What Am I

In continuation with my previous blog on the catch-22 situation of renewable energy companies in Andhra Pradesh, India, a probable radical solution as detailed below, may be explored by the Government of Andhra Pradesh. Renewable plants boast about their ability to serve the green agenda but are still dependent on subsidies and one of the subsidy being offered to them is the "must run" category. What if this "Must run" category is revoked. None of the plants would fall in the Merit Order Despatchability Curve and scheduling them will only be subject to the discretions of the DISCOM. While this would definitely send a wrong signal to the investors, but DISCOMs are unable to make good of any pending payments, and hence they might as well explore a legal way to get around.  And what happens when the MUST RUN category is revoked. There is no fixed/variable price component difference in Solar/Wind. 95% is a fixed cost component. Hence, technically the...

This is in the context of the recent attempts of Andhra Pradesh state Government, in India to renegotiate the PPAs of existing Solar/Wind assets. To give you a brief context, the previous Government encouraged renewable power installations in an attempt to encourage green power generation in the state inspite of the government's financial conditions in not such a great condition. The new Govt., came and alleges that the contracts with those renewable assets would be renegotiated as the Govt. cannot afford payments to those companies and also that the contracts were awarded only to a few companies that had alleged relationship with members of the previous regime. AP govt has been insisting upon renegotiating the PPAs that have been signed as it is unable to honour the high cost contracts, inspite of the recommendation from govt of India to not do so. Is there any merit in the approach by AP. Before we get into further analysis, if we take a peek into the ground reality...

Any one who has basic understanding of power plants would know that every equipment and the power plant as a total requires how much power to run. For example: a standard 270 MW plant would require so much, a super critical 800 MW boiler would burn so much coal etc. One wonders though why would the total consumption for a power plant change so much. As usual, the ambiguities come from one of Reliance for one of the largest power plants in the world (Sasan UMPP) Here is a brief history of the estimates given by Reliance on its expected coal consumption: In 2007, when Sasan was awarded to Reliance it initially quoted that it would require 16 mtpa (million tonnes per annum) to run its plant In 2007, Reliance quoted that it can mine 25 mtpa of coal from the mines it was awarded. This was 9 mtpa more than the requirement. As per the approved mine plant, Reliance was allowed to use 4 mtpa beyond the requirement of the plant In 2014, NDA government canc...

Continuing the discussion from the previous blog ( Is crude price decline good or bad? – Energy Economics 102!!  ), now that the decline in crude is seeing no decline, what next?? a) Acquisitions have become active... First the deal between Baker Hughes and Halliburton. Now the talks between Shell and BP. Wonder why Exxon is lying idle!! This was bound to happen, as companies continue to fight for survival due to working capital issues and also to increase their revenue. This is the right time for big fish eating the small fish. b) Social Planning: Many countries, especially the Opec ones derive much of their revenue from crude oil exports. The decline in crude prices have reduced their GDP by multiple basis points. Below is a chart that explains some of the impacts: Source: World Bank, Oil Rents (% of GDP) As you can see, the crude prices have reduced some of the least developed nations into a state of disarray. Countries like Saudi Arabia where oil revenue ...

I remembered a beautiful carnatic classical rendition "Raghu Vamsa Sudhambudi" This is a song, praising Lord Ram, who belongs to "Raghu" family hoping that he would bring all the good luck and charm.  The song sets the tempo for further course of action and is a hope that the Raghu Ram will take care of the reins and lead every one ashore.  Hope Mr. Raghu Ram can do so. If you did not already get my intentions. This is a request and praise of Mr. RaghuRam Rajan who is the next RBI director. Not that the earlier chairman Mr. Subbarao did anything bad, it is just a hope that Mr. Raghuram rajan will be able to better handle the government and make it understand it's work better. This was a simple blog requesting the almighty (RBI chairman, I guess holds the key for a lot of activities) to bring a shape to the country. He will have to break the lock of Chidambaram and unshackle the country's growth potential.  Otherwise most of us will end up doing nothi...

Leading retail chain Fart Mart has recently signed a deal worth more than $15 bn in India. The news was revealed in a press meet by Congress spokesperson Mr. Raj Babbar. This came after his remarks about Walmart that  “If Walmart has gone, more marts are there. They will come.” It was evident that congress already knew about the FartMart’s investments and hence were not concerned when WalMart said that they cannot procure the mandatory 30% from local small industries. The details of the MoU are yet to be revealed. FartMart is a world’s leading retail store with global supply chain in equipment that support farting. With a huge presence across the developed world, FartMart has recently  forayed  into the Asian space to adhere to the increased demand of farting from the various political groups across the nations. FartMart has agreed to adhere to the 30% norms of local procurement. In its press release FartMart has stated the following: "India has an esta...

Fucked up is probably the least thing to say, about the mentioned title's status in India! With the latest rape victim case just proving the case once again. So many rapes, gang rapes, blatant violations of the basic human rights .. sorry, I guess the word "human" is no longer relevant to our society. We are animals in a human form... not sure if even that sentence is correct. Every one understands that this is another story line, which will die out soon. Time and again, they keep happening, and now we are looking at some solutions to hasten the punishment process or the so called justice.  What justice are we referring to. What are the cases which actually have given justice in time to the petitioners in India.  The biggest problem behind rapes, gang-rapes or any crimes is the devastation of the legal infrastructure in India. All contracts can be violated, all crimes can be exempted, all criminals can be pardoned.. then what justice and what legal system...

As has been the case always, India is only doing a catching up in terms of Shale oil & gas exploration. With USA already reeling under the excess gas production ever in its history, and China going ahead with its second round of bidding for Shale gas exploration. India finally woke up to the possibility of exploration options and hence has prepared a draft policy, which is available for comments on the Ministry of OIl's website. With the recent power crisis, brining the energy crisis into limelight the shale gas development becomes all the more significant and lot of eyes will remain glued to the way things shape up. The whole process in a very nascent stages, since at this time even the likes of "Yours sincerely" is also aspiring to bid for the shale gas, India has to be really cautious about the way forward. One of the most important aspects associated with Shale gas is the (the Nuclear related issue as well) is the long term liability of the deve...

It was in 2005 that Reliance Industries made big news with the discovery of the largest gas deposits in that year. The gas deposits are found off-shore near the Eastern Coast of India. While the gas discovery was made, there were/are no major pipelines connecting the eastern coast of India with rest of the country. Hence there was a need to setup a major gas pipeline from Eastern Coast to the Western Coast and beyond (~1500 kms). So Reliance Industries with no prior experience in either of these two areas floated two companies: Reliance Industries Ltd (RIL) owns the gas well. Reliance Gas Transportation Infrastructure Ltd. (RGTIL). Every one was gungho about the discovery of gas and the progress of the gas pipeline because the gas production was estimated to reach 80mmscmd by FY2013 and the pipeline also planned to extend by another 1500 kms towards South & North Eastern India. Investments by various players also ensured that RIL got a decent return on equity. Alas,...

I could see that the gate opened into a small ground followed by two rooms with not even a concrete slab. We were waiting for some one to open the lock of the gate. Some guy came with keys. He looked alright..well built and decently dressed and with a badge in his neck. I appeared to be overly dressed up for the occasion in a suit and the laptop. He didn't bother to look into our eyes and was trying to unlock but it didn't happen. The person with me signaled him in some unfamiliar signs and the guy went in, brought another set of keys which opened the lock. I wondered what did the person tell the guy!!  The guy went away with no change of expression in his face as if he has ignored our presence and that he didn't care whether we came in or not. I was bemused at the least! I walked in and I met the lady of the place and the guy, who heads the center, invited me inside. For a place handling the students from Below poverty line, the place was well furnished. It had a...

Kill the  market The general RoE for the power sector itself is around 15-25%. Not a great sign!! Rupee depreciation by almost 15% ... a big blow to the industry!! On top of that the huge interest rates... Heartbreak to the industry!! Now GOvt. plans for tripling the custom's duty .. Thats it, industry is dead!! ..  Guess its time to run to fixed deposits

I was going through the Europe debt crisis and came across the topic that "investors are scared" so many times and then I wondered who are these investors and how many are these investors who seem to determine the fate of the world economy. Effectively these select group of people are determining the fate of 6 billion people. If Gini index were to be made for the influence of people, then I am sure it would be almost close to zero... But, for dumb heads like me, who are these investors whose opinion seem to fluctuate every day. One day the sensex rises on the hope that the Greece debt bail out talks are holding up, and the second day they are scared to the extent that they dump all their shares. Is it so simple that the world economy takes a U-turn every second day? If I look back, the topic of recession appears because either the Dowzone index crashed or a group of investors think that something tragic is going to happen the very next moment. So, I was trying to identi...

The title literally means "what a pitiable life". I wrote this in anguish about the rampant corruption. I could express it better in my native language telugu, and hence the blog below..(The translation is at the end of the blog) ఎంత తింటారు రా. విసుగు రాలేదా? జనాలని దోచుకుని దోచుకుని...చచ్చిపోతున్నారు రా జనాలు అక్కడ...ఏమి సాధించారు రా.. ఒక కోటి, పది కోట్లు, వంద కోట్లు, వెయ్యి కోట్లు సరిపోలేదా.. లక్షల కోట్లు కావాలా.. అది కూడా కష్టపడి సంపాదించడం కాదు.. పక్క వాడి డబ్బులని దోచుకోవడం...ఎందుకు రా ఈ బతుకులు  తప్పు చేసాను అని అనిపించదా? సిగ్గు, మానం మర్యాద చచ్చిపోయాయా మీలో?  ఏం చేసుకుంటారు రా అన్ని డబ్బులు...వున్నాయి అని బయటపెట్టుకోలేరు..కాబట్టి ఆనందించలేరు... మరి ఆ డబ్బులు ఉంది ఏం లాభం రా.. అలాంటప్పుడు ఎందుకు రా అంత దోచుకోవడం..  ఎవరో అన్నారు...ఒక కోటి తరువాత ఎన్ని కోట్లు సంపాదించినా ఒకటే అని... మరి ఆ ముక్క మీకు అర్ధం కాదా?  ఇంత డబ్బులు తిని మీకు ఇంకా నిద్ర ఎలా పడుతోంది రా. మీ బుర్ర కూడా చచ్చిపోయిందా..పాపం పుణ్యం అనే వ్యత్యాసం అర్ధం కావట్లేదా? ఎందుకు...

An engineering marvel is created. Well thought about, well planned, well designed, well executed...well??? It cost $24 bn to build the World’s largest Hydro power project - The Three Gorges Dam by China. It was completed well before the schedule. It provides 18400 MW of electricity which is unfathomable by many other Hydro power projects. Its back waters created a reservoir of water which is as big as UK in length. Now, the flip side..It displaced half a million population and thounsads of towns. The weight of the water stored in the reservoir is only adding to the woes of the land slides, tremors in and around the area. The river is getting more and more polluted since the 1.3 mile long concrete barrier diverted the migration of fish which otherwise would have preserved the sanctity of water in the river. Topping the charts are the facts that Central China, where the project is located is reeling under 50 year drought and that two of Southern China’s largest lakes have almost dried...

I was travelling across some areas of Telangana region to assess the energy demand and the propensity of the consumers to switch to gas...I actually took this journey to get an idea on how is the situaion beyond the city limits.. I was happy to know that atleast till a stretch of almost 100 kms away from the main city, things are actually not that bad...there are very good roads, power lines are laid out to the interiors and no where did my mobile stop receiving signals...these are acheivements that I was surprised and indeed felt happy... and now the critic in me is back to the fora.. In an area which is some 50 kms from the city, there were lot of autos plying back and forth between two small towns...we wanted to check how many autos were there and that would be they be interested to convert to CNG based systems... I inquired with some autowallas about the same and I was shocked to know that within a distance of 30 kms, there are close to 1000 autos plying every day...!!!...

Did you know that AP government has infact implemented a scheme where individuals can audit the government schemes? This audit is termed as Social Audit. Individuals, are trained on how to audit and monitor the progress and execution of National Rural Employment Guarantee Act (NREGA). Bureaucrats and contractors are supposed to explain the deviations, if any in the schemes being executed.  So far ~5000 cases of fraud have been identified and works to the tune of ~Rs 60 cr have been given back by the fraudsters. Though the size is not huge, it certainly is a fresh beginning to the fight against corruption.  I came to know about this from http://www.nytimes.com/2010/12/03/world/asia/03india.html Infact to ensure that even these social audits themselves do not become a major expenditure, Government of AP has passed an act to ensure a cap on the amount of expenditure per audit conducted, this includes a max. cap on the expenses to be bourne by the auditors, the share of equip...

Do you know the deficit of USA. It is ~$ 5 Trillion. Just so, one understand what that figure means, India's budget is around $1.3 Trillion and USA's defence budget is almost  as big our own GDP. There is a desperate need for USA to cut down its deficit. Diplomats have been trying vehemently to implement policies that will ensure reduction in this. But, as usual the Republicans oppose any of these policies...Guess, what they are seriously contemplating putting Sarah palin in the forefront for Presidency in 2012 elections. Getting back to the topic; Republicans are proving now and again that they represent the Rich and the media which is strong supportive of Republicans is strongly supporting their ideas. The tax benefits to the rich which are expected to expire this month are most likely to be continued, owing to the pressure of Republicans. So, what are the measures taken by Obama to cut the deficit?? Freeze the salaries of Federal employees..lol !! This freeze will save ...

This is the amount of investment halted due to the strict norms imposed by our Existing Environmental Minister Mr. Jairam Ramesh.  Rs2 lac crore wasted by Mr. Raja and all that he does is get back and sleep at peace in his own constituency. Now here is one minister who is working day in and day out to ensure that the environmental laws are adhered to but he is being booed all around. In-fact Wall Street Journal lambasted him for concentrating too much on environment than on development. All that Mr. Ramesh is asking for is to ensure that the laws are followed. Being in the industry, I know that many corporates do not follow much of the environmental laws. It is only under the reign of Mr. Ramesh that people started worrying about environment. Earlier the biggest threat for the completion of a power plant was fuel, land availability etc. Now the biggest concern is getting Environment Clearance. Companies used to get the clearance quite easily, but now when the voices of the loca...

The title means that "Proposition 23 is being debated in california State to suspend Assembly Bill 32" !! What big deal??one may ask Assembly Bill 32 (AB 32) was enacted in 2006 in the state of California to implement tighter regulations on green house gas emissions and hence more opportunities for renewable energy, incentives for R&D in that sector etc. It had a vision 2020 to reduce GHGs below a certain level. It also mandated 33% of electrical consumption from renewable energy sources. But now, due to the very high level of unemployment hovering around 12%, a new proposal (Proposition 23) will be voted next week, to suspend AB32 till the unemployment figures reduce below 5.5% for a continuous span of 4 quarters!! Note: Since 1970, the state of California had only 3 instances of continuous unemployment rate of less than 5.5% for a continuous span of 4 quarters... This proposal would ensure that California will have lesser regulations on green house gas emissions fo...

For the first time, the environmental concerns in India seem to be taking the limelight. Thanks to Mr. Jairam Ramesh for the first time we are seeing a stall to the major projects that have been flouting the environmental norms for decades. To begin with, Vedanta's very infamous alumnium smelter in Orissa may take a hit. Followed by the hydro projects of Lohari Nagpala and the one on Bhagirathi. Hopefully it will be a big blow to Vedanta's expansion plans...but the interesting part is just when the announcement of Vedanta's environmental concerns are about to be blown out of proportion, Vedanta announced its acquisition of Cairn. I guess, Vedanta already got a hint of the result and hence was planning to get away from there. I guess, Vedanta got tired of exploiting lush green forests, so it has targetted the vast desert!! I just pray that the group gets blown away by some sand storm. As the saying goes, the faster you rise the faster you fall...Considering the fact t...