Copy of Analysis of Power Sector

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:RESENTED BY ZAHERA BOHRA

ROHIT SOMANI

RAKHI JAIN

MD AZHARUDDIN LUCKY PARASHAR

ANKITA JAIN

ANALYSIS OF POWER SECTOR



INTRODUCTION

Bloodline of Industrial growth

Increased demand due to increased automation – demand-supply gap

Need to generate more supply with less harm to

environment

Deregulation has led to fierce competition in globalmarket



Global Overview

Average Annual Growth Rate from 1971 to 2004 – 3.7%Developing countries consume 30% of world’s energy

America:Less than 5% of world’s populationconsumes more than 26% of World’s energy

Energy demand expected to rise by 95%

Global consumption expected to rise by 50% by 2030



CONTD…

High prices of oil & natural gas will slow down growthof demand in long term

Energy demandOECD Countries: 0.7%

Non-OECD Countries: 2.5%India & China future key consumers

1980 : 8%

2005 : 18%

2030 : one quarter of world energy consumption(projected)



Comparative Per CapitaConsumption Of Electricity (Kwh)



:INDIAN power sector history

The process of electrification commenced in 1880 the establishment of asmall hydroelectric power station in Darjeeling

Commercial production and distribution started in 1889, in Kolkata

year 1947, the country had a power generating capacity of 1,362 MW by private utility companies

Post 1947, all new power generation, transmission and distribution in the

rural sector and the urban centers under the purview of State andCentral government agencies.

State Electricity Boards (SEBs) were formed in all the states.



SECTOR:OVERVIEW

Predominantly controlled by public sector undertakings(PSUs)

65% of Total installed capacity is under PSUs

The consumption sector is divided into Commercial and Retailsector

Differential rates are applied on consumption on both the sectors

The power sector is regulated by The Electricity (Amendmend)Act 2007 AND The National Electricity Policy, 2005



GENERATION

March ‘09,the installed power generation capacity stood at147,000 MW, 100 times the installed capacity of 1362 MW inthe year 1947.

The growth in generation during 2006-07 was 7.3% and in 2007-

08 was 6.33%

Heavy investment in recent years on renewable sources of energy

such as wind energy

Electricity generation:

Ø 75% by thermal power plants,Ø21% by hydroelectric power plants andØ4% by nuclear power plants.



Segments in PowerGeneration



SEGMENT WISE CAPACITY:

1. THERMAL POWER Current installed capacity :93392.64 MW or 63.3%.

Coal based power : 53.3%

Gas based power: 10.5 %

Oil based power.09%Maharashtra is the largest producer of thermal power in

the country.2. HYDRO POWER

Total potential : 600TWh



CONTD…

3. NUCLEAR POWER GENERATION:Installed capacity :126993.97 MW with a 3% share at

3900 MW

2.79% of total electricity generation

4. WIND ENERGY

Total wind potential around 45 000 MW

The technical potential that is based on the availabilityof infrastructure is estimated to be around 13 000 MW



CONTD…

5. SOLAR ENERGYAverage intensity of solar radiation received on India is 200

MW/km square which amounts to 657.4 million MW

However, 12.5% of the land area amounting to 0.413 million

km square can be used



DEMAND

The demand for energy has grown at an average of 3.6% p.a.over the past 30 years.

The total demand for electricity in India is expected to cross 950,000MW by 2030.

The gap between demand and supply has been ever increasing due to

faster rate of growth of demand

More than 50% of India's commercial energy demand is met through the

country's vast coal reserves,



Source: http://www.indexmundi.com/India/electricity_production.html

Gap Between Demand And Supply Of Power

http://www.indexmundi.com/India/electricity_production.html







INDIAN ELECTRICITY CONSUMPTION



10 TH PLAN:POWER SECTOR

The Tenth Plan for fiscal years 2002 to 2007 targeted acapacity addition of 41,110 MW

Subsequently revised to 30,641 MW

However at the end only 21,180 MW of capacity was

added.

“Planning is perfect but Path to achieve the target is not perfect”



11 TH PLAN: HIGHLIGHTS To achieve the objectives of POWER FOR ALL BY 2012 National

Electric Policy has been designed.

To fulfill the objectives of the NEP, a capacity addition of 78,577 MWhas been proposed for the 11th plan.

This capacity addition is expected to provide a growth of 9.5 % to the power sector.

The total fund requirement for generation projects, during the EleventhPlan period is estimated at Rs. 4,108,960 million,

2,020,670 million for the central sector,

Rs. 1,237,920 million for the state sector Rs. 850,370 million for the private sector.

The total fund requirement includes the fund requirement estimated atRs. 1,891,950 million for start-up generation projects benefiting in theTwelfth Plan



FACTORS DRIVING POWER DEVELOPMENT

Rising living standards of sizeable segments of population

Growth in the manufacturing sector and emergence of

India as a manufacturing destination in the world

Increasing urbanization

Thrust on rural electrification



SHORTFALLS OF INDIAN POWERSECTOR

Electricity losses in India during transmission anddistribution are extremely high and vary between 30to 45%.

Due to shortage of electricity, power cuts are commonthroughout India and this has adversely effected thecountry's economic growth.

Theft of electricity, common in most parts of urban

India, amounts to 1.5% of India's GDP.

Around 56 percent of India’s rural population or 78million households do not have access to electricity.



: “UTURE PLANS POWER FOR ALL BY”012

‘POWER FOR ALL BY 2012’:This mission would require that our installed generation capacity should be at least 2, 00,000 MW by 2012

The transmission perspective plan for 11th plan focuses on the

strengthening of National Power Grid through addition of over 60,000 ckm of Transmission Network by 2012

The existing inter-regional power transfer capacity is 17,000 MW, which

is to be further enhanced to 37,000 MW by 2012 through creation of “Transmission Super Highways”.

POWERGRID is working towards achieving its mission:

“Establishment and Operation of Regional andNational Power Grids to facilitate transfer of power within andacross the regions with reliability, security and economy, onsound commercial principles".



COPMANIES IN POWER SECTOR

ELECTRICITY GENERATION

National Thermal Power Corporation (NTPC),

National Hydroelectric Power Corporation (NHPC) and

Nuclear Power Corporation of India (NPCI)

Maharashtra State Electricity Board (MSEB),

TRANSMISSION AND DISTRIBUTION State Electricity Boards (SEBs)

private companies.



MOVEMENTS:





NATIONAL THERMAL POWER( )CORPORATION NTPC

NTPC, India’s largest power company, was set up in 1975 to accelerate power development in India.

Today it has emerged as an “Integrated power Major”, with a significant presence in the entire value chain of power generation business.

Its current generating capacity of 30144 MW

NTPC has embarked on plans to become a 75000 MW company by 2017

With 19.11 per cent of the country's capacity, NTPC accounted for 28.51 percent of the total power generation in India in the year 2007-08

KEY FINANCIAL VARIABLES



RATIOS MAR’04 MAR’05 Mar’06 Mar’07 Mar’08

EBIT(%) 12.71 21.30 18.66 22.84 23.55

ROCE(%) 18.04 13.15 12.26 14.69 15.25

RONW(%) 14.64 13.90 12.95 14.13 14.08

D/ERATIO

0.43 0.42 0.46 0.52 0.54

CURRENTRATIO

1.59 1.72 2.11 2.42 2.32

EPS 6.73 7.04 7.06 8.33 8.99

DPS 1.39 2.40 2.80 3.2 3.5

ASSETT/O

.0 47 .0 52 .0 57 .0 65 .0 70




TATA POWER

Incorporated in the year 1919 at MumbaiIndia’s largest integrated private sector power utility,

Tata Power pioneered the generation of electricity in India.

The core business of Tata Power Company is to generate,transmit and distribute electricity.

Tata Power has an installed power generation capacity of above 2785 Mega Watts,

April’08, Tata Power completes the Signing of FinancialAgreements for 4000 MW Ultra Mega Power

Project,coming up at Mundra, GujaratThe cost of the project is estimated at INR 17000 crores(USD 4.2 billion).




RATIOS ’MAR 05 ’MAR 06 ’Mar 07 ’Mar 08 ’Mar 09

EBIT% .13 41 .11 90 .7 79 .10 38 .10 63

ROCE(%) .8 37 .8 69 .7 61 .6 96 .7 32

RONW(%) .10 82 .11 07 .11 63 .10 88 .10 66

D/ERATIO

.0 57 .0 51 .0 61 .0 39 .0 61CURRENTRATIO

.1 86 .2 18 .2 22 .1 78 .1 64

EPS .27 86 .30 85 .35 21 .39 42 .41 65

DPS .7 50 .8 50 .9 50 .10 50 .11 50ASSETT/O

.0 72 .0 77 .0 79 .0 91 .0 81






Porter’s Five Force Model

BARRIERS TO ENTRY:

Heavy investmentFuel linkagePayment guarantees fromState GovernmentsRetail distribution

licensed, etc.

SUBSTITUTES:

BiomassRenewable Source Of India

BARGAINING POWER OF

SUPPLIERS:

Not very high asGovernment controls tariff structure.

BARGAINING POWER OF

BUYERS:Low power of retail customers islowGovt is a big buyer and paymentby Govt can be more erratic

COMPETETORS

Not very HighCurrently due to highdemand



Power sector Life cycle stage

Power sector is now in growth or expansionstage



:O P P U R T U N IT IE S



THREATS



:FUTURE OF POWER SECTOR DEPENDS UPON

Ensuring Adequate Supply of Coal with Consistent Quality

Ensuring Availability of Gas for Power Generation:

Power Sector Reforms

Reduction in Cost of Power

Rationalization of Fuel Prices

Energy Efficiency and Demand Side Management

Role of Nuclear and Hydro Power

Role of Renewable



IMPACT OF BUDGET Increasing investment in infrastructure to above 9% of GDP by 2014 IN

POWER SECTOR The Accelerated Power Development and Reforms Program (APDRP),

which is aimed to increase reliability and quality of power supply hasgot increased budget allocation to Rs 2,080 crore for 2009-10 fromRs.800 crore for 2008-09.

Expected to provide more funds in the hands of the state distribution

utilities to upgrade their network, infrastructure and improve their financial position

The Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), launched bythe Central Government in 2005 to provide access to electricity to allhousehold in India by 2012, has received budget allocation to Rs 7,000crore for 2009-10 from Rs 5,500 crore for 2008-09.

The proposed National Gas Grid will be beneficial for power generation asit would enable setting up of gas-based power plants near centres of consumption along the gas grid





CONTD…

6. NTPC, Tata Power & Neyveli Lignite show positivegrowth

7. Companies reported growth (Such as NTPC of 14%

YoY net sales & 6% YoY profit in FY09)8. Government taking steps to enhance competition in themarket



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Copy of Analysis of Power Sector