PROJECT OF

CORPORATE ACCOUNTING
PROCEDURES-1
AND
SPECIAL TRANSACTIONS
ACCOUNTING-1

“POWER SECTOR”
FY-1V
GROUP NO.8
431-HARSHIL
432-HEENA
433-HETA
434-{X}
435-JAINAM SHAH
436-JAINEE
437-JAINY
438-JEEL
439-JEET
440-JIGAR
ACKNOWLEDGEMENT

IT IS WITH DEEP SENSE OF GRATITUDE THAT WE

WOULD LIKE TO THANK:
PROF’s. P.M.PATEL
A.Y.SHAH
V.D.KADIA
P.DUGAR
V.TRIPATHI
N.DESAI
For giving us an excellent opportunity to enrich our
knowledge through the project.
The project has increased our knowledge of the
subject manifold. we thoroughly enjoyed doing the
project and was great to learn about POWER
SECTOR.
INDEX
SR.NO. TOPIC PG.NO.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
1. OVERVIEW OF INDIA’S POWER SECTOR

1.1 Background
India's power market is the fifth largest in the world. The power sector is high on
India's
priority as it offers tremendous potential for investing companies based on the
sheer size of
the market and the returns available on investment capital. The current installed
capacity of
power plants is 132329 MW (as on March 31, 2007).

Coal based Gas based Hydro Renewable Nuclear Diesel

Source: Ministry of Power, Government of India
Almost 55 per cent of this capacity is based on coal, about 10 per cent on gas, 26
per cent on
hydro, approximately 5 per cent on renewable sources, about 3 per cent on nuclear
and 1 per
cent on diesel.
In the past few years, there has been considerable growth in power plants based on
renewable sources of energy. The current installed capacity based on these sources
is about
6,200 MW of total utility capacity. An initiative to add 50,000 MW of hydro
capacity by 2017
was announced in 2003. The current installed capacity, at about 32,000 MW,
utilizes just
over one -fifth of 150,000 MW hydro potential.
The Plant Load Factor (PLF) of generating plants has improved consistently over
the last 10
years. In 2005-06, the PLF of generating plants was almost 74 per cent, compared
to 60 per
cent in 1994-95. The following table shows the details of installed capacity (in
MW) in India
as on March 31, 2007:
In the past five years, there has been a much greater emphasis on transmission and
distribution reforms. The interregional transmission capacity has been increased to
9,500
MW. The National Grid Development Programme calls for 37,150 MW of
interregional
capacity by 2012.
The government aims to provide "power to all" by 2012. To achieve that promise,
it will
have to add as much as 1,00,000 MW of generation capacity, cut AT&C losses
substantially
to below 20 per cent, rationalize tariffs and ensure that average revenue realization
is
greater than the cost of production. It will have to continue to push the process of
reform
and restructuring and ensure greater private participation, in every segment.

The share of thermal power as a proportion of total power generated has decreased
from 71
per cent to 66.3 per cent in the last decade. The share of hydro has increased to 26
per cent
from 25.7 per cent. The increasing price of oil, gas and coal in the international
market has
accentuated the significance and desirability of hydro power. An initiative to add
50,000 MW
of hydro capacity by 2017 was launched in August 2003. The intent is to increase
the share
of hydro power generation from 26 per cent to 40 per cent.
Of the fossil fuel supplies, there is delivery constraint with respect to gas. A
number of gas
plants today are running at sub-optimal plant load factor (PLF) levels due to
shortages. The
government has decided not to embark on new projects that rely on gas. It is feared
that
supply shortages can disturb the capacity addition plans, reduce PLFs, as the rising
crude
prices have led to firmer naphtha and natural gas prices.
Emerging environmental concerns have led to an increasing interest in renewables.
As per
the Central Electricity Authority (CEA) reviews the cost-effective hydro potential
of India is
about 84,044 MW, but it contributes just 6,000 MW at present.
State Electricity Boards (SEBs) and the new state generation utilities have an
installed
capacity base of 70,224 MW that accounts for a share of 57 per cent. Sector-wise,
the states
contribute the maximum generation capacity. Power producers in the central
sector, like
NTPC, NHPC and DVC, account for 32.2 per cent of installed generation capacity.
The contribution of the private sector was 11.3 per cent in 2005-06. Amongst the
private
players, Tata has the highest installed capacity, at 2,300 MW. In terms of actual
generation,
private contribution is 8.7 per cent. There is renewed interest in Independent Power
Producers (IPPs) in the power sector. Private IPPs contributed 5,691 MW to
installed
generation capacity in March 2006.
Captive power plants (CPPs) also make a major contribution, which is more than
one-fifth
of the total installed capacity. In the last three years, captive capacity has grown at
an average
of 1,600 MW per year. The introduction of ABTs (Availability Based Tariffs) has
changed
the thinking of discoms. They have to pay huge prices as they have to source
power from
the grid during low frequency periods. During this time the CPP power comes in
handy at a
much lower tariff.

Power Infrastructure in India:

The power industry in India derives its funds and financing from the government,
some private players that have entered the market recently, World Bank, public
issues and other global funds. The Power Ministry India has set up Power Finance
Corporation of India that looks after the financing of the power sector in India. The
Power Finance Corporation Limited provides finance to major power projects in
India for power generation and conversion, distribution and supply of power in
India.

Power Finance Corporation (PFC) Ltd India also looks after the installation of any
new power projects as well as renovation of an existing power project India. The
PFC in association with central electricity authority and the ministry of power
facilitates the development in infrastructure of the power sector India. They have
taken up construction of mega power projects that will answer to the power
shortage in various states through power transmission through regional and
national power grid..

POWER SUPPLY UNITS IN INDIA

Power is derived from various in India. These include thermal power, hydropower
or hydroelectricity, solar power, biogas energy, wind power etc. the distribution of
the power generated is undertaken by Rural Electrification Corporation for
electricity power supply to the rural areas, North Eastern Electric Power
Corporation for electricity supply to the North East India regions and the Power
Grid Corporation of India Limited for an all India supply of electrical power in
India.
Thermal Power in India is mainly generated through coal, gas and oil. India coal
power forms a majority share of the source of power supply in India. The electric
power in India is generated at various thermal power stations in India. The power
generated at these thermal power plants is then distributed all over India through a
network of powergrid at regional and national levels. The power ministry
organization responsible for the thermal power management in India is the NTPC.

Hydropower is India is one of the mega power generators in India. Various

hydropower projects and hydro power plants have been set up by the ministry of
power for generation of hydro power in India. Various dams and reservoirs are
constructed on major rivers and the kinetic energy of the flowing water is utilized
to generate hydroelectricity. The power generator here is the running water. The
hydroelectric power plants and the hydro power generation companies are
managed by the National Hydro Electric Power Corporation (NHPC).

Wind Power in India is available in plenty as India witnesses high intensity winds
in various regions due to the topographical diversity in India. Efforts have been
made to utilize this natural source of energy available free of cost for wind power
generation. Huge wind energy farms have been set up by the government for
tapping the wind energy by using gigantic windmills and them converting the
kinetic energy of the wind into electricity by the use of power converters.

The wind power advantages start with the very fact that a wind energy power plant
does not require much infrastructure input and the raw material i.e. wind itself is
available free of cost.

Solar Power in India is being utilized to generate electricity on smaller scale by

setting up massive solar panels and capturing the solar power. Solar power India is
also being utilized by the power companies in India to generate solar energy for
domestic and small industrial uses.

Nuclear Power in India is generated at huge nuclear power plants and nuclear
power stations in India. A nuclear power plant generates the electricity using
nuclear energy. All the nuclear power plants in India are managed by the Nuclear
Power Corp of India Ltd (NPCL). The electricity from all India nuclear plants is
distributed by the NPCL as per the nuclear power project scheme.
Biogas Production in India is still in its infancy stage. Also the number of biogas
plants in India is still very low. India being the largest domestic cattle producer has
plenty of biogas fuel and thus utilization of the fuel for mass biogas production
setting up more biogas plants in India would solve the power shortage problem to
some extend.

Electricity sector in India

The electricity sector in India is predominantly controlled by the Government of

India's public sector undertakings (PSUs). Major PSUs involved in the generation
of electricity include National Thermal Power Corporation (NTPC), National
Hydroelectric Power Corporation (NHPC) and Nuclear Power Corporation of India
(NPCI). Besides PSUs, several state-level corporations, such as Maharashtra State
Electricity Board(MSEB), Kerala State Electricity Board, (KSEB),in Gujarat
(MGVCL, PGVCL, DGVCL, UGVCL four distribution Companies and one
controlling body GUVNL, and one generation company GSEC), are also involved
in the generation and intra-state distribution of electricity. The PowerGrid
Corporation of India is responsible for the inter-state transmission of electricity and
the development of national grid.

The Ministry of Power is the apex body responsible for the development of
electrical energy in India. This ministry started functioning independently from 2
July 1992; earlier, it was known as the Ministry of Energy. The Union Minister of
Power at present is Sushilkumar Shinde of the Congress Party who took charge of
the ministry on the 28th of May, 2009.

India is world's 6th largest energy consumer, accounting for 3.4% of global energy
consumption. Due to India's economic rise, the demand for energy has grown at an
average of 3.6% per annum over the past 30 years.[1] In June 2010, the installed
power generation capacity of India stood at 162,366 MW[2] while the per capita
energy consumption stood at 612 kWH.[3] The country's annual energy production
increased from about 190 billion kWH in 1986 to more than 680 billion kWH in
2006.[4] The Indian government has set an ambitious target to add approximately
78,000 MW of installed generation capacity by 2012.[5] The total demand for
electricity in India is expected to cross 950,000 MW by 2030.[6]

About 70% of the electricity consumed in India is generated by thermal power

plants, 21% by hydroelectric power plants and 4% by nuclear power plants.[7] More
than 50% of India's commercial energy demand is met through the country's vast
coal reserves.[1] The country has also invested heavily in recent years on renewable
sources of energy such as wind energy.[8] As of 2008, India's installed wind power
generation capacity stood at 9,655 MW.[9] Additionally, India has committed
massive amount of funds for the construction of various nuclear reactors which
would generate at least 30,000 MW.[10] In July 2009, India unveiled a $19 billion
plan to produce 20,000 MW of solar power by 2020.[11]

Electricity losses in India during transmission and distribution are extremely high
and vary between 30 to 45%.[12] In 2004-05, electricity demand outstripped supply
by 7-11%.[13] Due to shortage of electricity, power cuts are common throughout
India and this has adversely effected the country's economic growth.Theft of
electricity, common in most parts of urban India, amounts to 1.5% of India's
GDP.Despite an ambitious rural electrification program, some 400 million Indians
lose electricity access during blackouts.While 80 percent of Indian villages have at
least an electricity line, just 52.5% of rural households have access to electricity. In
urban areas, the access to electricity is 93.1% in 2008. The overall electrification
rate in India is 64.5% while 35.5% of the population still live without access to
electricity .According to a sample of
97,882 households in 2002, electricity was the main source of lighting for 53% of
rural households compared to 36% in 1993. Multi Commodity Exchange has
sought permission to offer electricity future markets.

Generation
Grand Total Installed Capacity is 162,366 MW.
Thermal Power

Current installed capacity of Thermal Power (as of 06/2010) is

104,424 MW which is 63.7% of total installed capacity.

 Current installed base of Coal Based Thermal Power is

86,003 MW which comes to 53% of total installed base.
 Current installed base of Gas Based Thermal Power is
17,221 MW which is 10.61% of total installed base.
 Current installed base of Oil Based Thermal Power is 1,199
MW which is 0.74% of total installed base.
The state of Maharashtra is the largest producer of thermal
power in the country.
Hydro Power

India was one of the pioneering countries in establishing hydro-

electric power plants. The power plant at Darjeeling and
Shimsha (Shivanasamudra) was established in 1898 and 1902
respectively and is one of the first in Asia. The installed capacity
as of 2008 was approximately 36,877. The public sector has a
predominant share of 97% in this sector In the country.
Nuclear Power

Currently, seventeen nuclear power reactors produce 4,560 MW

(2.81% of total installed base).
Main article: Nuclear power in India
Renewable Power

Current installed base of Renewable energy is 16,492.42 MW

which is 10.12% of total installed base with the southern state of
Tamil Nadu contributing nearly a third of it (5008.26 MW)
largely through wind power.
Renewable Power

Current installed base of Renewable energy is 16,492.42 MW

which is 10.12% of total installed base with the southern state of
Tamil Nadu contributing nearly a third of it (5008.26 MW)
largely through wind power.

Transmission

A power transmission cable operated by BEST in Mumbai,

India.

Transmission of electricity is defined as bulk transfer of power

over a long distance at high voltage, generally of 132kV and
above. In India bulk transmission has increased from 3,708ckm
in 1950 to more than 165,000ckm today(as stated by Power Grid
Corporation of India). The entire country has been divided into
five regions for transmission systems, namely, Northern Region,
North Eastern Region, Eastern Region, Southern Region and
Western Region. The Interconnected transmission system within
each region is also called the regional grid.
The transmission system planning in the country, in the past, had
traditionally been linked to generation projects as part of the
evacuation system. Ability of the power system to safely
withstand a contingency without generation rescheduling or
load-shedding was the main criteria for planning the
transmission system. However, due to various reasons such as
spatial development of load in the network, non-commissioning
of load center generating units originally planned and deficit in
reactive compensation, certain pockets in the power system
could not safely operate even under normal conditions. This had
necessitated backing down of generation and operating at a
lower load generation balance in the past. Transmission
planning has therefore moved away from the earlier generation
evacuation system planning to integrate system planning.

While the predominant technology for electricity transmission

and distribution has been Alternating Current (AC) technology,
High Voltage Direct Current (HVDC) technology has also been
used for interconnection of all regional grids across the country
and for bulk transmission of power over long distances.
Certain provisions in the Electricity Act 2003 such as open
access to the transmission and distribution network, recognition
of power trading as a distinct activity, the liberal definition of a
captive generating plant and provision for supply in rural areas
are expected to introduce and encourage competition in the
electricity sector. It is expected that all the above measures on
the generation, transmission and distribution front would result
in formation of a robust electricity grid in the country.
Distribution

The total installed generating capacity in the country is over

148,700MW and the total number of consumers is over 144
million. Apart from an extensive transmission system network at
500kV HVDC, 400kV, 220kV, 132kV and 66kV which has
developed to transmit the power from generating station to the
grid substations, a vast network of sub transmission in
distribution system has also come up for utilisation of the power
by the ultimate consumers.

However, due to lack of adequate investment on transmission

and distribution (T&D) works, the T&D losses have been
consistently on higher side, and reached to the level of 32.86%
in the year 2000-01.The reduction of these losses was essential
to bring economic viability to the State Utilities.
As the T&D loss was not able to capture all the losses in the net
work, concept of Aggregate Technical and Commercial (AT&C)
loss was introduced. AT&C loss captures technical as well as
commercial losses in the network and is a true indicator of total
losses in the system.
High technical losses in the system are primarily due to
inadequate investments over the years for system improvement
works, which has resulted in unplanned extensions of the
distribution lines, overloading of the system elements like
transformers and conductors, and lack of adequate reactive
power support.
The commercial losses are mainly due to low metering
efficiency, theft & pilferages. This may be eliminated by
improving metering efficiency, proper energy accounting &
auditing and improved billing & collection efficiency. Fixing of
accountability of the personnel / feeder managers may help
considerably in reduction of AT&C loss.

With the initiative of the Government of India and of the States,

the Accelerated Power Development & Reform Programme
(APDRP) was launched in 2001, for the strengthening of Sub –
Transmission and Distribution network and reduction in AT&C
losses.
The main objective of the programme was to bring Aggregate
Technical & Commercial (AT&C) losses below 15% in five
years in urban and in high-density areas. The programme, along
with other initiatives of the Government of India and of the
States, has led to reduction in the overall AT&C loss from
38.86% in 2001-02 to 34.54% in 2005-06. The commercial loss
of the State Power Utilities reduced significantly during this
period from Rs. 29331 Crore to Rs. 19546 Crore. The loss as
percentage of turnover was reduced from 33% in 2000-01 to
16.60% in 2005-06.
The APDRP programme is being restructured by the
Government of India, so that the desired level of 15% AT&C
loss could be achieved by the end of 11th plan.
Generation
India has the fifth largest generation capacity in the world
with an installed capacity of 152 GW as on 30 September
20091, which is about 4 percent of global power
generation. The top four countries, viz., US, Japan, China
and Russia together consume about 49 percent of the total
power generated globally. The average per capita
consumption of electricity in India is estimated to be 704
kWh during 2008-09. However, this is fairly low when
compared to that of some of the developed and emerging
nations such US (~15,000 kWh) and China (~1,800 kWh).
The world average stands at 2,300 kWh2. The Indian
government has set ambitious goals in the 11th plan for
power sector owing to which the power sector is poised
for significant expansion. In order to provide availability of
over 1000 units of per capita electricity by year 2012, it has
been estimated that need-based capacity addition of more
than 100,000 MW would be required. This has resulted in
massive addition plans being proposed in the sub-sectors
of Generation Transmission and Distribution.
Transmission
The current installed transmission capacity is only 13
percent of the total installed generation capacity3. With
focus on increasing generation capacity over the next 8-10
years, the corresponding investments in the transmission
sector is also expected to augment. The Ministry of Power
plans to establish an integrated National Power Grid in the
country by 2012 with close to 200,000 MW generation
capacities and 37,700 MW of inter-regional power transfer
capacity. Considering that the current inter-regional power
transfer capacity of 20,750 MW4, this is indeed an
ambitious objective for the country.
Distribution
While some progress has been made at reducing the
Transmission and Distribution (T&D) losses, these still
remain substantially higher than the global benchmarks, at
approximately 33 percent. In order to address some of the
issues in this segment, reforms have been undertaken
through unbundling the State Electricity Boards into
separate Generation, Transmission and Distribution units
and privatization of power distribution has been initiated
either through the outright privatization or the franchisee
route; results of these initiatives have been somewhat
mixed. While there has been a slow and gradual
improvement in metering, billing and collection efficiency,
the current loss levels still pose a significant challenge for
distribution companies going forward.
Indian Power Industry - Current Scenario
Power Companies in India:

Many government as well as private organizations have taken up the task of power
generation in India. The major Indian power companies playing prime are:

. Essar Group

 Gujarat State Petroleum Corporation Ltd.

 Jindal Steel & Power Limited.
 Karnataka Power Transmission Corporation Limited
(KPTCL)
 Nippo Batteries
 Reliance Energy Ltd.
 Shri Shakti
 Durgapur Projects Limited
 United Power
 GE Power Controls India
 Green Power India
As per the latest assessment
with a high degree of confidence and additional 12,590 MW capacities is being targeted
on best efforts basis for commissioning during the XIth Plan.
participation has been more
percentage terms. In addition, 12,000 MW Captive Power Plants are under execution
against which about 5,000 MW has been commissioned till August 31, 2009. Against the
target of 14,000 MW for renewals,
2009.
5. Detailed status for requirement of capacity addition for the XIIth Plan are under
finalisation in Central Electricity Authority (CEA) and as per the preliminary studies, the
requirement of capacity additi
be a need to set higher target for private sector participation for the XIIth Plan in
view of its performance during the XIth Plan.
8,737
4,757
Commissioned
XI
4.2 The Electricity Act 2003
The Electricity Act 2003 has been enacted by the Parliament in June, 2003. The
salient
positive features of this legislation are:
• Removal of a number of restrictive barriers to the flow of power in a competitive
market scenario by opening access to transmission (from the outset) and
distribution.
• Freeing up of generation and captive power plants from licenses and
technoeconomic
approvals.
• The recognition to trading as a distinct activity that would help ushering in a
market environment.
• The formation of an expert Appellate Tribunal to hear appeals against State and
Central Electricity Regulatory Commission orders.
• Transferring the full range of regulatory and licensing functions to the Central
and State Regulatory Commissions.
• Deregulating tariffs in certain situations e.g. in case of agreements between
consumers and generating companies.
• The distancing of Government from the functioning of the sector after giving
broad directions via the National Electricity Policy and the National Tariff Policy.
• The conversion of the remaining State Electricity Boards into State Transmission
Utilities and deemed licensees with the freedom (but not compulsion) to
restructure and progress down the road to corporatisation and privatization.
• The Energy Conservation Act, 2001 has been enacted and consequently Bureau
of Energy Efficiency (BEE) has already been set up.
4.3 Reforms So Far
• 26 states have signed Memorandum of Understanding (MoU) with the
Government of India to undertake reforms.
• 20 states have constituted State Electricity Regulatory Commissions and are
functional. Tripura and Jharkhand have notified the constitution of SERC.
• 18 State Electricity Regulatory Commissions have issued tariff orders.
• 11 States have unbundled/corporatised.
• State of Orissa and Delhi have privatised distribution of electricity.
4.4 Major Policies Notified Under the Electricity Act During 2006
4.4.1 Tariff Policy
The Tariff Policy has been notified by Government of India on6 January, 2006
under the
provisions of section 3 of the Electricity Act, 2003.
The objectives of the tariff policy are to:
• Ensure availability of electricity to consumers at reasonable and Competitive
rates
• Ensure financial viability of the sector and attract investments
• Promote transparency, consistency and predictability in regulatory approaches
across jurisdictions and minimise perceptions of regulatory risks
• Promote competition, efficiency in operations and improvement in quality of
supply.
4.4.2 Guidelines for procurement of electricity
In compliance with section 63 of the Electricity Act, 2003, the Central Government
had
notified guidelines for procurement of power by Distribution Licensees through
competitive bidding. Central Government has also issued the standard bid
documents
containing RFQ, RFP and model PPA for long term procurement of power from
projects having specified site and location.
Amendment to these guidelines has been issued on 30
th
March, 2006 and 18
th
August,
2006.
4.4.3 Rural Electrification Policy
Rural Electrification Policy, in compliance with section 4 and 5 of the Electricity
Act
2003, was notified on 23
rd
August, 2006.
Overall approach enunciated in the Policy highlights grid connectivity to be normal
way
of electrification of villages. For villages / habitations where grid connectivity is
not
feasible or not cost effective of grid solutions based on stand alone systems may be
taken
up. De-centralized distribution generation facilities together with local distribution
network may be based on either conventional or non-conventional method of
electricity
generation. The State Governments should within six months prepare and notify a
Rural
Electricity Plan to achieve the goal of providing access to all households.
4.4.4 New Hydro-Policy
Section 63 of the Electricity Act provides for development of projects on the basis
of
competitive bidding for tariff. Sections 61 and 62 allow such projects developed on
the
basis of tariff to be fixed by the Regulator on the basis of capital cost and norms. In
fact,
the Electricity Tariff Policy notified in January 2006 also allows a special
dispensation for
project development by State and Central PSUs on the basis of capital cost and
normbased tariff to be determined by the Regulatory Commission. This
dispensation,
allowed for PSUs, is now proposed to be made available for the same period of 5
years
to promote hydro-power development even through the private sector route. The
State
would be required to follow a transparent process for selection of the developer.
This arrangement would have several advantages. While the initiative for
allocation of
the project would remain with the State Government (subject to the requirement of
transparency in the allocation), the scrutiny of the regulator and the CEA would
ensure
that the project is being designed and built in the most optimal and economic
manner,
and that the interest of the consumers is adequately protected. From the point of
view of
the developer, this procedure would reduce numerous risks associated with the
construction and operation and maintenance (O&M) of hydro projects.
New Hydel Policy announced with an objective of making investment in hydro
projects
more attractive. The government has prepared plan for creation of National Grid by
2012 and infrastructure to facilitate inter-regional exchange of 30,000 MW of
electricity
by 2012.
4.4.5 Ultra-Mega Power Projects (UMPPs)
The Ministry of Power, Government of India has launched an initiative for
development
of coal-based Ultra-Mega Power Projects (UMPPs) in India, each with a capacity
of
4,000 MW or above. These projects will be awarded to developers on the basis of
tariffbased
competitive bidding. To facilitate tie-ups of inputs and clearances, project-specific
shell companies have been set up as wholly owned subsidiaries of the Power
Finance
Corporation (PFC) Ltd. These companies will undertake preliminary studies and
obtain
necessary clearances including water, land, fuel, power selling tie-up etc. prior to
award
of the project to the successful bidder.
Nine sites have been identified by CEA in nine States for the proposed UMPPs.
These
include four pithead sites, one each in Chhattisgarh, Jharkhand, Madhya Pradesh
and
Orissa, and five coastal sites, one each in Andhra Pradesh, Gujarat, Karnataka,
Maharashtra and Tamil Nadu. It is proposed to set up pithead projects as integrated
proposals with corresponding captive coal mines. On the request of Ministry of
Power,
Ministry of Coal has already allocated captive coal mining block for Sasan UMPP
in
Madhya Pradesh and earmarked captive coal mining block for Orissa UMPP. For
the
coastal projects, imported coal shall be used. The projects are to be developed with
a
view to lower the cost of power to the consumers. These projects, adopting
supercritical
technology to reduce emissions, would be environment-friendly.
A time bound action plan for preparation of project report, tie-up of various inputs/
clearances, appointment of consultants, preparation of RFQ/RFP have been
prepared.
Lanco Infrastructure has bagged the Sasan Project at Rs. 1.19 per unit whereas
Tata
Power has been awarded the Mundra project at Rs. 2.26 per unit. The encouraging
results achieved in these two cases has shown the way forward for capacity
addition with
most competitive tariff. Developers for Krishnapatnam UMPP (Andhra Pradesh)
and
Tilaiya (Jharkhand) UMPP are expected to be selected by April, 2007 and July
2007
respectively. Once the developers are selected, the ownership of the shell
companies
shall be transferred to the successful bidders
4.4.6 Development of Merchant Power Plants
To facilitate the development of the electricity market, the Ministry of Power has
issued
the approach and guidelines on development of merchant power plants (MPPs).
Unlike
traditional utilities, MPPs compete for customers and absorb the full market risk.
There
is no guarantee regarding minimum off-take of their output. Typically the risk of a
MPP
is carried on the balance sheet of the promoter. MPPs can provide the additional
generating reserves that India needs now and will need in the future. They are a
modern,
market-based answer – at least in part – to the energy challenges faced by the
country.
MPPs are a product of the restructuring of the electricity industry and they fill
different
niches in the market; some provide steady supplies to a power grid, while others
fire up
only when demand is at the highest and meet peak loads. Merchant power plants
operating competitively help assure that power is produced with efficiency and
supplied
to locations where it is needed most. MPPs up to a capacity of 1,000 MW would be
provided coal linkage, and captive coal blocks may also be provided to merchant
power
plants in the range of 500–1000 MW.
It would be essential that certain normative criteria are laid down for eligibility for
coal
blocks allotment, particularly to IPPs and merchant plans. These criteria could
relate to
net worth of the company, their internal resource generation and annual turn-over.
The
agencies being allotted the coal blocks may also be required to put in place bank
guarantee of a reasonable amount which should be liable to be encashed if
important
milestones for development of coal mines are not achieved. The intermediate
milestones
may also include indicators concerning the development of power projects, such as
award of Engineering Procurement and Construction (EPC) contracts, and
commencement of construction. Success of this scheme would, to a great extent,
depend
on availability of reliable data and information for plant sites and other inputs in
this
capacity range so that developers then can take further appropriate action.
4.4.7 Private Participation in Transmission
Private investment has been allowed in power transmission either through 100per
cent
equity or joint venture with PGCIL. In case of latter, the PGCIL will hold only
26per
cent stake and private party would hold the rest.
Private sector participation in transmission has been limited to construction and
maintenance of transmission lines on BOOT (build-own-operate-transfer) basis
under
the control of PGCIL.
Policy initiatives for encouraging competition in development of transmission
projects
• Promote competitive procurement of transmission services.
• Encourage private investment in transmission lines.
• Facilitate transparency and fairness in procurement processes.
• Facilitate reduction ‘of information asymmetries for various bidders’. Protect
consumer interests by facilitating competitive conditions in procurement of
transmission services of electricity.
• Enhance standardization and reduce ambiguity and hence time for
materialization of projects.
• Ensure compliance with standards, norms and codes for transmission lines while
allowing flexibility in operation to the transmission service providers.
4.4.8 Development of Transmission Projects through Competitive Bidding
An Empowered Committee has identified 14 projects to be developed through
competitive bidding route. Expression of Interest in respect of 4 projects has
already
been published. Power Finance Corporation and Rural Electrification Corporation
have
been identified as nodal agency for this initiative.
Details of projects for which EoI (Expression of interest) has been published is
given
below:
1. Evacuation System for North Karanpura (1980 MW)
2. Talcher Augmentation System
3. Evacuation System for Maithon RB (1000 MW), Koderma (1000 MW) and
Bokaro Extension (500 MW)
4. Scheme for enabling import of NER / ER surplus by Northern Region
4.4.9 Multilateral / Bilateral external assistance arranged for power sector during
2006
In comparison to 2005 during which 3 power projects aggregating Rs.18.4 million
of
external assistance were sanctioned, in 2006 there has been substantial increase
and in
the year five power projects have been sanctioned by various multilateral / bilateral
funding agencies.

5. PROFILE OF MAJOR PLAYERS

5.1 Tata Power
A pioneer in the Indian power sector, Tata Power (TPL) is one of India’s largest
energy
utilities. Started as the Tata Hydroelectric Power Supply Company in 1911, it is an
amalgamation of two entities: Tata Hydroelectric Power Supply Company, Andhra
Valley Power Supply Company (1916).
TPL provides services in power generation, distribution and transmission; oil and
gas;
and broadband and communications. The company has big overseas power projects
in a
number of countries, including the UAE, Malaysia, Saudi Arabia, Kuwait and
Algeria. It
has also undertaken projects in power plant / utility operations and management in
Saudi Arabia, Liberia, Iran, Sierra Leone and Algeria.
Power expertise services
• Setting up independent power plants (lPPs) and captive power plants (CPPs),
and executing power transmission and distribution projects.
• Operation and maintenance services.
• ‘Remnant life assessment’ and ‘performance evaluation services’ of power plant
equipment.
• In overseas projects, erection, testing, commissioning and trial operations.
• In power plant / utility operations, management and plant operators’ training
projects (in India and abroad).

Financials
Year 2005-06 Year 2004-05
Turnover (Rs. Million) 45627.9 39304.4
Net Profit (Rs. Million) 6105.4 5513.6
TPL owns, operates and maintains a unique mix of thermal and hydroelectric
power
plants. The hydroelectric plants are in Khopoli, Bhivpuri and Bhira (all in
Maharashtra),
and the thermal power plants are in Trombay (Maharashtra), Wadi and Belgaum
(Karnataka), and Jojobera (Jharkhand).
5.2 Reliance Energy Ltd. (REL)
Reliance Energy Ltd is India's leading integrated power utility company in the
private
sector. It has a significant presence in generation, transmission and distribution of
power
in Maharashtra, Goa and Andhra Pradesh. Reliance's gas finds in KG-D6 block in
Krishna Godavari basin constitutes 60 per cent of India's present total gas
production.
REL and its affiliate power companies rank among the top 25 listed private sector
companies on major financial parameters. REL is part of the Reliance industries-
India's
private sector company ranked among the world's 175 largest companies in terms
of net
profit and the 500 largest companies in terms of sales.
REL is committed to creating superior value for all its stakeholders and be amongst
the
most admired and trusted utility companies in the world by setting new
benchmarks in
standards of corporate governance, operational and financial excellence,
responsible
corporate citizenship and profitable growth.
EPC Division (Engineering, Procurement and Construction Division)
REL has significant presence in the field of execution of the Power projects on
EPC
basis with a strong track record of the execution and commissioning of projects on
time.
REL has received wide acclaim for the initiatives in corporate governance. These
awards
and recognition's greatly motivates and encourage the REL team to set fresh
benchmarks in corporate governance, particularly in the Indian Power Sector.
Reliance Energy with its affiliates and sister companies in the Reliance group, own
and
operate over 2,000 MW of Generating capacity in the country. These comprise
conventional thermal plants, gas turbine based combined cycle power plants,
Cogeneration plants and wind electric generators. Most of its Projects have been
executed by Reliance Energy through its EPC division.
The EPC division of REL was set up in 1966 and was undertaking engineering,
procurement and construction contracts on a turnkey basis and other value added
services for major public and private sector projects both in India and Abroad. The
Division has 10 regional offices in major cities of India and Overseas offices in
Dubai,
Nepal and Bhutan. The Division has to-date undertaken the total engineering,
supply of
electrical and mechanical equipment, installation and commissioning services and
civil
works for the following range of projects:
• thermal, hydro, Co-generation and gas based power generating stations;
• 400/132 KV transmission lines and switch yards;
• overhead and underground electrical networks;
• industrial electrification works for petrochemicals, fertilizers, steel, cement
plants,
refineries, ports and hotels;
• indoor and outdoor illumination works;
• pre-moulded accessories for extra high voltage electrical cables;
• Renovation and Modernization of Delhi distribution network; and
• Other civil works
Experience and Achievements of EPC Division:
EPC division has undertaken and successfully commissioned the following major
projects:
• Its first ever IPP, 2 x 250 MW Coal based Thermal Power Station at Dahanu,
Maharastra
• Reliance Energy Limited-Samalkot Power Station: 220 MW Dual Fuel based
(Natural gas & Liquid Fuel) Combined Cycle Power Plant at Samalkot, Andhra
Pradesh. The Power Plant is already operational and supplying power to the State
Grid of Andhra Pradesh.
• 165 MW liquid-fuel based combined cycle power project for its subsidiary,
Reliance Energy Limited - Kochi Power Station at Kochi in Kerala with an
aeroderivative
unit of 40 MW along GE's LM6000 module, completed on 15 June
2001. .
• 106 MW Combined Cycle Power Plant of Gujarat State Electricity Corporation
Ltd. at Dhuvaran, Gujarat
• 24 MW Bagassed based Co-generation Power Plant for Godavari Sugar Mills
Limited at Sameerwadi, Karnataka.
• 20 MW Diesel based D.G.Sets for Surya Chakra Power Ltd. at Islands of
Andaman and Nicobar.
• 12.5 MW Lignite Based Power Project for Grasim Industries Limited at Ariyalur,
Tamil Nadu
• 10.5 MW (5 x 2 MW + 1 x 0.5 MW) Diesel based captive power project for
ITPark
for TIDEL- Chennai.
• 7.5 MW Thermal Power Plant for Monnet Power Ltd. at Raipur, Madhya
Pradesh.
• 3 x 2.5 M DG based Power Plant for National Institute of Biologicals, Noida.
• 5 MW Bagasse based Thermal Power Plant for Global Energy Ltd., Belgundi,
Karnataka,
• 3 MW Captive Power Project for Alok Industries Limited at Vapi, Gujarat.
• 2.5 MW D.G. set based Captive Power Plant for ITC, Bangalore.
• 2 x 250 MW Tau Devilal Thermal Power Station for Haryana Power Generation
Corporation Limited at Panipat, Haryana.
• (Unit - 8 of Tau Devilal Thermal Power Project of HPGCL has been awarded
the "Best executed 250 MW Thermal Power Project " of the Year 2004-05 )
Projects under Commissioning /Execution
• 2 x 300 MW Yamunanagar Thermal Power Station for Haryana power
eneratuion Corporation.
• More than 7000 Village Electrification, commissioning of new 52 GSS &
augmentation of 82 GSS under RGGVY - UPRE Project
• 4 x 70 MW Urthing Sobla Hydro Electric Project in Uttaranchal
• 2 x 210 MW Parichha Thermal Power Station for Uttar Pradesh Rajya Vidyut
Utpadan Nigam Limited at Parichha, U.P.
• Main Electrical System Packages for 2 x 220 MW Nuclear Power Plant at Kaiga,
Karnataka and 2 x 220 MW Nuclear Power Plant at Kota, Rajasthan for Nuclear
Power Corporation of India Limited.
• Changeover from overhead to underground Transmission Lines under Ranchi
beautification scheme for Jharkhand State Electricity Board
• 110 KV Switchyard and Revamping of Electrical System in the State of Tamil
Nadu for Chennai Petroleum Corporation.
• 220 kV d/c transmission lines Project from Panarsa to Nalagarh for AD Hydro
Power Ltd.
Financials
Year 2005-06 Year 2004-05
Turnover (Rs. Million) 40190.7 41306.7
Net Profit (Rs. Million) 6503.4 5202.9
5.3 National Thermal Power Corporation (NTPC)
NTPC Limited is the largest thermal power generating company of India. A public
sector company, it was incorporated in the year 1975 to accelerate power
development in
the country as a wholly owned company of the Government of India. At present,
Government of India holds 89.5per cent of the total equity shares of the company
and
Within a
span of 31 years, NTPC has emerged as a truly national power company, with
power
generating facilities in all the major regions of the country.
fg

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