Investement Opportunity in Power Sector in Bihar and Jharkhand

8/8/2019 Investement Opportunity in Power Sector in Bihar and Jharkhand

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INTROCUCTION:-

Continued growth of Indian economy will depend on large-scale investments in its energy sector.

As per the planning commissions estimates, India needs an installed capacity of 1200 GW by

2020 which is 7 times the existing capacity, to sustain the future economic growth. India has an

installed capacity of around 163669.80 MW as on 31 July 2010(CEA). The Central PowerSector Utilities and the state utilities have not been able to match up to the requirement. Most of

the previous plan targets have been missed and the government is now expecting the private

sector to support in the future generation and transmission capacity additions. Various policy

level initiatives for facilitating private investments in power sector has been introduced post the

notification of Electricity Act 2003. There have been significant capacity additions in the past

few years. While the total transmission line length (220 kV and above) increased at a CAGR of

6.64% during the past three years, total transmission transformation capacity (220 kV and above)

grew at a CAGR of 4.87%.

With over 75% of coal reserves and 45% of countrys hydro-

electricity potential located in the eastern and north-eastern states of India, these states can

transform themselves into a power hub for India. To achieve this goal, the state governments of

these states should initiate and sustain policy measures to attract investments. Considering the

fact that development of infrastructure, especially in these parts of India, will be always

associated with socio-political issues e.g. acquisition of land (including forest land) and

displacement of people (including indigenous tribes), the policy and support measures of the

Central and State Governments should also address these issues for faster implementation of

projects. Further, since any development in the generation and transmission sub-transmission

infrastructure can only be sustained through continuous cash-flow from end consumers, adequate

focus needs to be given to the strengthening of the distribution sector through administrative and

management reforms, the Central Government sponsored schemes such as the R-APDRP, and

development of the human resources through appropriately designed training and development

programs.


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ALL INDIA GENERATING INSTALLED CAPACITY (MW) (As on 31-07-10)

POWER SCENERIO OF BIHAR:-

Following the separation of Jharkhand in the year 2000,

which saw a majority of the generation assets getting transferred to Jharkhand, Bihar was left

with only two thermal power stations at Barauni and Muzaffarpur, both in a dilapidated

condition and generated almost no electricity The state has an installed capacity of 590 MW and

has a share of 1,379 MW in the Central Sector Generating Stations. In 2008-09 the state

experienced a 1,726 MU (16.4%) energy shortage and a 509 MW (27.6%) peak demand deficit.

This energy shortage has lead to wide-scale rationing of power to all categories of consumers.

Reform and restructuring of the sector has been initiated and independent Regulatory

Commission BERC has been constituted in May 2005. Bihar has been the second fastest growing

economy with economy growing more than 11% in 2008-09. However, this growth needs to be

seen in the context of low base and the State has a long way to go to catch up with other

developed states. Future, investment and growth in the power sector would be pre-requisite for


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sustaining the economic growth and also improving the socio-economic conditions of people in

the state.

INSTALLED CAPACITY (MG) as on 31 March 2008 of BIHAR

HYDRO DIESEL NUCLEAR

THERMAL

RENEWABLE

ENERGY

SOURCE

TOTAL

STATE 540.00 540.00 50.40 594.40

PRIVATE 0.00 0.00 0.00 0.00 0.00

CENTRAL 1306.59 1306.59 73.00 0.00 1379.59

SUB

TOTAL

1846.59 1846.59 73.00 50.40 1969.99

(Source: TERI 2009)

Installed Capacity (MW)


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Source: 2001 Census, CEA,


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POWER SUPPLY POSITION IN BIHAR

During the year 2006-07, Bihar faced energy and peak

power shortages of 8.1% and 16.9%, respectively. During April-May, 2007, the state had energy

shortage of 7.9% and peak deficit of 12.2%. Considering actual capacity addition of 21180 MW

in the 10th Plan and proposed capacity addition of 78577 MW in the country in the 11th Plan,

the anticipated power supply position has been worked out. It is expected that at the end of 11th

Plan though the country by and large will be able to meet its energy requirement and peak

demand, Bihar may face energy & peak shortage of about 41% and 58%, respectively.


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THERMALPOWER STATIONS INSTALLED IN BIHAR IN STATE SECTOR:-

At present, Barauni (2x50 + 2x110 MW) and Muzaffarpur

(2x110 MW) are two Thermal Power Stations in Bihar in State Sector. A meeting was held under

chairpersonship of Principal Adviser, in Planning Commission GoI, on 10.05.2005 regarding

Residual Life Assessment (RLA)/ R&M of all units of Barauni TPS and of Muzaffarpur TPS

under Rashtriya Sam Vikas Yojna (RSVY). A sum of Rs. 75 crores was released to BHEL by

Ministry of Power / Planning Commission, as advance payment for the above R&M works,

during the year 2005-2006 for both the power stations. A sum of Rs. 120 Crores was also

released to BHEL by MoP/ Planning Commission as advance payment for the R&M works

during the year 2006-07 for both power stations.

HYDRO ELECTRIC DEVELOPMENT IN BIHAR

As per the Reassessment of Hydro Electric Potential of the

Country, carried out by Central Electricity Authority (CEA) during 1978-87, the Hydro Electric

potential in Bihar is assessed at 60 MW at 60 % load factor. The corresponding probable

installed capacity of these schemes is estimated at about 70 MW. As on 1.8.2006, 64.1% of the

total potential in terms of installed capacity has been developed and 35.9% of the potential

remains yet to be developed.

Following six hydro stations with an aggregate installed capacity of 46.1. MW is in operationin Bihar:


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PENDING HYDRO SCHEMES

TRANSMISSION SYSTEM DEVELOPMENT:-

To strengthen the sub transmission and

distribution system in Bihar a comprehensive scheme for strengthening of sub transmission

system was formulated under Rashtriya Sam Vikas Yojana for Bihar in consultation with BSEB.

The scheme is funded through central assistance under the Special Plan for Bihar component of

Rashtriya Sam Vikas Yojana. The total scheme has been envisaged to be implemented in phases

as under:

i)Bihar Sub-transmission Scheme Phase-1

ii) Bihar Sub-transmission Scheme Phase-2, Part-1

iii) Bihar Sub-transmission Scheme Phase-2, Part-2


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BIHAR SUB TRANSMISSION SCHEME PHASE-I

Bihar sub transmission scheme phase-I (approved

estimated cost Rs. 526.28 crores) involves construction of 18 no (2 no 220 kV, 15 no 132 kV

and 1 no 33 kV) new substation, bay extension works at 12 no 220/132 kV existing substations

of BSEB and construction of 1240 ckt km (220 kV 170 ckm, 132 kV -1030 ckm and 33 kV- 40

ckm) transmission line. Details are at Annex-III. Implementation of the scheme is being done by

PGCIL on behalf of BSEB and the same has been completed.

BIHAR SUB-TRANSMISSION SCHEME PHASE-2, PART-1

Phase-II, Part-I of the scheme at an estimated cost of

Rs 629.22 crores was approved by BSEB in May 2006 The scope of works included works to be

implemented by PGCIL on behalf of BSEB and certain works to be implemented by BSEB.

Subsequently, BSEB has requested for inclusion of certain additional scope under the scheme to

be implemented by POWERGRID. Details of the scope of works including additional scope are

as per Annex-IV. The scheme is under implementation and as per PGCIL some of the contracts

for major Transmission Lines and Road Map for Development of Power Sector in Bihar A

Report of the Special Task Force on Bihar 39 Sub-Station packages have already been awarded

and for balance packages bids have been received/ NIT have been issued. PGCIL have also

submitted revised cost estimate of Rs 1005.72 crores including cost for additional scope of works

for approval.

BIHAR SUB-TRANSMISSION SCHEME PHASE-2, PART-2

Feasibility cum Detailed project Report at an estimated

cost of Rs 1240.86 crores has been prepared and submitted by PGCIL for approval. Details of the

scope of works covered under Phase-2, Part-2 are at Annex-V. Implementation of the scheme is

proposed to be taken up after completion of Phase-2, part-I of the scheme. 36. After the

implementation of the above schemes sub-transmission requirements of Bihar would generally

be adequate for meeting the increased load requirements for the next three to four years.

However, depending upon areas/pockets of future load growth certain sub-transmission


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strengthening works and augmentation of transformation capacity at 220/132/66/33 KV may be

required for which BSEB would need to assess their requirements and take further necessary

action.

ELECTRICITY DEMAND FOR BIHAR STATE:-

Final report of the 17th Electric Power Survey

Committee includes electricity demand & energy of Bihar for the year 2011-12 as 3607 MW and

19905 MU, respectively and in the year 2016-17 as 5598 MW and 32857 MU, respectively. This

gives a CAGR of about 19% in energy consumption which is very high and extremely optimistic.

ACCELERATED POWER DEVELOPMENT AND REFORMS PROGRAMME

The Government of India approved during 2000-01

a scheme called Accelerated Power Development Program (APDP) - now rechristened as

Accelerated Power Development and Reforms Program (APDRP) to provide systematic finance

to enable SEBs/Utilities to take up distribution sector reform. APDRP has been formulated to

finance specific projects for up gradation of sub-transmission and distribution (ST&D) network.

Under this programme strengthening of distribution system has been taken up to improve the

quality and reliability of power supply and reduce T&D losses. In Bihar, APDRP schemes

broadly cover following works:

i. Establishment of new power sub-stations;

ii. Installation of consumer and feeder metering;

iii. Re-conducting of over loaded 33 and 11 kV lines;

iv. Renovation and modernization (R&M) of power sub-station (33/11 kV) and distribution

Transformers;

v. Installation of new distribution transformers (DTs) and augmentation of existing DTs; and

vi. Computerization of various functions in distribution systems and implementation of DMS,

Supervisory control and data acquisition (SCADA) system for PESU (Patna).

STATUS OF RURAL ELECTRIFICATION

Rajiv Gandhi Grameen Vidyutikaran Yojna: Central Govt. has launched a new scheme

Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) of Rural Electricity Infrastructure and


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Household Electrification on 4th April, 2005 for providing access to electricity to all

households in the country in five years. As per the report prepared by CEA on monthly basis, the

present position of Rural Electrification in Bihar (as on 31 March 2007)is shown below:

Total number of villages 39,015

Total no of villages

electrified

20,620

Percentage electrified 52.9%

(Source: TERI 2009)

In 2007/08 also there is power deficit in Bihar, required meter unit is 9155, and available meter

unit is 7933 so there is -13.3 %( TERI 2009)

SURGING DEMAND IN FUTURE:

Demand for power in the state is expected to surge with

accelerated electrification of villages and households under the RGGVY (Rajiv Gandhi Gramin

Vidyutikaran Yojana) scheme, and peak demand is expected to increase by 500% in 2021-22.

Governments policies to promote industrial activity will increase industrial consumption. It is

estimated that at the end of 11th plan (FY 2012), state will have an energy shortage of 8150 MU

(41%) and peak deficit of 2073 MW (58%). Thus there is an urgent need to look for additionalgeneration capacity to meet this rising demand and an opportunity for potential investors.

INADEQUATE PRIVATE SECTORPARTICIPATION IN POWER SECTOR:

Bihars power sector, in the past, remained unattractive for private

sector participation because of the lack of strong administrative and policy support by the

Government to create an amicable investment climate, including addressing issues related to law

& order, acquisition of land, rehabilitation of displaced people etc. The Government of Bihar hastaken few steps, including certain policy measures, to address the concerns of private investors.

Some of the key initiatives are:

a) Assistance to developers in obtaining all initial consents/clearances for the development of

power projects through the State Investment Promotion Board (SIPB).


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b) Permission to sell up to 50 per cent of the power generated outside the state

c) Promotion of captive power generation by industries using any of their waste, by-product or

similar substances like biogases-based cogeneration in the sugarcane industry these measures are

expected to gradually increase the investment flow. However, the sustainability would depend on

the implementation success achieved by the early investments.

INVESTEMENT OPPORTUNITY FORPRIVATE PLAYERS:-

Government of Bihar is now encouraging private

player to participate in power generation, transmission and distribution. Also there is huge

demand of power in Bihar, to fulfill the need of (Rajiv Gandhi Gramin Vidyutikaran Yojana) and

Accelerated Power Development and Reforms Program (APDRP). Government is also focusing

on industrial sector. So investment opportunity in the field of power in Bihar is huge.

POWER SCENERIO OF JHARKHAND:-

With the reorganization of the state into two smaller

states, Jharkhand was endowed with mineral and industry rich belt along with the major share of

installed power capacity. Since then the government of Jharkhand has decided to take quantum

jumps in generating capacity addition and today the state has total installed capacity of 1394

MW and MoU for more than 15000 MW (including one UMPP at Tilaiya) has been signed.

Although the state has performed well in capacity addition front some of the problems it has

inherited from the parent state like high AT&C losses, low PLF and poor network condition is

proving to be deterrent for the development of sector. The availability of coal in abundance

makes Jharkhand an ideal state for setting up thermal power plants. A large number of new steel

plants are coming up in the region with their own captive generation facility.

EXISTING POWER SUPPLY AND POSITION

Presently the load demand of Jharkhand is met by six utilities namely JSEB, TVNL, NTPC,

DVC, NHPC and Tata Power. JSEB meets the requirement by generating from its power plant

and bulk purchase of power from DVC, NTPC, TVNL and NHPC. In DVC licensed area JSEB

has its own Distribution System. The state has also been allocated share of about 134 MW in


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Central Sector Power Stations. The total installed capacity of the state is 1390 MW. The

maximum peak load and minimum load under JSEB command are 507 MW and 258 MW

respectively.

INSTALLED CAPACITY (MG) as on 31 March 2008 of Jharkhand

HYDRO DIESEL NUCLEAR

THERMAL

RENEWABLE

ENERGY

SOURCE

TOTAL

STATE 1260.00 1260.00 130.00 4.50 1394.00

PRIVATE 360.OO 360.00 0.00 0.00 360.00

CENTRAL 352.00 352.00 46.00 0.00398.52

SUB

TOTAL

1972.52 1972.52 176.00 4.05 2152.57

(SOURCE: TERI year book 2009)

Installed Capacity (MW)


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With 31% village electrification, the State has one of the lowest electricity access levels in thecountry. The progress under RGGVY scheme also has been slow. The socio-economic

development of the state would be dependent on the pace of household electrification. Large

investments in augmenting the sub-transmission and distribution network in the state would be

required in next few years. Distribution reforms and improving the financial viability would be

essential to attract investments in generation sector. Jharkhand would be looking to take

advantage of supply deficits in Western and Northern region states to maximize the benefits from

sale of electricity outside state. Sale to other states would be dependent on the strengthening of

the transmission corridors and significant investments is expected in both building intra-state and

inter-state transmission systems to support the evacuation of large generation capacity addition.


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SWOT Analysis


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TRANSMISSION NETWORK: The transmission network is divided into two zones. Under

each transmission zone there are four transmission circles which functions through divisions and

sub-division.

Transmission NetworkZone Ranchi Transmission Zone Dumka Transmission Zone

CircleRanchi Deoghar

Jamshedpur Dumka

DISTRIBUTION NETWORK: Distribution network is divided into five supply areas. The

supply areas in turn are divided into circles, divisions, sub-divisions and sections. There are

eleven circles in all.

Distribution NetworkArea Ranchi Jamshedpur Hazaribagh Dhanbad Dumka

Circle

RanchiJamshedpur Hazaribagh Dhanbad Dumka

Gumla

Chaibasa Giridih Loyabad DheogharDaltonganj

Position of the transmission and distribution network of JSEB is as under:

Voltage CKT( Kms) Capacity (MVA)

220 KVS/C 135 450

200 KVD/C 145 450

132KVS/C 609 978.50

132KVD/C 329 978.50

33KV 3346 N.A

11KV 17663 N.A

LT 20490 N.A


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KEY CHALLENGES, ISSUES

Low access to electricity: The state has very only 31% of the villages electrified against the

target of 100% by 2012. Faster implementation of RGGVY scheme is needed to achieve

100%village electrification. Huge investments in sub-transmission and distribution network

would become through in next few years.

Socio-political issues: Large part of state has witnessed increased socio-political disturbances

over the past few years and this has posed problems in acquiring land for projects and safety of

the workers which has delayed many of the projects. This has also affected coal supply from

time to time by affecting rail transport infrastructure. Improving the Law and Order position

would be the biggest challenge for State government to retain and attract the investors coming to

state.

Rehabilitation and ResettlementProblems: A lot of multi-national companies have shown

interest in setting up large industries (mainly in metal and mineral sector) in the state to exploit

abundant of mineral resources. Most of these projects are facing rehabilitation and resettlement

problems. Policy initiative facilitating land acquisitions with proper R & R measures would be

required to expedite the project implementation in both metal and power.

OPPORTUNITIES FORPRIVATE PLAYERS:-

The availability of Coal in abundance makes

Jharkhand an ideal state for setting up Thermal Power Plants at the Coal Pits. With the abolition

of freight-equalization, there is tremendous cost advantage in setting up thermal power plants at

the Coal pit itself. The Present total installed power capacity is 2590 MW. In view of future

requirements NTPC, DVC and State PSUs setting up different plants with total capacity of 4736

MW. Due to several new investments in manufacturing setups coming up, the demand for Power

both within the state and the nearby states will increase manifold. There is also scope for setting

up Hydel power plants. 67 Hydel Power generation sites have been identified for this purpose.

Government of Jharkhand is also formulating

policies for growth of power sector and it also encourages private players to participate in the

process of power sector growth in the state. The steps taken by the govt. are as follows:


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y The State Government has signed Memorandum of Understanding with Government of

India as a token of Its commit to the reforms in the power sector as formulated by the

Union Government, Department of power, on 30.04.2001.

y Decision has been taken to open the state power sector for private Investment and extend

all due facilitation and incentive to the investors.

y The distribution system is planned for privatization at appropriate time.

y Rural electrification has been accorded top priority. All the 32000 villages are to be

electrified by the year 2007. Present electrification level is hardly 15%. This will Increase

the power demand and also scope for power generation through small power schemes

like small hydro, Biomass, etc.y The work on renovation & modernization of existing power generating station as well as

transmission and distribution system has already commenced in line with the guidelines

Issued by Government of India under Accelerated Power Development Reform

Programme (APDRP) and other schemes of national and International Financial

Institutions.

Private sector in distribution: A number of private distribution licensees are already operating

in the State. The limited distribution investment in past provides an opportunity for private sector

distribution players to enter this segment. The large scale industrialization in future provides a

good opportunity for investments in distribution sector.

Keeping in view the future demand of energy, the country requires doubling its generation by

2012. This requires a massive investment in the sector and to help the sector, Electricity Act

2003 provides the lead, by making provision for the private investment to play vital role. For

economising the cost of generation certain steps will help such as:

1. Cost of transporting coal will reduce the cost of generation to a great extent.

2. For thermal power, generation plants can be installed where coal, water and transmission line

are easily available at cheaper rate.

3. Cheap land and labour will also reduce the cost of generation.


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With above points in mind, Jharkhand seems to be an obvious choice for setting up generating

plants. Jharkhand has about 33% of nation's steam coal reserve, it has water, cheap labour and

the State Government has promised easy availability of land for setting of plants. Transporting

coal will be costlier than transmitting energy to any part of the country.

CONCLUSION:-

After the separation of Jharkhand from Bihar, it is left

out with a very small no of power generation capacity because major generation capacity fall

into the lap of Jharkhand. Now the govt. of Bihar is giving importance on industrialization and it

has to also fulfill the power requirement mentioned in 11th

five year plan. It has to also electrify

its villages under Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY). So there is need and

the government is also encouraging private sector to participate. Hence the opportunity for

investment in power sector in Bihar is huge.

Jharkhand is rich with minerals and coal. So large numbers

of industries are coming up there and they will require energy. Due to availability of coal in

abundance if thermal power plants will be established there then cost reduction is possible.

Government of Jharkhand is also inviting private players to participate in power generation,

transmission and distribution. So investment opportunity in the state of Jharkhand is huge

because there is a need and also the availability of natural resources.

Investement Opportunity in Power Sector in Bihar and Jharkhand

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