Ministry Of Power Has Issued A Direction To The Central Electricity Regulatory Commission (CERC) To Allow Changes In Any Central Or State Government Duties To Be Passed Onto Electricity Tariffs To Consumers Post Bidding

Aug 27, 2018
Source Power Weekly Newsletter
Reforms and Regulations

The Ministry of Power has issued a direction to the Central Electricity Regulatory Commission (CERC) to allow changes in any central or state government duties to be passed onto electricity tariffs to consumers post bidding. The MoP invoked its powers under Section 107 of the Electricity Act, 2003 to issue direction to the CERC stating that if there is any change in domestic duties, levies, cess and taxes imposed by central government, state government or by any government instrumentality leading to corresponding changes in the cost, the same may be treated as ‘change in law’ and may be allowed as a pass-through (unless provided otherwise in the PPA) subject to approval of appropriate commission. MoP further stated that delay in decision making at the regulator’s end was affecting the power sector and was one of the factors causing stress owing to cash flow problems with the generators.

Central Sector

The Allahabad High Court has refused interim relief beyond August 27, 2018, to private power companies against the Reserve Bank of India’s (RBI) circular on stressed assets thereby mandating initiation of insolvency proceedings by lenders against defaulting projects of companies. Further, the court has asked the central government to decide and take action under Section 7 of the RBI Act within 15 days. It has also asked the high-level empowered committee to submit a framework for under-resolution, resolved and impeding stressed assets by September 29, 2018. Following the order, it is estimated that lenders to about 30 stressed power assets will refer them to bankruptcy courts including 18 coal-based and 12 hydropower projects. Reportedly, power sector assets worth Rs 670 billion will go to bankruptcy courts, while work on the resolution of projects worth Rs 750 billion is underway

NTPC Limited has started the transportation of 1,233 tonnes of fly ash through waterways in association with the Inland Waterways Authority of India (IWAI) from its 2,340 MW Kahalgaon thermal power plant (TPP) in Bihar. The transportation has already commenced via inland waterways as a pilot project from the TPP to Pandu in Assam for use in cement manufacturing. For this project, first-mile activity of bagging and loading of fly ash into barges will be done by NTPC and cost of transportation will be shared by IWAI and Star Cement.

NTPC has installed an effluent recycling treatment plant at the 657 MW Jhanor-Gandhar TPP in Gujarat. The system proposed by NTPC’s R&D wing - NTPC Energy Technology Research Alliance will help achieve zero liquid discharge at the plant to optimise water costs and minimise environmental footprint. In a separate development, NTPC plans to use Indian Space Research Organisation’s (ISRO) technology to reduce pilferage of coal while transporting it through wagons on railway tracks. In this regard, a one-year pilot project was carried by ISRO by attaching the NaVIC system (an Indian regional navigation satellite system) onto a wagon on a train heading to West Bengal which helped in revealing the unscheduled stops of wagons and their stoppage time. The technology will help NTPC to combat the issue of coal theft especially in Bihar, Jharkhand and West Bengal.

An inter-ministerial panel has finalised the roadmap for the second phase of Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) scheme with an outlay of around Rs 55 billion spanning over five years. The scheme, which will be launched on September 7, 2018, will provide subsidy support for all types of electric vehicles (EVs). Under the scheme, depending on technology, battery-operated scooters and motorcycles will be eligible for incentives ranging between Rs 1,800 to Rs 29,000, while for threewheelers, the incentives will range between Rs 3,300 and Rs 61,000.

State Sector

The Telangana state discoms have proposed to levy a tariff of Rs 6.10 per unit from upcoming EV charging stations while seeking a separate category for these stations. A levy of Rs 6.10 per unit at low tension (LT) voltage level and Rs 6.10 along with the time of day (ToD) charges at high tension (HT) voltage level has been proposed by the discoms to the Telangana State Electricity Regulatory Committee (TSERC). TSERC has invited comments and suggestions for the discoms’ filing until September 12, 2018.

The Himachal Pradesh government plans to invite applications from private sector companies for setting up 250 KW to 500 KW solar power projects in the state. The Himachal Pradesh Energy Development Agency will soon notify a plan for the proposed scheme with a target of reaching 20 MW of solar installations.

Private Sector

GE Power India Limited has closed down operations at its Maneja (Vadodara) manufacturing plant in Gujarat with effect from August 27, 2018. Considering the current market situation wherein the company is experiencing more capacity than market volumes, GE Power decided to shut down the plant that manufacturers hydropower equipment. About 95 per cent of workmen at the facility opted for the voluntary retirement scheme which was initiated by the company. The company plans to leverage its robust supply chain capabilities from within GE Group and in collaboration with suppliers to serve its customers.

Tata Power Solar, a wholly owned subsidiary of Tata Power has commissioned an 820.8 kWp solar rooftop system at the Cricket Club of India, Mumbai. The project is one of the largest rooftop installations in the country and was completed in 100 days. It has an estimated generation 1.12 MUs of electricity per annum and is expected offset 840 tonnes of carbon annually.

ReNew Power has commissioned the first phase of 126 MW of its 250 MW wind project located in Kutch district of Gujarat. The project is part of India's first wind power reverse auction that was concluded by Solar Energy Corporation of India Limited (SECI) in February 2017 under the 1,000 MW auction. The project will supply power to Uttar Pradesh, Bihar, Jharkhand and Odisha using the inter-state transmission system network

Debt and Equity

The central government, World Bank and Energy Efficient Services Limited (EESL) have signed a $220 million loan agreement and an $80 million guarantee pact to push energy efficiency programme in India. The programme, which will be implemented by EESL, will help scale up the deployment of energy saving measures in residential and public sectors, strengthen EESL's institutional capacity, and enhance its access to commercial financing. The investments under the programme are expected to avoid lifetime greenhouse gas emissions of 170 million tonnes of carbon dioxide and contribute to avoiding an estimated 10 GW of additional generation capacity. This would be over 50 per cent of the National Mission for Enhanced Energy Efficiency target of 19.6 GW indicated in India’s Nationally Determined Contributions under the Paris Accord.

JSW Energy Limited has enhanced the offer of acquiring over 75 per cent stake in Prayagraj Power Generation Company (PPGCL) which has a stressed 1,980 MW coal-based power plant in Uttar Pradesh. The development comes after lenders to PPGCL served a letter of intent (LoI) to Tata Power’s joint venture Resurgent Power to acquire the project. JSW Energy has made an offer for an upfront payment of Rs 62 billion, which is higher than Rs 60.86 billion offered by Resurgent Power.

Adani Power Limited is, reportedly, close to acquiring GMR Chhattisgarh Energy Limited’s 1,370 MW coalbased power plant as a part of the restructuring the stressed project’s loans. In the process, Adani power will take over about Rs 38 billion of project’s debt out of a total of Rs 58 billion that GMR Chhattisgarh Energy owes, along with Rs 14 billion of non-funded liabilities. A deal is likely to be announced in the next few weeks after lenders give a formal approval.

The National Company Law Tribunal (NCLT) has ordered the liquidation of Lanco Infratech after its committee of creditors rejected a revised resolution plan from Thriveni Earthmovers. Lanco Infratech has consolidated debt over Rs 450 billion from 29 lenders. It was one of the initial 12 stressed assets that were identified by the RBI for resolution under the Insolvency and Bankruptcy Code (IBC).

Tata Power’s wholly-owned subsidiary Coastal Gujarat Power Limited has raised Rs 27 billion via the issuance of non-convertible debentures (NCD’s) on private placement basis. The non-convertible debentures were issued in two series (series I NCDs amounting Rs 17 billion for a tenor of 5 years and series II NCDs amounting Rs 10 billion for a tenor of 10 years).