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Initiatives Already
Taken
SERCs have been
established in AP, Gujarat, Haryana, Karnataka, Maharashtra,
Punjab, Rajasthan, Madhya Pradesh, Tamil Nadu, Uttar Pradesh,
Orissa and WB.
Unbundling of
generation, transmission and distribution
Orissa
The Government of
Orissa has been in the forefront of reforms by enacting the Orissa
Electricity Reform Act and setting up Orissa State Electricity
Regulatory Commission. The SEB has been unbundled into Orissa Power
Generating Company (OPGC) and Orissa Hydel Power Corporation
(OHPC), which are generating companies, and Grid Corporation of
Orissa (GRIDCO), the T&D company. The Government of Orissa has
initiated privatisation of distribution sector by selling a
strategic stake in the Western, North-Eastern and Southern
Electricity Supply companies to BSES, and Central Electric Supply
company to AES.
Andhra
Pradesh
The APSEB has been
corporatised to form Andhra Pradesh Generation Company Limited
(APGENCO) and Andhra Pradesh Transmission Company
(APTRANSCO).
Haryana
The Government of
Haryana has also enacted the Haryana Electricity Reforms Act and
has restructured the SEB into a Power Transmission Company (Haryana
Vidyut Prasaran Nigam Limited) and a generation company (Haryana
Power Generation Corporation Limited). It had initiated measures to
privatise the northern zone of HPGCL before the change of
government.
Performance Of Listed
Companies
A.
Licensees
BSES’ reduced
dependence on TECs due to increased generation by the Dahanu plant
has had a positive impact on margins in FY99 and H1FY00. Income
from contracts and EPC division has posted a healthy rise after
executing the EPC contract of the Kochi plant. The EPC and software
divisions are expected to be the growth drivers. BSES is executing
a number of IPPs in JV and has taken over 3 distribution companies
in Orissa.
CESC came back to
the black in FY00 as a result of the much awaited hike in tariffs.
The commissioning of the Budge-Budge project, although delayed, has
led to reduced dependence on WBSEB. It has a stake in 2 IPPs
–Dholpur and Korba, which are expected to attain financial
closure in FY00.
TECs are faced with
stagnation in sales due to their concentration in Mumbai which is
already saturated with industries. Their growth strategy lies in
acquisition and operation of captive power plants for Tata group of
companies and IPPs. TECs have 2 IPPs in progress – Belgaum and
Jojobera.
B. Equipment
Suppliers
BHEL is likely to
benefit from mega power projects to the tune of 5100MW being
executed by NTPC. It has recently bagged equipment orders for
Simhadri, Talcher and Suratgarh power projects. It is also
targetting exports in a big way. BHEL is likely to bag a good
number of R&M projects, whose value is pegged at
Rs10bn.
Siemens has turned
around in FY99 as a result of its restructuring efforts. It is
undertaking EPC contracts for 3 power projects – Bina, Shree
Maheshwara and Baspa. Power plant automation and T&D
modernisation are expected to be growth areas.
The performance of
ABB continued to languish in the first 9 months of FY99 due
to poor offtake from the power sector. It has bagged EPC contracts
for Rs30bn which are in various stages of approval. The prominent
IPPs where ABB has bagged EPC contracts are Korba, Videocon,
ST-CMS, Spic, Pench and Maheshwar.
Wartsila has
achieved a turnaround in the first 9 months of FY99 on the back of
healthy order execution. Encouragement to liquid fuel IPPs has
given a shot in the arm for Wartsila, which supplies DG engines.
Wartsila will be doing civil and mechanical works for 4 liquid fuel
based IPPs whose EPC contracts have been bagged by the
parent.
VI. Other
Significant Recent Developments
NTPC to take over
NHPC and sell some of its plants
The government is
considering a proposal where NTPC will buy out the entire
government stake in NHPC for a sum of Rs45bn. NTPC will raise the
money through the transfer of some of its plants to a subsidiary,
which will in turn offload 51% stake to a strategic investor for
Rs45bn. Around Rs20bn is expected in the first year and another
Rs25bn in the second.
The power ministry
justifies the proposal on the count that NTPC was planning to make
a foray into the hydel sector. By taking over NHPC, it can draw on
the latter’s expertise in the hydel sector. Acquisition of
NHPC will also enhance NTPC’s financial leverage which will
increase its borrowing capacity. And above all, the government can
bridge its fiscal deficit to that extent.
Sale of plants to a
JV as a means of raising finances seems to have a flawed logic.
NTPC will have to put its better plants on the block for raising
the money in such a short span of time. The government is
apparently trying its level best to indirectly retain control over
NTPC and NHPC. It is not clear how NHPC’s installed capacity
of 2115MW and capacities under construction of over 2500MW have
been valued at Rs45bn. And the benefits accruing to NHPC out of a
change in ownership is not clear. A better option for the
government would have been to offload its stake in NHPC itself to a
strategic partner with a clear expertise in managing and
constructing hydel plants. Moreover, it seems that the managements
of NHPC and NTPC have not been consulted on this, which is a gross
violation of the autonomy of a PSU board.
Cogentrix
Withdraws From Mangalore Power Project
Cogentrix and China
Light & Power, the promoters of Mangalore Power Company (MPC),
have pulled out of the 1000MW thermal power project. In a press
release, the company has said that continued development of the
project would not be feasible as a consequence of inordinate delays
in obtaining government approvals and resolving public interest
litigation.
The $1.3bn MPC was
one of the 7 fast track power projects that was slated to be come
up way back in 1992. The project has been bogged down by delays and
controversies from the very beginning. A number of environmental
petitions were filed against the company, all of which were
dismissed. The revised PPA was signed for the third time on
November 17, 1997 after all clearances were finally obtained. This
cleared the way for the counter-guarantee by the Central
government, which was to be incorporated in the PPA. In February
1998, a public interest petition was filed on development cost of
HK$191mn which were alleged to be kickbacks paid by China Light
& Power for obtaining clearances. The counter-guarantee was
therefore held back. The matter is still pending with the Supreme
Court which was supposed to give its verdict in January
99.
The fate of the
power project is not known. The project may be awarded to some
other promoter or may be scrapped altogether. From the reaction of
power ministry officials to the withdrawal, "Life goes on. If one
project goes, others will come up"; it looks as if the power
ministry is not unduly concerned about Cogentrix pulling
out.
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