will government's massive surge in investment ... - Myiris.com

Apr-Jun 2013 Earnings Preview
Sector Insights
CCEA approves the coal price scheme:
The ailing power sector heaved a sigh of relief in June 2013 when the Cabinet
Committee on Economic Affairs (CCEA) approved mechanism for coal supply to
power producers. Under this scheme
:Coal India will have to sign FSA for 78000MWs including tapering linkages
FSA will be relating to domestic coal to the extent of 65%,65%,67% and 75% of the
ACQ starting from FY14 onwards
CIL or the power plants can import their balance coal requirement on a cost-plus
basis. Higher cost of imported coal will be given as a pass-through as per the formula
suggested by CERC. For this, the MOC will give directives for distribution of coal and
MOP will advise CERC and SERC for including this pass-through mechanism in SBDs.
Along with this, nearly 4660MWs may come up before March 31, 2015. In this case,
only if excess coal is available, then CIL will provide them coal.
Power major signs coal pact with Coal major:
NTPC’s board approved the fuel pact with CIL. After a year long wait, this pact was
closed after various contentious issues between the two firms were discussed and
resolved at a meeting of their Senior Executives. Under the FSA, CIL will be eligible
for incentives if it supplies more than 80% of the contracted quantity. Also, NTPC has
agreed to CIL’s decision for a third-party sampling and analysis at the loading end
before Sep 30, 2013. NTPC has close to 20000MWs under construction which will
require coal in the next 3-4 years. About 7000MWs of plants, which came up after
2009, were operating under 60% PLFs which will now go up to 80-85%. Thus, this
development will turn positive for NTPC if the company is successful in adding the
capacity on time.
Debacle for Indian waters in North:
The catastrophic rains leading to the cloud burst and landslides in Uttarakhand and
Himachal Pradesh was ominous to the power sector too, with nearly 3000MWs of
HEPs coming to a standstill either due to silting or damages to barrages and shafts.
Plans affected on account of this were 1) NHPC’s 280MW Dhauliganga power project
2) 394MW Maneri Bhali 3) NJHP 1500MW of SJVN and 4) 1000MWs KWP and 400MWs
Vishnuprayag of Jaiprakash Power Ventures. The rains have also affected 195MW Kashang
project in Kinnaur, the first stage of which is likely to be delayed by about six months. All the
projects are covered under the Industrial All Risk Insurance Policy.
July 8, 2013 153