Madhya Pradesh: Means Business

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Madhya Pradesh: Means Business

Power

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Overview

MP is the second largest State in the Country stretching over 308,000 sq kms.

The State is blessed with large mineral resources of coal, diamond, limestone, methane etc.

MP is among the top 4 states of the Country for industrial investments.

Per capita GSDP USD 369**

Manufacturing sector USD 8.5 bn**

(Registered & Unregistered)

Gross state domestic product (GSDP) USD 23,983.63 Mn**

Average growth rate 5.5% per annum

Advantage MP

Total electricity generation capacity 6,449.25 MW*

India’s first greenfield SEZ Indore SEZ

Industrial Centers 8

The State is centrally located

Investor friendly Government policies

Madhya Pradesh has one of the upcoming industrial base in India

Economic Snapshot Madhya Pradesh is emerging as a key growth center for the Country

Madhya Pradesh (MP) – State that means businessOverview

MP is rich in low grade coal suitable for power generation. Potential of hydro-energy generation. Installed power capacity (MP’s share)

Hydel Power Generation: 852.7 MW* Thermal Power Generation: 2,147.5 MW*

Power Electricity generation capacity at present is 6,449.25 MW and estimated to rise to a surplus in 2008-09

*Ministry of Power (powermin.nic.in) **Source: Indiastat.com (as on 23 Feb 2006)

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RO

AD

NE

TW

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• The State is well connected with the rest

of India with almost 425 trains passing

through the State on a daily basis. Of

these 175 trains pass through the State

capital Bhopal alone.

• The total length of roads spanning MP is 67,600 kms.**

• National highways of 5,200 kms run through the State.*

• 18 National highways including trunk routes of Delhi-Mumbai, Delhi-Chennai, Delhi-Bangalore, Delhi- Hyderabad.

• The total length of State highways in the State is 9,885 kms.**

• Convenient linkages to western ports i.e. Kandla Port, Jawahar Nehru Port Trust.

• 25 airstrips.**

• Convenient air links from key Indian cities like Delhi & Mumbai to Bhopal, Jabalpur, Gwalior, Indore and Khajuraho.

• 5 operational airports.

• Indore airport has the capability of handling international cargo.

• An international airport proposed in Bhopal.

Enabling Infrastructure

MP IS CENTRALLY LOCATED AND WELL

CONNECTED WITH ALL MAJOR CITIES IN INDIA

*Source: Department of Road Transport & Shipping (morth.nic.in) **Source: www.destinationmadhyapradesh.com

INDORE BHOPAL

JABALPUR

GWALIOR

KHAJURAHO

4

Third largest producer of

cement in India*

12 blocks with reserves

totalling 2,585 million tons

of coal has been identified

Largest producer of pulses

and oilseeds in the Country

(~75% of soyabean

production)

31% of the State under forest

cover with a largely unexploited

species of rare, valuable

medicinal- herbal plants

Over 2,000 kms of roads

being developed with

Private Partnership (BOT)

Over 18,000 technical

graduates and 230,000

graduates add to workforce

each year

Over 144 BCM of coal bed

methane reserves available

Over 100 agricultural farms with

an area of over 20,000 acres is

available on lease to investor

India’s 1st operational

Greenfield SEZ at Indore

Favourable climatic

conditions for cotton

and over 40,000 power-

looms are driving the

textile industry

Availability of coal and natural gas

(G.A.I.L pipeline) along with support

from Government to make investment

in Thermal Power Plants lucrative

Offers diverse tourists destinations

catering to various segments of

tourism such as religious (Bhojpur),

eco/ adventure (Panchmari), heritage

(Sanchi, Khajuraho) tourism etc.

Madhya Pradesh: A Preferred Investment Destination

Various blocks available

for power, cement, iron

and steel units

*Source: www.mpsidc.org & Brochure: MP Means Business

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0%

20%

40%

60%

80%

100%Vishakapatnam

Chennai

Greater Noida

Chandigarh

Jaipur

Indore

0

50

100

150Mumbai

Delhi

Bangalore

Chennai

PuneHyderabad

Indore

Bhopal

Ahemadabad

Mumbai(780 Kms)

(MPV - 1000) Pune(800 Kms)

(MPV - 206.51)

Bangalore(1400 Kms)

(MPV - 254.52)

Chennai(1430 Kms)

(MPV - 362.84)

Hyderabad(840 Kms)

(MPV - 257.9)

Delhi(740 Kms)

(MPV - 789.5)

Ahmedabad(570 Kms)

(MPV - 220.63)

Kolkata(1350 Kms)

(MPV - 613.19)

Key Markets

(Distance From Bhopal)

MPV – Market Potential Value

Source: (Reference: RK Swamy)

MP: The Right Place with the Right Environment

MP is centrally located. The State is at an easy distance from

all the key consumer markets in the Country.

DESTINATION MADHYA PRADESH

- Distances rounded off**Source: India Today (September ‘06 Issue)

Fastest mover* in overall

performance among the

big States in the Country.

Fastest mover in agriculture

Fastest mover in

infrastructure development.

Ranks 2nd in terms of

governance.

Ranks 3rd in terms of law &

order

Cost of skilled labour is USD

2.4/day vis-a-vis USD 3.5 –

USD 4.0/day in metros

* Fastest mover is the State where the rate of improvement between 2003 & 2006 was greater than that between 1991 & 2003

Bhopal and Indore have substantial cost

advantages, even when compared to other Tier

III and IV cities.

Savings in Office Space Rates

(A comparison of rates in Central Business Districts)

The cost of land is one of the lowest in the Country. Even central hubs such as Indore and Bhopal fare well against other cities in terms of low land cost.

(Estimated Values for Multi-product SEZs)

Savings in Land Cost

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Industrial Policy: Catalyst for the InvestmentsThe Government of MP has devised an investor friendly industrial policy,

which is aimed at achieving global competitiveness. The policy emphasizes

on industrial growth in the state through adopting cluster approach,

establishing specialized infrastructure and offering favourable incentives.

The main thrust of this policy is:

• Establishment of a Madhya Pradesh Trade and Investment

Facilitation Corporation which would take decisions about

rationalization of taxes, facilities of mega projects and other related

matters.

• Enacting an Industrial Facilitation Act and to change the rules of

business with a view to make single window system decisive and result

oriented.

• Developing infrastructure for supporting the identified industrial

clusters

• Reviving closed down/ sick industrial units by granting special packages.

• Attractive incentive schemes.

CLUSTER APPROACH

• Indore – Pharmaceutical, Textile, Food Processing, IT, Auto Components

• Bhopal – Engineering, Biotechnology, Herbal, IT, Food Processing

• Jabalpur – Garment, Mineral, Forest & Herbal, Food Processing

• Gwalior – Electronics, IT, FMCG, Engineering, Food Processing

• Rewa – Refractories, Lime Stone, Forest Based

• Sagar – Mineral Processing

• Special package for Mega Projects on project basis by apex level investment promotion empowered committee headed by the Chief Minister.

• Industrial investment promotion assistance – 50% to 75% of commercial tax for 3-10 years

• Concessional registration charges and stamp duty exemption for Term Loans.

• Interest subsidy on term loan for 5 – years @ 3% to 5%.

• For thrust sector industries, 25% capital subsidy would be provided limiting up to a maximum of USD 56,000

• Land on 75% concessive rate for Mega Projects limited to USD 4.4 million.

• Entry tax exemption for 5 years.

• 5 years electricity duty exemption on captive power generation

• 15% capital subsidy to SSI up to USD 33,000 in backward areas

• Infrastructure grant up to USD 0.22 million crore for developing private sector industrial parks

• Partial reimbursement for Project report, ISO Certification, Patent and Technology Purchase cost

SPECIAL INCENTIVES

SP

EC

IALI

ZE

D I

NF

RA

ST

RU

CT

UR

E Crystal IT Park Indore

Food ParksMandsaur, Khargone, Chhindwara, Hoshagabad, Mandla and Bhind

Stone Park Katni

Herbal Park Rewa

Granite Park Chhatarpur

Life Sciences Project Bhopal

Apparel Park Indore (SEZ)

Gems & Jewellery Park Indore

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Area Developed: 2,492 Hectares

Allotted: 1431 Hectares

Units established: 575

Major Groups: Tata, Ranbaxy, Eicher,

Bridgestone, Hindustan Motors, Kinetic,

SRF, S Kumars, Gajra, Nicholas Piramal,

Indorama, IPCA, Bhilwara

Special Infrastructure: SEZ, Crystal IT

Park, Food Park, Apparel Park

In a bid to build a competitive environment; industries and their ancillaries would be promoted in clusters based on the availability of raw materials,

skilled labour and market potential. Under this Industrial Policy through Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVNs)

scheme, the State Government, has identified industrial clusters. Many of the industrial giants have their establishments in these areas, however 44% of

developed area is still untapped and open for investment.

Total developed area

7,147 Hectares

Total allotted area3,089

Hectares

Total units established

1,360

Growth centres 19

Doing Business Made Easy Through MPAKVNIN

DO

RE

AK

VN




Major Groups:HEG, Crompton

Greaves, P&G, Godrej, Lupin, IFB,

Oswal, Nahar

Special Infrastructure: ICD, Food

Park




Major Groups: JK, Surya Roshini,

Godrej, Grasim, Cadbury, Hotline,

Crompton Greaves

Special Infrastructure: ICD, Food

Park

Area Developed: 273 Hectares



Major Groups: Birla, Jaypee

Special Infrastructure: Integrated

infrastructure development centres

(IIDC)

Area Developed: 790 Hectares



Major Groups: Raymond, Hindustan

Petroleum, PBM, Ayur

Special Infrastructure: Stone Park,

Food Park

BH

OP

AL

AK

VN

GW

AL

IOR

AK

VN

JAB

AL

PU

R A

KV

N

RE

WA

AK

VN

Pithampur, Kheda, Dewas, Maksi, Megh Nagar

Malanpur, Malanpur Phase II, Banmore, Chainpura, Siddhgawan, Pratappura

Rewa, Waidhan

Borgaon, Maneri, Purena

Mandideep, Pillukhedi,

Mandideep Phase II

Source: MPSIDC

Power Industry in Madhya Pradesh

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Power: Backbone of the Indian Economy

India’s Power Sector: Opportunities Abound

Key Policy Initiatives

M.P.: Power House of India

Location Analysis

Advantage M.P.

M.P.: An Investment Destination

Way Forward

Sector Profile: Power

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Power : Backbone of Indian Economy

India’s power industry is growing faster as compared to most of the other countries. In the last decade with substantial capacity addition, India has moved to 5th rank from 8th in terms of generation capacity globally.

The country has installed generation capacity of 126 GW as on July 2006 , and a transmission & distribution network of more than 6.3 million circuit kms (2004).

India consumes about 3.7% of the world’s commercial energy and is ranked

5th largest consumer of energy in the world.

India’s power generation is largely coal dependent with 55% share in the

total capacity mix.

With India’s booming economy and vibrant industrial scenario, per capita

consumption of power had almost doubled from 350 units in 1998 to over

600 units in 2005 and is further expected to reach 1000 units in 2012. (source:

IBEF)

With the targeted GDP growth rate of over 8%, energy demand is expected

to grow at the rate of 5.2% annually. To support this the power supply of

the country needs to be augmented by 10% annually.

The mismatch in energy demand and supply in the country had resulted in

the increased energy shortage from 27 BU in 1995 to 80 BU in 2005.

Peak demand is expected to increase by 77% to 157,107 MW by 2012.

Also the energy requirement is expected to increase by 274% to 975,222 MU

by 2012.

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3rd Largest Consumer in Terms of Energy Demand

mto

e

10%1%

26%

3% 5%

55%

Coal

Gas

Oil

Hydro

Nuclear

Renewable

Source: IBEF Report, Ministry of Power (CEA)

Fact Sheet Energy Generation Bn KWh 2005

Primary Energy Consumption

Installed Capacity Mix

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2006 2012

126838 MW

200000 MW

Pro

ject

ed G

ener

atio

n C

apac

ity

India’s Power Sector - Opportunities Abound

The Government envisages to provide power to all the households under its ambitious

plan “Electricity for all villages by 2007” and “ Power for all by 2012”. The mission

aims at enhancing the installed capacity upto 200,000 MW by 2012, accompanied by an

increase in transmission and distribution network.

The investment required in this regard in the sector is estimated to be over USD

200 bn. Almost 50% of this amount would be required for generation projects alone. The

scale of investment required in power sector along with the need of advanced technical

inputs, has carved out a significant role for private players in power sector.

Nearly 5000 MW has already been added by the private sector under the 10th five

year plan. It is expected to contribute 11,912 MW during the 11th plan from 2007-12.

Government has initiated a string of reforms by enactment of Electricity Act, 2003 to

attract foreign and private investment in the power sector. From allowing FDI upto

100% via the automatic route in all the segments (generation, transmission and retail

distribution), to extending tax holiday for mega power projects, the government is keen to

create an investor’s friendly environment.

Generation Share Mix

Given the projected demand scenario coupled with favorable investment policies, the sector offers huge opportunities for foreign and private players.

Opportunities for Private Investors

Generation Share Mix

Capacity Addition Plan Period

Source: Ministry of Power (CEA)

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Policy initiatives by GOI

100% FDI is allowed under the automatic approval route in all

segments of the industry i.e generation (based on coal, gas, or

hydro), transmission and retail distribution

Under the Mega Power Policy, incentives such as capital import

duty concessions, waiver of local levies to improve cost

attractiveness are extended to large generation projects.

All power projects are extended a tax holiday i.e deduction of 100%

of profit of the generation, transmission or distribution company, for

10 consecutive years out of 15 years from commencement.

Key initiatives under the Electricity Act 2003

Generation other than for large hydro projects, is de-licensed

Open access on transmission and distribution networks

Retail competition mandates that by July 2008 all consumers above 1MW are free to choose their suppliers

For rural power development, generation and distribution is de-licensed in rural areas

Power trading and market development are recognized

Strong anti-theft and malpractice provisions

Functional unbundling of the integrated state electricity boards and setting up of State Electricity Regulatory Commission made mandatory by states.

Other policy initiatives

Competitive bidding for awarding projects

Incentives for mega power projects

Relaxation of 40% cap for debt exposure by Indian financial institutions

Inter institution group for speedy financing

Encouragement to FDI in transmission via Joint Venture route and Independent power Transmission Company Route

National Electricity Policy & National Tariff Policy notified

Initiation of Ultra Mega Projects

Key Policy Initiatives

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MP: The Power House of India

Overview:

M.P. has nearly 5% of the total installed capacity of India with 6449.25 MW

as on July 2006 including the Central, State and private sector. The sources of

power generation in the State includes thermal, hydel, wind power, methane

gas etc.

The State’s share in the installed capacity was about 3000.2 MW in the year

2005-06. Out of which ~72% is thermal power and remaining is hydel power.

The total energy availability in the State has increased from 26,606 MUs to

29,237 MUs during 2001-02 to 2005-06 at a CAGR of 2.68%, wherein power

purchase of the State has outgrown the own generation of the State.

The State is witnessing rapid industrialisation which would lead to very high

increase in energy demand in coming years. Further, the installed capacity is

also expected to increase in the coming years, with new projects coming in

the State.

The State Government has taken necessary policy initiatives to facilitate the

power sector reforms in the State.

Energy Shortages & Peak Deficit in M.P.

Installed Capacity of Power in M.P. (M.P.’s share)

The increasing energy shortages and peak deficit indicates a need for rapid increase in power generation capacity of the State. Further, the new Government reforms, and presence of necessary resources makes the power sector very attractive for the private investors to set-up their plants in the state.

Source: Annual Report (MPERC)- Tariff petition 2006, Ministry of Power

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MP: Power House of India

Generation Transmission Distribution

PUBLIC SECTOR

Madhya Pradesh Power Generation Company Ltd (MPPGCL)

Narmada Hydro Development Corporation

PRIVATE SECTOR

MP Wind Farm, Dewas (wind power)

Kalani Industries, Indore (wind power)

Goetze India, Dewas (wind power)

Som Distilleries, Bhopal (biomass)

Kalchury Trading Co., Jabalpur (biomass)

Shri Maheshwar Hydro Power Corporation

Madhya Pradesh Power

Transmission Corporation Ltd.

POWER PURCHASE

Madhya Pradesh Power Trading Company Ltd

POWER DISTRIBUTION

M.P.Poorva Kshetra Vidyut Vitaran Company Ltd.

M.P.Madhya Kshetra Vidyut Vitaran Company Ltd.

M.P.Pashchim Keshtra Vidyut Vitaran Company Ltd.

Category-wise Energy Consumption in M.P.

*

* HT Consumers include traction, coal mines, industrial, irrigation, township, residential etc

Agriculture sector is one of the main energy consumers in the State. The

HT consumers such as railway traction, coal mines, HT industrial and non-

industrial activities etc. together accounted for 6549 MU of sales followed by

domestic consumers in the year 2005-06.

The State has various organisations (mostly public undertakings) in the areas of

power generation, transmission and distribution. These organisations are

presented in the schematic below.

The Private sector has a very insignificant presence as of now with their major

presence only in non-renewable resources and captive plants. However,

various major companies are contemplating to set-up their units in M.P.

Source: Annual Report (MPERC)- Tariff petition 2006

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Location Analysis

Classified Regions in M.P. Energy SalesNo. of

CustomersGrowth Drivers in the Region

West Discom (Indore, Ujjain) 7392.59 MkWh 2.40 million The Discom contributes to highest energy sales in M.P. This is due to the highly developed and growing industry in and around Indore region. Further the establishment of SEZ would also contribute to sales.

East Discom (Jabalpur, Rewa, Sagar)

5548.31 MkWh 1.82 million Presence of number of cement and cable factories in the region leads to high energy sales.

Central Discom (Bhopal, Gwalior) 5484 MkWh 2.32 million The domestic consumption and small scale industries drives the sales in this region.

Power Generation Stations in M.P.

The State has following power generation units:

Power PlantInstalled Capacity

(MW)

MP’s Share

(MW)Locations

MPPGCL Thermal Power Plant

2272.5 2147.5

3 major plants located in Satpura, Amarkantak and Umaria where vast coal reserves are available.

MPPGCL Hydel Power Plant 575 575

8-10 plants are located near Pench, Banas, Gandhi Sagar and other rivers.

Intrastate Project 591 322.17

Gandhi Sagar, Ranapratap & Jawahar Sagar, Rajghat, Pench

Joint Venture Project 2450 1826.5

Indira Sagar & Sardar Sarovar

Non-Conventional Energy Plants

26.7 -Small wind power, biomass based plants are set-up in Dewas, Indore, Bhopal etc

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Advantage MP

Potential to be Energy Hub for Power Generation

Potential to be Energy Hub for Power Generation

Established InfrastructureEstablished Infrastructure

Government SupportGovernment Support

Centrally located and well connected to all the major cities

Accounts for ~ 8% of national coal reserve i.e. 18,205 million tons

Availability of coal bed methane reserves of approximately 144 bn cubic meters

Large rivers flowing across the State gives ample potential for hydel power generation

Well connected through roads and railway

Availability of vast contiguous land for setting up big plants

Extensive power distribution and transmission network with about 185 sub-stations

Transmission network of about 19,817.7 Ckt Km

Key incentives for private players establishing plant in the state, based on non-conventional energy resources like wind, bio and solar energy and mini micro hydel projects

Restructured power sector in accordance with the provisions of the

Electricity Act 2003

MP Electricity Regulatory Commission (MPERC), has laid down the tariff

plan for next 3 years

M.P. Offers following Advantages to Power Industry

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MP: An Investment Destination

Energy Demand Projections in MP

An increase of 45% is projected by 2011-12

Industry Drivers in M.P.

The demand for energy in the State is estimated to increase by 45%

by the year 2011-12.

M.P. is likely to face the energy deficit in the next five years and its

energy deficit in 2011-12 is expected to be as high as 10.5% (source:

MPSEB)

The natural resources available in M.P such as thermal, hydel, wind

power and coal bed methane has the potential to generate 15000 MW

of power in next 5-10 years.

Government Initiatives

The thermal and hydel power plants set-up in the State will receive

incentives from the Central as well as State Government (mentioned

in prior slide).

The State Government offers various incentives for organisations

installing power generation unit utilising non-conventional feed

stocks. These incentives include electricity duty exemption, sales tax

benefits, land incentives etc. These investors have the option of using

the power themselves as captive power and selling it to the MPEB @

USD 0.05 per unit (source: MPERC)

Government also provides incentives for setting-up captive plants in the State.

With the growing industrialisation in the State along with the Rural Electrification Programme initiated by the Government, the demand for electricity would increase manifolds in the State.

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The central government is setting up Ultra Mega Power Projects 5 locations in the country.

The project is first initiated in MP and is at an advanced stage of establishment.

Sasan in M.P., a pithead location based on domestic coal availability (while other proposed plants would be imported fuel based) is identified for setting up this project.

It is a large project of 4000 MW at a single location thereby ensuring economies of scale.

Project would require an investment of about USD 3.3 billion.

The project would utilize super critical technology to ensure higher efficiency and lower CO2 emissions

The projects would be awarded to developer through tariff based competitive bidding to ensure cheaper power.

Ultra Mega Project in M.P.Up-Coming Projects In M.P. (Indicative)

Thermal Power Projects

Malwa TPS, Purni, Dist. Khandwa 2X500 MW

Essar Group Project, Mahan coal field at Sidhi-Singrauli fields

1000MW

Jaypee Group Siddhi 1000 MW

Hydel Power Projects

Marhikheda hydro project, extension,

Shivpuri. 1x20 MW

Tawa HEP (M/s Hindustan Electro Graphite)

Hoshangabad 13.5 MW

Coal Bed Methane

Reliance Energy Shahdol -

Major private players such as Reliance, Essar and Jaypee Group have acknowledged the potential of M.P. and

have proposed investment plans in the State.

MP: An Investment Destination

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MP: Way Forward

Opportunities across the value-chain

Power GenerationPower

TransmissionPower Trading &

Distribution

Power generation plants

based on: Coal reserves Hydel power Biomass Coal bed methane Wind

Power generation plants

based on: Coal reserves Hydel power Biomass Coal bed methane Wind

The Transmission could be

taken through Joint

Venture or Independent

Private Transmission

Company (ITPC) route.

400 KV Bina-Nagda-

Dehgam D/C line in

Western Region has been

taken up as a pilot project

by POWERGRID and

would be awarded to

private party soon.

The Transmission could be

taken through Joint

Venture or Independent

Private Transmission

Company (ITPC) route.

400 KV Bina-Nagda-

Dehgam D/C line in

Western Region has been

taken up as a pilot project

by POWERGRID and

would be awarded to

private party soon.

This activity could be

taken independently or

under joint venture by

private players under

public-private

partnership in the State.

This activity could be

taken independently or

under joint venture by

private players under

public-private

partnership in the State.

With the increasing demand for power in the State and State’s objective to provide power to all by the year 2008, there lies

several opportunities for public-private partnership in the sector.

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Madhya Pradesh State Electricity Board

Madhya Pradesh Power Transmission Corporation Ltd.

Madhya Pradesh Electricity Regulatory Commission

www.mp.nic.in/energy/mpseb

www.mptransco.nic.in

www.mppkvvcl.nic.in

www. www.mperc.org

Connecting Further

Madhya Pradesh Paschim Kshetra Vidyut Vitran Company Ltd.

Madhya Pradesh Urja Vikas Nigam Ltd. www.mprenewable.org

Madhya Pradesh State Industrial Development Corporation www.mpsidc.com

Government of Madhya Pradesh www.mpgovt.nic.in

www.mpmkvvcl.nic.in Madhya Pradesh Madhya Kshetra Vidyut Vitran Company Ltd.

www.mpez-electricity-discom.nic.in/ Madhya Pradesh Poorv Kshetra Vidyut Vitran Company Ltd.

Madhya Pradesh: Means Business

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