International Business (power Sector)

INTERNATIONAL BUSINESS

REPORT ON INTERNATIONAL BUSINESS

POWER SECTOR: INDIAN AND INTERNATIONAL OVERVIEW SUBMITTED TO:

Prof. RAJWADE

SUBMITTED BY: LALAN MAHATO (72) ARPIT MANKAR (73) ROHIT MENEZES (74) ANJEETA MISHRA (75) ANKUSH NAGARWAR (76)

DATE: September 23, 2009

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REPORT ON INTERNATIONAL BUSINESS POWER SECTOR: INDIAN AND INTERNATIONAL OVERVIEW

SUBMITTED TO:

Prof. RAJWADE

SUBMITTED BY: LALAN MAHATO (72) ARPIT MANKAR (73) ROHIT MENEZES (74) ANJEETA MISHRA (75) ANKUSH NAGARWAR (76)

DATE: September 23, 2009

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CERTIFICATE

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This is to certify that the report POWER SECTOR: INDIAN AND INTERNATIONAL OVERVIEW is the original report done by LALAN MAHATO (72) ARPIT MANKAR (73) ROHIT MENEZES (74) ANJEETA MISHRA (75) ANKUSH NAGARWAR (76) under the guidance of Prof. RAJWADE.

Date: September 23, 2009

Signature:

Place: Thane

Prof. RAJWADE

Contents Contents..................................................................................................................... 3

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INTRODUCTION OF POWER SECTOR...........................................................................6 GLOBAL OVERVIEW.....................................................................................................7 WORLD POWER SCENARIO....................................................................................10 Electricity is an essential parameter for measuring economic progress and well being, and is the unique energy form that enables technical innovation and productivity growth. However, the important achievements of electrification remain elusive in many parts of the world because population is growing faster than the current rate of electrification can accommodate. The following tables show the prevailing electricity scenario of various countries of the World:-..........10 a)

Top 10 Countries (Total Installed Capacity wise)............................10

d)

Top 10 Countries (Hydro Installed Capacity)..................................12

POWER SECTOR IN INDIA..........................................................................................13 GENERATION.........................................................................................................14 STRATEGIES...........................................................................................................15 INVESTMENTS IN GENERATION..............................................................................18 RECENT DEVELOPMENT.........................................................................................19 NORMS RATIONALISED.......................................................................................19 IMPACE OF BUDGET 2008-09.................................................................................20 NUCLEAR POWER GENERATION.............................................................................20 INTERNATIONAL POWER AND BUSINESS...................................................................21 A: CO-OPERATION WITH NEIGHBOURING COUNTRIES IN HYDRO POWER:.............21 NEPAL.................................................................................................................22 MYANMAR........................................................................................................... 23 BHUTAN..............................................................................................................23 TAJIKISTAN..........................................................................................................24 MYANMAR........................................................................................................... 24 UZBEKISTAN AND TAJIKISTAN.............................................................................25 B: MULTILATERAL COOPERATION..........................................................................25 Carbon Sequestration Leadership Forum (CSLF):...............................................25 India-Brazil South Africa Dialogue (IBSA):...........................................................26 Asia Pacific Partnership on Clean Development and Climate (APP):...................27 C: REGIONAL COOPERATION..................................................................................27 South Asian Association for Regional Co-operation (SAARC):.............................27 Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation (BIMSTEC):..........................................................................................................28 Indo-US Cooperation:..........................................................................................28

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Indo-EU Cooperation:..........................................................................................29 Indo-German Cooperation..................................................................................30 Indo-Japan Energy Dialogue...............................................................................30 D: BILATERAL COOPERATION.................................................................................31 Cooperation with Neighbouring Countries:.........................................................31 LIST OF ON-GOING EXTERNALLY AIDED POWER PROJECTS...................................31 World Bank......................................................................................................... 31 ADB....................................................................................................................31 KfW (Germany)...................................................................................................32 JBIC (Japan).........................................................................................................32 Overseas Business Initiative by NTPC:...................................................................32 Sri Lanka :..........................................................................................................33 Nigeria :..............................................................................................................33 INTERNATIONAL COOPERATION AND DEVELOPMENT (IC & D) by Rural Electric Cooperation (REC).................................................................................................34 Japan Bank for International Cooperation (JBIC)- 2nd Line of Credit...................34 Indo German Bilateral Cooperation (KfW) - 2nd Line of Credit...........................34 Asian Development Bank (ADB).........................................................................34 Clean Development Mechanism (CDM)..............................................................35 Japan Bank for International Cooperation (JBIC) assistance for Rural Electricity Distribution Backbone Project:...........................................................................35 Indo German Bilateral Cooperation for HVDS project of APSPDCL......................35 REC- RUS Cooperation under Distribution Reforms, Upgrade and Management (DRUM) Project...................................................................................................36 POWER SECTOR IMPACTS ON THE ENVIRONMENT....................................................36 LOCAL IMPACTS:....................................................................................................37 REGIONAL IMPACTS:..............................................................................................37 GLOBAL IMPACTS...................................................................................................37 NATIONAL ENVIRONMENTAL LEGISLATION AFFECTING THE ELECTRICITY SECTOR...37 COMPARITIVE STUDY OF SOME OF THE MAJOR PLAYER IN INDIAN POWER SECTOR .............................................................................................................................. 38 NTPC Ltd............................................................................................................. 38 RELIANCE INFRASTRUCTURE LTD.......................................................................38 TATA POWER COMPANY LTD..............................................................................38 POWER GRID CORPORATION OF INDIA LTD........................................................39

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TORRENT POWER LTD........................................................................................39 Conclusion:............................................................................................................... 39

INTRODUCTION OF POWER SECTOR An economy’s growth, development, ability to handle global competition is all dependent on the availability, reliability and quality of the power sector. As the Indian economy continues to surge ahead, electrification and electricity services have been expanding concurrently to support the growth rate. The demand for power is growing exponentially and the scope of growth of this sector is immense. Existing generation suffers from several recurrent problems. The efficiency and the availability of the coal power plants are low by international standards. A majority of the plants use low-heat-content and high-ash unwashed coal. This leads to a high number of airborne pollutants per unit of power produced. Moreover, past investments have skewed generation toward coal-fired power plants at the expense of peak-load capacity. In the context of fastgrowing demand, large T&D losses and poor pooling of loads at the national level exacerbate the lack of generating capacity. India is one of the main manufacturers and users of energy. Globally, India is presently positioned as the 11th largest manufacturers of energy. It is also the worlds’ 6th largest energy users. In spite of its extensive yearly energy output, Indian power sector is a regular importer of energy because of huge disparity. Global and Indian economy have decelerated, but power is one of the few commodities in short supply in India. So, despite the sluggishness in production and demand for manufactured products, India remains power hungry, both in terms of normal and peak power demand. Power is derived from various sources in India. These include thermal power, hydropower or

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hydroelectricity, solar power, biogas energy, wind power etc. The distribution of the power generated is undertaken by Rural Electrification Corporation for electricity power supply.

GLOBAL OVERVIEW The energy required to support our economies and lifestyles provides tremendous convenience and benefits. Energy consumption is reportedly higher in countries where less than 5 % of the population lives below the poverty line than it is in countries where most people live in poverty -- four times higher. For example, Americans make up less than 5 % of the world’s population yet consume 26 % of the world’s energy. World electricity generation rose at an average annual rate of 3.7% from 1971 to 2004, greater than the 2.1% growth in total primary energy supply. This increase was largely due to more electrical appliances, development of electrical heating in several developed countries and rural electrification programmes in developing countries. De-regulation in areas of the global energy markets has led to fierce competition. Now more than ever electricity has to be produced at a lower cost with many countries imposing ever tightening environmental legislation to reduce the impact power generation has on the environment. The enormous challenges are recognised in providing electricity as efficiently as possible and strive to develop technology to meet your needs. Collectively, developing countries use 30% of the world's energy, but with projected population and economic growth in those markets, energy demands are expected to rise 95 %. Overall global consumption is expected to rise 50 % from 2005 to 2030. World energy consumption is projected to expand by 50% from 2005 to 2030 in the IEO2008 reference case projection. Although high prices for oil and natural gas, which are expected to continue throughout the period, are likely to slow the growth of energy demand in the long term, world energy consumption is projected to continue increasing strongly as a result

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of robust economic growth and expanding populations in the world’s developing countries. Energy demand in the OECD economies is expected to grow slowly over the projection period, at an average annual rate of 0.7%, whereas energy consumption in the emerging economies of non-OECD countries is expected to expand by an average of 2.5 % per year. China and India—the fastest growing non-OECD economies—will be key contributors to world energy consumption in the future. Over the past decades, their energy consumption as a share of total world energy use has increased significantly. In 1980, China and India together accounted for less than 8 % of the world’s total energy consumption. In 2005 their share had grown to 18 %. Even stronger growth is projected over the next 25 years, with their combined energy use more than doubling and their share increasing to one-quarter of world energy consumption in 2030 in the IEO2008 reference case. In contrast, the U.S. share of total world energy consumption is projected to contract from 22 % in 2005 to about 17 % in 2030. Energy consumption in other non-OECD regions also is expected to grow strongly from 2005 to 2030, with increases of around 60 % projected for the Middle East, Africa, and Central and South America. A smaller increase, about 36 %, is expected for non-OECD Europe and Eurasia (including Russia and the other former Soviet Republics), as substantial gains in energy efficiency result from the replacement of inefficient Soviet-era capital stock and population growth rates decline.

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Fig .1: World Marketed Energy Consumption, 1980 - 2030 Oil for power generation has been displaced in particular by dramatic growth in nuclear electricity generation, which rose from 2.1% in 1971 to 15.7% in 2004. The share of coal remained stable, at 40% while that of natural gas increased from 13.3% to 19.6%. The share of hydro-electricity decreased from 23.0% to 16.1%. Due to large programmes to develop wind and solar energy in several OECD countries, the share of new and renewable energies, such as solar, wind, geothermal, biomass and waste increased. However, these energy forms remain limited: in 2004, they accounted for only 2.1% of total electricity production. The share of electricity production from fossil fuels has gradually fallen, from just under 75% in 1971 to 66% in 2004. This decrease was due to a progressive move away from oil, which fell from 20.9% to 6.7%.

Company

Table 1: OECD Multinational Electricity Companies Activity Assets Countries Active

AES

Generation

1666MW

China, India, Pakistan, Sri Lanka

EDF

Generation

1684MW

China, Laos, Vietnam

Tractebel

Generation & supply

848MW

China, Thailand, Laos

Enron

Generation

204MW

Philippines, Guam

Intergen

Generation

1830MW

China, Philippines, Singapore, Australia

Mirant

Generation

2261MW

Philippines

Transalta

Generation

280MW

Australia

IP

Generation

3817MW

Australia, Pakistan, Thailand, Malaysia

CDC

Generation

810MW

Bangladesh

As per the recent survery, the global electrical & electronics market is worth $1,038.8 billion, which is forecasted to grow to $ 1,216.8 billion at the end of the year 2008. If electrical & electronics production statistics are considered, the industry accounted for $1,025.8 billion in 2006, which is forcasted to reach $1,051.5 billion in future.

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The per capita consumption is seen to be far behind from the world average and very less when compared to other countries. So there is a need to improve it. Though India has achieved many milestones in generation still the there is a wide gap between demand and supply of power. This is the most important issue to be concerned.

Fig.2: Comparative Per Capita Consumption Of Electricity (Kwh)

WORLD POWER SCENARIO Electricity is an essential parameter for measuring economic progress and well being, and is the unique energy form that enables technical innovation and productivity growth. However, the important achievements of electrification remain elusive in many parts of the world because population is growing faster than the current rate of electrification can accommodate. The following tables show the prevailing electricity scenario of various countries of the World:a)

Top 10 Countries (Total Installed Capacity wise)

Sl. No

Installed Capacity (Thousand MW)

Country

As on January 1, 2003 Thermal Hydro- Electric

Nuclear

Others Total MW % Of World Total

1 United States

689.5

79.4

98.7

17.4

884.9

25.22

2 China

253.0

83.0

2.2

0

338.2

9.64

3 Japan

168.7

21.7

45.9

0.7

237.0

6.75

4 Russia

139.6

44.7

21.2

0.02

205.6

5.86

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5 India

91.4

26.3

2.9

1.5

122.1

3.48

6 Germany

77.4

4.8

22.4

10.9

115.6

3.29

7 Canada

33.5

67.1

10.6

1.4

112.5

3.21

8 France

26.7

21.0

63.2

0.8

111.7

3.18

9 United Kingdom

61.7

1.5

12.5

1.3

76.9

2.19

8.2

62.5

2.0

3.5

76.2

2.17

Total Top Ten

1549.7

412

281.6

37.5

2280.7

64.99

Total World

2386.8

705.2

361.6

55.5

3509.1

100 %

10 Brazil

b)

Top 10 Energy Generating Countries Generation Net (Thousand MU)

Sl. No. Country Thermal

Hydro- Electric

Nuclear

Others

Total

% Of World Total

1 United States

2730.17

264.33

780.06

92.64

3867.2

25.17

2 China

1271.07

271.82

25.17

2.32

1570.3

10.22

3 Japan

646.46

81.55

280.34

27.86

1036.2

6.74

4 Russia

547.55

180.18

134.14

2.82

864.69

5.63

5 Canada

155.17

346.77

71.75

8.47

582.15

3.79

6 Germany

341.60

22.89

156.60

27.54

548.63

3.57

7 India

478.21

63.46

17.76

4.09

563.53

3.67

49.05

59.96

414.92

5.16

529.09

3.44

265.47

4.74

83.64

6.30

360.14

2.34

28.45

283.23

13.84

14.56

340.07

2.21

Total Top Ten

6513.2

1578.93

1978.22

191.7

10262

66.80

Total World

9905.81

2619.10

2546.01

292.1

15363

100 %

8 France 9 United Kingdom 10 Brazil

c)

Top 10 Energy Consuming Countries

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For the Year 2003 Sl. No.

Country

Consumption Net

% Of Total World

Per capita consumption

(Thousand MU)

Consumption

(Kwh)

1 United States

3656.49

24.76

12593.69

2 China

1671.23

11.32

1294.03

3 Japan

946.27

6.41

7438.41

4 Russia

811.51

5.50

5612.64

5 Germany

510.37

3.46

6193.96

6 India

519.04

3.51

494.46

7 Canada

520.90

3.53

16173.50

8 France

433.33

2.93

7200.44

9 Brazil

371.44

2.52

2040.50

10 United Kingdom

346.08

2.34

5758.88

Total Top Ten

9786.66

66.27

64800.53

Total World

14767.75

100 %

117007.38

d)

Top 10 Countries (Hydro Installed Capacity) Installed Capacity (MW)

Sl. No.

Country Total

%

1

United States

79366

11.02

2

China

86075

11.96

3

Canada

69206

9.61

4

Brazil

65311

9.07

5

Russia

44828

6.23

6

India

26910

3.74

7

Norway

26319

3.66

8

Japan

21697

3.01

9

France

21074

2.93

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10

Sweden

16523

2.30

11

Italy

13557

1.88

Total Top Ten

470866

65.41

World Total

719928

100.00

POWER SECTOR IN INDIA The process of electrification commenced in India almost with the developed world, in the 1880s, with the establishment of a small hydroelectric power station in Darjeeling. However, commercial production and distribution started in 1889, in Calcutta (now Kolkata). In the year 1947, the country had a power generating capacity of 1,362 MW. Generation and distribution of electrical power was carried out primarily by private utility companies such as Calcutta Electric. Power was available only in a few urban centers; rural areas and villages did not have electricity. After 1947, all new power generation, transmission and distribution in the rural sector and the urban centers (which was not served by private utilities) came under the purview of State and Central government agencies. State Electricity Boards (SEBs) were formed in all the states. Legal provisions to support and regulate the sector were put in place through the Indian Electricity Act, 1910. Shortly after independence, a second Act - The Electricity (Supply) Act, 1948 was formulated, paving the way for establishing Electricity Boards in the states of the Union. In 1960s and 70s, enormous impetus was given for the expansion of distribution of electricity in rural areas. It was thought by policy makers that as the private players were small and did not have required resources for the massive expansion drive, the production of power was reserved for the public sector in the Industrial Policy Resolution of 1956. Since then, almost all new investment in power generation, transmission and distribution has been made in the public sector. Most of the private players were bought out by state electricity boards. From the installed capacity of only 1,362mw in 1947, has increased to 97000 MW as on March 2000 which has since crossed 100,000 MW mark India has become sixth largest producer and consumer of electricity in the world equaling the capacities of UK and France

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combined. The number of consumers connected to the Indian power grid exceeds is 75 million. India's power system today with its extensive regional grids maturing in to an integrated national grid, has millions of kilometers of T & D lines criss-crossing diverse topography of the country. However, the achievements of India's power sector growth looks phony on the face of huge gaps in supply and demand on one side and antediluvian generation and distribution system on the verge of collapse having plagued by inefficiencies, mismanagement, political interference and corruption for decades, on the other. Indian power sector is at the cross road today. A paradigm shift is in escapable- for better or may be for worse.

GENERATION India has installed power generation capacity of 1,41,079.84 MW as on January 31, 2008, which is about 100 times the installed capacity of 1362 MW in the year 1947. Power generation has showcased a robust growth rate which is steadily improving year after year. There has been significant improvement in the growth in actual generation over the last few years. As compared to annual growth rate of about 3.1% at the end of 9th Plan and initial years of 10th Plan, the growth in generation during 2006-07 and 2007-08 was of the order of 7.3% and 6.33% respectively. The electricity generation target for the year 2008-09 has been fixed at 744.344 BU comprising of 631.270 BU thermal; 118.450 BU hydro; 19.000 BU nuclear; and 5.624 BU import from Bhutan.

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Gap Between Demand And Supply Of Power

STRATEGIES The various strategies followed to achieve the goal in power sector are, Power Generation Strategy with focus on low cost generation, optimization of capacity utilization, controlling the input cost, optimization of fuel mix, Technology up gradation and utilization of Nonconventional energy sources Transmission Strategy with focus on development of National Grid including Interstate connections, Technology up gradation & optimization of transmission cost. Details of Existing Lines and Sub-Stations Region Details of Existing Lines and Sub-Stations Region HVDC 1

400KV

220KV

132KV

(MVA)

Northern Region

15

J&K

-

300

687

-

1260

HP

-

572

192

-

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Delhi

-

397

-

-

1575

Haryana

-

1789

66

-

2025

Punjab

-

1170

401

-

1130

Rajasthan

-

791

1032

-

-

UP

817

2933

870

-

630

Total NR

817

7952

3248

0

6620

2

Western Region MP

-

5791

-

-

945

Maharashtra

-

1127

-

-

NIL

Gujarat

-

1195

852

-

630

Total WR

-

8113

852

0

1575

3

Southern Region AP

-

2762

-

-

3150

Karnataka

-

965

-

-

NIL

Kerala

-

260

156

-

630

Tamil Nadu

-

1647

64

-

1575

Total SR

-

5634

220

0

5355

4

Eastern Region

5

Bihar

-

1057

82

-

1860

Orissa

-

1034

-

-

2520

West Bengal

-

1287

872

333

2025

DVC

-

344

-

-

630

Total ER

-

3722

952

333

7035

N.E.Region

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Assam

-

1978

171

79

1015

Maghalaya

-

-

-

67

-

Nagaland

-

-

320

189

100

Manipur

-

-

-

443

6.3

Mizoram

-

-

-

178

-

Tripura

-

-

-

147

5

Arunachal Pradesh

-

333

-

42

-

Total NER

-

2311

491

1145

1126

Total All India

817

27732

5763

1478

21711

According to this table about 2.5% of Indian villages still remain unelectrified. In addition to state boards Power Grid Corporation of India Limited has a major role in transmission Power Grid Corporation of India limited (POWERGRID) was incorporated on October 23, 1989 with an authorized share capital of Rs. 5,000 Crore as a public limited company, wholly owned by the Government of India. POWERGRID started functioning on management basis with effect from August, 1991 and it took over transmission assets from NTPC, NHPC, NEEPCO and other Central/Joint Sector Organizations during 1992-93 in a phased manner. In addition to this, it also took over the operation of existing Regional Load Dispatch Centers from CEA, in a phased manner, which has been upgraded with State of-the-art Unified Load Dispatch and Communication (ULDC) schemes. According to its mandate, the Corporation, apart from providing transmission system for evacuation of central sector power, is also responsible for Establishment and Operation of Regional and National Power Grids to facilitate transfer of power within and across the Regions with Reliability, Security and Economy on sound commercial principles. Based on its performance POWERGRID was recognized as a Miniratna company by the Government of India in October 1998.

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POWERGRID, notified as the Central Transmission Utility of the country, is playing a major role in Indian Power Sector and is also providing Open Access on its inter-State transmission system. Distribution strategy to achieve Distribution Reforms with focus on System up gradation, loss reduction, theft control, consumer service orientation, quality power supply commercialization, Decentralized distributed generation and supply for rural areas. Regulation Strategy aimed at protecting Consumer interests and making the sector commercially viable. Financing Strategy is to generate resources for required growth of the power sector. Conservation Strategy to optimize the utilization of electricity with focus on Demand Side management, Load management and Technology up gradation to provide energy efficient equipment gadgets. Communication Strategy for political consensus with media support to enhance the general public awareness. To achieve the above objectives National Electric Policy has been designed. To fulfill the objectives of the NEP, a capacity addition of 78,577 MW has been proposed for the 11th plan. This capacity addition is expected to provide a growth of 9.5 % to the power sector. The Tenth Plan for fiscal years 2002 to 2007 targeted a capacity addition of 41,110 MW, which was subsequently revised to 30,641 MW; however at the end of the Tenth Plan period, only 21,180 MW of capacity was added. This shows that India is not upto the mark in achieving the targets of generation. Our planning is perfect but our path to achieve the target is not perfect.

INVESTMENTS IN GENERATION The total fund requirement for generation projects, during the Eleventh Plan period is estimated at Rs. 4,108,960 million, with Rs. 2,020,670 million being required for the central sector, Rs. 1,237,920 million being required for the state sector and Rs. 850,370 million being required for the private sector. The total fund requirement includes the fund requirement estimated at Rs. 1,891,950 million for start-up generation projects benefiting in the Twelfth Plan.

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POWERGRID is working towards achieving its mission of “Establishment and Operation of Regional and National Power Grids to facilitate transfer of power within and across the regions with reliability, security and economy, on sound commercial principles". The exploitable energy resources in our country are unevenly distributed, like Coal resources are abundant in Bihar/Jharkhand, Orissa, West Bengal and Hydro Resources are mainly concentrated in Northern and North-Eastern Regions. As a result, some regions do not have adequate natural resources for setting power plants to meet their future requirements whereas others have abundant natural resources. Demand for power continues to grow unabated. This calls for optimal utilization of generating resources for sustainable development. Thus, formation of National Power Grid is an effective tool to achieve this as various countries have adopted the model of interconnecting power grid not only at national level but also at international level. Further, acquiring Right of Way (ROW) for constructing transmission lines is getting increasingly difficult, especially in eco-sensitive areas like North-Eastern Region, Chicken neck area, hilly areas in Jammu & Kashmir and Himachal Pradesh. At the same time, these areas are also endowed with major hydro potential of the country. This necessitates creation of “Transmission Super Highways”, so that in future, constraints in ROW do not cause bottleneck in harnessing generating resources. Inter-connection of these highways from different part of the country would ultimately lead to formation of a high capacity “National Power Grid”.

RECENT DEVELOPMENT The Central Electricity Regulatory Committee (CERC) has issued a new notification that deals with the tariff computation for the years 2009-10 to 2013-14

NORMS RATIONALISED •

Return on equity (RoE) raised from 14 to 15.5 per cent

•

Provision of additional RoE of 0.5 per cent for projects commissioned on schedule. RoE to be computed post-tax.

•

Advance against depreciation removed, depreciation rates increased to 5.28 per cent from 3.6 per cent.

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•

Incentive payment linked to availability rather than plant load factor

IMPACE OF BUDGET 2008-09 The finance minister Mr. P Chidambaram urged in powering the country's power sector while reading out its second union budget in the parliament. The 'populist' union budget evoked somehow positive response from both consumer and industrial point of view. The power industry in the India has to witness the peak power shortages, where demand of the electricity is far more exceeding than the supply. The difference between the two is estimated to be nearly 7% and 12% in terms of total and peak requirements. For bridging the gap between demand and supply, the government is envisaged in setting up of around 78,000 MW of power generating capacity during the 11th five year plan, which covers the time period of 2007 to 2012. The finance minister announced the total allocation of Rs. 5500 Crore for the Rajiv Gandhi Grameen Vidyutikaran Yojana, which will be continued in the eleventh five year plan also with a capital subsidy of Rs. 28,000 Crore. The budget 2008-09 is proposed to spend Rs. 5500 Crore in lightning up 5000 villages across the country. The scheme aims in providing free electricity benefits to those villagers which are below the poverty line. The new fund outlay will clearly help in the setting and development of power infrastructure in villages. India is one of the largest consuming countries of coal. For bringing uniformity in the process of coal production and pricing, coal distribution policy has been announced. Coal regulator has to be appointed. The proposal of a coal regulator shall benefit the generating companies, which are badly hit by rising fuel prices. The finance minister has announced the withdrawal of exemption from 4% additional duty of customs levied under section 3(5) of customs act, 1975 on transmission, power generation projects, sub transmission, distribution projects and specified goods for high voltage transmission projects. Rs. 8000 Crore has been set aside in 2008-09 for accelerated power development and reforms project. The custom duty on project imports has been reduced from 7.5% to 5%. At Tilaiya, fourth UMPP (Ultra Mega Power Projects) has to be awarded shortly. Besides this Chhattisgarh, Tamil Nadu, Maharashtra & Karnataka are coming up with five more UMPPs with the available govt. support. Power generation companies like Tata Power and NTPC are more likely to be befitted with the allocation of UMPPs. 4% countervailing duty on imports is levied on power plants less than 1000 MW. The finance minister has decided to set up a 'National Transmission and Distribution Fund' for proper transmission and distribution reform and for addressing the higher losses in the power sector.

NUCLEAR POWER GENERATION Subsequent to the Indo-US nuclear deal and India getting clearance from the Nuclear Suppliers Group (NSG), nuclear power generation is likely to provide an opportunity of US$ 10 billion in the next five years, according to a JP Morgan estimate. India will now also be partnering several countries for nuclear fuel technology projects.

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•

•

• • •

As a part of the Eleventh Five-Year-Plan, Nuclear Power Corporation of India Ltd (NPCIL) will be commencing work on 12 reactors. NPCIL will be developing a series of nuclear reactors with capacities between 1,000 MW to 1,650 MW at 5-6 sites along the country's coastline. India will also be exploring export opportunities and is planning to set up nuclear power reactors abroad. Three Indian public sector companies—the NPCIL, BHEL and NTPC— will be setting up a company for the export of nuclear power reactors. GE Hitachi Nuclear Energy has tied up with NPCIL and BHEL for building multiple GEH-designed nuclear reactors. Sweden sees a market of around US$2 billion in India for back-end operations like nuclear waste management. NTPC Ltd and NPCIL would jointly invest around US$ 3.09 billion in the next eight years to set up nuclear power plants in the country.

INTERNATIONAL POWER AND BUSINESS A: CO-OPERATION WITH NEIGHBOURING COUNTRIES IN HYDRO POWER: Development of water resources of the common rivers of India and neighbouring countries of Nepal, Bhutan and Myanmar for mutual benefits has been under consideration with these countries. There is regular exchange of electric power between India and the neighbouring countries for the supply of surplus power and meeting power requirements in the border areas. India is developing cooperation with following countries. 1. Nepal, 2. Bhutan,

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3. Myanmar, 4. Tajikistan, and

5. Uzbekistan The details of cooperation with neighbouring countries are described below:

NEPAL India has been assisting Nepal in the development of its hydro power potential and four HE schemes viz. Pokhra (1 MW), Trisuli (21 MW) Western Gandak (15 MW) and Devighat (14.1 MW) have been implemented in the past with financial and technical assistance from Govt. of India. Three major multipurpose projects in Nepal viz. Pancheshwar, Saptakosi and Karnali are presently under discussion at various levels as mutual benefits projects. A Joint Committee on Water Resources (JCWR) headed by Water Resources Secretaries of India and Nepal has been constituted to act as an umbrella Committee to ensure implementation of existing agreements, understanding and also to oversee work of all technical and expert level Committees related with Water Resources. The Joint Ministerial Commission on Water Resources that is headed by the Minister of Water Resources of the two countries addresses bilateral co-operation between the two countries on Water Resources. In the 3rd meeting of the JCWR it was agreed to constitute Joint Standing Technical Committee (JSTC) to coordinate all existing committees and sub- committees. During 3rd Meeting of JCWR held on 29.9.2008, Pancheshwar was identified as a Priority Project and both sides agreed to set up Pancheshwar Development Authority (PDA) for development, execution and operation of Pancheshwar Multipurpose Project. The Term of Reference of the PDA is being finalized. Investigations have been carried out in respect of Pancheshwar Multi-purpose Project (5600 MW) by the two countries in their respective territories. Draft DPR has been prepared by Indian side which is to be mutually agreed by the two countries. India has offered financial and technical assistance for investigation and preparation of DPR of Saptakosi High Dam Multipurpose project and Sun Kosi Storage cum Diversion Scheme. A Joint Project Office has been established on 17.08.2004 in Biratnagar, Nepal for taking up field investigations and studies for preparation of Joint DPR. In addition, India has offered assistance for carrying out field investigations and studies for preparation of DPR for Naumure Multi-purpose Project and a team of officers from MOWR/ CEA/ CWC & U.P. Irrigation Deptt. visited Nepal in this regard. Joint Technical Expert Groups have been constituted for the above projects for guidance for carrying out investigations and preparation of

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Detailed Project Reports (DPRs). Government of Nepal has through a process of competitive bidding awarded Arun-III Hydropower Project (400 MW) to Sutlej Jal Vidyut Nigam Ltd. (SJVNL) on build-ownoperate- transfer basis for a period of 30 years and a Memorandum of Understanding (MoU), in this regard, have been signed between Government of Nepal and SJVNL on 2.3.2008. Project office has since been opened by SJVNL at Kathmandu and a G&D site has also been established w.e.f Nov., 2008. Government of Nepal has also awarded Upper Karnali Hydropower Project to a consortium consisting of GMR Group companies on buildown-operate-transfer basis and a Memorandum of Understanding (MoU) has been signed in this regard in Kathmandu on January 24, 2008.

MYANMAR As per the MoU signed on 16.9.2008 between Department of Hydropower Implementation (DHPI), Govt. of Union of Myanmar (GoUM) & NHPC Limited, NHPC carried out the study and appraisal of the Detailed Feasibility Reports of 1200 MW Tamanthi HE Project (report prepared by M/s Colenco Power Engineering Ltd; Switzerland) & 642 MW Shwezaye HE Project (report prepared by M/s Kansai Electric Co. Japan) vis-a-vis master plan of Chindwin River Basin. Accordingly, NHPC has submitted ‘Project Review Reports’ suggesting need for carrying out additional studies/ investigations for preparation of DPRs for these projects to MEA/MoP and the GoUM on 19.12.2008.

BHUTAN In Bhutan, Chukha HE Project (336 MW) implemented with Indian Financial and technical assistance and operating in an excellent manner is a shining example of cooperation between the two countries for mutual benefits. Kurichhu HE Project (60 MW) in Eastern Bhutan has also been implemented with Indian financial and technical assistance. Another project viz. Tala HE Project (1020 MW) has also been commissioned in 2006-07 by Tala Hydro-Electric Project Authority (THPA) comprising of Indian and Bhutanese Officers and Engineers. Design & Engineering consultancy for the project in respect of electro-mechanical and civil works had been rendered by Central Electricity Authority (CEA), Central Water Commission (CWC) and

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Water & Power Consultancy Services (WAPCOS). The project had been funded by India through grant and loan. PTC has been designated as nodal agency for transfer of Power from Tala Project to India. Surplus power from these projects is being imported by India. An agreement has been signed between GoI and RGoB in July’07 for execution of the Punatsangchhu-I (1200 MW) project with Indian financial and technical assistance. The project is presently under execution. An umbrella agreement for long-term cooperation for developing hydro electric projects and associated transmission system was signed. The agreement envisaged the development and import by India of not less than 5000 MW by 2020. A protocol to 2006 Agreement has been signed in 2009 which envisages import of 10000 MW of power from Bhutan by the year 2020. Accordingly, DPRs of 9 projects (10426 MW) in Bhutan are under formulation by CPSUs.

TAJIKISTAN NHPC has undertaken the work of Renovation, modernization and Uprating of Verzob Hydro Power Plant– I (2x3.67 MW) in Tajikistan. In this regard, a tripartite agreement has been signed between Ministry of External Affairs (MEA), NHPC Ltd. and Bharat Heavy Electrical Ltd (BHEL) on 12.08.2008 in MEA. The total cost of the assignment is Rs. 73.20 Crore, wherein NHPC has to execute the Civil & HM works for an amount of Rs. 23.95 Crore.

MYANMAR India had extended assistance for Design & Engg. Of Sedawyagi HE Project (25 MW). In addition, Tamanthi HE Project (1200 MW) has been identified as a mutual benefit project. Three nos. G&D sites have been established by India on Chindwin River. In pursuance to an agreement signed on 13.04.06 between Ministry of External Affairs (MEA) and NHPC Ltd., NHPC has prepared and submitted Pre- Feasibility Report (PFR) of the Tamanthi HE Project (1200 MW) has been prepared by NHPC and submitted in April, 2005. DPR for the project is being got prepared by Govt. of Myanmar through foreign consultants and is scheduled to be ready by Jan. 2008 after which decision regarding India’s involvement in the project relating to the level of investment, participation in construction and +purpose of power etc. would be taken.

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UZBEKISTAN AND TAJIKISTAN A delegation from NHPC, visited Uzbekistan in the month of April, 2003 and Tajikistan in the month of Oct., 2003 to explore the possibility of setting up small hydro power projects in those countries. Subsequent to discussions by, it was decided to take up RM&U works of Varzob Hydro Power Plant–I (2 x 3.67 MW) in Tajikistan jointly by NHPC & BHEL. Accordingly, a joint team comprising of Senior Officials of NHPC and BHEL visited Varzob – I Hydro power plant in May 2004 for preparation of feasibility report for Renovation, Modernization and Uprating of Varzob Hydro Power Plant–I. Subsequently, a feasibility report jointly prepared by NHPC and BHEL was submitted to MEA in Oct. 2004 for their acceptance. MEA vide letter dated 05.09.2006 informed Govt. of India’s decision to undertake rehabilitation of the Varzob – I hydropower station in Tajikistan on the lines of the feasibility report jointly prepared by NHPC & BHEL team in 2004. MEA vide their letter dated 1.11.2006 requested NHPC / BHEL to hold discussions with Barki Tojik, their Tajik counterpart. Subsequently, discussions were held among NHPC, BHEL, Barki Tojik & Indian Embassy officials, MEA and a Tripartite agreement for Renovation, Modernization and Uprating of Varzob Hydro Power Plant–I (2 x 3.67 MW) has been signed between Barki Tojik, Tajikistan and NHPC and BHEL on 7th Dec. 2006.

B: MULTILATERAL COOPERATION Following are the multilateral cooperation done with other nations: 1. Carbon Sequestration Leadership Forum (CSLF) 2. India-Brazil South Africa Dialogue (IBSA) 3. Asia Pacific Partnership on Clean Development and Climate (APP)

Carbon Sequestration Leadership Forum (CSLF): In June 2003, India signed, along with Australia, Brazil, Columbia, Italy, Japan, Mexico, Norway, China, Russia, U.K. and EC, Carbon Sequestration Leadership Forum (CSLF) Charter which aims at facilitating the development of improved cost effective technologies for the separation and capture of carbon dioxide for its transport and its long term safe storage. India is

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represented on the Policy Group of CSLF by Secretary (power) and Secretary, Department of Science and Technology. Ministry of Power has been coordinating all the activities relating to CSLF in India. A meeting of the Task Force of Policy Group of CSLF Group on Financial Issues was held on 2nd and 3rd December, 2008 at New Delhi. The Task Force deliberated on the Issues of Innovative financing mechanism for R&D activities in CCS in India. India has taken a stand in the CSLF that developed countries need to finance the CSLF related R&D activities in developing countries

India-Brazil South Africa Dialogue (IBSA): This forum was set up in June 2003. First meeting of the Working Group on energy was held in Brazil in March 2006. Main areas of cooperation are: (i) Bio-fuels and renewable energy (ii) Experience sharing in areas of energy efficiency. (iii)

CDM projects and evolution of regulatory structure.

IBSA Summit was held on 13-15 October, 2008 in New Delhi. The IBSA Working Group on Energy is now led by Ministry of New & Renewable Energy. The meeting of the Working Group on Energy was held on 18-19 September, 2008 in New Delhi. FutureGen Project The US Government had invited Government of India to join in the collaborative funding for the FutureGen Project, a US $ 950 million public-private initiative to design, build and operate the first coal-fired emission-free power plant of 275 MW. US$ 250 million is expected from private industry coalition and the balance US $ 700 million is to be provided by the US Federal Government in partnership with foreign governments. India has agreed to contribute US $ 10 million over a 5 year period. A Framework Protocol was signed between US and India on 3.4.2006 on cooperation on the FutureGen Project in New Delhi. The Framework Protocol recognizes that the objective of the FutureGen Project is to demonstrate a technological solution applicable to a variety of coal types. India has become a full charter member in the FutureGen Government Steering Committee (GSC) which is the mechanism to provide guidance, input and recommendations on the direction of the FutureGen Project. India will also have opportunity of joining the Technical Sub Committees of the Steering Committee in focus areas like plant design, sequestration sub-system, technology inclusion, test planning, risk analysis and

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assessment. First meeting of the GSC was held in USA in September 2006. Ministry of Power represented India in this meeting. The US Department of Energy has entered into a cooperative agreement with a Consortium (FutureGen Alliance) led by the coal fired electric power industry and the coal production industry to execute this project. This Consortium is responsible for the design, construction and operation of the FutureGen plant and also for monitoring and verification of sequestrated carbon dioxide. The Consortium is selecting a site for the project using the criteria developed jointly with the US Department of Energy. It will follow a competitive selection process for selecting equipment supplier and service vendors.

Asia Pacific Partnership on Clean Development and Climate (APP): This initiative was launched in January 2006. The partners are US, Australia, India, China, Japan and South Korea. Canada had joined recently. This Ministry coordinates the Task Force on “Power Generation and Transmission”. Activities undertaken during the year 2008 An Indian delegation participated in US Peer Review of Coal Fired Generation at Wisconsin, USA from 28th April, to 2nd May, 2008 A delegation led by Chairman, CERC visited Australia to attend the Energy Regulatory and Market Development Forum meetings on 25-27 June, 2008 in Sydney. An Indian delegation participated in APP Brown Coal (lignite) best practices workshop on 23-27 June, 2008 in Melbourne, Australia. An Indian delegation participated in a Study Tour to USA for introducing Best Practices for Efficiency Improvement in Power Plants from 28/8/2009 for two weeks. An Indian delegation visited San Francisco to participate in a programme for exchange of technical information concerning electricity generation using wind power from 2nd March to 6th March, 2009.

C: REGIONAL COOPERATION South Asian Association for Regional Co-operation (SAARC): One of the SAARC Working Groups is on Energy. As a follow-up to the decisions taken in the Fourth Working Group meeting held in Islamabad, Pakistan, the following activities have been undertaken during the year. The meeting of the Expert Group on Energy Ring was held on 21.11.2008 at New Delhi. The meeting deliberated on the concept paper circulated earlier by the

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SAARC Secretariat and finalized the same. A meeting to evolve the common template on commercial and technical aspects of electricity grid interconnections among the SAARC Member Countries was held on 4/12/ 2008 in New Delhi. A detailed questionnaire was circulated in the Member countries seeking further information to finalize the common template. The Governing Body Meeting of SAARC Energy Centre was held on 13-14 November, 2008 at Islamabad. The meeting was attended by the representative of Ministry of Power. As decided in the meeting a Workshop on Energy Efficiency shall be organized by India in 2009. 3rd Meeting of SAARC Energy Ministers was held on 28- 29 January, 2009 in Colombo. The Indian delegation was led by Hon’ble Minister of Power. The meeting reviewed the status of implementation of decisions of second meeting of the SAARC Energy Ministers.

Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation (BIMSTEC): Energy cooperation has emerged as one of the important areas in this regional cooperation forum which consists of Bangladesh, Myanmar, Thailand, India, Nepal, Bhutan, Sri Lanka. On the invitation of Prime Minister, we hosted first BIMSTEC Energy Minister’s Conference in New Delhi in October 2005. The conference also adopted a Plan of Action in addition to the Ministerial Declaration. A Workshop on BIMSTEC Energy Centre was held from 25-27 January, 2006 in New Delhi to finalize the concept for proposed centre. A meeting of Senior Officials of BIMSTEC was held on 27-29 August, 2008 in New Delhi to discuss preparation for BIMSTEC Summit in October, 2008 and to finalize the Memorandum of Agreement (MOA) for BIMSTEC Energy Centre. The meeting discussed about the proposed MOA of BIMSTEC Energy Centre. BIMSTEC Summit Meet was held in New Delhi on 12-13 October, 2008. As per the plan of action BIMSTEC Energy Centre will be setup in India.

Indo-US Cooperation: India and US have agreed to begin an Indo-US Energy Dialogue. The Energy Dialogue is chaired by Deputy Chairman, Planning Commission and US Energy Secretary. Following 5 working groups under the Energy Dialogue have been constituted : (i) Oil and Gas (ii) Power and Energy Efficiency (iii) Coal

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(iv) Non-Conventional and Renewable Energy (v) Civil Nuclear Energy Ministry of Power is leading India in Working Group on Power and Energy Efficiency. A successful Indo-US Conference on energy efficiency was held in May 2006. NTPC has proposed partnership with NETL of USA. Under the India-US Energy dialogue, five working groups have been constituted. Out of these, Working Group on Power and Energy Efficiency is led by Ministry of Power from Indian side. The first meeting of the working group was held through video conferencing. The next meeting of working Group on Power & Energy Efficiency was held on 2.4.2008 in New Delhi. Both sides agreed to work in the areas of Clean Coal Power, IGCC Technology, Electric Power Distribution, Cooperation and Coordination in coal bed methane, exchange of best practices between Federal Energy Management Programme (FEMP) and Indian ESCOS and public building users. Under the electric power distribution, DRUM programme is successfully completed by providing training to 17,000 power utilities’ personnel and immense benefit has been gained from the programme. The programme shall continue up to 2009-10. Under Building and Energy Efficiency ESCOS Conference, US Aid Eco.III Project is contemplating as an initiative to exchange best practices from FEMP, USA to Indian ESCOS and Building and Public Building Users.

Indo-EU Cooperation: At the 5th India-EU Summit held in November, 04 India and EU agreed to set up a Joint Energy Panel with a view to coordinate their actions in the field of energy and all related fuel chains. The Panel is co-chaired by the Foreign Secretary from India side. The energy panel met for the first time in Brussels. The panel had decided to set up 3 Working Groups. (i) Clean and Clean Coal conversion Technologies (ii) Energy efficiency and renewable energies (iii) Fusion energy including India’s participation in ITER The last meeting of working Group on Energy Efficiency and Renewable Energy was held in January, 2007 at Brussels. During the meeting participating experts made presentations

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on energy efficiency of end use appliances, Co-generation and Bio-fuels. The following areas of mutual interest were identified for further enhanced work: Energy efficiency, notably labeling; co-generation also in view of district cooling; bio-fuels first generation. Nodal persons have been identified for this purpose. Enhanced EU-India cooperation including industry cooperation was envisaged by both the Chairs. At the request of Ministry of Coal, Ministry of Power is dealing with Working Group on Clean Coal Technology. The first meeting of Indo-EU Working Group on Clean Technology was held in January, 2008 at New Delhi. The Working Group agreed to take up further cooperation activities in following two areas: i) A joint study on feasibility of introducing advanced supercritical technology in India. ii) Participation by India in ZEP demonstration plant. The 2nd Meeting of Indo-EU Working Group on Clean Coal Technology (CCT) was held on 20/6/2008 at Brussels. An Indian delegation led by Member Planning, CEA participated in the meeting from the Indian side. The 3rd meeting of Indo-EU Working Group was held on 26/11/2008 at New Delhi. The meeting was followed by a Workshop on CCT on 27-28 November, 2008. Delegation from EU attendedthe meeting along with representatives of Government of India, academic institutions, industries.

Indo-German Cooperation India and Germany launched energy dialogue in April, 2006. The year has seen an increasing interest on both sides to enhance cooperation. Two batches of engineers from CEA/ State utilities have been deputed to Germany for training in power plant efficiency improvement. The second meeting of the Indo-German Energy Forum was held in New Delhi in December, 2007. A number of issues for bilateral cooperation were identified and three ad-hoc sub groups, namely on, power plant efficiency, CDM projects in Energy and Renewables have been set up.

Indo-Japan Energy Dialogue The Indo-Japan Energy Dialogue to promote cooperation in energy sector was set up. The Deputy Chairman, Planning Commission is the co-Chair from the Indian side. The Ministry of Power is heading the Working Groups on ‘Energy Efficiency’ and ‘Power Generation and Electricity’.

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D: BILATERAL COOPERATION Cooperation with Neighbouring Countries: Existing cooperation with Nepal and Bhutan for construction of hydropower projects with Indian expertise has further been strengthened. Tala HEP in Bhutan has been commissioned. Further, an Agreement has been signed on 28.7.2007 between the Government of India and the punatsangchhu-I hydroelectric project (1095 MW) in Bhutan. The project is expected to be completed in about seven years. PGCIL has completed 132 KV single circuit transmission line under Government of India assistance from Deothang in Bhutan to Rangia in Assam, India. This shall provide adequate transmission arrangement for reliable operation of Kurichhu HEP in Bhutan. Further, construction of 33KV indoor substations at Yurmoo, Trongsa & Bumthang along with 33 KV line from Yurmoo-Trongsa in Bhutan is also being undertaken by PGCIL. PGCIL has completed a 220 KV transmission line in Afghanistan from Kabul to Pul-e-Khumri and a substation in Kabul to enable import of power from Uzbekistan. The project has been funded by Government of India. PGCIL has undertaken pre-feasibility study for establishing transmission interconnection of India with Nepal, Bangladesh and Sri Lanka. NTPC is setting up a thermal power project in Sri Lanka and MOA was signed in the year 2006 to this effect.

LIST OF ON-GOING EXTERNALLY AIDED POWER PROJECTS World Bank • Power System Development Project – III (PSDP-III) /PGCIL (USD 400 million) • 4th PSDP / PGCIL (USD 1000 million) • Rampur HEP / SJVNL (USD 400 million)

ADB • Assam Power Sector Development Project / ASEB (USD 100 million) • Powergrid Transmission (Sector) Project – III (USD 400 million) • National Powergrid Development Investment Programme – IV (USD 600 million) • M.P. Power Sector Investment Programme / MPPTCL and E.W.C. Discoms (USD 600 million) • Uttarakhand Power Investment Programme / UVNL and PTCL (USD 300 million) • Himachal Pradesh Clean Energy Development Programme / HPPCL (USD 800 million)

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• JICA TPP / WBPDCL (JY 36771 million) • R&M of Umiam HEP / MeSEB (JY 1964 million) • North Karapura TPP/NTPC (JY15916 million) • Rural Electrification Programme (M.P., A.P. and Maharashtra) REC (JY20629 million) • EHV Transmission System in Haryana / REC (JY20902 million) • Transmission System Modernization in Hyderabad /APTRANSCO (JY 23697 million) • Bangalore Distribution Upgradation Project / BESCOM (JY10643 million) • Maharashtra EHV Transmission System Project / MSETCL (JY 16749 million)

KfW (Germany) • 2*800 MW Krishnapatnam TPP / APPDCL (Euro 281 million) • PFC Energy Investment Programme / PFC / UJVNL (Euro 103.59 million) • High Voltage Distribution System (HVDS) in A.P. / REC (Euro 70 million) • High Voltage Distribution System (HVDS) in Haryana/ REC (Euro 70 million) • Pare HEP / NEEPCO (Euro 80 million)

JBIC (Japan) •

North Karanpura TPP (IDP-160)/NTPC

•

Rural Electrification Programme (IDP-169)/REC

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Renovation & Modernisation of Umiam-II HEP(IDP-156)/MeSEB

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Purulia Pump Storage Project (IDP- 98, 152, 167)/ WBSEB

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West Bengal Power Transmission Project (IDP-117,143)/WBSEB

•

Bakreshwar TPP (IDP-147)/WBPDCL

Overseas Business Initiative by NTPC: NTPC is making consistent efforts to enter in overseas market in Middle East, Asia Pacific and African regions for consultancy business. During 2008-09, it has bagged seven orders which include orders from M/s Green Energy Consultancy, Dubai for review engineering of 132/11 kV GTS sub-stations, order from M/s Alghanim International

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General Trading and Contracting Co. (AIGT), Kuwait for providing experts supervision services for operation of 800 MW Az Zour open cycle gas based power plant in Kuwait. The representative office of NTPC in Dubai has been functioning since November 2006 for marketing of its services in Middle East region.

Sri Lanka : Memorandum of Agreement between NTPC, Govt. of Sri Lanka (GOSL) and Ceylon Electricity Board (CEB) was signed in December’06 for setting up a 2x250 MW coal based power plant in Trincomalee region of Sri Lanka through a 50:50 Joint Venture Company (JVC) to be established between CEB and NTPC. Muttur-East (Site no. 5) was identified as a suitable site for setting up the power project subject to techno-economic feasibility. NTPC has been appointed as the consultant for preparation of Feasibility Report for the proposed power plant. For the purpose of preparation of FR, activities for award of Site specific studies as well as EIA studies are under progress. The Joint Venture Agreement (JVA) and the Definitive agreements are under finalization between NTPC & CEB.

Nigeria : MOU for Energy Cooperation was signed between NTPC and Ministry of Energy, Federal Govt. of Nigeria (FGN) in May, 2007. As per the MOU, NTPC shall setup one 500 MW coal based and one 700 MW gas based power projects in Nigeria in lieu of long term supply of 3 MTPA of LNG to NTPC for its use in NTPC’s Indian Power Stations. Pre-feasibility Report (Pre-FR) for setting up the proposed 500 MW coal based and 700 MW gas based power plants in Nigeria was submitted to Director (Power), Ministry of Energy (Power), Federal Government of Nigeria (FGN) on 11.06.2008. NTPC is following up with FGN and is in constant touch with Indian high commission at Nigeria on the matter. NTPC has also started benchmarking with leading international power utilities in association with North American Electricity Reliability Council (NERC), GADS, USA. Membership of NERC, GADS, USA has been renewed to facilitate International benchmarking. Data of NTPC stations on parameters like availability factor, PLF, planned & forced outage etc. was compared with NERC-GADS international database. The performance of NTPC stations is at par with and even better than the international

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utilities. Performance Improvement Projects have been institutionalized in the organization to give impetus to continuous improvement culture. Performance Improvement Project of NTPC, Vindhyachal received the prestigious DL Shah Award for Economics of Quality in the public sector category for the year 2008-09.

INTERNATIONAL COOPERATION AND DEVELOPMENT (IC & D) by Rural Electric Cooperation (REC)

Japan Bank for International Cooperation (JBIC)- 2nd Line of Credit REC has entered into a second Loan agreement with JBIC on 10th March 2008 for official Development Assistance (ODA) of 20.902 billion Yen for implementation of Transmission System Project by Haryana Vidyut Prasaran Nigam Ltd (HVPN). The objective of the project is to achieve stability in power supply and to meet the fast growing load demand by strengthening intra-state transmission systems in the State of Haryana, thereby contributing to local economic development and improvement of living standard of local residents in the State. The loan has been effectuated on 12th September 2008 and drawl of funds has commenced under the loan.

Indo German Bilateral Cooperation (KfW) - 2nd Line of Credit REC has entered into a Second Loan Agreement with KfW on 16.03.09 for Official Development Assistance (ODA) of EUR 70 million & Financing Agreement for financial Contribution of EUR 500,000 under Energy Efficiency Programme-II for implementation of Energy Efficiency and System improvement Project of Uttar Haryana Bijli Vitran Nigam Ltd (UHBVN), Haryana. The objective of the project is to promote energy efficiency by reduction in distribution losses, reduction in failures in electricity distribution and to provide higher quality of services to predominantly agricultural consumers in UHBVN’s distribution network.

Asian Development Bank (ADB) ADB has approved a line of credit amounting to US $ 225 million to REC on 27.11.08 to finance transmission and distribution networks in rural sector. Further negotiations with ADB in availing the loan are under progress.

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Clean Development Mechanism (CDM) The 4 nos of Project Design Documents (PDDs) on HVDS Project of APSPDCL financed by REC under REC-KfW Energy Efficiency Programme-I have received Host Country Approval from MoEF in January 2009 for availing carbon credits under CDM andthis approval is first of its kind in the Indian Power Distribution Sector.

Japan Bank for International Cooperation (JBIC) assistance for Rural Electricity Distribution Backbone Project: JBIC has sanctioned a loan assistance of 21 billion yen (Rs. 835 crore) under the ODA loan package for the Rural Electricity Distribution Backbone Project (REDB) of REC envisaging erection of 785 no. of new 33/11 KV sub stations and 510 no. of augmentation of sub stations in the States of AP, MP & Maharashtra. This loan assistance shall be available from December, 2006 onwards. The objectives of the project are to improve the sub transmission system by relieving the existing overloaded system and reducing the T&D losses and to expand access to electricity for un electrified households and other rural loads for different economic activities, by constructing and augmenting the sub stations and associated distribution lines, thereby improving living standard of local residents and promoting economic and social development in the concerned areas.

Indo German Bilateral Cooperation for HVDS project of APSPDCL REC’s project proposal of HVDS system of APSPDCL for Chitoor and Kadapa district has been approved by Kfw Germany for providing financial assistance of 70 million EURO (Rs. 410 crore) under Indo German Bilateral Cooperation. Depending upon the success of the programme, Kfw has also agreed to consider further allocation of 50 million Euro for the HVDS Project of Discoms of Uttar Pradesh, and negotiations between India & Germany are expected to conclude by March, 2007.

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The project aims at reduction in distribution losses, failure rate of distribution transformer and avoidance of theft in agriculture sector and will ultimately help in improving the financial sustainability of the respective Discoms.

REC- RUS Cooperation under Distribution Reforms, Upgrade and Management (DRUM) Project DRUM aims at enhancing access to electricity and water through power distribution reform activities and demonstrating best managerial, commercial and technological practices that improve the quality and reliability of “last mile” power distribution. An alternative model for financing rural electricity distribution entities is being developed for financing Rural Electricity Utilities to make them viable and sustainable in the long run through development of community ownership. This model is based on sound lending principles, participatory institutional arrangements, and establishment of financial, technical and engineering standards relevant to Indian rural electricity distribution companies, developed by REC. This financing model is to be tested though a few pilot projects being taken up in collaboration with respective state governments for future replication, with technical assistance and guidance from RUS. As part of this initiative, capacity building measures will be taken up by exposing project implementers to International technical, financial and managerial best practices.

POWER SECTOR IMPACTS ON THE ENVIRONMENT Electricity generation has several impacts on the environment, depending on the choice of technologies. While the evaluation of specific power plants would necessitate the assessment of site and plant-specific issues, in general, one can consider source-specific local, regional, and global impacts.

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LOCAL IMPACTS: Large power sources can affect their surroundings through impacts such as air pollution, submergence of land and waste accumulation, excessive resource use and disruption of human activity. The impacts of coal-based thermal plants are particularly important in a study of India, as these plants currently provide the largest generating capacity in India, and about 80% of the actual generation. Electricity generation consumed 67% of India’s coal use, in 2002; further, India’s coal consumption is projected to grow 2.2% annually between 2002 and 2025 (EIA, 2005).

REGIONAL IMPACTS: Regional pollution issues, for example the issue of acid rain and sulphur deposition, have received attention in Northeast Asia. While the magnitude of coal-fired power plants' contribution may be disputed, particularly during winter and spring, when dominant highpressure systems sweep accumulated pollutants off the landmass toward the eastern ocean mass.

GLOBAL IMPACTS The Indian power sectors contribute about 52% of the carbon emissions in the country. Due to the magnitude of its electricity generation, China’s total carbon emissions are over three times those from India and even on a per capita basis are over 2½ times.

NATIONAL ENVIRONMENTAL LEGISLATION AFFECTING THE ELECTRICITY SECTOR Energy Conservation Act, 2001 (with effect from 2002)  National Environment Appellate Authority Act, 1997  National Environment Tribunal Act, 1995  Ministry of Environment and Forests Environmental Impact Assessment Notification, 1994 (and additional notification of September 2005)  Central Pollution Control Board’s National Ambient Air Quality Standards Notification, 1994  Environment (Protection) Act, 1986, amended 1991 (followed by Rules and amendments of 1986, 1998, 1999, 2001, 2002, 2003, 2004)  The Air (Prevention and Control of Pollution) Act, 1981, and Amendment, 1987

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 The Water (Prevention and Control of Pollution) Act, 1974, amended 1988 42nd Amendment, 1976, to the Indian Constitution (1949)

COMPARITIVE STUDY OF SOME OF THE MAJOR PLAYER IN INDIAN POWER SECTOR To study and analyze the power sector better, the comparative and analytical study of the Top 5 firms of power sector in India are done. The firms are chosen based on their sales turnover. The below are the firms selected by us for the study.

NTPC Ltd. NTPC Limited is the largest power generating and Navratna status company of India; it was incorporated in the year 1975 as National Thermal Power Corporation Private Limited to accelerate power development in the country. As a wholly owned company of the Government of India, NTPC has emerged as a truly national power company, with power generating facilities in all the major regions of the country. It has a Production Capacity of 29,394 MW

RELIANCE INFRASTRUCTURE LTD Reliance Energy Limited (REL), with its corporate lineage going back to 1929. At the time of incorporation REL was called as Bombay Suburban Electric Supply Limited (BSES). The company has been in the field of power distribution for nearly eight decades and with its emphasis on continuous improvements. REL is a fully integrated utility engaged in the generation, transmission and distribution of electricity. It has Production Capacity of 941 MW

TATA POWER COMPANY LTD Tata Power Company Limited (TPC), India's largest integrated Electric Power Utility in private sector with a reputation for reliability, incorporated in the year 1919 at Mumbai. TPC pioneered the generation of electricity in India nine decades ago. The core business of Tata Power Company is to generate, transmit and distribute electricity. The Company operates in two business segments: Power and Other. The Power segment is engaged in generation, transmission and distribution of electricity. The other segment deals with electronic equipment, project consultancy. It has Production Capacity of 2300MW

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POWER GRID CORPORATION OF INDIA LTD The Company was incorporated in October 23rd of the year 1989 as the National Power Transmission Corporation Limited with the responsibility of planning, executing, owning, operating and maintaining the high voltage transmission systems in the country. Subsequently, the company name was changed to the present name Power Grid Corporation of India Limited (PGCIL) with effect from October 23rd of the year 1992. The company's operational area includes, Development of Inter-State transmission Systems and Grid Management. Development of Inter-State transmission Systems consists of Planning & Design, Construction, Quality Assurance & Inspection and Operation & Maintenance. It has a capacity of 77,217 MVA

TORRENT POWER LTD Torrent Power Limited (TPL) is an integrated power company engaged in the generation and\ distribution of electricity in the cities of Ahmedabad, Gandhinagar and Surat in the state of Gujarat and Bhiwandi Franchise in Maharashtra. TPL was incorporated in 29th April of the year 2004 as Torrent Power Trading Private Limited. It has Production Capacity of 500 MW

Conclusion: Power is one of the prime movers of economic development. The basic responsibility of power supply industry is to provide adequate electricity at economic cost, while ensuring reliability and quality of supply. Significant impetus by successive Governments has resulted in increase in capacity from 1,300 MW during independence to more than 100,000 MW today. Along with the growth in installed generation capacity, there has also been a phenomenal increase in the transmission and distribution capacity. However, despite the significant progress in capacity addition, the demand for electricity continues to outstrip supply with the result that energy and peaking shortages continue to plaque the economy. The per capita consumption is among the lowest in the World at 408 kwh/year

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The Government proposes to enhance public funding for the sector as well as encourage the public sector undertakings to take up projects in joint ventures with private investors and state governments in the 10th and 11th Plan period. There is also a focus on initiating suitable policy measures to accelerate the pace of hydro power development as well as to make nuclear power generation as competitive as power generation from other fuels. Significant reforms are being undertaken in power sector management and financing at the state level. Indian power sector has been witnessing a wide demand – supply gap. Although electricity generation has increased substantially, it has not been able to meet the demand. India possesses a vast opportunity to grow in the field of power generation, transmission, and distribution. The target of over 150,000 MW of hydro power germination is yet to be achieved. By the year 2012, India requires an additional 100,000 MW of generation capacity. A huge capital investment is required to meet this target. This has welcomed numerous power generation, transmission, and distribution companies across the globe to establish their operations in the country under the famous PPP (public-private partnership) programmes. The power sector is still experiencing a large demand-supply gap. This has called for an effective consideration of some of strategic initiatives. There are strong opportunities in transmission network ventures - additional 60,000 circuit kilometers of transmission network is expected by 2012 with a total investment opportunity of about US$ 200 billion. "Of course, the development of the power sector will not be possible without private sector participation,"

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