Daily News Mail - News of 09/03/2015

Coal output: billion-tonne target

• Coal production in the last nine months has increased by 7%, Piyush Goyal, Minister for Power, Coal and New and Renewable energy, said.

• He said it was easy to dismiss this as insignificant, but the difference was stark considering that the compounded annual growth rate was just 1.5% over the past five years and 3-4% in the best years.

• The Power Minister said it was during a long review with Coal India officials that he had, in a moment of frustration, come up with a coal production target of one billion tonnes in the next five years. “An off-the-cuff(not prepared in advance) comment became our target,” he said. Coal India had achieved 925 million tonnes, which gave him the confidence that even a billion tonnes was possible.

• The bigger challenge was where to use the coal. He said he had persuaded the Railways to provide 25 additional rakes to move coal in March. He had requested the government-owned NTPC to lift additional quantities of coal so that stocking capacity at mines was freed up, enabling them to produce more.

• Referring to the proposal to have five new ultra-mega power projects (UMPPs), each of 4,000-MW capacity, he wondered whether it was worth pursuing the UMPPs that relied on imported coal. It was for the States to decide, especially coastal States such as Tamil Nadu, Gujarat and Maharashtra, where the cost of transporting coal from mines was high. 

• Note : New UMPPs will get sanction provide their coal linkage from imported coal. Indian coal reserves estimated at 250 billion tonnes may last only few decades at current consumption levels. Further, small and medium power pojects rely on domestic coal and they cannot afford to use imported coal. Whereas, UMPP's if located near the coast, can achieve economies of scale and can use imported coal. So, future UMPP's are most likely to come up near the coast.

• Ultra Mega Power Projects (UMPP) are a series of ambitious power projects planned by the Government of India.This would entail the creation of an additional capacity of at least 100,000 MW by 2012. Ultra Mega Power projects, each with a capacity of 4000 MW or above, are being developed with the aim of bridging this gap.

• The UMPPs are seen as an expansion of the MPP (Mega Power Projects) projects that the Government of India undertook in the 1990s, but met with limited success. The Ministry of Power, in association with the Central Electricity Authority and Power Finance Corporation Ltd., has launched an initiative for the development of coal-based UMPP's in India. These projects will be awarded to developers on the basis of competitive bidding.

• Based on supercritical technology, 16,000 MW of capacity has been contracted through the competitive bidding process for UMPPs. The first UMPP, developed by Tata Power at Mundra, Gujarat has been commissioned and contributes 4,000 MW in power to the Western grid.

Minister for Power, Coal and New & Renewable Energy,

Piyush Goyal

Govt. looking at Rs. 1,00,000-cr. bonanza from spectrum sale

• Against an earlier estimate of about Rs. 82,000 crore, the Modi government is likely to raise in excess of Rs. 1,00,000 crore from the biggest-ever sale of 2G and 3G airwaves. In 24 rounds of bidding since March 4, the government has already received commitments from telecom players totalling Rs. 86,000 crore.

• The auction will resume on Monday. Mobile users can expect improved quality of services — be it fewer call drops or better data speeds — with service providers garnering additional spectrum through the auctions. “The bidding has taken place in all bands,” the Ministry of Communications and IT said.

Welcome push on infrastructure

• The National Democratic Alliance (NDA) government rolled out a new policy paradigm by shifting its focus to productive expenditure by making infrastructure creation central to its road map for economic growth. Finance minister Arun Jaitley underlined the government’s commitment to reviving the investment cycle to spur growth by increasing public expenditure in capital formation, in line with the recommendations of the economic survey.

• The Budget has proposed a National Investment and Infrastructure Fund with an annual inflow of Rs.20,000 crore. 

• This could strengthen the balance sheet of infrastructure finance companies such as the NHB(National Housing Bank) and the IRFC (Indian Railway Finance Corporation Limited), and help them improve their leveraging power and refinancing capacity. This will have a trigger effect down the line. 

• Simultaneously, Mr. Jaitley has planned tax-free infrastructure bonds for projects in the rail, road and irrigation sectors. The allocation for roads and railways in this Budget is Rs.40,000 crore each, an increase of Rs.14,031 crore and Rs.10,050 crore respectively over the current fiscal year.

• The Budget has also proposed five ultra-mega power projects. With the plug-and-play model, one hopes that the winners of the contracts could begin the project implementation process immediately without worrying about regulatory clearances and coal or gas linkages. 

• Mr. Jaitley has pressed the right buttons. Whether these initiatives take off depends on how potential investors respond.