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Feature | March 2017

Road to the top!

POWER TODAY looks at some of the PSUs involved in pushing India´s developmental agenda.

Public utilities have played a significant role in India´s growth story. Be it garnering wealth for the nation, ensuring planned development, contributing to public exchequer, working towards sustainability and social empowerment or initialising corporate governance, they have always been in the forefront. Here, we look at the power sector PSUs and their contribution to the country.

Some of the power sector highlights / achievements are:

  • Most comprehensive power sector reform ever, Ujwal DISCOM Assurance Yojana (UDAY) to turnaround discoms.
  • UDAY Bonds worth about 1 lakh crore issued.
  • 7,108 unelectrifled villages electrified in FY2015-16 - 37 per cent higher than previous 3 years.
  • Around one fifth (46,543 MW) of current conventional power capacity added over a two year period in FY2014-16.
  • Around 69 ckm transmission lines laid per day in FY2014-16 compared to 46 ckm in FY2012-14.
  • Lowest ever Energy deficit of 2.1 per cent in FY2015-16 versus 11.1 per cent in FY2008-09.
  • Around 3.44 lakh crore potential revenues to coal bearing states over life time of mines from transparent coal auctions and allotment of 74 coal blocks.
  • Highest ever growth in coal production over a two year period of Coal India of 7.4 crore tonnes in FY2014-16.
  • 157 per cent increase in solar power capacity since 2014 of 4,132 MW.
  • Highest ever wind capacity addition of 3,423 MW in FY2015-16.
  • Over 9 crore LED bulbs distributed under UJALA in 2015-16. About 150 times higher than 6 lakh in FY2013-14.
  • Highest ever 31,472 solar pumps installed in FY2015-16. Greater than total solar pumps installed since launch of programme in 1991.

Mobile apps for greater transparency and accountability:

  • Grameen Vidyutikaran (GARV) app to track rural electrification;
  • Vidyut PRAVAH app to monitor real time electricity price and availability;
  • Unnat Jyoti by Affordable LEOs for all (UJALA) app to monitor LED distribution.

Generation: Thermal Taking Strides

  • Increasing supply of domestic coal to reduce prices and disincentivise theft.
  • Coal usage flexibility of domestic coal inefficienct generating stations resulting in reduction in the cost of electricity generation and reduction in the purchase cost of discoms.
  • Coal linkages rationalisation of 2.3 crore tonne saved about Rs.1,371 crore annually in transportation cost.
  • Coal price rationalisation based on gross calorific value (GCV) for correct tariff fixation.

Transmission: One Nation, One Grid, One price

  • 50,215 ckm transmission lines laid in FY2014-16, the highest ever for both years - 1.5 times higher than 33,855 ckm in receeding two years of FY2012-14.
  • 128,403 MVA increase in sub-station capacity in FY2014-16 - highest increase over two year period.
  • 71 per cent increase in transmission capacity to south India (AP, Karnataka, Kerala, TN, Telangana and Puducherry) from 3,450 MW in 2013-14 to 5,900 MW. To be increased by over five times to 18,400 MW in next three years.
  • PowerGrid commissioned projects worth around 30,300 crore in FY2015-16, registering a growth of 39 per cent.
  • Projects worth around Rs.1 lakh crore initiated in FY2015-16.

Distribution: UDAY - Powering Reforms

  • Ujjwal Discom Assurance Yojana is the most comprehensive power sector reform ever. Discoms are the weakest link in the power chain and losses of about Rs.60,000 crore annually and accumulated debt of Rs.4.3 lakh crore.
  • Permanent resolution of past (state takeover, high losses), present (financial, operational, lower cost of power) and future (budgetary discipline, smart infrastructure) discom issues.

Turnaround discoms through financial and operational efficiency improvements.
Uday bonds worth Rs.1 lakh crore issued in FY2015-16:

  • Potential for low cost of power by reducing the discom losses.
  • Takeover of discom debts to lower cost of servicing the debt from average interest rate of 12 per cent to average 8 per cent.

Operational efficiencies to reduce aggregate commercial and technical (AT&C) losses:
  • Improving billing efficiency through mtering and tracking of losses;
  • Infra augmentation and smart metering;
  • Improving collection efficiency through public participation.
  • Increasing plant load factor (PLF) to reduce fixed cost per unit.
These goals have been met by the government through their various Public Sector Utilities/Enterprises, e.g. NTPC, REC, PGCIL, BHEL, NHPC and CIL.

The economic reforms since 1990-91 have made PSUs emerge more competitive and stronger, both in the domestic and global markets. The recent economic slowdown in the economy also saw the PSEs fare well, which is another testimony to their resilience and inherent potential.

With the Indian economy growing rapidly, PSUs are slated to emerge even stronger with the immense strengths and potential they possess. In that context Power Today attempts to highlight the top PSUs in the power sector which have contributed to the nation on various fronts.

Disclaimer: Views expressed/statements given throughout the feature have been sourced from the power ministry and companies´ websites. Readers are requested to do their own due diligence before making any investments in the above companies.

Bharat Heavy Electrical Limited
Bharat Heavy Electricals Limited (BHEL) owned by the Government of India, is an engineering and manufacturing company based in New Delhi, India. Established in 1964, BHEL is India's largest power plant equipment manufacturer. The company has been earning profits continuously since 1971-72 and paying dividends uninterruptedly since 1976-77.

BHEL entered into power equipment sector ion 1982, to reduce its dependence on the power sector. It developed the capability to produce a variety of electrical, electronic and mechanical equipments for all sectors, including transmission, transportation, oil and gas and other allied industries.

It has been granted the prestigious Maharatna (big gem) status in 2013 by GoI for its outstanding performance. It shares the elite Maharatna status with another six behemoth PSU companies.

Operational Highlights

  • BHEL is engaged in the design, engineering, manufacturing, construction, testing, commissioning and servicing of a wide range of products, systems and services for the core sectors of the economy, viz. power, transmission, industry, transportation, renewable energy, oil & gas and defence.
  • It is the 7th largest power equipment manufacturer in the world.
  • It has network and infrastructure allowing it to execute more than 150 projects at sites across India and abroad.
  • It has established the capability to deliver 20,000 MW pa of power equipment to address the growing demand for power generation equipment.
  • It retained market leadership position during 2015-16 with 74 per cent share in the power sector.
  • It also has been exporting its power and industry segment products and services for over 40 years.
  • The cumulative overseas installed capacity of BHEL manufactured power plants exceeds 9,000 MW across 21 countries.
  • BHEL's R&D investment is amongst the largest in the corporate sector in India. During FY2015-16, the R&D expenditure of the company was 3.34 per cent of the turnover.
  • 477 patents and copyrights were filed during FY2015-16, enhancing the company's intellectual capital to 3,441.
  • It is one of the only four Indian companies and the only Indian PSE figuring in 'The Global Innovation 1000' of Booz & Co., a list of 1,000 publicly traded companies which are the biggest spenders on R&D in the world.

Awards and Recognitions

  • Appreciation shield (June 2016) by the External Affairs Minister Sushma Swaraj and the Union Minister of Water Resources, River Development and Ganga Rejuvenation Uma Bharati for successful commissioning of Salma Dam project in Afghanistan.
  • BHEL wins India Pride Award 2015-16 for Excellence in Heavy Industries.
  • BHEL was adjudged the Best Power Equipment Manufacturing Organisation by CBIP
  • The company bagged PSE Excellence Award 2014 for R&D & Technology Development
  • BHEL received the National Intellectual Property Award 2014 and WIPO Award for Innovative Enterprises
  • In 2014, BHEL won ICAI National Award for Excellence in Cost Management for the ninth consecutive year.

National Thermal Power Corporation
Established to accelerate power development in the country, NTPC is one of India´s largest energy conglomerate with roots tracing back to 1975. Since then it has become a dominant power major, foraying from fossil fuels into hydro, nuclear and renewable energy sources. To strengthen its core business, the corporation has diversified into the fields of consultancy, power trading, training of power professionals, rural electrification, ash utilisation and coal mining as well. It became a Maharatna company in May 2010, one of the only four companies to be awarded this status. The company´s total installed capacity is 47,178 MW (including JVs) and will be a diversified fuel mix by 2032, with non-fossil fuel based generation capacity making up nearly 28 per cent of it´s portfolio.

Operational Highlights

  • NTPC Limited is the largest power company in India with an electric power generating capacity of 45,548 MW.
  • The company has ~16 per cent of the total national capacity, but contributes to over 25 per cent of total power generation.
  • This is due to its focus on operating its power plants at higher efficiency levels i.e. ~80.2 per cent against the national PLF rate of 64.5 per cent.
  • NTPC currently produces 25 billion units of electricity per month.
  • NTPC recorded highest ever gross generation of 241.98 BU during FY2015-16. NTPC coal stations achieved a PLF of 78.61 per cent during the same period, which is highest among central, state and private sectors.
  • NTPC group recorded gross generation of 263.42 BU during 2015-16.
  • NTPC operates from 55 locations in India, one location in Sri Lanka and two locations in Bangladesh.
  • The company has developed a long term plan to become 130 GW company by the year 2032.

All time high stand alone CAPEX of Rs.25,960 crore exceeding the MoU target of Rs.23,000 crore. NTPC Group CAPEX stood at Rs.32,091 crore in FY16.
Earning Rs.70,506.80 crore as net revenue from operations and Rs.71,696.07 crore as total revenue, with net profit after tax (PAT) at Rs.10,242.91 crore in FY16.
A profit of Rs.2369.5 crore in Q1 FY17, marking an increase of 4.1 per cent over corresponding period last year.

Awards and recognitions

  • NTPC was ranked 400th in the ´2016, Forbes Global 2000´ ranking of the World´s biggest companies.
  • NTPC was ranked 2nd among the 250 largest Power Producers and Energy Traders in the world by Platts in 2015. On overall basis NTPC ranked 56th amongst Platts 250 Companies.
  • In 2009, it received ICSI National Award for Excellence in Corporate Governance.

Rural Electrification Corporation
The Rural Electrification Corporation Limited (REC), is a listed´Navratna´ PSE under the Ministry of Power. A non-banking financial company with 'Infrastructure Finance Company' status, its main objective is to finance and promote power sector projects across India.

REC provides loan assistance to various state power utilities, private sector project developers, central power sector utilities and state governments for investments in power generation, power transmission, power distribution and other system improvement schemes/initiatives.

As March 31, 2016, REC has a loan book of over Rs.200,000 crore and net worth of Rs.28,618 crore.

The Project Offices and the sub-offices in the States coordinate the programmes of REC´s financing with the concerned State Power Utilities to facilitate formulation of schemes, sanction & disbursement of loans and monitor the implementation of schemes by the State Power Utilities. The different types of projects funded by REC are as under:

Operational Highlights

  • REC´s power generation schemes include setting up new power generating stations based on conventional sources of energy; R&M of existing power generating stations based on conventional sources of energy; and setting up of power generation plants based on renewable energy sources.

  • REC´s power transmission schemes include evacuation of power from new power generating stations and strengthening/improvement of existing transmission system in the designated areas.

  • Its power distribution schemes include improvement of the power sub-transmission and distribution system in the designated areas; conversion of LVDS to HVDS in rural areas; purchase of equipment for upgradation of T&D systems; intensive load development for connections to rural consumers; setting up of electrical infrastructure for energisation of agricultural pump sets.

  • Financially, it provides short term and medium term loans for working capital requirements like purchase of fuel for power plant, purchase of power, purchase of material and minor equipment, system and network maintenance including repair of transformers, etc.

  • REC also plays an important role in the implementation of several flagship schemes such as, acting as the Nodal Agency for implementation of DDUGJY, the scheme for rural electrification; the NEF, etc., among others.

  • REC is actively involved in the implementation of the 'Ujjwal Discom Assurance Yojana' (UDAY), and in monitoring of progress of the various reform linked parameters committed by the participating utilities.

  • It also provides counter-part funding for the IPDS, for improvement of the urban power infrastructure in India.

  • REC raises funds through various domestic and international sources, including commercial banks, capital gain tax exemption bonds, non-priority sector bonds and commercial paper, and official development assistance loan from international agencies.

  • Domestic debt instruments of REC are assigned the highest rating "AAA" by reputed credit rating agencies CRISIL, Fitch and ICRA. Moody´s and Fitch have rated its international credit rating at par with India´s sovereign rating.

Achievements

  • Accorded hightest safety ratings by CRISIL, FITCH and CARE.
  • Consistently rated as 'Excellent' - the highest category - by GoI since 1993-94.
  • Received 'MOU' Award from the Government of India five times, for 'Excellence in performance.

Power Grid (PGCIL)
The Power Grid Corporation of India Limited (Power Grid), is a state-owned electric utility company headquartered in Gurgaon, India. It transmits about 50 per cent of the total power generated in India on its transmission network. Operating throughout the country, its transmission network consists of roughly 101,886 ckm and 197 EHVAC and HVDC sub-stations, which provide total transformation capacity of 168,063 M VA. Its interregional capacity is 47,450 MW.

Operations Overview

  • Power System Management They take continuous action regarding operation and maintenance to seek to ensure compliance with prescribed standards as well as to achieve high availability of the system.
  • Construction Activity Their core business is the transmission of electric power. As on July 31, 2016, they own and operate over 1,31,728 ckt km network of transmission lines, 2,65,663 MVA transformation capacity and 213 sub-stations, which constitute most of the interstate and inter-regional electric power transmission systems and carries electric power across India.
  • Operation & Maintenance It takes continuous action regarding operation and maintenance to seek to ensure compliance with prescribed standards as well as to achieve high availability of the system for uninterrupted power supply to customers.
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