A K Srivastava_Essar Power

7/31/2019 A K Srivastava_Essar Power

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1Essar Power Limited

A positive a++itude

ESSAR POWER

CONFERENCE ON THE POWER MARKET

POST ELECTRICITY ACT 2003

15th October 2003

INDEPENDENT POWER PRODUCERS PERSPECTIVE

A K SrivastavaMD - ESSAR POWER LTD.


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ESSAR OIL LTD

EXPLORATION &

PRODUCTION

REFINING

MARKETING

ESSAR

CONSTRUCTIONS

TURNKEY

PROJECTS

- Marine

- Pipeline

* Water line* Gas line

- Industrial Plant

- Civil & Irrigation

- Roads & Highways

Group Business Structure

ESSAR GROUPESSAR GROUP

STEELSHIPPING

& TERMINALOIL & GAS POWER TELECOM CONSTRUCTIONS

ESSAR SHIPPING

OIL TANKERS

BULKERS

OFFSHORE

SUPPLY VESSELS

TERMINAL

FACILITIES

ESSAR POWER

HAZIRA

515 MW CC

VADINAR POWER

COMPANY

JAMNAGAR

77 MW COGEN

HUTCHISON ESSAR

JV with HUTCHISON

- Delhi

- Mumbai

- Chennai

- Kolkata

- Gujarat

- Andhra Pradesh

- Karnataka

- Haryana

- Rajasthan

- East UP

- Punjab

HAZIRA

OPERATIONS

- Hot Briquetted Iron

- Hot Rolled Coils

- Down Stream

Complex

VIZAG OPERATIONS

HY-GRADE PELLETS

JV with STEMCOR

- Pellet Plant

- Beneficiation plant

- Slurry pipeline

INDONESIA

OPERATIONS

P T ESSARDHANANJAYA

- Cold Rolling Mill


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PROJECT CONFIGURATION

Capacity : 515 MW Combined Cycle Power Plant.

Commissioning Dates

First & Second GT - Aug 95

Third GT - Nov 95

Combined Cycle - October 97

Comprises of :

3 Gas Turbines ( GE Make Frame 9E)

of 110 MW each.

3 HRSG (KHIC Make)

1 Steam Turbine ( GE Make)

of 185 MW.

Multi Fuel capability(Naphtha/ NGL/NG/HSD)

Instrumentation & Controls (Siemens Make)

Hazira


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POWER PURCHASE AGREEMENT

GEBESSAR

STEEL

ESSAR

POWER

515 MW

300 MW215 MW


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SALIENT FEATURES OF PPA WITH GEB & ESTL

Allocated Capacity - 300 MW for GEB & 215MW for ESTL

Effective date - 1st July 1996 for GEB & 1st April 1996 for ESTL

PPA : in accordance with GOI guidelines - Two Part tariff Structure

Recovery of Fixed Charges at 68.49% PLF. ROE @ 16% at PLF of 68.49% PLF,Incentives @ .575% per % increase in PLF upto 80%.

Approved Capital Cost Rs. 957 Crores for GEB & Rs. 810 Crores for ESTL

Deemed Generation - 80% PLF average through the year

Deemed Non-Generation - applicable if Essar not able to generate as per the

declared availability


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PLANT PERFORMANCE 1998-2003

-99 99 -99 99 -99 99 -9 99 9 -9 99

Plant A vailability (%) 99 99 99 99 99

PLF(%) 99 99 99 99 99

PLF (GEB ) (%) 99 99 99 99 99

PLF (Essar Steel) (%) 99 99 99 99 999


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FINANCIAL PERFORMANCE 1998-2002

(Rs. in Crs.)Parameters 98-99 99-00 00-01* 01-02

Total Income 718 829 1034 648

EBIDTA 422 451 614 454

Interest 271 273 372 293

Depreciation 111 114 173 119PBT 39 64 69 42

Tax 0 1 6 3

PAT 39 63 62 39

* for 18 months


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OUR EXPERIENCE AS IPPS

Lot of Clearances were required to set up the project such

as Environmental Clearance

State & Central Government Clearances

Techno-economic Clearance of Central Electricity

Authority (CEA)

PPA Finalisation was a long drawn processProblems encountered during implementation of PPA

States are not honouring commitment given in PPAs

concerning Payment Security Mechanisms

Deduct rebate for timely payment even though payment is

not made in time Due to non-payment of dues to IPPs and mounting of

overdue


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OUR EXPERIENCE AS IPPS

Most of the IPPs are defaulting to FIs / Banks

Do not have enough fund for O&M of plant

FIs / Bank tend to charge penalty & LD for not paying in time

which is not recoverable in tariff

Though the plants are supposed to be Base-Load

station, gas-based plants are asked to be back-down off &

on which results in Frequent Starts & Stops

Higher heat rate due to part load operation and frequent

startups

Most of the states have started reopening & re-negotiation

of PPA . This is threatening the viability of projects.


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IMPACT OF ELECTRICITY BILL 2003 FOR DEVELOPMENT OF POWER SECTOR

Provisions and intent of EC 2003 is a step forward in

Power Sector reforms such as Power Generation is de-licensed except hydro

Open access system in Transmission

Open access in Distribution

Generators can supply Power directly to bulk consumers

Electricity Regulators role is defined and enlargedHowever the above mentioned good intentions may be

difficult to realise in practice in near future

Open Access as of now would be an As-is-Where-is

As-Available-When-Available

For Supplying Power to bulk consumers directly, anelement of Surcharge in lieu of cross subsidy would be

levied. How long cross subsidy would continue?

What would be the basis of Surcharge?


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IMPACT OF ELECTRICITY BILL 2003 FOR DEVELOPMENT OF POWER SECTOR

What issues EC 2003 has not addressed?

Power is in concurrent list. Each State, as a source of

revenue has imposed Electricity Duty on Power to

Consumers which varies from Ps. 5/unit to Ps. 50/unit

If Electricity Act 2003 does not provide any guidelines to

States on Electricity Duty, then States may impose such

Duty rates which may nullify good intentions of PowerSector reforms

As a suggestion, EC 2003 can specify that Electricity Duty

rates as prevailing on 10th June 2003 shall be the cap.

Ideally it should be uniform throughout the Country.

Electricity Duty should be scrapped on Captive PowerUsers.


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ROAD AHEAD

For increasing and encouraging the generation in Private Sector

Generators should be encouraged to take up Distribution ofElectricity

To mitigate existing IPPs financial problems, they may be given

preference in allocation of Distribution Circles.

Open Access in Transmission and Distribution need to be

given on fixed basis

Surcharge for supplying to the bulk consumers should bereasonable and abolished in definite period

Electricity Duty to be rationalised

Power trading needs to be encouraged

Tariff should be decided based on competitive bidding and cost-

plus method should be discouragedElectricity boards needs to be restructured to make them

financially viable units


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THANK YOU

A K Srivastava_Essar Power

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