EVEN as vast swathes of the country face moderate to acute power deficit, eastern and western regions have turned power-surplus; however, dismal transmission infrastructure continues to hamper seamless flow of electricity across the country. Transmission constraints in some parts ? including Punjab and most of southern India ? have forced generators to cut output, even as consumers demand power.

Chhattisgarh has an installed capacity of 12,000 MW, against the state?s power demand for 3,000-3,300 MW. However, consumers continue to suffer thanks to the acute shortage of transmission networks.

Other gaps in the national power wheeling network too are choking the flow of electricity from generating stations to load centres. Domestic power exchanges Indian Energy Exchange and Power Exchange of India failed to consummate sales-purchase deals worth R1,350 crore ? amounting to 15% of total traded volume of power in 2012-13 ? due to transmission constraints. During the same period, plants supplying electricity to state electricity boards (SEBs) under long-term power purchase agreements (PPA) lost 1.93 billion units of generation due to transmission capacity bottlenecks.

According to industry experts, investment in transmission capacity addition should be at least as much as 50% of what goes into generation. But in India, this ratio averages at a paltry 30%.

What seems to have caused the mismatch is the fact that the national transmission sector remains a virtual monopoly of state-owned Power Grid Corporation of India (PGCIL) while the share of private sector in generation capacity addition has risen dramatically from 9% in the Tenth Plan to 44% in the 11th Plan. ?Generation has overtaken transmission in terms of investment inflows. That is the reason there are inadequacies in the national transmission capacity,? former power secretary RV Shahi told FE. Ashok Khurana, director general, association of power producers agreed with Shahi’s assessment. ?Corresponding investments have not been made in the transmission segment,? Khurana said.

Faulty planning is also contributing to transmission gaps. For example, banking on power availability from the 1,000 MW Kudankulam nuclear plant which was to be initially commissioned in December, Tamil Nadu government did not move any proposal to the Central Electricity Authority to strengthen its inter-state transmission network. But its plan has since gone haywire as the developer, Nuclear Power Corporation, has deferred commissioning of the project because of local resistance.

Adani Power’s Mundra-Mohindergarh high voltage-direct current (HVDC), an inter-state transmission system (ISTS), is a case in point. Building an ISTS is the responsibility of Power Grid. But since at that time there was no transmission line in place to evacuate power from the plant, the private developer had to build its own line. The confusion arose as the plant was implemented as a Case-I project (where developers first construct power project and then find buyers for electricity by participating in tariff bidding).

Total Case-I generation capacity (operational and under-construction) is estimated at 40,000 MW and the size is growing fast. So, there is likelihood that the mismatch between generation and transmission capacities will only become worse in coming days.

Shortsighted planning and delays in securing statutory approvals like the Right-of-Way (RoW) and forest clearances for transmission projects have further aggravated transmission congestion.

A case in point is the associated transmission system for Tata Power?s Mundra ultra-mega power project in Gujarat. The commission of the transmission project was delayed by some six months due to hurdles relating to forest clearance and the RoW. Consequently, the private developer had to commensurately delay commissioning of the power plant which resulted in generation loss.

In the absence of a national grid, there are serious network capacity constraints in exporting electricity from power-surplus eastern and western region to the electricity-deficient southern region. Because of transmission uncertainty, traders quote a much higher price for electricity supply to the southern region, as compared to the rest of India. Similarly, traders face choked transmission lines in exporting electricity out of Chhattisgarh, a state which has emerged as a power generation hub in recent years due to its rich coal deposits. Traders also face transmission uncertainty while exporting power out of the Eastern region. On the other hand, Punjab faces transmission hurdles in importing electricity during agriculture peak seasons.

Within the southern region, lack of adequate transmission capacities constrains inter-state transfer of electricity. For example, there are network constraints in transferring electricity from power-surplus Karnataka to Andhra Pradesh which is facing huge power shortages as the majority of gas-based plants in the state remain idle due to non-availability of domestic gas. Similarly, transferring electricity from Tamil Nadu to Kerala is often constrained due to lack of adequate transmission capacity.

CDR queue…

Non-bank lender Srei Infrastructure has an exposure of Rs 350 crore to the company. The Umesh Kejriwal-promoted Electrosteel reported a loss of Rs 122 crore for the quarter ended March 31,2013 .The company’s total income rose 39.45% year-on-year to Rs 87.3 crore, but total expenses rose 63% from a year ago to Rs 150.86 crore.

Soma Enterprises and its highway construction arm have sought a recast of Rs 6,000 crore debt. In a consortium of 20 lenders, SBI is the lead bank. Arch Pharmalabs, Tulsi Castings, Pradip Overseas, Southern Biotech are some of the companies that have sought easier terms from the cell in June.

For the CDR cell to approve debt recast, 60% of the lenders by number and 75% by value must approve the package. In FY13, the cell approved 106 loans worth Rs 76,479 crore while in FY12, it okayed 30 cases worth Rs 39,311 crore. Apart from large exposures like Gammon India, worth Rs 13,500 crore, and two units of the Arshiya Group, worth Rs 3,000 crore, the cell has approved at least four more cases in June. Companies like Educomp Solutions, Forever Diamonds, Orchid Chemicals, Corporate Ispat, Shiv-Vani Oil & Gas Exploration, etc. have been referred to the CDR cell in June, bankers said.

Regulatory…

The recent jump in daily volumes in the futures market on exchanges indicates that speculation had indeed increased. Rupee futures are traded on the National Stock Exchange, MCX-SX and the United Stock Exchange.

On NSE’s platform, an average of around 37 lakh contracts were dealt daily, notching up a turnover of Rs 22,000 crore in June compared with around 30 lakh contracts and a turnover of Rs 16,000 crore in May. The MCX-SX currency derivatives platform saw an even larger increase in turnover during the same period.

For 2012-13 ,the combined average daily turnover (ADT) of the currency derivatives on National Stock Exchange (NSE) and MCX-SX, that constitute 97% of exchange traded activity, stood at Rs 35298 crore. In the first three months of FY14, the combined ADT grew by 40% to Rs 48969 crore.

Officials at exchanges said a chunk of this volume is from day traders who take positions in early trade and square off by end of the session. ?The margin increase could impact day traders to some extent but they are not going to reduce their trading,? said an official at one of the exchanges. Market watchdog Sebi on Monday said it would double the initial and extreme loss margins for dollar-rupee future and options contracts.

The regulator also lowered the position limits for non-bank trading members and clients. With effect from July 30 2013, the gross open position of non-bank trading members across all contracts are capped at 15% of the total open interest or $50 million, whichever is lower. At the client level, gross open positions across all contracts are to be applied a ceiling of 6% of the total open interest or $10 million, whichever is lower.

For the ongoing or the near-month derivative series (contracts maturing on 29 July, 2013), those who are above these revised limits are asked not to increase their current open interest.

?The 100% increase in margin requirements may not have a significant impact on trading activity, given that at the most, applicable rates would rise to 6% to 8%. However, the trading member caps are very key because currently many players are seen hitting these limits regularly,? said Sahil Kapoor, AVP-research, Edelweiss Financial Services.