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Utilities Sector India

January 2014



Table of Contents

I. Utilities Overview

1. Utilities Highlights

2. Main Sector Indicators

3. Power Sector Snapshot

4. Power Sector Snapshot (cont’d)

5. Utilities as Percent of GDP

6. Wholesale Price Index (WPI)

7. FDI in Utilities

8. Power Sector Forecast

9. Electricity Utilisation, Consumption Forecast

10.Energy Requirement and Peak Load Forecast

11.Power Generation Forecasts

12.Water Supply Forecast

13.Employment and Salaries

II. Utilities Government Policy

1. Power Sector Government Policy

2. Power Sector Government Policy (cont’d)

3. Power Sector Government Policy (cont’d)

4. Renewable Energy Government Policy

5. Urban Water Supply Government Policy

6. LPG, PNG Government Policy

III. Power Generation - Overview

1. Power Sector Highlights

2. Power Generation, Electricity Demand

3. Installed Capacity and Capacity Additions in FY 2013

4. Capacity Utilisation and Per Capita Consumption

5. Energy Requirement/Availability Gap

6. Peak Load Demand/Supply Gap

IV.Power Generation By Type of Fuel

1. Coal

2. Coal (cont’d)

3. Legal Framework for IPP Projects in India

4. Competitive Bidding Policy

5. The Fuel Supply Agreement (FSA)

6. Gas and Liquid-Fuel-Based Generation

7. Gas and Liquid-Fuel-Based Generation (cont’d)

8. Hydropower Generation

9. Hydropower Generation (cont’d)

10.Nuclear Power

11.Nuclear Power (cont’d)

12.Renewable Energy

13.Share of RES in Power Generation, Capacity

14.Power Generation SWOT Analysis



Table of Contents

V. Power Transmission and Distribution

1. Power Transmission and Distribution Highlights

2. Power Transmission and Distribution Highlights (cont’d)

3. Power Transmission and Distribution Highlights (cont’d)

4. Performance of State Power Utilities

5. Performance of Utilities Selling Directly to Consumers

6. Performance of Utilities Selling Directly to Consumers

(cont’d)

7. Power Exchange and Trading

8. Power Exchange and Trading (cont’d)

VI.Water Supply and Sanitation (WSS)

1. Power Transmission and Distribution Highlights

2. Water Utilities in India

3. Urban Water and Sewage Highlights

4. Water Supply

5. Water Supply and Sewage

VII.City Gas Distribution (CGD)

1. City Gas Distribution (CGD) Highlights

2. PNG in India

3. CNG Sales, Stations and Vehicles

VIII.Major Players

1. Top M&A Deals

2. Possible M&A Activity in Utilities

3. Liquidity and Solvency Ratios of Major Players

4. GAIL India Ltd.

5. GAIL India Ltd. (cont’d)

6. NHPC Ltd.

7. NHPC Ltd. (cont’d)

8. NTPC Ltd.

9. NTPC Ltd. (cont’d)

10.PowerGrid Corporation of India Ltd.

11.PowerGrid Corporation of India Ltd. (cont’d)

12.Tata Power Ltd.

13.Tata Power Ltd. (cont’d)

14.Tata Power Ltd. (cont’d)

IX.Appendix

1. Table of Terms and Abbreviations

2. Ratio Calculation Formulas



I. Utilities Overview



Utilities Highlights

In 2011, India was the fourth-largest energy consumer in the world after the United States, China and Russia. The country currently accounts for

about 5% of the world's primary energy consumption and is forecast to claim 6% by 2025. Per capita energy consumption in Asia's third-largest

economy is among the lowest in the world, but is expected to be around the present levels of Japan by 2030.

Energy consumption

Transmission

Water Supply

Natural Gas

Four of India's five regional electricity grids are interconnected. Inter-regional transmission capacity totalled 28 GW in Mar 2012, accounting for

14% of generation capacity. While keeping its focus on adding generation capacity, the government has pledged to increase inter-regional

transmission to some 59 GW by 2015. State governments sell electricity to consumers at discounted rates and also grant capital subsidies to the

state utilities. Policies and electricity tariff rates are decided by the government. Issues to be addressed include unbundling, granting open access

to transmission and adopting loss reduction technologies.

Economic growth and urbanisation are widening the demand/supply gap of water and managing domestic water resources rationally and

sustainably is a national priority. Current water consumption is roughly in line with availability, but by 2030, water consumption is estimated to be

100% higher than water available. The uneven distribution of water resources, both geographically and seasonally, aggravate the problem. Less

than 50% of the urban population has access to piped water. Cities typically receive piped water for a few hours per day. Water utilities are run by

state, municipal or city authorities.

With a share of 10%, natural gas is India's third most important energy source and is expected to grow to 20% of the energy basket by 2025. About a fifth

of natural gas demand is currently met by imports. In 2013, India had some 14,000 kilometres of gas pipelines, some 75% of which were operated by state-

run gas utility GAIL. City gas distribution (piped natural gas or PNG) was available in some 50 geographical areas at the end of 2013.



Source:

Main Sector Indicators

Main Sector Indicators

CEIC, CEA

Indicator FY 2013 FY 2012 Performance Trend

10-Year History

National GDP, (at constant prices, FY 2005 is base), INRbn 55,054.37 52,435.82

GDP growth (at constant prices, FY 2005 is base), % 4.99% 6.21%

Fiscal Deficit, INRbn 5,209.25 5,159.90

8-Year History

FDI Inflows in Power, USDbn (calendar years) 3.83

(Jan-Jul 2013) 38.57

Plan-Wise History**

Installed Generation Capacity, GW* 223.34 199.88

Gross Electricity Generation, TWh 963.72 922.45

Transmission Lines Installed, ckt km 17,107 20,434

Per Capita Electricity Consumption, kWh 917.20 883.60

10-Year History

All-India Plant Load Factor (PLF) (Coal & Lignite), % 69.93% 73.47%

Energy Deficit, % 8.71% 8.50%

Peak Deficit, % 9.00% 10.60%

*Includes Renewable Energy Sources (RES)

**Planwise databars show data for years:

FY 1966 (End of 3rd Plan); FY 1974 (End of 4th Plan); FY 1979 (End of 5th Plan); FY 1985 (End of 6th Plan); FY 1990 (End of 7th Plan); FY 1997 (End of 8th Plan); FY 2002 ( End of 9th Plan); FY 2007 (End of 10th

Plan); FY 2012 (End of 11th Plan); FY 2013 (First Year of 12th Plan);



Source:

Power Sector Snapshot

Fossil Fuel Reserves of Key Countries, 2010

Natural Gas Demand Forecast

Projected Primary Energy Consumption in 2025

Fossil Fuel Availability

BP Statistical Review, Tata Power, India Energy Book 2012, World Energy Council, GAIL, Oil India Limited, NTPC, Planning Commission

88 38

3 35

308

92 36

211 179

498

33

19% 20%

6% 9%

6% 4% 2% 2% 1% 1% 1%

0%

5%

10%

15%

20%

25%

0

100

200

300

400

500

600

US

A

Chi

na

Japa

n an

d S

outh

Kor

ea

Wes

tern

Eur

ope

Rus

sia

Indi

a

Bra

zil

Sau

di A

rabi

a

Sou

th A

fric

a

Aus

tral

ia

Egy

pt

Years of Reserves Share of Primary Energy Consumption, %

Rank Country Energy Consumption

(Mtoe)

% of World

Consumption

1 China 4,055 24%

2 U.S. 2,722 16%

3 India 980 6%

4 Russia 814 5%

5 Japan 597 4%

Total World Consumption: 16,922 Mtoe

Demand from power generators outstrips domestic production of fossil

fuels (coal and gas). As a result, coal imports have been rising to support

the operation of plants not ordinarily functioning on imported coal.

Generation losses due to coal supply shortages have also been

increasing. India’s energy requirement is expected to grow four times the

current level to 2.0 BMT/year by 2031. To meet this demand, domestic

coal production has to grow between 7% and 9%. During the XII planning

period, thermal power plants are expected to require 842 MMT of coal,

against an estimated domestic availability of 604 MMT. The 238 MMT

shortfall is expected to be bridged by imports.

134 185 199

249 305

159

186 206

197

168

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Gap,MMSCMD

Supply,MMSCMD

473

293

371 405

446 Projected Gas Demand, MMSCMD



Source:

Power Sector Snapshot (cont'd) (charts show Indian fiscal years)

Capacity Addition Targets (MW) for the XII Plan (2012-2017)

Private Sector Vs Total Capacity Additions

XI Plan (2007-12) Capacity Addition - Target Vs Actual

Energy Availability and Peak Supply Gaps

NTPC, Association of Power Producers (APP), CEA

Hydro, 9,204

Nuclear, 2,800

Gas, 1,086

Coal, 62,695

Total: 75,785 MW

82.7% 12.14%

3.7%

1.43%

39,829

27,952

10,760 15,220 16,732

23,012

Central Sector, MW State Sector, MW Private Sector, MW

Target Actual

38%

214%

60%

5,061 2,671

23,012

42,131

19,015 21,180

54,964

75,785

IX Plan (1997-2002) X Plan (2002-2007) XI Plan (2007-2012) XII Plan (2012-2017)(F)

Private Sector Capacity Addition, MW Total Capacity Addition, MW

27%

56%

42%

13%

Private Sector Capacity Addition as Percent of Total

Capacity Addition

-11.10%

-10.10%

-8.50% -8.50% -8.71%

-11.90%

-13.30%

-9.80%

-10.60%

-9.00%

-16.00%

-12.00%

-8.00%

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Energy Requirement/Availability Gap, %

Peak Demand/Supply Gap, %

Actual as Percent of Target



Source:

Utilities as Percent of GDP

Industrial Production Index - Electricity

Utilities as % of GDP

IPI Weight, FY 2014 GDP Growth Forecasts

CEIC, EMIS Insight calculations

41,587 45,161

49,370 52,436

55,054

831 882 928 988 1,029

2.00%

1.95%

1.88% 1.88% 1.87%

1.80%

1.85%

1.90%

1.95%

2.00%

2.05%

0

20,000

40,000

60,000

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

All India GDP, INR bn (Constant Prices, FY 2005 is base)GDP Electricity, Gas and Water Supply, INR bn (Constant Prices, FY 2005 is base)Electricity, Gas and Water Supply GDP as % of Total GDP

53,036 61,089

72,670

83,535

94,610

911 1,139 1,310 1,448 1,702

1.72%

1.86%

1.80%

1.73%

1.80%

1.60%

1.65%

1.70%

1.75%

1.80%

1.85%

1.90%

0

20,000

40,000

60,000

80,000

100,000

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

All India GDP, INR bn (Current Prices)

GDP Electricity, Gas and Water Supply, INR bn (Current Prices)

Electricity, Gas and Water Supply GDP as % of Total GDP

123 131

138

149

155

2.75%

6.08% 5.50%

8.19%

3.95%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0

20

40

60

80

100

120

140

160

180

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Industrial Production Index - Electricity, FY 2005 is base % y/y change

With a weight of 10.32%, electricity is the fourth-largest contributor to India's

industrial production index (IPI), preceded by manufacturing with 75.53%,

mining with 14.16% and basic metals manufacturing with 11.34%,

respectively, the statistical supplement of the Economic Survey of India for

FY 2013 showed. Chemicals and chemical products have a weight of

10.06% and food products and beverages – of 7.28%.

In June 2013, the IMF revised its GDP forecast for India for the current fiscal

year (FY 2014) to 5.6% from 5.8% issued in April.

In September 2013, HSBC cut its forecast for India's GDP growth to 4.0%

from 5.5%, while in October the World Bank lowered its forecast for FY 2014

to 4.7% from 6.1% estimated in April.



Source:

Wholesale Price Index (WPI)

Wholesale Price Index (WPI), Fuel and Power and Subsectors, FY 2005=base

Wholesale Price Index (WPI), Electricity Subsectors, FY 2005=base

CEIC

100

120

140

160

180

200

220

240

Mar-12Apr-12

May-12Jun-12

Jul-12Aug-12

Sep-12Oct-12

Nov-12Dec-12

Jan-13Feb-13

Mar-13Apr-13

May-13Jun-13

Jul-13Aug-13

Sep-13Oct-13

WPI Fuel and Power WPI Fuel and Power - Coal WPI Fuel and Power - Mineral Oils WPI Fuel and Power - Electricity

100

120

140

160

180

200

Mar-12Apr-12

May-12Jun-12

Jul-12Aug-12

Sep-12Oct-12

Nov-12Dec-12

Jan-13Feb-13

Mar-13Apr-13

May-13Jun-13

Jul-13Aug-13

Sep-13Oct-13

WPI Electricity - Domestic WPI Electricity - Commercial WPI Electricity - Agriculture WPI Electricity - Railway Traction WPI Electricity - Industry



Source:

FDI in Utilities (charts show calendar years)

Foreign Investments in Power in India

The Electricity Act of 2003 makes provisions for 100% FDI in the

Indian power sector under an automatic approval scheme and

offers incentives such as 16% assured post-tax return on equity in

current dollars and a five-year tax holiday.

In spite of this, FDI inflows in the power sector have been very

moderate and have not shown a trend to increase over the years.

India's total FDI inflows are about a fourth of those of China.

Between April 2000 and March 2012, the Indian power sector

attracted FDI equity inflows of some 4%, compared to 19% by the

service sector and 7% by telecommunications.

In May 2010, the country got its first FDI in the power sector in 54

months, when Singapore-based Sembcorp announced plans to

invest in a 49% stake in a 1,320 MW thermal power plant in

Andhra Pradesh.

In December 2011, Mauritius-based private equity fund Multiples

Private Equity, set up by an Indian national, sought government

approval to acquire a minority stake in the Indian Energy

Exchange (IEX), one of the two power exchange platforms in the

country. The move sparked a debate on whether the government

needs to clarify rules on FDI in such enterprises.

According to comments by India's largest thermal power producer

NTPC, the low FDI inflow in the power sector is indicative of

concerns of the foreign investors over the government's slow

progress in dealing with the sector's structural problems.

Indian Investments Abroad

CEIC

12.35 11.32 7.88 11.97 4.86 0.48

253.37

179.77

137.73 158.63

148.62

52.22

4.87%

6.30% 5.72%

7.54%

3.27%

0.93%

0%

2%

4%

6%

8%

0

50

100

150

200

250

300

2008 2009 2010 2011 2012 2013(Jan-Jul2013)FDI Inflows, Power, USD bn

Total FDI Inflows, USD bn

FDI Inflows in Power as % of Total FDI Inflows

17.52 17.45

40.51

33.94

25.60 25.73

0.14 0.82 0.09

0.36

0.15 0.04 0.81%

4.71%

0.23%

1.07%

0.59% 0.14% 0%

1%

2%

3%

4%

5%

0

10

20

30

40

50

2008 2009 2010 2011 2012 2013(Jan-Oct

2013)Total FDI Outflows, USD mn

FDI Outflows - Electricity, Gas and Water, USD mn

Electricity, Gas and Water Outflows as % of Total Outflows



Power Sector Forecast

Soaring

Demand

India's demand for electricity may cross 300 GW earlier than most estimates, consulting firm McKinsey said in a report. The reasons for the optimistic forecast include faster growth of India's manufacturing sector in the future compared to the past, the rapid increase in domestic demand as the quality of life of Indians improves, and connection to the grid of some 125,000 villages. A demand of 300 GW will require about 400 GW of installed capacity, the McKinsey analysts pointed out, adding that blackouts and load shedding currently suppress demand.

Capacity

Additions

India will need between 600 GW and 1,200 GW of new power generation capacity before 2050, according to the International

Energy Agency (IEA). The technology and fuel sources India adopts as it adds this capacity may have a significant impact on

global resource usage and the environment.

Reliance on

Imported Coal

With a share of 58.3% of India’s total installed generation capacity, coal is the single most important fuel in domestic electricity generation. Reliance on imported coal has been steadily increasing in the past decade, with volume more than doubling to 80 MMT in FY 2012 from 30 FY in fiscal 2010. In comparison, domestic production has remained stagnant. Reliance on imported coal for power generation in India is expected to continue. Imported coal is forecast to account for some 20% of the coal-based generation and 19% of all generation in India by fiscal year 2017.

Natural Gas

Deficit

Net natural gas production dropped 15.94% to 38,945.61 MCM in FY 2013, against 46,326.91 MCM in the previous year, due to lower than anticipated production by both the public and private/JV sectors. The gap between natural gas demand and supply is expected to grow. The gas requirement of the power sector in fiscal 2017 is forecast at 100 MMSCMD. Due to the unfavourable demand/supply balance of hydrocarbons in India, the government is encouraging national oil companies to pursue equity oil and gas opportunities abroad as well as explore domestic shale gas deposits.

Nuclear Power

India has a largely indigenous nuclear power program and expects to have 14,600 MWe nuclear capacity by 2020. It aims to supply 25% of electricity from nuclear power by 2050. The government has adopted a vision for the country to become a world leader in nuclear power, due to its expertise in fast reactors and thorium fuel cycle. The use of thorium for nuclear power generation was developed in India due to its limited availability of indigenous uranium and its being largely excluded from nuclear trade for some 30 years. The country is a nuclear power and has not signed the Nuclear Non-Proliferation Treaty.



Comments

Source:

Electricity Utilisation, Consumption Forecast

The national, regional and state findings of the 18th Electric Power Survey of India were released in September 2011. The Electric Power Survey

Committee (EPSC) convened to forecast annual electricity demand for states, union territories, regions and the whole country, up to the end of the 12th

Planning Period in fiscal 2017. Another task on the committee agenda was to project electricity demand for the 13th and 14th Planning Periods, i.e. up to the

end of fiscal years 2022 and 2027, respectively.

Electricity Utilisation Pattern Forecast, % Rural, Urban Electricity Consumption Forecast, %

18th Electric Power Survey of India (most recent available)

26.38% 26.44%

10.60% 11.52%

18.96% 17.86%

35.79% 36.35%

8.27% 7.83%

0%

20%

40%

60%

80%

100%

120%

FY 2017 FY 2022

Domestic Commercial Irrigation Industrial Others

44.55% 31.23%

40.91%

61.64% 60.87%

41.24%

55.45% 68.77%

59.09%

38.36% 39.13%

58.76%

0%

20%

40%

60%

80%

100%

120%

Northern Western Southern Eastern North-Eastern All India

Urban Rural



Source:

Energy Requirement and Peak Load Forecast

Energy Requirement Forecast, GWh

Energy Requirement and Peak Load Forecast by Region

All India Energy Requirement and Peak Load Forecast

18th Electric Power Survey of India

Region FY 2014 FY 2015 FY 2016

Northern 324,206 353,738 386,382

Western 313,465 337,289 362,901

Southern 280,709 301,823 324,033

Eastern 129,725 140,637 151,668

North-Eastern 12,621 13,703 14,878

All India 1,076,327 1,159,201 1,248,456

FY 2017 FY 2022 FY 2027 FY 2032

Region Energy

Requirement, GWh Peak Load, MW

Energy


Energy


Energy


Northern 422,498 60,934 59,400 86,461 840,670 121,979 1,135,543 164,236

Western 394,188 62,015 539,310 86,054 757,318 120,620 1,028,974 163,222

Southern 357,826 57,221 510,786 82,199 727,913 118,764 1,017,526 165,336

Eastern 163,790 24,303 236,952 35,928 349,412 53,053 480,046 72,874

North-Eastern 16,154 2,966 23,244 4,056 33,952 6,169 46,921 8,450

All India 1,354,874 199,540 1,904,861 283,470 2,710,058 400,705 3,710,083 541,823

1,354,874 1,904,861 2,710,058 3,710,083

199,540

283,470

400,705

541,823

0

200,000

400,000

600,000

0

1,000,000

2,000,000

3,000,000

4,000,000

FY 2017 FY 2022 FY 2027 FY 2032

All India Energy Requirement, MU, (l) Al India Peak Load, MW, (r)



Source:

Power Generation Forecasts

Coal Consumption Trend Forecast

Transmission and Distribution Losses Forecast, %

Power Generation Mix Forecast, %

CRIS Analysis, 18th Electric Power Survey of India

Region FY 2017 FY 2022

Northern 20.13 16.12

Western 19.12 14.91

Southern 16.78 15.44

Eastern 19.36 14.22

North-Eastern 22.71 18.65

All India 18.9 15.39

54% 54% 55% 53% 53%

14% 16% 17% 19% 19%

10% 9%

8% 8% 7%

22% 21% 20% 20% 19%

0%

20%

40%

60%

80%

100%

120%

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Domestic Coal Imported Coal Gas Hydro & Renewables

2%

11% 10% 10%

11%

15%

21%

15%

11%

3%

17% 18%

19% 19% 20%

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Increase in Domestic Coal Consumption, % Increase in Imported Coal Consumption, %

Imports as % of Total Coal Consumed



Source:

Water Supply Forecast

Water Demand Forecast by Sectors, bcm

According to the Asian Development Bank (ADB), India's

population is likely to total around 1.6 billion people in

2050. Food requirement is estimated at 400 million metric

tonnes (MMT), against current food production at about

230 MMT.

From a water supply perspective, India will have to extend

irrigation to currently rain-fed areas to meet this demand.

The Ministry of Water Resources forecast total water

requirement in 2050 for all sectors including irrigation,

domestic, industry, power, inland navigation, ecological,

and evaporation losses, at 1,180 billion cubic meters

(bcm). The return flows have been estimated at 259 BCM,

giving a net requirement of 921 BCM for 2050.

Climate change impact is expected to increase

demand, mainly for agriculture, due to increased

evaporation from cropped areas.

An expert committee on Indian urban infrastructure and

services has estimated the total capital investment

needed in the urban water and sewage sector at INR

7,546.27bn over the next 20 years.

Average Annual Water Resource Potential, bcm, 2030

Ministry of Water Resources, Asian Development Bank, 2030 Water Resources Group, Planning Commission

543

43 37 19

807

111 81 70

Withdrawals forAgriculture

Withdrawals forMunicipal and

Household Use

Industrial Withdrawals Power Withdrawals

2010 2050 Water Requirement Projection for All Sectors, 2050 – 921 BCM

Surface Water (SW), BCM, 2,118

Ground Water (GW), BCM, 400

Available Water Resources

Surface Water (SW), BCM, 514


Utilizable Water Resources



Source:

Employment and Salaries

Daily Average Number of Employees

Employment in Utilities

Average Daily Wages in Utilities

CEIC

946 940 920 910 870 860 850 850

800 840 840 830

41 50 40 50 50 50 40 50 50 60 60 70

FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Employment in Electricity, Gas and Water Utilities - Public Sector, thou persons Employment in Electricity, Gas and Water Utilities - Private Sector, thou persons

FY 2009 FY 2010

Daily Avg No. of Employees in

Electric Power Generation,

Transmission and Distribution

26,913 28,926

Daily Avg No. of Contract Workers in

Electric Power Generation,

Transmission and Distribution

8,034 13,600

Daily Avg No. of Employees in Water

Collection, Treatment and Supply 833 452


Water Collection, Treatment and

Supply

169 N/A

Daily Avg No. of Employees in

Sewerage 1,156 937


Sewerage 170 385

472.27

263.59 291.5

550.71

462

365.17

Average Daily Wage in ElectricPower Generation,

Transmission and Distribution,INR

Average Daily Wage in WaterCollection, Treatment and

Supply, INR

Average Daily Wage inSewerage, INR

FY 2009 FY 2010



II. Utilities Government Policy



Source:

Power Sector Government Policy

Key Bodies

The Ministry of Power (MoP) of India - acts as a liaison between the central government and state utilities of public and private

ownership, as well as oversees rural electrification projects.

The Central Electricity Authority of India (CEA) – MoP's planning arm, provides advise to the central and state governments and

regulatory commissions on technical matters relating to generation, transmission and distribution of electricity. It also provides

operational advise to state governments and utilities.

Central Electricity Regulatory Commission (CERC) – a key regulator of the power sector in India, in charge of overseeing the tariffs

of state-owned power generating companies and regulating interstate transmission of energy.

Other

Institutions

The Ministry of Coal is in charge of exploration of the coal and lignite reserves of India, as well as of production, supply, distribution

and price of coal through government-owned coal major Coal of India Limited (CIL).

The Department of Atomic Energy (DAE) of India is a body directly under the Prime Minister, in charge of nuclear technology,

nuclear power and research.

The Ministry of New and Renewable Energy (MNRE) – the chief institution in charge of implementing renewable energy policies and

programs in India. It was established as Ministry of Non-Conventional Energy Sources in 1992 and assumed it current name in 2006.

The Petroleum & Natural Gas Regulatory Board (PNGRB) Act of 2006 provides the legal framework for the development of the

natural gas pipelines and city or local gas distribution networks.

Electricity Act

2003

The Electricity Act, 2003, is a key legislation regulating generation, distribution, transmission and trading in power in India. It replaced

laws adopted in 1910 and 1948 which were unable to meet modern-day electricity demand and realities. The act de-licenses power

generation, except for hydropower projects over a certain size, de-licenses distribution in rural areas and introduces a licensing regime

for distribution in rural areas. In addition, the act stipulates that 10% of the power distributed to consumers has to be generated from

renewable and non-conventional sources of energy.

Power Finance Corporation Ltd. (PFC) is the financial backbone of the Indian power sector. It provides financial assistance for

power projects across India and also provides funding to State Electricity Boards (SEBs) (which are both electricity regulation boards

and power generating companies), central and state sector power utilities and private companies.

CEA, Power Ministry, CERC, Coal Ministry, DAE, MNRE, PNGRB, PFC



Source:

Power Sector Government Policy (cont'd)

Power

Legislation

National Electricity Policy, 2005 – adopted as required by the Electricity Act of 2003. Policy sets priority on hydropower, highlights the need for increased use of natural gas and nuclear power, pledges to make thermal power less polluting by using low-ash coal and sets recommendations for improving the transmission and distribution of power.

National Water Policy, 2005, Small Hydropower Policy, 2007 (for plants with capacity of below 20 MW), Hydropower Policy, 2008 - emphasis on development of India’s full hydropower potential, states encouraged to develop workable PPP projects.

The Energy Conservation Act of 2001 was adopted to promote energy saving, reduce India’s energy intensity and curb energy wastage. The act was amended in 2010. The Bureau of Energy Efficiency (BEE) is a Government of India agency under the Ministry of Power, in charge of encouraging the conservation and efficient use of energy in India. BEE was set up in 2002 under the provisions of the Energy Conservation Act of 2001.

Rural

Electrification

Scheme

(RGGVY)

A comprehensive scheme of rural electricity infrastructure and household electrification for providing access of electricity to all rural

households was launched by the government of India in Apr 2005. Under the scheme, called Rajiv Gandhi Grameen Vidyutikaran

Yojana (RGGVY), state capital subsidy is provided for projects under the following panels: Rural Electricity Distribution Backbone

(REDB), Creation of Village Electrification Infrastructure (VEI), Decentralised Distributed Generation (DDG) and Supply and

Electrification of Below Poverty Line Households. In addition, states develop their own Power Distribution and Rural Electrification

Projects. Some 80% of India's inhabited villages were electrified and 44% of the rural households had access to electricity, according

to the 2001 Census. As of July 31, 2011, 96% of India's villages had access to electricity, the Planning Commission said in its report

on Power in the XII Planning Period (2012-17).

Ultra Mega

Power

Projects

(UMPP)

Projects under this initiative, aimed at bridging the gap between India’s power demand and supply, are awarded to developers on the basis of competitive bidding, by the Ministry of Power in association with CEA and PFC. Each of the coal-based projects has about 4,000 MW capacity.

According to the government's Economic Survey for FY 2012, four UMPPs at Sasan in Madhya Pradesh, Mundra in Gujarat, Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand, respectively, had been awarded to developers. The Mundra UMPP, owned by Tata Power and functioning on coal imported primarily from Indonesia, started operations in March 2012. The Tiliaya UMPP, awarded to Reliance Power, is expected to be up and running in 2015.

A 50,000 MW hydroelectric initiative, aimed at building a combined 50,000 MW of hydropower capacity in 16 states, was launched in 2003. UMPPs are regulated by the Revised Mega Power Project Policy of 2009.

World Resources Institute, Planning Commission, India Economic Survey 2011-12, Reliance Power



Source:

Power Sector Government Policy (cont'd)

Energy

Efficiency

Management

National Mission on Enhanced Energy Efficiency (NMEEE) – an Indian government initiative designed to address inefficient energy

use, developed under the Energy Conservation Act of 2001. A major energy saving initiative is the Perform, Achieve, Trade (PAT)

scheme. PAT is a trading mechanism aimed at stimulating high-energy-consuming industries to implement energy efficiency measures

and to comply with energy consumption targets set by the Bureau of Energy Efficiency. Under PAT, 478 Designated Consumers (DCs)

have been selected from eight industrial sectors including the power sector. The DCs have been given targets to reduce energy

consumption by March 2015. If the DCs are unable to achieve the allocated targets, they would be either required to purchase Energy

Saving Certificates (ESCerts), or pay penalty corresponding to the shortfall in their target achievements.

Financial

Incentives to

Electrical

Utilities

India's Finance Act of 2012 provided a number of incentives to the domestic power sector. Steam coal has been fully exempted from

basic custom duty and countervailing duty (CVD) has been reduced to 1% until March 31, 2014. Coal mining projects have also been

fully exempted from basic custom duty on imports. Import duties on natural gas have been scrapped. Tax withholdings on External

Commercial Borrowing have been reduced to 5% from 20% and income tax exemption rules have been extended to power plants that

had started generation by the end of the FY 2012 in March.

Reforms in

Distribution

Power distribution is a highly regulated segment, so government policies play a crucial role in its development. Power distribution in

India, a link between power consumers and generators, is plagued by high distribution losses and low billing recovery, which results in

the poor financial health of utilities. The Accelerated Power Development and Reform Program (APDRP) was launched in FY 2003

to improve the financial viability of state utilities, reduce transmission and distribution (T&D) losses and improve the reliability, quality

and availability of power supply. In FY 2008, the government introduced the Re-Structured Accelerated Power Development and

Reforms Program (R-APDRP) to implement IT systems for distribution and launch large-scale distribution franchising.

NTPC, Tata Power, Chandigarh Engineering Dept.



Source:

Renewable Energy Government Policy

Market

Mechanisms

Details

Significance

Technologies for power generation from Renewable Energy Sources (RES) are evolving and

the Indian RES market is expected to mature rapidly. As a result, the cost of renewable-based

generation is expected to decrease. The Indian RES market functions under two government-

promoted mechanisms – Renewable Energy Certificates (REC) and Renewable Purchase

Obligations (RPO). RECs are a policy mechanism to promote RE-based power generation in

India. RPO is being implemented throughout the country to create demand for renewable

energy. Under the Electricity Act 2003, the National Electricity Policy 2005 and the Tariff Policy

2006, State Electricity Regulatory Commissions (SERCs) are required to purchase a certain

percentage of power from renewable energy sources.

Various State Commissions have established an RPO obligation for their distribution companies. They have also determined the tariffs for RES generation based on different technologies. However, the specified RPO varies from 1% to 10% across the country. At the same time, there is wide divergence in the tariffs of different technologies set by different Regulatory Commissions. REC is aimed at addressing the mismatch between the availability of RE resources in states and the requirement of the obligated entities to meet the RPO. Under the REC mechanism, RE generators have two options - to sell the renewable energy at a preferential tariff or to sell the two cost components of RE generation – (1) electricity generation and (2) environmental attributes associated with RE generation - separately. The environmental attributes can be exchanged in the form of RECs.

Subsequent to the launch of the Jawaharlal Neru National Solar Mission (JNNSM) in 2010, almost every state announced a solar-specific percentage as a part of the overall RPO. These are currently in the range of 0.25% to 0.5% and are expected to go up to 3% by 2022. Solar generation is complemented by solar‐sector specific RECs. RECs are issued to RE generators for 1 MWh of RE electricity injected into the grid, and are valid for 365 days after the date of issuance. Purchase of RECs is equivalent to purchase of RE for RPO compliance. Strengthening the REC mechanism is expected to help manage the liquidity in the RE market by allowing states that lack RE sources to meet their RPO. There could be significant opportunities in the RE sector, depending on how the REC market evolves, and also on whether regulators penalise distribution companies that do not meet their RPO.

Mid-Term Potential

The Planning Commission estimated the total medium-term (up to FY 2032) potential for power generation from RE sources, such as wind, small hydropower plants, solar, waste-to-energy and biomass, in India at some 183,000 MW.

Government measures to boost RE energy

development:

Fiscal and financial incentives such as capital/interest subsidies and nil or lowered excise and customs duties.

Preferential tariff for grid-interactive renewable power in most states.

FDI of up to 100% under the automatic route.

JNNSM targeting 2,000MW of grid-connected solar power by 2022.

Council of Energy, Environment and Water, Tata Power, NTPC



Source:

Urban Water Supply Government Policy

Strain on

Urban

Infrastructure

According to the United Nations Population Division, between 500 and 600 million Indians, equivalent to roughly half of the country’s

population, will live in cities by 2030. As a result, urban infrastructure is coming under severe pressure. In an attempt to boost urban

infrastructure development, the Indian government launched the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) in

December 2005 to fast-track the development of 65 cities across the country. The initiative envisaged spending USD 11bn over

seven years on water, sanitation, drainage, solid waste management, roads, transport and urban renewal. Water supply projects

under JNNURM focus on goals such as reducing non-revenue water (NRW) below 15% and introducing volumetric tariffs, 100%

metering of all connections as well as a 24-hour water supply, among others.

Urban

Renewal

Mission

JNNURM covered 65 Mission Cities and several hundred non-mission cities. The interventions in the Mission Cities are covered by

two sub-missions called Urban Infrastructure and Governance (UIG) and Basic Services to the Urban Poor (BSUP). The non-mission

cities, on the other hand, have two sub-schemes called Urban Infrastructure Development Scheme for Small and Medium Towns

(UIDSSMT) and Integrated Housing and Slum Development Programme (IHSDP). The UIG and UIDSSMT components are managed

by the Ministry of Urban Development (MoUD), while Ministry of Housing and Urban Poverty Alleviation (MoHUPA) is the nodal

agency for the other two components.

Steps to

Improve Urban

Water Sector

According to a report by ADB and another by the Indian Planning Commission on water guidelines for the 12th planning period ending

2017, measures that need to be adopted to address the issues faced by the urban water sector include making the installation of

rainwater harvesting systems mandatory for all public and private buildings, levying progressive water tariffs to discourage waste of

water while providing a basic quantity of water at a low price, introducing mandatory water supply metering, developing a suitable

strategy for operation and maintenance of the assets of water utilities, empowering local bodies to impose penalties for water wastage,

encouraging the usage of low-volume flushing cisterns and promoting the recycling of wastewater.

CEA, UN Population Division, Grant Thornton, ADB, Indian Planning Commission



Source:

LPG, PNG Government Policy

Subsidy

Details

The total amount of the LPG subsidy was INR 19.89bn in FY 2013, according to data by the Petroleum Planning and Analysis Cell. As

of Aug 16, 2013, LPG's cost to Oil Marketing Companies (OMCs) (desired price) was INR 807.98 per cylinder. The price OMCs

charged to retailers (depot price) was INR 373.41, and the retail price charged to consumers was INR 410.66. The difference of INR

434.57 between the desired and the depot price represents the OMCs’ under-recoveries per cylinder as of that date. The central

government subsidy totalled INR 22.58. The remaining INR 411.99 (to INR 434.57) were shared by upstream (oil producing)

companies and the OMCs themselves.

Consumers

Must Make a

Choice

Households pay for PNG less than they do for subsidised LPG, which results in many using PNG, while continuing to get refills of their

LPG bottles. In early 2009, the government said households using PNG will have to give up their LPG connections. Authorities also

authorised state-owned OMCs to develop a mechanism for blocking multiple or back-up LPG connections, the newswire added.

According to a report by The Hindu dated Oct 20, 2013, India is home to some 140 million LPG connections, of which 25 million are

believed to be multiple LPG connections or to exist parallel to PNG infrastructure. Some 6.3 million of these have already been

blocked by OMCs.

LPG

Connection

Portability

In early 2013, the government launched an LPG portability scheme allowing consumers to change LPG dealers but not the supplying

oil company. In October, the scheme - which is available in 24 cities across India - was enhanced by the possibility for consumers to

buy small 5-kg cylinders at retail company-owned company-operated outlets (COCO), which account for some 3% of all filling stations

in the country. According to an Oil Ministry official, inter-company portability was not legally possible, as the current law required LPG

cylinders belonging to a particular company to be refilled only by that company. The ministry was looking into ways to amend the law

or allow users to return their bottles before signing up for a new connection to a different company, the official added.

The Indian government controls fully the prices of LPG and kerosene and partially de-controlled those of petrol and diesel in 2010 and 2013, respectively. Subsidies are provided on 14.2 kg LPG cylinders sold to households under the PDS Kerosene and Domestic LPG Scheme of 2002. Subsidised LPG is termed "domestic" and is only for residential usage. In September 2012, the government limited subsidised LPG to six cylinders per household a year but in December said it would raise the cap to nine cylinders per year. As of December 2012, subsidised LPG cost INR 410.66 per cylinder, against a market price of some INR 896 per 14.2-kg bottle. The price of 19-kg commercial-usage cylinders is market-linked and higher than the market price of the 14.2-kg bottle.

Petroleum Planning and Analysis Cell, International Institute for Sustainable Development/The Energy and Resources Institute, EMIS Insight



III. Power Generation - Overview



Power Sector Highlights

Installed

Capacity

India's power generation sector boasts the world's fifth-largest installed capacity, at 223.34 GW as of March 31, 2013. Captive

power plants generate additional 43.3 GW. Thermal power plants, fuelled by coal, gas and diesel, constituted more than 67% of

the installed capacity, with coal alone accounting for 58.3% of capacity at the end of FY 2013 in March. Hydro power plants and

those using renewable energy sources had shares of some 17.7% and 12.32%, respectively.

Demand

Outstrips

Availability

Electricity demand in India traditionally outstrips availability, both in terms of base load energy and peak availability. In FY 2013,

base load requirement was 998,114 GWh against availability of 911,209 GWh, which translated into an 8.7% deficit. The

percentage dipped slightly from FY 2012, when peak load demand was 130 GW, against availability of 116 GW, which resulted

in a 10.6% deficit. Peak load deficit was 9.0% in FY 2013.

Electricity

Subsidies

State governments sell electricity to consumers at discounted rates and also grant capital subsidies to the state utilities. Policies and electricity tariff rates differ among states and between consumer categories in each state. State utilities compute tariffs on the basis of revenue required and sales forecasts. Tariffs are subject to approval by state regulatory commissions. The approved tariffs are often lower than those suggested by the companies. State governments then compensate utilities with a cash subsidy that is supposed to be paid in advance for the upcoming financial year but is often paid later.

Network

Losses

India's transmission and distribution (T&D) losses totalled 23.65% of distributed electricity in FY 2012, against a world average

of some 15%. According to expert estimates, technical factors contribute up to 20% of total losses. Non-technical losses result

from illegal tapping of lines and the installation of faulty electric meters that underestimate actual consumption, among others.

Intermittent

Supply

More than 300 million Indians, comprising nearly half of the rural and 6% of the urban population, had no access to electricity

as of December 2011. Industry experts often criticise the electricity supply in India as intermittent and unreliable with blackouts

and power shedding interrupting irrigation and manufacturing across the country.



Comments

Source:

Power Generation, Electricity Demand

In India, a kilowatt hour is called a unit of energy. Energy is traditionally measured in Million Units (MU) = million KWh and Billion Units (BU) = billion KWh.

1 MU = 1 Gigawatt hour (GWh), and 1 BU = 1,000 MU = 1 Terawatt hour (TWh). For example, 855 BU=855,000 MU=855 TWh. All power and electricity

figures taken from Indian sources and measured in MU and BU, have been converted to GWh and TWh for convenience.

On the other hand, 1 TWh per year = 114 megawatts (MW). [1 megawatt = 10^6 watts; 1 terawatt = 10^12 watts. 1 year = 8,765.813 hours.]

Power Generation, TWh, FY 2013 Electricity Consumption by Sectors, GWh, FY 2013

Tata Power, NHPC, NTPC, CEA, 18th Electric Power Survey of India Report

Household 185,858

Commercial 71,019

Industrial 382,670 Traction 15,431

Agriculture 140,960

Others 44,809

1.81%

17.95%

5.25%

21.79%

8.33%

44.87%

Total

Consumption

(figure by

CEA):

852,902 GWh 708.81

760.68

130.51 113.72

32.29 32.87

5.28 4.79

0

100

200

300

400

500

600

700

800

900

1,000

FY 2012 FY 2013

Import fromBhutan

Nuclear

Hydro

Thermal

912.06 876.89



Comments

Source:

Installed Capacity and Capacity Additions in FY 2013

India's total installed capacity was 223.34 GW as of March 31, 2013, the world's fifth-largest. Capacity additions expected in FY 2014 total 18,432 MW,

comprising 15,234 MW of thermal, 1,198 MW of hydro and 2,000 MW of nuclear power stations. The country's gross energy generation from the power

plants in operation and those expected to be commissioned by the end of FY 2014, has been assessed at 975 TWh, the Central Electricity Authority (CEA)

said.

The number of villages with provided access to electricity jumped by 37,099 to 593,732 in FY 2013 from 556,633 in FY 2012.

Installed Generating Capacity (GW) by Type of Fuel, FY 2013 Installed Capacity by Sector (GW), FY 2013

Central Electricity Authority, Tata Power, NTPC, Infraline Reports

17%

Hydro 39.5

Coal (Thermal) 130.2

Gas (Thermal) 20.1

Diesel (Thermal) 1.2

Nuclear 4.8

RES 27.5

Total:

223.34 GW 58.3%

9%

12.32%

17.7%

2.15%

Companies owned by the Central Government

(Central Sector) 89.12

Companies owned by State

Governments (State Sector) 68.9

Private Companies

(Private Sector) 65.36

39.91%

68.9%

29.26%



Comments

Source:

Capacity Utilisation and Per Capita Consumption

Capacity utilisation in the Indian power sector is measured by a Plant Load Factor (PLF). Plant Load Factor is the ratio of the actual output of a power

plant over a period of time and its output if it had operated a full capacity of that time period.

Plant Load Factor = Gross Generation / (Installed Capacity * Number of Hours).

Per Capita Consumption = Gross Electrical Energy Availability/Mid-Year Population.

Per capita electricity consumption in India about one-third of the world’s average, but is expected to reach 5,000-6,000 kWh by 2050, which would require

about 8,000 TWh per year.

Thermal Power Capacity Utilisation, PLF % All India Annual Per Capita Consumption of Electricity

CEA, NTPC, Sterlite Technologies

465

559

672

884

917

FY 1997 (End of 8th Plan)




FY 2013 (1st Year of 12th Plan)

Per Capita Electricity Consumption, kWh

82.01%

68.35% 67.27%

76.19% 73.47%

79.18%

65.54% 62.16%

75.69%

69.93%

Central PLF, % State PLF, % IPP PLF, % Private PLF, % All India PLF, %

FY 2012 FY 2013



Comments

Source:

Energy Requirement/Availability Gap

India's energy requirement and availability are forecast at 1,048,533 GWh and 978,301 GWh for FY 2014, respectively. This translates into a shortage of 70,232

GWh, or a deficit of 6.7%, according to CEA. India's energy requirement outstripped availability between FY 2009-2013. Both requirement and availability reported

annual increases in the observed years, so that the gap between requirement and availability remained essentially unchanged. In percentage terms, the energy

requirement deficit reported an average value of -9.4% between FY 2009-2013. Therefore, a constitutional gap between requirement and availability exists in the

country. In the future, as demand grows further, India will have to either boost generation capacities by exploiting more own resources, increase inter-state power

trading or rely on imports.

All India Energy Requirement/Availability Gap Requirement/Availability Gap by Regions, FY 2013

CEA, EMIS Insight calculations

300,

774

296,

475

281,

842

107,

457

11,5

66

273,

240

286,

683 23

8,05

8

102,

510

10,7

18

-9.20%

-3.30%

-15.50%

-4.60%

-7.30%

-18%

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Northern Western Southern Eastern North-Eastern

Requirement (GWh) Availability (GWh) Demand Deficit, %

-4,947 -43,784 -9,792

-848 -27,534

Deficit, GWh

777,

039

830,

594

861,

591

937,

199

998,

114

691,

038

746,

644

788,

355

857,

886

911,

209

-11.10%

-10.10%

-8.50% -8.50% -8.71%

-12%

-10%

-8%

-6%

-4%

-2%

0%

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Requirement (GWh) Availability (GWh) Demand Deficit, %

-79,313 -73,236

-83,950

-86,905

-86,001

Deficit, GWh



Comments

Source:

Peak Load Demand/Supply Gap

India's peak demand and supply are forecast at 144,225 MW and 140,964 MW for FY 2014, respectively. This translates into a shortage of 3,261 MW, or a

deficit of 2.3%, according to CEA's Annual Load Generation Balance Report (LGBR) for FY 2014. Considering transmission constraints, however, the

anticipated peak shortage increases to 6.2%, CEA added. Similarly to energy requirements and availability commented on in the previous slide, peak load

demand and supply reported increases between FY 2009-2013. Deficit remained large, at an average value of -10.9%, but in the years after FY 2010, it

has been smaller compared to 2010, perhaps due to utilities striving to add capacities to reduce power cuts. Peak load demand is set to further increase in

the future, not only because of current consumer usage, but also as a result of new consumer additions under the rural and urban electrification programs.

Peak Demand-Supply Gap Peak Demand-Supply Gap by Regions, FY 2013

CEA, EMIS Insight calculations

45,8

60

40,0

75

38,7

67

16,6

55

1,99

8

41,7

90

39,4

86 31

,586

15,4

15

1,86

4

-8.90%

-1.50%

-18.50%

-7.40% -6.70%

-20%

-18%

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Northern Western Southern Eastern North-Eastern

Demand (MW) Supply (MW) Demand Deficit, %

-1,240 -7,181

-589

-134

-4,070

Deficit, MW

109,

809

118,

472

122,

000

130,

006

135,

453

96,7

85

102,

725

110,

000

116,

191

123,

294

-11.90%

-13.30%

-9.80% -10.60%

-9.00%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Demand (MW) Supply (MW) Demand Deficit, %

-12,000 -15,747

-13,024

-13,815

Deficit, MW

-12,159



IV. Power Generation by Type of Fuel



Source:

Coal

Sufficiency of Coal Reserves in Meeting India's Power Demand

With a share of 58.3% of India's total installed generation

capacity, coal is the single most important fuel in domestic

electricity generation.

Some 75 thermal power projects depend on government-

owned Coal India Ltd. (CIL) for supplies. Power projects

absorb about 80% of domestic output. It takes some 5,000

tonnes of coal to generate 1 MW of power.

CIL accounted for about 81% of the total coal produced in

India in FY 2013. The country’s ever-increasing demand for

coal is expected to total 980 million tonnes by FY 2017. The

power sector is to account for some 70% of this demand.

In FY 2013, CIL reported output of 452.21 million tonnes of

coal, against 435.84 million tonnes in FY 2012.

Domestic coal availability is challenged by a number of

issues including bottlenecks in capacity expansion of CIL and

coal block allocation, tribal land acquisition and

environmental and forest clearances. Most of India’s coal

deposits are located under forest land.

Coal-based plants also face issues related to water

availability and ash disposal.

Thermal coal imports are needed to bridge the gap between

demand and domestic coal availability.

Reliance on imported coal has been steadily increasing in the

past decade, with volume more than doubling to 80 MT in FY

2012 from 30 MT in FY 2010. In comparison, domestic

production has remained stagnant.

Share of Coal-Fired Plants in Total Installed Capacity, 2012

Tata Power, Sterlite Technologies, CRIS Analysis, Coal India

39,761 24,492 12,879 9,297 8,871 5,490

40

22

12 9 9

5

0

5

10

15

20

25

30

35

40

45

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Jharkhand Orissa Chhattisgarh AndhraPradesh

MadhyaPradesh

Maharashtra

Top 6 States with Proven Coal Reserves (million tonnes)

No. of Years Reserves Can Support India's Power Requirement

56%

92%

77% 76%

India South Africa China Australia

Share of Coal-Fired Plants in Total Installed Electricity Capacity, 2012



Source:

Coal (cont'd)

CIL Production and Dispatch to Power Sector

As of March 31, 2013, the President of India held 90% in

CIL. The remaining 10% were owned by Indian and

overseas financial institutions, pension funds and other

investors, following a 2010 IPO. The government of India

has repeatedly stated it aimed to further reduce its stake

in CIL through share offers in the markets, a Sep 2013

report by the Institute for Energy Economics and Financial

Analysis (IEEFA) and Greenpeace said.

CIL's current measure of its extractable reserves, by its

own research subsidiary the Central Mine Planning and

Design Institute Limited (CMPDIL), is 16% below the

estimates contained in the 2010 IPO papers, the IEEFA

and Greenpeace report added.

There remains significant uncertainty about the true extent

of CIL’s extractable reserves. The Indian Chamber of

Commerce considers an accurate account of CIL’s

extractable reserves as a critical reform to India’s coal

policies.

Domestic coal prices have grown at a slower rate than

imported coal prices over the past five years. Imported

coal is forecast to account for some 20% of the coal-

based generation and 19% of all generation in India by FY

2017, CRISIL said.

As the reliance on imported fuel grows, power tariffs need

to become more reflective of costs and fuel prices, the

research agency added.

Indian Coal Production and Imports

Tata Power, CRIS Analysis, Ministry of Coal, IEEFA, Greenpeace

395 420 430 440 452

285 299 304 310 312

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

CIL Production, MT Dispatch to Power Sector, MT

362 397

419 440 442

27 28 30 46 80

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Domestic Coal Production, MT Imported Coal, MT



Source:

Legal Framework for IPP Projects in India

Legal Options for Establishing IPP Projects in India

Trilegal

Power off-take

arrangements

depend upon

the scheme

the IPP is set

up by.

The power producer does not enter

into long term off-take arrangements,

and instead sells power on a short-

term basis on the spot market or

through .a power exchange.

In January 2011, the Ministry of Power decreed that all long-term power procurement by state governments and

distribution companies should be made under the competitive bidding process.

The Competitive Bidding Guidelines require project developers to bid on the basis of a level annual tariff.

Winning bidders sign a standard-form power purchase agreement (PPA) drafted by the Power Ministry.

The Competitive Bidding Guidelines provide for

two bidding models:

Case I Route - the project developer is

responsible for arranging consents, land and

fuel for the power project; and

Case II Route - the procurer undertakes to

bear higher risk by arranging land and fuel

linkages for the project.

The effect of the introduction of competitive

bidding has been estimated as positive, but a

major problem is that the contractual

framework does not provide power producers

with flexibility to react to issues such as coal

shortage or increase in coal prices, leading to

project developers running a significant risk of

default. Considerable certainty on fuel price

and availability is necessary for bidders to

accurately price their bids. However, obtaining

an assured domestic coal supply arrangement

has become a challenge resulting in producers

often failing to meet their agreements with off-

takers.

A memorandum of understanding

(MoU) is negotiated and executed

with a state government for setting

up the project within its jurisdiction.

A merchant plant

Under the negotiated

route (MoU route)

Under a competitive

bidding process

The IPP candidate bids for an

identified project under the

Competitive Bidding Guidelines.

Power procurement in the Indian

market is increasingly being done

through competitive bidding.

In India,

there are

three options

for setting up

an

Independent

Power

Producer

(IPP) project:



Source:

Competitive Bidding Policy

Coal Supply

Coal Supply

Problems

Way Out of

Coal Supply

Problems

The Ministry of Coal grants coal allocation under a long-term or a short-term linkage. To

obtain a long-term linkage, project developers file an application with the Ministry, which

issues a letter of assurance (LoA). Following fulfilment of milestones set out in the LoA, the

IPP signs a standard-form Fuel Supply Agreement (FSA) with a government-owned coal

producer [e.g. Coal India Limited (CIL)]. Under the FSA, the coal supplier guarantees up to

50% of the IPP’s requirements, which is a significant risk for the project developer. In

agreements signed in late 2012 and Jan 2013, CIL guaranteed coal supplies meeting at

least 80% of plants’ requirements (see next slide).

IPPs are entitled to full capacity charges when selling power only if their plants operate at "normative availability", which was 85% as per tariff regulations in force in January 2012. Under the standard PPA, if availability falls below a pre-agreed threshold, the IPP is required to pay a penalty to the power purchaser. The power purchaser can terminate the PPA if average availability falls below 65% of normative availability for a specified period. Thus, IPPs are penalised for failing to achieve normative availability due to fuel supply problems outside their control. On the other hand, existent coal reserves cannot be transported to IPPs due to transportation network problems.

In an attempt to insure themselves against coal supply risks, IPPs may seek to buy

imported coal in which case they will face a substantial increase in fuel supply and

power generation costs. IPPs may seek to pass this increase on to power distributors

(which they sell power to), and ultimately to consumers. However, the Competitive

Bidding Route forbids the passing on of increased fuel supply costs. As a result, IPPs

risk incurring significant losses if they use imported coal to generate power and sell it

at the tariff agreed under their PPAs.

Policy Changes Needed

Coal suppliers should be required to commit to supply 100% of IPPs’ requirements or provide compensation;

IPPs should not be penalised for failing to perform their obligations under the PPA to the extent of the effect of the reasons outside their control;

Allowing passing on of fuel price increases to the extent beyond the control of IPPs should be allowed;

⌑⌑

Power distribution companies are also required to bid for power procurement under the Competitive Bidding Policy. However, the negotiating process is seriously challenged as procurers are unwilling to take fuel price risks and would like them to be built into the tariff. As a result, distribution companies prefer to procure power under the MoU route with a fuel price increase pass-on, or under competitive bids on fixed charges and efficiency.

Trilegal, Tata Power



Source:

The Fuel Supply Agreement (FSA)

Coal Demand

Above

Production

Capacity

With the nationalisation of coal mines in 1973, the government of India became responsible for managing the country's coal mines through Coal of

India (CIL) and its subsidiaries. The shortage of coal supply in recent years has limited the ability of power companies to generate at full capacity

and meet their purchase agreements with off-takers. In an effort to address coal supply uncertainties, the Ministry of Coal decreed that by March 31,

2012, CIL and its subsidiaries sign Fuel Supply Agreements (FSA) with power projects that had entered into long-term PPAs with distribution

licensees, and started operations after March 31, 2009 or are scheduled to become operational by March 31, 2015. CIL’s independent directors

strongly opposed the move saying that the aggregate demand under the FSAs will exceed the company’s and its subsidiaries’ current and near

future production capacities. In April 2012, the President of India issued a decree requiring CIL to commit to supplying 80% of the coal requirements

of projects that started operations between March 31, 2009 and 2011. In case of a failure to do so, the company had to pay a penalty of 0.01% of the

value of the deficit measured against the supply commitment, or import coal to bridge the shortfall.

Controversy

over Coal

Supplies

The presidential decree sparked off a multi-level debate. Experts questioned its legality since there is no judicial precedent of a decree regulating the

management of a company. Others voiced concerns as to whether coal supplies to power producers were a public or a commercial interest. CIL

independent directors said the decree undermined their fiduciary duties to act in the best interest of the company. Power producers demanded

higher penalty, claiming that the proposed threshold of 0.01% of commitment deficit may make CIL consider penalty payment a more viable option to

importing coal. In the same time producers argued that if CIL chose to import coal to bridge its supply deficit, it may transfer higher coal costs to

them, thus making the production and delivery of power under an agreed tariff impossible. Other contentious issues included coal quality and the

need to sign multiple FSAs for multiple units of the same plant.

India’s largest thermal power producer, NTPC, declined to sign the FSA, saying the pact was lacking in commitment. As a result of the growing

pressure, the CIL Board of Directors requested the Prime Minister’s Office (PMO) to review the FSA provisions in May 2012.

Attempts at

Solution

The PMO recommendations, which NTPC deemed acceptable, included fuel supply commitment of 65% instead of 80%, and a penalty of between

20% and 40% of the value of the deficit in the first four years of the agreement. Interested parties voiced enthusiasm over the Prime Minister’s

recommendations, but India’s legal order makes them less binding to CIL than those of the President.

On December 10, 2012, CIL and NTPC officials met to smooth out their differences over the FSA provisions and set a date for signing the pact.

NTPC agreed to sign the FSA in June 2013 on mutually agreed terms and conditions. In August 2013, CIL modified the FSA to allow a third party to

collect samples and determine the quality of the dry fuel. As of September 6, 2013, the coal producer had signed FSAs with 140 power plants, out of

the 173 that depend on it for coal supplies. In the meantime, in the summer of 2013, CIL came under the scrutiny of India’s Competition Commission

over allegations that it abused a dominant market position in supplying fuel to power plants.

Trilegal, Local media



Source:

Gas and Liquid-Fuel-Based Generation

Deficit in Domestic Natural Gas

India was home to 20.1 GW of gas-based installed

generation capacity as of Mar 31, 2013.

The price of the gas power generators receive from state-

owned GAIL are decided by the government under the

Administered Price Mechanism (APM) regime. Gas can also

be domestically sourced from companies exploiting the

Panna Mukta Tapti (PMT) fields, both at APM and non APM

prices. Generators sign Gas Sales and Transmission

Contracts (GSTCs) and long term agreements for gas

supplies.

In FY 2012, the Ministry of Petroleum and Natural Gas

(MPNG) said India’s gas output was expected to fall by 35%

by the end of the year and by additional 12% in years 2013

and 2014. For this reason, the Central Electricity Authority

(CEA) issued a statement advising investors not to plan new

capacities based on domestic gas supplies until the end of

FY 2016 in March. The embargo did not affect FY 2012

capacity additions which were a little above 1,000 MW.

The ban will also not be applicable to power projects planned

on imported LNG, which, according to comments by Tata

Power, is a direct substitute for domestic natural gas but at

almost double the price.

As a result, electricity produced from imported LNG will

increase the cost of generation, the recovery of which will be

uncertain due to highly regulated transmission. The

production of such electricity may not be financially viable.

LNG Imports, million tonnes

Tata Power; Deloitte Touche Tohmatsu; Petroleum Planning and Analysis Cell; NTPC;

7.958

8.922 9.73

11.632

10.901

-3.54%

12.11%

9.06%

19.55%

-6.28%

-10%

-5%

0%

5%

10%

15%

20%

25%

0

2

4

6

8

10

12

14

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Total LNG Imports (Long-Term, Spot), million tonnes % y/y change

85 86 84.6 89.7

129.5 142.6

132.5

103.9 111.9 115.8 120

163.9 179.8 178.8

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Est.

Supply of Domestic Natural Gas (MMSCMD)

Total Consumption of Gas (MMSCMD)



Source:

Gas and Liquid-Fuel-Based Generation (cont'd)

Production and Availability of Natural Gas

With a share of 9%, natural gas was India’s fourth power

generation source in FY 2013, after coal with 58.3%, hydro

power with 17.7% and RES with 12.32%, respectively.

The average global share of natural gas in primary energy

consumption is some 24%. It is expected that the share of

natural gas in India's energy basket will double to 20% by

2025.

The demand for natural gas is largely met through

domestic production with imports contributing less than

30% of the total gas consumption.

With an import of 20.5 million tonnes in 2012, India has

become the fourth largest importer of LNG in the world,

ONGC said.

The main producers of natural gas are Oil & Natural Gas

Corporation Ltd. (ONGC), Oil India Limited (OIL) and

Reliance Industries. LNG is imported by state-owned

company Petronet LNG Ltd. As of March 2013, GAIL held

some 60% in India's gas marketing.

The demand for natural gas is expected to reach

more than 450 thou mmscmd by end of the XII five-year

plan ending in FY 2017, and over 600 thou mmscmd by the

end of the XII five-year plan ending in FY 2022.

In such a scenario, India will have to boost domestic

natural gas production as well as create sufficient

infrastructure for LNG imports to meet demand.

PPAC, CEA, GAIL, OIL, ONGC, Ministry of Petroleum and Natural Gas

31,4

78.5

7

31,7

51.0

2

46,4

85.8

8

51,2

29.2

9

46,3

26.9

1

38,9

42.6

1

26,9

47

27,0

63

40,8

31.1

0 46,0

42

41,0

25

34,3

03

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Natural Gas Net Production, mmscm

Natural Gas Available for Sale, mmscm

Natural Gas Available for Sale is

derived by deducing internal use

of gas by producing companies.

CAGR Natural Gas Available for

Sale FY 2008-2013: 4.95%



Source:

Hydropower Generation

All India Hydropower Generation, GWh

Hydropower generation accounted for 17.7%, or 39.5 GW, of

India’s total installed capacity as of Mar 31, 2013.

In the early 2000s, the Indian government adopted a strategy

to boost hydropower development in the country in an effort

to achieve a hydro-to-thermal ratio of 40:60.

Some 68% of India’s identified hydropower capacities were

still to be developed as of Nov 30, 2012.

The following hydropower projects exist in India: storage

schemes, Run-of-River (RoR) Schemes without Poundage,

RoR Schemes with Poundage and Pumped Storage

Schemes.

Problems affecting the development of the hydropower

sector include land acquisition, resettlement and

rehabilitation issues, delays in environment and forest

clearances, landslides affecting capacity construction

schedules, tunnelling in inaccessible sites and inter-states

water disputes.

The Indian government has established special mechanisms

and committees to encourage hydropower cooperation with

neighbouring Nepal, Bhutan and Myanmar, as well as with

Afghanistan.

Hydropower projects are capital-intensive, have a long

gestation period and require large investments, which all

hinders the full exploitation of India’s hydropower potential.

Since water is a state subject in India, state governments are

demanding incentives, such as free power, which results in

higher tariffs.

Hydropower Stations in India as on Aug 31, 2013

CEA, hydropowerstation.com, NHPC

118,924.80 109,026.30

119,905.80

135,714.00

118,514.79

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

All India Hydropower Generation, GWh

No. of Stations No. of Units Capacity (MW)

Northern Region 61 206 15,523.25

Western Region 28 101 7,392.00

Southern Region 67 240 11,387.45

Eastern Region 17 61 4,078.70

North Eastern 10 29 1,242.00

All India (Total) 183 637 39,623.40

Note: Figures show installed capacity of stations with capacity above 25 MW



Source:

Hydropower Generation (cont'd)

Hydropower Potential Development by Region Hydropower Potential Development by Basin

CEA

Percentages are shown in terms of Identified Capacity Above 25 MW (which is assumed to equal 100%).

Figures are as of Nov 30, 2012.

Capacity Identified Operating Capacity Capacity Under

Construction

Capacity Under

Operation and

Under Construction

Capacity Yet To

Be Developed

Total

(MW)

Above

25 MW MW % MW % MW % MW %

Northern

Region 53,395 52,263 15,643.30 29.93 6,903 13.21 22,546.30 43.14 29,716.80 56.86

Western

Region 8,928 8,131 5,552 68.28 400 4.92 5,952 73.20 2,179.00 26.80

Southern

Region 16,458 15,890 9,426.90 59.33 510 3.21 9,936.90 62.54 5,953.20 37.46

Eastern

Region 10,949 10,680 3,138.70 29.39 2,482 23.24 5,620.70 52.63 5,059.30 47.37

North-

Eastern

Region

58,971 58,356 1,242 2.13 2,810 4.82 4,052 6.94 54,304 93.06

All India,

Total 148,701 145,320 35,002.9 24.09 13,105.00 9.02 48,107.80 33.10 97,212.20 66.90

Percentages are shown in terms of Identified Capacity Above 25 MW (which is assumed to equal 100%).

Figures are as of Nov 30, 2012.

Capacity Identified Operating Capacity Capacity Under

Construction

Capacity Under

Operation and

Under Construction

Capacity Yet To

Be Developed

Total

(MW)

Above

25 MW MW % MW % MW % MW %

Indus 33,832 33,028 11,244.3 34.04 5,596.0 16.94 16,840.3 50.99 16,187.7 49.01

Ganga 20,711 20,252 4,987.2 24.63 1,307.0 6.45 6,294.2 31.08 13,957.6 68.92

Central

Indian

Rivers

4,152 3,868 3,147.5 81.37 400.0 10.34 3,547.5 91.71 320.5 8.29

West

Flowing

Rivers

9,430 8,997 5,660.7 62.92 100.0 1.11 5,760.7 64.03 3,236.3 35.97

East

Flowing

Rivers

14,511 13,775 7,843.2 56.94 410.0 2.98 8,253.2 59.91 5,521.9 40.09

Brahmaput

ra Basin 66,065 65,400 2,120.0 3.24 5,292.0 8.09 7,412.0 11.33 57,988.0 88.67

All India,

Total 148,701 145,320 35,002.8 24.09 13,105.0 9.02 48,107.8 33.10 97,212.2 66.90



Source:

Nuclear Power

Indian Nuclear Power Capacity Expansion, MW

India has a 42-year history of nuclear power generation

with 20 nuclear power reactors operating in six states.

The country’s three-stage nuclear power program

includes a closed-fuel cycle of Pressurised Heavy Water

Reactors (PHWR) in the first stage, Fast Breeder

Reactors (FBR) in the second stage and uranium and

thorium usage in the third stage. Efforts are made towards

progressively increasing the share of nuclear power in the

country’s electricity portfolio.

India's integrated energy policy aims to reach 63,000 MW

of nuclear power generation by 2032.

The Nuclear Power Corporation of India Ltd. (NPCIL) is a

state-owned nuclear power company, in charge of

generation, construction and operation of the first stage

PHWRs and Light-Water Reactors (LWR).

As of March 31, 2013, NPCIL operated 20 nuclear power

reactors with a total installed capacity of 4,780 MW. A

total six reactors, with an aggregate capacity of 4,800 MW

were under various stages of construction and

commissioning. A total eight projects with a cumulative

capacity of 16,100 MW have been proposed for launch in

the 12th Five-Year Plan.

Nuclear Power Generation

World Nuclear Association, NPCI, Department of Atomic Energy (DAE), EMIS Insight calculations

14,921

18,798 26,469

32,451 32,863

25.98%

40.81%

22.60%

1.27% 0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Electricity Generation by NPCIL, GWh % y/y change

320 470

1,010

1,890

4,120

4,780

46.9%

114.9%

87.1%

118%

16%

0%

20%

40%

60%

80%

100%

120%

140%

0

1,000

2,000

3,000

4,000

5,000

6,000

FY 1969 FY 1979 FY 1989 FY 1999 FY 2009 FY 2011

Indian Nuclear Power Capacity Expansion, MW

% change CAGR FY 1969 – FY 2011: 71.3%



Source:

Nuclear Power (cont'd)

Nuclear Plants in Operation, as of Mar 31, 2012 Projects Proposed for Launch in the XII Plan (2012-17)

NPCIL

Plant Name Unit Type Capacity,

MW

Launch

Year

Tarapur Atomic Power Station (TAPS),

Maharashtra

1 BWR 160 1969

2 BWR 160 1969

3 PHWR 540 2006

4 PHWR 540 2005

Rajasthan Atomic Power Station (RAPS),

Rawatbhata, Rajasthan

1 PHWR 100 1973

2 PHWR 200 1981

3 PHWR 220 2000

4 PHWR 220 2000

5 PHWR 220 2010

6 PHWR 220 2010

Madras Atomic Power Station (MAPS),

Kalpakkam, Tamil Nadu

1 PHWR 220 1984

2 PHWR 220 1986

Kaiga Generating Station (KGS), Karnataka

1 PHWR 220 2000

2 PHWR 220 2000

3 PHWR 220 2007

4 PHWR 220 2011

Narora Atomic Power Station (NAPS), Uttar

Pradesh

1 PHWR 220 1991

2 PHWR 220 1992

Kakrapar Atomic Power Station (KAPS), Gujarat 1 PHWR 220 1993

2 PHWR 220 1995

Plants under Different

Stages of Construction and

Commissioning

Capacity (MW) Type Expected Commercial

Operation

Kudankulam Nuclear Power

Project, Tamil Nadu 2 x 1,000 LWR Unit 1 - FY 2014

Unit 2 - FY 2014

Kakrapar Atomic Power

Project, Gujarat 2 x 700 PHWR Unit 3 - FY 2017

Unit 4 - FY 2017

Rajasthan Atomic Power

Project, Rajasthan 2 x 700 PHWR Unit 7 - FY 2017

Unit 8 - FY 2017



Source:

Renewable Energy

India’s Renewable Energy Basket, FY 2013

The installed capacity of India's renewable energy sector

increased significantly from 3.9 GW in FY 2003 to about

27.5 GW in FY 2013. Capacity was at 24 GW in Jan 2012.

Wind energy dominates India's renewable energy

industry, accounting nearly 70% of installed capacity (18.6

GW). It is followed by small hydropower (3.5 GW),

biomass power (1.26 GW) and solar power (1.45 GW).

A total capacity of 18,635 MW was installed up to January

2013 in the country, making India the fifth-largest wind

power producer in the world, after the U.S., Germany,

Spain and China. India is a major producer of wind

turbines.

The slowdown in the growth of the wind power sector in

FY 2013 that can be attributed to the withdrawal of

accelerated depreciation for investments made in the

sector, MNRE said.

A total 1,067 MW of wind power projects started

operations in FY 2013 .

A total 12,760 villages and hamlets have been covered

under the Remote Village Electrification Program as of

December 31, 2011. In FY 2013, a total 66,000 biogas

plants were installed across India, taking the total number

of biogas plants to 4.54mn.

Off-Grid/Captive Power Capacities as of Jan 31, 2013

Ministry of New and Renewable Energy (MNRE)

Wind Power 68.27%

Small Hydro Power 13.01%

Biomass Power and Gasification

4.63%

Bagasse Cogeneration

8.43%

Waste to Power 0.35%

Solar Power 5.30%

Off-Grid/Captive Power (Capacities in MW eq) Capacities in MW eq, as of Jan 31,

2013

Waste-to-Energy 116

Biomass (non-bagasse) Cogeneration 443

Biomass Gasifiers

Rural 17

Industrial 140

Aero-Generators/Hybrid Systems 2.08

SPV Systems 107.8

Water mills/Micro Hydel 2,323 (number)

Bio-Gas Based Energy System 0.65

TOTAL 826.1



Source:

Share of RES in Power Generation, Capacity

RES as % of Total Generating Capacity in India

RES as % of Total Energy Generation in India

CEA

245,438 287,029

395,889

517,439

670,654 722,626

741,167

799,850 844,846 928,113

6 39 876

2,085

9,860 25,210 27,860 36,947 41,150 51,226

0% 0.01% 0.22% 0.40%

1.47%

3.49% 3.76%

4.62% 4.87%

5.52%

0%

1%

2%

3%

4%

5%

6%

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1990 1992 1997 2002 2007 2008 2009 2010 2011 2012

Total Gross Energy Generation in India, GWh Total Gross RES Energy Generation, GWh RES as % of Total

63,636 69,065 85,795

105,046 132,329

143,061 147,965 159,398 173,626

199,877

318,414

18 32 902

1,658

7,761 11,125 13,242 15,521

18,455 24,503

54,503

0.03% 0.05% 1.05% 1.58%

5.86%

7.78% 8.95%

9.74% 10.63%

12.26%

17.12%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

31-Mar-90 31-Mar-92 31-Mar-97 31-Mar-02 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10 31-Mar-11 31-Mar-12 31-Mar-17 (F)

Total Installed Generating Capacity in India, GW Total Installed RES Generating Capacity, GW RES % of Total Capacity



.

…

Source:

Power Generation SWOT Analysis

India offers different models of power sale including integrated utilities,

single buyers (MoU-based regulated generation), wholesale

competition (Ultra Mega Power Projects), captive power generation and

sale to captive users, as well as retail competition (open access).

Economic growth and policy reforms are triggered by social factors

such as urbanisation. Increased environmental responsibility drives

efforts to replace current polluting technologies with more sustainable

sources.

Delays in land acquisition, environmental clearances and indigenous

population policies block the development of power projects.

Distribution companies sell power at prices below procurement costs,

which hurts their liquidity and solvency and results in high subsidies.

The low tariff hikes approved by authorities limit the cost recovery

possibilities of companies. The ban on the pass-on of increased costs

to consumers adds to the problem. T&D losses need to be limited

through metering, feeder separation and other measures.

Domestic coal supply is estimated to last less than a century and is a

concern because of policy and logistic issues. Imported coal will result

in higher fuel and generation costs. Shortage of domestic gas and

expensive LNG imports could hamper the financial viability of gas-

based power plants. The availability and cost of capital for funding new

projects is also a problem, as power projects are highly capital-

intensive. The fresh water requirements of power plants can be met by

developing coastal capacities and building desalination plants.

The need for regular and sustainable sourcing of fuel will result in

company efforts to decentralise generation and distribute capacities

among various resources and technologies. Diversified generation will

be challenged by technology maturity and grid infrastructure issues.

New business models will result from regulatory intentions to privatise

distribution and transmission companies and allow distribution

franchisees as a way to bring private investment into the sector. Clarity

in commercial policies and regulations will be crucial.

Power Sector

SWOT Analysis

Strengths Opportunities

Weaknesses Threats

Tata Power, NTPC



V. Power Transmission and Distribution



Power Transmission and Distribution Highlights

Electricity Grids

India has five electricity grids - Northern, Eastern, North-Eastern, Southern and Western. All of them are interconnected in

synchronous mode into a National Grid, except the Southern grid, which is connected asynchronously. All are run by the state-

owned PowerGrid Corporation of India Ltd. (PGCI), which operated more than 100,200 circuit km of transmission lines at end-

March 2013. One-third of the population is not connected to any grid. Installed transmission capacity is about 14% of

generation capacity. Part of India’s national power strategy is to have a country-wide synchronous grid by 2014.

Power

Allocation

Electricity end-consumers are largely served by their respective State Electricity Boards (SEBs). Each SEB has an allocated

share of the electricity generated by the central sector and public-private companies, which is provided, and expected to be

drawn, at a certain price. Pricing is controlled by the central and state governments. The amount of electricity drawn below or

above the allocated daily share is called Unscheduled Interchange (UI) and is priced at a separate UI rate. PowerGrid

transmitted some 50% of the total power generated in India as of end-March 2013.

Electricity

Tariffs

End-user electricity tariffs consist of fixed- and variable-charge components, determined by the Central Electricity Authority

(CERC). The fixed-charge component covers fixed costs such as property, plant and equipment maintenance and salary

expenses; the variable-charge component covers the costs of generating electrical energy, including fuel costs linked to

generation. The actual amounts of charge components depend on each beneficiary’s claim on the generation capacity used.

Power Trading

Power generation and transmission are highly capital-intensive so the fixed-charge components make up a major part of the

tariff. Thus, the average tariff becomes sensitive to the generation capacities’ Plant Load Factor (PLF). Investing in higher grid

interconnection that would enable trading of power from state utilities reporting surplus to those reporting deficit, could help

defer or reduce investment in additional generation capacity, would increase PLF and reduce the average cost of power for

utilities and consumers.



Power Transmission and Distribution Highlights (cont'd)

Power Trading

Problems

India is currently home to two power exchange platforms – PXIL and IEX. According to B2B portal electricityindia.com, the

issues hampering the quicker development of inter-regional electricity exchange include relative lack of commercial awareness

by SEBs, lack of statutory provisions for direct sale by Independent Power Producers (IPPs) and Captive Power Plants (CPPs)

outside the state, and inadequate transmission capacity, among others.

Debt Recast

In September 2012, the Indian government approved a plan to relieve the debt burden of state-run power distribution

companies by taking over half of their short-term debt over the next two to five years. According to international media, the

distribution companies will issue bonds to lenders backed by the state governments against this debt. For the remaining short-

term debt, lenders will relax the terms, including extending the time of repayment. The central government will also provide

fiscal incentives to states which adopt the plan.

Temporary

Relief

The implementation of the plan is at the discretion of states, which could be a hurdle to its success. As of Sep 2013, six states

have approved the scheme, and two of them – Tamil Nadu and Haryana, have already issued bonds. According to Standard

and Poor’s, the plan would provide only temporary relief as it fails to address tariff regulations and unreliable fuel supply.

Reliable fuel supply, according to the rating agency, depends on the existence of a transparent framework for producing fuel

and adequate infrastructure for transporting it.

Electricity

Tariffs

More than 30 states and Union Territories have raised electricity tariffs since January 2012. The move was an attempt to

improve the financial position of distribution companies, whose accumulated losses (at INR 2.4tn in FY 2013) prevent them

from meeting payment deadlines from lenders and generating companies. The average price increase was 16%. Tamil Nadu

was the state that reported the highest increase – 37%, followed by Kerala – 30%, Mumbai – 28%, Kolkata – 24% and Delhi –

21%.



Power Transmission and Distribution Highlights (cont'd)

Grid Inter-

Connection

Milestones

Grid management on regional basis started in the 1960s in India. Integrating regional grids to establish a national grid was conceptualised in the early 1990s. State grids were initially interconnected to form regional grids. The initial inter-regional links were planned for exchange of operational surpluses amongst the regions. Later the planning philosophy evolved from regional to national self-sufficiency. The North-Eastern and Eastern grids were connected in 1991. The Western and Northern grids joined the network in 2003 and 2006, respectively. The Southern grid is connected to the synchronous grid network through HVDC links. Part of India’s national power strategy is to have a country-wide synchronous grid by 2014. As of March 31, 2013, India had inter-regional transmission capacity of 29.8 GW, against 28 GW (some 14% of generation capacity) in the previous year. Inter-regional transmission capacity is expected to grow to 58.7 GW by 2015 and some 65 GW by the end of the XII Plan in March 2017.

Private

Participation

In an effort to meet the growing power demand of the country, the government of India has developed a legal framework for

private sector participation in power generation. Private power generating companies, called Independent Power Producers

(IPPs), are required to transmit the power they generate to state and regional load centres. Regional Load Dispatch Centres

(RLDC) are the bodies in charge of the daily management of local grids. Their operations are overseen by the National Load

Dispatch Centre (NLDC), set up in 2009. Government-controlled company PowerGrid is in charge of granting Long-Term

Access (LTA) to private power producers. To facilitate the long-distance transfer of power generated from IPP projects,

PowerGrid will build 11 High-Capacity Power Transmission Corridors, nine of which are scheduled to be completed in the XII

plan ending Mar 2017.

Power

Transmission

Corridors

The 11 High-Capacity Power Transmission Corridors will be worth an estimated INR 750bn, newswire The Hindu reported,

quoting a top PowerGrid official as saying. The company planned to raise the funds it needed through bond issues. The first

phase of a 6,000 MW sub-station in the eastern state of Odisha, part of High-Capacity Power Transmission Corridor-1

(HCPTC-1) is expected to be completed in by March 2014, a May 2013 report by the Power Ministry said. HCPTC-1 will help

bring about 10,000 MW power from Independent Power Projects (IPP) to the state and will improve its transmission capacity.

The sub-station will require some 300 acres of land in and around four villages.



Source:

Performance of State Power Utilities

Revenue Growth in State Power Sector

Aggregate Losses of All State Power Utilities

Capital Employed by State Power Utilities

Power Finance Corporation Ltd.

1,729.48

2,073.47 2,421.89

9.83%

19.89%

16.80%

0%

5%

10%

15%

20%

25%

0

500

1,000

1,500

2,000

2,500

3,000

FY 2010 FY 2011 FY 2012

Sales, INR bn % y/y Growth

-245.96 -304.30

-516.02

-625.81 -534.92

-644.63

-742.91

-928.45

-377.73

-453.82 -539.86

-670.06

FY 2009 FY 2010 FY 2011 FY 2012

Aggregate Book Losses, All Utilities, INR bn

Aggregate Losses w/o Accounting for Subsidy, All Utilities, INR bn

Aggregate Losses on a Subsudy Received Basis, All Utilities, INR bn

150 53 -318

448 437 551

2,632

3,285

3,811

31

39

57

206

244

302

262

240

304

FY 2010 FY 2011 FY 2012

Consumer Contribution,INR bn

Grants towards CapitalAssets, INR bn

Other Loans, INR bn

Loans from FinancialInstitutions, Banks, Bonds,INR bn

State Govt. Loans, INR bn

Networth, INR bn

INR 3,729.36bn

INR 4,707.92bn

INR 4,297.84bn



Source:

Performance of Utilities Selling Directly to Consumers

Subsidies Booked and Released

Cost Recovery of Utilities Selling Directly to Consumers

Total Income and Energy Sold

AT&C Losses by Region

PFC

38.72% 37.03%

29.22%

19.21%

24.47% 26.04%

42.61%

34.85% 31.49%

18.62%

24.86% 27%

Eastern North-Eastern Northern Southern Western Total

FY 2011 FY 2012

340.14 226.66 302.42

190.74 202.95 258.32

56.08%

89.54% 85.42%

0%

20%

40%

60%

80%

100%

0

50

100

150

200

250

300

350

400

FY 2010 FY 2011 FY 2012

Subsidy Booked, INR bn Subsidy Released, INR bn

% Subsidy Released

2,287.31 2,684.47

578,698

622,504

540,000

560,000

580,000

600,000

620,000

640,000

2,000

2,200

2,400

2,600

2,800

FY 2011 FY 2012

Total Income Excl. Subsidy for Utilities Selling Directly to Consumers, INR bn

Total Energy Sold, GWh

1,906.98 2,287.31 2,684.47

2,529.32 2,998.15 3,555.01

75.39%

76.29%

75.51%

75%

75%

76%

76%

77%

0

1,000

2,000

3,000

4,000

FY 2010 FY 2011 FY 2012

Aggregate Turnover of Utilities (SEBs, Power Departments and DISCOMs) Excl. SubsidyBooked, INR bnAggregate Expenditure, INR bn

Cost Recovery, INR bn



Source:

Performance of Utilities Selling Directly to Consumers (cont'd)

Power Sales by Region

Gap between Electricity Cost of Supply and Consumer Price

Receivables and Payables of Utilities Selling to Consumers

PFC

FY 2010 FY 2011 FY 2012

Region

Revenue

from Sale

of Power,

INRbn

Energy

Sold, GWh

Revenue

from Sale

of Power,

INRbn

Energy

Sold, GWh

Revenue

from Sale

of Power,

INRbn

Energy

Sold, GWh

Eastern 149.57 44,124 187.56 47,957 231.03 48,656

North-Eastern 24.8 6,116 27.52 7,010 32.55 7,664

Northern 509.45 166,530 591.91 184,605 686.72 198,005

Southern 489.44 168,116 604.6 176,042 684.3 187,026

Western 556.21 143,420 661.87 163,084 787.29 181,153

All India 1,729.48 528,086 2,073.47 578,698 2,421.89 622,504

0.87

0.94

1.07

0.4

0.64

0.7

FY 2010

FY 2011

FY 2012

Gap with Subsidy, INR/KWh Gap w/o Subsidy, INR/KWh

109 105 102

100

116

151

646.41

807.02

1,077.50

504.08

686.07

1,075.53

0

200

400

600

800

1,000

1,200

0

20

40

60

80

100

120

140

160

As of Mar 31, 2010 As of Mar 31, 2011 As of Mar 31, 2012

No of Days of Customer Receivables Outstanding, (l)

No of Days of Payables for Purchase of Power, (l)

Total Receivables for Sale of Power of Utilities Selling Directly toConsumers, INR bn, (r)

Total Payables for Purchase of Power of Utilities Selling Directlyto Consumers, INR bn, (r)



Source:

Power Exchange and Trading

Price of Electricity Transacted

The Electricity Act of 2003 recognised power trading as a new

segment apart from generation, transmission and distribution.

Inter-state trading in electricity started in 2004. The two power

exchanges, IEX and PXIL, started operations in Jun 2008 and

Oct 2008, respectively. The number of CERC-licensed traders

rose to 56 in FY 2012 from 13 in FY 2005. A total 13.79 TWh

were traded through IEX and 1.03 TWh through PXIL in FY

2012.

Although unscheduled interchange (UI) is not a market

mechanism, electricity transacted under UI is considered part of

short-term transactions, as is electricity transacted directly

between distribution companies, without involving trading

licensees or power exchanges.

In FY 2013, the volume of UI transactions was 24.76 TWh and

that of transactions directly between distribution companies -

14.52 TWh (see tables on next slide).

Developments expected to lead to further growth in power

trading in the future include open access to consumers,

increased share of merchant power from independent power

plants, establishment of distribution franchisees and supply of

power to investment-promoting projects such as the Special

Economic Zones (SEZs).

Rising competition among power exchange players reduces

trade margins. Independent power producers are selling below

their estimates, as, when faced with a deficit, power distribution

companies prefer load shedding to buying market-priced

electricity and thus increasing their expenses. In spite of the

Electricity Act provisions, open access is only slowly granted to

consumers, which is a further barrier to growth and competition

in the sector.

Short-Term Transactions by Participants, FY 2013

Central Electricity Regulatory Commission (CERC), Tata Power, NTPC

7.29

5.26 4.79

4.18 4.33

7.49

4.96

3.47 3.57 3.67

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Price of Electricity Transacted Through Traders, INR/kWh

Price of Electricity Transacted Through Power Exchanges, INR/kWh

UI Transactions 25.0%

Bilateral Through Traders 36.5%

Power Exchange Transactions

23.8%

Bilateral Between Distribution

Companies 14.7%

Long-term

transactions

accounted for

89% of all

power trading

transactions in

FY 2013. Short-

Term

transactions

were 11% of the

total.



Source:

Power Exchange and Trading (cont'd)

Volume and Price of Electricity Transacted Through UI

Volume of Electricity Transacted Directly Between Discoms

Electricity Transacted by Trading Licensees, Sept 2013

CERC, CEA

Volume of UI

Transactions,

TWh

Volume of Short-

Term

Transactions,

TWh

Volume of UI as

% of Short-Term

Transactions

UI Price

(INR/kWh)

FY 2010 25.81 65.9 39% 4.62

FY 2011 28.08 81.56 34% 3.91

FY 2012 27.76 94.51 29% 4.09

FY 2013 24.76 98.94 25% 3.86

Volume of Electricity

Transacted Directly

Between Distribution

Companies, TWh

Volume of Short-

Term Transactions,

TWh

Volume of Direct

Bilateral Transations

as % of Short-Term

Transactions

FY 2010 6.19 65.9 9%

FY 2011 10.25 81.56 13%

FY 2012 15.37 94.51 16%

FY 2013 14.52 98.94 15%

Name of the Trading Licensee %

PTC India Ltd. 33.87%

Tata Power Trading Company Ltd. 14.79%

JSW Power Trading Company Ltd. 12.68%

Shree Cement Ltd. 6.21%

Reliance Energy Trading Ltd. 4.76%

Jaiprakash Associates Ltd. 4.67%

Mittal Processors Ltd. 4.31%

Adani Enterprises Ltd. 3.36%

Knowledge Infrastructure Systems Ltd. 3.13%

NTPC Vidyut Vyapar Nigam Ltd. 2.75%

Manikaran Power Ltd. 1.78%

GMR Energy Trading Ltd. 1.70%

National Energy Trading & Services Ltd. 1.46%

Instinct Infra & Power Ltd. 1.30%

RPG Power Trading Company Ltd. 1.27%

Essar Electric Power Development Corp. Ltd. 0.77%

Arunachal Pradesh Power Corporation Ltd. 0.73%

Pune Power Development Ltd. 0.33%

Customised Energy Solutions India Ltd. 0.12%

Ambitious Power Trading Company Ltd. 0.02%

Total 100.00%

Top 5 trading licensees 72.30%



VI. Water Supply and Sanitation (WSS)

India’s fiscal year runs from Apr 1 to March 31. Thus, FY 2012 (also called fiscal 2012) means Apr 1, 2011 – Mar 31, 2012. In Indian documents, FY (fiscal) 2012 is also labeled FY11-12.

Indian fiscal year 2013 ends in March 2013 and the remaining nine months of calendar 2013 belong to fiscal year 2014.

In order to better align with calendar years and make international comparisons more meaningful, Emerging Markets Insight has chosen to label data by the year in which most of the result

occurred. Unless otherwise stated, in graphs throughout this report, 2011, for example, means the 12 months between Apr 1, 2011 - Mar 31, 2012, or what in India is referred to as fiscal 2012.



Water Supply and Sanitation (WSS) Highlights

Top Priority

India's rapid economic growth and urbanisation are widening the demand/supply gap of water and managing the country’s

water resources rationally and sustainably is one of the government of India's priorities for the 12th Planning Period (2012-

2017).

Scarcity

According to the Asian Development Bank, per capita water availability is expected to fall to 1,140 cu m by 2050 from 1,588 cu

m in 2010 and 5,200 cu m in 1951. India's current water consumption is roughly in line with its availability, but by 2030, water

consumption is estimated to be 100% higher than the water available, the deputy chairman of the Indian Planning Commission,

Montek Singh Ahluwalia, was quoted as saying. The uneven distribution of water resources, both geographically and

seasonally, aggravates the problem.

Intermittent

Supply

According to the World Bank, more than 90% of India's urban population has access to drinking water, and more than 60% of

the population has access to basic sanitation. However, less than 50% of the urban population has access to piped water. No

Indian city receives piped water 24 hours a day, 7 days a week. Utility companies provide piped water for never more than a

few hours per day, regardless of the quantity available. The government urges power generators to reduce fresh water

consumption in plants under the Reduce, Reuse & Recycle principle.

Water Losses

The World Bank estimates Non Revenue Water (NRW), unaccounted for due to leakages, unauthorised connections and billing

and collection inefficiencies, at some 40% to 70% of the water distributed. Operations and maintenance (O&M) cost recovery

through user charges is at about 30% to 40%. Most urban water utilities survive on operating subsidies and capital grants.



Source:

Water Utilities in India

Indian Water Utilities Performance Trend

Indian Water Utilities Industry Turnover Forecast

Indian Water Utilities Industry Volume

Indian Water Utilities Industry Volume Forecast

Marketline

819 858 930

990

1,140

4.69%

8.36%

6.49%

15.22%

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

200

400

600

800

1,000

1,200

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Indian Water Utilities Turnover, INR bn % y/y change

728

744

761

773

791

2.24% 2.24%

1.63%

2.22%

0%

1%

1%

2%

2%

3%

680

700

720

740

760

780

800

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Indian Water Utilities Industry Volume, bn cu m % y/y change

1,140 1,214 1,335

1,469 1,617 1,783

6.45%

9.98% 10.01% 10.09% 10.29%

0%

2%

4%

6%

8%

10%

12%

0

500

1,000

1,500

2,000

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Indian Water Utilities Industry Turnover Forecast, INR bn % y/y change

791

806

822 838

853 869

1.97%

1.95%

1.90%

1.86% 1.84%

1.75%

1.80%

1.85%

1.90%

1.95%

2.00%

740

760

780

800

820

840

860

880

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Indian Water Utilities Industry Volume Forecast, INR bn % y/y change



Urban Water and Sewage Highlights

Sewage

Upgrade

As of January 2012, most Indian cities did not have sewage treatment plants for biological and chemical waste, the Planning

Commission said in a report. Technologies used are not adapted to treating chemical waste or operating within a limited

capacity of the receiving environment to assimilate treated waste. Sewage technology issues include price of capital, availability

of land and operation and maintenance costs. The increasing pollution of the receiving environment highlights the need for

more advanced and expensive sewage technologies.

Upgrade Costs

Tertiary treatment plants, capable of cleaning water for reuse in households and industries are being built in India, but are

expensive. According to the Planning Commission, cities can partially recover construction costs by restricting freshwater use

and promoting the sale and use of treated sewage water. Companies that build their own pipelines and connect them to the

city’s sewage treatment plants can recover their costs by buying treated water at a lower price than the industrial tariff.

Public-Private

Partnerships

Current models of public-private water partnerships include concessions for treatment plants and service contracts for billing,

tariff collection and metering. Most projects are publicly funded and focus on distribution improvement by employing the

managerial and technical expertise of private companies. Examples of cities with privately-run citywide distribution include

Jamshedpur, where a company of industrial conglomerate Tata Group has set up a water supply system, and Tirupur where a

public-private company is in charge of water distribution.

Attracting

Private Capital

The Planning Commission believes that the role of private companies in water distribution and sewage treatment must be encouraged. The current experience, however, is that the private sector is reluctant to engage in capital and operational investments. In order to promote private participation, city authorities will have to better consider the financial sustainability of projects, keep accurate base-line data on water and sewage, provide correct project designs and relax procedures for renegotiating of tendered agreements in case of an inaccuracy significantly altering the performance or financial scopes of projects.



Source:

Water Supply

Per Capita Water Availability in India (cu m/per year)

Water availability in India is very unevenly distributed, with

75%-80% of precipitation falling during the monsoon

season from July to September. This, coupled with India’s

billion-strong population and increasing household and

industrial demand, is the major cause for water scarcity in

the country.

Because of India's rapid population growth, annual per

capita water availability is declining and is forecast at just

about the water stress line in 2015.

According to the Indian Planning Commission, the

drinking water requirements of most big cities in the

country are generally met with a combination of

groundwater (75%) and surface water supply (25%)

from nearby irrigation/multi-purpose reservoir schemes.

India's average annual water resource potential, meaning

the total runoff generated from rainfall, is estimated at

1,869 billion cubic meters (BCM), the Asian

Development Bank said.

Utilisable water resources are assessed at 1,123 BCM

and include water that can be utilised economically within

the limitations of the technology available, the

physiographic, hydrological and socio-political conditions,

as well as the existing environmental, legal and

constitutional constraints.

Water Resources by Source and Consumers

Ministry of Water Resources, Asian Development Bank

5,177

2,200 1,869

1,341 1,140

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,0005,500

1951 1991 2001 2015 2050

Per Capita Water Availability in India (cu m/per year)

Water Scarcity

Water Stress

Surface Water (SW), BCM, 690


Total:

1,123

BCM

Utilizable Water Resources in

India (Publ. Oct 2011)

Industry

1.90%

Agriculture

59.70%

Water Utilities by Major

Consuming Sectors, FY 2012,

% Households

38.40%



Source:

Water Supply and Sewage

Central Government Investment in Water and Sewage

Improving water and utility management and ensuring

equal supply to all is India’s main urban water objective

the XII plan (fiscal 2012-17), according to a Jan 2012

report by the Planning Commission’s body on water

resources and sanitation.

Water utilities are mostly run by cities and municipalities,

making India’s water supply network very fragmented.

Water utilities comprise the following legal forms:

municipal council, municipal corporation, private

company, city board and autonomous local body.

In most cities, water is supplied from distant sources.

Long pipelines result in higher leakage and losses, which

the Planning Commission estimated at some 50% of the

water that enters pipes. Electricity makes up 40%-60% of

water supply costs.

Pipes are distributed unevenly in cities, with some parts

getting nearly all the water and other parts getting none.

City water agencies have no records of the amount of

groundwater which is privately extracted in cities.

Cities keep no national accounts on the load of sewage

generated because of the different ways in which people

source water and dispose of sewage. According to the

Planning Commission, India treats 30% of the sewage it

generates, with the cities of Delhi and Mumbai claiming

40% of the country’s installed capacity.

Types of PPP Contracts in Water Supply and Sewage

Planning Commission, JNNURM, World Resources Institute

Period (FY) INR bn

Central Assistance for Water and Sewage 1980-2005 37

Central Assistance for River Conservation 1995-2010 50

Central Assistance under JNNURM (urban renewal mission) 2005-2011 430

Management Contract

Service Contract

Design-Build-Operate Contract (DBO)

Long-Term Lease

Build-Own-Operate Contract (BOO)

Build-Operate-Transfer (BOT) – Variations: Build-Transfer-Operate

(BTO), Build-Rehabilitate-Operate-Transfer (BROT), Build-Lease-

Transfer (BLT), Build-Own-Operate-Transfer (BOOT)



VII. City Gas Distribution (CGD)







City Gas Distribution (CGD) Highlights

Natural Gas

Overview

Indian natural gas production was 1.4% of global production in 2011, down from 1.6% in the previous year. Domestic natural

gas consumption accounted for 1.9% of global consumption in 2011. With a share of 9%, natural gas is India's fourth energy

source, after coal with 58.3%, hydro with 39.5% and RES 12.32%, respectively. Natural gas held a 10% share in India's

installed capacity in FY 2012. About a fifth of natural gas demand is currently met by imports. It is expected that the share of

natural gas in the country’s energy basket will grow to 20% by 2025.

City Gas

Distribution

Gas requires expensive infrastructure and complex pipeline networks to ensure constant flow. As of March 2012, India was

home to gas pipelines of a total length of 13,428 km, 70% of which were operated by public gas transporter and marketer GAIL.

City gas distribution was available in 43 geographical areas and consumed some 14 MMSCMD of gas, of which 6.63

MMSCMD is from re-gasified liquefied natural gas (RLNG), according to the government's Economic Survey for FY 2013.

PNG/CNG

City gas projects based on PNG/CNG started operations in the early 1990s in Delhi and Mumbai. Piped Natural Gas (PNG), in

this context also termed "cooking gas" is for household and commercial usage, and Compressed Natural Gas (CNG) is used as

transportation fuel. Before the government's Oil Sector Vision 2015 was adopted in 2009, PNG/CNG was available in 35 cities,

reached 860,000 households and was used by 500,000 vehicles. By 2015, a total 200 cities are envisaged to be covered. India

had some 1.6 million PNG connections in mid-2012.

LPG

In its Oil Vision 2015, the government pledged to secure 55 million new connections to raise population coverage from 50% to

75%. The total number of LPG customers is thus set to reach 160 million, with most of the newly joined households coming

from rural India. The government vowed to provide 100% LPG coverage to all towns with a population of more than 500,000.

Portability of LPG connections, similar to that for mobile phone numbers, is also on the agenda.



Source:

PNG in India

Piped Natural Gas Status as of Mar 31, 2013

PPAC

State City Covered Company Domestic PNG Commercial PNG Industrial PNG

Delhi Delhi, Noida, Greater Noida, Ghaziabad IGL 386,226 962 418

Maharashtra Mumbai, Thane, Mira-Bhayandar, Navi Mumbai, Pune,

Kalyan, Ambernath, Panvel, Bhiwandi MGL, MNGL 647,790 1,990 98

Gujarat Ahmedabad, Baroda, Surat, Ankeleshwar GSPC, SABARMATI GAS, GUJRAT GAS,

HPCL, VMSS,ADANI GAS 1,144,424 12,693 3,686

Uttar Pradesh Agra, Kanpur, Bareilly, Lucknow Green Gas Ltd. (Lucknow),

CUGL(Kanpur) 7,090 55 430

Tripura Agartala TNGCL 11,431 256 41

Madhya Pradesh Dewas, Indore, Ujjain, Gwalior GAIL GAS, AGL 1,775 6 49

Rajasthan Kota GAIL GAS 177 0 16

Assam Tinsukia, Dibrugarh, Sibsagar, Jorhat ASSAM GAS CO. LTD 23,632 759 366

Andhra Pradesh Kakinada, Hyderabad, Vijaywada, Rajamundry BGL 1,802 15 1

Haryana Sonepat, Gurgaon, Faridabad GAIL GAS, ADANI GAS, HARYANA CITY

GAS 11,508 43 123

TOTAL 2,235,855 16,779 5,228



Source:

CNG Sales, Stations and Vehicles

CNG Sales as of Mar 31, 2013 CNG Stations and Vehicles as of Mar 31, 2012

Petroleum Planning and Analysis Cell (PPAC)

State Company Name FY 2012,

thou tonnes

FY 2013

(Prov.),

thou

tonnes

Gujarat GAIL Gas/ Adani Energy/ Gujrat

Gas,GSPC, GGCL, SGL,HPCL 409.1 441.8

Delhi Indraprastha Gas (IGL) New Delhi 649.3 695.1

Rajasthan

(Kota) GAIL 0.2 0.8

Maharashtra Mahanagar Gas Ltd.(MGL) Mumbai,

MNGL Pune. 382.8 425.1

Andhra Pradesh Bhagyanagar Gas Ltd.( BGL)

Hyderabad. 15.8 24.7

U.P. Green Gas Ltd. (Lucknow),

CUGL(Kanpur) 112.6 137.7

Tripura Tripura Natural Gas Co. Ltd.(TNGCL)

Agartala. 3.2 4.3

M.P. Avantika Gas (Indore) / GAIL Gas Ltd. 10.7 14.5

Haryana Haryana City Gas Ltd. 54 73.2

West Bengal GEECL 0 0.6

Total 1,637.7 1,817.8

State Company Name No of CNG

Stations

No of CNG

Vehicles,

mln

Gujarat GAIL Gas/ Adani Energy/ Gujrat

Gas,GSPC, GGCL, SGL,HPCL 313 638,422

Delhi / NCR Indraprastha Gas (IGL) New Delhi 286 654,158

Maharashtra Mahanagar Gas Ltd.(MGL) Mumbai,

MNGL Pune. 203 334,810

Andhra Pradesh Bhagyanagar Gas Ltd.( BGL) Hyderabad. 29 19,958

Rajasthan Gail Gas. 2 1,085

U.P. Green Gas Ltd. (Lucknow),

CUGL(Kanpur) 30 56,857

Tripura Tripura Natural Gas Co. Ltd.(TNGCL)

Agartala. 3 4,682

M.P. Avantika Gas (Indore) / GAIL Gas Ltd. 16 10,878

Haryana Haryana City Gas Ltd. 14 85,560

West Bengal GEECL 7 1,201

All India 903 1,807,611



VIII. Major Players







Source:

Top M&A Deals

Top M&A Deals in the Indian Utilities Sector in 2013

DealWatch

Date Target Company Deal Type Buyer Seller Deal Value USD (mn) Stake %

Sep 11, 2013 Transmission and distribution (T&D)

business of Vijai Electricals Ltd Acquisition Toshiba Corporation Vijai Electricals Ltd 200 N/A

Mar 4, 2013 Gujarat Gas Company Ltd Tender Offer Gujarat State Petroleum Corp (GSPC) Minority Shareholders 62.46 8.58%

Jun 5, 2013 ReNew Wind Power Pvt Ltd Minority stake

purchase; PE Entry Goldman Sachs Capital Partners N/A 135 N/A

Jul 5, 2013 150MW Gujarat wind mill project Acquisition Bharat Light and Power Pvt Ltd DLF Ltd. 53.41 100.00%

Apr 8, 2013 Wind power facility of VRL Logistics Acquisition Amplus Infrastructure Developers Pvt Ltd VRL Logistics Ltd 42.15 100.00%

Jul 30, 2013 110 MW Chuzachen Hydro-Electric

Project in East Sikkim Minority Stake Purchase GE Energy Financial Services

Gati Infrastructure Private

Limited 43.29 21.63%

Apr 23, 2013 NSL Renewable Power Pvt Ltd Minority stake

purchase; PE Entry

Asia Clean Energy Ltd., DEG Investitions und

Entwicklungsgesellschaft mbH, FE Clean Energy

Group Inc., GS Power Co.Ltd., International Finance

Corp (IFC), Proparco - Societe de Promotion et de

Participation pour la Cooperation Economique SA

N/A 60 N/A

Oct 9, 2013 AES Saurashtra Windfarms Pvt Ltd Acquisition Tata Power Company Ltd AES Corp 24.4 100.00%

Apr 4, 2013 Tamil Nadu wind mill of DLF Acquisition Tulip Renewable Powertech Pvt Ltd DLF Ltd 34.62 N/A

Nov 15, 2013 Dans Energy Consulting Pvt Ltd Minority Stake Purchase Equis Funds, Singapore N/A 18.96 N/A

Jan 23, 2013 Bharat Light and Power Pvt Ltd

Minority stake

purchase; PE Entry, VC

Entry

Draper Fisher Jurvetson Venture Capital, UTI Capital

Pvt Ltd, VenturEast, N/A 18.64 33.96%

Jun 13, 2013 Atria Brindavan Power Minority stake

purchase; PE Entry BanyanTree Finance Pvt Ltd N/A 8.62 N/A

Apr 4, 2013 Rajasthan wind mill of DLF Acquisition Violet Green Power Pvt Ltd DLF Ltd 10.9 N/A

Sep 15, 2013 Kudgi Transmission Ltd Acquisition L&T Infrastructure Development Projects Ltd (L&T-

IDPL) Rural Electrification Corp Ltd 2.39 100.00%

Oct 30, 2013 5.7 MW hydro plant in Uttarakhand Acquisition Pan Global Corp Regency Yamuna Energy Ltd 6.6 100.00%

Aug 30, 2013 Vizag Transmission Ltd Acquisition Power Grid Corpn. of India Ltd REC Transmission Projects

Co Ltd N/A 100.00%

Aug 26, 2013 Two wind farms in Madhya Pradesh Acquisition Continuum Wind Energy Sravanthi Group N/A 100.00%



Source:

Possible M&A Activity in Utilities

Companies Looking to Buy Companies Looking to Sell

Local media

Tata Power Co Ltd is evaluating renewable energy projects totaling over

2,800 MW for acquisition, the Business Line reported on December 2,

2013. In October, the company had acquired a 39-MW wind farm in

Gujarat.

Jindal Steel and Power (JSPL) will acquire a majority stake of 53.63%

in Gujarat NRE Coke's loss-making Australian subsidiary through a

complex deal, which involves issue of convertible notes, placement of

shares and option to acquire shares at a later stage, the Financial Express

reported on October 28, 2013. The deal, announced in September, was

cleared on October 27, 2013 by the shareholders of Gujarat NRE Coking

Coal, which is the Australian subsidiary of Kolkata-based Gujarat NRE

Coke.

Public sector company SJVN Ltd. may acquire two hydro electric projects

owned by Jaypee Group if the later goes for open bidding, the Hindu

reported on September 16, 2013. SJVN Chairman and Managing Director

R. P. Singh said the private sector company was selling two of its major

hydro projects, the 1,000 MW Karcham Wangtoo and 300 MW Baspa

hydro electric projects, to square off some of its debts. The Jaypee Group

is believed to be in touch with many players including the UAE

Government-owned Abu Dhabi Water and Electric Authority (ADWEA) and

might choose not to go for an open international bidding.

State-owned NHPC was in the process of buying back its shares worth up

to INR 23.68bn between November 29 and December 12, Business Today

reported. The company was to buy back 123,00,74,277 fully paid-up equity

shares of INR 10 each at a price of INR 19.25 per share, which

represented 8.89% of its total paid-up equity share capital and free

reserves as of June 30, 2013. Prior to the buyback, the government held

86.36% in NHPC.

Essar Energy, the India-focused and London-listed oil, gas and power arm

of the Essar group, will be divesting its exploration and production (E&P)

assets globally to raise funds for further growth, the Financial Express

reported on November 26, 2013. Essar Energy CEO Sushil Maroo did not

give any deadline for completing the process or the amount that the

company would raise, but alluded to the fact that Essar Energy would look

at exiting most of its non-core or non-performing assets in the near future.

On Nov 7, 2013, the Indian government approved a secondary share sale

of PowerGrid Corp., open from Dec 3 to Dec 5 for institutional buyers and

to Dec 6 for retail investors, the Economic Times of India reported.

PowerGrid’s follow-on public offer (FPO) got subscribed 0.06 times on day

1 and 1.06, 4.77 and 6.74 times on days 2, 3 and 4 respectively. The offer

included a government disinvestment of 4% and the sale of 601.9 million

new shares, equivalent to 13% of the existing paid-up capital. Post-issue,

the government’s holding in PowerGrid came down to 57.89% from

69.42%. The shares were offered at INR 85-90 per share and could fetch

around INR 70.83bn at the upper end of the price range. The company

may raise some INR 57.17bn, while the government may receive some

INR 17.58bn. PowerGrid’s IPO was held in October 2007. The

government has set a target to raise some INR 400bn from disinvestment

in the current fiscal year, ending Mar 31, 2014.

The Jaypee Group is in talks with Abu Dhabi National Energy

Company PJSC (TAQA) to sell its hydro-power projects, Business Line

reported on September 17, 2013. Earlier in September, the group, whose

interests range from engineering and construction to cement and sports,

sold its Gujarat cement unit for INR 38bn to UltraTech Cement of the

Aditya Birla Group.



Source:

Liquidity and Solvency Ratios of Major Players

Liquidity Ratios of Major Players

Solvency Ratios of Major Players

Cash Flow/Earnings Index of Major Players

Comments

Company data, EMIS Insight calculations

PowerGrid NTPC NHPC Tata Power GAIL

Debt-to-Assets

2012 61.36% 36.09% 34.18% 35.84% 20.28%

Debt-to-Assets

2011 59.2% 35.7% 33.44% 31.65% 14.79%

Debt-to-Capital

2012 72.21% 41.97% 40.09% 44.53% 27.22%

Debt-to-Capital

2011 69.45% 40.69% 40.10% 39.47% 19.82%

Debt-to-Equity

2012 259.87% 72.33% 66.91% 80.29% 37.41%

Debt-to-Equity

2011 227.36 68.6% 66.94% 65.20% 24.72%


Cash

Flow/Earnings

Index 2012

2.61 1.23 0.81 0.42 1.25

Cash

Flow/Earnings

Index 2011

1.97 1.16 0.75 0.56 1.23

Liquidity, measured by the current ratio, improved for GAIL and NHPC and

worsened for the other three observed companies in 2012. The quick ratio

reflects the y/y increase in current liabilities, observed in all companies

except NHPC, and the decrease or non-proportional increase in cash and

receivables. The cash ratio shows that NTPC and NHPC had more cash

relative to current liabilities compared to the other three companies.

Solvency weakened for all five observed companies. The three solvency

ratios were similar for the three power generators – NHPC, NTPC and Tata

Power, and widely different for the other two companies, active in electricity

and gas transmission and distribution, respectively.

A Cash Flow/Earnings Index of 1.0 would indicate parity between a

company’s net operating cash flows and net income. An index below 1.0

could be a sign of high levels of debt financing.


Current Ratio

2012 0.43 1.82 1.91 0.83 1.01

Current Ratio

2011 0.56 2.17 1.76 1.33 0.86

Acid Test 2012 0.22 1.06 1.24 0.43 0.55

Acid Test 2011 2.68 4.05 4.05 2.62 1.49

Cash Ratio 2012 0.13 0.82 0.92 0.15 0.27

Cash Ratio 2011 0.22 1.03 0.92 0.43 0.13



Highlights

Source:

GAIL India Ltd.

Financial Performance

Physical Performance by Segments

Gail India Ltd., headquartered in New Delhi, is the largest

state-owned gas transporter and marketer in India. The

company is active in the following segments: transmission

of natural gas and LPG, natural gas trading, production of

petrochemicals, LPG and liquid hydrocarbons, and

telecommunications.

GAIL, formerly known as the Gas Authority of India Ltd.,

was set up in 1984 to create gas infrastructure in the

country. GAIL began city gas distribution in New Delhi in

1997. GAIL Gas Ltd. is a wholly-owned subsidiary of GAIL,

set up in 2008, to manage its PNG/CNG business.

As of March 31, 2013, GAIL held some 60% market share

in gas marketing in India. The company claimed 75% in the

gas transmission business in the country.

GAIL is the only company in India, which owns and

operates LPG transmission pipelines for third-party usage.

The company has seven LPG plants in the country which

produced a total 1.38 million tonnes of liquid hydrocarbons

between April 1, 2012 and March 31, 2013.

In the Exploration and Production (E&P) segment, the

company has been awarded exploration rights for a total 32

blocks, 30 of which in India and two overseas.

GAIL has international presence, including stakes in JV

companies, wholly-owned subsidiaries and representative

offices, in China, Egypt, Myanmar, Singapore and the

United States.

Company data

Unit 2011 2012

Natural Gas Throughput mmscmd 117.62 104.90

Natural gas Trading mmscmd 84.17 81.44

Liquid Hydrocarbon Sales thou tonnes 1,441 1,371

Polymer Sales thou tonnes 448 427

LPG Transported thou tonnes 3,362 3,136

244 254

329

408

480

42 46 52 53 61 28 31 36 37 40

2008 2009 2010 2011 2012

Gross Sales, INR bn Profit Before Tax, INR bn Profit After Tax, INR bn



Highlights

Source:

GAIL India Ltd. (cont'd)

Five-Year Gas Throughput/Production Overview

Statement of Cash Flows

Its wholly-owned subsidiary GAILTEL operates in

bandwidth and infrastructure leasing.

GAIL moved from being a captive renewable energy

producer to being a commercial producer, after launching

some 100 MW of wind energy projects in 2011. In its

annual report, the company announced plans to further

expand its wind and solar energy portfolio.

GAIL is one of the three upstream companies that share

the under-recoveries of Oil Marketing Companies (OMCs)

by selling them petroleum products at a discount. In an

effort to make LPG affordable to domestic consumers, the

company has contributed a total INR 165.19bn since 2003.

GAIL’s contribution to OMCs’ under-recovery burden

totalled INR 26.87bn in 2012, slightly down from INR

31.83bn in the previous year.

The gas transporter and marketer is listed on both Indian

stock exchanges as well as on the London Stock

Exchange.

GAIL's operating cash flows were not sufficient to finance

investments in 2011 and 2012. Long-term borrowing

increased in 2012 compared to 2011. Unlike in 2011, in

2012 GAIL took on short-term debt. Cash increased by INR

14.27bn in 2012 compared to a net decrease of INR 12bn

in the previous year.

Company data

Unit 2008 2009 2010 2011 2012

Natural Gas MMSCMD 83.29 106.73 117.62 117.91 104.9

LPG M/T

(metric tonnes) 1,087,986 1,099,554 1,068,156 1,124,341 1,077,866

SBP

Solvent/Naphtha M/T 101,493 102,479 111,140 146,123 147,988

Pentane M/T 58,392 58,551 34,523 23,144 20,739

Propane M/T 152,671 179,274 155,152 146,015 129,570

Ethylene M/T 431,580 429,992 428,444 457,080 448,534

HDPE/LLDPE M/T 420,108 417,147 416,396 441,136 441,051

2011,

INRbn

2012,

INRbn

Cash Flow from Operating Activities 44.88 50.33

Cash Flow from Investing Activities -71.42 -54.72

Cash Flow from Financing Activities 14.54 18.65

Net Increase/Decrease in Cash and Cash Equivalents -12.00 14.27

Cash and Cash Equivalents at the Beginning of the

Year 21.31 9.31

Cash and Cash Equivalents at the End of the Year 9.31 23.58



Highlights

Source:

NHPC Ltd.


Power Generation Overview

NHPC Ltd. is a hydropower generating company based in Faridabad in the state of Haryana. As of Mar 31, 2012, the government of India controlled 86.36% in the company.

NHPC, which is listed on both the Bombay and National Stock Exchanges, had a total five subsidiaries and joint venture companies in 2012. The utility was awarded a Miniratna status in 2008.

NHPC, set up in 1975, operated 16 power stations with an installed capacity of 4,227 MW as of March 31, 2013. In addition, it operated two power stations of its subsidiary, NHDC Ltd., with an installed capacity of 1,520 MW. As of Mar 31, 2012, the company had a 14.55% share of India’s installed hydroelectric power capacity (5.75 GW out of 39.5 GW).

NHPC launched the 231-MW Chamera-III hydro project in Himachal Pradesh in Jul 2012, the 44-MW Chutak project in Jammu & Kashmir in Jan 2013 and the 132-MW Teesta Low Dam III HEP project in West Bengal in May 2013. In addition, all the three units of the 45-MW Nimmo Bazgo project were launched at partial load.

Six hydropower projects with an installed capacity of 4,050 MW were under construction at the end of the company’s most recent completed financial year in March 2013. Two of these projects, the 760-MW Uri-II and Parbati-III were in advanced stages of completion.

NHPC has also been working on capacity additions of 3,686 MW to be developed through JVs with central and state utilities.

Net cash from operations decreased in 2012 (see next slide) but was sufficient to cover the company’s investments. The company took on less debt compared to 2011 but repaid more, resulting in negative cash from financing activities. The company reported lower ending cash and increased borrowing in 2012 compared to 2011.

Company data

26.72

42.19 40.47

55.10 50.49

10.75

20.91 21.67

27.72 23.48

3.25 6.77 7.38 8.61 7.38

2008 2009 2010 2011 2012

Sales, INR bn Net Profit, INR bn Dividend Proposed/Paid, INR bn

9,863 11,046 11,286

12,567 13,049

14,813

16,689 16,960

18,604 18,683 18,923

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Power Generation, GWh



Source:

NHPC Ltd. (cont'd)

NHPC Borrowings

Other Lines of Business


Number of Employees

Company data

13,017

13,648 13,470

13,118

12,768

12,341 12,028

11,712 11,420

11,036

10,410

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Number of Employees

NHPC is registered with the World Bank, the Asian Development

Bank, the African Development Bank, the Kuwait Fund for Arab

Economic Development and the Central Water Commission as a

consultant in the area of hydropower.

The company has so far completed 84 consultancy assignments and

has 17 assignments under progress.

Apart from hydropower generation, NHPC has taken up initiatives in

solar power.

70.22 71.67 75.32

99.56

122.34 138.68 145.69

176.41 186.27

2004 2005 2006 2007 2008 2009 2010 2011 2012

Borrowings, INR bn (include current maturities of long-term borrowings)

2012, INRbn 2011, INRbn

Net Cash from Operating Activities 18.98 20.84

Net Cash (Used in) Investing

Activities -12.95 -19.76

Net Cash Flow from Financing

Activities -9.91 5.45

Net Increase/Decrease in Cash and

Cash Equivalents -3.88 6.54

Cash and Cash Equivalents at the

Beginning of the Year 60.04 53.5


End of the Year 56.16 60.04



Highlights

Source:

NTPC Ltd.


Commercial Capacity and ESO (standalone)

NTPC Ltd, formerly called National Thermal Power Corporation, is India's largest power utility. The Delhi-based company, set up in 1975, is listed on both Indian stock exchanges and was awarded a Maharatna status in 2010.

As of March 31, 2013, the utility was 75.00% owned by the government of India.

The company's core business is engineering, construction and operation of power plants. It also provides consultancy services to both Indian and foreign power utilities.

As of March 31, 2012, NTPC had an installed generation capacity of 34.82 GW, which accounted for 15.7% of India's total installed capacity of 223 GW. Standalone coal-based and gas-based plants had capacity of 31.9 GW and 3.96 GW, respectively. Group generation capacity was 41.18 GW in 2012, against 37 GW a year earlier. With standalone power generation of 232.03 TWh, the company claimed a 25% share of India’s total generation in 2012.

As of March 31, 2012, NTPC had five subsidiaries and 21 joint venture companies. JVs reported a total 5.36 GW of capacity, 3.4 GW and 1.94 GW of which were fuelled by coal and gas, respectively.

Standalone number of employees was 23,865 in 2012 against 24,011 in 2011, and group employees were 25,484 against 25,511 in 2011, respectively.

NTPC's operating cash was sufficient to cover its investment activities in both 2012 and 2011. Long-term debts increased which drove ending cash up at the end of the period. The dividends NTPC paid out accounted for 44% of net profit in 2012, compared to 40% in 2011.

Company data

452.29 492.34

573.99

645.15 679.31

82.01 87.28 91.03 92.24 126.19

0

100

200

300

400

500

600

700

800

2008 2009 2010 2011 2012

Total Revenue, INR bn Net Profit, INR bn

27,850 28,840 29,830 30,990

34,820

193.69

205.09 206.58 206.68

215.92

180

185

190

195

200

205

210

215

220

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2008 2009 2010 2011 2012

Commercial Capacity , MW Energy Sent Out (ESO), TWh



Source:

NTPC Ltd. (cont'd)

Capacity and Generation by Regions, 2012

NTPC Long and Short-Term Debt

Number of Employees


Company data

Number of Stations -

Fuel Type By Station Capacity MW

Gross

Generation,

GWh

Northern Region 4 - Coal 5,990 44,372

National Capital Region 2 - Coal; 4- Gas 4,869 29,421

Western Region 4 - Coal; 2 - Gas 12,154 71,540

Eastern Region 4 - Coal 7,900 51,670

Southern Region 2 - Coal; 1 - Liquid

Fuel 4,960 35,025

Total 35,872 232,028

23,639

23,743

23,797

24,011

23,865

2008 2009 2010 2011 2012

Number of EmployeesNote: Figures exclude joint venture companies and

subsidiaries

2012, INRbn 2011, INRbn


Net Cash (Used in) Investing Activities -140.17 -78.81

Net Cash Flow from Financing Activities -7.52 -28.69


Cash Equivalents 7.26 -0.40



Cash and Cash Equivalents at the End of

the Year 168.68 161.42

345,663 377,836

431,750

502,671 581,457

14.20

133.90 132.60 122.60

0.00 0

20

40

60

80

100

120

140

160

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2008 2009 2010 2011 2012

Long-Term Loans, INR mn Short-Term Loans, INR mn



Highlights

Source:

PowerGrid Corporation of India Ltd.


Power Transmitted and Length of Transmission Lines

PowerGrid Corporation of India Ltd. is the country’s Central

Transmission Utility (CTU) active in bulk power transmission

and in charge of operating the national and regional power

grids of India. PowerGrid also plans and supervises the

development of India’s inter-state transmission system.

The company, set up in 1989, was listed on both Indian stock

exchanges in 2007 and as of March 31, 2013 was 69.42%

controlled by the President of India. In 2008, it was awarded a

Navratna status, meaning it has the autonomy to undertake

new transmission projects of any amount without the approval

of its Board of Directors.

As of March 31, 2013 the company owned and operated a

transmission network of some 100,200 ckt km of inter-state

transmission lines and 197 EHV & HVDC substations with

transformation capacity of about 164,763 MVA.

PowerGrid had three subsidiaries and held stakes in 12 joint-

venture companies as of Mar 31, 2013. As of Nov 2013, it also

operated an all-India broad-band telecom network of some

29,300 km.

The company has worked as consultant and developer of

projects in Afghanistan, Bangladesh, Bhutan, Ethiopia, Nigeria,

Nepal, Kenya, Myanmar, Sri Lanka, Tajikistan and UAE.

Cash from operating and financing activities was insufficient to

cover investment both in 2011 and 2012, and the company

reported net cash decreases in both years. Borrowing

increased y/y in 2012, weakening both liquidity and solvency.

Company data

53.24

67.01

79.02

95.44

121.63

61.39

75.04

90.99

107.85

133.29

16.91 20.41 26.97

32.55 42.35

2008 2009 2010 2011 2012

Transmission Charges, INR bn Total Revenue, INR bn Net Pprofit, INR bn

71,500 75,290 82,355 92,981 100,200

334,013 363,723

400,596 430,992

450,027

2008 2009 2010 2011 2012

Length of Transmission Lines, ckt km

Power Transmitted on PowerGrid network, GWh



Source:

PowerGrid Corporation of India Ltd. (cont'd)

Sources of Funds, %, 2012

Cash Flow Statement

PowerGrid Total Debt, INR bn

Number of Employees (l), Sub-Stations (r)

Company data

8,214

9,162

9,775

9,670

9,347

2008

2009

2010

2011

2012

Number of Employees

120

124

135

150

167

2008

2009

2010

2011

2012

Number of Sub-Stations

277 332 372

491

631

22

26

31

8 13

15

17

20

0

100

200

300

400

500

600

700

800

2008 2009 2010 2011 2012

Short-Term Loans, INR bn

Current Maturities of Long-Term Loans, INR bn

Total Long-Term Loans,INR bn

534.02

408.83

344.17

284.65

681.88

Bonds (Incl. Foreign Currency Bonds) 43.91%

Reserves 21.08%

Foreign Currency Loans 18.87%

Deferred Tax & Net Current

Liabilities 7.78%

Equity 4.52%

Short-Term Loans 1.95%

Loans from Banks and Financial

Institutions 1.78%

Grants 0.11%

2012, INR bn 2011, INR bn


Net Cash (Used in) Investing

Activities -217.11 -158.34

Net Cash Flow from Financing

Activities 99.90 80.89


Cash Equivalents -6.75 -13.43




End of the Year 16.62 23.37



Highlights

Source:

Tata Power Ltd.

Standalone and Consolidated Financial Performance

Ten-Year Standalone Generation, Net Profit Overview

Tata Power, which assumed its current name in 2000, is one of India’s leading privately-held utilities with a significant international presence.

As of March 31, 2013, the company had an installed generation capacity of 8,521 MW in India and a presence in all the segments of the power sector - generation (thermal, hydro, solar and wind), transmission, distribution and trading. It is also a partner in a number of public-private projects in power generation, transmission and distribution in India.

As of March 31, 2012, Tata Power, which is listed on two Indian stock exchanges, had a wind generation installed capacity of 398 MW (375 MW in 2011) and plants spread across Maharashtra, Gujarat, Tamil Nadu and Karnataka – the leading states in promoting wind power generation in India.

Tata Power’s international investments include a stake in coal mines and a geothermal project in Indonesia; a coal supply project in Singapore; a joint venture to develop projects in South Africa, Botswana and Namibia; an investment in geothermal and clean coal technologies in Australia; and a hydro project in partnership with The Royal Government of Bhutan.

As of March 31, 2013, Tata Power owned 23 subsidiaries (14 wholly owned), 26 joint venture companies and 10 associates. Including major subsidiaries, the company employed 4,830 people, against 4,709 a year earlier.

Company data

84.96 95.67

260.01 330.25

11.70 10.25

-9.68 0.99

2011 2012 2011 2012

Standalone Consolidated

Revenue from Operations (Net of Excise Duty), INR bn Net Profit, INR bn

12,917 13,283 13,746 14,269 14,717 14,807 15,946 15,325 15,230 15,770

5.09 5.51 6.11

6.97

8.7 9.22 9.39 9.41

11.7

10.25

0

2

4

6

8

10

12

14

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Generation, GWh, (l) Net Profit, INR bn (r)



Source:

Tata Power Ltd. (cont'd)

Installed Capacity of the Tata Power Group of Companies Tata Power Group of Companies - Other Businesses

Company data

Fuel Source Location State

Installed

Capacity

MW

Total

Capacity by

Category,

MW

Thermal –

Coal/Oil/Gas

Mundra Maharashtra 4,000

7,407

Trombay Jharkhand 1,580

Maithon Gujarat 1,050

Jojobera Jharkhand 428

IEL – Jojobera Jharkhand 120

Rithala New Delhi 108

Belgaum Karnataka 81

Lodhivali Maharashtra 40

Thermal –

Waste Heat Recovery

IEL – Jojobera Jharkhand 120 240

Haldia West Bengal 120

Hydro

Bhira Maharashtra 300

447 Khopoli Maharashtra 75

Bhivpuri Maharashtra 72

Renewables

Wind farms

Maharashtra,

Gujarat,

Karnataka, Tamil

Nadu

398

427

Solar Photovoltaic (PV) Maharashtra,

Gujarat 28

Total 1 8,521

Business Location Details

Transmission

Mumbai Over 1,110 ckm of transmission lines, connecting

generating stations to 19 receiving stations.

Eastern/North

Eastern Regions

Installed transmission lines which transmit surplus

power from the Eastern/North Eastern region

(Siliguri) to Uttar Pradesh (Mandaula), covering a

distance of 1,166 km.

Distribution Mumbai Over 2,500 ckm of distribution lines.

New Delhi Over 10,500 ckm of distribution lines.

Retail

Mumbai

Over 380,000 customers with sales of over 6,500

MUs in FY13, emerging as the largest Distribution

Company in Mumbai.

New Delhi Over 1.3 million customers with sales of over

7,760 MUs in FY13.

Strategic Electronics Mumbai

One of the leading suppliers of defence

equipment and solutions amongst the Indian

Private Sector.

Power Services Mumbai

One of the leading service providers for Project

Management, O&M and specialised services in

the power sector.



Source:

Tata Power (cont'd)

Performance by Major Items

Standalone and Consolidated Cash Flow Statements

Comments

Company data

2012 2011 Change,

INRbn % Change

Revenue from Power

Supply and

Transmission

Charges, INRbn

9,081.33 8,051.53 1,029.80 13

Finance Costs,

INRbn 6.78 5.15 1.63 32

Depreciation and

Amortisation, INRbn 3.64 5.70 -2.06 -36

Tata Power reported higher Revenue from Power Supply in 2012 compared

to 2011 mainly because of higher fuel costs.

The company reported higher financing costs mainly due to the fresh issue

of INR 15bn of 10.75% Redeemable and Non-Convertible Debentures.

Depreciation was lower mainly due to a one-time impact of a change in the

depreciation rate and methodology authorised by the Ministry of Corporate

Affairs (MCA) for companies engaged in the generation and supply of

electricity.

In 2012, standalone net operating cash decreased 34% y/y. The company

invested less in 2012 compared to the previous year, took on more short-

and long-term debt, but, unlike in 2011, did not issue Unsecured Perpetual

Securities which are classed as equity instruments. This resulted in a

deepened net decrease in cash and 39% less ending cash compared to

2011.

2012, INR bn 2011, INR bn 2012, INR bn 201, INR bn

Net Cash from Operating Activities 4.32 6.51 32.80 11.47

Net Cash Used in Investing Activities -14.94 -19.88 -42.86 -61.28

Net Cash from Financing Activities 8.03 11.63 -5.87 57.98

Net Increase/Decrease in Cash and Cash

Equivalents -2.60 -1.74 -15.93 8.17


Beginning of the Year 6.61 8.35 31.22 21.41

Cash and Cash Equivalents at the End of

the Year 4.01 6.61 17.90 31.22



IX. Appendix







Source:

Table of Terms and Abbreviations

Table of Terms and Abbreviations

Reference sources

kWh A unit of energy equivalent to one kilowatt (1 kW), or 1,000 watts, of power expended for one hour (1 h) of time.

MW A unit of electric power equal to one million (10^6) watts

GW A unit of electric power equal to one billion (10^9) watts, one thousand megawatts

MU, BU Million Units, Billion Units; 1 MU = 1 GWh, 1 BU = 1 TWh. For example, 855 BU=855,000 MU=855 TWh

MMT, BMT Million Metric Tonnes, Billion Metric Tonnes

Plant Load Factor (PLF) Plant Load Factor is the ratio of the actual output of a power plant over a period of time and its output if it had operated a full capacity of

that time period. PLF = Gross Generation / (Installed Capacity * Number of Hours)

Load Shedding The deliberate shutdown of parts of a power distribution system to prevent the failure of the entire system when demand strains capacity.

MWe Megawatt electrical, used in the electric power industry

MWth or MW t Megawatt thermal, refers to a unit of tehrmal power produced

ckt km, circuit kilometers The route kilometers of revenue producing circuits in service, determined by measuring the length in terms of kilometers, of the actual

path followed by the transmission medium.

MMBtu One million Btu = British Thermal Unit, a unit of energy used for natural gas. Approximately 1,000 ft3 of natural gas ≈ 1 MMBtu ≈ 1 GJ

(gigajoule).



Source:

Ratio Calculation Formulas

Calculation of Liquidity Ratios

Calculation of Solvency Ratios

Emerging Markets Insight;

Ratio Name What it Measures Calculation

Debt-to-assets The percentage of total assets financed with debt Total interest-bearing debt (long-term borrowings+current portion of long-term borrowings+short-term

borrowings) ÷ Total Assets

Debt-to-Capital The percent of total capital (debt+equity) financed through

debt Total debt ÷ (Total Debt + Total Shareholders' Equity)

Debt-to-Equity The amount of debt financing relative to equity financing Total debt ÷ Total Shareholders' Equity

Cash Flow/Earnings Index Operating cash generated per rupee of net income Net Cash Flow from Operations ÷ Net Income

Ratio Name What it Measures Calculation

Current Ratio A unit of current assets per unit of current liabilities.

Higher ratio means higher level of liquidity. Current Assets ÷ Current Liabilities

Quick (Acid Test) Ratio

More conservative than the current ratio. Reflects the

fact that certain current assets cannot be easily

converted into cash.

(Cash + Current Investments + Receivables) ÷ Current Liabilities

Cash Ratio The most stringent liquidity ratio. A measure of a

company’s liquidity n a crisis. (Cash + Current Investments) ÷ Current Liabilities



Contact:

Corporate Headquarters

Nestor House

Playhouse Yard

London EC4V 5EX

UK

Voice: +44 207 779 8471

Fax: +44 207 779 8224

Americas Headquarters

225 Park Avenue South

New York, New York 10003

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About EMIS Insight

EMIS Insight is a unit of EMIS that produces proprietary strategic research and analysis. The service features market overviews, industry trend analysis, legislation

and profiles of the leading sector companies provided by locally-based analysts.

About EMIS

Founded in 1994, EMIS (formerly known as ISI Emerging Markets) was acquired by Euromoney Institutional Investor PLC in 1999. EMIS works from over 15 offices

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