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Black Magic Essay

KVS Krishnamohan**

The world’s worst power outage affected 600 million people, business worth an estimated $1.5 billion was lost, trains stopped, flight schedules were thrown out of gear, and miners were trapped, in deep coal shafts and hospitals had to switch the emergency operators. That’s half of the population in the darkness on 31st July 2012. This is because of the failures of three grids in supplying to north, eastern, north eastern regions of the country. In recent times power outrages made headlines in US, Canada, Brazil and Greece. This is not exception to India, but this crisis in not an ordinary crisis, because investors are looking infrastructure support from the government of India.

Repeated grid failures may create a negative opinion about India in international market. Industry experts concur that there is serious shortage of electricity in India. The annexure- III explains very clearly that power loss is taking place that power projects that get delayed or stalled for want of environment forest coal block clearance and public agitations. Ministry of power had to battle serious fuel linkages that required generating power and environmental issues, apart land acquisition problems through people agitations.

Currently, India has a total installed capacity of 2, 05,339 MW, but on a bad day fuel problems, maintenance can pare this to 1, 30,000 MW. The deficit worsened in recent weeks because of poor supply of fuel, poor monsoon rains, falling reservoirs, level high temperatures, farmers to rely on clerical pumps to irrigate their land. This black out was a disaster waiting to happen. An official admits from ministry of power that “as it is hydel generation is less than 50 percent because of deficit water in reservoirs and many thermal plants are not running to optimum level because inadequate coal supply. Dr. Pavan Patel, Professor, SSIM, Kompally, Secundarabad, Andhra Pradesh. KVS Krishnamohan, Associate Professor, Kompally, Secundarabad, Andhra Pradesh.

Coal supply and demand scenario in India: Mr.Venugopal Dhoot, Chairman of Videocon Industries points out “the power sector is facing problems in terms of fuel supply linkages, land acquisitions and environmental concern are address by the government, we may miss our target of adding100, 000 MW capacity in the 12th five year plan, he further emphasized that “ the coal sector inefficacy is creeping into the power sector. One more expert said that “today 35,000MW of coal –fired projects are working on less than 40 percent of the installed capacity due to lack of coal supply” told by Mr.Ashok Khurana, Director general of Association of Private Power Producers, which represents 24 companies. Ministry of Environment and Forest raised the hackles of the coal ministry by putting 203 blocks in the “no-go” mining areas under forest cover. The coal ministry had that the country could lose access to around 660 million tonnes of coal due to this classification.

Coal from these blocks was supposed to feed the thermal power plants. Annexure-III highlighted list of at least nine power projects based on information from CII that were stalled or delayed due to want of environment/forest clearness or due public agitations. Thermal plants constituting almost 66% of the total installed power capacity in India. In spite of knowing this fact and India has some of the largest coal reserves in the world (approximately 270 billion tons) domestic suppliers are tardy at best. This may be because of coal production in handled by Coal India Limited (CIL), which is often criticized for insufficient production supply to meet demand. However, CIL can only supply about 60% of our power plants coal demand. CIL’s monopolistic position has often resulted in supply bottlenecks, delays in developments of new coal fields and inadequate emphasis on cost reduction at operational level. Coal pricing is also a crucial issue.

Coal India, being the dominant producer of coal in the country, has to adopt a pricing policy which is transparent, credible and based on global norms. There is perhaps need to introduce competition in this sector. April 2012, the government invoked a rare presidential decree to force CIL, India to sign long-term fuel supply agreements (FASs) with private power companies. Domestic coal production is projected to increase by over 795 million tons by 2016-17. There are serious challenges towards, achieving the target output and in any case demand for coal is expected to reach at least one billion tons by 2017. Second, CIL has agreed to enter in to FASs with 48 new projects with a very low penalty (0.01percent) for non-supply.

Final, conclusion on coal supply in India and coal issues are debated very serious in the parliament, political parties are demanding for CBI enquiry on allocation mine to different companies, in this situation there are many unanswered questions and challenges are there, spokesperson of one leading power company says that “you cannot expect companies to invest billions without knowing if the coal block allotted will be taken or held back for one reason to another”. This is back ground for coal supply in India. The opportunity explored by an Indian company to supply coal for thermal power generating companies, identifying opportunity at international level and got all approval to supply coal to their own companies and rest of the companies’ in Asia region, company proud enough in contributing to economy, the company popularly known as GVK.

Overview of GVK

GVK is a leading Indian conglomerate with diversified interests across various sectors including energy, resources, airports, transportation, hospitality and life sciences. It has taken pioneering initiatives across many sectors that it operates in and has overcome every challenge to provide reliable infrastructure to contribute to the country’s growth. GVK’s greatest strength is its highly experienced and proficient in-house talent pool. GVK’s collaboration with global infrastructure leaders has brought international expertise to India reflecting excellence and advancement in all its endeavors. Having already invested over Rs. 15, 000 crore (USD 3.3 billion) the company has projects worth over another Rs. 30, 000 crore (USD 6.6 billion) in the pipeline, in India. GVK has pioneered various infrastructure projects viz. setting up India’s first Independent Power Plant (IPP), first six-lane road project and first Brownfield airport under the Public Private Partnership model.

GVK is developing and managing two of the busiest airports in the country namely, Chhatrapati Shivaji International Airport(CSIA), Mumbai International Airport(MIB). GVK also has road projects of over 2200 lane km under construction and development apart from the 542.4 lane km Jaipur-Kishangarh Expressway under operation. GVK has established itself as premium hospitality in name of Taj GVK properties. GVK Biosciences is Asia’s leading Contract Research Organization (CRO) with 1250 scientists working integrated services, across the R&D value chain for leading international pharmacy, agro, biotech and life sciences companies. GVK is a socially responsible and an environmentally conscious organization that believes in sustainable development.

It runs various social initiatives under the GVK Foundation for the overall development of the society. GVK EMRI attends to every emergency, be it a medical crisis, law and order situation or a fire disaster. This service is spread across 11 states and 2 union territories with 3160 ambulances and over 17000 employees. GVK, with its various developmental services aims to make a difference to the lives of people all over India. GVK Energy sector business: The 540 MW (2X270 MW) thermal power project is under development near Goindwal Sahib Village, District Tarn Taran in the state of Punjab.

To meet the fuel requirements of Goindwal Sahib, coal will be sourced from Tokisud and Seregarha coal mines in Jharkhand. A MoU has been signed with PSPB (Punjab State Power Board) to develop 2×660 MW thermal power project. For this upcoming coal based thermal power project’s fuel requirement, application for coal linkage/mine allocation was submitted to the Ministry of Coal. It has over 900 MW operational power plants and around 5000 MW projects under various stages of construction and development. Particular GVK energy companies’ details are as fallows

Projects under operation

– 445 MW Jegurupadu CCPP (Phase: 1&2), East Godavari district, Andhra Pradesh – 469 MW Gautami CCPP, East Godavari district, Andhra Pradesh Projects under development
– 800 MW Jegurupadu CCPP Phase 3, East Godavari district, Andhra Pradesh – 800 MW Gautami CCPP Phase 2, East Godavari district, Andhra Pradesh – 540 MW Goindwal Sahib Thermal Power Project, Tarn Taran district, Punjab – 2X660 MW Coal based Thermal Power Project, Tarn Taran district, Punjab – 330 MW Shrinagar Hydro Electric Project, Uttarakhand

– 850 MW Ratle Hydro Electric Project, Jammu & Kashmir
– 146 MW Bogudiyar Sarkari Bhyol Hydro Electric Project, Uttarakhand – 200 MW Mapang Bogudiyar Hydro Electric Project, Uttarakhand The above information shows that GVK being an infra company, going big way in generating power to provide sustainable growth to Indian economy, then GVK looking for opportunities outside to get fuel for the thermal power generating companies which are running by exclusively GVK and those companies dearth of requirement of coal to generate power by respective Indian companies. International Opportunity for GVK:

GVK has acquired the Hancock Coal Mines in Australia with 8 billion tons reserves and a capacity of more than 80 million tons per annum for USD 1.26 billion. It will also set up a 500 km rail line and a 60 mtpa port as part of the ‘pit-to-port’ logistics solution. The project envisages a total investment of USD 10 billion. GVK welcomes the Federal Government’s decision to grant environmental approval for the Alpha Mine and Rail Projects in Queensland, Australia. GVK’s Alpha Coal Project Gains Federal Government Approval under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC).

Following a rigorous and thorough assessment process by two levels of government spanning four years, Federal Environment Minister Tony Burke gave an approval decision to construct and operate the Alpha Coal Mine and a railway line between the mine and the port at Abbot Point, near Bowen. “We are delighted with the Federal Government decision. Ultimately we believe the overall assessment process has resulted in best practice environmental protection outcomes,” said GVK Chairman and Managing Director, Dr. GVK Reddy. It may be recalled that the Queensland Government had earlier accorded the environment clearance for the said project in May, 2012.

GVK’s Respect and Commitment for the Environment

• GVK is a very environmentally responsible company;  • It has been working with environmental experts, environmental government agencies, landholders and stakeholders for four (4) years (since 2008); • A rigorous and detailed environmental assessment process has been followed by GVK in Australia, a country that has one of the highest environmental standards in the world – which GVK fully supports and excuted. • GVK has spent in excess of $25 million specifically on ensuring that its environmental assessment process is of the highest standard; • GVK has employed 275 environmental personnel in its study work to ensure that this project has a very high environmental standard and values; and • GVK chose to invest in Australia because of its low political risk, coupled with strong environmental and safety standards which align with GVK’s corporate philosophy and values.

This is another important milestone for our project which will provide significant benefits to the Alpha and Bowen regions, the state and the country. The projects we are planning will provide 2,000 on-going jobs in operations, directly employ around 4,000 during construction and return to government $1.5bn annually in royalties and taxes at peak production”, said GVK Vice-Chairman, G V Sanjay Reddy. GVK has acquired a 79% stake in the Alpha Coal and Alpha West projects and a 100% stake in the Kevin’s Corner project in Queensland from Hancock Prospecting Pty. Ltd. These projects hold total resources of 8 billion tonnes and a peak capacity of 80 million tonnes per annum. When combined, these Projects will create one of the largest coal mining operations in the world. The Alpha Coal project has a mine life of 30+ years and a capacity of 32 mtpa which makes it suitable for high production open cut mining.

GVK has also acquired a 100% stake in the 500 km rail line and a 60 million tonne per annum port as part of the “pit-to-port” logistics solution. The Queensland Government has selected GVK’s Rail Corridor as the north-south corridor for connecting the Galilee Basin to the Port of Abbot Point in Australia. GVK’s coal mining project with its superior quality low ash, low sulphur and low gas thermal coal, will be reliably exported mainly to Asian destinations. Construction is expected to start next year with first coal being produced in 2015/16. “This positive decision also paves the way to ensure more than 1.4 billion people (largely in Asia) that face a major shortage of electricity, are provided with an additional source of coal to enhance supply of electricity to the region, thus improving quality of life of the people and overall economic development”, said GVK Vice-Chairman, G V Sanjay Reddy.

Queensland Government selects GVK’s Rail Corridor for connecting Galilee Basin to Abbot Point Port in Australia: Commenting on the announcement, Dr. GVK Reddy, Chairman and Managing Director, said, “We welcome the state government’s decision to approve the construction of the GVK Rail Corridor from the Galilee Basin to the port of Abbot Point. This investment will deliver wider benefits as it provides both initial and additional capacity to satisfy both Galilee and Bowen Basin rail capacity requirements in the future. This, combined with the continued investment in the Strategic Rail Corridor, underlines the Government’s commitment to develop rail infrastructure for many decades to come.”

GVK has maintained that its railway alignment is the most efficient and cost effective option that will benefit the Galilee Basin for several decades to come. It is also the most advanced with agreement reached with a majority of landowners, rail infrastructure manager accreditation in place, advanced design based on extensive operational modeling and ground survey and strong interest for third party rail haulage services from other Galilee Basin proponents and existing Bowen Basin coal producers.

One of the requirements of the government is to allow third party access, which GVK has embraced from the outset, with a public expression of interest process for haulage commenced in September 2011, immediately after GVK’s majority acquisition of the project. GVK remains committed to providing haulage services for proponents in the Galilee and Bowen Basins.

Mr. G V Sanjay Reddy, Vice Chairman, GVK, said “We welcome this development and see this as a huge vote of confidence in GVK and most significantly recognition of the vital role that we will play in the construction of this rail corridor thereby supporting jobs and also driving sustainable economic growth. The GVK Rail Corridor from the Galilee Basin to the port of Abbot Point would also help create opportunity for mines in the region to transport their product to the port, thereby facilitating economic development of the region.”

GVK is now looking forward to further cooperation with State and Federal Governments and third party users as it continues to finalize the requisite approvals to enable the construction of the 495km standard gauge multi-user rail system from the Galilee Basin to Australia’s closest port to Asia, Abbot Point, just north of Bowen to occur.

Quality export thermal coal will be transported reliably and responsibly by state of the art 25,000 tons trains utilizing rolling stock not seen before in Queensland. Initial capacity and current approvals are for 60 million tonnes per annum (Mtpa), however the rail line is scalable to 120Mtpa on the single line, whilst duplication and the addition of passing loops in the north would allow for expanded capacity in the coming decades that would satisfy Galilee and Bowen Basin rail capacity requirements. The north/south corridor announcement today will be of a relief to landholders along the rail corridor and GVK particularly acknowledges the assistance and patience of landholders over the past three years. GVK also acknowledges the traditional owners along the route with whom it also has agreement.


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