Transmission Economics & Finance

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    Transmission - Economics and

    Finance

    Anil Raawal21stMay 2015

    1

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    Contents

    Lots of Work in Pieline Lots of Positi!es " T#e Trends Lots of Positi!es " Transmission as $nfra

    %&siness

    T#e reality c#eck T#e La' desite Ena(lin' Framework T#e Power and t#e Prayer T#e )oncerns

    *ey Risks T#e Way Forward

    2

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    Transmission Scenario

    Lots of Work in Pipe Line

    Source -Metis

    Additions during 12thPlano As per the latest estimates of MoP

    90,000 ckm transmission lines and

    1,54,000 MVA transformer capacity is

    projected to be added in Xth plan .

    Historic Investment

    Decito !espite "s 4,50,000 #rs in$estmentplanned in %eneration for 1&th and

    1'th plan, the in$estments in the

    transmission sector not ade()ate*

    o +or e$ery ")pee in$ested in

    %eneration, 50 sho)ld be in$ested

    in transmission*

    o n ndia, this ratio stands at '0*

    o n$estment deficit - "e()ired more

    than 0*5 times of the f)t)re

    in$estments made in %eneration into

    transmission*

    +o&rce " )AREResearc#

    3

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    Transmission Scenario

    ./o)rce 2P for 1&thPlan, #2A and Prospecti$e plan, 3o

    ./tate sector opport)nity yet to emer%e

    Lots of Work in Pipe Line

    12thPlan Capex estimates

    CentralSector 125,000 Cr

    State Sector 55,000 CrTotal 1,80,000 CrOut of kitt !s 25000 Cr for Pri"ate Participation

    12thPlan Capex estimates

    CentralSector 125,000 Cr

    State Sector 55,000 CrTotal 1,80,000 CrOut of kitt !s 25000 Cr for Pri"ate Participation

    12thPlan Tar#ets -

    1,10,000 ckm of Transmission lines an$ 2%0000 M&' of

    transformation capacit a$$ition

    12thPlan Tar#ets -

    1,10,000 ckm of Transmission lines an$ 2%0000 M&' of

    transformation capacit a$$ition

    1(thPlan Capex estimates

    P)C*+ an$ States 1(0,000 Cr

    Pri"ate Sector 1,10,000 Cr

    Total 2,0,000 Cr

    1(thPlan Capex estimates

    P)C*+ an$ States 1(0,000 Cr

    Pri"ate Sector 1,10,000 Cr

    Total 2,0,000 Cr

    4

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    Lots of Positives !he !rends

    Competitive "idding !rendso

    Sector is Maturing QRs were amended, No of players have settled to a reasonable numberwith major players in een contest.o !rend line of "st #RR $ %&' indicates upward trending

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    Lots of Positives !ransmission as Infra"usiness Competitive "idding

    #Approacho (arger number of projects are being put for bidding

    year on year with larger project )osts.

    o )oncept to )ommissioning period has come downo*as come down from about + months previously to about - months

    o "emption for State Sector from !/)/ is over andmore projects from State Sector are epected

    o !ime period for )onstruction has been aligned with

    the time period provided under !ariff Regulations

    &%01%2

    o "arly )ommissioning is under )onsideration by

    Mo3 for recognising tariff

    o )hange in 4pproving 4uthorities foro Section %+0

    o 3owers now with )"4 )hairperson, shall save time.

    o Section +5o 3owers now with )"4 )hairperson, shall save time.

    o Selection of projectso 3owers now shifted to Mo3 as re6uired under 7a8ette

    Notification6

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    Lots of Positives !ransmission as Infra"usinessAmendment in $A $%panding Hori&onso Section %0 4mendment

    !he 4ppropriate )ommission may, on an application made to it under section %-, grant alicence to any person11

    9a: to transmit electricity as a transmission licensee; or

    9b: to distribute electricity as a distribution licensee; or

    1111111111111111111111111111

    9c: to undertae trading in electricity as an electricity trader, or

    9d: to supply electricity as a supply licensee.

    PoC 'echanismo National "lectricity 3olicy mandates that the national tariff framewor implemented should be

    sensitive to distance, direction and related to 6uantum of power flow.o /illing, )ollection and

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    !ransmission # the real )ottlenecko #n recent times transmission has wored as major bottlenec, some facts 1

    o Millions of

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    !he Lag despite $na)ling (rame,ork

    2,

    55

    22

    1-.

    /0.

    1.

    StateCentral

    Pri"ate

    StateCentral

    Pri"ate

    11thplan - 67548 MW

    12thplan (2 yrs) - 45516 MW

    Source - 'PP

    11thplan - Rs 1,40,000 Crs

    12thplan - Rs 1,80,000 Crs

    $um*ers te(( it

    a((++++++++++++>#t is also a fact that in the

    architecture of electricity sector,

    generation

    is delicensed and, accordingly,

    generation capacities have

    come up

    and will continue to come up

    based on technical and

    commercial

    feasibilities of these projects.

    !herefore, the contention thatmassive

    capacity additions, in a

    delicensed regime, pose a

    major challenge to

    transmission system planning

    and, therefore, this type of

    mismatch is

    inevitable, cannot be taen as

    an acceptable argument. #n a

    situation

    of power sector being starvedof generation capacity,

    delicensing have

    been a correct strategy and

    transmission system planners

    will have to

    devise strategy to cope with

    thisA #2"# #on%estion

    "eport 6)ne &015

    Pri"ate *n"estment is must to match the monstrous $eman$s

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    !he Po,er and the Pra+er

    10

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    * $on.t kno. ho. * am #oin# to $eci$e this case, /ut it appears from the paper.ork, .e ha"e a /ar o.ner .ho/elie"es in the po.er of praer an$ .e ha"e an entire church an$ its $e"otees that $oes not

    !he Po,er and the Pra+er

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    Proect 3electiono Reconstitution of "mpowered )ommittee1

    !he Concerns

    Representation and confdence building or private parties to invest expectedmore than Rs 1 lac Crores!!!

    efore 'fter

    Mem*er '% Mem*er .S/ '

    Mem*er .S/ ' Mem*er .'/ '

    Mem*er .'/ ' oint Sec .Mo/

    oint Sec .Mo/ irector .ro/

    irector .ro/ &visor .'nerg8/, $T 8og

    9ormer hairman, ' 9ormer hairman, '

    9ormer hie: Sec, Mah ';-Mem*er.S/, '

    irector .Trans/ Mo hie: 'ng .(an S/, '

    Secretar8, '%

    12

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    $na)ling (rame,orko Tari:: o(ic8 # ';em"tions "ro"ose eaves "ractica((8 nothing !hich necessari(8 has to *e

    "ut un&er T ?>

    Wor=s require& to *e &one cater to anurgent situration require& un&er

    com"resse& time sche&u(e+

    ntrastate transmission "roects u" to 6 than 2013

    9irst t!o 1200 => su*station @"-gra&ations o: e;isting (ines o:T@AST@A

    Some more u"-gra&ations o: (ines ugmentation o: e;istingAun&er

    construction su*stations o:T@AST@A

    'vacuation :rom $uc(ear o!er (ants roects un&er com"resse& timesche&u(e+

    roects !here no *i&&ers comes:or!ar&+

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    Contractual (rame,orko $o TS # ost o, no TS :or "re-commissioning "erio&, current TS is not va(i&o TS "rovisions the "ena( "a8ment o: a&&itiona( in case the &eve(o"er :ai(s to o*tain

    Transmission icense or get the tari:: a&o"te& !ithin sti"u(ate& time :rame+o $o recognition o: &e(a8s cause& *8 the reasons *e8on& contro( o: the &eve(o"er inc(u&ing the

    c(earances (i=e :orest, !i(& (i:e, section 164 a""rova( etc+o $o incentive :or ear(8 commissioning, the change no! un&er consi&eration is a(so ha(: hearte&

    as it &oes not s"e(( out an8 incentive an& on(8 recogniBes ear(8 commissioning, !hich means

    ear(8 start o: 35 8ears earning stream+o

    >er8 Stee" s # can eat u" to :irst 8ear tari::

    Price 4ariations )e+ond a )ando >aria*(e com"onent o: *i& "ricing can not han&(e the stee" variation o: commo&itieso $o (ong term instruments o: he&ging on stee( an& a(uminium avai(a*(e in n&ia

    -5 clearances involved6 processes for some of,hich are open ended ,ith no timel+ redressal

    o s man8 as 120 transmission "roects have :ace& &e(a8s *ecause o: the &eve(o"erCs ina*i(it8 to

    acquire (an& an& get time(8 c(earances :rom a(( sta=eho(&erso 9orest, Wi(& (i:e c(earances

    Courts issuing directions for (I*s against

    developers on *oW case ,ithout hearing the

    !he 7e+ *isks

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    $ncouraging Private 3ector Participation

    e"elopmental *ssues

    !he Wa+ (or,ard

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    $ncouraging Private 3ector Participation

    Pro3ect *mplementation *ssues

    !he Wa+ (or,ard

    16

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