Latest news with #DamodarValleyCorporation
Time of India
4 days ago
- Business
- Time of India
Jharkhand coal-fired power project LoA by year-end
Kolkata: The letter of award (LoA) for execution of a coal-fired 1,600 MW ultra-supercritical power project in Jharkhand's Chandrapura will likely be issued by the end of 2025. The project is a joint venture between Coal India and Damodar Valley Corporation (DVC). Tired of too many ads? go ad free now State-run power utility DVC and Coal India signed an MoU in April to set up the brownfield project of 2X800 MW power plants — an expansion of the existing Chandrapura thermal power station of 2X250 MW capacity. "We signed a formal agreement with Coal India for this brownfield project, which will be set up on our land. An LoA is likely to be issued by this year-end. Around 38 months will be needed for the completion of construction. The project is expected to be fully commissioned by 2030," DVC chairman S Suresh Kumar said on Friday. A joint venture company would be set up on a 50% equity-sharing basis for the power project, Coal India said in a stock exchange filing on April 21. Total investment for the project would be around Rs 16,500 crore. "DVC and Coal India will together borrow around 70% of the total project cost over a period of time," Kumar said. Coal for the proposed power plants would be sourced from coalfields in proximity with Coal India's subsidiaries — Bharat Coking Coal and Central Coalfields.
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Business Standard
4 days ago
- Business
- Business Standard
Steel & ferro-alloy industry seeks Bengal CM's help over power tariff hike
Trade associations representing the steel and ferro-alloy sector in West Bengal have appealed to Chief Minister Mamata Banerjee for urgent intervention against what they describe as an unsustainable rise in electricity tariffs by the Damodar Valley Corporation (DVC). They fear the increased power costs could force many units to shut down. In a joint statement, the Damodar Valley Power Consumers Association, the Steel Re-Rolling Mills Association of India, and the West Bengal Sponge Iron Manufacturers Association raised concerns over the revised power rates approved by the West Bengal Electricity Regulatory Commission (WBERC) for DVC consumers. According to them, the base tariff has been fixed at Rs 4.64 per unit for the financial year 2025–26. On top of this, an additional Rs 1.36 per unit is being charged to recover arrears from 2014 to 2020, taking the effective rate to Rs 6 per unit. Further, they alleged that additional charges imposed through the Energy Charge Rate (ECR) and Monthly Variable Cost Adjustment (MVCA) amount to another 50 paise per unit. 'The net chargeable tariff to industries will now be around Rs 6.80 per unit, a 30 per cent increase, which is unaffordable and threatens the survival of our units,' the industry bodies stated in their appeal. They added, 'We are not against paying dues, but request that the Rs 1.36 per unit past arrears be recovered over the next six years to avoid tariff shocks.' Claims of disparity and demand for audit The associations also highlighted what they described as a disparity in tariffs between West Bengal and Jharkhand. They claimed DVC charges consumers in Jharkhand only Rs 4.42 per unit and demanded a forensic audit of the ECR and MVCA components. DVC, however, responded that the average cost of power in Jharkhand is Rs 5.61 per unit. The trade bodies stressed the importance of West Bengal in India's steel ecosystem. 'West Bengal is the second-largest contributor to India's secondary steel production, ferro alloys, pig iron, and pellets, and third in sponge iron output. Collapse of this sector will endanger the livelihoods of lakhs of people,' they warned. DVC rejects allegations DVC refuted the allegations, calling them 'factually inaccurate and selectively presented.' It clarified that electricity tariffs are not set by DVC itself, but by the relevant state regulators—WBERC for West Bengal and JSERC for Jharkhand. The utility explained that tariffs in West Bengal had remained mostly unchanged since 2018–19 due to legal action initiated by the same associations. The Supreme Court dismissed these cases as without merit in 2018, and only recently resolved the matter, instructing that arrears be paid within two months. 'We have complied fully with regulatory and court directions and shown great patience through years of litigation,' DVC said. It noted that it continued supplying power throughout the period, despite rising input costs. DVC also defended the current rates as 'cost-reflective and justified' and said that the WBERC had approved the revised structure. It reiterated that it cannot risk financial instability after a long period of absorbing losses. The utility added that it has proposed the creation of a common regulator to ensure uniform tariffs across states. Industry urges CM's immediate action Calling the situation a crisis, the associations urged Chief Minister Mamata Banerjee to step in and facilitate talks between WBERC and DVC.
Time of India
5 days ago
- Business
- Time of India
Steel, ferro alloys industries seek Bengal CM's help to reduce tariff hike by DVC
Kolkata: Trade bodies representing the steel and ferro alloys industry in West Bengal have sought Chief Minister Mamata Banerjee 's help to reduce the alleged steep hike in power tariffs by the Damodar Valley Corporation (DVC), which they claim would lead to a shutdown of operations. In a joint statement, the Damodar Valley Power Consumers Association, the Steel Re-Rolling Mills Association of India and the West Bengal Sponge Iron Manufacturers Association claimed that the revised power tariff approved by the West Bengal Electricity Regulatory Commission (WBERC) for DVC sets the rate at Rs 4.64 per unit for 2025-26. Additionally, an extra Rs 1.36 per unit is being charged toward arrears accumulated between 2014 and 2020, raising the effective tariff to Rs 6 per unit, it added. They also claimed that the DVC imposed extra charges through Energy Charge Rate (ECR) and Monthly Variable Cost Adjustment (MVCA), amounting to another 50 paise per unit. "The net chargeable tariff to industries will now be around Rs 6.80 per unit, a 30 per cent increase, which is unaffordable and threatens the survival of our units," the appeal stated. Highlighting regional disparities, the stakeholders pointed out that DVC only charges Rs 4.42 per unit from its consumers in Jharkhand. "We are not against paying dues, but request that the Rs 1.36 past arrears be recovered over the next six years to avoid tariff shocks," the appeal read. They also demanded a forensic audit of ECR and MVCA charges levied since 2017-18, and urged that the DVC be restrained from collecting these amounts until the audit is complete. "West Bengal is the second-largest contributor to India's secondary steel production, ferro alloys, pig iron, and pellets, and third in sponge iron output. Collapse of this sector will endanger the livelihoods of lakhs of people," the industry bodies warned. Calling it a crisis, the stakeholders urged the CM to engage with WBERC and the DVC at the earliest. "Your timely intervention will be instrumental in resolving this issue and saving these crucial industries in the state," the letter added. PTI
Time of India
29-04-2025
- Business
- Time of India
DVC signs pacts with SJVN to source hydropower to meet green energy obligations
Kolkata: The Damodar Valley Corporation (DVC) on Tuesday said it has signed power purchase agreements with SJVN Ltd for sourcing hydropower, in a bid to boost the multipurpose river valley project's push towards green energy and ensure stable supply for its consumers in West Bengal and Jharkhand. The hydropower will be sourced from SJVN Ltd's Sunni Dam and Luhri Stage-I Hydro Projects. The agreements come on the heels of five similar PPAs signed between DVC and NHPC, and are part of a broader strategy to diversify the former's energy portfolio and strengthen grid reliability across the Damodar Valley region. "These PPAs are aimed at securing green energy obligations in our distribution business," DVC Member-Secretary John Mathai told PTI. "It will help us meet 100 per cent of our future obligations in green energy - be it solar, hydro, or any other source," he said. DVC currently distributes around 43 billion units annually across its command area in West Bengal and Jharkhand. Its power supply is primarily high-tension electricity catering to industrial consumers. Under the latest pacts, DVC will procure hydropower from SJVN as allocated by the Ministry of Power. The agreements will become effective upon the commissioning of the respective projects. With an installed capacity of nearly 6,500 MW, predominantly thermal, DVC's future expansion plans are focused heavily on clean energy. The latest agreements are expected to boost peak demand management, support industrial growth, enhance grid stability and reinforce the adoption of renewable energy in the region. "This collaboration aligns with our strategy to provide stable, sustainable and affordable power to our consumers while complementing our existing thermal and renewable assets," Mathai added.
Mint
25-04-2025
- Business
- Mint
Power play: Can Coal India defy the headwinds?
Coal India has been on a roll recently. This week, it made back-to-back announcements—a mining agreement worth ₹ 7,040 crore with TMC Mineral Resources and a joint venture with Damodar Valley Corporation (DVC) amounting to ₹ 16,500 crore for its power play. But investors were not enthused. The stock has remained flat as recent headwinds weigh on investor sentiment ahead of the Q4 results. That said, over the last couple of years, Coal India has significantly outperformed the broad market index. It has tracked the general enthusiasm around PSU stocks, and delivered almost 75% return during the period. Going forward, however, as global drivers take a backseat, company fundamentals are expected to come back into focus. Coal India is a Maharatna central public sector undertaking, which has been India's leading coal producer since 1972. But recent headwinds have doused investor sentiment. While the near-term outlook is a mixed bag, the medium to long-term promise still holds. In Q3FY25, Coal India reported 1% year-on-year decline in revenues to ₹ 35,780 crore while profits saw a much steeper fall of 17.5% during the period. The mining industry faces seasonality, with production taking a dip during monsoons and extreme summers. So, while sequential numbers looked better, they do not reflect the true picture. Apart from seasonality, Coal India has also struggled with slower evacuation and high pithead inventory levels. To make matters worse, its subsidiary, SECL has continued to struggle in FY25 as land-acquisition and regulatory clearances were delayed, and projects were deemed unviable. Coming to margins, given that prices are fixed under FSA (fuel supply agreements), margin expansion at Coal India is contingent on higher e-auction premiums and realizations. This, in turn, depends on global coal prices. While coal had remained stable at about $150 per tonne up till September 2024, geopolitical and economic uncertainty thereafter has led to a sharp correction down to $94 per tonne. This has increased the risk of import substitution, consequently affecting e-auction premiums and margins. Moreover, import substitution during down-trending global prices also leads to lower offtake volumes. Since costs in mining are primarily fixed, margins are significantly correlated with production volumes. Lower volumes lead to lower operating leverage and compressed margins. Also Read: Coal India banks on upcoming power plants to accelerate growth India's peak electricity demand in 2024 touched 250 GW, and is expected to keep growing with rapid urbanization and climate-change. To meet these rising energy needs, the government has pushed for higher renewable as well as conventional power capacity. Still, as much as 75% of India's power requirement is fueled by coal, and 80% of that is produced by Coal India. Estimates pencil in about 80 GW of additional thermal power capacity required by 2030, of which only about 35 GW is currently under construction. The government's call for higher thermal power production, supported by its consistent commitment towards expanding the railway network, puts Coal India in a beneficial position, given its near monopolistic status in the industry. While Coal India has faced troubles recently at some of its mines, its diversification across eight states has helped negate localized issues. For instance, continued underperformance of SECL (Chhattisgarh) has been countered to an extent by MCL in Odisha. Furthermore, a bulk of Coal India's sales are executed through FSAs. This ensures robust revenue-visibility. At the same time, growing energy needs of the country are expected to support long-term e-auction premiums and margins. Additionally, its agreements with clients ensure advance payment, contributing to a strong liquidity position and a healthy cash conversion cycle. Finally, despite the capex-intensive nature of the business, Coal India has managed to maintain a healthy balance sheet with debt-to-equity controlled at less than 0.2x for five consecutive years now. Of course, contingent liabilities worth more than ₹ 54,000 crore as of March 2024 pose a risk. The company is expected to announce its earnings for the final quarter of FY25 on 7 May. It is expected to close the year with a dividend yield of 7%, ranking the highest among PSUs in FY25. However, its dividend yield has been trending lower in recent years. Moreover, performance in Q4 is expected to remain subdued as cheap imported coal continues to affect offtakes and margins. The pace of land acquisition and regulatory clearances has not picked up either, while evacuation infrastructure continues to remain a bottleneck. Looking ahead into Q1 FY26, extreme summer is impacting production. But early in March, the Indonesian government had announced HBA regulations for coal export prices that replace other benchmarks. Consequent firmer import prices could help support Coal India's margins. This week, the company announced a mining agreement worth ₹ 7,040 crore between SECL and TMC Mineral Resources. Under the agreement, TMC will help employ a modern paste-fill technology wherein mined-out voids are backfilled with a chemical paste. The resulting improved surface land stability would prevent land subsidence, be environmentally friendlier, enable higher coal production. and also help save on costs associated with surface-level infrastructure and safety measures. The company aims for 1 billion tonnes of coal production by FY26. To achieve this, it plans to invest about ₹ 16,000 crore annually in the expansion of mines, evacuation infrastructure, and coal washeries. Higher washing capacity is expected to reduce ash content, thereby bridging the gap between the quality of domestic and imported coal while also improving combustion efficiency and reducing operating costs. The government had opened up coal mining to private players in 2020. Coal India has managed to retain near monopoly so far. But over the longer term, the risk from renewable energy is real. Against this context, the company's forward integration towards power production makes perfect strategic sense. Early in 2024, Coal India received regulatory approvals for setting up power plants. It started with two power plants with capacities of 660 MW and 1600 MW in Madhya Pradesh and Odisha. This week, the company announced a JV with DVC for brownfield expansion of its Jharkhand power plant. The 50:50 venture will entail an investment of ₹ 16,500 crore to add 1600 MW capacity. While the power plants will benefit from proximity to the company's own coalfields, it will be several years before the projects can commence operations and reach financial fruition. The company has also been considering renewable energy, coal bed methane, and coal gasification projects. The business is faced with risks arising from renewable energy, bottlenecks in evacuation infrastructure, potential materialization of contingent liabilities, and falling prices of global coal. It also faced regulatory overhang from the Supreme Court's judgement in August 2024, that allowed states to retrospectively levy or renew tax demand on mineral rights and mineral-bearing lands. While the company has been investing towards expansion and diversification for managing some of these risks, the pace of execution and debt on its books will remain key monitorables. For more such analyses, read Profit Pulse . Ananya Roy is the founder of Credibull Capital, a SEBI-registered investment adviser. X: @ananyaroycfa Disclosure: The author does not hold any shares of the companies discussed. The views expressed are for informational purposes only and should not be considered investment advice. Readers are encouraged to conduct their own research and consult a financial professional before making any investment decisions.
