Professional Documents
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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
210936.72
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%age Contribution
Thermal 66.83 Hydro 18.64
Nuclear
2.27
Renewable
12.26
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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
still then
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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
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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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
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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.
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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
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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.
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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
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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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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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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
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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: 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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UMPP : Tariff
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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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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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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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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
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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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