15 July 2011
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Insights from bureaucrats
the
Interaction with Tamil Nadu Discom, SERC
Roadmap to achieve financial viability
Post our meetings with Tamil Nadu State Electricity Regulatory Commission (TNERC)
and Tamil Nadu Generation and Distribution Company (TANGEDCO), we have came
assured about impending improvement in TANGEDCO's financials.
Clear roadmap exists to achieve financial viability for TANGEDCO and a clear
consensus amidst authorities on restoring the financial health of the power sector.
This is in line with the key theme in our Sector Update dated June 2011, Utilities:
Just an Eclipse…Brighter Days Ahead, highlighting improvement in SEB finances.
Power sector reforms key priority for government; consumer opinion favors tariff hikes:
There is a clear
consensus amidst authorities on restoring the financial health of the power sector. Load shedding has awakened consumer
opinion in favor of tariff hike and financial independence of TANGEDCO.
Roadmap to achieve financial viability: FY11 estimated revenue gap of Rs90b for TANGEDCO is targeted to
be bridged through:
1. TANGEDCO added capacity of just ~500MW over the last 8 years, leading to increased reliance on short-term
purchases. However, over the 18-month period beginning October 2011, ~6GW of LT capacity would be available
through own generating companies and state share in capacities commissioned by the center. According to TNERC's
August 2010 Tariff Order, TN will become a net exporter of power in FY13 (v/s being the largest buyer, currently).
2. The state government had provided subsidy of INR21b in FY11, including INR2.7b towards the agriculture sector,
which is grossly inadequate. It could increase subsidy towards agriculture by INR30b-35b per year.
3. The local elections would be completed by September/October 2011, post which there could be a tariff increase of
~15%, enhancing annual revenues by INR25b-30b. This would then be followed up with annual tariff petition and
'truing up' exercise every year.
Addressing cash flow issues, exploring LT funding options:
TANGEDCO indicated monthly under-recoveries of
INR7b-8b. Given its corporate status as against a state government body earlier, debt funding is becoming difficult. To
address near-term cash flow issues, TANGEDCO has resorted to load shedding in 2011, which could lower ST power
purchases by 400MW (~30% reduction). Outstanding borrowings stand at INR400b, and PFC and REC's cumulative
exposure is estimated at ~INR150b. Both these companies, however, have an escrow mechanism, and a large part of the
funding is towards generation projects (not as working capital). Additionally, TANGEDCO has term loans of INR170b-180b
from 17-18 public sector banks. These loans are unsecured and largely for meeting working capital requirements.
Lower ST purchases, increase in LT availability negative for merchant players; PFC / REC well covered:
We
continue to believe that merchant power prices will be under pressure, as TN contributes ~25% of the purchases in the
short-term merchant market and this is likely to decline meaningfully in FY13. According to TNERC's August 2010 Tariff
Order, TN will become a net exporter of power in FY13 (v/s being the largest buyer currently).
PFC / REC
continue to be
our preferred bets, as a play on the theme of 'improvement in SEB finances'. CPSUs continue to be our preferred sectoral
theme, given acceleration in earnings growth and attractive valuations. Our top picks are:
NTPC, Coal India
and
Powergrid.
SEB financials alarming, but the worst seems to be behind:
In our Sector Update dated June 2011, Utilities: Just
an Eclipse…Brighter Days Ahead, we had opined that FY11 would be the peak of SEB losses. With decline in ST power
cost and improvement in availability of LT power, there would be a reduction in SEBs' power purchase cost. This combined
with gradual tariff increase would lead to an improvement in SEB finances. We reiterate our positive stance. For SEBs',
we expect commercial losses to moderate from ~INR685b in FY11 to ~INR466b in FY13.
Nalin Bhatt
(NalinBhatt@MotilalOswal.com) +91 22 3982 5429
Satyam Agarwal
(AgarwalS@MotilalOswal.com) +91 22 3982 5410
/ Vishal Periwal
(Vishal.Periwal@MotilalOswal.com) +91 22 3982 5417

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Roadmap to achieve financial viability
Utilities: Detailed Report
June 2011
We met various senior officials of 'Tamil Nadu State Electricity Regulatory Commission'
(TNERC), 'Tamil Nadu Generation and Distribution Company' (TANGEDCO) and also visited the
State Load Dispatch Management Centre. We came back assured that the financial situation
of TANGEDOC is set to improve meaningfully and there is a concrete roadmap to achieve
financial viability, going forward. This corroborates with the key theme highlighted in our
Sector Report (Indian Utilities: Just an Eclipse…Brighter days ahead, dated June 2011) and
vindicates our belief that directionally, SEB Finances are set to improve with FY11 being the
peak of the under-recoveries.
the
Severe cash crunch in interim period, PFC/REC secured on payment mechanism
Background:
Tamil Nadu Power Distribution Company is the top loss making distribution
entity in FY09 with commercial loss of Rs90b (17% of total Rs526b). It also continues to
be the largest purchaser of ST power and accounted for 24% of total ST purchase in
FY11 and 40% in April 2011. TN Discoms have last affected the tariff hike in August 2010,
after a period of 7 years. Recently, the state government of Tamil Nadu has asked for a
bailout from the Central Government to address the financial constraints with TANGEDCO.
Power sector is now the key government priority; consumer opinions
in favour of tariff hikes and financial independance
A. There seems to be a clear consensus from meetings with several officials in TNERC /
TANGEDCO that "restoring financial health of the Power sector is the most important
priority for the state government". The current financial crisis has led to commencement
of scheduled load shedding in 2011, leading to strong consumer opinions in terms of
rationalizing (increasing) tariffs. On the day of our visit, there was a review meeting of
the 'Chief Minister' with the senior members of TANGEDCO, where concerns were being
expressed that any delays in turnaround can seriously impact industrial growth / job
creation in the state, due to lack of power.
B. The average tariffs of Rs2.8/unit in the state are amongst the lowest in the country, and
the interim tariff hike in August 2010 (in the election year) was post a gap of 7 years.
This was applicable till March 2011, and has now been extended till Dec 2011. TANGEDCO
is ready with the Annual Revenue Requirement (ARR) petitions and is awaiting directives
from the state government.
Consumer opinions in
favour of Tariff Hike and
financial independence…
Roadmap to achieve financial viability
In FY11, the estimated revenue gap for TNGEDCO stood at Rs90b, of which tariff hike in Aug
2010 covered ~Rs18b and balance Rs72b was funded through creation of regulatory assets.
FY12 finances are expected at status quo, but FY13 could be a turning point. The pace of
loss reduction will depend on:
1. Capacity additions / increased Long Term (LT) power availability:
Capacity
addition by TANGEDCO over past 8 years has been just ~500MW, leading to increased
reliance on short term power purchases (for ~14% of demand, 1400MW). During the
18 months of 2HFY12-FY13, ~6GW of LT capacity would be available through own
generating companies (including Joint Venture projects) and state share from capacities
commissioned by Central Public Sector Units (CPSUs). This will lead to significantly
lower dependence on short term power purchases. As per the August 2010 Tariff order
of TNERC, TN will become a net exporter of power in FY13 (vs being the largest buyer
currently).
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LT supply for Tamil Nadu to improve meaningfully by ~6GW over next 2 years...
Projects
A] State Projects
North Chennai TPS
Mettur TPS
Co-Gen
Hydro projects
Total State projects
B] Joint Venture Projects
Vallur TPP
Ownership
State
State
State
State
Cap (MW)
1,200
600
183
93
2,076
NTPC JV
1,075
1.5GW capacity, but share of TN
DISCOM is 1.1GW
750MW to be available from
3QFY12 (from initial 1000MW)
375MW beginning 2HFY13
Tuticorin TPP
Udangudi TPP
NLC JV
BHEL JV
1,000
-
(from balance 500MW)
Supply to begin from 1QFY13 for 500MW &
500MW by 1HFY13E
1,600MW capacity not considered for
time being as initial progress slow,
Target CoD by FY14E looks challenging
CoD as indicated by TNERC/TANGEDCO
1st unit CoD by Feb-12 (earlier Feb-11),
Full CoD by June/July-12
2HFY12 (vs earlier 1HFY11)
2HFY12
To be completed by 1HFY12
As per CEA
the
Both units by Mar-12
Mar-12
1000MW by Mar-12
500MW in FY13
500MW in FY13
500MW in FY14
Total JV projects
C] Share from CPSU projects
Neyveli TS-II expansion
Kaiga Atomic Power (Unit 4)
Kudankulam Atomic project
Simhadhri Stage - II
Other projects
Share from CPSU Projects
Total [A + B + C]
2,075
Central Share
Central Share
Central Share
Central Share
325
36
975
190
19
1,545
5,696
Out of total 500MW
Out of total 220MW
Out of total 2GW
Out of total 1GW
Entire Capacity in FY12
Commissioned
Entire Capacity in FY12
500MW Commissioned (95MW for TN),
500MW in FY12 (95MW for TN)
LT power supply is expected to increase significantly, as many projects delayed in past gets bunched up for commissioning
from 2H FY12. This will lead to significantly lower dependence on short term power purchases
2. Increased government subsidy:
The subsidy provided by the state government in
FY11 was Rs21b, including Rs2.7b towards the agriculture sector. This is a gross under
recovery as agriculture consumes 22% of the power in the state and is largely 'free
power'. There are expectations that the government will increase the subsidy towards
agriculture by Rs30-35b pa. Currently, TNERC has approved subsidy payment at Rs21b
in FY12, and we understand that the same could possibly be revised upwards in FY13E.
Consumption pattern (% of total, MUs)
Inter State
1%
Others
2%
Revenue pattern (% of total, INR m)
Inter State
1%
Others
3%
Domestic
26%
Domestic
16%
Industrial HT
/ LT
37%
Commerical
12%
Agriculture
22%
Industrial HT
/ LT
54%
Commerical
26%
Agriculture
0%
Soucre: TNERC/TANGEDCO
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3. Tariff increase
leading to higher revenues of ~Rs25-30b (~15% tariff hike) is possible.
In all our meetings, there was reconciliation that tariff hike is "inevitable". This is possible
by Sept/Oct 2011 as the local polls get completed. This would then be followed up with
annual tariff petition and truing up exercise every year. The severity of cash crunch led
to a tariff hike in Aug 2010 (in an election year), and now the political climate is more
conducive.
Tariffs in Tamil Nadu are amongst the lowest in the country (Rs/unit)
the
Top loss making states have
relatively lower tariffs
Soucre: CEA
4. Creation of a vibrant Renewable Energy Certificate (REC) market:
Recently
REC's have started trading on the power exchanges, and provide a mechanism for
various state discoms to meet the renewable energy obligations. Tamil Nadu has the
largest installed wind capacity of 6,000MW, meeting 15-20% of the power demand in
the state. This could lead to a potential savings of ~Rs10b given the lower PPA rates
possible.
Facing cash flow issues, various steps taken including 'scheduled' load
shedding
TANGEDCO has severe funding gap, with monthly under recoveries at ~Rs7-8b currently.
Post the unbundling in November 2010, TANGEDCO now has a corporate status and this
has made the lenders uncomfortable in increasing funding, hitherto given to TNEB, as
state government body. To address the near term cash flow issues, TANGEDCO has
resorted to load shedding in 2011 (1 hour in Chennai, 2 hours in Madurai & Coimbatore
and ~20% in HT/Commercial consumer on rotation basis), which could potentially lower
power purchases by 400MW. This will lead to ~30% reduction in short term power
purchases.
Short term power purchases are being planned in a more systemic manner by inviting
bids, and recently ~2,600MW capacity has been tied up for specific periods at Rs3.81-
3.84/unit (vs Rs4.5-5.0/unit in FY11). The state has also done banking arrangements
with Haryana, Punjab, Chhattisgarh, etc. TANGEDCO has also invited medium term bids
for power procurement for 450MW (bid opening is August 2011) and this is valid for 5
years. This will bring down the reliance on less than one year power market for TNEB
quite meaningfully.
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ST power accounts for 13% of total demand
Spot
purchases,
13%
the
TN accounts for 25% of ST power purchases
Tamil Nadu
Andhra Pradesh
UP
Rajasthan
15.8
37.8
26.6
3.8
13.7
18.5
21.6
15.6
13.2
10.9
23.6
-1.1
FY09
FY10
FY11
Maharashtra
Other States
9.5
12.2
16.4
23.0
40.2
-1.3
Apr-11
Other
renew able,
2%
Wind,
10%
Thermal,
67%
8.2
25.3
21.7
24.0
10.4
10.4
Hydro, 8%
Soucre: TNERC/TANGEDCO
Spot purchase of power account for 13% of total power purchase by TN DISCOMs.
Rs400b bailout demand towards past arrears; delayed payments but
no defaults till date
Outstanding borrowings of the erstwhile TNEB were Rs400b which was bifurcated as
40% for transmission and 60% for Gencos / Discoms. Within this, the bifurcation for
Gencos and Discoms is not yet finalized and they operate as single company. Also, the
officials indicated that the bailout is largely for past arrears, while they expect to operate
the current operations without any under recovery, with annual tariff revisions.
The borrowing is funded by: 1) Power Finance Corporation (PFC) and Rural Electrification
Corporation (REC) exposure estimated at ~Rs150b. We understand that these companies
have an escrow mechanism, and almost the entire funding is towards the generation
projects (not as working capital) 2) Exposure of TN PFC (state government entity) of
~Rs60b 3) Term loans of Rs170-180b from ~17-18 PSU banks and these are unsecured
and largely for meeting working capital requirements.
There are thoughts of swapping the unsecured borrowings with banks at 12% into
bonds at 10% (with part state government guarantee); which will lower the interest
cost. The bonds can also be subscribed by the other State agencies (under directives by
state government and backed by Government guarantee), who park surplus funds in
FDs, liquid funds, etc. This will also provide moratorium in terms of principal repayments
in the interim period.
There have been no defaults till date, but there have been delays in making payments.
To manage cashflows, Discoms have been making payments to utilities only at the last
date (2-3 months), while supplier payments are also delayed by 1-2 months (4-5 months).
Even for repayment of loan, in one instance, the payment was made through 4
installments.
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Significant increase in leverage (INR b)
- Loans from FI/banks
- Other Loans
- Grants
- Consumer money
35
14
the
35
14
23
13
93
FY06
26
13
116
FY07
30
14
215
146
351
FY08
FY09
FY11
Soucre: TNERC/TANGEDCO
Implications negative for merchant players / PSU Banks; prefer NTPC,
PGCIL, Coal India and PFC / REC
We continue have a negative bias on merchant power prices, and model in merchant
rates of Rs4/unit in FY12 and Rs3.5/unit in FY13 (vs Rs4.11/unit in FY11). TN contributes
~25% of the purchases in the short term merchant market, and quantum is expected to
be reduced quite meaningfully in FY13. As per the August 2010 Tariff order of TNERC,
TN will become a net exporter of power in FY13 (vs being the largest buyer currently).
Also, top 5 states contribute ~70%+ of the short term market purchases and most of
these states are lowering purchases. Commissioning of large capacities by state gencos
/ CPSUs will lead to competition shifting to variable cost for merchant producers, in our
opinion. We have a Neutral rating on most private developers.
PFC / REC continue to be our preferred bets, as a play on theme of 'improvement in SEB
finances'. These companies have an escrow mechanism with large part of funding for
generation capacities, and valuations are attractive.
CPSUs continue to be our preferred sectoral theme, given acceleration in earnings
growth and attractive valuations. Our top picks are:
NTPC, Coal India
and
Powergrid.
Comparative valuations
Company
CPSUs
NTPC
PGCIL
CIL *
NHPC
Recom
CMP
TP UpSide EPS (INR/sh) EPS Gr (%)
Price
Buy
Buy
Buy
Neutral
189
110
365
25
229
125
447
27
(%)
21
14
22
7
FY12
11.7
6.6
22.1
1.6
FY13
13.9
7.6
27.7
1.9
FY12
21
20
28
11
42
389
35
48
11
1
5
FY13
19
15
25
19
-7
18
-2
12
20
3
17
RoE (%)
FY12
13.6
13.6
26.3
6.5
9.0
34.1
18.5
19.7
6.8
12.5
6.2
FY13
15.0
14.2
26.2
7.5
7.2
30.8
15.8
19.2
7.7
11.6
7.0
P/BV (x)
FY12
2.2
2.2
5.4
1.1
2.4
2.8
1.8
1.0
0.8
1.1
1.0
FY13
2.0
2.0
4.2
1.0
2.3
2.2
1.6
0.9
0.8
1.0
0.9
P/E (x)
FY12
16
17
17
15
11
10
11
6
13
9
9
FY13
14
14
13
13
12
8
11
5
11
EV/EBITDA (x)
FY12
12
11
11
10
19
11
8
9
7
FY13
10
10
8
8
19
7
7
9
6
Private Sector
Tata Power
Neutral
Adani Power Neutral
JSW Energy
Neutral
Lanco Infra
Buy
Reliance Infra Buy
1,269 1,261
110
106
75
23
569
75
55
879
-1 111.7 104.3
-4 11.5 13.6
1
142
55
29
64
6.9
4.1
44.9
39.3
4.8
6.8
4.5
53.7
40.6
5.6
CESC
Buy
335
434
PTC
Buy
77
127
* RoE adjusted for OB reserves provisions
8
5
6
7
11
8
Source: Company/MOSL
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Takeaways from August 2010 Tariff order by TNERC
TANGEDCO under recoveries to halve by FY13 even assuming current tariffs
We also highlight few of the important workings covered in the tariff order (TO) approved by
TNERC in August 2010, highlighting improvement in financial position, purely on the back of
lower power purchase cost. TO also expects TN DISCOMs to have surplus power for sale in
open market in FY13. Thus, under recoveries are expected to halve from Rs79b in FY11 to
Rs35b in FY13 without any additional tariff hikes.
the
TNERC and TANGEDCO officials indicated that actual under recovery (of Rs90b in FY11) can
be quite minimal in FY13, driven by possible ~Rs35-40b of savings in power purchase cost,
Rs25-30b from tariff increase (only ~15% increase, should not face opposition) and Rs30-
35b additional subsidy from government. We believe that the situation is manageable and
the delayed capacity addition in past 1-2 years accentuated the problems of TN DISCOMs.
With 6GW of capacity addition over next 2-3 years, TN DISCOMs look on track to achieve
turnaround without much ado.
TN expects to be net exporter of power in FY13, vs largest buyer now (MUs)
FY11
Energy input requirement
70,933
-
70,933
26,539
Energy required for Dd-Sy mismatch
Total energy required
Less: Net energy from own generation
FY12
74,453
2,000
76,453
33,113
43,885
(545)
2,250
4,545
FY13
78,196
2,000
80,196
38,414
52,834
(11,052)
2,000
15,052
Soucre: TNERC
TNERC/TNDISCOMs working
indicates possible surplus
power for state by FY13
Available from Central Sector, CPPs, etc
39,856
Net balance to be procured from open market 4,538
Actual open market purchases
4,538
Net saleable energy in open market
-
TNERC expects power purchase cost to decline over next 2 years, and ARR to
remain flat despite demand growth (INR b)
FY11
Power purchase cost
Transmission charges
Fuel cost /
Cost of own generation
O&M Expenses
Depreciation
Interest on Loan
Other debits
RoE
Demand side management
Total ARR
Less: Other operating receipts
Net ARR to be recovered
162
18
60
29
3
14
0
1
0
288
9
279
FY12
138
19
78
31
4
13
0
1
0
285
10
275
FY13
114
21
87
34
4
15
0
1
0
276
12
263
Soucre: TNERC
ARR is expected to decline,
despite demand growth
Remarks
Electricity purchase cost to come down
by ~Rs50b
Increase in-line with increase in own
gencos capacity
TO working indicates
reduction in purchase cost
and decline in ARR
requirement despite
demand growth
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TNERC forecasted under recovery at Rs80b in FY11, but to come down to Rs35b
in FY13
FY11
FY12
275
196
(78)
214
(61)
9.1
FY13
263
209
(54)
229
(35)
9.2
Soucre: TNERC
Revenues as per last revised tariff in 2003
Remarks
the
Tariff hike in Aug-10 was
mere ~9% (after a gap of
~7 year) and additional 15%
tariff hike could mean no
under recovery in FY13
Required revenues as per TO
279
Revenues as per prevailing tariff
(before Aug-10 hike)
Gap in the revenues
Revenues post tariff hike
(Aug-10 approved)
Gap in the revenues,
post tariff hike
Effective tariff hike (%)
184
(96)
200
(79)
9.0
Regulated asset in books, total
Rs168b.
Subsidy payments by increased marginally since FY10
TNERC and TNDISCOMs are
looking to avail higher
subsidy from State
government as subsidy was
decided based on the earlier
cost structure (2001-02)
and thus, possibility of
upwards revision exists.
Category
Domestic
Agriculture
Huts
Public Worship
Powerloom consumers
Handloom weavers
Utilities
Lift Irrigation Co-op soc
Total
Petition by
TNGEDCO for FY12
16.6
2.9
0.2
0.1
0.6
0.1
0.6
0.0
21.0
FY12
16.3
2.9
0.2
0.1
0.6
0.1
0.6
0.0
20.7
Approved by TNERC
FY11
14.9
2.7
0.2
0.1
0.6
0.1
0.5
0.0
19.1
FY10
13.7
2.6
0.2
0.1
0.6
0.1
0.5
-
17.7
Soucre: TNERC
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SEB Financials: Alarming, but worst seems to be behind…
Commericals losses to moderate from FY11 peak levels
We highlighted that health of distribution companies would improve from FY11 peak levels
in our sector report recently (Indian Utilities: Just an Eclipse…Brighter days ahead, dated
June 2011), on the back of lower power purchase cost (as ST power cost is coming down,
while LT availability of power improves) and gradual tariff increase. We believe that there is
sufficient incremental generation available at competitive rates and India will not be a large
buyer for imported coal at spot rates for power generation; keeping LT power costs under
check. We re-iterate our positive stance and feel more comfortable post the meeting with
TN DISCOMs.
the
Expect SEB losses to taper off (INR b), driven by...
SEB losses to taper off on
the back of lower power
purchase cost (as ST power
cost is coming down, while
LT availability of power
improves) and gradual tariff
increase
FY06
FY07
FY08
FY09
FY10
FY11
FY12E
FY13E
FY14E
-271
-209
-319
-526
-466
-411
-685
-588
-612
Soucre: PFC report on SEB finacials/MOSL
... ST power cost as a % of total procurement cost declined (INR b), and
FY06
Total purchase
of discoms
ST market size
ST power as %
of purchases
1,317
81
6.2
FY07
1,477
116
7.9
FY08
1,685
153
9.1
FY09
1,976
351
17.7
FY10
2,123
318
15.0
FY11
2,223
336
15.1
Soucre: CERC/CEA
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... Sizable addition from CPSUs and State government over next 3 years, improving
LT power availablity
FY08
FY09
FY10
FY11
2,490
120
-
220
250
1,000
200
FY12E
3,660
1,372
-
2,500
500
3,200
200
FY13E
3,930
1,800
-
-
500
500
1,326
FY14E
6,260
2,045
412
-
500
-
110
FY15E
Total
Established Utilities - CPSUs / State Gencos
NTPC
1,740
750
1,240
NHPC
SJVN
NPCIL
510
-
220
-
250
520
-
-
-
-
-
-
-
-
440
-
500
-
3,118
5,298
250
833
-
660
-
735
2,478
-
-
-
-
-
300
-
the
551 20,621
-
-
-
-
-
-
5,847
412
3,380
1,750
5,450
2,356
Capacity addition by Central,
State is expected to be
15GW+ pa over FY12-14
NLC
DVC
Others
State Gencos
5,273
1,821
Total (A)
8,513 2,571
Established Utilities - Private
CESC
Lanco Infratech
Tata Power
Adani Power
Jindal Power
JSW Energy
-
-
-
-
750
-
-
-
250
-
250
-
500
-
-
-
-
-
-
-
383
383
3,454
25.6
2,759
8,315
7,843
7,954
7,039 19,747 15,899 17,281
-
733
-
1,320
-
735
2,788
-
-
-
-
-
300
1,200
-
1,870
1,850
1,980
-
1,410
7,110
-
-
-
-
1,000
-
-
-
500
1,600
2,640
-
-
4,740
870
-
-
1,350
500
2,580
1,200
-
-
1,600
-
1,200
-
2,800
-
1,050
2,600
1,350
-
2,780
-
2,353 39,436
2,904 79,252
-
-
-
-
1,200
-
250
3,936
5,300
6,600
3,400
2,880
Total (B)
750
Emerging Utilities - Private
GVK
-
GMR
Essar Energy
Indiabulls Power
Jaiprakash Power
Reliance Power
Sterlite Energy
Other Utilities
Total (C)
Total (A+B+C)
-
-
-
-
-
-
-
-
9,263
1,200 22,366
-
300
1,800
-
1,320
3,200
-
870
1,350
4,400
2,700
2,820
9,160
2,400
1,509
428
1,236
1,205
1,334
3,024
9,524
1,809 2,333 2,236 7,705 9,114 9,644 33,224
9,585 12,160 29,093 28,344 29,195 13,748134,842
44.7
42.1
32.1
43.9
40.8
78.9
41.2
Pvt Sector (% of total) 8.1
Highest capacity addition
Second highest capacity addition
Third highest capacity addition
15 July 2011
I
10

P
olicy
M
aker
FY11 demand growth lower as loss making states curtail demand
Comm Loss
FY09
Tamil Nadu
Andhra Pradesh
Rajasthan
Uttar Pradesh
Haryana
Madhya Pradesh
(89.6)
(79.4)
(76.6)
(58.2)
(41.2)
(37.3)
(32.4)
(31.2)
(17.3)
(13.2)
(13.2)
(10.9)
(9.0)
(4.7)
(1.4)
(0.8)
(0.8)
(0.7)
(0.7)
(0.7)
(0.5)
(0.0)
0.1
0.3
0.3
0.4
1.2
1.6
2.2
7.7
Demand Growth (% YoY)
FY10
9.4
10.5
16.5
9.6
15.2
2.6
9.9
5.7
11.7
9.4
12.6
4.3
2.5
19.0
(6.1)
2.9
4.9
6.4
10.9
0.4
(4.7)
(9.5)
11.7
8.0
12.0
8.2
8.4
10.1
(0.2)
(25.8)
FY11
5.3
(0.0)
3.5
1.0
3.4
12.2
(2.6)
10.7
6.7
5.4
3.2
1.8
2.6
10.9
8.8
6.2
0.2
4.3
11.6
5.6
24.9
0.2
5.0
2.2
8.5
7.9
5.8
2.2
2.3
(6.2)
CAGR (%)
FY06-11
8.2
8.3
7.3
6.6
7.8
5.6
4.6
7.8
9.6
8.9
7.5
4.6
4.5
13.9
2.2
8.1
4.8
9.7
7.6
6.0
19.5
2.4
13.7
3.5
12.1
7.9
3.5
6.2
5.7
(4.5)
Soucre: CEA
the
As a "Self-correction"
mechanism, top five loss
making states have recorded
FY11 demand growth of
2.4% YoY, v/s historic five
year average demand
growth of ~9%
Punjab
Karanataka
Bihar
Jharkhand
J&K
Gujarat
Maharashtra
Uttarakhand
Manipur
Orissa
Puducherry
Mizoram
Nagaland
Assam
Arunachal Pradesh
Meghalaya
Sikkim
Tripura
Himachal Pradesh
West Bengal
Delhi
Goa
Kerala
Chattishgarh
ST procurement as % of total demand for top loss making states
23
14 14
FY11
21
19
14
13
9
8
7
6
FY09
12 12 12
6
6
5
4
5
4
4
3
3
3
2
2
2
2
1
0
0
(1)
Soucre: CEA
15 July 2011
I
11

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