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Rs10.76 lakh crore
               =
      6 * Rs1.76 lakh crore



‘COAL-GATE’ Smile washes away 2G
              Woos!
Energy and Power Sector of India

                  By
           Mathangi Sridhar
         Indresh Vikram Singh
           Dipankar Biswas
            Mazid Ali Khan
The Big Picture
                             Total Installed Energy Capacity:210GW
                                3.4% of Indian GDP (2012)


   Energy Capacity Generation Statistic in
             India(as of 2011)                           High presence of energy mix
                     10%
                                                         in India compared to world
        1%                                                     average of 27%

             11%
       2%                                                  4th largest consumer of
                                                                energy globally
                                   55%
             21%
                                                           5th largest producer of
Coal   Hydro       Nuclear   Renewable   Diesel   Gas          energy globally
India’s Energy Trajectory
                                             Post - Reform



                                                                                      Phase 3 (post
                                                                                      2003)
                                                                  Phase 2 (1996-
                                                                  2003)               Electricity Act
                                                                                      2003
Pre - Reform                                      Phase 1 (1991- CMNAP Guidelines
                                                                                      Delicensing
                                                  1995)          Nationalization of
                                                                  tariffs             Open Access in
                               Post-              IPP                                 T&D
                               Independence Enron case                                Single-buyer to
                               Era : (1947- Orissa                                    Multi-buyer
                               1990)        Restructuring                             model
                               Electricity Act    1995 – Mega
      Pre-independence era 1948 amended           Power Policy
      : prior to 1947
                               Creation of SEBs
      Dates back to Calcutta
                               Hydropower
      Electricity Supply
                               Project
      Corporation in 1897
      Electricity Act 1910
What changed the energy game?
Pre - 2003             Post - 2003

Generation


Transmission



Distribution




Consumers
Current Status : Twin Issues
                                            Demand Supply Gap
                         1000
                                                                                                    830.3
Power in Billion Units




                          800
                                                                          559.4             620.9                •Current demand-supply gap
                          600                                                                         746.5
                                                  266.4       447.3                                              of 8% leading to peak
                          400       168.1                                 517.4             559.4
                                                              395.9                                              shortages at 11-12%
                          200                     245.4                                                          •Grid access not available to
                                    156.8
                            0
                                                                                                                 more than 55% of the rural
                                1             2           3           4                 5             6          population
                                            Five Year Plans of Indian Government
                                              Availabiliy         Demand


                                                                                                      Cost Vs Tariff rates in India
                                                                                                Unit Cost(paise/kWh)           Tariff(paise/kWh)
                                                                                 1000
                                                                                                                                       357         380
The gap between average tariff and                                                800                            326       333
                                                                           Paise/kWh




                                                                                                     306
average cost per unit of electricity                                              600
                                                                                                                 460       476         484         487
                                                                                  400                404
has ranged from between 20 % and
                                                                                  200
30 % of cost per unit in the last 5
                                                                                    0
years.
                                                                                               2008           2009     2010        2011        2012
                                                                                                                       Years
E = m * Coal²
• 70 % of the electricity generated is from coal based power plants.

• On the domestic production front, Coal India Ltd is the largest
  contributor accounting for 81 % of country's coal production.
    – 9.5 % of balance comes from the Singareni Collieries Company Ltd
    – Meghalaya – 6 mn tonnes of production


• 285.86 billion tonnes - country’s total known and estimated coal
  resources(Sept, 2012)
    – Coal India Ltd (CIL) holds 65 bn tonnes, NLC and Singareni holds 49 bn tonnes


• Presently the country imports about 85 million tons of coal(2012)
Captive , not attractive!
• Captive mining introduced in 2003 to open up private investments.
   – Cement , coal & steel industries


• 30 out of 200 blocks have commissioned production
   – Produced 36.30 million tons in FY 2010-11 against a target of 104 million tons


• Huge loss to Government due to state monopoly
   – Loot of coal
   – Corporate tax loss on profits
   – Inefficiencies in mining & production


• Supreme Court order on allocation of captive mines?
Coal India Ltd :One Man’s Army!
    • Coal India Ltd – largest coal producing company in the world

                                                                        CIL’s Projection for
                                        About 20% of the                2017
CIL’s Production in 2011-12              output is lost in            918
                              713         pilferage, 35%              MT
                                           loss in T&D         556
           436       487      MT
                                                               MT
           MT        MT
          Output Target Demand                               Output Demand

    • Classifies customers based on the requirement of coal
         – Supplies either through e-auction/agencies/FSA


    • Shift from differential pricing strategy based on gross calorific value
      based pricing
         – At par with international pricing
CIL : Sitting on Cash Reserves?
                                     Gross Profit (in crore)                                                   EPS (in Rs.)
                        10,000.00                                                                  15                                 12.77
                                                                            8,606.91
Gross profit in Crore




                                                                                       EPS in Rs
                         8,000.00                                                                  10                          7.43
                                                                                                                5.56   5.82
                         6,000.00                                4,729.14                               3.88
                                           3,658.50                                                5
                         4,000.00                     3,879.39
                                  2,593.58                                                         0
                         2,000.00
                                                                                                        2008    2009   2010    2011   2012
                             0.00
                                     2008     2009     2010      2011       2012                                       Years

                                                       Years


                           • CIL sits on Rs.65,000 crore(2012) cash reserves but fails to meet
                             coal demand in India

                           • Lack of land acquisition policy in place
                                 – 236 CIL proposals pending with environmental ministry for clearance


                           • A widening demand-supply gap due to huge administrative issues.
From 1 barrel of Crude Oil…

        1 barrel              35% of
                                                3%
        of Crude              Gasoli                          Others
                                                LPG
           Oil                  ne


• Huge demand for Natural gas has pushed imports of LNG in the recent
  years

• The recent development of shale gas reserves in North America –
  opportunity for increased LNG demand in emerging economies like
  India, China and other emerging markets (Argentina, Brazil, Bangladesh
  etc.).

• Demand for gas is expected to increase by a CAGR of 14% during 2011-
  12, to 2016-17, from 194 MMSCMD to 373 MMSCMD.
To Million Units of Natural gas!
                                                              14000                                  12800




                             Million Metric Standard Cubic
                                                              12000
                                                              10000




                                      metre/day
                                                                                        7600
                                                               8000
                                                               6000
                                                                              868
                                                               4000                             158
6     India stands 6th in
      production figures                                       2000      81            95
                                                                      151           231        313
            globally                                              0
                                                                       2001-02     2006-07 2011-12
                                                                                       Years
                                                             Demand (MMSCMD)              Supply (MMSCMD)
      Contributes to 7% of                                   Imports (cubic meteres)
7
           total GDP
                                                             •Currently, power sector consumes
                                                             about 37% followed by fertilizers with
       India stands 9th in                                   23%
      consumption figures                                    •Development of National Gas Grid
9           globally                                         •LNG regasification terminals
But the story continues…


To march towards 2020, to achieve 15% target of GOI


        Let’s go the green way!
‘New –clear’ and Clean Source
      • Six nuclear power plants producing 4780 MW

      • India is endowed with 1/3 rd of world’s thorium reserves.

      • Power Generation by NPCIL : 26,473 million units in 2011
70
60
50
40
30
20
10
0
     1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

                        World    India
Hydro is next in the row!
• New Electricity Act 2003 and 2005

•   100,000 MW is planned for the coming 5 years

•    Continuous decline of hydro power from 50% in 1963 to 25%
    in 2010
     Hydropower Class
      Pico       < 5 kw
     Micro      < 100 kw
      Mini     < 2000 kw
     Small     < 25000 kw
    Medium    < 100,000 kw
     Large    > 100,000 kw
The answer my friend is blowing in the
                    Wind!
• Current production capacity of wind turbines – range of 3000 to 4000
  MW

• Fiscal concession such as income tax exemption, excise duty
  exemption etc available from the government

• Last year 6 new companies were given approval

• Bold move- Government washing hands off to the States
Going the Solar Way!
• 2008 - National Action Plan on Climate Change was announced,
  constituting 8 major national mission

• Jawaharlal Nehru National Solar Mission (JNNSM) was launched in
  January 2010

• Gujarat ranks first in manufacturing solar power; 2/3rd of the 900
  MW of PV in the country

• 48 cities and 23 states to be built as solar cities, Nagpur and
  Chandigarh will be built as a model solar cities
Is India heading towards darkness?
• India power consumption to double by
  2020
                                            Energy Mix of India in 2020
• Dependency on import of fuel for          Coal            Oil            Gas
  power generation expected to increase     Nuclear         Traditional    Renewable
  to 73% to 2020
                                                              8%

                                                      16%                 30%
• India, even with a low per capita
  consumption of electricity, is already      5%

  the third largest emitter of GHG gases.             16%
                                                                     25%


• Excluding a few private players like
  Reliance, TATA, industry is dominated
  by public sector
Power Play @ 2020
• Coal : Mine the Gap!
    – Output estimated to grow from 257.7m tonnes of energy (mtoe) in 2011 to
      320.2 mtoe in 2020.
    – Increased private sector participation to reduce imports


• Natural Gas : Unnatural Progress
    – Will grow to displace coal to increase imports
    – Australia – LNG provider?


• Oil : Less than Slick
    – Privatization of ONGC


• Renewables : Rapid Evolution
    – Minimum of $50 bn investment required in renewable energy alone by 2020
Electricity Saved is Electricity Produced!
• If you turn off your monitor for a minute, a bulb can be lit in some
  remote part of India for about 2 minutes.

• Try to switch off all your electrical appliances for at least half an
  hour everyday.

• Do not switch on the power when TV and Audio Systems are not in
  use i.e. idle operation leads to an energy loss of 10 watts/device

• If you reside at an above sea-level region, minimize the use of fans.

Doing this and more can save about 30% of the total domestic power
                       consumption in India!!!
Links

http://en.wikipedia.org/wiki/Electricity_sector_in_India
http://www.indiaenergyportal.org/overview_detail.php
http://businesstoday.intoday.in/categorylist/13/1/energy.html
http://powermin.nic.in/
http://www.dnb.co.in/IndiasEnergySector/Regu_Power.asp
http://agmetalminer.com/2012/04/19/india-working-on-ppp-model-for-coal-india-ltd-mines-part-one/
http://www.powermin.nic.in/indian_electricity_scenario/introduction.htm
http://www.economist.com/node/21543138
http://www.indiacore.com/overview-energy.html
http://www.business-standard.com/india/news/coal-india%5Cs-modified-fsa/487096/
http://indiatoday.intoday.in/story/corruption-in-mining-reserves-and-growing-domestic-demand-of-coal/1/217325.html
http://www.indianpowermarket.com/2011/05/indian-power-sector-snapshot.html
http://stockshastra.moneyworks4me.com/indian-power-sector-analysis-industry-overview-and-research-2011/
http://energy.about.com/od/Coal/a/All-Coal-Is-Not-Created-Equal.htm
http://articles.economictimes.indiatimes.com/2012-08-20/news/33287986_1_captive-mines-captive-iron-ore-coal-mines-nationalisation-act
http://www.thehindu.com/news/national/auction-not-sole-route-for-allocation-of-natural-resources-supreme-court/article3942022.ece
http://www.eia.gov/electricity/data.cfm
http://articles.economictimes.indiatimes.com/2012-02-10/news/31046103_1_capacity-addition-energy-efficiency-energy-conservation
http://www.business-standard.com/india/news/shortage-hit-india-exporting-coal-to-chinajapan/479589/

http://www.coalcontroller.gov.in/coal_admin/files/Statistics/Statistic-9.pdf

http://ighem.org/Paper2010/TSA01.pdf


http://www.youtube.com/watch?v=numrTQEceVA
THANK YOU

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Energy & power sector.docx