Bihar stir may power NTPC diversification

A citizens’ agitation in Bihar and the state government’s promise to look at the privatization of the state’s electricity utilities have provided NTPC Ltd an opportunity to diversify into power distribution—a logical extension of business for the Central government owned power generation firm, the country’s largest.

This could provide an impetus to the company’s plans for the distribution business. NTPC has been exploring the idea of entering the business and even formed a distribution arm, NTPC Electric Supply Co. Ltd, or NESCL. As part of its forward integration move, NTPC had earlier planned to set up distribution networks in Kanpur in Uttar Pradesh and Mangalore in Karnataka. Neither, however, have come about yet.


As the local population in Bihar continues agitating against the lack of adequate power in the state, chief minister Nitish Kumar, in a bid to contain the political backlash, on Monday said it was NTPC’s duty to provide power to Bihar. Kumar’s statements were made following an agitation, which led to the death of three people in police firing on Friday near the NTPC-owned 1,340MW plant in Kahalgaon in south Bihar.
NTPC has two plants in Bihar, but these are not owned by the state government and their output can only be accessed indirectly by the state from a central pool.
A generation utility located in any of the five power regions in the country supplies power to the region’s load dispatch centre. In Bihar’s case, it is Eastern Region Load Dispatch Centre, or ERLDC, from where the state electricity board (SEB) purchases power.

Bihar has a power generation capacity of 584MW, compared with a demand of around 1,400MW. The deficit is made up by accessing the central pool.

Following the chief minister’s remarks, NTPC is readying to move into power distribution, provided it is issued a power distribution licence by the Bihar State Electricity Regulatory Commission (BSERC), a state government body.

“The state government is trying to divert the issue. Supplying power to Kahalgaon is not our responsibility as it is the job of the Bihar State Electricity Board (BSEB). As per the law, we cannot distribute power. If they want us to do so, let them issue us a distribution licence and then we will consider it,” said T. Sankaralingam, chairman and managing director, NTPC.

The state government can do this only by privatizing power distribution.
Nitish Kumar, immediately after he become chief minister in November 2005, had promised to explore all options, including privatization, to revive the power sector in Bihar.

“BSEB is in a big mess with more than 51% power cut in Bihar. Our units at Kahalgaon are operating at maximum capacity. I will be visiting the state shortly to firm up our plans,” Sankaralingam said.

State government officials do not agree with NTPC’s view and argue that the firm cannot shy away from its responsibility of supplying power. “When you take away land and displace the people from there, these people are given a special status. You cannot treat them as ordinary consumers. While NTPC is maintaining 24-hour power supplies to its operational units, including the railway station used for handling coal (which comes to the plant), they are not willing to supply power to the consumers,” said H.C. Sirohi, divisional commissioner, Bhagalpur.

Analysts say NTPC’s entry into the distribution business will be significant, given the fact that it has a power generation capacity of 27,404MW and plans to increase this to 50,000MW by 2012.

A Delhi-based analyst who did not wish to be named said: “NTPC may negotiate with the state governments to get a distribution company. That is the way forward. There are very few good distribution companies in the sector such as Calcutta Electricity Supply Corp., Tata Power, Torrent Group and Reliance Power. Nothing stops NTPC from entering the power distribution sector. It is a strong player and SEBs have failed in certain respect in certain areas which are primarily managerial in nature.”
“Entering the distribution part of the business will not be a problem for NTPC as it has the access to power generation,” said a Union government official who did not wish to be named.

PGCIL signs MoU with Bihar govt

Patna, Nov 22: The Power Grid Corporation of India Limited (PGCIL) has signed an MoU with the Bihar State Electricity Board (BSEB).

The project aims at improving the overall distribution of electricity in the state by 2012 at an expenditure of Rs 1240.86 crore.

The four-party agreement was signed by PGCIL Chairman and Manganig Director (CMD) R. P. Singh, state Energy Secretary Rajesh Gupta, BSEB Chairman Swapan Mukherjee and Union Ministry of Power Director Lokesh Chandra in the presence of Bihar Chief Minister Nitish Kumar, state Energy Minister Dijendra Yadav, state Chief Secretary A. K. Sinha and several other senior officials.

The Bihar Chief Minister, Nitish Kumar, after signing the MoU asserted that following the completion of the third and final phase of the work within the next five years, the overall power scenario in the state would undergo a sea change to ensure better living conditions.

"The laying of transmission line by the Power Grid would go a long way in providing electricity to every household even in rural areas of the state," the Chief Minister said.

He also described the Rs 2,500 crore project as a "major milestone in the ongoing industrialization programme of the state government."

"It has become the need of the hour to improve the entire power transmission network in Bihar in line with that of the national power grid so that the proposed extra generation of electricity by the NTPC and the BSEB are not wasted," Kumar said and requested the Power Grid CMD to ensure that the work of the final phase was completed on time.

Rlys, NTPC in venture for power plant

Gets Bhartiya Rail Bijlee rolling: The Union Minister for Power, Mr Sushil Kumar Shinde, and the Union Minister for Railways, Mr Lalu Prasad, during the signing of a joint venture agreement in the Capital on Tuesday.

New Delhi, Nov 6 Indian Railways hopes to save Rs 400-600 crore annually by sourcing power from the 1,000 megawatt (MW) captive power unit to be set up at Nabinagar in Bihar. The project, which is targeted to be functional in four years, would bring in savings to Railways by providing cheaper power.

The Railways and NTPC on Tuesday signed an agreement to enter into a joint venture for setting up the 1,000 MW power plant – Bhartiya Rail Bijlee Company Ltd. The project has been accorded mega-status and would enjoy fiscal benefits.

“The average level cost of generation from this plant will be 213 paise per unit. After paying wheeling and transmission charges, it is expected that the Railways will pay about 338-363 paise per unit and save Rs 400-600 crore per annum,” said Mr K.C. Jena, Chairman, Railway Board, adding that this would reduce the operating expenses by 1-2 per cent. The average cost of electricity for Railways is 428 paise per unit. In 2006-07, Railways spent Rs 5,707 crore for consuming 13.3 billion units of electricity for traction and non-traction purposes.
PROJECT COST

The Nabinagar power plant, to be built at a cost of Rs 5,352 crore, will also provide 10 per cent of generated power to other users. While NTPC would have an equity of 74 per cent (Rs 1,188 crore), Railways will have a 26 per cent (Rs 417 crore) equity. The project would be taken up on a 70:30 debt-equity basis.

It would have an estimated annual coal consumption of five million tonnes and coal would be sourced from North Karanpura colliery, located 250 km from the site.

The Union Power Minister, Mr Sushil Kumar Shinde, said that this joint venture will be mutually beneficial for both the Ministries of Railways and Power in view of the rising demand for power in the country. The joint venture agreement was signed by Mr Sudheer Kumar, Executive Director (Electrical Energy Management), Ministry of Railways and Mr R.S. Sharma, Director (Commercial), NTPC.

Electricity from this plant, to be supplied through 164 traction substations, will be utilised by Indian Railways for running electric trains in Bihar, Jharkhand, West Bengal, Orissa, Chhattisgarh, Maharashtra, Gujarat and Madhya Pradesh.

Speaking on the occasion, the Minister for Railways, Mr Lalu Prasad said that nearly 18,000 route km (out of more than 63,000 route km) of Indian Railways network, has already been electrified which constitutes 28 per cent of the total rail network carrying nearly 63 per cent of freight and 47.8 per cent of passenger traffic.

The Railways stated that the Union Cabinet had, in view of the “unreasonably high tariff” charged by the State electricity boards (SEBs), approved Railways’ proposal for availing itself of direct power supply from Central generating agencies from the 15 per cent unallocated central share of power. Accordingly, the Railways availed itself of power supply from Dadri and Auriya power plant of NTPC in November 2000 for Ghaziabad-Kanpur section of Northern Railway. It is saving about Rs 50 crore per annum due to implementation of these schemes for availing direct power supply from NTPC/Central generating agencies.

Abhijeet to invest in power in Bihar

as Infrastructure Capital Pvt. Ltd, a company belonging to the Rs 310-crore diversified Abhijeet Group, plans to invest around Rs 65 billion in a power project in Bihar.

The company will set up a 9x135 mw coal-based thermal plant at Navinagar, Lakhisarai, Pirpainti, Banka, in Bihar. The project is in a nascent stage and details are being worked out. The state investment promotion board has given in-principle approval.

"We have applied for coal blocks. More details will be known only after allocation of the blocks," an official of Jas said on condition of anonymity. The company hopes to get the coal blocks within three to four months.

Meanwhile, Jas Infrastructure has applied for six coalfields, namely Amrakonda-Murgadangal (Birbhum coalfields), Patal East (South Karanpura coalfields), Ashok Karkata Central (North Karanapura coalfields) and Ganeshpur (North Karanpura coalfields) in Jharkhand; and Mahuagarhi (Rajmahal coalfields) and Gourangdih ABC (Raniganj coalfields) in West Bengal.

Abhijeet Group is mainly engaged in the iron and steel sector. In recent years, the group has forayed into infrastructure and has successfully completed Rs 270-crore worth of road projects on BOT basis. More recently, the group announced two coal-mining pit-head based merchant power projects of 810 mw in Jharkhand. Phase-I is estimated to cost around Rs 22 billion.