Project Appraisal

DETAILED PROJECT REPORT

Indo Thermal Power

plant
Bringing Light To
Life…….

Submitted to

Prof. M.V. Monica

Submitted by

ANINDYA SANKAR KUNDU

(08BS000328)
1
 Batch of 2010

A
DETAILED PROJECT REPORT
ON

“Indo Thermal Power plant”

Submitted By:
ANINDYA SANKAR KUNDU

(08BS000328)

A report submitted in partial fulfillment of

the requirements of MBA Program of
ICFAI Business School

Faculty Guide:
Prof M.V.Monica

2
 DECLARATION

I hereby declare that this detailed project report on “Indo Thermal Power
plant” has been written and prepared by me during the year 2009. The project
was done under the valuable guidance and supervision of PROF.M.V. MONICA,

Faculty of ICFAI Business School, Kochi in the partial fulfillment of the

requirement for the Master of Business Administration Degree course of the
ICFAI University.

I further declare that this project is the result of my own effort and has not been
submitted to any other centre or institution or published anywhere earlier for the
award of any Diploma or Degree.

Place: Kochi
Anindya Sankar Kundu
08bs0000328

3
 Table of Contents

Declaration 3

Acknowledgement 5

Executive summary 6-9

Chapter-1 Opportunity
Analysis……………………………………….…………10-16

Chapter-2 Market and Demand Analysis 17-30

Chapter-3 Technical Analysis 31-39

Chapter-4 Environmental Impact Analysis 40-45

Chapter-5 Social Cost Benefit Analysis…………………………46-50

Chapter-6 Structuring of the Project………………………...…..51-59

Chapter-7 Financial Projection…………………………………..60-68

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Annexure……………………………………………………………
………….………70

Acknowledgements

I extend my sincere thanks to Prof M.V.Monica for giving me the

opportunity to work on the report titled “Indo Thermal Power plant” and
learn the various frame work of Project Appraisal.

I also wish to convey my deep sense of gratitude to Prof M.V.Monica,

whose valuable guidance and encouragement has been a very important reason
for the successful completion of this project.

I wish to record my heartfelt thanks to our System Administrator and

Librarian, who helped me at different stages of my work.

I am thankful to all my friends and the employees of IBS-Kochi for their

co-operation.

5
Executive Summary

6
Project Title: Setting up a Thermal Power Project.
DESCRIPTION OF THE PROJECT:- This project aims to set up a Thermal
Power Project. This is a coal based Thermal Power Plant. In the first Phase our
production target will be 250 mw. We will supply the electricity for the house
hold and Commercial use.

Location: - (Haldia, West Bengal)

Significance of this project:

West Bengal is a developing state many manufacturing

company are coming and setup their manufacturing unit over
there. Many MNCs already setup their offices. So, demand of
electricity is very high. This power plant also provide job
opportunity for the local people.

Input:
In thermal power plant Inputs are as coal, Water and labor.

Process:-

Thermal energy is derived from Boilers by burning Coal and the

steam produced in Boilers is led to rotate Steam Turbines,
which in turn act as the prime movers of Alternators for
generating Electrical Power.

Output:-

As the Steam releases heat energy to turn the turbine, its

temperature drops. To reuse water used in Generating Power,
the Steam is condensed back into water. To condense the
steam, it is discharged into a vacuum and passed over cooling
water in tubes.

 Outlay of the Project:-

• Land – 111 crores

• Construction –181 crores

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 • Plant & Machinery-621crores

• Administration – 54 crores

• Working capital -35 crores

• Misc Expenses-68crores

• Total expenditure – 1070 crores

 Funding:-

• We will take Long Term as well as short term loan from Financial
Institution.

• 100 crore will be self capital.

• We will introduce our IPO in Indian stock market.

 Time Frame:-

• The process of hiring the players will start by the end of year 2014.

• The Main factory will be ready by September-October 2017.

• The production will be started in the January, 2018.

 Revenue Generation Model:-

• Selling Electricity Commercial and industry.

• Selling Electricity to house hold.

• Selling Electricity to neighbor state.

 The project implementation stages:

8
Phase I – This phase helps to evaluate, understand and identify the need to set
up Thermal power project. It will take almost 6-8 month to develop a clear idea.
Phase II – In this phase a layout will be prepare to where form the funding will
come for the project. And things have to be done for the project
 Like,
 Selection of location for Power Project- 6-8 month
 Selection of lands - 8-12month.
 Selection of vendor - 4-5 month
Phase III: according to the plan made in Phase II the thing will be implemented.
In this phase important things have to done like,
 Building the Administrative offices at the suitable location -8-12 months
 Hiring of trained employee-4-5 months
 Purchasing office equipments and fixed assets – 5-6 month.
Phase IV – In this phase it will be observed that any necessary changes will
have to be done form the initial plan. Experts in this phase will focus on the
progress of work, with the time and cost involve with it. There will be definite
some changes in the macro-economic factors while implementing the project.
For that the experts who are implementing the project will have to take
corrective action to mitigate that kind of risk, which can have a significant effect
on the project.
Some of them like,
 Changes in govt/regulatory authority norms.
 Cost of labor.
 Cost of land.
The corrective measure will be implemented in this phase so that the company
can starts its operation.

9
 Chapter – 1
Opportunity Analysis
10
 1.1 INTRODUCTION

An economy’s growth, development, ability to handle global competition is all

dependent on the availability, reliability and quality of the power sector. As the
Indian economy continues to surge ahead, electrification and electricity services
have been expanding concurrently to support the growth rate. The demand for
power is growing exponentially and the scope of growth of this sector is
immense.

Existing generation suffers from several recurrent problems. The efficiency and
the availability of the coal power plants are low by international standards. A
majority of the plants use low-heat-content and high-ash unwashed coal. This
leads to a high number of airborne pollutants per unit of power produced.
Moreover, past investments have skewed generation toward coal-fired power
plants at the expense of peak-load capacity. In the context of fast-growing
demand, large T&D losses and poor pooling of loads at the national level
exacerbate the lack of generating capacity.
11
India is one of the main manufacturers and users of energy. Globally, India is
presently positioned as the 11th largest manufacturers of energy. It is also the
worlds’ 6th largest energy users. In spite of its extensive yearly energy output,
Indian power sector is a regular importer of energy because of huge disparity.

Global and Indian economy have decelerated, but power is one of the few
commodities in short supply in India. So, despite the sluggishness in production
and demand for manufactured products, India remains power hungry, both in
terms of normal and peak power demand. Power is derived from various sources
in India. These include thermal power, hydropower or hydroelectricity, solar
power, biogas energy, wind power etc. The distribution of the power generated
is undertaken by Rural Electrification Corporation for electricity power supply.

1.2 The India Opportunity in Energy Sector

In order to fuel a rapidly growing economy, the Indian energy sector
requires investments to the tune of USD120-150 billion over the next five
years. The imperative for private sector investment is strong in order to
complement the public sector in meeting this investment requirement and
to bring in the required capabilities and technologies to enhance energy
resource extraction.

The Government of India has recognized the need for private participation
and policies to promote private investment are being implemented.
Private participation in coal mining for captive use, in oil & gas exploration
and in the power sector is already seeing significant progress. It is also
expected that private participation in nuclear energy would be allowed as
and when the Indo-US Nuclear deal goes through.

Along with private participation, there is a move to bring in market

mechanisms in the energy sector under an independent regulatory
oversight. Progress has been made in sectors such as power and oil & gas
where private participation is already significant. A gradual approach is
important till the supply side position improves and more players enter the
sector so that markets can work effectively.

In parallel, the Government is making efforts to broaden the supply base

both internally and externally. It is intended to diversify the fuel basket
by increasing shares of Natural Gas, Hydro and even Nuclear energy. At
the same time, both Government and private sector companies are

12
looking to acquire equity in energy assets abroad and we have seen
recent examples in the oil & gas and coal sectors.

Energy transport infrastructure such as ports, railways, pipelines and

power transmission networks need significant investment. The policy now
allows private participation in all these areas and some private sector
activity is already under way.

Tariff reform in the energy sector and distribution reform in the power
sector are two important steps that need to be successfully carried out.
Tariff reform to phase out subsidies or to target them effectively and
distribution reforms to bring efficiency in the power sector are vital. Steps
have been taken in these directions with mixed results. Going forward, this
is an important area to manage.

The following sections highlight key opportunities in the different sectors

Coal:-
India has vast reserves of coal and participation of the private sector in
captive mining, across different user industries, is an immediate
opportunity for investment. Thirty eight coal fields with mineable coal
reserves in excess of 2,800 million tones have been identified and are in
the process of being allocated for captive mining. This may imply a total
capital requirement of around USD 1.5-2 billion Investment activity in
other parts of the coal value chain such as in coal washeries has also been
seen in recent times.

Oil:-
The Government’s policy of allowing full private participation in upstream
exploration and production has already attracted a number of private
investors. Six rounds of competitive bidding under the Government policy,
named New Exploration Licensing Policy (NELP), have already been done,
around 185 blocks were awarded and reserves estimated at 700 MMT of
oil and gas have been discovered. The sixth round of bidding (NELP-VI) for
65 blocks was successfully completed last year. In addition, India presents
a lot of potential in the refining sector due to the strategic advantages of
low cost and location; and is already a net exporter of products. The
downstream marketing sector is also now open to private participation.

Gas:-
Discoveries of gas to the tune of 700 bcm2 in the last decade have meant
that gas reserves hold promise in India. The potential for Coal Bed
Methane appears to be very promising and will probably exceed the free

13
natural gas reserves. While in the near term, potential for LNG may be
limited due to in ability of key sectors such as power to absorb high
international prices, in the longer term there would be place for LNG as
the share of Natural Gas in India’s energy mix increases.

On the demand side, an emerging area is auto-CNG and piped gas which
have together accounted for about 7 percent of the total gas demand in
the last five years. In the next few years, at least 30 cities have been
identified for city-wide gas coverage by private and public sector players.

The draft gas pipe line policy gives support to the development of a
national gas grid meant to create a common gas market across the
country.

Nuclear
The envisaged growth of nuclear power in India is possible provided robust
technologies are developed for both the front-end and the back-end of the
fuel cycle. India has one of the largest reserves of the nuclear fuel-
thorium. However, the nuclear energy programme will continue to be
uranium based until commercial production based on thorium becomes
feasible. There is a persisting need for developing techniques for economic
and efficient extraction of uranium from lean sources e.g. seawater. If the
Indo-US nuclear deal goes through, there will be a boost to nuclear energy
and private participation in this sector would be expected.

14
1.3 Overview of India’s Energy Position
By world standards, India’s current level of energy consumption is very low. For the year
2004-05, the total annual energy consumption for India is estimated at 572 Mtoe (million
tons oil equivalent) and the per capita consumption at 531 kgoe (kilograms oil
equivalent)

Source: International Energy Agency, Key World Statistics 2006

However, with a targeted GDP growth rate of 7 to 8 percent, and an estimated energy
elasticity of 0.80, the energy requirements of the country are expected to grow at 5.6-6.4
percent per annum over the next few years. This implies a four- fold increase in India’s
energy requirement over the next 25 years and hence, the country faces significant
challenges in meeting this.

India’s Current Energy Basket

India is well endowed with coal. However, it is poorly endowed with oil assets and has to
depend on crude imports to meet a major share of its needs (around 71percent).

Source: Planning Commission of India, 2006

Reflects only primary energy sources that are commercially exploited. A large population
of India in the rural areas still depends on traditional sources of energy such as firewood,
animal dung and biomass. The usage of such sources of energy is estimated at around

15
143Mtoe per annum or approximately 44 percent of total primary energy use (Source:
Planning Commission of India).

Future Energy Requirements and Supply Options

Coal is expected to continue to be the dominant energy source. However

India would have to actively develop non-coal sources given that at a
growth rate of 5 percent in coal production, India’s extractable coal
reserves would get exhausted in 45 years. Therefore, from a long-term
perspective and in view of growing environmental concerns from use of
coal, the country needs to look at developing alternate sources such as
nuclear energy. India has vast reserves of the nuclear fuel thorium but the
technology is not yet developed for its commercial use. India’s oil assets
are meager but recent discoveries hold promise for India’s gas reserves
and coal bed methane. Renewable energy currently contributes a small
fraction and it is expected to grow very rapidly especially in areas like
wind and solar power. In the short-term, renewable energy would play an
important role of supplementing the total energy requirement. Over the
longer term, its importance would be more strategic so that the country
can build a certain level of self-reliance in renewable technologies of the
future. The following exhibit depicts the estimated reserves for various
energy sources:

Resource Unit Reserves

Coal Extractable M toe 13,489
Oil M toe 786
Gas M toe 1866
Uranium Tones 61,000
Thorium Tones 2,25,0000

Different demand-side and supply-side scenarios have been developed by

India’s Planning Commission to meet the future energy requirements.
These scenarios look at energy efficiency as well as supply side options.
The energy efficiency options include:
•Energy efficiency in end-use: Efficient use of energy in industry,
lighting, house hold appliances etc. can lower India’s energy needs by 142
Mtoein 2031-32(or7.5 percent of the total energy requirement).

•Increase in rail road share of freight: Currently, the road transport

carries a major portion of freight traffic. If the share of railways in freight
increases from the current level of 32 percent to 50 percent by 2031-32,
it would contribute towards an energy saving of 34 Mtoe in 2031-32 (or1.8
percent of the total energy requirement).

•Increase in transportation efficiency: Use of mass transport system

in cities, better utilization of motor vehicles (such as vehicle pooling) and
increase in fuel efficiency of motor vehicles (possible to the extent of 50
percent with current technology) can save about 81Mtoe of energy in
2031-32 (or4.3 percent of the total energy requirement).
16
•Efficiencies in thermal power generation: Currently, the efficiencies
of thermal generation in India stand at30.5 percent. An increase to 38-40
percent through use of super critical boiler technologies could lead to a
savingsof111 Mtoe in 2031-32(or 5.8 percent of the total energy
requirement).

Together the energy efficiency measures can save 351Mtoe of energy or

around 19 percent of India’s energy requirements by 2031-32.

The range of utilization of different fuels in 2031-32 as compared to current levels is

shown below:

Source: Planning Commission of India,

2006(planningcommission.nic.in/aboutus/committee/.../wg11_hfw2.pdf)

17
 Chapter – 2
Market & Demand Analysis

18
 2.1 GLOBAL OVERVIEW

The energy required to support our economies and lifestyles provides tremendous
convenience and benefits. Energy consumption is reportedly higher in countries where less
than 5 % of the population lives below the poverty line than it is in countries where most
people live in poverty -- four times higher. For example, Americans make up less than 5 % of
the world’s population yet consume 26 % of the world’s energy. World electricity generation
rose at an average annual rate of 3.7% from 1971 to 2004, greater than the 2.1% growth in
total primary energy supply. This increase was largely due to more electrical appliances,
development of electrical heating in several developed countries and rural electrification
programmes in developing countries.

De-regulation in areas of the global energy markets has led to fierce competition. Now more
than ever electricity has to be produced at a lower cost with many countries imposing ever
tightening environmental legislation to reduce the impact power generation has on the
environment. The enormous challenges are recognised in providing electricity as efficiently as
possible and strive to develop technology to meet your needs. Collectively, developing
countries use 30% of the world's energy, but with projected population and economic growth
in those markets, energy demands are expected to rise 95 %. Overall global consumption is
expected to rise 50 % from 2005 to 2030.

World energy consumption is projected to expand by 50% from 2005 to 2030 in the IEO2008
reference case projection. Although high prices for oil and natural gas, which are expected to
continue throughout the period, are likely to slow the growth of energy demand in the long
term, world energy consumption is projected to continue increasing strongly as a result of
robust economic growth and expanding populations in the world’s developing countries.
Energy demand in the OECD economies is expected to grow slowly over the projection
period, at an average annual rate of 0.7%, whereas energy consumption in the emerging
economies of non-OECD countries is expected to expand by an average of 2.5 % per year.

19
China and India—the fastest growing non-OECD economies—will be key contributors to
world energy consumption in the future. Over the past decades, their energy consumption as a
share of total world energy use has increased significantly. In 1980, China and India together
accounted for less than 8 % of the world’s total energy consumption. In 2005 their share had
grown to 18 %. Even stronger growth is projected over the next 25 years, with their combined
energy use more than doubling and their share increasing to one-quarter of world energy
consumption in 2030 in the IEO2008 reference case. In contrast, the U.S. share of total world
energy consumption is projected to contract from 22 % in 2005 to about 17 % in 2030.
Energy consumption in other non-OECD regions also is expected to grow strongly from 2005
to 2030, with increases of around 60 % projected for the Middle East, Africa, and Central and
South America. A smaller increase, about 36 %, is expected for non-OECD Europe and
Eurasia (including Russia and the other former Soviet Republics), as substantial gains in
energy efficiency result from the replacement of inefficient Soviet-era capital stock and
population growth rates decline.

Fig .1: World Marketed Energy Consumption, 1980 - 2030

Source: EIA International Energy Annual 2005(June-October 2007)

Oil for power generation has been displaced in particular by dramatic growth in nuclear
electricity generation, which rose from 2.1% in 1971 to 15.7% in 2004. The share of coal
remained stable, at 40% while that of natural gas increased from 13.3% to 19.6%. The share
of hydro-electricity decreased from 23.0% to 16.1%. Due to large programmes to develop
wind and solar energy in several OECD countries, the share of new and renewable energies,
such as solar, wind, geothermal, biomass and waste increased. However, these energy forms
remain limited: in 2004, they accounted for only 2.1% of total electricity production. The
20
share of electricity production from fossil fuels has gradually fallen, from just under 75% in
1971 to 66% in 2004. This decrease was due to a progressive move away from oil, which fell
from 20.9% to 6.7%.

Table 1: OECD Multinational Electricity Companies

Company Activity Assets Countries Active

AES Generation 1666MW China, India, Pakistan, Sri Lanka

EDF Generation 1684MW China, Laos, Vietnam

Generation &
Tractebel 848MW China, Thailand, Laos
supply

Enron Generation 204MW Philippines, Guam

China, Philippines, Singapore,

Intergen Generation 1830MW
Australia

Mirant Generation 2261MW Philippines

Transalta Generation 280MW Australia

IP Generation 3817MW Australia, Pakistan, Thailand, Malaysia

CDC Generation 810MW Bangladesh

Source: http://www.tni.org/books/yearb05corporations.pdf.

As per the recent survery, the global electrical & electronics market is worth $1,038.8 billion,
which is forecasted to grow to $ 1,216.8 billion at the end of the year 2008. If electrical &
electronics production statistics are considered, the industry accounted for $1,025.8 billion in
2006, which is forcasted to reach $1,051.5 billion in future.

Fig.2: Comparative Per Capita Consumption Of Electricity (Kwh)

21
The per capita consumption is seen to be far behind from the world average and very less
when compared to other countries. So there is a need to improve it.
Though India has achieved many milestones in generation still the there is a wide gap
between demand and supply of power. This is the most important issue to be concerned.

2.2 Indian POWER SECTOR Market

India has set itself an ambitious target of providing electric power for the
nation by the year 2012. The country's National Electricity Policy wants the
entire billion plus population to have access to power by 2012 and to raise
the per capita availability of electricity by nearly 50 percent. This goal
requires another 78,000 mw of capacity by 2012. Based on the progress
visualized by government planners for the nation during the next two
decades, the country's power generating capacity needs to increase to
400,000 mw by 2030 from the existing 130,000 mw. But, by all accounts,
that appears to be a tall order, particularly considering India's past
performance.

The Indian economy is growing at one of the fastest rates in the world.
This leads to a high demand for additional energy, in particular electricity -
at 9 percent every year. India's electricity consumption is sixth globally
and third in Asia with 606 units of per capita consumption per annum. It is
set to increase to 1,000 units per annum by 2012. The power generation
capacity has to grow by at least 10 percent to sustain the current GDP
growth of 9 percent, say industry experts. Ideally, they say, the ratio of
energy generation and GDP growth should be 1:1.

The government has set an ambitious capacity addition target of 78,557

mw during the country's 11th five-year economic plan period (2007-12).
The government is expecting a capacity addition of 16,785 mw in 2007-
08, the first year of the plan, another 7,272 mw in 2008-09, 15,198 mw in
2009-10, 16,970 mw in 2010-11 and 22,372 mw in 2011-12. The
envisaged capacity addition of over 76,000 mw comprises 58,644 mw or
75 percent in thermal, 16,553 mw or 21 percent in hydropower and 3,380
mw or 4 percent in nuclear power. Currently, 44,000 mw is under
construction.

However, most experts dismiss this target as unrealistic given the

country's past track record. During the 10th plan period (2002-07) which
ended in March, the country could add just half of the targeted 41,000
mw. The story was not different during the ninth plan period (1997-2002),
when only 19,000 mw or less than half the target was achieved.

22
GENERATION
India has installed power generation capacity of 1,41,079.84 MW as on
January 31, 2008, which is about 100 times the installed capacity of 1362
MW in the year 1947. Power generation has showcased a robust growth
rate which is steadily improving year after year.

There has been significant improvement in the growth in actual generation

over the last few years. As compared to annual growth rate of about 3.1%
at the end of 9th Plan and initial years of 10th Plan, the growth in
generation during 2006-07 and 2007-08 was of the order of 7.3% and
6.33% respectively.

The electricity generation target for the year 2008-09 has been fixed at
744.344 BU comprising of 631.270 BU thermal; 118.450 BU hydro; 19.000
BU nuclear; and 5.624 BU import from Bhutan.

Abbreviation:
 SHP = Small Hydro Project
 BG = Biomas Gasfier
 BP = Biomass Power
 U&I = Urban & Industrial Water Power
 RES = Renewable Sources.
Table.2: Gap Between Demand And Supply Of Power

23
Source: http://www.indexmundi.com/India/electricity_production.html

The table shows the average shortage of electricity in India every year to
be approximately between 7-8%.

2.3 STRATEGIES

The various strategies followed to achieve the goal in power sector are,

Power Generation Strategy with focus on low cost generation, optimization of capacity
utilization, controlling the input cost, optimization of fuel mix, Technology up gradation and
utilization of Nonconventional energy sources

Transmission Strategy with focus on development of National Grid including Interstate

connections, Technology up gradation & optimization of transmission cost.

Distribution strategy to achieve Distribution Reforms with focus on System up gradation,

loss reduction, theft control, consumer service orientation, quality power supply
commercialization, Decentralized distributed generation and supply for rural areas.

Regulation Strategy aimed at protecting Consumer interests and making the sector
commercially viable.

Financing Strategy is to generate resources for required growth of the power sector.

Conservation Strategy to optimize the utilization of electricity with focus on Demand Side
management, Load management and Technology up gradation to provide energy efficient
equipment gadgets.

24
Communication Strategy for political consensus with media support to enhance the general
public awareness.

2.4 Analysis
TREND ANALYSIS
The term "trend analysis" refers to the concept of collecting information
and attempting to spot a pattern, or trend, in the information. In some
fields of study, the term "trend analysis" has more formally-defined
meanings.

In project management trend analysis is a mathematical technique that

uses historical results to predict future outcome. This is achieved by
tracking variances in cost and schedule performance. In this context, it is a
project management quality control tool.

The trend analysis of the Industry (power generation) is done here in two
methods,

 Exponential Trend Analysis

 Moving Average Method

The factor considered by us for the Trend analysis is the power

generation over the period of years.

India's power generation has grown with nominal rate at 0.65% in

December 2008 compared with 3.90% increased in December 2007.

25
Thermal, hydro and nuclear are three major source of power generation.
Thermal power generation recorded positive growth at 3.25% in December
2008 however hydro and nuclear were recorded negative growth rate at
12.41% and 21.62% respectively in December 2008 compared with
December 2007.

In April-December 2008 power generation were recorded 2.57% growth

compared with April-December 2007.

There has been significant improvement in the growth in actual generation

over the last few years. As compared to annual growth rate of about 3.1%
at the end of 9th Plan and initial years of 10th Plan, the growth in
generation during 2006-07 and 2007-08 was of the order of 7.3% and
6.33% respectively.The electricity generation target for the year 2008-09
has been fixed at 744.344 BU comprising of 631.270 BU thermal; 118.450
BU hydro; 19.000 BU nuclear; and 5.624 BU import from Bhutan.

Table. 3: Trend in Power Generation in India

Power Generation in
in billion KWH
India in billion KWH
Trend Analysis
Trend Analysis
Gross Energy (Exponential)
Year (Moving Average
Generated (A) {F1=F0+0.2*(A0-
Method)
F0)}
1980 – 81 129.2 129.2 129.20
1981 – 82 131.1 129.2 131.10
1982 – 83 140.3 129.58 140.30
1983 – 84 151 131.72 133.53
1984 – 85 169.1 135.58 140.80
1985 – 86 183.4 142.28 153.47
1986 – 87 201.3 150.51 167.83
1987 – 88 219 160.67 184.60
1988 – 89 241.3 172.33 201.23
1989 – 90 268.4 186.13 220.53
1990 – 91 289.4 202.58 242.90
1991 – 92 315.6 219.94 266.37
1992 – 93 332.7 239.08 291.13
1993 – 94 356.3 257.8 312.57
1994 – 95 385.5 277.5 334.87

26
1995 – 96 418.1 299.1 358.17
1996 – 97 436.7 322.9 386.63
1997 – 98 465.8 345.66 413.43
1998 – 99 496.9 369.69 440.20
1999 – 00 532.2 395.13 466.47
2000 – 01 554.5 422.54 498.30
2001 – 02 579.1 448.94 527.87
2002 – 03 596.5 474.97 555.27
2003 – 04 633.3 499.27 576.70
2004 – 05 665.8 526.08 602.97
2005 – 06 672.4 554.02 631.87
2006 – 07 697.4 577.7 657.17
2007 – 08 704.47 601.64 678.53
2008 – 09 744.34 622.21 691.42
2009 – 10 projected 646.63 715.40

Source: Derived from the data collected economy survey of Indian power
and then formulated.

1.1. Output

Fig.3: Output of Trend Analysis – Exponential method (1980 –

2009)

27
Source: Derived from the table 3

Interpretation:

The output (Fig.7) shows that there has been gradual and continuous
growth in power generation in India, the trend analysis using exponential
method also shows the similar curve in growth, showing the projected
power generation for the year 2008-09 in the growing pattern.

Fig.4: Output of Trend Analysis – Moving Average method (1980 –

2009)

28
Source: Derived from the table 3

Interpretation:

The output (Fig.8) shows that there has been gradual and continuous
growth in power generation in India, the trend analysis using moving
average method also shows the similar curve in growth, showing the
projected power generation for the year 2008-09 in the growing pattern.

2.5 SWOT ANALYSIS

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage
of planning and helps marketers to focus on key issues. SWOT stands for strengths,
weaknesses, opportunities, and threats.

29
The aim of any SWOT analysis is to identify the key internal and external factors that are
important to achieving the objective. These come from within the company's unique value
chain. SWOT analysis groups key pieces of information into two main categories:

 Internal factors – The strengths and weaknesses internal to the organization.

 External factors – The opportunities and threats presented by the external
environment to the organization

SWOT analysis is a flexible concept that can be used in various scenarios from assessing
projects or business ventures, making decisions, solving problems, evaluating candidates for a
position to marketing strategy formulation.

Fig.5: SWOT Analysis

Source: http://www.excelsia.ch/htmlgb/blog/index.php?entry=entry090108-234052

The SWOT analysis provides information that is helpful in matching the firm's resources and
capabilities to the competitive environment in which it operates. As such, it is instrumental in
strategy formulation and selection. The following diagram shows how a SWOT analysis fits
into an environmental scan:

30
 Fig.6: SWOT Analysis Framework

Environmental Scan
/ \
Internal Analysis External Analysis
/\ /\
Strengths Weaknesses Opportunities Threats
|
SWOT Matrix

Source: http://www.dolphinventures.com/swot_analysis.htm

STRENGHTS AND OPPORTUNITIES OF POWER SECTOR:

 Well established and vast transmission and distribution network.

 Highly qualified engineering and technical personnel.
 Regulatory framework is further facilitated with enactment of Electricity Bill, 2003.
 The Electricity Bill, 2003 holds promises for the power sector and certainly for the
consumer by way of competition reliability and rationalized tariff structure.
 Emergence of strong and globally comparable central utilities.
 India has substantial non-conventional energy resource base and technologies to meet
growing power requirements by tapping this energy.

WEAKNESSES AND THREATS TO POWER SECTOR:

31
 Poor infrastructure has led to heavy T&D losses. Old and poor transmission and
distribution network has led to frequent power outages and poor quality of power
 Lack of proper metering and theft has led to large scale losses. Only 51% of the power
generated is billed and only 41% is realized
 Moreover, Government provides power to agricultural sector at subsidized rates and
also free of cost in some states. All these factors have resulted in financial disorder of
the State Electricity Boards (SEBs).
 Restoration of SEBs financial health and improvement in their operating performance
continues to be a critical issue. The Government of India has signed a Memorandum of
Understanding (MOU) with various states reflecting the joint commitment of centre and
states to undertake reforms in a time bound manner
 Poor return to utilities, which affect their profitability and capacity to make further
investments
 Increasing gap between unit cost of supply & revenue, approximately Rs 1.10/ unit
 Managerial and financial inefficiencies in state sector utilities have adversely affected
capacity addition and systems improvement
 Non-availability of quality coal may hamper thermal plants’ efficiency in power
generation
 Inability of SEBs to raise funds, as most of the SEBs is on the verge of bankruptcy due
to poor operational performance. Adding to the problems, SEBs need huge money to
measure up competition from efficient private players
 The major risk of privatizing a critical sector like power is the precedence of
commercial over public interest. Some of these interests that will take a back seat
include development of environment friendly generation and provision of electricity for
rural areas. The new Electricity Act does not provide any specific financial incentives
for private players to address public issues
 The SBEs which are right now holding 60% of total installed capacity, will be hit
adversely by some provisions of the new electricity act such as delicensing of
generation and open access for IPPs and CPPs, there by such units will take away the
most lucrative customers (like industrial and commercial users) from the SEBs. This
will not only affect SEB’s but also the entire power sector for near term.

32
Chapter – 3
TECHNICAL
analysis

33
3.1 Important factors in site selection for Thermal power plants

In general, both the construction and operation of a power plant requires the
existence of some conditions such as water resources and stable soil type. Still there
are other criteria that although not required for the power plant, yet should be
considered because they will be affected by either the construction or operation of
the plants such as population centers and protected areas. The following list corers
most of the factors that should be studied and considered in selection of proper sites
for power plant construction:

 Transportation network: Easy and enough access to transportation network

is required in both power plant construction and operation periods.

 Gas pipe network: Vicinity to the gas pipes reduces the required expenses.

 Power transmission network: To transfer the generated electricity to the

consumers, the plant should be connected to electrical transmission system
Therefore the nearness to the electric network can play a roll.

 Geology and soil type: The power plant should be built in an area with soil
and rock layers that could stand the weight and vibrations of the power plant.

 Earthquake and geological faults: Even weak and small earthquakes can
damage many parts of a power plant intensively. Therefore the site should be
away enough from the faults and previous earthquake areas.

 Availability of labor:-Human resource is very important factor. cheap

manpower reduce the cost of production.

 Topography: It is proved that high elevation has a negative effect on

production efficiency of gas turbines. In addition, changing of a sloping area
into a flat site for the construction of the power plant needs extra budget.
Therefore, the parameters of elevation and slope should be considered.

 Rivers and floodways: obviously, the power plant should have a reasonable
distance from permanent and seasonal rivers and floodways.

 Water resources: For the construction and operating of power plant different
volumes of water are required. This could be supplied from either rivers or
underground water resources. Therefore having enough water supplies in
defined vicinity can be a factor in the selection of the site.

 Environmental resources: Operation of a power plant has important impacts

on environment. Therefore, priority will be given to the locations that are far
enough from national parks, wildlife, protected areas, etc.

 Population centers: For the same reasons as above, the site should have an
enough distance from population centers.

 Need for power: In general, the site should be near the areas that there is
more need for generation capacity, to decrease the amount of power loss and
transmission expenses.

34
  Climate: Parameters such as temperature, humidity, wind direction and speed
affect the productivity of a power plant and always should be taken into
account.

 Land cover: Some land cover types such as forests, orchard, agricultural
land, pasture are sensitive to the pollutions caused by a power plant. The
effect of the power plant on such land cover types surrounding it should be
counted for.

 Area size: Before any other consideration, the minimum area size required for
the construction of power plant should be defined.

 Distance from airports: Usually, a power plant has high towers and
chimneys and large volumes of gas. Consequently for security reasons, they
should be away from airports.

 Archeological and historical sites: Usually historical building …are fragile

and at same time very valuable. Therefore the vibration caused by power plant
can damage them, and a defined distance should be considered.

 Ash disposal: Ash is the main waste product of steam power plant. The site
is near the coal mine, and then it can be dumped into the disused mines. or
the ash can be dumped near the river.

Raw Material procurement:-

Plant uses coal for generation of electricity. Its daily requirement of coal is
about 7,760 metric tons, delivered from Asansol Coalfields, Estern
Coalfields Ltd. and Durgapur Coalfields Ltd. The coal supplied is sampled
using a computerized system and sent to the laboratory for testing. This
ensures that a properly graded coal is being used. The plant has also
started to use washed coal, due to its lower ash content. The water plant's
cooling water is pumped from the Hooghly river nearby.

LAND REQUIREMENT & AVAILABILITY

For 500 MW thermal power plant, around 443 Ha. will be required for Plant, Raw
Water Storage, Green Belt, Ash Disposal etc. The break up of the land
requirement is as follows:

Land Requirement Area (in Hectares)

Main Plant (including power plant, 145 Ha.
water treatment plant & reservoir,
adm. building etc.)
Green Belt 148 Ha
Ash Disposal Area 120 Ha.
Others (rail, road, intake pipe corridors) 30 Ha
Total 443 Ha

35
FUEL REQUIREMENT & AVAILABILITY
For 500 MW TPP, raw coal is proposed to be used as a base fuel. Coal from
Asansol ,Eastern, Durgapur coalfield has been considered for this project.

The daily coal requirement shall be about 7760 tonnes based on gross calorific
value of 2000 Kcal/Kg, @ MCR and 1230 Kcal/KWh unit heat rate. The annual coal
requirement would be about 2.58 MTPA considering 90% plant load factor.

WATER REQUIREMENT & AVAILABILITY

The source of water for the project shall be River Brahmani which flows in the
north direction at a distance of about 6 km w.r.t. the project site. An intake well,
located near village Kotapala, at about 10 km distance from the project site has
been considered. The raw water will be conveyed to the reservoir at the project
site through a pipeline. The reservoir will have the total reserve capacity of
around 10 days’ requirement of water. Make up water requirement for this
project would be about 4534 m/hr. (around 45 Cusec).

LAND USE

The land use pattern of the study area has been established based on Census
Data of 2008 and interpretation of Satellite Imageries. The analysis of satellite
data indicates that the area is predominantly occupied by agricultural land
(39.75%). The forest comprise of about 6.15% of the land area while culturable
waste covers about 2.96% of the land area. 9.36% of the land is not available for
cultivation. Remaining land is occupied by rivers, water bodies, hills, valleys etc.
and not included in the village directory of Census Data. Analysis of the Satellite
Imagery indicates that 30.52% of the study area is agricultural land while 16.46%
of the area is covered under settlements. Forests, plantations and scrubs cover
14.33% of the study area and river and water bodies cover 3.55% of the study
area.

ASH UTILIZATION & ASH DISPOSAL

At this thermal power plant, various avenues for utilization of ash in application
areas shall be explored.

With all possible efforts it is expected that fly ash generated at the thermal
power stations shall be utilized in the areas of cement, road construction, mine
filling etc. Based on recommendations of the study, detailed Road Map for 100%
Ash Utilization in line with MOEF gazette notification shall be prepared.

36
Clean coal technologies

Clean coal technologies offer the potential for significant reduction in the
environmental
emissions when used for power generation. These technologies may be utilized in
new as well as existing plants and are therefore, an effective way of reducing
emissions in the coal fired generating units. Several of these systems are not
only very effective in reducing SOx and NOx emissions but, because of their higher
efficiencies they also emit lower amount of CO2 per unit of power produced.
CCT's can be used to reduce dependence on foreign oil and to make use of a
wide variety of coal available.

Blending of various grades of raw coal along with beneficiation shall ensure
consistancy in quality of coal to the utility boilers. This approach assumes greater
relevance in case of multiple grades of coals available in different parts of the
country and also coals of different qualities being imported by IPPs. Ministry of
Environment and Forests vide their notification dated 30th June 1998 had
stipulated the use of raw or blended or beneficiated coal with an ash content not
more than 34% on an annual average basis w. e. f. 1st June 2001.

CPCB has constituted a Steering Committee consisting representative from some

SEBs, CPCB, Ministry of Coal, Ministry of Power, CEA and World Bank to carry out
cost benefit analysis of using clean coal technologies and assess and prioritize
technically feasible and economically viable measures to improve coal quality.

37
 3.2 Projected Site Map

Source:http://www.energymanagertraining.com/power_plants/img/tpp1.gif

3.3 Factory Layout

1-Main plant
8
2-Water reserver
9
3-cooling Towers
4 3 4-Oil Reserver
3 5-Coal Storage
3 3
1 6-Road
3
7-Railway Track
11
8-Equipment Godown
9-Switch yard
5 2 2 10-Primary Ash
6 disposal
5
11-Building
7

38
3.4 Process Layout: -
Electricity is generated here in Thermal Power Plants. Thermal energy is derived from
Boilers by burning Coal and the steam produced in Boilers is led to rotate Steam Turbines,
which in turn act as the prime movers of Alternators for generating Electrical Power.
In a Boiler or Steam Generator, water is heated until it turns to Steam at temperature above
350 degree Centigrade, depending on the pressure of the Boiler. Then it is further superheated
to temperature above 500 degree Centigrade. When water is boiled into steam, its volume
increases about 1600 times, producing heat energy – the force used to turn the turbine rotor
that generates electricity.

In all Steam Generating Stations, the water used to create steam must be highly purified. This
is important because the steam is forced against the row of blades that rotate the shaft. The
steam constantly hits these metal parts, so even the tiniest impurities will erode the metal
blades.

The water is softened, filtered and demineralised until it is as pure as distilled water. Each
Generating Station has a chemical Lab. Where water purifying process is regularly monitored.

As the Steam releases heat energy to turn the turbine, its temperature drops. To reuse water
used in Generating Power, the Steam is condensed back into water. To condense the steam, it
is discharged into a vacuum and passed over cooling water in tubes.

39
3.5 Technological Layout:-
Integrated operation of large environmental control facilities
The environmental control facilities at this plant consist of FGD, electric
precipitator, coal handling, ash handling, and waste water treatment systems.
This large application with more than 30,000 data items is monitored and
controlled by Plant’s CENTUM CS integrated control system. With a remote I/O
architecture that minimizes cabling, highly reliable dual-redundant optical fiber
cables, and communication links with plant auxiliary sub-systems, the CENTUM
system achieves highly-reliable, single-architecture monitoring of all facilities.

Mouse operation and large displays

For safety and efficiency, plant operators can perform input with a mouse and
monitor operations on two 100-inch displays. Plant has optimized the operation
of these large displays through the development of individual screens, frames,
and alarm functions. For example, in an emergency, a guidance message pops
up on a screen and easy-to-understand video/audio prompts enable operators to
quickly verify associated systems and instruments. This customized operator
interface helps to ensure that the plant operates smoothly and safely.
Calculation system for environmental management system
For the effective management of the FGD and waste water treatment facilities,
a calculation system was embedded in the CENTUM control system. The system
also includes an operation management function that reduces operating costs
and extends equipment life, a forecast calculation function, and a reporting
function. This supports highly-reliable and efficient management of the
environmental control facilities.

40
lidyalife.blogspot.com/2009/04/distributed-co...
3.6. Communication Layout:-
 Broad band connectivity:-24*7 broad band connection is
available in administrative building.

 Telephone services:- B-phone connection from Bharat Sanchar

limited(BSNL).

 Walkie-talkie:-This connection available for Ground floor staff and

security.

The entire communication setup will be outsourced from BSNL for

maintenance and servicing which will cost around Rs 10
lakh/annum.

3.7 Transport layout:-

 Transportation network: Easy and enough access to transportation network

is required in both power plant construction and operation periods. Railway
connection is there upto coal storage and one way Road is there all over the
plant.

41
  Distance from harbor: Usually, a power plant needed large volumes of coal.
Some time coal are imported from China. Distance between plant and harbor
is very little(5 kms)

To setup entire Transportation network the project cost will be 10 crore

rupees.

3.8 Organizational Layout:-

42
 Chapter – 4
Environmental
Analysis

4.ENVIRONMENT IMPACT ASSESSMENT STUDY

In order to identify the environmental impacts due to the construction and

operation of the project and its associated facilities, and draw a suitable
environmental management plan to mitigate adverse impacts, if any, an
Environmental Impact Assessment (EIA) study has been undertaken. The
study covers the disciplines of Land Use, Demography & Socio-economics,
Soils, Water Quality, Meteorology, Air Quality, Terrestrial Ecology, Aquatic
Ecology and Noise. The study covers the baseline data generation, predictions
and evaluation of impact on various environmental components and
formulation of Environmental Monitoring Plan and Disaster Management Plan.
The baseline environmental scenario has been established through primary
data generated in the study area and secondary data available at
site/published in literature.

4.1.1 BASELINE ENVIRONMENTAL SCENARIO

The proposed unit 500 MW Captive Power Plant is situated at Neulapoi village
in Dhenkanal district of Orissa. The graphical coordinates of the plant site are
20°447N and 85°4023E. The site already has proper road linkage for
transport of materials and equipments. The plant will be located about 12 km
43
from NH-42 connecting the Cuttack-Sambalpur road. Joranda town and
Dhenkanal are at distances of 11 kms. and 12 kms. respectively from the site.
Nearest railway station is Joranda on Talcher-Cuttack section of SE railway.
The nearest port is Paradeep (220 km). The nearest airport is Bhubaneswar
Airport, which is about 57 km away from the project site. The Brahmani River
flows from west to north
east direction w.r.t. the proposed site.

4.1.2 LAND USE

The land use pattern of the study area has been established based on Census
Data of 2001 and interpretation of Satellite Imageries. The analysis of satellite
data indicates that the area is predominantly occupied by agricultural land
(39.75%). The forest comprise of about 6.15% of the land area while
culturable waste covers about 2.96% of the land area. 9.36% of the land is
not available for cultivation.
Remaining land is occupied by rivers, water bodies, hills, valleys etc. and not
included in the village directory of Census Data. Analysis of the Satellite
Imagery indicates that 30.52% of the study area is agricultural land while
16.46% of the area is covered under settlements. Forests, plantations and
scrubs cover 14.33% of the study area and river and water bodies cover
3.55% of the study area.

4.1.3 GEOLOGY & SOIL

The study area forms a part of North-East upland of Orissa, which is rolling
and multiplying the ground slopes from a height of 776 ft. to a height of 460
ft. The thick blanket of alluvial soil all over the district has been made
somewhat sticky by the yellow earth developing in the undulating topography
of the district. The physico-chemical characteristics and nutrient levels in soil
were measured at three locations in the study area during the study period.
Soil in the study area was sandy loam with pH ranging between 7.5-7.7. Bulk
density was found in the range of (1.44-1.63) gm/cm3. Nitrogen was found to
be in the range of (9.7-11.2) mg/100
gm. Organic matter varied between (0.65-0.82)%.
4.1.4 AIR QUALITY

To establish the background data on air quality, ambient air quality

monitoring was conducted at 10 (ten) appropriate locations within the study
area at a frequency of twice a week during, adopting a continuous 24-hour
schedule during the study period (December’08– February’09). The overall
mean of 24-hourly average values of SPM, RPM, SO2 and NOx in the area
(mean of all the 10 locations) were 157.6, 55.2, 6.4 and 23.4 μg/m3
respectively. The values of all the pollutants at the respective locations were
below the permissible limits as stipulated in the National Ambient Air Quality
standards, applicable for industrial areas.

4.1.5 METEOROLOGY

The climate of the area is tropical humid and generally variable, characterised
by four distinct seasons namely summer (March to May), monsoon (June to
September), post-monsoon (October to November) and winter (December to
February). May is the hottest and January is the coldest month. An on-site
meteorological observatory was set up near the project site, which was
operated continuously for three months’ period (1st December 2008 - 28th

44
February 2009). The parameters monitored on a daily/hourly basis at this
observatory included
temperature, relative humidity, atmospheric pressure, wind speed and wind
direction. During the said monitoring period, the monthly mean wind speed
measured on-site varied between 3.6 Km/hr and 4.02 Km/hr. The overall
mean wind speed during the period was 3.84 km/hr. The most predominant
wind direction was ‘W’.

4.1.6 WATER QUALITY

The main surface water body in the study area is Bramhani River. The
Bramhani River flows from west to north east direction w.r.t. the project site.
The water quality of Bramhani River was assessed near the proposed raw
water intake point. Besides, the water quality of three (3) ponds in the study
area were identified for the assessment of surface water quality. Ground
water quality was monitored at four (4) locations during the study period
(December 2008 to February 2009) and were analysed for relevant
physical and chemical parameters including heavy metals and toxic
constituents. Water of Bramhani River was in a pretty healthy and clean state
at the monitored section. The ground water in the study area is free of any
kind of pollution and has been found to be generally fit for human
consumption.

4.1.7 NOISE

It is observed from the ambient noise monitoring carried out at 10 locations

around the project site that the day and night time noise levels beyond the
plant boundary, in general, satisfied the acceptable quality. For Industrial
type, the day time equivalent noise level varied between (71.5-72.8) dB (A),
while at night time, it ranged between (57.6-64.2) dB (A). For commercial
type, the day time equivalent noise level was ranged between (56.8-62.5) dB
(A), while at night time, it ranged between (42.1-44.5) dB (A). For Residential
type, the day time equivalent noise level varied between (52.4-59.7) dB (A)
while at night time, it ranged between (40.1-43.4) dB (A). For Silence zone,
the day time equivalent noise level varied between (57.4-59.7) dB (A) while at
night time, it ranged between (40.8-47.1) dB (A).

4.1.8 ECOLOGY

The area under study is characterized by normal tropical dry deciduous

plantation. Topographically, the area is surrounded by two hills, namely
Rupabalia Mountain range & Kapilash Hills. Due to presence of hills, there is
no such dense vegetation, but presence of some barren lands is observed.
Most of the plantations are natural.

4.1.9 DEMOGRAPHY AND SOCIO-ECONOMICS

The proposed project will be located in Dhenkanal district of Orissa. 71

villages in Dhenkanal district fall under the area of 10 km radius around the
proposed project. Total population of the study area is 64,463 (as per 2001
Census).
The sex ratio is about 931 females per 1000 males. The literacy rate was 61.2
% of the total population in 2001. The male literacy rate was 69.7% (of total
male population), whereas corresponding figures for the female literacy rate
45
was 52.2% (of total female population) in 2001. Out of the total population
(i.e. 416601) in the study area, 77% constitute main workers.

4.2. ANTICIPATED ENVIRONMENTAL IMPACTS & MITIGATION

MEASURES

4.2.1 LAND USE

The proposed thermal power plant (500 MW) shall be installed in around 443
hectares of land at Neulapoi village in Dhenkanal district of Orissa. The land is
fully vacant land, free from habitation. The construction activities attract a
sizeable population and influx of population is likely to be associated with
construction of temporary hutment for construction work force. However, this
will be only a temporary change and shall be restricted to construction period.
As
soon as the construction phase is over, the land use pattern modified to meet
the requirement of construction phase shall be reversed. In view of the above,
no change in land use pattern is envisaged due to construction and operation
of the project

4.2.2 AIR QUALITY

The predictions for air quality during operation phase were carried out for
increase in ground level concentration (GLC) of suspended particulate matter
(SPM), sulphur dioxide (SO2) and oxides of Nitrogen (NOx) using “Industrial
Source Complex Model” developed by the US Environmental protection
Agency (USEPA) and meteorological data recorded at site. The maximum
predicted incremental GLCs for SO2, NOx & SPM are 36.69, 17.94 and 1.19
μg/m3 respectively and these were observed in the ‘East’ direction at distance
of 2 km.

4.2.3 WATER QUALITY

While developing the water system for the project, utmost care has been
taken to maximize the recycle/ reuse of effluents and minimize effluent
quantity. As there will be no discharge of any effluent outside the plant
boundary, there will be no impact on the surface water quality of the area.

4.2.4 NOISE

The operation of the proposed TPP is expected to generate relatively high and
continuous noise levels especially near Compressor House of TPP. However,
all the machineries will be within the permissible noise limit as per
Environment Protection Act. Operational activities are not expected to cause
any undue
disturbances to the people living in the proximate areas outside the plant
boundary. Impacts of noise on workers could be minimized through the
adoption of adequate protective measures in the form of (a) use of personal
protective equipment (ear plugs, ear muffs etc.), (b) education and public
awareness, and (c) exposure control through the rotation of work
assignments in the intense noise areas.
46
4.2.5 ECOLOGY

The surrounding area of the proposed TPP has some vegetation in the form of
village orchards, roadside trees and agriculture. If the gaseous emission is
controlled properly, there will not be significant impact. There will be
sufficient plantation of trees at the plant site. All these measures, if
implemented properly will ensure insignificant impact on the local vegetation
from the proposed project and may improve the vegetation scenario of the
area. The runoff from construction area may lead to a short-term increase in
suspended solids and decrease in dissolved oxygen near the discharge point
in receiving water body. This may lead to a temporary decrease in the
photosynthetic activity of phyto-planktons, rise in
anaerobic conditions and food chain modification. However, for major part of
the year during construction phase, no detectable impact is expected
because water quality will not change significantly.

4.2.6 DEMOGRAPHY & SOCIO ECONOMICS

As the area is close to Dhenkanal Town, the skilled people from the town will
be available to work here. So, there will be no major change of local
occupational scenario, though the establishment of the proposed project will
increase the direct and indirect jobs and other economic opportunities. There
will be some development of secondary service market, which will be
beneficial to the local economy.

4.3.1 GREEN BELT DEVELOPMENT PLAN

Out of the total plant area of 443 acres, 148 acres shall be covered under
green belt, which constitutes around 33% of the total project area.

4.3.2 ASH UTILIZATION & ASH DISPOSAL

At this thermal power plant, various avenues for utilization of ash in

application areas shall be explored. With all possible efforts it is expected that
fly ash generated at the thermal power stations shall be utilized in the areas
of cement, road construction, mine filling etc. Based on recommendations of
the study, detailed Road Map for 100% Ash Utilization in line with MOEF
gazette notification shall be prepared.

4.3.3 ENVIRONMENTAL MONITORING PROGRAMME

An environmental monitoring programme has been developed for the

proposed TPP with the objective of assessing the changes in environmental
conditions, if any, during operation of the project; monitoring the effective

47
implementation of mitigatory measures envisaged and warning of any
significant deterioration in
environmental quality so that additional mitigatory measures may be planned
in advance.

4.3.4 DISASTER MANAGEMENT PLAN

The EIA Report includes a Disaster Management Plan covering elements of

emergency planning like organization, communication, coordination,
procedure, accident reporting, safety review checklist, on-site emergency
plan and off-site emergency plan. During the commissioning of the project, a
detailed Disaster Management Plan (DMP) shall be prepared and
implemented at site, specifying
responsibilities at various levels to be discharged in case of an emergency.

4.3.5 ENVIRONMENTAL MANAGEMENT PLAN

An Environment Management Plan for construction and operation phases of

the project has been prepared. For environmental management of proposed
TPP, an Environmental Management Group shall be created at site, which
shall act as coordinator for environmental matters.

48
 Chapter – 5
Social Cost Benefit Analysis

5.1.1 Social cost benefit analysis

Introduction:
The main reason for doing social cost benefits analysis in projects is to subject a
project to a consistent set of general objective and national policy. The choice of
reviewing different project not only in term of the profitability but also it must
be view in the contest of national impact and this total impact has to be
evaluated in terms of consistent and appropriate set of objectives.

SCBA method followed in this project:

Setting up a Thermal Power Project, the IDBI method has been used to analyze
the Social cost & the benefit of this project.
49
About the method: The develop financial institutions of India, probably most of
them own by the central of state govt evaluate all their projects mainly in terms
of how much social benefit can happen through their projects. In this project the
method followed by the IDBI to analyze the SCB will be used to find out the
SCB of this project.

The social cost benefit analysis carried out by IDBI is based on three
concepts:

i. Economic rate of return.

ii. Effective rate of protection.

iii. Domestic resource cost.

5.1.2Capital Expenditure
Estimates of project
Particulars Amount in(Cr.)
Land 110
Building 181
Plant and machinery 121
( imported)
Plant and machinery 501
(indigenous)
Transportation cost 21
Technical know-how fess 41
Pre-operative expenses 14.60

5.1.3 BY IDBI Approach

Social Conversion Factor (SCF) or Proportions of Three

Components, Tradable (T), labor (L) and Residual (R)

Item SCF or Proportions

Land SCF=1/1.5
Building and construction Proportion: T=0.5, L=0.25,
R=0.25
Indigenous equipment SCF=0.7
Transportation Proportion: T=0.65, L=0.25,
50
 R=0.1
Engineering and know-how SCF=1.5
fees
Preoperative expenses SCF= 1
Labor SCF=1
Salaries SCF=0.5
Repairs and maintenance SCF=1/1.5
Water, fuel etc Proportion: T=0.5, L=0.25,
R=0.25
Electricity Proportion: T=0.71, L=0.13,
R= 0.16
Domestic stores SCF=0.8
Other overheads SCF=1/1.5

5.1.4Calculation of Social cost of initial outlay for 1 year.

Item Financi Basis of Tradeabl T L R

al cost conversi e value
on ab initio
Land 110 SCF=1/1 73.33 - - -
.5
Building 181 T=0.5 - 36.2 18.1 18.
L= 0.25 1
R=0.25
Plant & 121 CIF 121 - - -
Machinery(import Value
ed)
Plant & 500 CIF 500 - - -
Machinery(indigen value
ous)
Transportation 21 T=0.65 - 13.6 5.25 2.1
cost L=0.25 5
R=0.1
Technical know- 41 SCF=1.5 61.5 - - -
how
Preoperative 14.6 SCF=1 14.6 - - -
expenses
Working capital 70.53 CIF 70.53 - - -
requirement value
Total 1059.1 840.96 49.8 23.3 20.
3 5 5 2

5.1.5 Calculation of social value

51
Particulars Rs (crore)
Tradable value ab Initio 840.96
Social cost of tradable 33.23
component
Social cost of labor component 11.68
Social cost of residual 10.1
component
895.97

5.1.6 Projected annual Profitability statement

Amount (cr)
Income
Net sales 405

Expenditure
Raw material (indigenous) 92.66
Labor 1.75
Salaries 3.75
Repairs & maintenance 0.55
Fuel 0.23
Depreciation 249.62
Other overheads 0.55
Taxable Profit -152.78

5.1.7 Calculation of Social value

52
Item Financi Basis of Tradeable T L R
al cost conversi value ab
on initio
Raw 92.66 SCF= 74.13 - - -
material 0.8
(indigenou
s)
Labor 1.75 SCF=0.5 0.88 - - -
Salaries 3.75 SCF= 3.00 - - -
0.8
Repairs & 0.55 SCF=1/1 0.37 - - -
maintenan .5
ce
Fuel 0.23 T=0.5 - 0.12 0.06 0.06
L=0.25
R=0.25
Depreciati 249.62 - - - - -
on
Other 0.55 SCF=1/1 0.37 - - -
overheads .5
Total 78.75 0.12 0.06 0.06
5.1.8 Calculation of Social value

Particulars Rs (crore)
Tradable value ab Initio 78.75
Social cost of tradable 0.08
component
Social cost of labor component 0.03
Social cost of residual 0.03
component
78.89

CIF value of output=2750000000*1.47= Rs 404cr

Social Net Benefit per annum= Rs (404-78.89) = Rs 325.11 cr

53
 Chapter-6
STRUCTURING OF
THE PROJECT

54
6.1 Project Structuring
Today projects need to be better planned, more transparently presented, and then
to be monitored and reported on according to key performance indicators.
Likewise, the demands for speed and higher returns from a project are
constantly growing, and so only the best-integrated, business driven structures
are able to achieve the desired project outcomes.

So the project structuring can be define as a multifunctional exercise that selects

the best implementation strategy, sets the scope according to a defined basis,
selects the best contracting strategy, and then plans and schedules all business
and project aspects from mobilization through to ramp-up.

Project Structuring also includes:

 organizational Structure

 Capital Structure

 Ownership

 Board

 Contractual

 Corporate Participants

 Common Facility

 Customize Facility

And besides this hierarchical structure of the organization, there are different
works allotted to specialized officers. These works include

 Business strategy
 Business development
 Technology
 Research
 Finance
 Operations
 Compliance

55
  Human resources

Each of the above department is headed by a chief officer and has various
managers to perform specialized functions.

6.2 Capital structure

It is the way of financing of organization through the different means of debt,
equity or the combination of both.

This project of shopping mall comprises of 50% debt and 50% equity and hence
D/E ratio is 1 in this case.

Now let us see what is the cost of financing debt and equity and this also called
as cost of capital.

Cost of capital is the opportunity cost for a particular investment. It is the rate
of return that an individual or organization would otherwise expect to receive,
given the same level of risk as the investment that is chosen. Two terms used in
cost of capital are cost of debt and cost of equity. In basic terms, cost of debt is
calculated as the rate of a "risk free" bond with the same term structure as the
investment, added with a default premium. Cost of equity, likewise, can be
counted as a similar rate of return on a risk free investment, with an added
premium for the expected risk.

Cost of debt
The cost of debt is computed by taking the rate on a risk free bond whose
duration matches the term structure of the corporate debt, then adding a default
premium. This default premium will rise as the amount of debt increases (since
the risk rises as the amount of debt rises). Since in most cases debt expense is a
deductible expense, the cost of debt is computed as an after tax cost to make it
comparable with the cost of equity (earnings are after-tax as well).

Cost of equity
Cost of equity = Risk free rate of return + Premium expected for risk

Capital asset pricing model (CAPM)

The capital asset pricing model (CAPM) is used in finance to determine a
theoretically appropriate price of an asset such as a security. The expected return
on equity according to the capital asset pricing model where the market risk is
normally characterized by the β parameter is given by:
56
Where:

Es: The expected return for a security

Rf: The expected risk-free return in that market (government bond yield)

βs: The sensitivity to market risk for the security

RM: The historical return of the stock market/ equity market

(RM-Rf): The risk premium of market assets over risk free assets.

The model states that investors will expect a return that is the risk-free return
plus the security's sensitivity to market risk times the market risk premium. The
risk free rate is taken from the lowest yielding bonds in the particular market,
such as government bonds. The sensitivity to market risk (β) is unique for each
firm and depends on everything from management to its business and capital
structure. This value cannot be known "ex ante" (beforehand), but can be
estimated from ex post (past) returns and past experience with similar firms.

Weighted average cost of capital

The Weighted Average Cost of Capital (WACC) is used in finance to measure a
firm's cost of capital. The total capital for a firm is the value of its equity (for a
firm without outstanding warrants and options, this is the same as the company's
market capitalization) plus the cost of its debt (the cost of debt should be
continually updated as the cost of debt changes as a result of interest rate
changes). Notice that the "equity" in the debt to equity ratio is the market value
of all equity, not the shareholders' equity on the balance sheet. To calculate the
firm’s weighted cost of capital, we must first calculate the costs of the individual
financing sources: Cost of Debt Cost of Preference Capital Cost of Equity
Capital. Calculation of WACC is an iterative procedure which requires
estimation of the fair market value of equity capital.

57
6.3 Calculations
Means of Finance

Particulars Rs.(In Cr) Rs.(In Cr)

Means Of Finance
Equity
Promoters 225
Public 165
Total 390
Debt
Term Loan From Financial
Institutions
IDBI 380
IFCI 275
ICICI 225
Total 880
Term Loan From Bank
SBI 145
Canara Bank 45
Total 190
Total Amount 1460

Given Pre-tax cost of debt

Public Information Derive =15%
Ba using
Be D:E T equation 17 Tax bracket 30%
1:1 debt equity to fund the
Reliance power 1.23 1.8 40% 0.59 project
Tata power 0.93 2.2 35% 0.38 Rf=10%
Ksg power 1.1 1.4 40% 0.60 Rm=18%
Find average 0.52

Now use equation 16, page 238: Be=Ba*((1+

(d/e)*(1-T))

For new project Be 1.26 1.4 2.2 1.152718

The Value of equity beta thus obtained is put in

CAPM

Ke = Rf+β(Rm-Rf) = 0.200601

Derive WACC = 0.0525

58
6.4 Ownership Structuring
To own and operate property, structures (often known today as legal entities)
have been created in many societies throughout history. The concept of
ownership has existed for thousands of years and in all cultures. Over the
millennia, however, and across cultures what is considered eligible to be
property and how that property is regarded culturally is very different.
Ownership is the basis for many other concepts that form the foundations of
ancient and modern societies such as money, trade, debt, bankruptcy, the
criminality of theft and private vs. public property. Ownership is the key
building block in the development of the capitalist socio-economic system.

Legal advantages or restrictions on various types of structured ownership have

existed in many societies past and present. Cooperatives, corporations, trusts,
partnerships, condominium associations are only some of the many varied types
of structured ownership; each type has many subtypes. To govern how assets are
to be used, shared or treated, rules and regulations may be legally imposed or
internally adopted or decreed.

This Thermal power company is a limited company which has its own identity.
The company has its own legal status (like a person). It is separate from its
shareholders (its owners). It is legally formed company, which includes
registering the company name, creating a constitution (rules) for the company
and issuing shares. Company also has a separate Inland Revenue number.

The company is administered by Directors, who are not shareholders in the

company. All Directors are legally bound to act in keeping with the relevant
legislation and the Company’s own constitution.

The company profits are taxed at the flat company tax rate of 30%. The
advantage of setting up a limited company to own my investment property is
that it’s a separate legal entity, so I can separate business and my personal
assets. This helps protect my personal assets if anything goes wrong.

In our company depending on internal rules and regulations, certain classes of

shares have the right to receive increases in financial "dividends" while other
classes do not. After many years the increase over time is substantial if the
business is profitable. Examples of this are common shares and preferred shares
in private or publicly listed share capital corporations.

59
6.5 Board Structuring
In this project board of directors consists of 10 persons i.e. 1 CEO and 9 Senior
Managers and they will be responsible of every decision regarding the
organization. The role of the Board of Directors is to manage the corporation.
This will likely include establishing policies which the organization will follow,
and making major business decisions such as:

Establishing and amending bylaws;

Issuing dividends;

Approving major contracts or mergers;

Making key decisions regarding real estate owned or managed by the

corporation;

Electing or appointing officers.

Contractual Structuring
This portion will include all the business proposals or parts of the business
which I am going to give on contracts or to which I am going to outsource.

It will include housekeeping, Maintenance, Security and logistics

responsibilities.

Corporate participants: - I have taken different place for professional

corporate offices like NTPC, Reliance Power, JSW Power and more like this.

Common Facility:-
There are so many common facilities for the workers and officers are there.
These are :-

• Eco-friendly working environment.

• 24*7 transportation facility.

• Cafeteria
• CCTV (For security)

• Centralized A/c in the Administrative offices.

60
6.6 Regulatory bodies for Electricity in India
Regulatory commissions, Central Electricity Regulatory
Commission (CERC) at the central level, and State electricity
regulatory commissions (SERC) at the state level will monitor
the electricity generation, transmission and distribution in the
country.
The primary function of the CERC will be to regulate the tariff of
electricity generating companies owned or controlled by the
Central Government. The job of setting the tariffs of Central
generating stations, as well as transmission charges for
transmission companies, have so far been discharged by the
Central Government in consultation with the Central Electricity
Authority (CEA).

The commission will regulate inter-State transmission including

tariff of the transmission utilities. Interstate and inter-regional
displacement of power, which is currently being overseen by
the CEA, would be henceforth transferred to the CERC.
Regulation of inter-state sale of power, and advising of the
Central Government in the formulation of tariff policy, are the
other functions of CERC. The CERC is a quasi-judicial body,
where the chairperson has to have been either a judge of the
Supreme Court or the Chief Justice of a High Court. The CERC
would take over functions from the CEA and would be the nodal
authority at the center for matters related to power. CEA on the
other hand would continue its function of approving projects as
well as their capacity, clearing sites for the projects and the fuel

61
to be used for power generation. CEA would also undertake the
operation of forming power plans for the country and providing
technical inputs to the commission.

The main function of the State Electricity Regulatory

Commission will be to determine the tariff for electricity,
wholesale, bulk, grid and retail. The fixation of bulk and retail
tariffs is now being undertaken by the state electricity boards
(SEBs). The SERC will also determine the tariff payable for use
of the transmission facilities and regulate power purchase and
procurement process of the transmission utilities. Other than
these functions, each State Government on its own can assign
other regulatory functions to SERCs.

Till such time that the State Governments transfer the power of
regulating investment in generation, transmission and
distribution to the SERC, it would be mandatory on the part of
the CEA to accord its techno-economic clearance for power
projects.

Once the investment clearance decision is transferred by the

State to the SERC, the SERC would then be entrusted with the
job of issuing TECs for all power projects. Hence, by default, the
SERCs are tariff bodies unless further powers are delegated to
them by the State Governments. Issuance of licenses would
remain in the domain of the State Governments. The SERC
would enter in at a stage when the tariff is required to be
examined.

6.7 Government:
For any company it is important to meet the all the statutory
requirement to conduct their business in any country. Company
will definitely meet the entire obligations provided by the
Government like paying tax, meeting rural obligation, maintain
62
environment friendly atmosphere in the branch offices and
corporate offices.

Chapter – 7
Financial Projection
63
7.1.1 Cost of the Project

Particulars Rs (In lakh)

Land & site development 11185

Building & Civil work 18150

Plant & Machinery 62125

Know How & Engg. Fees 4100

Miscellaneous Assets 7250

Preliminary & Preoperative expenses 1460

Working Capital Margin 3540

Total Project Cost 107810

64
7.1.2 Calculation of Land & Site development:-

Particulars Rs (In
lakh)
Land 11000
Site Development

Leveling the Plot 55

Laying of Factory Road 45
Construction Of Boundary wall
65
Construction of main gate
15
Tube well digging
5

11185

7.1.3 Construction of Building & Civil Works

Particulars Rs (In
65
 lakh)
Construction of main factory 14500
Building administrative office 2000
Construction of Godown 1500
Civil works for utilities 150

18150

7.1.4 Calculation of plant & machinery

Sl. No
Particulars Rs (In
lakh)
A. Boiler furnace and steam drum 8500

B Super heater 9500

7550
C Reheater
8450
D Fuel preparation system
7450
E Air path
9950
F. Miscellaneous
51400
Total ( A+B+C+D+E+F)
8224
Tax & Duties@ 16%
59624

2385

66
 Sales Tax @ 4% 62009
51
Freight, Octroi, Loading & Unloading 65
Erection & Commissioning

Total Cost 62125

7.1.5 Calculation of Technical Know how Fees

Particulars Rs (In
lakh)
1200
Expenses On Foreign Technicians
1350
Know how & Engg. Fees
1550
Royalty & compensation payable

4100

7.1.6 Miscellaneous Fixed Assets

Particulars Rs (In
lakh)
Boiler 50

Piping 25
Laboratory Equipment 2535
Testing Equipment
1545
Furniture & office equipment
1525
Payment for Licenses
15
Water Treatment Equipment
1555

Total Cost 7250

67
7.1.7 Calculation of Preliminary & Preoperative
expenses

Particulars Rs (In
lakh)
Consultancy charges 50

Rent, Rates ,Taxes 125

Promotional Expenses 550

Organizational training Cost 150

Interest during construction 450

Postage, telephone, telegram 15

Printing & Stationary 25

Guarantee Commission 95

1460

7.1.8 Means of finance:-

Particulars Rs.(In Cr) Rs.(In Cr)

Means Of Finance
Equity
Promoters 225
Public 165
Total 390
Debt
Term Loan From Financial
Institutions
IDBI 380
IFCI 275
ICICI 225
Total 880
Term Loan From Bank
SBI 145
Canara Bank 45

68
Total 190
Total Amount 1460

7.1.9 Monthly Salary Estimation

SL.NO Position NO. Salary

1 Chairman 1 25 lakh

2 Vice Chairman 1 15 lakh

3 Company secretary 1 8 lakh

4 Quality manager 2 7 lakh

5 Human Resource Manager 2 6.5 lakh

6 Legal Affairs (Officer) 4 6 lakh

7 CFO 1 15 lakh

8 Finance Manager 3 7 lakh

9 Auditor 2 5 lakh

10 System manager 4 8 lakh

69
 11 Operation manager 4 8 lakh

12 Marketing Manager 4 7.5 lakh

13 Supervisor 2 25 thousand

14 Ground Staff 225 18 thousand

15 Labor 1525 12 thousand
16 Security 16 15 thousand

17 Sweepers 5 10 thousand

7.2.1Technical Man Force:-

1 Production Manager 2 6.5 lakh

2 Civil Engineer 2 5.5 lakh

3 Computer Engineer 4 6.5 lakh

4 Metal Engineer 2 5.5 lakh

5 Electrical Engineer 2 5.5 lakh

6 Mechanical Engineer 2 5.5 lakh

Total salary=549 lakh

Salary are expected to increase by

5% every year.
First year salary=549 lakh
Second year salary=576.5
Third year salary=605.3
Fourth year salary=635.6
Fifth year salary=667.4
Sixth year salary=700.8
Seventh year salary=735.8

70
Eighth year salary=772.6
Ninth year salary=811.2
Tenth year salary=851.8
Eleventh year salary=894.4
Twelfth year salary=939.1
Thirteenth year salary=986.1
Fourteenth year salary=1035.4
Fifteenth year salary=1087.2

Rs. In Crore

71
 Repayment Of Interest Schedule Of Term Loan
Year Opening Amount Closing Interest@1 Total
Balance Repaid Balance 8% Repayment
Year 1 1070 0 1070 192.6 192.6

Year 2 1070 0 1070 192.6 192.6

Year 3 1070 0 1070 192.6 192.6

Year 4 1070 53.5 1016.5 192.6 246.1

Year 5 1016.5 53.5 963 183 236.5
Year 6 963 107 856 173.3 280.3
Year 7 856 107 749 154.1 261.1

Year 8 749 107 642 134.8 241.8

Year 9 642 107 535 115.6 222.6

Year 10 535 107 428 96.3 203.3

Year 11 428 107 321 77 184

Year 12 321 107 214 57.8 164.8

Year 13 214 107 107 38.5 145.5

Year 14 107 53.5 53.5 19.3 72.8

Year 15 53.5 53.5 - 9.6 63.1

References:-

 KPMG, Sep2009, Indian energy outlook 2009[online] Available from

http://www.kpmg.co.il/Events/india/conference/thought
%20leadership/IndiaEnergy_07.pdf

72
  RB, jan2009, Indian energy report 2009[online] Available from
www.reportbuyer.com/energy...energy.../india_energy_report.html
 planningcommission.nic.in/aboutus/committee/.../wg11_hfw2.pdf
 www.teriin.org/opet/reports/tpp.pdf

 en.wikipedia.org/wiki/National_Thermal_Power_Corporation

LITERATURE REFERENCE:

Augustine .A(2007), “Modeling Indian Power Sector”, pp: 173-181.

www.cs.utexas.edu/~achal/IndianPowerSector.pdf

Banerjee. R (2004), “Comparison of options for distributed generation in India”, Journal of

Energy Policy, Elsevier - Article in Press, 6th June, 2004, Vol – 37 (1), pp: 1-11.
http://www.whrc.org/Policy/COP/India/Banerejee_Energy%20Policy%20(in%20press).pdf

Kumar. S, A. Khetan & B. Thapa (2005),“Indian Power Sector – Emerging Challenges to

Growth”. Reprinted from World Power, pp: 1-5.
http://www.icfi.com/Markets/Energy/doc_files/indian-power-sector.pdf

ANNEXURE-1

73
Project Appraisal
DETAILED PROJECT REP

• DESC
Market
• Locat
Interpretation:
Theoutput (Fig.8) showst
Indo
• Th
Input
inpower generationin Ind

SWOT ANAL Y
methodalso showsthesim
generationfor theyear 20
• Increasing Dem
• Outla
• The governmen
800

target •
of Fund
78,557
700

StrengthImportan
74
600
 Raw Ma
• • B
LAND REQUIRE ASE&
MENT
• Fina
FUELREQUIREMENT &
• LAND
• ASHUTILIZATION & AS
• LAND USE
• GE OL
•• Calculation
• of
AIR
Equity
WATER REQUIR EMENTLa
Q
p
Construction
•ayout
L of the METE
•Payproject:of
pack period 5

• Process • WA
LayoutTE
Calculation of p
discounted Pay b
IRR 33.33%
• NOISE
75
ANNEXURE-2
(Risk Analysis)

76
 ANNEXURE-3
(Project Appraisal)

77
ANNEXURE-4
(Financial
Projection)

78