Sunday, 23 September 2012

Crooks of Powerpur Render 650 million Indians powerless

Crooks of Powerpur
Render 650 million Indians powerless

The back to back power failures caused by the tripping of the National Power Grid on two successive occasions within 24-hours on 30th and 31st July 2012 has put the country through a lot of shame.  This ENERTIA issue was held back luckily to report in time this worst ever Grid Failure in the world. Not that the continuous cheating of the nation by those who are at the helm had made the nation any prouder, with an utterly incompetent power minister of the country in its history, who has had the dubious distinction of being a minister with the longest tenure, is shameful more. 

The question that gripped the nation is: Who was really responsible? 

The answer though found out through a complex set of logical analogies takes us to the former Minister of Power, Sushil Kumar Shinde and his long non-performing years as the Power Minister.  The collapse of the National Grid was the symptomatic culmination of a larger and deeper malaise that has resulted in the destruction of India’s backbone industry and economic driver namely the Power and Energy sector.  That the Grid incapability, complete lack of smartness and utter disregard for adoption of liberating technology solutions like Smart Grid resulted in giving India and its tax paying citizens combined with the smugness of the power politicos and babus who warmed their chairs in the last decade, has resulted in the consequential damage of a “Weak and Dilapidated- so-called National Grid”.

The plethora of woes that the power sector has been made to suffer has been compounded due to the inefficiency and callous disregard for National Energy Security by Shinde and his incompetent and servile team, who pandered to the Mantri’s whims more or less conducting itself as his chaperone service, demolishing India’s power sector aspirations and ensured that India remains a laggard nation to China and rest of the developed world. 

Today, the host of challenges facing the Indian Power Sector span from Induced Coal Shortages; Manufactured Natural Gas Shortages; Murder of Hydropower Development owing to the gang of politicos, conmen-godmen,pseudo-environmentalism by Greenhoppers etc.; Nuclear Prophets of Doom; Fly-by-night Developers with the right connections with political masters; Corrupt, elastic and pliable babudom; Retired Prospecting Babus continuing cover-up of their past misdeeds in the sector; Babus not willing to work blaming their inaction on fear of CVC—thereby draining precious public resources and thriving at the expense of the nation; Complete subterfuge of critical public information; Self-aggrandising by some PSU chiefs across PR exercises along with their masters on their websites and Business TV channels; Minister of Power making several trips to China, France, Brazil, etc. only next to the former President on the pretext of study trips and in the case of China coo-cooing to the neighbour and facilitating their entry and importation of poor grade BTG equipment, Solar PV systems and Thin Films, etc. thereby partner in Chinese strategy to kill Indian manufacturing as subsidised below-par Chinese supplies of the order of 70GW – 80GW has landed into India in the absence of an anti-dumping regime [required- a Low-Technology-Anti-Dumping Duty-LTADD, similar to what the US has done to the tune of 31% to Chinese PV systems, must be levied on such imports not only from China but also on equipments from France, whose former T&D major Areva, now Alstom T&D has been dumping their T&D equipment in the Indian market undercutting and killing India based manufacturers opportunity like BHEL & Siemens in a sort of tendering nexus—maintaining a charade).   

The problems listed above are only the tip of the iceberg.  The State Discoms reeling under a phenomenal loss of Rs. 2 lac crores (US$ 40bn) are threatening the sector viability as banks, financial institutions, power sector investors and developers all fear any truck with these bankrupt entities.  The government is encouraging a non-performance based bail-out formulae promising roughly 3 lac crores (US$ 60bn) in the 12th Plan to these ailing state utilities, who are taken to the slaughter house by their political masters time and again, as the country continues to fail in plugging its T&D losses (read Theft and Dacoity) from the current levels of 30% - 35% to below 15%.

Power given for agriculture to most states is still unmetered and even if billed in some states, is on Horse Power (HP) rating of the pump-sets, which results in concealed thefts and overdraws.  These pump-sets belong to landlords with large tracts of arable lands and in no way are poor farmers, who definitely need subsidy support.  The politician is a party to ensuring that these subsidies reach these rich landowners and not the poor farmers,  leading to unaccounted consumption.  The banking sector is a big culprit too because they have constantly advocated reducing exposure to the power sector thereby squeezing the financing capacity of this sector and also driving away the foreign investors. 

Further, India’s dependence on coal-based thermal power plants is further under threat firstly owing to a 35% to 40% rise in international coal prices in the last 6-8 months.  The multiplier effect on this is that the Indian bankers are refusing private sector players any debt funding for their coal-based thermal power projects as Coal India is not signing any long term Fuel Supply Agreements (FSAs).  This inspite of the developers having valid and confirmed Power Purchase Agreements (PPAs) with payment guarantee arrangements with state utilities.  We must keep in mind here that Coal India and even foreign coal suppliers are ready to sign Medium and Short term FSAs, which the Indian banks refuse to recognise for debt-financing considerations. This is however a great opportunity for foreign banks who can come into power sector debt financing in an open ECB regime, with innovative green energy debt financing schemes. Will Indian banks take a Cue? 

The travesty is: the most potential and upcoming green energy sector of Solar has also seen Indian banks’ reluctance to fund through debt-financing several Solar PV projects, which are viable.This is simply owing to the bankers’ utter lack of exposure and ignorance of the Solar sector, almost bordering on silly irrationality. A 50MW–100 MW Solar Power Plant can be connected to the grid in less than 12-months when compared to a coal-based power plant of equivalent capacity, which will take approximately minimum of 4-5 years to come to the grid.  We must remember here that as predicted by ENERTIA in the past, the “Solar Power Tariffs” are reaching grid-parity and commercial scale application would be hitting the magic tariff of Rs. 6.00 to Rs. 7.00 per unit (KWh) by 2014, when the days of FIT (Feed in Tariff) would become a thing of the past. 

Another case in point is the diesel subsidy going to the power sector in the diesel engine based power currently being generated in the urban centres, which contribute to a loss of Rupees 1 lac crores      (US$ 20bn).  Your journal has been issuing warnings of the impending diesel subsidy disaster since 2009 across articles, editorials and forum DEFI (De-Centralised Energy Forum of India).  All this back-up power in urban centres must have been by this time converted to gas based De-Centralised and Distributed power using CCHPs (Combined Cooling Heat and Power), plants which have efficiencies as high as 80% to 90%.  These CCHPs and CHPs can completely take over the air-conditioning loads across malls, hospitals and urban commercial centres using the waste-heat in VAM (Vapour Absorption Machines), which operate the central air-conditioning plants without consuming electricity as a by-product or add-on benefit, while the gas engine / gas turbine based power plant generates electricity in De-Centralised mode. 

DLF in Gurgaon (Haryana-India) has shown such a successful 70MW CCHP project in operation, but instead of encouraging such efficient plants, the government at the centre continues in its policy of encouraging stand-alone large gas power plants which are only 45% efficient, as they cannot be operated in the CHP or CCHP mode.  Such gas based power plants also do not see the light of the day-a classic case being the Reliance Dadri project. Natural  Gas allocation for such large centralised projects are a waste and remain unused, killing the opportunity of developing smaller urban gas based De-Centralised and Distributed power which are the most efficient way of using gas in power generation. Not to mention their phenomenal benefits in savings across long-distance transmission infrastructure.

The Ministry of Power under Sushil Kumar Shinde simply ignored this opportunity for obvious reasons favouring the large power sharks and stalling the growth of efficient De-Centralised and Distributed gas based power plants.  The icing on the cake is that these Natural Gas-based and such alternative fuel based De-Centralized and Distributed power also offers “Urban-Peak Load-Shaving” benefits as they can come on to the grid quickly for supply and are 24/7 stations unlike diesel engine back-up power, which can only operate for a maximum of 8-hrs on the trot.  Not to mention the fact that the carbon emissions of diesel are reduced by more than 70% when substituted by natural gas.  Where is the MoP policy for such gas and multi-fuel based De-Centralized and Distributed CCHP or CHP power??

Coming to the issue of Power Grid failure in the backdrop of the above scenario, our analyses leads us to the following key dimensions.  India’s installed power generation capacity is 200GW (Giga Watt), producing 1077bn units of electricity per annum, for a population of 1.25 billion resulting in a per capita power consumption of 860 units (KWh) [India’s GDP = US$ 1.85 trillion].  Our neighbour, China has 1000 GW or 1 TW (Terra Watt) of installed capacity for a power generation of 4500bn units of electricity per annum, for a population of 1.5 billion resulting in a comparative per capita consumption of 3000 units (KWh) approximately [China’s GDP = US$ 7.3 trillion].  Therefore, it is pretty clear and scary to note that our transmission capability of 28-30GW is very weak to even handle the current 200GW (14%) and the large power capacity addition programs cannot be supported by such a weak national power grid.

State Grid Corporation of China (SGCC) is the largest electric utilities company that transmits and distribution power in China and in the world having distribution, it subsidiaries for Northern China, Northeastern China, Eastern China, Middle China and Northwestern China.  After the electricity "Plant-Grid Separation" reform in early 2002, the assets of State Electric Power Corporation, which included both power plants and electric grid all over mainland China, were divided into the five "power generation groups" that retained the power plants, and State Grid Corporation headquartered in Beijing with its five regional subsidiaries and China Southern Power Grid Corporation headquartered in Guangzhou, that operate power transmission, distribution and other assets of the old State Electric Power Corporation. It was ranked eighth in the 2010 Fortune Global 500 list of the world's largest companies by revenue and has moved one place up in the 2011 Fortune Global 500 list.  

In comparison, Power Grid Corporation of India Limited (PowerGrid) state-owned monopoly power Transmission Company, established in 1989, wheels about 50% of the total power generated in India on its transmission network.  Power Grid has a pan-India presence with around 95,009 Circuit-km of Transmission network and 155 EHVAC & HVDC sub-stations with a total transformation capacity of 136,358 MVA with a paltry Inter-regional capacity of grid transfer of power of 28,000 MW. The intriguing part is although PowerGrid is divided into 5 Regional Load Dispatch Centres (RLDCs) - Northern Region (NR), Eastern Region (ER), Western Region (WR), Southern Region (SR) and North-East Region (NER).

Out of all these Regions the NR, ER, WR and NER are synchronized which is known as NEW Grid. Whereas SR is not synchronized with the rest of the regions with AC lines and hence runs on a slightly different Frequency. SR is connected with WR and ER with HVDC links only. When PowerGrid was formed then the responsibility of Regional Load Despatch Centres (RLDCs) was handed over to PowerGrid by Central Electricity Authority (CEA). On 25th February, 2009 the National Load Despatch Centre (NLDC) was inaugurated. Now these Regional Load Despatch Centres (RLDCs) and National Load Despatch Center (NLDC) is a separate Organisation named POSOCO (Power system Operation Corporation), a wholly owned subsidiary of PowerGrid.

It is very clear from the above that PowerGrid inspite of being established as an independent entity in 1989, almost 13 years before its Chinese counterpart continues to retain its monopoly status with barely a small power system company POSOCO as its subsidiary.  Further, there has been no attempt to form separate Power Transmission and Management companies for our various regions and the current RLDCs do not enjoy any autonomy to modernise and make decisions like deploying Smart Grids and integrate with a POSOCO Smart Grid in quick time. 

Over the last five years, State Grid Corporation of China has embraced advanced Smart Grid Systems using adapted and indigenously designed technologies and systems, making it the world’s smartest and latest grid system operating entity in the world even better than countries like US and Germany.  It must be noted here that for integrating renewable energy onto the grid a Smart Grid is essential and mandatory.  This proves the failure of the current PowerGrid structure in adopting Smart Grid to face challenges of a complex and increasing demand centric power sector in India.  If India’s Power transmission company – PowerGrid had a Smart Grid, then the power blackout would have been easily avoided with minimum outage and the grid would have self-healed. 

In case, a real national grid existed in India, then Southern RLDC should have been integrated with the national grid system.  Under this scenario, a state like Tamil Nadu, which has almost 6400MW of Wind Energy of which only 3000MW to 4000MW is on regular operation, balance being backed down due to export bottlenecks and demand off-take would have been instantaneously available as a buffer for protecting the grid from collapse.  Obviously, such a complex system would have deployed a Smart Grid approach combining Outage Management Systems (OMS), Grid Intervention Technologies, Grid Monitoring Systems, Advanced Communication Protocols and Modules with IT integration.  Such a technology and a National Integrated Grid would have never allowed this sort of break-down due to a simple overdraw by a couple of states. 

A second scenario could have been a Smart Grid for the North, Eastern and North-eastern Regions, which could have automatically detected and responded to overdraw and dislodged one of the critical overdrawing states for a temporary period with auto warning to the rest of similar disconnection.  This is Auto-Grid Discipline Mode (AGDM).  Those who are suggesting manual discipline have forgotten their engineering and too old and pig-headed regarding technology still seek interference powers arrogating to themselves divine rights to render advice using their tired minds to the Ministry and dragging the sector to the archaic 20th century.

It was shocking to see an engineer of the grade of R. N. Nayak, CMD of PowerGrid talking to national TV and blaming the Western Region islanding via Agra link as the root cause.  Adding to the woe was Shinde’s position that the states overdrew and made the system to collapse.  Were the Power Minister and CMD, PowerGrid mute spectators to this happening?  What was the Power Minister doing for 8-years?  Wasn’t he responsible for making the Grid Smart and expanding the Transmission infrastructure in the country?  The combined inefficiency and arrogance of the Power Minister and that of the PowerGrid chief resulted in 650 million Indians blacked out for hours on end, getting this event the dubious distinction of the world’s most spectacular and derided power grid collapses. 

The Indian nation was put to shame as on one side, the country boasts of Satellite and Space superiority, is a recognised Nuclear Power, has plans for space forays to the Moon, but fails to supply reliable power to its citizens.  Not to mention that 50% of India is denied access to any electricity even as on date.  They have distribution but no power on the wires.  Several Indian villages do not receive electricity for 16-18 hours a day and there are regions where electricity does not come for days together and is a rare event.  

Not adopting technology and new ideas has been a chronic malaise with the tired and retired brains being deployed as advisors in Planning Commissions and Ministry of Power, who are dead against liberating technologies like Smart Grids as they are IT unfriendly and have no idea of telecom integration and automation in power system.  It is well known now that adoption of Smart Grid could cost as low as Rs. 1-2 crores per MW and even less if scaled up in comparison to new power plants that costs Rs. 5-7 crores per MW, which could help our distribution losses also come down substantially if invested in quickly.  Even in solar, the retired and semi-retired officers with vested interests constantly harped about it being costly and non-feasible.  The fact is: we are going to see Solar becoming the most tariff competitive power by 2014-15. 

ENERTIA on 27th July 2012 had conducted its 2nd Gird Smart 2012 meeting in Delhi, where the adoption of Smart Grid was discussed for India on a mega scale. Our Editors brought into focus the malaise in the sector alongwith industry experts on urgent need for adoption of Smart Grid. However, it must be brought here that sector operators like BSES Rajdhani, the Distribution entity in Delhi, have people like Mr. Gopal Saxena at their helm who refuse to adopt Smart Grid and continue to feign ignorance of the complete weakness of our Transmission & Distribution Systems which are now too old and need urgent modernisation and adoption of technology. It is such private sector pure profit- motive operators who have only taken over old PSU discoms and simply squeezed the profits out of them and failed to modernise their systems including several discoms and also the so called apex Transmission company PowerGrid which fails to recognise the fact that we should go to large Smart Grid Technology implementation than just look at shoe-string pilots that make a deadly and sure recipe for failure. Expansion, unbundling and making the transmission sector competitive using public-private participation and joint-sector collaborative transmission infrastructure development with a Smart Grid implementation is the remedy. ENERTIA August 2012 issue will give a complete retrospective coverage on 2nd Grid Smart 2012 with the possible solutions for Smart Grid in Transmission and Distribution Sectors.

We would also like to inform our readers that the National News Channel-NDTV was the only channel where Prof A. G. Iyer, Editor – in – Chief and Publisher of ENERTIA, agreed to speak on National Prime Time on NDTV 24/7 at 8.00PM on Program Left, Right and Centre and at 10.00PM on NDTV India-News Point @10 on the issue of Power Grid failure on 31st July 2012. Prof. Iyer, had also briefly expressed his view on the previous day on the same channel on the 6.00PM news that is the 30th July 2012,  when the 1st Grid failure happened and demanded the resignation of the Power Minister. The next day what happened was there for everybody to see as the inefficient and Non- Performing-worst ever Power Minister of India, Sushil Kumar Shinde was re-shuffled to the Home Ministry by the ruling alliance and later on to add salt to the wound of the country, where 650 million Indians plunged to darkness on 31st due to this very Minister, saw this man being promoted to the position of the leader of the House in the Lok Sabha, The message that we are sending to the world here is that “the worst will be rewarded with the best” in this country. Inefficiency and non-performance is being encouraged in Government, as long as the Minister proves his loyalty to his masters and is ready to be the important cog-in-the-wheel of the mis-governance and populist political game plan. But one good thing did happen. Shinde’s exit from the Power Ministry was the biggest gift to this country and its backbone –power and energy sector. Now much is expected from the erudite new incumbent, Veerappa Moily, who has been given additional charge of the Power Ministry. However, it would have been even better if he was in independent or full-charge of the sector, as such a step would have sent better signal to the sector and nation at large. Both these programs television debates are available on the archives of NDTV on the web. These discussions on the day were the most watched shows, with your Editor – in – Chief exposing the failures of the government in the sector and providing the solution of Smart Grid, where he was the only one doing so, as the rest of the participants on the program continued to grope in the dark. News point@10 by Abhigyan Prakash of NDTV India (Hindi) on 31st July was unarguably the best show on the Power Blackout on the day of India’s North and Eastern Grid, where 20 of 28 Indian states plunged into darkness for more than 15hours on the trot and 3/4th of the country came to a grinding halt.

That adoption of a “Smart Grid” for India’s “Transmission and Distribution” systems on a mega-scale and on mission-mode, including modernisation of the National and Regional Grids including connecting the critical Southern India Grid to the rest across the West and East coasts is the way forward. Not to mention the fact that Power Grid corporation of India Limited must be restructured from it’s current monopoly status to have five entities namely- Northern India Power Grid Corporation Ltd.(NIPGCO), Eastern India Power Grid Corporation Ltd.(EIPGCO), Western India Power Grid Corporation Ltd.(WIPGCO), North Eastern Power Grid Corporation of India Ltd.(NEIPGO), Southern India Power Grid Corporation of India Ltd. (SIPGCO)and POSOCO (Power Systems Corporation of India Ltd.). All these companies should be under the holding of a common entity and an Investments and Asset holding corporation namely – Power Grid Holdings India Ltd (PGHIL). The Independent entities must have their own independent and autonomous status as SBU’s mandated to develop, modernise, integrate and implement Smart Grids in their regions in synchronous with a National master plan of 10-20Years.Each of these regional entities must be headed by an independent CMD /CEO, who must also be part of the governing board of the holding company, to be chaired by a World – Class T&D infrastructure professional/expert supported by the right team of strategy leaders chosen from public & private sectors who could then deliver to our 1.25 billion people a  “Grid Smart and Power-full India” leading them from the current netherworld of darkness to a lightened and empowered future.   

 (An Exclusive ENERTIA Editorial take by A.Prakash Iyer, Executive Editor with inputs from team and sector experts and sources)

COALGATE – Real Facts Versus Apparent Fiction CAG on a Sticky Wicket for Once!!!!

12th September 2012

My Dear Colleagues, Bros & Sisters of India, Our Great Nation,

                                              Greetings from ENERTIA- Asia’s Premier Journal on Sustainable Energy & Power!!!

Sub: “COALGATE” – Real Facts Versus Apparent Fiction

The Issue of “Coalgate” has been engaged-in and flirted-with by all and sundry including some of my eminent media colleagues, especially on T.V. Media, without any in-depth knowledge of how Coal, Coal Mining and issues pertaining to Thermal Power, including environmental bottlenecks, land bank politics etc. -- which come on top of the already existing plethora of challenges faced by India’s Public and Private Sector companies -- operates in the Power and Energy space in India.

My “Letter Format Article” titled ““COALGATE” – Real Facts Versus Apparent Fiction” dtd: 11th Sept, 2012 (Ref: Prof. A. G. Iyer / Coalgate / Rebutt/Sept 2012) as a representation to the “Eminent Parliamentarians of India”, I hope will be an eye-opener and engage them in the larger discussion of taking India’s Power Generation capacity to level of 7,00,000 to 8,00,000 MW by 2022”.

If we fail to achieve this target for power generation then we can forget about the 8 to 9% economic growth rate for India and be prepared to write an obituary on the “India Growth Story”. The destiny of this country is in our hands. Time will try all the culprits who destroy this “India opportunity”. This includes the so called activists and disrupters of development, who now need to be dealt with a firm and decisive hand, while parallely allowing freedom of speech and expression to continue to prosper in this great democracy of ours.

May God give us all the Wisdom and Vision to clear the Muck in our Thinking and Understanding on such Critical National issues, than just playing to the galleries.

With Warm Regards and Best Wishes    

Prof. A. G. Iyer, Editor- in- Chief & Publisher,
ENERTIA-Asia's Leading Journal on Sustainable Energy & Power &
Author – India Brandished – The Branding of a Nation
Falcon Media
& President & Promoter Director
Renewable Energy Promotion Association, REPA

Encl/below: Article of 4 pages – titled COALGATE” – Real Facts Versus Apparent Fiction

 11th September 2012
1.    Dr. Manmohan Singh, Honourable Prime Minister, Government of India.
2.    Smt. Sonia Gandhi, President, Indian National Congress and Members of Parliament (Lok Sabha), Parliament of the Union & Republic of India
3.    Shri Lal Krishna Advani, Member of Parliament, Parliament of the Union & Republic of India and Chairman, BJP Parliamentary Board
4.    Smt. Sushma Swaraj, Leader of the Opposition - Lok Sabha, Parliament of the Union & Republic of India.
5.    Shri Shriprakash Jaiswal, Minister of Coal, Government of India.
6.    Dr. M. Veerappa Moily, Minister of Power (AC) & Corporate Affairs - Government of India.
7.    Dr. Montenk Singh Ahluwalia, Deputy Chairman - Planning Commission, Government of India
8.    Dr. Murli Manohar Joshi, Chairperson & Member of Parliament, Public Accounts Committee, Lok Sabha, Parliament of the Union & Republic of India
9.    Shri Kalyan Banerjee, Chairperson - Standing Committee on Coal and Steel and Honourable Member, Lok Sabha, Parliament of the Union & Republic of India
10. Shri Mulayam Singh Yadav, Chairman, Standing Committee on Energy and Honourable Member, Lok Sabha, Parliament of the Union & Republic of India

Dear Sir / Madam,

COALGATE – Real Facts Versus Apparent Fiction
CAG on a Sticky Wicket for Once!!!!

The "COALGATE" promoted by several of Indian TV Media as a “Scam” even before the last word and further facts rollout on a daily and sustained basis, will be perceived as the Worst ever irresponsible reporting seen on some sections of Indian Television, who are stooping below all grade to paint the entire Corporate India as “Sinners and Fixers”. While it is true that “Crony & Cranti (Crackpot – antinational) Capitalists” in the form of “fly-by-night operators” have entrenched India’s competitive - bidding space in several sectors like Power, Infrastructure, Telecom, Mining etc., painting everything yellow  with a common brush labelling the issue and related developments as “Scam and Corruption Nexus” is nothing short of sensational reporting.

 Coal used in Power Generation for Captive purpose is the prime reason for “How competitive Tariffs were offered by Reliance Infra/Power, Tatas, Jindals, Adanis, etc.” in private bids, as Input (Coal) for Thermal Power Generation and its costs (major part of the Variable Tariff component), were in control of Power Producers (Private or Public), wherever “Captive Mining” capacities were available. These are projects using Indian Coal.

 Taking the case of imported coal based Coastal Power Plants-- Both Tata and Adani at Mundra in Gujarat are today not in a position to generate power due to the fact that Coal prices worldwide have gone up by 35-40% over the last 8-12months or so. Now tariffs from these UMPP's (Ultra Mega Power Plant’s) will have to be raised, as Fuel Prices (Coal) and its cost -escalation worldwide will have to be made "pass through" due to "Force Majeure" conditions “International Coal Price Variations”, which is deemed an uncontrollable factor. Expecting these plants and their developers to absorb global price shocks, is nothing short of wishful thinking and shows lack of business acumen and economic understanding of the geopolitics of coal and other energy resources.

Coal obtained from “Indian Mines” are under “Captive Price Control” of Power Producers, who have bid and been given mining rights. So is it now that with “Coal Auction”, we want the “Coal based Power Tariffs of Thermal Power Plants and UMPPs” to hit the roof sending most of India to an unaffordable zone as far as “Power Tariffs” are concerned --Spiralling further inflation - the way we have done with our food products affecting “India’s food security”-which keeps inflating while we continue our whopping “diesel subsidies” as a policy aberration."Coal Subsidy Regime"? --Are we moving towards this monstrous situation? We are de-facto jeopardising our “Energy Security” in a way no other country has done in the history of nations post World War II. Today we in Mumbai – MMR pays Rs. 6 per unit for domestic  power and Rs. 9.25 per unit for commercial power in MSEDCL (State Utility) territory like Thane in the region of 500 units p.m. or above. This could literally double & even go beyond if coal is sanctioned.

Remember, Coal India Ltd., sold over the last 5-years or so, Indian Coal at Rs.1000/-per ton average, whereas International Coal prices hovered in the region of Rs.3000-4000 per ton average. While Indian Coal has a Gross Calorific Value (GCV) of 3500Kcal/Kg - 3800Kcal/Kg with a high ash content--40%plus in many cases, that from Australia or Indonesia has 5000-6000Kcal/Kg with far lower and nominal ash content. Further, Coal used in Power Generation is a far Lower Grade of Coal compared to that used for steel production. So this time, CAG has got it all wrong in its report and the Honourable PM, Dr. Manmohan Singh seems to be Right perceptibly for the First time in recent months.

Why has the CAG not commented on Coal sold by Coal India Ltd., all these years at below market prices, which resulted in “Coal India” being poorer due to billions of rupee revenue loss on account of below par pricing than could have been realized on market price mechanism (MPM) through auction of its coal or competitive bid for distribution and sale of coal to power and steel sector etal? If we take that as benchmark, the Coal India production goes as follows—Year 2011-12-436 MT; Year 2010-11-431MT; Year 2009-10-431MT; Year 2008-09404MT; Year 2007-08-380MT. This makes it clear that on an average over the last 5-years Coal India including its subsidiaries produced 400MT of Coal per annum average. Considering the price differential (Read Under-realization) of Rs. 2000 per ton average, the total under-realization or lost revenue per annum is Rs.80,000 Crores. For the 5-year period using straight line calculations this is a whopping Rs.4,00,000 crores. Indeed perceptibly bigger Scam than the notional Rs.1,86,000crores attributed to the “COALGATE”. CAG is silent in its report on this issue of Coal India’s underselling of National Coal mined and consumed, speaks volumes of the single minded agenda of going after the private sector, while condoning the public sector Coal India, which by the same logic has lost a revenue opportunity of Rs.4,00,000 crores. One cannot assess two similar situations with different yardsticks.

Further, “Jindal Steel and Power” has come under severe attack for booking indecent profits across its Raigarh, Madhya Pradesh 1000MW coal based Merchant Power Plant for which Captive mines were allocated by the government. The position in most media is that MP, Navin Jindals group made windfall profits from this power plant. This is more of an imagination good for fiction and not a legally tenable position. As the very nature of Merchant Power Plant (MPP)is that it is open to freely sell its produced power in the market and does not necessarily depend on a PPA. So, Jindal sold most of the power from this facility in open market taking risks thereof via exchanges and trading options making legitimate profits from the plant on a “risk and return” principle, a perfectly legitimate business strategy. This is very different from PPA backed IPPs. Merchant power may be costlier than PPA based IPP power, but encourages Captive producers to expand and sell excess capacities via exchanges or other power trading routes in an open-access regime making electricity a market based commodity. Jindals Raigarh project is unique as the captive coal is mined for both power and steel production and is a classic example of efficient operations in the country. Not to forget the Pilot Coal gasification project taken up by the group as the first of its kind repeat project in the country. By the way the power plant uses 4 BHEL BTG sets of 250MW each and are one of the best performing machines in India for use in thermal power generation.

The fact of the matter is that for indigenous Coal based Thermal power, the cost of input Coal cannot be competitive on auction and will simply render thermal power uncompetitive in India. Instead, there must be a price discovery formula using Coal India’s benchmark scale and comparing with international prices and gross calorific value (GCV) of Indian coal vis-a-vis imported coal for global price parity of input coal in thermal power generation, a formula, which will be more scientific and render the power sector and coal sector more efficient. Another factor that must be looked at is that the payment for coal supplied to all utilities public and private, should be strictly on the basis of Coal analytics like Gross calorific value (GCV), Moisture content, Ash content etc., which will need quality analytics measurement techniques mandatory for all coal based power plants in the country and for all coal-washeries and coal supply companies to ensure the right grade and quality of coal supply. This presently is not done in the country, resulting in complete variance from batch to batch. Mahagenco, the country’s second largest utility after NTPC has rightly hauled Coal India Ltd. to the court recently for inconsistent and poor grade of coal supplies which affected power generation of this apex state utility in Maharashtra. Can all this inefficiencies be sensationally labelled as Scam and Fraud just because the CAG or any other agency brings them to the notice of the government and public at large?

Hence, this "COALGATE" --alleged Scam is a non-starter and CAG's competence comes under sharp radar of criticism and its report on Mines Allocation-Coal audit report, seems to demean the neutrality of the office of CAG and position-with potential to send India to Chaos-With the disruptive forces leaving no stones unturned in achieving the “Chaotic India Objective”. Is this a planned Economic Agenda based attack from Overseas forces on India??Time will prove My point - That it is Indeed!!!!

The Country’s leading Political Parties must come on a common platform and on war footing address the core issues minus politicking. We must remember that for richer economies like USA, Australia, Canada, Russia and even Indonesia do not resort to auctioning Coal. It is mined on a cost plus strategy predominantly in joint – sector model (Governments & Private Companies Co-operation) as mining involves complex technology issues and knowhow for best yields.  

However, fly by night operators must be disallowed and their licences be cancelled but without affecting the core movement of the power sector failing which India will be sent to irreversible chaos. Not to forget the kind of opposition to Hydro Power, Nuclear Energy etc. which is already threatening India’s march forward in Power Generation, as this sector is in the worst state of paralysis at this moment and needs national consensus, maturity and co-operation amongst the Government, Policy  Makers, Opposition & Stakeholders including the public at large. 

Prof. A. G. Iyer, Editor- in- Chief  & Publisher,
ENERTIA-Asia's Leading Journal on Sustainable Energy & Power &
Author – India Brandished – The Branding of a Nation.

You can contact me on +91-9223207245/09029007245 or
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