability of power in the state. This plan is besides the capex plan to strengthen the distribution system. During the current financial year, 32 new sub-stations have already been commissioned and capacity of 47 existing sub-stations has been augmented.

He said that the Centre had approved power development schemes of Rs 1,487 crore for 36 towns in Haryana under its Restructured Accelerated Power Development and Reforms Programme (RAPDRP).

The RAPDRP would be implemented in two parts. Under the first part, the power distribution system would be made information technology (IT) based while under the second part, the power distribution system in towns would be strengthened and renovated.

Under the first part of this prestigious programme, the nigams plan to give a strong information technology base to the electricity distribution system through consumer indexing, asset mapping, metering of feeders and distribution transformers, automatic data logging, feeder segregation, ring fencing, information technology applications and the establishment of base line data system.

While the second part of RAPDRP covers renovation, modernisation and strengthening of 11 kV level by adding distribution transformers, re-conductoring of lines at 11KV level and below, feeder segregation or bifurcation, load balancing and installation of capacitor banks, mobile service centers and others.

Source: Business Standard