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Where the mind is without fear and the head is held high; Where knowledge is free; Where the world has not been broken up into fragments by narrow domestic walls; Where words come out from the depth of truth; Rabindranath Tagore

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Introduction
Electricity an essential input to fuel economic growth of the country and to improve living standard of people. Installed Capacity of the country has grown from 1800 MW to about 210936.72 MW after independence. Energy Generation grown from 5BU to 811.43 BU India achieved 85% of village electrification -78 million households in rural areas yet to be electrified . Electricity is in concurrent list which looked after Central and state Government both

Installed Capacity in India (as on 30.11.2012)


Mode of Generation Thermal Installed Capacity 140976.18 Coal 120873.38 Gas 18,903.05 Oil 1,199.75 Hydro Power Nuclear Power Renewable Power ( Includes Small Hydro Power, Biomass Gasifier, Biomass Power and Urban & Industrial Waste Total 39,324.40 4780.00 25856.14

210936.72

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%age Contribution
Thermal 66.83 Hydro 18.64

Nuclear

2.27

Renewable

12.26

DOWN THE MEMORY LANE

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The Human odyssey is saga of five thousands years of human civilization which saw many upheavals, revolutions, agricultural evolution, emergence of industrial societies, wars, epidemics, assassinations, discoveries, inventions all paving way for .. EMERGENCE OF NEW WORLD ORDER

The journey continues continues came.. came..

still then

EMERGENCE OF NEW WORLD ORDER

GET READY FOR SHOCKING TRUTH

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Century Starts With


WTC Bombing in 2001 War Began after WTC Anthrax scare in us Indian Parliament Attack Royal Massacre in NEPAL Continuing Internationa War Jehad Gujrat Earthquake Natures fury: Mt. Atna erupted in italy Weeping Budha at Bamiyan Natures Fury: Hurricane Devastated Havana, CUBA Anti WTO protest in Manila Middle East was burning

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THE HUMAN PERSPECTIVES


EMERGENCE OF NEW WORLD ORDER

Emergence of new civilization, brings with it new styles of human endeavors During decades gone by people witnessed new world order, which was not market driven, people took center stage, they decided their own destiny. The fall of Berlin wall, collapse of Russian empire, sealed fate of communism in Eastern Europe were not compulsions. Rather these events were peoples choice. Communist lost West Bengal their Fort

THE TECHNOLOGY CONVERGENCE

Human race has until now, witnessed two revolutionary changes viz. Agricultural revolution & Industrial revolution We are witnessing now the much larger phenomenon, emergence of new order, the age of information; the age of technology convergence ; so revolutionary that it challenges all our assumptions

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THE TECHNOLOGY CONVERGENCE


THE BLURRED VISION

So long as we skip significance of emergence of new order, we can not design a cohesive response because : As individuals , our decisions remain aimless As society , we keep ourselves busy in reforms As Governments, we stumble from socio-economic crisis to resource crunch Limping to shape future, Identity crisis despair, no plans, neither vision nor perspectives

Power Sector
Historical Perspective

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Historical Perspective
Electricity (Supply) Act 1948 enacted after Independence to rationalize growth and control of electricity supply industry. Act provided for establishment of State Electricity Board. CEA set up at National level through this Act. Periodic & Systematic National Power Surveys conducted under section 3 (1) of Electricity Act, 1948 3% profit was recommended in Electricity (Supply) Act 1948 Free Electricity and Subsidies were main Features

Growth Process
Creation of SEBs which was vertically integrated utilities looking after Generation, Transmission and Distribution CEA was created as part time body in 1951 got full status in 1975 CWC was to look after water planning CWPC was created and decided to put up Thermal and Hydro power units in Central Sector CWPC got disintegrated Thermal Projects had been handed over to CEA and Hydro Projects to CWC NTPC and NHPC were created to put Thermal and Hydro power in central sector in 1975

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Growth ProcessContd.
Hydro Projects under CWC got transferred to NHPC and Thermal Plant Badarpur was handed over to NTPC for management on Contract basis Tehari Project Started by UP irrigation with an project cost of Rs450 Crores NEEPCO got created to look after needs of Seven sisters i.e. Assam, Meghalalaya, Tripura, Manipur, Arunachal Pradesh, Nagaland and Mizorum and now 8th is Sikkim NPTC now known as PGCIL got created to look after transmissions In Himachal Pradesh NJPC was created as Joint Venture of State and central government now SJVN Tehari Project taken over by THDC started by UP irrigation

Growth was not sustaining because of non realization of dues


The main culprit was free electricity the subsidy which was not supported from state budget

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Effects of Subsidies
Positive Effect Providing minimum consumption entitlement to the poor Subsidies can correct for the under-consumption of goods with positive externalities Subsidies can make the necessary correction to under Consumption Negative Effect Subsidies make the beneficiaries lethargic. Subsidies lead to misallocation of resources. Malpractices have often been noticed in the administration of subsidies. Subsidies are often misused by politicians.

Power Sector Reform


Overview, Learning and Challenges

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Electricity Services Historical Perspective


State-owned monopolies in many developed countries of Europe and in most developing countries of the world till 1980s It was considered that monopolies were best suited to deliver electricity services Monopolies enjoyed economies of scale and scope In India too Vertically integrated entity that generated, transmitted and distributed power, under the respective State Ministries of Power known as SEBs till 1991 when reform process started State-owned integrated electric utilities reflected the internationally common view that electricity sector was a natural monopoly with the exception of US and Japan

Power SectorSector- Pre 1991


Low PLF of SEBs Huge Mismatch between Electricity Distributed and Billed High T&D Losses SEBs were blamed for inefficiency Electricity was perceived as Right Financing new Project was real problem Poor Consumer Grievance Handling System

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Need of Reform
GOI was having difficulty in funding new Power Projects Word Bank was having capability to fund one fifth of demand of developing countries Only solution was left Private Sector Participation

Need of Reform Indian scenario


i. The ever-widening gap between the demand and availability of electricity ii. The poor technical and financial performance of the State Electricity Boards and iii. Inability of the Central and State Governments to finance and mobilize resources for generation capacity expansion projects, making third party investment in power sector imperative.

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GOI Reports
Unsatisfactory operational efficiencies, with the availability of thermal plants at less than 80 percent, losses (including theft of power) as high as 20 to 21 percent; High transmission and distribution losses substantially higher than normal technical standards, with a high component on non-technical losses, accounted for by poor/inadequate metering and high incidence of theft of energy; Poor billing and collection, because of incorrect reporting and billing, and inadequate collection efforts, tampering with meters and misreporting in collusion with consumers; Imbalance in the mix of generation sources and undesirable proliferation of captive generating units; and Unmanageable size and monolithic structure, making it unwieldy, inefficient and unresponsive to change as well manpower related problems; poor productivity, low skills and lack of training for up gradation, low motivation levels.

Reform Process in India


The GOI had announced a new policy for Power Sector by opening up electricity generation to private participation in October 1991 A high level committee visited USA, Europe and Japan in May-June 1992 to invite Foreign companies enumerating concessions and incentives being offered by the GOI to Power Sector business which has never been heard and very attractive Flooding of foreign companies in Power Sector business in India was obvious result

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Blame on SEBs
SEBs are having unacceptable low system efficiency Lower Technical Performance Poor Management of SEBs Lower commitment of employees Corruption charges

Private Sector An alternative


It will support the growth of Indian Economy Better System Efficiency Better Management Highly Committed Employees Corruption Free

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Policy Change
The first policy statement of October 19991, titled the Government of India Resolution Policy on Private Participation in Power Sector, achieved the following:
it allowed the private sector to set up thermal projects, hydroelectric projects, and wind/solar energy projects of any size. Generators were invited to submit unsolicited proposals to SEBs for the purpose; it allowed the private sector to supply and distribute energy in a specified area, (even without ownership of) a generating station; foreign ownership up to 100% was allowed; the contract between the generator and the SEB would be a long-term power purchase agreement (PPA) offering a guaranteed return on equity of 16%. Foreign investors would receive exchange rate protection up to the benchmark return and for servicing the costs of foreign debt.

Impact
MOU to setup more than 1,00,000 MW during 1992-2002 was signed Some big names e.g. ENRON, COGENTRIX, Hinduja Power etc. had emerged as new player Even some Indian Player like Spectrum, DLF Power etc came into the race Orrisa became the first SEB to be unbundled AES became first company to enter into distribution

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Worst Actions
In 1999 AES demanded three (3) times hike in electricity charges because its installation gots affected due to Cyclone Ongoing Projects of NTPC Like Simhadri, Yamunanagar, Manglore , Kakinada etc where Land acquisition activities, site leveling etc were handed over to IPPs/ MNCs Cost of Electricity proposed by ENRON was so high that no one was able to justify Hinduja Power has proposed 2.72 times higher cost than NTPC for plants which were adjacent to each other at Vishakhapatnam Over invoicing by Spectrum became a scandal

Reaction
SEBs Employees Federations Electricity Employees Federation of CITU & AITUC All India Power Engineers Federation Various Consumer Groups and NGOs Public Service International studying impact of Gobal Privatisation

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Different Voices
It is Government Policy which is responsible for dismal performance of SEBs not the Employees and management If SEBs are offered the same condition as IPPs then SEBs will perform better Consumers interest are not being protected

Actual Result
First phase was utter failure Around 5000 MW added against more than 1,00,000 MW committed thru MOU On the other hand state sector performed excellent during same period surpassing all previous records NTPC continued to perform better In 2000 (Late) Sh. Kumarmaglam initiated the idea of selling some best performing units of NTPC Electricity Bill 2001 draft was ready which was to be passed in 2001 Then NEFI also joined the protest Sh. Suresh Prabhu sensed the need to change in reform process

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2001 in Power Sector


Sh. Suresh Prabhu sensed the need to change in reform process NEFI organized a Seminar on 6th & 7th Feb 2001 and presented a Road Map for Power Sector Reform based on resolutions of seminar The views of all stakeholders were taken and Resolution of Seminar became one of the document to decide the direction of reform In 2001 the reform process got changed Even the electricity act 2001 was all set to come which later enacted in year 2003 with lot of amendments in draft EA2001

Year 2001 has got vital impact on world history leading to radical changes
Year 2001 became the year when shape of electricity industry also got changed

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Neither Public nor Private Sector can be seen as Panacea to Growth


Employees of any organization can not be blamed for Policy failure
Employees should always be seen, developed and harnessed as key driving force to Growth of organization

Transformation in Legal Framework


The Indian Electricity Act, 1910 The Electricity Supply Act, 1948 The Electricity Regulatory Commission Act, 1998 and The Electricity Act, 2003.

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Features of Indian Power Sector


Delicensed Generation except Hydro Open Access in Transmission Phased Open Access in Distribution Transparency & Competition in Procurement Power Trading Recognized as separate activity Obligation for States to Restructure Stringent Penalty for Theft

Different Laws to Support


Indian Electricity Act 2003 National Electricity Policy 2005 CERC Notification on Open Access 2005 Policy for Competitive Bidding 2006 Guidelines for Private Investment in Transmission 2006 New Environment Policy 2006

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Indian Power Sector


India Stands Fifth in largest power consuming Countries India is second largest in population India is 144th in per capita consumption Per capita consumption of 1000 kwh is planned to be achieved by 2012; Even with after achieving plan-2012 it will be 120th provided situation in other countries do not change

Plan 2012 2012: : Power to All


Per capita consumption of 1000 kwh; Installed capacity over 200,000 MW; Spinning reserve of 5% of total capacity; Minimum lifeline consumption of 1 unit per day per household; Inter-regional transmission capacity of 37000 MW; Energy efficiency/conservation about 15% Quality and reliable power supply.

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Plan 2012 : Power to All


Sufficient power to achieve GDP growth rate of 8% Reliable power Quality power Optimum power cost Commercial viability of power industry Power for all

Reality Check In 2013


Power for all still a dream Spinning Reserve: Still many miles to go Commercial Viability, Reliability and Optimum Cost of Power : Conflicting interest between Polity and Business orientation is yet to resolve To achieve 8% growth in GDP: itself in jeopardy

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Indian Power Sector has tremendous Growth Potential Indian Power Sector needs Growth Much faster than planned

The sector needs pool of committed work force in order to achieve this Growth

ULTRA MEGA POWER PROJECT

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UMPP : Reason
Government of India has envisaged capacity addition of 100,000 MW by 2012 to meet its mission of power to all. It needs huge capacity addition during 10th & 11th plan, which is not feasible from the ongoing and proposed new projects already identified. As such there is need to develop large capacity projects at the national level to meet the requirements of a number of states under the competitive bidding guidelines dispensation. This will give a thrust to development of projects through competitive bidding. Ultra Mega Power Projects are steps in that direction. The projects will substantially reduce power shortage in future.

UMPP : Concept
Development of Ultra Mega Power Projects (UMPPs) has been identified as a thrust area. These are very large sized projects, approximately 4000 MW each involving an estimated investment of about Rs. 16,000 crore. These projects will meet the power needs of a number of States/ distribution companies located in these States, Developed on a Build, Own, and Operate (BOO) basis. Identification of the project developer for these projects is being done on the basis of tariff based competitive bidding.

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UMPP: Role of Ministry of Power


Coal Block Allotment/ Coal Linkage Environment/ Forest clearances Required support from State Govt. Agencies Financial Institutions towards financial closure

UMPP: Criteria for selection of sites


Pit head location with domestic coal, Coastal location with imported coal, Coastal location with domestic/blended coal, Through a preliminary scrutiny by CEA of a number of potential sites identified in the country.

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UMPP: Features
The Ultra Mega Power Projects would use Super Critical Technology with a view to achieve higher levels of fuel efficiency, which results in saving of fuel and lower green-house gas emissions. Flexibility in unit size subject to adoption of specified minimum Supercritical parameters. Integrated power project with dedicated captive coal blocks for pithead projects. Coastal projects to use imported coal.

UMPP : TakeTake-off
PFC have been entrusted the job of Nodal agency for carrying out all activities Five Shell Companies have been created Executives from PFC, NTPC and CEA have been nominated to carry out the job of Shell company Government imitated talks with Financial institution for financing these projects Sasan, Akaltara, coastal Gujarat, Coastal Karnataka have been approved on 13.2.2006

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Role of Shell Company


Preparation of project report Land acquisition Allocation of fuel linkages/coal blocks Allocation of water by the state Government Appointment of consultants for EIA & Project Report Appointment of consultants for International Competitive Bidding (ICB) document preparation & evaluation. Various approvals and statutory clearances Off-take/sale of power section 63 of EA2003 provision Power Evacuation/ (Transmission) System Rating of Projects (suggested by FIs in the meeting on 06.01.06)

Payment security mechanism


Revolving Letter of Credit by distribution licensees; Escrow account establishing irrevocable claims of receivables of distribution utility; In a likely event of any default, direct supply to HT consumers or any other more credible distribution licensees as per the provisions of Electricity Act, 2003.

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UMPP : Tariff

UMPP : Commissioning Schedule


Mundra : 2012 (First unit commissioned on 10th Jan 2010 instead of september 2011) Sasan : First two units by April 2012 Krishnapatnam : September 2013 to October 2015 Talaiya : 2015

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UMPP
Such low tariffs may be attributed to the many unique characteristics of UMPP scheme, such as
Economies of scale resulting in lower capacity charges, Allocation of coal blocks for the UMPPs resulting in low energy charges, Increased transparency and competition.

Current Scenario
UMPP has not been successful Distribution reforms has not yielded result Generators are backing down because of no demand Load shedding by distributor because of inadequate supply

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New world order


Globalization World has reduced to a cluster of global villages Opening of Economy world wide Future and Option trading of Electricity

Power Sector is Back Bone of Economy

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Fuel Security is concern


Harnessing Renewable Energy is The solution

Coal Cost is serious concern


Regulator in Coal Supply is now necessity

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EXPECTATIONS
To Make available the Power at Affordable Rate i.e. to Common People 10% Rate of Growth in Power Sector supports roughly 6-7% Growth in GDP To be competitive in Global Market Cheap Electricity is essential Quality and uninterrupted Power Supply The aim should be 8-10% increase in KWH power given to consumer Rural Electrification Government Agenda Power on Demand by 2012

CONSTRAINTS
Electricity Being Used to attract Votes Regulator in Power Sector but no Regulator in Fuel Balance of Thermal, Hydro, and Nuclear Power to minimise cost of Electricity T&D Losses

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Electricity is Necessary, but not Sufficient for Human Development

Environmental concern is going to be key driver of future growth

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Countries should maximize the use of renewable sources


Only renewable source of Energy is going to support the sustainable development

The major guiding elements


Providing Basic Energy Needs Ensuring Energy Security Promoting Energy Efficiency and Conservation Promoting Indigenous Resources Adopting an Appropriate Pricing Policy Enhancing Energy Sector Management Capacity Consumer Protection and Ensuring a Level Playing Field Enhancing the Quality of Energy Services Protection from Adverse Environmental Impacts of Energy Facilities

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Challenges Ahead

Challenges
To Cater Huge Population Power to all by 2012 INDIAs per capita consumption is 733 Kwh is much lower than world average per capita consumption of 3000 Kwh World average consumption is going to be 1000 Kwh per person Majority of population has affordability problem

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Situation Demands Alternatives and Change in mindset


Renewable Source Energy Conservation

The real challenge before Power professionals is


To ensure availability of power to poorest of poor at an affordable rate

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World is changing with fast pace

Fierce Competition
Many time from very small players too

Every morning in Africa when a gazelle wakes up, it knows that it must run faster than the fastest lion ,or it will be killed.

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Every morning in Africa when a lion wakes up, it knows that it must run faster than the slowest gazelle ,or it will starve to death.

Perform or Perish

THE NEED OF THE HOUR TO CHANGE


Change by Choice Change by Force Purpose : Outperform Competitor

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Certainly we are wanting to do Wonders but finding ourselves in paradoxes. paradoxes .

Power Sector is struggling with paradoxes


Definitely searching right path

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Revisiting Turbulence
Introspection- Gap Analysis
Desire exists Opportunity exists Intention exists Concern exists Procedure exists Child is born - Vision missing - Capability missing - Initiative missing - Cooperation missing - Human face missing - Nurturance missing

Paradoxes
Struggling with confusion, Struggling with uncertainty, Struggling with conflict, Struggling with threats, Struggling with stagnation, Struggling with direction, Struggling with adhocism, Struggling with inconsistency, Struggling with irrationality, searching for clarity searching for direction searching for collaboration searching for opportunity searching for growth searching for leadership searching for order searching for continuity searching for rationality

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Change of Paradigm
In the past we Talked more about Availability of Systems Now we talk about Efficiency and Effectiveness Earlier monitoring focused on Dissection of Failure Now evolves around Analysis of Success Earlier concern was around Sanction and Commencement Now focus on Cost , Quality and Time Earlier Customer was no one and grossly neglected Now the focus is around Customer

Being ignorant is not so much a shame as being unwilling to learn to do things right way. way. -Benjamin Franklin

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THANK YOU

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