Advantage Karnataka

S E C T O R P R O F I L E : P O W E R

Welcome to Karnataka - The Knowledge Hub of AsiaWelcome to Karnataka - The Knowledge Hub of Asia

GIM Brochure (Power) Size: A3 Open Dt: 31/5/10

“Karnataka’s capital Bangalore is a brand the world identifies India with. It is also the single biggest reason why India has become such a hot investment destination.”

Manmohan Singh Prime Minister of India

MESSAGE

Welcome to Karnataka, the Knowledge Hub of Asia. It gives me immense pleasure and pride to

showcase Karnataka’s potential at the Global Investors Meet 2010. The State’s entrepreneurial spirit in

innovations and R&D has given us recognition world over. Our rich natural resources, proactive

Government policies, talented workforce and a strong economy have propelled the State to become a

preferred investment destination.

I have a dream, a vision for this one State with many opportunities. Vision 2020 for Karnataka seeks to

propel a holistic growth by promoting equitable development of sectors and districts, by providing

employment to all sections of people and regions of the State. It will also focus on ensuring excellent

infrastructure, quality education, decent living conditions and life security for all our citizens. This vision,

combined with our passion for excellence will drive the economy to greater heights.

Karnataka is a State of action. We have witnessed rapid and unparalleled growth across our

knowledge-based sectors. Each of our 30 districts is unique in its own right, offering investment

potential like no other State in the country. Over 700 MNCs are already reaping the advantages of

making Karnataka their home. One new global company moves into our State every week and a new

industrial unit is approved every day. Supported by rich natural resources and progressive policies, the

State presents its investors with the right blend of strengths and opportunities.

We would like to assure all investors that the State Government would extend the fullest cooperation

and support for the timely implementation of their projects.

I would like to congratulate the investors for choosing our State and wish them grand success

in their ventures.

With best wishes,

B. S. Yeddyurappa

Chief Minister of Karnataka

SRI B. S. YEDDYURAPPAHon'ble Chief Minister

C O N T E N T S

KARNATAKA: LAND OF PLENTY

Snapshot 06

Economic growth 07 Agriculture 07

Manufacturing 08

Services 08

Karnataka’s contribution to India’s economy 08

Infrastructure and resources 09

Skilled manpower 11

Karnataka Policies: Calling investors 12

FUELLING GROWTH

The global scenario 14

The Indian scenario 15

Advantage Karnataka 16

Transmission 18

Distribution 18

Skilled manpower 19

POLICY AND INVESTMENT

Suvarna Karnataka Development Corridor Initiative 22

Innovative schemes 26

Karnataka Industrial Policy 2009-14 29

Strengths and opportunities 33

Powered by success 34

Shelf of Projects 35

LAND BANK 36

APPENDIX

Contact us 37 Websites 37

References 37


Karnataka: Land of Plenty

0706


0

10000

20000

30000

40000

50000

60000

2009-102008-092007-082006-072005-06

Per Capita Income (Rs.) at Current Prices

Source: CSO Directorate of Economics and Statistics, Bangalore

Karnataka

India

3282529678

3632733684

4190237969

4673142749

50974

‘Industrialise or perish’– Sir M Visvesvaraya,

Karnataka’s world-famous engineer

Industrial Revolution alone can spur economic growth of India.

This, in turn, will impact literacy rate, lifestyle and income

levels for our future generatrion. The Government of

Karnataka, therefore, has organised the Global Investors Meet

in Bangalore on June 3-4, 2010, showcasing the investment

opportunities in the State.

Karnataka is one of India’s fastest-growing States, with a vast and

diversified industrial base. Apart from nurturing the globally

recognised Silicon Valley of India – Bangalore – the State has

emerged a prized destination for not only Information

Technology, but also Aerospace, Biotechnology, Heavy Construction

Machinery and Equipment, Sericulture and Floriculture.

Capital Bangalore

Area 191,791 sq. km.

Population (Census 2001) 52,850,562

Population density (per sq. km.) 276

Per capita income Rs. 40,309

Percentage of urban population 35%

Literacy rate 66.6%

Number of districts 30

Number of towns 270

Number of villages 27,028

Prominent cities Ankola, Bangalore, Bagalkot, Belgaum, Bidar, Bijapur, Chikmagalur, Chitradurga, Dandeli, Hubli-Dharwad, Davangere, Gadad-Betageri, Gulbarga, Harihar, Kolar, Mandya, Mangalore, Mysore, Raichur, Shimoga, Tumkur and Udupi

Prominent airports Bangalore, Mangalore

Prominent ports New Mangalore, Karwar

Karnataka: Snapshot

Gold and Renewable Energy. The entrepreneurs here have

already ventured into these sectors, the result of which has seen

the emergence of Karnataka as the ‘Knowledge Hub of Asia’.

Further, salubrious climate, vast natural resources, proactive and

growth-intensive Government policies lend the State an edge.

• Eighth-largest State in the Union of India.• Located in the South-Western part of the country; shoreline along the Arabian Sea.• Situated on the convergence of the Western and Eastern Ghat ranges, between 74° E and 78° E longitudes, and 11° N and 18° N latitudes. • Area: 191,976 km2.• 5.8% of India’s land area and is home to 5.1% of the population (around 52 million). • Borders Goa (N-W), Maharashtra (North), Andhra Pradesh (East), Tamil Nadu (S-E) and Kerala (S-W).

Economic growth • One of India’s fastest-growing States, Karnataka has a strong industrial base and a vibrant service sector. • Software is State’s star performer; software exports form 35% plus of country’s software exports.• Secondary sector contributes more than a quarter of GSDP• State contributes 5% of national income. • Since 2003-04, the State growth has pushed the levels of per capita income higher than the national average.

Agriculture • Sustains about 63% of the population.• The State is pushing to diversify agricultural activity; horticulture and agro-processing are important activities being encouraged by State Government.• Karnataka is one of the country’s largest producers of fruits and vegetables and No. 2 in floriculture.• Karnataka is the second-largest producer of milk in India.• The State has the largest sericulture in the country.

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• Second in area and third in production of plantation crops in the country. • Second-largest producer of tobacco in the country. • Largest producer of spices, aromatic and medicinal crops. • Fourth among States in foreign technology transfer approvals. • Third-highest FDI inflows among States in India with 6.5% of all FDI inflows into the country. • Capital Bangalore is the world’s fourth-largest technology cluster. • Popular tourist destination, has second-largest number of protected monuments in India.

Infrastructure and resourcesIt’s the goal of State to double investment from the present 4.5% of GSDP in infrastructure to meet the needs of a fast growing economy. Private sector partnership actively sought by an investor-friendly Government – more than 88 projects worthRs. 87,000 crore are in various stages of implementation.

Power

Karnataka’s three areas of concentration are: Energy Sufficiency;

Energy Efficiency; Green and Clean Power. The first hydel power

station in India was set up in Sivasamudram in 1902 and the

longest transmission line at the then highest voltage in the world,

was constructed to meet the needs of Kolar Gold Fields. With a

transmission network of 36,542 CKMs and 1205 stations, the

State distributes power to 1.7 crore consumers. As the demand

for power rises with the groth of the economy, Karnataka intends

to meet the projected demand and make the State power-surplus

by 2014 through a rapid expansion of power schemes.

Manufacturing • It is well-diversified. • Main industries are engineering, chemicals, electrical, automobilie, textile, aeronautics and food processing.• Industrial growth up from 6.2% in the Nineties to 8.9% per annum since 2000.

Services • The engine of growth in the State.• Bangalore, the State Capital, the powerhouse of IT in the country.• State was the first in India to set up a Software Technology Park in 1991. • Karnataka is the first State to bring the private sector into higher education.• State has the highest number of medical colleges in the country and is a hub of medical tourism.• Karnataka leads in biotechnology and nanotechnology.

The Karnataka Government’s Vision 2020 seeks to remove the sectoral and regional disparities by encouraging diversified economic activity in all regions of the State, and by raising upgrading skills in the labour force through vocational training.

State’s contribution to India’s economy• No. 1 Investment Destination. • One of India’s most progressive states.• Contributes 8% to India’s industrial income. • Contributes 9.8% of India’s product exports. • More than a third of India’s software exports from State. • State has the second-largest iron ore reserves in India. • More than half of India’s biotech companies in State. • State’s Hutti mines are the only primary-gold producing source in the country. • Third-largest producer of steel in the country. • Seventh-largest producer of cement in the country, 6.5 % of India’s production. • Third-largest producer of fruits and fifth-largest producer of vegetables in the country, produces 12% of fruits and 8% of vegetables grown in India. • Contributes 70% of India’s coffee production. • Largest area under horticulture, third-largest production in the country.

Karnataka: Third Highest FDI Inflows(in USD million)

Source: DIPP (inflow from April 2000 to February 2010)

5369.62

6397.63

6850.95

22101.96

38476.33

Sectoral Composition Of Income

Source: CSO

1993-1994

2008-2009

38%

56%

25%

28%

36%

16%

Share Of Employment

Source: NSSO

1993-1994

2006-2007

23%

26.3%

10.6%

17.9%

66%

55.9%

Status of Infrastructure Projects (as on May 2010)

Sector Number Value of Projects (Rs. Cr)

Transport logistics 52 35,432Urban and Municipal Infrastructure 6 253Tourism 8 1,224Energy 4 8,400

Industrial Infrastructure 10 41,231

Agri-Infrastructure 8 854

Total 88 87,394

Source: IDD, Govt. of Karnataka

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Water • Seven river systems – Krishna, Godavari, Cauvery and their

tributaries, North Pennar, South Pennar, Palar and the West flowing rivers in the Western Ghats: Kali, Gangavali (Bedthi), Aganashini, Sharavathy & Netravati.

• River systems together yield on an average 3475 TMC.• About 50% of this water is available to the State. • Hydel constitutes one-third power generation of the State.

Mineral resources• Geological setting for the State from Precambrian to recent

formations provide 40,000 sq.km. of green stone belts. • Minerals found: Gold, silver, copper, iron, manganese, limestone,

dolomite, chromite, magnesite, granite etc.• 174 mining leases have been issued by the Government for

iron ore covering 18,670 hectares.• A progressive State with a forward-looking mineral policy since

2000, which was later revamped in 2008. • Policy emphasis on modern technology, transparency in

granting mineral concessions, emphasis on value addition, sustainable development in eco-sensitive areas, like the Western Ghats.

Skilled manpower• Third-largest pool of engineering graduates; Karnataka’s share

of engineering degree and diploma holders is 10% in the country after Andhra Pradesh and Maharashtra.

• Globally recognised higher-education centres. • Leading hub of research and development institutes.• Low-cost skilled manpower makes value-added manufacturing

almost 60% cheaper than in Western Europe and the USA.• Educational atmosphere in the State enhanced by institutes like

the only 100-year-old Indian Institute of Science (IISc) and the Indian Space Research Organisation (ISRO).

• With 1,162 ITIs, Karnataka has 15% or the largest number of such institutes in the country.

Karnataka is well connected with rest of the world; while the existing air, road, rail and sea connections already cater to high volumes of traffic in passengers and freight, they are in the process of expansion and upgradation.

Air traffic• International airports at Bangalore and Mangalore.• Bangalore International Airport Limited can handle 3,000

passengers per hour and is the first private airport in the country. • Airports at Hubli and Belgaum cater to North Karnataka.• Mysore airport has been upgraded for commercial traffic.• Hubli, Belgaum and Mangalore airports being upgraded. • Airports planned at Hassan, Shimoga, Bellary, Bijapur & Gulbarga.• Karwar and Bidar defence airports being opened for civil traffic.• A helipad each is planed for all 30 districts.

Shipping • Long shoreline of 300 km. • Major port in New Mangalore handled more than 36.02 MT.

traffic in 2007-08 or 7% of the country’s total traffic in major ports.• 10 minor ports in Karwar, Belekeri, Tadri, Honnavar, Bhatkal,

Kundapur, Hangarkatta, Malpe, Padubidri and Old Mangalore; handled 8,893.64 MT of cargo in 2007-08 or 4% of India’s traffic in minor ports.

• Tadadi and Haldipur ports set for expansion on PPP basis.

Roadways• More than 150,000 km road network in State.• Targetted to add another 10,000 km. • 96 projects, under various stages of implementation.• Monorail projects in Bangalore.

Railways• 3,300 km railway line across State.• Konkan Railway links Mangalore with Financial Capital of India,

Mumbai, and Northern States.• High-speed rail link to the Bangalore airport on the cards.• Two mono rail projects in State Capital to decongest city traffic.

Communication• 27.7 million wireless subscribers in the State, adds more than a

million new subscribers each year. • State possesses the fourth largest Internet subscriber base in

the country.• Mobile towers in the State will go up from 3,000 to 6,000

towers by September. • 3G services mean greater convergence between mobile and

Internet services in the future, ushering mobile TV, online gaming, video call, movie on demand, faster downloads and other services.

Karnataka Technical Skill Development

Number of institutions

Engineering Colleges 172

Medical, Dental, Ayurvedic and Unani Colleges

114

Polytechnics 273

Pharmacy Colleges 69

Industrial Training Institutes 1162

R&D Centres 103

Karnataka Non-Technical Skill Development

Number ofinstitutions

Universities 22

National Institutes 25

International Schools 13

Law Colleges 83

Foreign Language Training 9

Nursing Schools/ Colleges 350

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KARNATAKA POLICIES: CALLING INVESTORS

The Government has targeted a balanced regional growth by creating development corridors in the State, linking major industrial areas by national highways and rail links, and matching natural resource capabilities. Every part of the State is set to be supported with infrastructure projects to boost growth and employment.

Steel Zone: Bellary, Koppal, Bagalkot, Haveri, Gadag & RaichurCement Zone: Gulbarga, Bagalkot, Chitradurga, Belgaum & OthersFood Processing Zone: Bangalore Rural, Kolar, Belgaum, Gadag, Koppal, Shimoga, Bagalkot, Bijapur, Davangere, Mandya & DharwadIT/BT Zone: Mysore, Mangalore, Hubli-Dharwad, Belgaum, Shimoga, Gulbarga, Kolar & MandyaAutomobile Zone: Ramanagara, Shimoga, Dharwad & KolarReadymade Garments Zone: Bangalore Rural, Tumkur, Kolar, Mandya, Belgaum, Bidar, Dharwad & OthersSugar and Co-gen, Power Zone: Bidar, Belgaum, Bagalkot, Shimoga & MandyaPharmaceutical/BT Zone: Bangalore, Mysore & HassanPower Generation Zone: Raichur, Bellary, Bijapur & Chitradurga Media & Entertainment Zone: Bangalore Rural & Ramanagara

Karnataka State Government Policy 2009-14

Karnataka’s investor-friendly and responsive administration has worked towards easing administrative procedures and implementing policy measures for faster and smoother industrial growth. • An investor-friendly responsive administration includes the

Karnataka Udyog Mitra, set up more than a decade ago.KUM is a single contact point for all investors – from receiving a proposal to ensuring its implementation.

• The State-level Single Window Clearance Committee and the State High Level Clearance Committee facilitate clearance of proposals in a speedy manner.

• Karnataka State Industrial Policy 2009-14 enhance all such previous policies for a comprehensive, investor-friendly approach.

• Land Bank – More than 3,000 acres in each district acquired by the Karnataka Industries Areas Development Board (KIADB) for industrial development, ironing out difficulties in creating the basic infrastructure before operationalising production facilities.

• Suvarna Karnataka Development Corridor programme connects most of the Tier II cities through a network of highways, with cluster development in designated zones.

• Under the SKDC programme, 25 km on both sides of the corridor will be developed for industrial clusters, townships, satellite towns and sector-specific industrial zones.

• The planned four major industrial corridors, connected by eight-lane roads, are:

* Bidar-Bangalore via Chitradurga * Tumkur-Honnavar via Shimoga * Chitradurga-Mangalore via Shimoga-Udupi * Bangalore-Belgaum along National Highway 4 * Bidar-Gulbarga-Bellary-Hiriyur * Chitradurga-Hospet-Bagalkot-Bijapur• Sector-specific industrial zones and SEZs that match the natural

resources and capabilities of a region with the industry requirements.

• Special focus on skill development to enhance generation of technical manpower.

• Creation of world-class ready-to-use infrastructure through investments in power, roads, water, warehouse and logistic facilities, connectivity through rails and ports etc.

• The State Government’s packages of incentives and concessions for new industrial investments, include:

- 75% to 100% stamp duty exemption on land sale deeds and loan documents registration.

- Land-conversion fine reimbursement of 75% to 100% for converting agricultural land to industrial use.

- 100% exemption on entry tax on plant and machineries for 3 years during implementation of the project.

- 100% 5-year exemption on entry tax on raw materials, inputs, components etc. during operation period.

- 50% limited to Rs.1 crore subsidy for effluent treatment plants. - Interest-free loan to an extent of 50% of the value of fixed

assets at 25% of the assessed gross VAT for a period of 7 years extendable to 12 years.

- A State Policy for Special Economic Zones formulated as per Central SEZ Act 2005 & Rules 2006, with a view to provide a hassle-free environment for export production and to attract FDI. The objectives of this policy are to set up a single-point clearance to SEZ developers and units, to facilitate and expedite establishing of SEZs, to delegate the powers of the Labour Commissioner to the Development Commissioner of SEZs and to extend incentives as below:

• Exemption from State Taxes for all purchases from Domestic Tariff Area

• Exemption from Stamp Duty • Exemption from Electricity Duty • Capital subsidy for common effluent treatment plant

(maximum Rs. 1crore per SEZ)

Yadgir

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World Electricity Generation By Type

Source: Energy Information Administration, USA

Geothermal, Solar, Wind, Wood and Waste

Thermal

Nuclear

Hydroelectric

69%

19%

9%

3%

FUEL TOTAL THERMAL POWER HYDRO NUCLEAR MINI HYDEL TOTAL

COAL GAS OIL RENEWABLE BIOMASS,

WIND ETC

MW 100599 82,343 17,056 1,200 36,863 4,340 15,427 1,57,229

SHARE % 64.6 53.3 10.5 0.9 24.7 2.9 7.7

Source: Ministry of Power, Government of India

All-India Power Generation

Sector MW Share%

State 78,378 52.5Sector

Central 50,523 34Sector

Private 28,329 13.5Sector

Total 1,57,229 100

The Global Scenario

With electricity consumption rising in response to demands from the growing population and economic activity, provision of sufficient, reliable and cheap electricity is a priority for all developing countries. Choice of technology in generation of electricity therefore becomes an extremely critical input towards a sustainable growth and development model. Currently, almost 60% of the world electricity is generated by the conventional thermal source of coal-based plants, hydroelectric plants compose 19% and nuclear power 9%. Other sources - geothermal, solar, wind, wood and waste make up a small 3% of total electricity generated in the world.

However, technology in each country varies with local resource availability. For example, in the OECD countries, nuclear power makes up the second-most important source of electricity, contributing 22% to the total output. Developing countries rely more on hydel and thermal sources for power. Yet, in the OECD countries, geothermal, wind and solar sources, which together compose just 3% of the total, showed the highest growth in 2009, with output 18.6% higher than the previous year. With climate change negotiations working towards the use of less carbon-intensive technology, the world is changing towards cleaner, greener energy, and developing countries need to weigh in their costs and benefits effectively to fit into this new world.

The International Energy Authority’s report on the cost of electricity generation in 2009 reports that, when financing costs are low, nuclear energy followed by coal with carbon capture are the most competitive solutions. However, with higher financing costs, coal-fired generation followed by coal with carbon capture and gas-fired combined cycle turbines are the cheapest sources of electricity. Apart from interest rates, generation costs of renewables are heavily dependent on local resources and technological improvement. Where local conditions are favourable, hydro and wind are competitive generation technologies. Many renewable technologies are still in the nascent technology stage, though their capital costs can be expected to decline over the next decade.As the IEA notes, governments play a key role when it comes to the costs of raising financial capital and the price of carbon. The cost of capital is essentially a function of the risk faced by each option for generating electricity - market risk, technology risk, construction and regulatory risk. With their high capital costs, low-carbon technologies such as nuclear, renewables and carbon capture and storage are particularly vulnerable. Smart government action, however, can do much to reduce these risks.

The Indian Scenario

India has an installed generation capacity of 153694.09 megawatts of electricity, of which 65 % is accounted for by thermal power, the hydro sector contributes 24 % and rest comes from other sources of renewable energy such as solar, wind and biomass. The overall power generation in India has increased from 704.469 BU during 2007-08 to 723.794 during the year 2008-09.

• Thermal power generation improved by 5.57%.• Hydro power improved by 8.38%.• Nuclear power generation improved by 12.3%.

With demand surpassing supply, India has a deficit of 12% in the power sector, that is constraining economic growth by not allowing full utilisation of the country’s resources and potential.

Recognising the urgent need to raise power generation capacity the Government of India implimented the National Electricity Policy in 2005 with the objective of providing access to electricity to all the households in India and raising per capita availability of electricity to over 1000 units by 2012.

• Licence not required for generation and captive generation allowed.

• Private sector permitted to set up coal, gas or liquid based thermal projects, hydel projects and wind or solar projects of any size.

• Foreign equity participation upto 100% in the power sector allowed under the automatic route.

• Role of the Central Government is minimal and the State Government and State Electricity Boards (SEBs) have been empowered to negotiate directly with developers, facilitating speedy clearances for the investor.

• Ancillary sectors such as coal have been significantly deregulated.

Fuelling growth

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Progress in Power Sector 2007-08 to 2009-10

Units 2007-08 2008-09 2009-10A*

I. Installed capacity (cumulative)

Public sector

a) Hydel KPC Plants MW 3,407.35 3,637.35 3,637.35

b) Wind Energy MW 5 5 5

c) Thermal (KPC) MW 1,470 1,970 1,970

d) Diesel Plants MW 128 128 128

e) Solar PV Plant MW - - 6

Total MW 5,010 5,740 5,746

Private sector

a) Hydel MW 412 422 544

b) Wind MW 936 1,366 1,429

c) Co-generation & Biomass MW 421 618 629

Total - 1 MW 1,769 2,406 2,602

Total installed capacity MW 7,279 8,146 8,616

II. Electricity generation

a) Hydel KPC generation Mu 14,510 12,898 12,248

b) Thermal (KPC) Mu 10,875 11,717 13,363

c) Diesel (KPC) Mu 214 451 205

d) Private generation Mu 4,731 2,500 3,000

e) Wind (KPC) Mu 14 14 14*

Total - 2 Mu 30,344 27,580 29,161

III. Electricity imported from

a) Central projects Mu 10,992 11,600 10,495

b) Other states Mu 646 Nil Nil

Total - 3 Mu 11,638 11,600 10,495

IV. Pumpsets electrified (Cumulative) Lakh 17 18 18

V. Hamlets electrified Nos. 561 883 436

Source: KPC and KPTCL *Solar 2.95MW

ADVANTAGE KARNATAKA

Karnataka state has a long and enviable history in power genera-tion - Asia’s first major hydro-electric generating station was set up at Sivasamudram as early as 1902 for commercial operation, at a time when technology was still in its infancy, even in the advanced countries. The longest transmission line, at the highest voltage in the world, was constructed to meet the power needs of mining operations at Kolar Gold Fields.

At present, power sector generation in Karnataka is spear headed by the Karnataka Power Corporation Limited (KPCL). Karnataka Power Transmission Corporation Limited (KPTCL) is the sole transmission utility which handles power from the grid to the distribution level. Power is then distributed to the customers through five Distribution Companies namely, BESCOM, MESCOM, HESCOM, GESCOM & CESC, and one co-operative Society i.e. Hukkeri Rural Co-operative Society.

Karnataka has maintained its tradition of being at the forefront of technology and the Government of Karnataka has always emphasised development of renewable energy, with Karnataka Renewable Energy Development Corporation Ltd. (KREDL) as its nodal agency championing the green agenda in the energy sector.

In order to facilitate private investment in development of conventional energy resources, Power Company of Karnataka Ltd. (PCKL) was formed in the year 2007. PCKL facilitates the entry of private players in power projects in the state and also takes up energy trading on behalf of all distribution companies.

The main source of energy in Karnataka is thermal with the two main power plants at Raichur and Bellary. Hydel power projects on the rivers of Sharavathi, Kalinadi, Varahi, Ghataprabha, Almatti and Shivanasamudram form the second most important source, contributing 37% to total power generation in the state. The state has also been successful in harnessing wind energy, that makes up 6% of power generation. Kaiga Generating Station in Uttar Kannada district is one of India’s six atomic power plants; in operation since 2000, the plant has four units and in November 2009, approval was granted by National Power Corporation for expansion in the Second Phase that will generate 1400 MW of power when completed.

1918

Voltage wise Sub-stations & Transmission Lines

* End of March 2010

66 kV

110 kV

220 kV

400 kV

Voltage Level

400kV

220kV

110kV

66kV

Total

No. of Stations

4

82

310

508

904

Tariff wise Energy Consumption

HT IP Industrial Commercial Domestic

29%

36%

10%

5%

20%Tariff

Domestic

Commercial

Industrial

IP

HT

Total

Percentage ofenergy handled

20.65

5.00

9.75

35.55

29.5

100

Skilled manpower

Karnataka has a large pool of skilled human resources - with the third largest strength of engineering graduates, the state also has many reputed higher education centres and research institutes creating the capabilities required by the power industry.

One of the reasons why global companies approach India is for the highly skilled and low-cost manpower. India has a large pool of skilled engineers capable of matching international standards, with a capacity to generate more than a million graduates every year. Karnataka’s share of engineering degree and diploma holders is 10%, the third highest in the country after Andhra Pradesh and Maharashtra.

Visvesvaraya Technology University (VTU) in Belgaum is leading centre for engineering excellence, providing high-quality graduates. The 50-year-old National Institute of Technology Karnataka (NITK) at Suratkal is another house of technical knowledge. The educational atmosphere in the State is enhanced by the presence of Indian Institute of Science (IISc), the countries premier institution in research and post-graduation education in science and engineering in Bangalore.

There are currently three training centres approved or in the process of being approved by the Central Electricity Authority for training engineers and ITI graduates to meet the specialised needs of the power industry:

• Jindal Power’s JSW Energy Centre for Excellence at Toranagallu, Bellary.

• NPTI’s Power System Training Institute at Bangalore.• GMR Energy Limited’s GMR Training Centre at Panambur in

Mangalore is in the process of being granted approval.

JSW Energy Centre of Excellence (JSWECE) has been set up by JSW Energy Limited, the energy vertical of the dynamic US$ 8 billion JSW Group with the objective of training engineers in the gamut of O&M of thermal power plants, thereby providing skilled and competent manpower to meet the ever-growing demand for skilled engineers by power sector in the country.

Transmission:

The power requirements of the State are met through drawing power from the grid and is handled entirely by Karnataka power transmission corporation limited (KPTCL) which transmits this power from 400 KV and below up to 66 KV. Beyond 66 KV distribution companies handle the transmitted power and distribute to the consumers. KPTCL has the least transmission loss in the country.

Distribution:

Karnataka was one of the first States in the country to separate distribution from transmission and 4 distribution companies namely BESCOM, MESCOM, HESCOM & MESCOM were started and later CESC was started. The power transmitted to the distribution companies are distributed to 1.7 crore consumers across various categories.

The distribution companies have 346 number of 33 kV sub-stations, 2,09,573.48 km of HT lines, 4,57,491.96 km of LT lines and 3,56,504 distribution transformers. Over the years, Karnataka has built up an efficient and robust distribution in the state which is considered one of the best in the country.

Dabhol - Bangalore Pipeline

• Phase I - 2011-12 Length (Trunk line) - 730 km (30” diameter)• Spurline - 242 km (18” diameter)• Capacity - 14.31MMSCMD• CAPEX - 4058 crores• Phase II - 2012-13 Spurline - 417 km (8“/10”/18” diameter)• Capacity - 1.69 MMSCMD• CAPEX - Rs. 486 crore• Demand centres - Chikodi, Belgaum, Bijapur, Dharwad, Davangere, Tumkur, Bidadi, Bangalore


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• JSWECE provides technical training to power professionals, offering tailor-made programmes in power plant engineering.

• It is the first training institute established by a private power company in the country to develop the Real-Time PC-based Power Plant Simulator of 300 MW in the country.

• The 300 MW high fidelity dynamic emulated power plant simulator is the replica of the 300 MW units being commissioned by JSW Energy at Vijayanagar in Karnataka (4x300 MW) and Ratnagiri in Maharashtra (4x300 MW).

• JSWECE which offers advanced simulator training programmes to other power generating companies, has signed an MoU with M.S. Ramaiah Institute of Technology, Bangalore to run a one-year full time Post-Graduate Diploma in Power Plant Engineering for engineering graduates.

• The centre also runs an autonomous Post Diploma Certificate Course in Power Plant Engineering for Diploma graduates, and conducts short-term Industrial Certificate Programmes in Power Plant Engineering to give a power plant familiarization to engineering and diploma students.

Power Systems Training Institute (PSTI) has been conducting high-quality training courses in power systems since 1972. Set up as the Load Despatch Training Institute by the Central Electricity Authority at Bangalore in 1972, it conducted training courses on economic load despatch techniques. The institute was renamed Power Systems Training Institute in 1975 and the scope of training was enlarged to cover other facets of power systems. PSTI merged with the National Power Training Institute in 2002, an ISO 9001:2000 organisation under the Ministry of Power, Government of India.

• Conducts about 20 specialised courses for engineers from various state/central electricity organizations.

The Central Power Research Institute (CPRI), established by the Government of India in 1960, was re-organised into an autonomous society under Ministry of Power in 1978, as a National Level Laboratory for applied research in the field of power engineering and also to function as an independent authority for testing, evaluation and certification of electrical equipment and components. The head office and its largest unit- Central Research & Testing laboratory - is located in Bangalore.

• CPRI has built up expertise in the areas of transmission and distribution systems, power quality, energy metering, energy

auditing, transmission line tower design, conductor vibration studies, power systems instrumentation, transformer oil reclamation and testing, diagnostic, condition monitoring and estimation of remaining life of equipment, new materials for power system application, ultra high voltage testing, short circuit testing, high voltage testing and other related fields.

• The institute has a state-of-the-art seismic testing facility and a Real Time Digital Simulation facility.

• CPRI offers consultancy services in these areas, including specialized services on the performance, evaluation and certification of different kinds of power equipment, in its seven laboratories spread across India. CPRI also undertakes third party inspection as one of its regular functions for Indian utilities. CPRI has been functioning as an advisor cum consultant in the states of Andhra Pradesh, Karnataka and Kerala under the Accelerated Power Development & Reforms Programme of the Government of India during the pastsix years.

Apart from the engineering colleges and specialised training centres for the power industry, there are also excellent management schools, with IIM (Bangalore) leading the field, that provide training and skills for various complementary fields of finance, logisitics, human resources, marketing etc.

Karnataka also has the largest number, 1162, of Industrial Training Institutes in India, making up 15% of the country’s total. These institutes provide a valuable resource in skilled technicians.

Under the Government of India’s Skill Development Initiative, the Modular Employable Skills Scheme has been initiated in Karnataka. In 2009-10, 340 modules were developed in 32 professions for training of unorganised laborers, with priority given to automobile, construction of building, hospitality and electronic fields under this scheme, the government plans to train ten million persons, by providing training in the ITI's/ITC's and at any other location having facilities. More than 400 centres in the state have registered as vocational training providers under this programme to impart training through courses in auto repair, electronics, fabrication, process instrumentation, plastics, information and communication technology, material management, soft skills etc.

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Investments in Power Sector in Karnataka(Rs. crore)

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Policy and Investment

Suvarna Karnataka Development Corridor Initiative

The Karnataka Government has targeted balanced regional development by creating development corridors in the state, linking major industrial areas by national highways and rail links and matching natural resource capabilities to sector specific development. Every part of Karnataka is set to be supported with infrastructure projects to boost growth and employment. Under the Suvarna Karnataka Development Corridor (SKDC) programme, an extent of 25 Kms on both sides of the corridor will be developed by establishing industrial clusters, townships, satellite towns and sector specific industrial zones.

Four major industrial corridors connected through eight-lane roads:

1. Bidar - Bangalore via Chitradurga2. Tumkur - Honnavar via Shimoga3. Chitradurga - Mangalore via Shimoga - Udupi4. Bangalore - Belgaum via Davanagere - Hubli

Additional corridors will cover Bidar, Bijapur and other potential locations.

Karnataka Industrial Areas Development Board (KIADB) is the nodal agency for this project and has already identified the land requirements, working towards the execution of projects through the PPP mode. Sector specific industrial zones are planned on the PPP model across the state in synergy with local natural resources with the aim of optimising value addition.

The State’s Power Generation zones are Raichur, Bellary, Bijapur and Chitradurga districts.

Investments in the power sector have risen from Rs. 732 crore in 2001- 02 to Rs. 4,105 crore in 2008 - 09, yet only 71% of the demand is being met by the existing power sector in the state. Economic activity has increased at a much faster clip than the power generation, there is an urgent need to tap all possible sources of energy and meet the growing demand in the state.

Public sector enterprises dominate the Sector in the State:• Karnataka Power Corporation Ltd (KPCL)• Power Company of Karnataka Limited (PCKL)• Karnataka Renewable Energy Development Limited (KREDL)• Karnatak Power Transmission Corporation Limited (KPTCL)• Bangalore Electricity Supply Company (BESCOM)• Mangalore Electricity Supply Company (MESCOM)• Chamundeshwari Electricity Supply Company (CESCOM)• Hubli Electricity Supply Company (HESCOM)• Gulbarga Electricity Supply Company (GESCOM)

On-going projects planned by KPCL, PCKL, KREDL and IPPs are going to culminate after 2013-14. If these projects get completed in time, then the energy sufficiency will be achieved only in 2013-14 with a capacity addition of 23,523 MW in the next four years.

The installed capacity in the public sector was likely to be6,014 MW by the end of the last fiscal contributed by 3,652 MW of hydel power, 2,220 MW of thermal power, 128 MW of diesel power, 5 MW of wind power and 9 MW from solar PV plants. There is more to be achieved, given that the State has a hydel potential of 7,750 MW.

Non-conventional energy sources are also being tapped for optimal power generation in the State, an additional 4,200 MW is planned through these sources.

Installed Capacity & Proposed Targets for RE Generation in Karnataka, 2009 -14

Renewable Energy Source Potential Installed Capacity Addition (MW) Capacity by 2014 (MW) (MW) Target Cumulative

Wind Power 2,950 1,368 2,269 3,637

Mini and Small Hydro 3,000 416 500 916

Cogeneration in 500 535 281 816Sugar Industry

Biomass/Bio-gas 1,000 81 1,000 1,081

Waste to Energy 135 -- 50 50

Solar PV/ CSP/ Thermal 50 -- 100 100

Total 18,500 2,400 4,200 6,600

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Since 2008-09 a number of initiatives were taken up by the government to address the severe power shortage resulting from inadequate monsoons.

• Renovation and modernisation Unit IV of Nagazari Hydro power house which has started producing 15 MW.

• Agreement with NTPC was signed to put up 4000 MW Ultra mega power project at Kudgi in Bijapur district and land acquisition process initiated.

• MOU was signed with Chattisgarh State for putting up a1,600 MW plant at the pit-head in Jangir, Champa District. Engineering and construction major Larsen & Toubro (L&T) plans to set up a 1,600 MW power plant in Karnataka and has bid under the PPP model along with KPCL for a coal-based power plant involving an investment of Rs. 10,000 crore.

• Work started on 400 MW hydro electric plant at Gundia.• KPCL in JV with BHEL started work for 2,400 MW Coal based

power plant at Yermarus, Edlapur and Raichur districts.• 3 MW Solar power projects each at Kolar, Belgaum and

Raichur were undertaken by KPCL.• Commissioning of 500 MW of Bellary Thermal Power Station

(BTPS) unit-I.• 230 MW of Varahi Hydro Electric Power Plant Commissioned.• Power Company of Karnataka Limited got the approval for

setting up a 1320 MW plant through private investors in Gulbarga and process of land acquisition has began.

• Government land was allotted in Ghataprabha of Belgaum District for establishing 1320 MW power plant through Private Investment.

• PCKL invited bids for procurement of 2000 MW of power on long term basis through competitive bidding route (Case-I) under merchant Power Plants.

• PCKL also invited bids for 5 MW power plants at taluk level for decentralised power production in each taluk.

• The State Cabinet also cleared gas-based project at Belgaum, Kudgi and Davangere of 700 MW each.

• Wind power project of 500 MW also put up by NTPC in collaboration with KPCL under joint venture.

• Power was purchased from IPP’s and through energy exchange.• All the distribution companies went for scheduled power

supply of three-phase and single-phase (in rural areas) for6 hours each during this period.

• From non-conventional energy sources, 422 MW capacity was also added.

The state’s proactive investor-friendly policies have attracted many investors in the recent past as well:

• Two gas pipeline projects of Relogistics Infrastructure and Gas Authority of India Ltd have got in-principle approval from the Karnataka State Government.

• Reliance (Relogistics) will lay 455 km of gas pipeline through Chennai-Bangalore-Mangalore at a cost of Rs. 6,796 crore, GAIL will lay 746 kms of gas pipeline from Dhabol to Belgaum and Bangalore at a cost of Rs. 4,544 crore. These pipelines are expected to help the industries as well as the State's proposed gas-based power plants along the pipeline route.

• Oil refinery project at Rs. 8,655 crore in Dakshina Kannada is mooted by Mangalore Refinery and Petrochemicals Ltd,

• Solar energy producer Azure Power plans to start a solar plant each in Kolar and Bagalkot and add 12 MW to the grid in 18 months. Azure would invest between Rs. 200 crore and Rs. 225 crore in both the plants.

• Shree Renuka Infra Projects has been given approval to set up a thermal power plant at an investment of Rs. 5,500 crore.

• Bharat Heavy Electricals has been contracted by KPCL to set up an eco-friendly grid-interactive solar power plant of 3MW capacity, on turnkey basis. The company will invest Rs. 420 million in the solar photovoltaic power plant at Yapalaniddi village in Raichur district. The scope of work in the contract envisages engineering, manufacture, supply, erection and commissioning of the equipment, besides operation and maintenance of the plant for three years thereafter. The plant will be completed in a schedule of eight months.

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Innovative Schemes for Energy:

Wind Energy: Karnataka, one of the first states to undertake wind power projects, stands fourth in the country in wind energy generation. Of the 30 districts in the state, 8 districts – Chitradurga, Davanagere, Bellary, Gadag, Koppal, Belgaum, Hassan and Tumkur - have excellent wind energy potential.While the installed wind power as of September 2009 was about 1421 MW with different ratings of wind turbine generators ranging from 225 KW to 1650 KW capacities, plans have been made to establish wind power capacity addition of 800-1000 MW annually till 2014. The wind energy potential of the state has been assessed to an extent of 13236 MW by considering wind borne of 2% of the geographical area of the state

Mini Hydel: Hydro power plants with an installed capacity of upto 25 MW are considered to be Small Hydro Plants and the Government of Karnataka is encouraging private participation in a bid to harness the small hydro potential available across the State. The hydro power projects are built downstream of dams, across rivers, streams, canals etc. While the installed capacity till date is about 474.27 MW, potential for small hydro energy has been assessed to an extent of 2500 MW in the State. The Government has made power allocation for 2063.35 MW of small hydro projects so far and has identified a number of small hydro projects with different capacity amounting to total of 100 mega watt for development on Public Private Participation (PPP) basis. The projects to be developed in this mode shall be in the joint name of the Government and the developer. All technical assistance for developing the project and also obtaining statutory clearances will be facilitated by the Government for the developer. In turn the developer has to pay a royalty for the energy generated through these projects. The PPP could be on Build Own Transfer (BOT)/ Build Own Operate & Transfer (BOOT) basis.

Solar Energy: The region of the earth between the latitude of 40° North and 40° South is generally known as the solar belt and this region is covered by an abundant amount of solar radiation. Karnataka’s location between 11O 40’ and 18O 27’ N latitude is ideally suited for harvesting solar energy. While Karnataka receives global solar radiation in the range of 3.8-6.4 KWh/sq.m., the coastal parts of the state receive higher global solar radiation, with good potential for solar energy plants.

Karnataka receives global solar radiation in the range of 5.1-6.4 kWh/sq.m during summer,3.5-5.3 kWh/sq.m during monsoon, and 3.8-5.9 kWh/sq.m during winter. Maximum global solar radiation is received in districts such as Uttara Kannada, Dakshina Kannada etc. Global solar radiation in Uttara Kannada during summer, monsoon and winter are 6.31, 4.16 and 5.48 KWh/sq.m. respectively. Similarly, Dakshina Kannada has 6.16, 3.89 and 5.21 KWh/sq.m. during summer, monsoon and winter, whereas Mandya district has minimum global solar radiation of 5.41, 3.45, 3.73 KWh/sq.m. during summer, monsoon and winter.

State’s solar potential can be summarised as: • Solar Energy Availability: 4-7 kWh per square metre.• Sunny for more than 300-330 days per year.• Proposed solar potential estimated at about 10,000 MW.• Investment needs of Rs. 15 crore per MW; total investment

requirement for 10,000 MW is of about Rs. 150,000 crore.• Given that 5 acres required to generate 1MW of power, there

is a need of 50,000 acres for 10,000 MW.

Solar power will be the dominating source of energy in the future and Karnataka has a tremendous potential. The field has seen tremendous innovations globally that the State has yet to experience. With cost reduction in harnessing the sun for power, the State can hope to reap high profits.

KREDL has made a humble beginning in the solar sector and entered into an agreement with investors for generation of 65 MW as against the proposal received for 100 MW. The Solar sector has a distinct future of reaching the common man and as well as producing power in a large scale.

KREDL has planned to develop the solar sector on a broad principle by categorising it in three different concepts viz Unorganised sector, Organised sector and the Investor sector. The organised sector caters to the needs of remote villages by installing solar roof tops. In the organised sector the concept of a “Solar City” is being outlined and is proposed in cities like Hubli - Dharwad, Mysore and Shimoga - Bhadravathi in the first phase. Subsequent phases will include Mangalore and Belgaum.

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R-APDRP: The Government of India’s Restructured Accelerated Power Development and Reform Programme (R-APDRP) aims at ushering in a revival of the power distribution sector by bringing down the overall Aggregate Technical and Commercial (AT&C) losses in the country to 15% from over 30 % at present. State governments are granted resources for the implementation of this programme. The scheme has two parts.

a) R-APDRP Part-I: Initiatives limited to towns with a minimum population of 30,000 as per 2001 Census. Karnataka is the first State to have been sanctioned a Central Government loan of Rs. 388 crore which will be converted to a grant if the work is completed within the 3 years period. The Central Government has been requested to reduce the population criteria from 30,000 to 25,000 as per 2001 Census which would enable 25 more towns to be included in the scheme.

b) R-APDRP Part-II: System improvement to strengthen regular distribution. It is expected that Karnataka would get a grant of Rs.1,200 crore, which would be used over the next 4 years to bring the ATC losses below 15%.

Smart Grid: Always on the frontier of technology, Karnataka is utilising its IT-advantage and high potential in resources for renewable energy to tap into the latest technology and set up Smart Grids in the State. A Smart Grid is an automated, widely distributed energy delivery network, characterised by a two-way flow of electricity and information and is capable of monitoring everything from power plants to customer preferences to individual appliances. It incorporates into the grid the benefits of distributed computing and communications to deliver real-time information and enable the near-instantaneous balance of supply and demand at the device level.

Karnataka has planned a smart grid pilot project to be implemented in Bangalore's IT hub, Electronics City under the public-private partnership model. At a cost of Rs. 100 crore, the project is expected to get implemented in less than two years and the state plans to set up similar smart grids across the state. The grid would cater to 2,000 customers in Electronic City. The two-way communication nodes will be placed in each installation, including houses and commercial buildings, and transformers to help control power consumption. This will be India’s first Smart Grid, an innovative scheme being propelled forward by a government that is determined to address the issue of power shortage in the most efficient manner.

Karnataka Industrial Policy 2009-14

Karnataka’s investor friendly and responsive administration has worked towards easing administrative procedures and implementing policy measures geared for faster and smoother industrial growth in the state.

The Karnataka State Government has always provided an investor-friendly responsive administration. The Karnataka Udyog Mitra works as single-contact point for all investors - from receiving a proposal to ensuring its implementation KUM is actively working with the investors at all stages. The State Level Single Window Clearance Committee and the State High Level Clearance Committee (for investments greater than Rs. 50 crore) have been working to clear proposals in a speedy manner.

While the State Industrial Policy 2006-11 was a comprehensive, investor friendly policy, the government initiated a new Karnataka State Industrial Policy 2009-14, with various improvements over the previous policy. They include:

• One main policy measure, intended to smooth the path for investors is an exclusive land acquisition policy and development of a Land Bank - each district to have 1000-2000 acres acquired by the Karnataka Industries Development Board for industrial development. This eases the difficulties faced by investors in creating the basic infrastructure before operationalising the production facilities.

• Suvarna Karnataka Development Corridor connecting cities in all districts through a network of highways, with cluster development in designated zones

• Sector Specific Industrial Zones and SEZs that match the natural resources and capabilities of a region with the industry requirements

• Special focus on skill development to enhance generation of technical manpower

• Creation of World-Class ready to use Infrastructure through investments in power, roads, water, warehouse and logistic facilities, connectivity through rails and ports etc.


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In accordance with the above policy, the Karnataka government has set up Power Generation Zone in Raichur, Bellary, and Bijapur and Chitradurga Districts and Sugar and Co-Gen Zone in Bidar, Belgaum, Bagalkot, Shimoga and Mandya Districts.

The government offers tax concessions to attract investment in desired sectors and the automotive industry has benefited from this policy. For all industrial investment, the state government has put together an attractive package of incentives and concessions, some of which are listed below.

• 75% to 100% stamp duty exemption on land sale deeds and loan documents registration.

• Refund of land conversion fine to an extent of 75% to 100% for converting agricultural land for industrial use.

• 100% exemption on entry of plant and machineries for a period of 3 years during the implementation of the project.

• 100% exemption on entry of raw materials, inputs, components etc for a period of 5 years during the operation period.

• Rs.100 lakhs subsidy for setting up of Effluent Treatment Plants.• Interest free loan to an extent of 50% of the value of fixed

assets and will be sanctioned at 25% of the assessed gross VAT for the initial period of 7 years to 12 years. Loan is repayable after 7 to 12 years in four to five annual installments.

Karnataka Renewable Energy Policy 2009, was formulated to undertake development of renewable sources with two goals:

• RE power Generation from 2400 MW to about 6600 MWby 2014.

• Energy Conservation & Energy efficiency 7900 MU (900 MW).

Highlights of the policy:

• Green Energy Cess of Rs. 0.05 (five paise) per kWh on commercial and industrial consumers to generate aboutRs. 55 crore annually.

• Akshaya Shakthi Nidhi (Green Energy Fund) to finance the Renewable Energy projects amounting to Rs. 500 crore. “Green Energy Cess” of Rs. 0.05 (five paise) per unit would be levied on the electricity supplied to commercial and industrial consumers. It is estimated to generate about Rs. 55 crore annually. Out of the Rs. 55 crores, 10% of this fund to the tune of Rs. 5 crore will be set apart as contribution to Energy Conservation Fund for Energy Conservation activities. The balance Rs. 50 crore will be set apart for Renewable Energy project financing.

• Akshaya Shakthi Nidhi Trust to raise project finance for Renewable Energy. Akshaya Shakthi Nidhi trust will be registered under the Trust Act. The duration of the trust will be 5 years. The object of the trust is to raise funds through bonds or schemes to make portfolio investments in the Renewable Energy sector.

• Consortium KREDL, Akshaya Shakthi Nidhi Trust and Energy department in collaboration with the Karnataka State Finance Corporation (KSFC).

• Land inventory of surplus and unused land, private land purchase under Section 109, Karnataka Land Reforms Act, Forest Land clearance within four months, land development by KREDL are all features of a policy to facilitate land acquisition for RE companies.

• 10% of barren government lands will be kept at the disposal of KREDL for setting up Renewable Energy power projects, 10% of SEZ land to be reserved for RE power projects.

• Solar Karnataka Programme for 25000 Solar Roof Tops of 5 to 10 kw with Net Metering will be taken up with a 250 MW potential during next 5 years with a generation potential of 350 MU.

Government support for harnessing solar energy include: • Entry Tax Exemption: Windmills and its parts and accessories

are exempted and for small hydro projects all electromechanical equipment and accessories are exempted.

• Electricity Tax: Electricity tax is exempted for a period of 5 years for captive consumption of power generated.

• Purchase Price for Power: KPTCL is purchasing power from RE projects at Rs. 3.40 per unit (Wind) without any annual escalation valid for the period of 10 years and for small hydro Rs 2.80 per unit.

• Third-Party Sale of the Power: Under the open access system, KPTCL allows the sale of power to a third party.

• PKCL is a Special Purpose Vehicle to facilitate private player investment; two bids have been floated and are in the process of being finalised.

• The Government of Karnataka has put in guidelines for competitive bidding on Route A and Route B as specified by the Ministry of Power, Government of India.

• Gas pipeline has great potential and will be ready by 2012, IL&FS have been chosen as consultants for this.

• Three gas-based projects have already been approved at Gadag, Belgaum and Davangere districts with a capacity of 700 MW each.


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• The Government has approved mini gas plants along the gas pipeline; the bidders are free to select location and technology.

• 19 bidders have qualified at RFQ stage with the Government acting as a facilitator.

• Solar plants of great potential in northern parts of Karnataka.• The wheeling and banking scheme in Karnataka is unique,

offering the grid for generators and consumers to match demand and supply.

• Government of Karnataka is encouraging the establishment of a 4,000 MW Super Thermal Power Plant through the MOU Route and a 1,320 MW Power Plant through the competitive bidding route.

• The will Government provide all support and act as a Facilitator. Coal-based power projects at Kudgi,Gulbarga and Ghataprabha are proposed.

• Deemed Industry Status: Renewable energy projects have

been proposed for, according to the industry status in the ensuing RE policy so that the required lands for development of the project can be acquired without hassels.

• Green Projects Status: Wind and small hydro projects have been accorded green projects status under, “The Water (Prevention and Control of Pollution) Act”, 1974 and The Air (“Prevention and Control of Pollution) Act”, 1981 respectively and can avail the benefits of CDM by registering the project with the UNFCCC under the Kyoto Protocol.

• Clean Development Mechanism (CDM): India being a developing country allows the promoters to trade the CERs among the developed nations. Thereby the indirect benefit obtained from the CDM reduces the cost of the project.

Karnataka’s Semiconductor Policy 2010 is one more step in the right direction of leveraging the State’s IT capabilities to tap clean, green energy sources.

Strengths and Opportunities

Karnataka has a long and enviable tradition in being at the forefront of technology, from setting up the first hydroelectric power station in Asia in 1902 to being the first to introduce Smart Grid technology in 2010. At the base of the value chain in power generation lies raw materials. Karnataka is rich in resources, it has seven river systems with their tributaries for hydel projects. More than a third of the power generation in the State comes from hydel sources and there is ample scope for utilising more water for energy needs.

With high potential for wind energy, Karnataka has been amongst the first to start wind power projects, the State ranks fourth in the country with respect to wind energy generation. Located in the high solar radiation belt, the State, especially in the coastal regions, also has extremely high potential for solar energy.

Power in the state is generated through all conventional methods - thermal, hydel, gas, the state has one of India’s six nuclear power stations. Further, with high potential for renewable energy development, the state has made impressive strides in co-gen and small hydro projects, wind and solar energy plants. However, the high growth in the economy has made strident demands on power and the energy shortage calls for higher investments in the power sector. While at one end stands the high unmet demand, at the other is the enabling environment created by the state government that has made power sector an attractive investment option in Karnataka.

The SEZ for Hi-tech Engineering Products & related services in New Mangalore Port spread over an area of 259.32 hectares set up by Suzlon Infrastructure provides a reckoning source of equipments for non-conventional energy related to windmills.

Project Land(Acres) Water(TMC)

Kudgi (4000 MW) 3500 5.2

Gulbarga (320 MW) 1500 2.06

Ghataprabha (320 MW) 1300 1.56


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The State’s expertise in skilled manpower is backed by high quality engineering colleges, power research institutes and excellent training institutes for technicians at every level. The engineering companies in the State include those manufacturing inputs for power plants, while the IT ecosystem is well suited to integrate with the power sector to set up the country’s first Smart Grid, raising efficiency in power networks.

The high interest shown by the private sector in investing in the power industry reflects on the strengths and opportunities present in abundance here. The partnership between the private sector and the proactive investor-friendly Government is slated to bring about energy sufficiency in Karnataka.

Powered by SuccessThree decades and the task of fulfilling the power needs of a State. That defines the Karnataka Power Corporation Limited (KPCL),a prime mover and catalyst behind power sector reforms in Karnataka. KPCL’s strength has been its resource management which has given it a high rating in project completion and commissioning within the implementation calendar. Through the decades, the PSU, constantly working at lowering the cost per MW, is known to raise the bar on the quality of deliverables. ‘Growth from within’ is the prime drive for KPCL, which today has an installed capacity of 5,510 MW of hydel, thermal and wind energy, with 4,000 MW in the pipeline. The 1,470 MW Raichur thermal station is ISO 14001-2004 certified for its environment protection measures.

Karnataka’s emphasis on using the latest technology shows in its attracting investments that are revolutionary in their field. For instance, General Electric has a long relation with the State going right back to 1902 when it set up Asia’s first hydroelectric plant at Sivasamudram. In 1999, it set up the John F. Welch Technology Centre in Bangalore, India, a multi-disciplinary research and development centre. The centre collaborates with GE’s three other R&D facilities that form the GE Global Research team (the Research Centre in Schenectady, New York; Munich, Germany; and Shanghai, China) to conduct research, development and engineering activities for all of GE’s diverse businesses worldwide.

The Bangalore-based Udupi Power Corporation Ltd is an imported coal-based thermal power project, in the process of being set up at a cost of Rs 43,420 million through a mix of debt and equity from a consortium of 14 banks and financial institutions led by the Power Finance Corporation Ltd. This is the first Independent Power Project in the country to operate on imported coal and has been awarded a ‘mega project’ status. The project has obtained all clearances from the Central and the State Governments.

Shelf of Projects

Power Districts

Gas Based Power Projects Bijapur

Thermal Plants Raichur

Solar PV Power Plants Bellary

Generation from Extra Thermal Energy of Coke Plant Chitradurga

Sustainable Research Institute

Agro Waste Wind Farm

Technology Transfer for Geo Thermal Projects

Wind Turbine Manufacturing Unit

Geo Thermal Projects

Wave Energy Plants

Solar Thermal Power Plants

Captive Power Plants

Co-Generation Power Plants

Appendix

Websites

Karnataka Udyog Mitra http://www.kumbangalore.com/Karnataka Industries Area Development Board http://www.kiadb.in/IBEF http://ibef.org/industry/aviation.aspxGovernment of Karnataka http://www.karunadu.gov.in/informationdepartment/Pages/People-place.aspxGovernment of Karnataka Water Resources Department http://waterresources.kar.nic.in/index.aspKarnataka Power Transmission Corporation Ltd. http://www.kptcl.com/kptclhistory.htm Karnataka Renewable Energy Development Ltd. http://kredl.kar.nic.in/Index.aspVisvesvaraya Technological Institute http://www.vtu.ac.in/NITK, Suratkal http://www.nitk.ac.in/

References

Economic growth data from Central Statistical Organisation, Government of IndiaNewspapers quoted: Hindu, Planning Commission, Government of India, Eleventh Five Year Plan documents Govt. of Indiahttp://www.iea.org/stats/indicators.asp?COUNTRY_CODE=29Projected Costs of Generating Electricity – 2010 Edition, IEA, available at http://www.iea.org/Textbase/npsum/ElecCost2010SUM.pdfMinistry of power http://www.mangalorean.com/news.php?newstype=broadcast&broadcastid=157663http://www.jswel.net/about_jswece.htmlhttp://psti.kar.nic.in/PSTI-Introduction.htmhttp://www.powermin.nic.in/research/cpri.htmhttp://detkarnataka.com/ilp/jsp/homepage/training/schemes/mes.jsphttp://dget.nic.in/mes/index.htmhttp://www.business-standard.com/india/news/lt-plans-1600-mw-power-plant-in-karnataka/90171/onhttp://www.blonnet.com/2010/01/06/stories/2010010652211900.htmhttp://www.business-standard.com/india/news/lt-plans-1600-mw-power-plant-in-karnataka/90171/onhttp://smart-grid.tmcnet.com/news/2010/01/07/4563464.htmScope for Global Investor’s in Global Energy Sector Karnataka State, KREDLhttp://www.bloombergutv.com/industry-news/it-industry-news/44695/powering-up-the-smart-way.htmlScope for Global Investor’s in Global Energy Sector Karnataka State, KREDL

CONTACT US

The Principal Secretary to Government Commerce & Industries Department Government of KarnatakaVikasa Soudha, Bangalore - 560 001, Karnataka, IndiaPh: +91 80 2225 2443/22203 4340E-mail: [email protected]

Commissioner for Industrial Development andDirector of Industries & Commerce2nd Floor, Khanija BhavanNo.49, Race Course RoadBangalore - 560 001

Karnataka Udyog Mitra Managing DirectorKarnataka Udyog Mitra3rd Floor, Khanija Bhavan (South Wing)No.49, Race Course Road, Bangalore - 560 001

Other agencies supporting investors in KarnatakaKarnataka State Industrial Investment Development Corporation http://www.ksiidc.com/Karnataka Industrial Areas Development Board http://www.kiadb.kar.nic.in/Karnataka Small Scale Industries Development Corporation http://www.kssidc.kar.nic.in/index.aspTechnical Consultancy Services Organisation of Karnataka http://www.tecsok.com/

GIM Brochure (Aerospace) Size: A3 Open Dt: 30/5/10

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DEPARTMENT OF INDUSTRIES & COMMERCEGovernment of KarnatakaE-mail: [email protected]: www.karnatakaindustry.gov.in

KARNATAKA UDYOG MITRA(A Government of Karnataka Organisation)E-mail: [email protected]: www.kumbangalore.com

Associate partners:

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