MAJOR NEWS IN THE POWER SECTOR
February 1st to 28th 2009
TATA POWER
Tatas keen on N-power
Tata Power Company is preparing the ground work to make a foray into the nuclear power sector. The core group to explore the possibilities of entering into the sector has been formed and the company is waiting for the government to open up the sector to private players.
(Business India, Feb 08, 2009)
Tata Power buys 1.58% stake in Tata Comm
Tata Power increased its stake in Tata Communications from 0.9% to 2.48%. Tata Power purchased 4,500,00 equity share from the open market or 1.58% of the total paid up capital of Tata Communications.
(Business Standard, Feb 19, 2009)
(Also appeared in Business Standard, Financial Express DNA, Financial Chronicle, Dainik Bhaskar, Divya Bhaskar)
Tata Power hid info in Sasan case: Govt
Government of India sought dismissal of Tata Power’s petition to re-tender the Sasan UMPP on the grounds that the company suppressed the facts from the court. The government further added in its petition that the entire basis of the writ petition filed in by Tata Power is false and purely misconceived. The court asked the government and Reliance power to file their affidavits within three weeks and Tata Power to file its re-joinder in the subsequent two weeks.
(Business Standard, Feb 06, 2009)
(Also appeared in Free Press Journal, Business Bhaskar, Hindu Business Line, Hindustan Times)
Tata Power to set up power plant in Orissa
Tata Power will be setting a coal – based power plant in Orissa with a joint venture with Indian Oil Corporation to meet the captive requirement of IOCL Paradip refinery and petrochemicals complex. Tata Power holds 74%, while IOCL holds 26% equity in the proposed joint venture.
(Construction World, Feb 01, 2009)
Tatas bet on power of Aussie rocks
Tata Power is among the other players who will be investing more than $750 million on geothermal expansion in Australia over the next 5 years. It is one of the few forms of baseload renewable power. Tata Power paid A$44.1 million in September for a 10% stake in Geodynamics.
(DNA, Feb 19, 2009)
Hirco, Tata Power sign MoU
Tata Power signed a MoU with Hirco Developments to ensure power supply for the real estate developer’s Panvel Twonship project. The association with Tata Power will enhance their ability to provide reliable power solutions to their customers.
(DNA, Feb 11, 2009)
(Also appeared in Financial Chronicle, Financial Express)
Tata Power ups play on renewable energy
Tata Power will be increasing its portfolio to 25% (wind, solar and geothermal energy) substantially in the next few years. Under the 3C initiative, the company is committed to take forth the issue of environment protection and will also look at bringing down its carbon dioxide emissions substantially. Tata Power’s plants generate 750 kg of carbon dioxide/ MH.
(DNA, Feb 21, 2009)
(Also appeared in Hindu Business Line)
PSEB – Tata Power agreement to bridge demand – supply gap
Punjab government will hand over two thermal power producers and two more are in the pipeline and have signed with various power producers. Tata Power Trading Corporation Ltd. (TPCL) and Power State Electricity Board (PSEB) signed a long term power purchase agreement. Maithon Power Ltd., a joint venture of TPTCL and Damodar Valley Corporation is setting up a 1,050 MW (2 x 525 mw) pithead thermal power station.
(Financial Express, Feb 27, 2009)
(Also appeared in Hindu Business Line)
Tata’s Bhira bags the award
Tata Power’s Bhira Hydro generation facility is awarded the Silver Shield as the second best performing power in the country for 2007-08, in the category of Power Stations more than 100 MW. This is the second year that the 80 year old Bhira and Bhira Pump Storage Scheme has been selected as the second best performing station in the country.
(Maharashtra Times,
(Also appeared in Sakal, Aapla Vartahar, Lokmat)
Tata Power plans to import 7 mt of coal
Tata Power will scouting for other sources to import 7 mt of coal for its proposed power projects. The company will be exploring various options including mines in Indonesia, South Africa and Australia and is also keen to expand its green energy project. Even though Indonesian mines offer better propects and the company has signed a $1.1 billion deal to buy 30% stake in two Indonesian coal companies, Tata Power would still like to explore other opportunities. With regards to green energy, the company has invested in 200 MW wind projects and also carrying out pilot projects for generating power from solar-thermal technology.
(Hindu Business Line, Feb 12, 2009)
Tata Power’s ‘Energy Champions Meet’
Tata Power Company introduced “Energy Club” in various schools with the sole objective to create awareness and educate the school children on the various methods of electricity conservation. The programme was implemented in 12 schools and succeeded in sensitizing and reaching to 27 schools in Mumbai. A meet was organized to felicitate a total of 272 ‘Energy Champions’ for their efforts in propagating the initiative and making it a grand success.
(Navshakti, Feb 13, 2009)
Tata Power not to bid for any more large projects
Tata Power will not be bidding for any more large power projects as raising funds is proving difficult given the current market conditions.
(Hindustan Times, Feb 21, 2009)
Tata Power has adhered to SRA regulations
Tata Power Company has followed the prescribed SRA process and the company has also gone to great lengths in establishing contact with the slum dwellers to explain the benefits of the rehabilitation program. The rehabilitation program ensures that the SRA guidelines are well adhered to and that it encompasses not only robust and reliable housing for the dwellers but also includes recreation and other amenities.
(Loksatta, Feb 10, 2009)
Tata Power
CMP: Rs. 752.95
Target price: NA
ICICI Securities initiated coverage on Tata Power with a ‘hold’ rating and advised the investors to consider aspects like loan servicing and project funding capabilities of the company. Falling prices do not augur well for Tata Power as it has a long position on coal. The brokerage also feels that the slowdown in metals in China and the resultant sluggishness in power consumption, long term coal prices will most likely be at $40 – 45 per thermal equivalent.
(The Economic Times, Feb 07, 2009)
COMPETITION
« RELIANCE ENERGY LIMITED (REL)
Reliance Power bags Tilaya
Reliance Power bagged third UMPP Tilaya in Jharkhand and it is to be erected at the estimated cost of Rs. 16,000 – Rs.18,000. Reliance was awarded this project as it emerged the lowest bidder for the 4000MW project. The company’s financial bid was at Rs. 1.77 per unit.
(Business India, Feb 22, 2009)
R-Power to double Butibori capacity
Reliance Power will double the capacity of its coal based Butibori power project to 600 MW. The project is set up under the group’s captive power projects model. The power generated from this plant will be supplied first to the industries in the MIDC areas of Butibori and Hingna and other industrial areas in the region and the surplus power will be supplied to meet the shortfalls elsewhere through open access.
(Business Standard, Feb 23, 2009)
R- Power’s plants may face delay on loan approvals
Reliance Power is facing delays in building its largest coal – fired plants as the global credit crunch holds up loan approvals. A dispute over the supply of natural gas has stalled the utility’s largest plant and contributed to the 56% slump in its shares since they started trading a year earlier.
(Business Standard, Feb 12, 2009)
Sasan UMPP’s financial closure soon
Reliance Power was hopeful of achieving the financial closure for the 4000 MW in Madhya Pradesh within a fortnight. They have advanced the schedule for Sasan by three years from what was mandated in the power purchase agreement. The project is being funded by 10-12 institutions led by State Bank of India. The land of 3,500 acres for the main plant has been acquired.
(Business Standard, Feb 13, 2009)
RPower owes Rs 11cr in refund to IPO applicants
The government announced that Reliance Power owes only Rs. 11 crore in refunds to investors who had unsuccessfully applied for its mega IPO last year while it has refunded Rs. 99, 281 crore. Reliance Power also informed Sebi that out of 5,243 pending cases, 1,302 cases refund orders were returned undelivered by postal authorities for various reasons and in the remaining 3,941 cases the warrant have not been en-cashed by investors and therefore no action is proposed to be taken by Sebi.
(Business Standard, Feb 26, 2009)
Reliance Power, L&T vie for 2,400 mw Punjab plant
Reliance Power and Larsen & Toubro were among the four companies that submitted technical bids on Monday for the 2,400 mw Gidderbaha project in Punjab’s Muktsar district. The coal ministry is yet to give a coal linkage to the project and hence the date extension. PSEB has formed a special purpose vehicle, Gidderbaha Power Ltd, which will undertake all necessary studies and preparation of the project report.
(DNA, Feb 18, 2009)
Reliance Power asked to set up production units
Minister of State for Power, Mr. Jairam Ramesh, had asked Reliance Power to opt for domestic manufacturing of boilers and turbine generators for its power projects in Sasan, Krishnapatam and Tilaya in order to provide employment and maximum value addition in the country. The minister had also asked RPower to look at BHEL as the boiler and turbine supplier to the Krishnapatam UMPP. However, BHEL was unable to forge an agreement with them despite giving their best shot.
(The Economic Times, Feb 8, 2009)
« NATIONAL THERMAL POWER CORPORATION (NTPC)
NTPC to bid for imported fuel – based UMPP’s
NTPC has plans to bid for imported fuel-based 4,000 mw UMPPs after acquiring coal properties abroad. NTPC indentified coal mines in Indonesia, Mozambique and South Africa to bridge the fuel supply shortfall from domestic sources.
(The Economic Times, Feb 16, 2009)
NTPC to tie up with NPCIL
NTPC signed a joint venture agreement with NPCIL, which will be the first joint venture in nuclear power generation in the country that would end NPCIL’s monopoly in the sector. The approved JV was approved by the boards of both the companies and endorsed by the department of atomic energy and the atomic energy commission. As per the proposal, NPCIL will hold the majority 51% equity, while NTPC will hold the remaining 49%.
(The Economic Times, Feb 12, 2009)
NTPC suspends work at Loharinag – Pala project
NTPC announced that the work on its 600 mw Loharinag – Pala Barrage Project on the Bhagirathi river has been suspended in the wake of protests by environmentalist and former IIT professor Mr. G.D Agarwal. Work on the project at Uttarkashi had commenced in 2005 at an investment of Rs. 2,200 cr. The professor’s contention had been that the construction work on the project was destroying the natural flow of the river to a great extend and that the river should be allowed to flow in its natural form between Gangotri and Uttarkashi.
(The Hindu, Feb 21, 2009)
NTPC to set up plant in Lanka
NTPC was in the final leg of talks for sealing a deal with Ceylon Electricity Board to construct a 500 mw power project in Sri Lanka. The differences over how the agreement will be carried out have been narrowed down to the issue of operating the escrow account for the project. NTPC had signed an MoU in December 2006 with Sri Lanka government and Ceylon Electricity Board to set up the power project.
(The Times Of India, Feb 26, 2009)
INDUSTRY
« STATE / GOVERNMENT/ REGULATOR / POLICY
Govt may limit UMPP number per company
The government will revive a proposal limiting the number of UMPPs to be awarded per developer. Power Minster, Ramesh’s statement came the day after Reliance Power emerged as the lowest bidder for the 4000 MW Tilaiya UMPP. A proposal to impose a limit was made about a year back but was turned down by an Empowered Group of Ministers in November 2007 in the interest of increasing competition.
(Business Standard, Feb 2, 2009)
Power min-Plan panel differ on open access policy, PM set to play refree
The open access system would empower power producers to sell electricity directly to bulk consumers. Plan panel says through the open access system, consumers should have access to buying 25% of the Centre’s discretionary allocation of 15% of the power generating capacity of the CPSU power firms. But power ministry wants the rights of the entire 15% to be used by it during emergency situations. The plan panel argued back saying that its initial recommendation of 25% can be brought down to 20%. They also say that 12% is as good as 15% for meeting such power ministry’s objectives but the power ministry has relented.
(Financial Express, Feb 3, 2009)
CERC proposals on equity returns evoke mixed reactions
CERC’s proposal to increase return on equity to 15.5% from 14% in the tariff regulation for 2009 -14 evoked mixed reactions. Private entities like Power Dodson LHPL, Energy Infratech, Avanta Power, CESC and Torrent Power have proposed a post-tax rate of return on equity of at least 16%, considering the financial markets.CERC had also made it clear that the return on equity will be computed in rupee terms, on the equity base determined in accordance with the regulation 12 and will be computed on pre-tax basis at the base rate of 15.5%.