PSM Compilation

POWER STATION MANAGEMENTCompailed by Dr.Rohit Varma Dy.Director,NPTI CAMPS,Faridabad Table of Contents Chapter 1 2 3 4 5 6 7 8 9 10 11 Coal Scenario Gas Trends in India Topics Page No. 3 34 62 80 90 131 145 157 204 215 229 Statutory Requirement of Trained Manpower Contract Labour Act Turbine Efficiency Efficiency of Hydro Power Plant Working Capital and Cost Management Strategy Safety Act Human Resource in Power Sector Boiler Efficiency MIS in Power Sector External Marks: 70 Internal Marks: 30 Time: 3 hrs. POWER STATION MANAGEMENT Paper – PM 2311 Unit I Management of Fuel, Water Resources, Electricity Demand Scenario, vis-a-vis fuel supply, storage and handling of coal/oil/gas, coal/gas linkages, pricing, contracts, inventory control. Unit II Performance Management, Boiler Efficiency, Turbine Efficiency, Cycle Efficiency, Monitoring and control of heat rate, other performance parameters, Efficiency of hydro Plants, Energy conservation & Efficiency measures, Maintenance Planning. Unit III Statutory requirements, trained manpower as per Indian Electricity Rules, Apprising of Act, Factories Act, Contract Labour Act, Environmental regulations etc. Unit IV Working capital Management, Cost Management Strategies, Human Resources Management, Management Information system. Suggested Readings: 1. 2. Power Plant Performance Management, Butter Worth, A.B. Gill – 1984 Modern Power Station Practice, Publisher British Electricity Authority. 3. Power Station Engg. & Economy by – B.G.A. Skrotzki & W.A. Vopat , Tata McGraw Hill. 4. Standard Plant Operators Manual – Third Edition – Stephen Michael Elanka, McGraw Hill Book Company Coal What is Coal? Coal is a combustible, sedimentary, organic rock formed from ancient vegetation, which has been consolidated between other rock strata and transformed by the combined effects of microbial action, pressure and heat over a considerable time period. This process is referred to as 'coalification'. Coal is called a fossil fuel because it was formed from the remains of vegetation that grew as long as 400 million years ago. It is often referred to as "buried sunshine," because the plants which formed coal captured energy from the sun through photosynthesis to create the compounds that make up plant tissues. The most important element in the plant material is carbon, which gives coal most of its energy. It is found in seams/coal beds which vary from a few inches to 100’ more in thickness. On the basis of amount of ground cover or over burden the coal can be mined by the surface method (complete removal of overburden) or deep (underground) method. The Origins of Coal Coal is a readily combustible rock containing more than 50% by a weight of carbonaceous material, formed from compaction and in duration of variously altered plant remains similar to those in peat. Most coal is fossil peat. Coal is composed mainly of carbon (50-98%), hydrogen (3-13%) and oxygen, and smaller amounts of Nitrogen, Sulphur and other elements. It also contains a little water and grains of inorganic matter that remain as a residue known as ash when coal is burnt. Peat is an unconsolidated deposit of plant remains from a water saturated environment such as a bog or mire, structure of vegetal matter can be seen and when dried peat burns freely. Coal is formed by the physical and chemical alteration of peat (coalification) by processes involving bacterial decay, compaction, heat and time. Coal is an agglomeration of many different complex hydrocarbon compounds. Peat deposits contain everything from pristine plant parts (roots, barks, spores etc) to decayed plants, decay products & even to charcoal if the peat caught fire. Peat deposits formed in a waterlogged environment where plant debris is accumulated, peat bogs and peat swamps are examples. For the peat to become coal it must be buried by sediment. Burial causes the compaction of peat and much water is squeezed out during the first stage of burial. Continued burial and addition of heat and time causes the complex hydrocarbon compounds in the deposit to start to breakdown and alter in the varieties of ways. The gaseous alteration products (methane is one) are typically expelled from the deposit and the deposit becomes more and more carbon rich (other elements drop out). The stages of this trend proceed from plant debris, peat, lignite, sub-bituminous coal, bituminous coal, anthracite coal to graphite (a pure carbon mineral). It is estimated that because of squeezing and water loss it took vertical 10 feet of original peat material to produce 1 vertical foot of bituminous coal. Coal Types 1) Anthracite is a type of coal with the highest carbon content, between 86 and 98 percent. Heat value of nearly 15,000 BTUs-per-pound. Most frequently associated with home heating, anthracite is a very small segment of the world coal market. 2) Bituminous coals are dense black solids, frequently containing bands with a brilliant lustre. The carbon content of these coals ranges from 78 to 91 percent and the water content from 1.5 to 7 percent. Bituminous coal has a heat value of 10,500 to 15,500 BTUs-per-pound. 3) Sub-bituminous coals usually appear dull black and waxy. They have carbon content between 71 and 77 percent and a moisture content of up to 10 percent and are used for electricity generation or can be converted to liquid and gaseous fuels. Heat value between 8,300 and 13,000 BTUs-perpound. 4) Brown coals or lignite have a high oxygen content (up to 30 percent), a relatively low carbon content (60-75 percent on a dry basis), and a high moisture content (30-70 percent). Heat value ranging between 4,000 and 8,300 BTUs-per-pound. Peat 5% 5% 92% Lignite 38% 19% 43% Bituminous 65% 32% 3% Anthracite 96% 1% 3% Carbon Volatile Water Proximate analysis of coal Proximate analysis indicates the percentage by weight of fixed carbon of fixed carbon, Volatiles, Ash content and moisture content in coal. The amount of fixed carbon and volatile combustible matter directly contribute to heating value of coal. Fixed carbon acts as main heat generator during burning. High volatile matter content indicates easy ignition of fuel. The ash content is important in the design of furnace grate, combustion volume pollution control equipment and ash handling systems of a furnace A typical proximate analysis of various coal is given below: - Significance of various parameters in proximate analysis a) Fixed carbon Fixed carbon is the solid fuel left in the furnace after volatile matter is distilled off. It consists mostly of carbon but also contains some hydrogen, oxygen, sulphur and nitrogen not driven off with gases. Fixed carbon gives a rough estimate of heating value of coal. b) Volatile matter Volatile matters are the methane, hydrocarbons and carbon monoxide and incombustible gases like carbon dioxide and nitrogen found in coal .Thus the volatile matter is an index of gaseous fuels present. Typical range of volatile matter is 20% to 35%. • Proportionately increases flame length and helps in easier ignition of coal. • Sets minimum limit on the furnace height and volume. • Influences secondary air requirement and distribution aspects. • Influences secondary oil support. c) Ash Content Ash is an impurity that will not burn. Typical range is 5% to 40%. Ash • Reduces handling and burning capacity. • Increases handling costs. • Affects combustion efficiency and boiler efficiency. • Causes clinkering and slagging. d) Moisture content Moisture in coal must be transported handled and stored. Since it replaces combustible matter, it decreases the heat content per kg of coal. Typical range is 0.5% to 10%.Moisture • Increases heat loss, due to evaporation and superheating of vapor. • Helps to limit, in binding fines. • Aids radiation heat transfer. e) Sulphur Content Typical range is 0.5% to 0.8%. • Affects clinkering and slagging tendencies. • Corrodes chimney and other equipment such as air heaters and economizers. • Limits exit flue gas temperature. Ultimate analysis of coal The ultimate analysis splits up fuel into all its component elements, solid or gaseous. This analysis must be carried out in a properly equipped laboratory by skilled chemist. The ultimate analysis indicates the various elemental chemical constituents such as carbon, hydrogen, oxygen, sulphur etc.It is useful in determining the quantity of air required for combustion gases. This information is required for the calculation of flame temperature and the flue ducts design etc. Relation between Proximate and Ultimate Analysis %C =0.97C+0.7(VM+0.1A)-M(0.6-0.01M) %H2 =0.036C+0.086(VM-0.1XA)-0.0035M2 (1-0.02M) %N2 =2.10-0.020VM Where C % of fixed carbon A % of ash VM % of volatile matter M % of moisture COAL RESOURCES OF INDIA As a result of exploration carried out up to the depth of 1200m by the GSI, CMPDI and MECL etc, a cumulative total of 267.21 Billion tonnes of Geological Resources of Coal have so far been estimated in the country as on 1.4.2009. The state-wise distribution of coal resources and its categorisation are as follows: (in Million Tonnes) State Geological Resources of Coal Proved Indicated Inferred Total Andhra Pradesh 9194 6748 2985 18927 Arunachal Pradesh 31 40 19 90 Assam 348 36 3 387 Bihar 0 0 160 160 Chhattisgarh 10910 29192 4381 44483 Jharkhand 39480 30894 6338 76712 Madhya Pradesh 8041 10295 2645 20981 Maharashtra 5255 2907 1992 10154 Meghalaya 89 17 471 577 Nagaland 9 0 13 22 Orissa 19944 31484 13799 65227 Sikkim 0 58 43 101 Uttar Pradesh 866 196 0 1062 West Bengal Total 11653 105820 11603 123470 5071 37920 28327 267210 Categorisation of Resources: The coal resources of India are available in sedimentary rocks of older Gondwana Formations of peninsular India and younger Tertiary formations of north-eastern/ northern hilly region. Based on the results of Regional/ Promotional Exploration, where the boreholes are normally placed 1-2 Km apart, the resources are classified into Indicated or Inferred category. Subsequent Detailed Exploration in selected blocks, where boreholes are less than 400 meters apart, upgrades the resources into more reliable ‘Proved’ category. The Formation-wise and Category-wise coal resources of India as on 1.4.2009 are given below: (in Million Tonnes) Formation Proved Indicated Inferred Total Gondwana Coals 105343 123380 37414 266137 Tertiary Coals 477 90 506* 1073 Total 105820 123470 37920* 267210 * Includes 456 Mt of Inferred resources established through mapping in NE region. The Type and Category-wise coal resources of India as on 1.4.2009 are given in table below: (in Million Tonnes) Type of Coal Proved Indicated Inferred Total (A) Coking :Prime Coking 4614 699 0 5313 Medium Coking 12449 12064 1880 26393 Semi-Coking 482 1003 222 1707 Sub-Total Coking 17545 13766 2102 33413 (B) Non-Coking:87798 109614 35312 232724 (C) Tertiary Coal 477 90 506 1073 Grand Total 105820 123470 37920 267210 Status of Coal Resources in India during Last Five Years: As a result of Regional, Promotional and Detailed Exploration by GSI, CMPDI and SCCL etc, the estimation of coal resources of India has reached to 267.21 Bt. The estimates of coal resources in the country during last 5 years are given below: (in Million Tonnes) As on 1.1.2004 1.1.2005 1.1.2006 1.1.2007 1.4.2007 1.4.2008 1.4.2009 Geological Resources of Coal Proved Indicated 91631 116174 92960 117090 95866 119769 97920 118992 99060 120177 101829 124216 105820 123470 Inferred 37888 37797 37666 38260 38144 38490 37920 Total 245693 247847 253301 255172 257381 264535 267210 Gross Calorific value of Coal The heating value of coal varies from country to country and even from mine to mine in same country. The typical values of GCV of different types of coal are as follows: Grade Useful Heat Value (UHV) (Kcal/Kg) UHV= 8900-138(A+M) A Exceeding 6200 B Exceeding 5600 but exceeding 6200 C Exceeding 4940 but exceeding 5600 D Exceeding 4200 but exceeding 4940 E Exceeding 3360 but exceeding 4200 F Exceeding 2400 but exceeding 3360 G Exceeding 1300 but exceeding 2400 Corresponding Ash% +Gross Calorific Value GCV (Kcal/ Moisture % at (60% RHKg) (at 5% moisture level) & 40O C) Not exceeding 19.5 Exceeding 6454 not19.6 to 23.8 Exceeding 6049 but not exceeding 6454 not23.9 to 28.6 Exceeding 5597 but not exceeding. 6049 not28.7 to 34.0 Exceeding 5089 but not Exceeding 5597 not34.1 to 40.0 Exceeding 4324 but not exceeding 5089 not40.1 to 47.0 Exceeding 3865 but not exceeding. 4324 not47.1 to 55.0 Exceeding 3113 but not exceeding 3865 Coal Companies in India • Coal India Ltd (CIL) and its subsidiaries o Eastern Coal fields Limited o Western Coal fields Limited o Northern Coal Fields Limited o Bharat Coking Coal Limited o South Eastern Coalfields Limited • Neyveli Lignite Corporation (NLC) • Singraeni Colliery Company Limited (SCCL) Dept. Central Electricity Authority. quantum of coal and the made of transportation. Ministry of power and representative of Ministry of Industry. Other members of the SLC (LT). The Committee decides the linkage of coal for source of supply. Minutes of the meetings are drawn and circulated to all concerned for implementation. The committee meets in March. for setting up a Power Plant. The linkages are classified in two types:• Long term linkages • Short term linkages Standing Linkage Committee (Long Term) for Power & Cement Sectors The consumers desiring linkage for supply of coal should apply for linkage to the SLC (long Term). Ltd. generating companies. For thermal power stations. of Industrial Policy & Promotion (as the case may be). Planning Commission. Ministry of Power. . Time to time adjustment/incorporation in the quarterly linkages is done by the Chairman’s (ST). or Central/State with private sector with substantial say in the matter of management of the Joint Venture by the public sector. Ministry of Industrial Policy & Promotion. The SLC (LT) has the Additional Secretary in the Ministry of Coal as the Chairman. For example. are the member of SLC (ST) for power sector. CMPDIL. The consumers should route the application through the concerned Ministry to the Chairman. the application has to be routed through the Central Electricity Authority and Ministry of Power. keeping in view indigenous coal resources as well as the need to supply fuel of appropriate quality to the consumers and at the same time making the most economic use of the available capacity for production and of coal. Railways. SLC (LT). Dept.of Industrial Development are the other members. Ministry of Industry. namely. representatives of SCCL. Railways. Standing Linkage Committee (Short Term) for Power and Cement Sectors The Additional Secretary in the Ministry of Coal. Central Electricity Authority. Railways. Within this group expansion projects will have higher priority in view of their shorter gestation. may be accorded next priority. Govt. As per MoP guidelines coal linkage & coal block allotment to Power Plants is done in following order: (i) Projects proposed to be executed by Central Public Sector Undertakings / organizations and state public sector organizations (namely. In SLC (ST) for cement sector besides Chief of Marketing of CIL. June. representatives of SCCL. it has to be routed through the Ministry of Industry.Coal Linkages The Linkages of coal demand is primarily done with the objective of planning of coal supplies. of India is the Chairman of the Committee. In case of cement unit. (ii) Joint Venture projects. Are representatives of CIL. whether belonging to state or central generating stations coal linkage is given by Coal Ministry’s standing committee on coal linkages. joint venture between Central Sector and State Sector or between the two states. Representatives of Coal India Limited. Electricity Boards etc) may be accorded the first priority. September and December each year to review the coal supplies to Power and Cement Sectors in the quarter and finalise the linkage to consumers in Power and Cement Sectors for the next quarter. and Representatives of Singareni Collieries Co. (iii) IPP projects. (iv) Projects being developed on the basis of competitive bidding for tariff under Section 63 of the Electricity Act. Coal Pricing in India Production costs of coal vary widely between open cast and deep pit mines and between mining areas: Some mines produce coal at a profit and clearly below the price of imported coal – some mines produce at a loss compared to domestic and international prices.Dadri Power Station of NTPC]. (vii) Merchant Power Plants.IX [This shall form SCHEDULE. and (b) Captive coal block allotment for plants in the range of 500 – 1000 MW capacity. wheeling of electricity. (viii) Any other category not covered above. (vi) Other captive power plants. SCHEDULE.000 MW. (a) Linkage to the plant upto a capacity of 1. This would include Ultra Mega Projects and projects being developed on similar lines by the distribution companies/State Electricity Boards or agencies authorized by them to be the Nodal Agency for development of such projects. which have been allowed tariff approval by the appropriate tariff commission under Section 62 of the Electricity Act. I: Total Washed Coal Price comprises of (a) Raw Coal Price Component with statutory charges on Raw Coal (b) Washing Charges Component with Statutory Charges on Washed Coal II: Escalation Formula for – (a) Raw Coal Price Component (b) Washing Charges Component With adjustment in Price due to Revision of Statutory Charges DETAILS: The price of coal delivered consists of following components: 1. 2003. Basic Price of Run Of Mine coal shall be determined as under: • Under Price Notification: Price was notified by Government of India and/or notified by any other body designated by Government of India . many decisions on cost optimization have to be made: Coal transport vs. In the coal value chain from mines mouth to power plant and to the final electricity consumer.IX to CSA ] Breaking down the total washed coal price into its components and development of Price Escalation Formula [ for supply of washed coal from Piparwar Washery of CCL to NCPP. Basic Price 2. coal transportation by ship or by rail. Other Charges 3. Statutory Charges 1. (v) Expansion of existing IPP plants which are already supplying power to the grid as per tariff policy and captive power plants supplying at least 25% of their capacity to the grid. reducing the ash content at the mine mouth or transportation of higher volumes. shall be payable by the purchaser subject to –Provisions of relevant statute and not included in the basic price. If the studies are not completed within six months. The total moisture determination shall be jointly undertaken forthwith as per BIS. shall become effective from the date as Notified by the Government. 3500 or more tonnes per hour. The purchaser shall pay sizing/crushing charges as applicable from time to time. Dhanbad. • Rapid Loading Charges: Where coal is loaded through Rapid Loading System either into Indian Railways system or into Purchaser’s Own MGR.4. Cesses. Purchaser shall pay Rapid Loading charges as applicable from time to time> (Note : Rapid Loading Charges should be paid only if Rapid Loading system (cl1.Coal Price Under De-Control Regime ( With price escalation provision): In the event of decontrol of the price of coal in full or in part.2 of this agreement over the monthly weighted average equilibrated moisture at 40 Oc and 60% RH equilibrated moisture • Pro-rata correction factor equivalent of the percentage by which the total moisture exceeds the equilibrated moisture. 930 per tonne are – Component Symbol Rs/ tonne Rs/ tonne (effective from (effective from 1. Breaking up of total price of washed coal ( P ) into Raw Coal Component (P R ) . the permissible moisture limits provided in this agreement shall be taken as final for adjustments in quantity of coal with retrospective effect.2001) Basic Raw coal Price (BP) 332 431 + Crushing Charges (CR) PR 20 20 . • The agreement provides that. Compensation for Excess Superficial Moisture: • If the monthly weighted average total moisture in coal exceeds the permissible % age level given in clause 10. Washing Charges Component (PW) and Statutory Charges Component on Washing Charges. • Shall be applied to the weights recorded by the weighment system • This aspect should be taken care of for the purpose of billing and payment supplies during that month. without waiting for the norms to be fixed through the • Study to be conducted by CFRI I. if any (Psw) : Corresponding price break up of Rs 715 and Rs. or any exemption duly notified by the Government of India in respect of any mine.25) which automatically loads coal i.4. Duties.The permissible limits are to be reviewed and revised based on study through Joint reference to Central Fuel Research Institute. Statutory Charges Component on Raw Coal (Psr) . 3. Statutory Charges: The Statutory Charges shall comprise of : Royalties. 2. Other Charges: • Transportation Charges: Where coal is transported by the seller beyond the distance of 3 Kms from the pit-head to be delivery /unloading point and the purchaser shall pay transportation charges as applicable time to time • Sizing/Crushing Charges: Where the coal is crushed by mechanical means for limiting the top size to 200mm -250 mm depending on coal agreement. if any. The Basic prices of coal as mentioned earlier shall be subject to escalation in accordance with a Price Escalation formula. Levies etc. 1997) 1.e. Taxes. f. (4) Power and (5) Other stores including spares.78 489. Derivation of price escalation formula for the components of washed coal i./tonne) : . Interest and Pre-tax Return which are based on the variation in Net Block per Tonne of Coal (related to capacity) of the linked / dedicated mine of the Seller.97 659.Statutory Charges on Raw Coal (Ro) =Royalty + (SE)= SED Add: Adjustment due to Yield Factor (Yc) Total Raw Coal Component Price Washing charges = + Wage Revision Adjustment Total Price of Washed Coal PSr Extra  PW (P) 50 3.50 * (F1 – Fo)/10) per tonne PART 3 (dPRW ) : Escalation factor to take care of the revision of salaries and wages for the regular employees of CCL engaged in the linked / dedicated mine catering to supplies of coal to Piparwar Washery: + W4 x By using the following formula tonne (Rs.50 154. II. PART-2: dP2 =Coal price escalation in Rs/tonne on account of Depreciation. = For variation of every Rs 10 in the net block per tonne of coal (related to capacity).04 930. W2 . the impact of price on per tonne of Coal (Rs per tonne) shall be: dP2 = Rs 2.} / 100] – PR0 D0 E0 W1 .48 +2. W5 are respectively the Weights for (1) Salaries & Wages (2) POL (3) Explosives . W4 . W3 .47 268.00 50 3. PR0 = Price of coal on a mutually agreed date to be termed as “Base Date”(from which date price escalation to be calculated for the first time or any subsequent times) PR1 = Escalated price of coal to be calculated annually on the date of revision A-I: Price escalation formula for the RAW COAL components: PR1 = PR0 + dPR1 + dPR2 + dPRW + Escalation on Breaking Charges A1 B1 C1 dPR1 PR0 X [{ 44 + W1 X ------+ W2 x-------+W3 x --------= A0 B0 C0 D1 E1 ------.72 715.+ W5 x ----.e.50 83.28 225.00 The above shall be the base prices for the purpose of escalation w.e. A-I: Raw Coal Component(PR) A-II: Washing Charges Component(PW) In addition: Adjustment for Statutory Charges (PSr and PSw ) and adjustment due to Wage revision Yearly Escalated Price of coal in terms of Rs / Tonne may be determined by the following formula: Let. 1-4-1997 and 1-4-2001 respectively. A . Rate Contract for SMS notified by CIL Ci Tariff Revision notified by SEBs WPI available www. Escalation of Breaking Charges: The escalation of breaking charges shall be based on following formula: E1 Escalated Breaking Charges (CR )= CR x ( 0.nic.) E0 A-II: Price escalation formula for the Washing Charges components: (A) Formula for dPW1 : The agreed formula of price escalation for the washing charges part derived from the Minutes of Meeting dt. W2 W3 W4 W5 4 5 6 32 AICPI for industrial workers available Ai in www.in (published by Govt of India) Actual Diesel price notified by the Bi Govt.PWO + { PSw + (g1 . Indices.eaindustry.25 x -------.03) --+w2x--+w3x -----+w4 x ----+w5 x----a0 b0 c0 d0 e0 f1 +w6 x-------+w7 }/100 .75 + 0. related to linked / dedicated mine supplying coal to Piparwar Washery / 12 . 7-8-1988 is as under: a1 b1 c1 d1 e1 n dPw1 = Pw0 x ( w1 x-----x (1.in (published by Govt of India) Di in Ei ANNEXURE. notification on Diesel Price and CIL rate contract on SMS. Notifications for Price ESCALATION CALCULATIONS are detailed below: Compon ent Salaries & Wages POL Explosiv es Power Other stores Symbo l W1 Weigh ts in % 9 Indices / basis Symbols Part 1: Items of Cost of Sales which is linked to published indices/ SEB tariff notifications / Govt.chd.nic. after such revised amount is officially declared and is actually paid after 1-4-2001 dPRW = -----------------------------------------------------------Total installed capacity of the mine on MT basis.Total additional amount payable per month to the regular employees as additional salaries & wages on account of salary / wage revision for the linked / dedicated mine.g0) } f0 Weights. 500 276.3 ) Tonne Raw Coal Part: Raw Coal Input Costs Basic Price (Bp) Rs Breaking charges (CR) Rs Total Raw Coal Price (PR) Royalty (Ro) Rs Stowing Excise Duty(SE) Rs Total Statutory Charges (Psr) Rs Total PR+Psr Yield adjustment Factor (Yc) Yield adjustment Amount Raw Coal Component Price Rs Washing Charges Variable Costs : Wages Cost(W1) – AICPI Rs Stores . Proposed price escalation formula: .66 247.50 504.250 19.500 5.300 110.39 57.39 14.89 858.81 14.306 53.Calculation of Price break-up for of WASHED COAL supplies to DADRI from Piparwar as on 1-4-1997 and 1-4-2001 Unit of Measurement As of 1.(W6) Rs TOTAL Variable --> Fixed Costs: Int on Working Capital (Fixed) Rs Depreciation (Fixed) Rs Int on Loan Capital ( Fixed) Rs Return on Equity ( Fixed ) Rs Total Washing Charges (excl Wage Revision)--> PW Wage Revision (as per CCL)-PWW Price of Washed Coal (P) Transportation Cost TOTAL Price incl Surface Transportation 0 431 20 451 50 3.525 4.56 (say 909) V VI VII Rs Rs Rs Calculation of increase in coal price during the period Jan 2000 to Dec 2004 as per escalation formula submitted to XXXX.83 1.Others (w3) -WPI Power (W4) .070 74.766 264.338 Amount per Tonne Escalated as on 1-4-2001 1 2 3 4 I a b c e II III a b c d e f g h IV Rated Capacity Raw Coal input ( 85% of 1) here the capacity of the mine is considered at 85%.SEB Tariff Rs Misc Expenses (w5) .585 940 Amount (in 000) 1.652 51.Diesel) Rs Stores .205 104.10 908.130 262.47 57.PoL (w2) .WBI Rs Admn Charges .10 19.46 2.58 12.24 608.047 0.74 23.834.4.97 Tonne 6.50 1.33 13.889 231.568 38. Tonne Beneficiated Coal ( 83% of 2 ) here taken as the agreed yield for beneficiated coal Tonne Rejects & Slurry ( 2 .46 50.5 53.63 50.429 31.690 7. 1 143.x w6 x -----) A0 B1 C0 D0 E0 F0 X Y AO A1 BO B1 CO CI DO D1 EO E1 FO F1 W1 W2 W3 W4 W5 W6 = = = = = = = = = = = = = = = = = = = = % of total sale price considered as fixed = 10% Annualized increase in wages due to pay revision = 3.54% Annualized increase = 6.0335) + 0.) 2125 172.03 -------.2 189. B & C.09 x ----. F & G till Jan'2000 once in every six months by updating cost indices as per . Subsequently.+ w5 x ---.x (1 + y) + w2 x ---.21 x -------x 0.04 RBI index of mineral oil as on Dec 2004 = 330.09 x ------.9 P1 = 100 ( 0.+ w3 ---. Government of India deregulated the prices of non-coking coal of grade D.06 x -------.03.03.+ 0.1 WPI for all commodities as per RBI Index as on Dec 2004 = 188.42 x ------.3 166.A1 B1 C1 D1 E1 F1 P1 = PO ( X + w1 x ---.+ 0.9 Weightage for salary & wages = 42 % Weightage for POL = 6% Weightage for explosive = 3% Weightage for Power = 9% Weightage for other expenditure including other stores & spares = 21% Weightage for Heavy Machinery = 9% 2588 330.3 146.04 124.58 Note: The weightage have been arrived at on the basis of cost sheet of CIL (OCP & UG) for the year 03-04 Government of India deregulated the prices of Non-Coking Coal of grades A.3 RBI index of power as on Dec 2004 = 252.+ w4 x ---.1997.2 RBI index for “Heavy Machinery” as on Jan 2000 = 143.03 RBI index of explosives as on Dec 2004 = 127.1996.8 RBI index of explosives as on Jan 2000 = 124. Hard Coke and Soft Coke and also allowed Coal India Ltd.4 Increase in 5 years = 37.00 RBI index of power as on Jan 2000 = 166.10 + 0.8 127.+ 0.2 188. to fix coal prices for grades E.4 RBI index “Heavy Machinery” as on Dec 2004 = 189.2 WPI for all commodities as per RBI Index as on Jan 2000 = 146.x (1 + 0.0 252. on 12.35% AICPI as on Jan 2000 = 2125 AICPI as on Dec 2004 = 2588 RBI index of mineral oil as on Jan 2000 = 172. Coking coal and Semi/Weakly coking coal on 22. 01.direct feed Coal. CIL fixed the prices of deregulated coal from time to time and last such revision has been made on 15-10-09.f 00 hrs of 16-10-09.escalation formula contained in the 1987 report of the Bureau of Industrial Cost & Prices. With effect from 01. to be effective w. Assam Coal for various subsidiaries of CIL are tabled below : Table: IA Table: IB Table: IC . Semi Coking Coal& Weakly Coking Coal .Long flame Coal.e. CIL was free to fix the prices of all grades of coal in relation to the market prices. Grade wise Basic Price of coal at the Pit-head excluding statutory levies for Run-of-mine (ROM) Non-LongFlame Coal . Coking Coal. Pursuant of the above.2000. . 13. in addition to the price applicable for Run of Mine coal.3680 per tonne for ROM Coal and the price difference among the steam . either into Indian Railways system or into the purchasers’ own system of transport. The prices do not apply to coal sold for export. 4. Taxes and Levies. Where the top size is being limited to 50 mm through manual facilities or mechanical means. a charge at the rate of Rs. For undertaking special sizing or beneficiation of coal. For a distance of more than 3 kms but not more than 10 kms Rs. 6. The prices given in this notification are either FOR or FOB. additional charge of Rs.44.61.77. in addition to the price applicable for Run of Mine coal. would be levied extra. 8. 5. Additional Rs. a charge at the rate of Rs. levied by the Govt. In Grade "A" for every additional UHV of 100K Cal /Kg. transport charges will be payable on actual basis. 2. Additional Rs..NOTE: 1. Surface transportation charges. For UHV exceeding 7099 k.the price of coal shall be Rs. The revised pithead prices of all varieties of Run of Mine Coals have been given in tables I to V. 11. . 2. Cal.00 per tonne. where coal is transported for more than 20 kms to the loading points. a charge at the rate of Rs.20. 12. Notes: 1.00 per tonne will be levied. Where coal is loaded. For a distance of more than 10 kms but not more than 20 kms Rs. 10. 7. 9.90 /M Te. 3.77. The pit head prices fixed are exclusive of Royalty. Where coal is transported beyond a distance of 3 kms to the loading point. Where the top size is being limited to 100 mm through manual facilities or mechanical means. exceeding 6299 K Cal /Kg.180 per tonne shall be charged on pithead price of Run of Mine Coal for the supply of Steam Coal./ kg. Cess. Grading/ classification of coal and the definitions relating to the same have been given in Annexure –X. Additional Rs. as the case may be. A rebate of 5% for supply of wahsery grade coking coal will be given to power houses other than captive ones. where applicable. .slack and run of mine coal shall remain same.00 per tonne. additional charges as may be negotiated between the purchaser and the producer may be realized over and above the pithead prices .00 per tonne will be levied.20 per tonne shall be charged on pithead price of Run of Mine coal for the supply of Slack Coal.00 per tonne will be levied. 2. to be borne by the purchaser. shall be added to the price of " A "Grade. if any. through high capacity loading system with a nominal capacity of 3500 tonnes per hour or more. In cases. the coal companies shall be entitled to charge additional transport costs from the purchasers at the following rates 1. Local Authorities or any other bodies of Excise and Sales Tax from time to time. Where the top size is being limited to any maximum limit within the range of 200 mm – 250 mm through manual facilities or mechanical means.00 per tonne shall be levied for such loading. in addition to the price applicable for Run of Mine coal.39. The prices are determined on the basis of cost incurred in Coal Production from different mines. Regulate trading margins. Latest in Coal Pricing Coal Pricing. Ensure that price discovery through e-auctions is free of distortions. at present.700 a tonne.g. • The expert committee on Integrated Energy Policy headed by Kirit Parikh. And the value ‘a’ is Fixed Components and ‘b’ is Variable or ad valorem Components. This new system of royalty would jack up coal prices by 10 to 15 % taking up the overall royalty components on coal prices to 15 -20 % level. has recommended setting up of an independent Coal Regulator to replace government committees for determine coal prices for different user industries. Inventory Control of Coal Implication of CERC and CEA CERC (Terms & Conditions of Tariff) Regulations. Present domestic coal prices range between Rs 770 and Rs 1. Suggest measures for Setting Coal prices. levies and other charges. Functions of Regulators:• • • • • Ensure price revisions. ROYALTY ON COAL The rates of royalty. for a 1000 MW plant Coal consumption for 1 day = 10000 ton . 2004 the 2 months coal cost (non peat head) power plant and 1 and half months of coal cost (pit head) has to be taken in the working capital. is fixed by coal ministry in consultation with Coal India Ltd. E. 2009 As per the CERC (terms and conditions of tariff) Regulation. which shall be a combination of specific and ad valorem rates of royalty which shall be as follows: R (Royalty Rs/Tonnes) = a +bP Where ‘P’ (Price) shall be the basic pit head price of ROM (run-of time) coal and lignite excluding taxes. The revised basic price of ROM coal for ECL being notified shall be applicable except for the portion of Raniganj coal of grades A & B from such mines of ECL which are supplied under MOU to specific consumers at special price. (CIL) & Singareni Collieries Company ( SCCL ) . Ensure coal supply to the power sectors under commercially driven Long – term Fuel Supply & Transport Agreements ( FSTAs) New Coal Royalty System in India The present system of royalty charging is likely to change to combined royalty rates ( fixed plus ad valorem ) to balance the aspirations of the coal producing states and apprehensions of the consumers.14. g. two exceptions to the policy were introduced viz. Coal Required to be stored = 10000 x 40 = 400000 tonnnes Volume = 400000 m3 Height of Coal Stack = 10 m Area required for Storage = 400000/10 = 40000 m2 ≈ 10 acres Captive Coal Mining Under the Coal Mines (Nationalisation) Act. E. By an amendment to the Act in 1976. 4.76 to Rs.8000000 Cost of coal for 2 months = Rs. for a 1000 MW plant Coal cost for 40 days = 400000 x Rs. 32 Crore Stacking Area Requirement E. for a 1000 MW plant Coal consumption for 1 day = 10000 tonnnes Density of Coal: 1 m3 = 1 Tonne For 40 Days. The Coal Mines (Nationalisation) Act. The Central Govt.800 X 10000 = Rs. CEA Guidelines As per the CEA guidelines 40 days dead stock of coal has to be kept and 8 – 10 hrs. on this debt around 12% interest rate can be applicable which can be equal to Interest on working capital = Rs. a corporation owned. 1973 was amended in June. 1993 to allow coal mining for captive consumption for generation of power. 5.. ii) Sub lease for coal mining to private parties in isolated small pockets not amenable to economic development and not requiring rail transport. 800 = Rs. managed and controlled by the central govt can do coal mining without the restriction of captive use. Of live stock of coal has to be maintained. 48 Crore Coal cost for 1 and half month = Rs.g. a govt company including state govt company.Cost of coal for 1 day = Rs. 1973. Captive Mining by private companies engaged in production of iron & steel. washing of coal obtained from a mine and other end uses to be notified by Govt from time to time. 36 Crore The 75% of the working capital has to be taken from the short term debts.32 Crore. . coal mining was mostly reserved for the public sector. BCCL and CCL areas of CIL and preparation of data dossier for 1 or 2 most prospective and commercial viable CMM blocks. With each UMPP requiring about 12-14 million tonnes of coal. If we consider the four imported coal based UMPPs then there is need of 16000MW energy generated from imported coal i. CMM related activities are being addressed by Ministry of Coal separately. production has commenced in 25 blocks. it forms a supplementary source of energy. In view of the abundant resource of coal in the country. Ministry of Industry and Commerce. Similarly extraction of Methane from working mines is termed as Coal Mine Methane.The allocation of coal blocks to private parties is done through the mechanism of an inter-ministerial and inter-govt body called the screening committee. out of these there are four numbers of UMPPs are imported coal based. Effect of coal utilisation by the imported coal based UMPP in India on the international prices World steaming coal trade around 550 Mt. Methane associated with virgin coal beds is conventionally termed as Coal Bed Methane. There are 229 coal blocks for allocation to specified end users.e. CMPDI has taken up a CIL R&D project for delineation of prospective CMM blocks in ECL. India would become a major player in the world coal markets in the coming decade. Ministry of Power. Production from these coal blocks for 2009-10 is about 23. Govt of India has so far allocated 26 CBM blocks to various operators for exploration and exploitation of CBM. . CIL.66 million tonnes. CMS is one of the potential greenhouse gases and is in adsorbed state on the coal surface and possess a potential threat from safety angle during mining operation. Presently there are nine numbers of UMPPs proposed in India having capacities of 4000 MW each. CBM is jointly managed by Ministry of Coal and Ministry of Petroleum and Natural Gas. Central Mine Planning & Design Institute Ltd. 10 more blocks to various operators were offered in 4th round of bidding concluded in Oct’09. Till date India has been a small player in the global markets with imports of 17. Ministry of Environment and Forest. Ministry of Railways. The offers received against this bidding are under consideration of the Govt for their allotment for commercial development. So far. CMPDIL and concerned state govts.5 Mt of thermal coal in 2005. Underground Coal Gasification and Coal Liquefaction are under focus and Government is taking all the necessary steps for development of these areas within the existing legal framework.e. 208 coal blocks have been so far been allocated to eligible companies. Consequent to the formulation of CBM Policy in 1977. Coal Bed Methane New area of clean technologies like Coal Bed Methane and Coal Mine Methane. a four fold attainment in coal imports. we need an import of around 48-60 mtpa of coal. If extracted separately. there is a significant scope for commercial development of CBM. up from 15 Mt in 2004 and 10 Mt in 2003. This requirement of coal will come up in between 2010 to 2016 i. It is chaired by the Secretary (Coal) and has representation from Ministry of Steel. and transfer of CBM development technologies that can further the growth of the sector. Investment in coal and gas transportation infrastructure.CIL & ONGC is working on collaborative project on CBM. The clearing house will function as the nodal agency for collection and sharing of information on CMM/CBM related data of the country and help in the commercial development of CMM projects in India by public/private participation. A CMM/CBM clearing house has been established at CMPDI. CBM extraction also potentially offers the opportunity of earning carbon credits under Clean Development Mechanism of Kyoto Protocol. During the year. India is one of the select countries which have undertaken steps through a transparent policy to harness domestic CBM resources. including gas gathering. With growing demand and rising oil and gas prices. with demand for gas rising sharply. CBM Exploration Experience – Reliance (Sohagpur) CBM Discovery – 3. There are other measures like provision of technical training. The plan for 2010– 11 is to monetise the production capability from the present as well as the proposed wells. RIL currently holds a total of 3 CBM blocks. is necessary to fill the gap and move CBM from coal fields to local and more distant end-use markets which include rural and commercial power generation and transportation fuels. Coal bed methane will clearly emerge as the one of the viable and clean routes to India's energy security. transportation and distribution. With this. The development plan for Sohagpur CBM blocks (MP) has been approved by the Government and development activities have been planned to commence in FY 2010-11 by drilling and completion of additional wells. Nevertheless. technological collaboration and bringing financial investment opportunities. Moreover. Australia and China in terms of exploration and productionof coal bed methane. Great Eastern Energy Corporation is the first private sector company to take up coal bed methane exploration in India.65 TCF. however. India has good prospects for commercial production of coal bed methane. CBM is definitely a viable alternative supplementary energy source. Prolonged production testing was undertaken in the wells drilled in Sohagpur CBM blocks with favourable results. two CBM blocks BS-1 and BS-2 were relinquished. In order to fully develop India's CBM potential. Some of the identified CBM blocks are Jharia & Raniganj. CBM will have to compete with imported (liquefied) natural gas. a viable alternative to compressed natural gas (CNG) and its use as automotive fuel will certainly help reducing pollution levels. The Centre has received an overwhelming response from prospective producers with several big players starting operations on exploration and development of CBM in India. It is envisaged that in India operational CBM fields may contribute about 8-10 mmscmd of gas production in the next five years. being an environmentally friendly fuel. Methane is. delineation of prospective CBM blocks is necessary. promotion of research and development. India is set to become the fourth after US. validated by DGH Technology used for drilling – Air Drilling (First ever used in India) Gas Production Potential – 3-5 MMSCMD in a frontier area Water Production Potential – 50000-70000 BPD of good quality water Investment potential – Over 3000 Cr . Ranchi under the aegis of Ministry of Coal and United States Environmental Protection Agencies on 17th Nov’08. As the third largest coal producer in the world. • Hence opening up of the acreages for active exploration by private or joint venture companies. • To bring-in new & state of art technology in exploration & exploitation. • NELP has introduced a level playing field for public as well as private sector players. was considered necessary. • To stimulate & promote interest and activity from a wide range of E & P players. • Opening up of acreages in ultra deep water & frontier areas. it has been felt that the efforts of the upstream National Oil Companies (NOCs) may not be adequate to achieve the set mandate. in addition to the efforts of the NOCs. • Level playing field to all participating companies. however. • The acreages offered by the Government under various exploration rounds earlier met with only partial success. OBJECTIVES OF NELP ROUNDS • Intensive exploration of Indian basins. . begun with the introduction of New Exploration Licensing Policy (NELP) by the Government in 1997. • Under this policy. NOCs are also required to compete with the private and joint venture companies in acquiring exploration acreages in Indian sedimentary basins. The main thrust for acceleration of exploration activities has.OIL NEW EXPLORATION LICENSING POLICY • In view of the inherent risk of hydrocarbon exploration and the huge financial investment associated with such risky exploration ventures. all companies would be required to bid for a committed work programmes to profit petroleum share expected by the contractor at various levels of pre-tax multiple of investments and percentage of annual production sought to be allocated towards cost recovery. 588 NELP IV 21 20 2004 1. 1999 • World class gas discovery by RIL-NIKO in 2002 in KG off shore block • Cairn energy’s discovery in KG deep water block • Gas discovery by RIL in Mahanadi shallow water block NELP II – 2000 • Discoveries were made in Cambay Basin GSPC discovered OIL & NIKO discovered natural gas NELP III – 2001 • GSPC .21. 2005 NELP IV – 2003 • Provision of fast track arbitration . There are certain differences between the earlier rounds of bidding for exploration blocks and NELP. • income tax holiday for seven years from the start of commercial production. Table 9.050 NELP III 23 23 2003 2. cess and PEL fees on behalf of private companies in the earlier rounds. companies are now required to bear royalty.180 NELP VI 52 52 2007 3. discovery or production bonus by the bidder. • Under the policy.14: Progress under new exploration license policy • Parameter NELPI NELP II 23 23 2001 2. NOCs are no longer needed to participate as Government nominees. • While NOCs were to bear royalty. of blocks 25 awarded No. • fiscal stability provision in the contract and • Incentive for deepwater exploration with only half of the royalty payable in the initial seven years from the beginning of commercial production.200 NELP VII 44 41 2008 1.06. The other main features of the terms offered by the Government inter alia include: • no signature. The policy exempts them from payment of customs duty and cess for the blocks offered.jubilant .04.15.92.94. • freedom to the contractor for marketing of oil and gas in the domestic market.735 (sq. • Cess and fees have now been exempted under NELP.000 No. royalty to be payable by the contractor on ad voleram basis.GGR consortium made world class gas discovery in KG ( KG-OSN-2001/3) offshore block in June.810 NELP V 20 20 2005 1. of PSCs 24 signed Signed in 2000 Area awarded 1.63. • biddable cost recovery limit up to 100 per cent. km) Source : Ministry of Petroleum & Natural Gas PSC: Production Sharing Contract NELP I– JANUARY 8.• Transparent Bid Evaluation system . • no customs duty on imports required to be payable for petroleum operations. • Higher weightage for technical and financial viability of deep water block • Surcharge on foreign companies abolished • Bank guarantee to be returned after completion of MWP NELP V – 2005 • Workstations were provided in data centers in London. natural gas. The hydrocarbon sector in India is one of the most crucial industries for determining energy security as nearly 45 per cent of the country’s total energy needs are met by the oil and gas sector.3 Like shortage of oil. agriculture.2009 • 70 new blocks for bids to the Indian and foreign companies for exploration of oil and natural gas • bidding would lead to 42 billion dollars of gas in the next 11 years. Through the New Exploration Licensing Policy. This energy . • Govt. the Government of India is making a concerted effort to expeditiously explore the inadequately explored and unexplored areas of the country’s sedimentary basins. Linkage THE LINKAGE BETWEEN OIL CONSUMPTION AND ECONOMIC GROWTH IN INDIA The relationship between use of energy and economic growth has been a subject of greater inquiry as energy is considered to be one of the important driving forces of economic growth in all economies unable to meet up the world demand for oil. • Co. has so far been successful in accelerating the pace of hydrocarbon exploration in the country. One or the other forms of energy becomes vital to all the sectors of the economy viz. decided to take its profit share of natural gas in cash or kind for a block of 5yrs instead of such option being made every year. there exists shortage of electricity and other forms of energies viz. a vehicle designed by the Government of India. Production of indigenous oil and gas is therefore a major plank of oil security for the nation. industry and services. NELP VIII. NELP IX-2010 • more tax benefits • investment.2 leads to frequent escalation in the world oil prices. NELP VI – 2006 • Check on aggressive/speculative bidding • Uniform seismic coverage of basins • Participation of E&P companies with global experience – Induction of new technology – Global knowledge – Better geological models – Better E&P practices • Better Government take NELP VII • Approximately 50 to 60 blocks have been identified for the offering. Calgary & Dubai to facilitate companies to review and analyze data.4 The shortage can significantly affect the consumption and production in the economy. Houston. The increasing world demand for oil. The supply constraint of energy could be attributed to the frequent geo-political tensions between the nations or natural physical supply constraints in the oil extracting regions 1.based incentives The New Exploration Licensing Policy.’s with net worth US $500million or more not required to give bank guarantee towards MWP commitment as against the threshold limit of US $ 1 billion earlier. The world has probably reached the point at which oil supply has peaked . price would have tracked the world price averaging $28. the oil price will regain the level of $100 a barrel.500 or $2. The recovery in the gold price reflects a number of factors. In India. In the post World War II era U. thereby inhibiting the growth rate. the U.) Until the March 28. The linkage between oil. in terms of the oil supply. and will have to adjust to a higher oil price. Over the same post war period the median for the domestic and the adjusted world price of crude oil was $19. . 2000 adoption of the $22-$28 price band for the OPEC basket of crude. The declining supply of these sources of energy not only raises the input prices5 but also influences the prices of other commodities leading to a rise in overall inflation rate and thereby dampening the aggregate demand and growth rate.S. The Asian economies have accumulated excessive quantities of dollar securities. been living beyond its means. gold prices in recession Underlying the rise in the oil price has been the basic strength of oil as a commodity.60 in 2008 prices. at some point.S.000 an ounce. Oil Pricing Oil Price History and AnalysisIntroduction Crude oil prices behave much as any other commodity with wide price swings in times of shortage or oversupply. India in the past had experienced a huge import bill on account of an increase in the price of crude oils. Everything else depends on that. The world has. oil prices only exceeded $24. (See note in box on right. The inelastic oil demand and rising oil import bill had put pressure on the scarce foreign exchange resources and had also been largely responsible for shortages in energy supply. the transport sector is the principal consumer of petrol and diesel. The gold price has reached $982 an ounce.dependence being common to every sector of the economy justifies the association between energy utilization and the overall economic growth rate in an economy. and the Asian central banks are reluctant to continue accumulating dollars.if not. The U. except on a purely speculative basis. The weakening of the dollar has had a reciprocal effect in the strengthening of the gold price.64 per barrel adjusted for inflation to 2008 dollars. any deficiency in supply of oil. perhaps to $150 or $200 a barrel and $1. The crude oil price cycle may extend over several years responding to changes in demand as well as OPEC and non-OPEC supply. My own expectation is that these figures will be exceeded substantially. followed by big and small industrial units. If the recovery does continue. petroleum industry's price was heavily regulated through production or price controls throughout much of the twentieth century. more than by any other factor. In the absence of price controls.68. With limited spare production capacity.60 per barrel. we are close to that point. lead to a revival of inflation. both have been in a stage of recovery. The growth of the huge economies of China and India is limited by the long term constraints of the oil supply. Oil and gold prices have been linked for most of the period of the recession. Oil prices fell in the recession by about 70 per cent. which was reminiscent of the late 1970s. oil prices at the wellhead averaged $26. close to its peak when it touched $1.000 an ounce. indeed. natural gas and electricity generations can directly constrain the economic activities.000 an ounce. Hence. There is also a fear that the Keynesian policies which have helped to create the appearance of a global recovery will. That means that only fifty percent of the time from 1947 to 2008 have oil prices exceeded $19.00 per barrel in response to war or conflict in the Middle East. and the gold price will rise well above $1. In recent. and have now received about 50 per cent. But that will limit the possible global recovery.S. OPEC abandoned its price band in 2005 and was powerless to stem the surge in oil prices. . the price of crude oil was about $3. By the end of 1974. When viewed in 2008 dollars an entirely different story emerges with crude oil prices fluctuating between $17 and $19 during most of the period.00. 2009 Post World War II Pre Embargo Period Crude Oil prices ranged between $2.00 per barrel. The decline in the price of crude when adjusted for inflation for the international producer suffered the additional effect in 1971 and 1972 of a weaker US dollar. The United States and many countries in the western world showed support for Israel. The Yom Kippur War started with an attack on Israel by Syria and Egypt on October 5. The apparent 20% price increase in nominal prices just kept up with inflation.00 from 1948 through the end of the 1960s.Arab Oil Embargo In 1972.Crude Oil Prices 1947 . the price of oil had quadrupled to over $12.00 per barrel. but in real terms the price of crude oil declined from above $19 to $14 per barrel. 1973. From 1958 to 1970.50 and $3.August.50 in 1948 to about $3.00 in 1957. The price oil rose from $2. World Events and Crude Oil Prices 1947-1973 Middle East Supply Interruptions Yom Kippur War . prices were stable near $3. S. exploration and production would certainly have been significantly greater. Any doubt the ability to control crude oil prices had passed from the United States to OPEC was removed during the Arab Oil Embargo. consumers faced lower prices than the rest of the world. U. consumers of crude oil paid about 50 percent more for imports than domestic production and U. US Oil Price Controls . and World Events and Oil Prices 1973-1981 Crises in Iran and Iraq In 1979 and 1980. At one point production almost halted. The extreme sensitivity of prices to supply shortages became all too apparent when prices increased 400 percent in six short months. The net loss of 4 million barrels per day extended through March of 1974 and represented 7 percent of the free world production. consumer. In the absence of price controls. The obvious result of the price controls was that U. events in Iran and Iraq led to another round of crude oil price increases.S. While these nations curtailed production by 5 million barrels per day other countries were able to increase production by a million barrels. The Iranian revolution resulted in the loss of 2 to 2.S.S producers received less than world market price. several Arab exporting nations and Iran imposed an embargo on the countries supporting Israel. . homes and commercial buildings would have has better insulated and improvements in industrial energy efficiency would have been greater than they were during this period. U. In effect. the United States would have been less dependent on imports in 1979-1980 and the price increase in response to Iranian and Iraqi supply interruptions would have been significantly less. the recession induced by the 1973-1974 crude oil price spike was somewhat less severe because U. The US imposed price controls on domestically produced oil.S. the domestic petroleum industry was subsidizing the U. Did the policy achieve its goal? In the short-term. However. it had other effects as well.S. Consequently.5 million barrels per day of oil production between November 1978 and June 1979.Because of this support.Bad Policy? The rapid increase in crude prices from 1973 to 1981 would have been much less were it not for United States energy policy during the post Embargo period. Higher petroleum prices faced by consumers would have resulted in lower rates of consumption: automobiles would have achieved higher miles per gallon sooner. From 1990 to 1997 world oil consumption increased 6. The price cycle then turned up. From 1982 to 1985. In August of 1985. Declining Russian production contributed to the price recovery. The United States economy was strong and the Asian Pacific region was booming. Between 1990 and 1996 Russian production declined over 5 million barrels per day. Crude oil prices plummeted below $10 per barrel by mid-1986. the Saudis tired of this role.000 barrels per day of that gain and contributed to a price recovery that extended into 1997. These attempts met with repeated failure as various members of OPEC produced beyond their quotas. During most of this period Saudi Arabia acted as the swing producer cutting its production in an attempt to stem the free fall in prices. OPEC does not satisfy the definition. OPEC attempted to set production quotas low enough to stabilize prices. A December 1986 OPEC price accord set to target $18 per barrel bit it was already breaking down by January of 1987and prices remained weak. They linked their oil price to the spot market for crude and by early 1986 increased production from 2 MMBPD to 5 MMBPD. The price of crude oil spiked in 1990 with the lower production and uncertainty associated with the Iraqi invasion of Kuwait and the ensuing Gulf War. Following what became known as the Gulf War to liberate Kuwait crude oil prices entered a period of steady decline until in 1994 inflation adjusted prices attained their lowest level since 1973. Saudi Arabia could enforce discipline by threatening to increase production enough to crash prices. While often referred to as a cartel. Despite the fall in prices Saudi revenue remained about the same with higher volumes compensating for lower prices.US Oil Price Controls 1973-1981 OPEC Fails to Control Crude Oil Prices OPEC has seldom been effective at controlling prices. One of the primary requirements is a mechanism to enforce member quotas. The world and particularly the Middle East had a much harsher view of Saddam Hussein invading Arab Kuwait than they did Persian Iran. . In reality even this was not an OPEC enforcement mechanism unless OPEC's goals coincided with those of Saudi Arabia. The proximity to the world's largest oil producer helped to shape the reaction.2 million barrels per day. With enough spare capacity at times to be able to increase production sufficiently to offset the impact of lower prices on its own revenue. Asian consumption accounted for all but 300. The old joke went something like this. What is the difference between OPEC and the Texas Railroad Commission? OPEC doesn't have any Texas Rangers! The only enforcement mechanism that has ever existed in OPEC was Saudi spare capacity. There were mistakes in timing of quota changes as well as the usual problems in maintaining production discipline among its member countries. Non-OPEC Production & Crude Oil Prices OPEC Production & Crude Oil Prices Current Scenario –International (oil pricing uncertainty)The world’s energy ministers and oil producers are trying to agree on ways to prevent oil price spikes in the immediate future – although at least one economist is predicting “triple-digit” oil later this year.The change in attitude marks a significant shift in political relations between Opec.OPEC continued to have mixed success in controlling prices. .0 mmb/d.” having to balance Opec’s claim of spare oil capacity “exceeding 6 million barrels per day” against the claims of neutral strategic advisors PFC Energy that oil will be “peaking between 2020-2025 around 95. The elite group is today (Wednesday. Opec’s efforts to control the market once made it the enemy of the US and many European nations. other producers and the world’s biggest oil-consuming countries. participants considered “demand and supply uncertainties.” The majority of oil consuming nations are siding with Opec. According to papers published ahead of the event. March 31) concluding their three-day International Energy Forum meeting in Cancun. Mexico. the producers and consumers should work together to avoid a repeat of 2008’s market volatility. Given our increasing dependence on imports. nothing from the meeting has yet indicated how this will be achieved. the private sector companies withdrew from oil marketing.” But how much longer can the world pretend that it won’t soon be facing another energy shock. Daniel Poneman. diesel.e. or at what price Opec should endeavour to maintain oil. "Prices above $85 for a sustained period of time could well be harmful. the US is reportedly pushing for a free-market approach. OMCs had large under-recoveries1. they are generally expected to rise. and partly by upstream public sector companies ONGC and OIL. and by next year oil prices will rise to record highs. domestic prices of petroleum products have to reflect the international prices. It continues: But there was no sign of a clear consensus by OPEC members at what price they would ramp up production if prices broke above the band Saudi Arabian Oil Minister Ali al-Naimi this week called "most appropriate". They reduced the cash surplus of upstream public sector oil companies restricting their ability for exploration of domestic fields and acquisitions overseas. These policies had a number of consequences.5 / barrel in July 2008. our government. As the oil bonds were not issued to OMCs on time. Oil price volatility has also increased. with Reuters citing analysts suggesting “it could push even higher as demand from the United States and other industrialized nations rebounds as their economies recover. Our import dependence has reached 80 per cent and is likely to keep growing. like those that once flowed from places like Prudhoe Bay in Alaska or the North Sea? If so. said: “The goal of the US is a clear and long-standing one and that is to let the laws of supply and demand set prices.But there was at least one important dissenter this week. When the average monthly price of Indian basket of crude oil on the world market increased from US$ 36 / barrel in May 2004 to US$132. they created cash flow problems for OMCs who had to borrow from the market. US deputy energy secretary. the government did not permit Public Sector Oil Marketing Companies (OMCs) to pass the full cost of imports on to domestic onsumers of major oil products. taking out the high-water mark of $147 per barrel set back before the recession began in 2008. At least publicly. We have to be aware that the economic recovery is still fragile. oil prices will be back in triple-digit range. which is aimed at promoting dialog between oil consumers and producers. They put stress on government’s finances. where is that supply of new affordable oil coming from? Surely not from tar sands or from ultra-deep water fields six miles below the ocean’s floor. i. The OMCs also absorbed a part of the under-recoveries themselves. Since only the OMCs were provided financial support." an OPEC delegate told Reuters on the sidelines of the forum. one every bit as challenging as the one it faced two years ago? Does anyone still believe the reassuring forecasts from discredited feel-good organizations like the International Energy Agency about new sources of cheap supply.” maintaining producers’ revenues and consumers’ economies.However. Current Scenario – India India’s imports of oil are increasing. our oil industry and our economists toldus we would never see. The consumers of these products thus received large subsidies. This not only made in fructuous the large investments they had . US crude is currently up to around $82 a barrel. He goes on to predict further price shocks in the immediate future: By the fourth quarter of this year. In the first place. At the same time 2008 saw an unprecedented rise in oil price on the world market. and already we face prices that. petrol. domestic LPG. We’re barely out of the recession.” Meanwhile. just a few years ago. which were financed partly by Government through issuing bonds. delegates are quoted by Reuters agreeing that oil at $70-80 per barrel “was good for both sides. and GAIL through price discounts. which increased interest payments and reduced their surplus. As a consequence. Though future oil prices are difficult to predict.. the US insisted at the discussions that markets needed to be left to determine the oil price. It is equally important to keep domestic private sector firms viable as it is to keep public sector firms viable. use of clean cooking fuels has many social and environmental externalities. There is no clear evidence that in an increasingly open and competitive economy. storage of LPG in large underground caverns facilitates imports by larger ships and reduces unloading time compared to storage in over-ground tanks. all of which have been found to have some deficiency or the other. A viable long-term strategy for pricing major petroleum products is required. These biomass based fuels create indoor air pollution that causes respiratory diseases. Another objective may be to provide merit goods to consumers such as clean cooking fuels like natural gas. A level playing field between public and private sector firms as well as among public sector firms is desirable to promote competition. Over the years. eye infections and result in many premature deaths. all these affect certain sections of the people adversely. Thus. If the cost formula has set item-wise limits on operating . Continuation of the present policies is not viable.made in setting up retail outlets. But. The issue therefore is to assess the costs and incidence of the burden of alternative mechanisms on different groups in the society. keeping domestic oil firms viable and in good financial health and providing an environment in which they can grow are also important policy objectives. This is difficult to do. and as merit goods the government may promote them through subsidies. A viable policy has to be workable over a wide range of international oil prices and has to meet the various objectives of the government. A major objective of policy is to have an efficient and competitive oil economy that promotes efficient use by consumers. the task of gathering these fuels keeps girls away from schools. Intervention through price control necessitates that someone bears the financial costs. This is best ensured by a competitive energy sector. Another frequently reported reason for Government's intervention is to insulate the domestic economy from the volatility of petroleum prices on the world market. price calculations involve rigid specifications of items to be considered and their costs. It should limit the fiscal burden on government and keep the domestic oil industry financially healthy and competitive. particularly of women and children. the demand for petroleum products such as petrol and diesel recorded double digit growth – higher than the GDP growth. it also reduced competition in oil marketing. Subsidizing domestic consumers also did not incentivize them to economize on use of petroleum products. OBJECTIVES OF POLICY AND ISSUES The very first question is: Should the government intervene at all in the market and set prices? The first reason for intervention is to protect poor consumers so that they may afford kerosene for lighting. it may involve increase in operating costs. Also. use of firewood encourages deforestation and dung is better used as a fertilizer. or by increasing fiscal deficit or by cutting other government expenditure. On whom the burden falls depends on the policy and the instruments used. In addition. If it is done on a cost-plus basis. It is feared that complete passthrough of increase in world oil prices may cause inflation which may persist even when oil price comes down. Also. This discourages innovation. and personal incomes rose. appropriate choice of fuels among substitutes and a proper choice of technique. Government has followed a variety of policies for pricing of petroleum products. For example. price movements triggered by changes in the prices of oil products would persist over the medium-run. the impact of international oil prices on domestic economy would be reduced. which is a necessity for those who do not have access to electricity. Rather. Thus. LPG and kerosene to replace use of biomass-based fuels such as firewood and dung. Moreover. it creates incentives for gold plating and creative accounting. attempts to insulate the domestic economy against volatility requires discriminating between a secular price rise due to demand-supply forces and a price rise due to transient causes such as speculation in the world market. If the costs are financed by a general increase in taxes. particularly once oil prices rise again. Price control means setting prices. To the extent the level of self-sufficiency in domestic oil production increases. as prices remained low. that has to be based on some principle.costs. In an industry. since then. For instance. This approach is also fraught with major deficiencies. the project may be discouraged even if its total cost is much less. The formula often involves elements of cost-plus. been applied to . If prices are to be fixed by the Government. there is no single or unique formula for import parity which is applied globally (Note 3. The Rangarajan Committee (February 2006) suggested a pragmatic approach of TPP for pricing of petrol and diesel which was accepted by the Government. Prices can be fixed based on pre-determined formula. a prescriptive and biased cost-plus pricing formula requires continuous monitoring and periodic adjustments in certain components of the formula. or export parity (EPP). which is continuously changing. trade parity (TPP). It has. Appendix). which is derived from principles like import parity (IPP). 61 59. it may encourage freight movement by trucks rather than by train. if diesel is cheap. When the price difference between petrol and diesel is high. Instead.42 655. it also leads to erroneous choice of technique.23 36. 20/litre and LPG by around Rs.51 (Rs. A competitive price discovery process empowers companies to follow their own judgments of market conditions and results in fair pricing of products.petrol and diesel. we have even seen diesel being used in place of furnace oil. It was derived as a weighted average of IPP and EPP in the ratio of 80:20.92 43.42 615. Diesel.70 41. International Prices Crude Oil (Indian Basket) Petrol Diesel Kerosene LPG Petrol Indicative Retail Selling Price(at Delhi) Diesel Kerosene LPG 60 70 80 90 100 110 66 77 88 99 110 121 ($/bbl. In the event of any company adopting unfair pricing methods. All these call for administrative and regulatory tasks to be performed by the Government or its agency on a permanent basis. / Cyl.45 23. subsidies and taxes can introduce distortions which may not be desirable. kerosene may be used to adulterate diesel.61 51. Apart from inefficient use. In 2008. as suggested by the Integrated Energy Policy.66 55. If there is a large difference between the prices of diesel and kerosene.76 47.42 575. It reveals that when crude oil prices rise from US$70/bbl to $120/bbl.56 63. The trade parity pricing was also recommended by the Parikh Committee on Integrated Energy Policy (August 2006) as one which reflects the opportunity costs of a consumer or a producer.71 51. diesel./Litre) 32. NEED FOR CHANGE IN POLICY We have worked out domestic prices of the four products under alternative assumptions of crude price on the international market. Domestic Prices of Petrol.08 39.42 .29 30.76 34. According to the Integrated Energy Policy. LPG and kerosene at Delhi corresponding to a range of prices of the Indian basket of crude oil from $60/bbl to $150/bbl.) 70 72 81 83 93 94 104 115 127 ($/MT) 538 595 652 106 709 117 765 128 822 43. Provides estimated retail selling prices of petrol. IPP is to be used for a product for which the country is a net importer and EPP for a product for which it is a net exporter. diesel driven vehicles may be preferred.20/litre. the price of petrol in Delhi is required to be increased by Rs. it increases administrative burden.23 37. Price control.) 455.41 535. Kerosene and LPG derived from different levels of prices of the Indian Basket of Crude Oil. The weight of 20 for EPP was based on the share of petroleum product exports in the total consumption in 2004-05. As suggested by the Committee. 200 per cylinder. Also. the price of diesel by less than Rs.82 27.42 495. EPP equals TPP. Intervention in pricing must be carefully thought out for its possible consequences. formula-based approach involving direct government intervention does not result in a competitive price discovery process.75 47. As long as the country exports a particular product. For example. this ratio was required to be assessed periodically and adjustments made to align the formula to the current position. such activities can be curbed by the regulatory authorities set up by the Government. a prescriptive.18 (Rs. 1 Projections 2020-21 2030-31 25. Y = a + bX.4 49.65 48.120 132 130 143 140 154 150 165 Current Retail Prices 138 149 161 172 140 151 162 173 879 936 993 1. The equation. 2001-02 to 203031 Actual Consumption 2001-02 2004-05 2008-09 CAGR Product 2002-09 MS 7.82 32. the total under-recoveries of OMCs on sale of petrol.06 9. If oil prices rise by 25% to $100/bbl.1 -1. the much higher will be the under-recoveries.6 51.1 226.4 4.31 3.59 55.7 100. the under-recoveries will rise higher by 77%.0 49.5 44.13 1. Kerosene.23 695.20 The product prices of Petrol.049 67. gives the following estimates.1. diesel. Higher the growth rate of GDP and longer the period beyond 2020-21. .22.41 2.3 11.3 7.0. Likewise if oil prices rise to $120/bbl (50% increase) the under-recoveries will rise by 155%.5 10.6 144.42 815.32 44.4 93.4 10.31 b 1.3 217.6 6.58 per cylinder for Domestic LPG.4 6.41 75.5 7.10 1.6 Based on these projected demand. Coefficients Petrol Diesel Kerosene LPG a 0. LPG and PDS kerosene work out to Rs.9 153.98 66. Indicative retail selling prices of PDS Kerosene and Domestic LPG are after netting off fiscal subsidy at current level of Rs.46 71.7 38.4 73.37 79.43 775.3 12.7 61.82/litre for PDS Kerosene and Rs. we have projected consumption based on two assumptions: (i) the annual average compound growth rates of petrol.7 9.68 Exchange Rate considered at Rs. in which Y is product price and X is crude oil price.0 102.43 735.57.6 26.0 HSD SKO LPG Sensitive Products Free Industrial Products TOTAL Source: PPAC 36. diesel. The projected consumption of petroleum products by 2020-21 and 2030-31 is given in Table C2. In order to assess the financial burden that may arise from rising under-recoveries of OMCs in the face of another price spiral in the international market.4 7.29 59.72 55.6 3.1 111.7 4.42 281. the under-recoveries of oil marketing companies on these four products have been worked out (Figure C1) At crude oil price of $80/bbl.7 9.5 51.0 133.13 62. Table C2: Consumption of Petroleum Products.0 8.13 5. Diesel. 47 per US Dollar.92 44.4 5. (ii) The current level of prices set by the government will continue.6 325. kerosene and LPG during 2002-03 to 2008-09 apply to 2020-21 and 2030-31.4 39.2 84.12 51.2 67.000 crore by 202021.93 197. LPG have been derived through regression equations of crude and product prices in international market during January '07 to December '09. Accordingly. The higher excise duty on petrol compared to diesel encourages use of diesel cars. the financial burdens on the companies as well as on the government will be unsustainable. they are generally expected to rise.At different levels of crude oil prices. It suggests that at current levels of prices of petrol. We have examined the impact of the formula-based prescriptive pricing of major petroleum products devised by the Government from time to time. we recommend that petrol prices should be market determined both at the refinery gate and at the retail level. including SUVs. based on the model outlined in paragraph 4. At the same time 2008 saw an unprecedented rise in oil price on the world market. Given our increasing dependence on imports. product-wise under-recoveries of OMCs on sale of petrol.14. The issue therefore is to assess the costs and incidence of the burden of alternative mechanisms on different groups in the society. Oil price volatility has also increased. On whom the burden falls depends on the policy and the instruments used. • A transparent and effective distribution system for PDS kerosene and domestic LPG can be ensured through UID/Smartcards framework. Therefore. are for final consumption. particularly since 2002. These estimates reveal the dominant share of diesel in OMC’s under-recoveries. the following measures need to be taken. • The petrol is largely an item of final consumption. domestic prices of petroleum products have to reflect the international prices. Therefore. Though future oil prices are difficult to predict. we recommend the price of diesel should also be market determined both at the refinery gate and at the retail level. An analysis of the trend of petrol consumption by the automobile owners reveals that increase in prices of petrol can be borne by motorized vehicle owners. Such a trend needs to be stemmed early. diesel. • A viable long-term strategy for pricing major petroleum products is required. a way needs to be found to collect the same level of tax that petrol car users pay from those who use a diesel vehicle for passenger transport. LPG and PDS Kerosene is presented in the Figure C2. • The Government has not permitted public sector oil marketing companies to pass global prices to domestic consumers. • Intervention through price control necessitates that someone bears the financial costs. PDS kerosene and domestic LPG. Our import dependence has reached 80 per cent and is likely to keep growing. An additional excise duty. A viable policy has to be workable over a wide range of international oil prices and has to meet the various objectives of the government. should be levied on diesel car owners. It will rise from 45% at crude oil price of $80/bbl to 58% at $150/bbl by 2020-21. This has affected competition in the domestic petroleum product market. and has put undue stress on finances of the PSU oil marketing companies as well as of the Government. It should limit the fiscal burden on government and keep the domestic oil industry financially healthy and competitive. • We have examined the implications of increase in retail price of diesel on various groups of consumers and do not find any compelling reason to subsidize them. The present system of price control on petrol and diesel in particular has resulted in major imbalances in the consumption pattern of petroleum products in the country. • Petrol and diesel used in cars. . there is a need to change the existing policy which can strike a balance between the capacity of the consumer to bear higher prices and fiscal stability of the government SUMMARY OF RECOMMENDATIONS • India’s imports of oil are increasing. It has also led to withdrawal of private sector oil marketing companies from the market. While greater fuel efficiency of a diesel vehicle should not be penalized. diesel. Until it becomes operational. • The price of PDS kerosene needs to be increased by at least Rs. Thereafter. the price of domestic LPG should be periodically revised based on increase in paying capacity as reflected in the rising per capita income. • A mechanism for financing under-recoveries on PDS kerosene and domestic LPG has been provided in Table UR2 in paragraph 4.6/litre so that the share of expenditure on kerosene in the total consumption expenditure of rural households remains at the same level as in 2002. LPG and piped gas availability which is expected to reflect much larger reductions in next NSSO surveys. or failure to deliver goods or failure to make payment. which will bring down all-India allocation by at least 20%. households have flexibility in absorbing increases in price of PDS kerosene to certain extent. the system price will be the price at which he has made contract. Considering the volatility of prices in the spot market. • We are not recommending a windfall profit tax since MOPNG ought to have flexibility in mopping up incremental incomes of ONGC and Oil India for the purpose of meeting a part of the under-recoveries of OMCs on sale of domestic LPG and PDS kerosene as outlined in paragraph. 100 per cylinder. The OMCs marketing PDS kerosene and domestic LPG should be compensated fully for their under-recoveries based on this mechanism. the system price will be the price at which he has made contract. if any. And from seller’s point of view. or how the price is fluctuating he doesn’t have to bother. . OIL CONTRACTS (a) Forward Contract: It is a tool which is used to hedge against system price. • Our analysis shows that prices of domestic LPG can be increased by at least Rs. instead of having one to one relationship. However. the market also facilitates development of standard contracts. • For calculation of the under-recoveries incurred by the OMCs on sale of PDS kerosene and domestic LPG. Besides. whatever the system price in there.48. many buyers and sellers may develop a market for trading of goods in advance of the delivery.49. This mechanism involves periodic reduction in PDS kerosene allocation. So from buyer’s point of view. the extant methodology based on import parity pricing may be continued so long as the country remains a net importer of kerosene and LPG. buyers and sellers often agrees on price. Further reduction in PDS kerosene allocation can be done on the basis of progress of rural electrification. These are called as forward contracts. at the rates indicated in paragraph 4. or how the price is fluctuating he doesn’t have to bother. as also decline in the percentage of households using kerosene. which were given by the Government on nomination basis. Therefore. whatever the system price in there. and providing cash subsidy from the Budget to meet the remaining gap. Besides.• There is disparity in per capita allocation of PDS kerosene amongst States. Thereafter. For him also. For him. The subsidy on domestic should be discontinued for all others except the BPL households once an effective targeting system is in place. Price discovery in such a market is based on more informed choice as compared to one to one contracts. and mopping up a portion of the incremental revenue accruing to ONGC/OIL from production in those blocks. price of PDS kerosene be raised every year in step with the growth in per capital agricultural GDP at nominal price. PDS kerosene allocation across states should be rationalized. These contracts will have mode and timing of payments as also penalties. quality and quantity of goods in advance of actual delivery and the goods are delivered on a future date. increase in prices of PDS kerosene and domestic LPG from time to time. the freight for petroleum products is high. Though movement by road results in excessive consumption of diesel and is a potential safety and environmental hazard. Capacity of railways has already been over-stretched. the holder to purchase the underlying product i. Fundamental option positions Calls and puts There are two basic types of options: buy (call) options and sell (put) options. Feasible only for short distances and secondary movement of petroleum products. OIL TRANSPORTATION • Movement of oil takes place in two steps: 1. The decision to invest in a call or put option is made according to the investor's expectations about the price movement of the underlying instrument. The only difference being that an upfront payment of premium has to be made in case of an option whereas a trader does not need any upfront payment in case of futures.Tankers are used for movement between coastal locations. developed since earlier days and cover substantial parts of the country.crude oil(from well to gathering station& gathering station to refineries) 2. With continuing growth on all spheres. Rail and Pipeline as the feasible means of transportation of petroleum . finished products(from refineries &port to consumption centre) • MODES OF PRODUCT TRANSPORTATION 1 Rail 2 Road 3 Pipelines 4 coastal Most of the major consumption centres in India are land-locked. For movement of petroleum products over long distances. Road: It Plays a crucial role in country’s transport sector for goods and passengers. For example. railways transportation capacity would fall short of the transportation requirements. in options buyer does not have any obligation to exercise the contract. A put option entitles the holder to sell the underlying product on corresponding terms. environmental pollution and transit losses. Railways have been the largest transporter of POL.e Oil at a price that has been agreed to in advance (the exercise price) -. Due to cross-subsidisation. but does not obligate.no later than at the agreed-to date (the exercise date). Options can also be used to hedge the risk of price fluctuations. (c) Options:Unlike futures. • . Railways: • Railway Traditionally. A call option entitles.(b) Futures Contract:Future contact in the power exchange would mean that the participant can hedge their risk in the fluctuation of Oil prices for longer terms. railways also transport goods and passengers. Besides petroleum products. Rail transportation also leads to high energy consumption. it still enjoys a large share in the modal mix due to unavoidable short distance movement from bulk depots to retails outlets. This makes only Road. a Oil Pproducing company expecting a decrease in the Oil prices can sell the futures now to be able to ensure higher prices at the time of delivery in future. road transportation is not very cost effective and efficient. Various kinds of contracts under this type of instrument can be of varying time horizon. During 1960-63. the movement of petroleum products through tankers is somewhat limited. • • . the refining capacities being low. Pipelines: • The term pipeline in broader sense means a facility used to transport commodities from point of receipt to the point of delivery. Tankers are used for movement between coastal locations. • Development of Pipelines in India • Most of the earlier Refineries in India were installed at coastal locations. This mode also suffers from capacity constraints in terms of draft availability. Many commodities are transported through pipelines. thus depending on coastal movement of crude oil. jetties etc. most of the Refineries were installed in land-locked locations necessitating laying of crude & product pipelines. Crude oil. Oil India Limited laid the first trunk crude oil pipeline.Coastal: Since the major consumption centers of the country are located in the hinterland. the products were either consumed locally or transported to the consumption centres by rail or road. petroleum products and gas are perhaps the most common commodities transported by pipelines. After 1960. 1156 km long from Naharkatiyaand Moran oil fields to the Refineries at Guwahati and Barauni. The first cross country product pipeline was laid by IOCL during 1962-64 to transport products from Guwahati Refinery to Siliguri. navigational facilities. Further. . thus achieving NELP’s goal and also helping to move India towards self sufficiency in natural gas. Oil and gas represent over 40 per cent of the total energy consumption in India. With a view to ensure long term energy security. pricing and policy issues surrounding NELP and other gas finds under it. Ten years later. The Government of India (GOI) introduced the NELP about ten years ago to spur exploration and development in oil and natural gas. With exploration and development efforts made under New Exploration Licensing Policy (NELP). significant gas finds have been found off the Indian shores. Therefore. with the huge oil & gas discovery in Bombay High field in 1974. the question then was “How to develop a market for this gas?” The answer then was GAIL and the HBJ pipeline.74 BCM of natural gas in 2006-07. Under the Production Sharing Contracts. around 74 MMSCMD is available for sale to various consumers. With this in view. the government is also building oil and gas equity abroad Circa 1974. followed by the giant South Bassein free gas find in 1978. While this is a very positive development of the NELP regime. Crude is the single largest item on India’s import list. Government have also offered blocks under New Exploration Licensing Policy (NELP) to private and public sector companies with the right to market gas at market determined prices. The consumption of petroleum products in the country is on the rise and demand already far exceeds domestic supply. During 2007-08. Natural Gas production in the country is likely to be doubled from the present level of gas production of about 90 million standard cubic meters per day (MMSCMD) by end of 11th Five AVAILABILITY & UTILISATION OF NATURAL GAS Natural gas has emerged as the most preferred fuel due to its inherent environmentally benign nature. Oil India Limited (OIL) and JVs of Tapti. crude oil production is likely to increase 24% as against actual crude oil production during X plan period. greater efficiency and cost effectiveness. During XI Plan period. after internal consumption. The main producers of natural gas are Oil & Natural Gas Corporation Ltd.NATURAL GAS Introduction: India is one of the top 10 oil-consuming countries in the world. there are also some concerns regarding utilization. particularly over the last decade. the natural gas sector has gained importance. The demand of natural gas has sharply increased in the last two decades at the global level. (ONGC).99 MMT of crude oil and 31. . the scenario turned 180 degrees. the government announced the New Exploration Licensing Policy (NELP) in 2000. extraction of LPG and unavoidable flaring. the country has to depend largely on imports. and is being termed as the Fuel of the 21st Century. The country’s existing annual crude oil production is peaked at about 32 million tonnes as against the demand of about 110 million tonnes. Out of the total production of around 87 MMSCMD. In India too. which was almost negligible at the time of independence. Panna-Mukta and Ravva. With inadequate crude production. private parties from some of the fields are also producing gas. Since then. Production of natural gas. crude oil production in the country is expected to be about 34. Estimates show that the demand is likely to grow at a faster pace over the next decade if India is to maintain the GDP growth target of 8 per cent. when the gas demand exceeded the supply and the question changed to “How to find more gas?” The answer then was New Exploration and Licensing Policy (NELP).763 million metric tones (MMT) and 31. This implies larger imports unless new domestic oil reserves are found. the country is heavily dependent on imports. is at present at the level of around 87 million standard cubic meters per day (MMSCMD).67 billion cubic metres (BCM) of natural gas production as against the production of 33. P..74 1. The gas brought to Uran is utilised in and around Mumbai. There was a major increase in the production & utilisation of natural gas in the late seventies with the development of the Bombay High fields and again in the late eighties when the South Bassein field in the Western Offshore was brought to production.(2003-04) Region/Sector HVJ & Ex-Hazira Onshore Gujarat Uran K. the gas supplies by GAIL is of the order of 63 MMSCMD spread over about 300 major consumers. Natural Gas Allocation & Supply Scenario As against the total allocation of around 118 MMSCMD.29 0.25 0. Gas produced by Cairn Energy from Lakshmi fields and Gujarat State Petroleum Corporation Ltd.96 1. The gas produced by ONGC and a part of gas produced by the JV consortiums is marketed by the GAIL (India) Ltd.41 1.25 1. All India Region-Wise & Sector-Wise Gas Supply By GAIL .29 4. STORAGE OF NATURAL GAS The gas produced in the western offshore fields is brought to Uran in Maharashtra and partly in Gujarat. Andhra Pradesh and Gujarat States are other major producers of gas.38 62.66 3. 4% to sponge iron and the balance 23% (including shrinkage) goes to other sectors. U.04 20. Basin Cauvery Basin Assam Tripura Grand Total Power 12.07 0. etc. LPG is now being extracted from gas at Duliajan in Assam.63 1. The gas produced in Gujarat. Two new plants have also been set up at Lakwa in Assam and at Ussar in Maharastra in 1998-99.53 1. The gas produced by OIL is marketed by OIL itself except in Rajasthan where GAIL is marketing its gas. is currently being used at Uran for Maharashtra Gas Cracker Complex at Nagothane. The on-shore fields in Assam.5 MMSCMD of gas is being directly supplied by the JVs/private companies at market prices to various consumers. Iron 1.Most of the production of gas comes from the Western offshore area. the gas is partly utilised at Hazira and the rest is fed into the Hazira-Bijaipur-Jagdhishpur(HBJ) pipeline which passes through Gujarat. Rajasthan.32 0. Uran in Maharashtra. Around 8. Bijaipur in M. .91 0.37 25.41 0.38 0. This gas is outside the purview of the Government allocations. OIL is operating in Assam and Rajasthan States. is utilised within the respective states. Assam.G. whereas ONGC is operating in the Western offshore fields and in other states. 41% to power. Natural gas has been utilised in Assam and Gujarat since the sixties.85 7. One more plant is being set up at Gandhar in Gujarat. Around 32% is supplied to the fertiliser sector..08 1. Natural Gas is currently the source of half of the LPG produced in the country.01 14. After sweetening.61 1.58 S. The gas brought to Hazira is sour gas which has to be sweetened by removing the sulphur present in the gas. Pata in UP and Nagapattinam in Tamil Nadu. MadhyaPradesh.61 OIL is also supplying around 3 MMSCMD in Assam against allocations made by the Govt.81 2.57 4. Smaller quantities of gas are also produced in Tripura.23 Total 37. which is a feedstock for the Petrochemical industry. Hazira and Vaghodia in Gujarat.24 1.78 9. Tamil Nadu and Rajasthan States.33 Others 9. GAIL has also set up a 3 lakh TPA of Ethylene gas based petrochemical complex at Auraiya in 1998-99.P. Natural gas containing C2/C3. (GSPCL) from Hazira fields is being sold directly by them at market determined prices.04 3.65 Fertilizer 13. Delhi and Haryana.15 2. The three sides agreed to transport of natural gas from Myanmar to India by pipeline transiting through Bangladesh. The second meeting of the Special JWG on Iran-Pakistan-India Pipeline Project was held in Tehran on 24th October. To pursue the matter at the Government level. technical. and thus should be seen as a significant project for the benefit of the people of these countries. The Indian side was led by Secretary (P&NG).2005. The two Governments will designate a body of experts comprising three representatives of each party to identify and implement the projects in the hydrocarbon sector. Ministry of Petroleum and Natural Resources. 2005 for the first meeting of India-Pakistan JWG. At the latest due to various pricing and the security related unsolved issues with Pakistan. It was also decided to establish a Techno-Commercial Working Committee (TCWC) comprising duly designated representatives of the three Governments to prepare a draft MOU prescribing the framework of . The second meeting of the JWG was held in Islamabad on 8-9 September. A Memorandum of Understanding (MOU) for cooperation in the petroleum sector between the two Governments was signed. the deal had been shelved. Iran-Pakistan-India (IPI) Pipeline Project In pursuance of Government decision in February 2005. The first meeting of the Special JWG on Iran-Pakistan-India Pipeline Project was held in New Delhi on 3-4 August. which will meet regularly and report the progress to the Ministers to facilitate definitive decisions by them. Govt. The route of the pipeline will be determined by mutual agreements of the three Governments. The MOU provides for furthering cooperation in the hydrocarbon sector and for establishing a cooperative institutional relationship in the field of petroleum industry on the basis of equality and mutual advantage. it was agreed to establish a special JWG on the Iran-Pakistan-India gas pipeline project. a Heads of Agreement between NIGEC and the Indian companies concerned had been finalized. Myanmar-Bangladesh-India Gas Pipeline Project.2005. To this end. M/s Ernst & Young and is in the process of finalizing appointment of legal & technical consultants for the project. it was agreed that the momentum pertaining to the project should be accelerated by constituting a Joint Working Group at the Secretary level at the earliest. A Pakistani delegation led by the Secretary.IMPORT OF NATURAL GAS TO INDIA THROUGH TRANSNATIONAL GAS PIPELINES. During the talks. The Indian and Pakistani delegations agreed to exchange information in regard to the financial structuring. and Iran has signed the modified deal with Pakistan as the sole partner in may 2009. the Minister (P&NG) visited Yangon during 11-13th January 2005.. After the meeting a Joint Press Statement was issued by the three Ministers. During the 2nd JWG meeting. commercial. With a view to undertaking further studies and discussions in regard to relevant issues so that the project could take off by early next year.1. the Pakistani side informed that they will also shortly be appointing their Financial Consultants. 2005. taking into account the possibilities for cooperation available in each country.e. Both sides noted with satisfaction that as a result of regular discussions on technical issues pertaining to the project. Indian side has already appointed financial consultants i. legal and related issues to realize a safe and secure world class project. of Pakistan visited New Delhi on July 12-13. Minister (P&NG) led a delegation to Pakistan during 4-8 June 2005. would go a long way in meeting the energy security requirements of the two countries. for bilateral and trilateral discussions with Myanmar and Bangladesh. A trilateral meeting between the Petroleum Ministers of India. Myanmar and Bangladesh held on 12. They agreed that the project. An Indian delegation also visited Iran from 11-14 June 2005 and discussed the issue of import of natural gas from Iran through on-land pipeline transiting via Pakistan. the two Ministers reviewed the Iran-Pakistan-India gas pipeline proposal. 2005. which envisaged supply of gas to Pakistan and India through a transnational pipeline. All aspects of Myanmar-Bangladesh-India gas pipeline were discussed. bypassing Bangladesh territory. Malaysia. Although. In pursuance of the MoU. Minister (P&NG) visited Bangladesh during 5-6 September 2005 to pursue the matter with Government of Bangladesh. there are certain bilateral issues which have to be sorted out with Bangladesh. GAIL has been asked to do a pre-feasibility study of the onland pipeline route from Myanmar to India through North-Eastern Indian States. World trade in LNG is currently in the range of 150 BCM. the LNG importing countries in recent times had started asking for medium/short term contracts with varying linkages. However. LIQUEFIED NATURAL GAS (LNG) Natural gas at -1610C transforms into liquid.  Transportation & distribution to the Gas consumer. This is done for easy storage and transportation since it reduces the volume occupied by gas by a factor of 600.2005. LNG is transported in specially built ships with cryogenic tanks. of Myanmar recently visited India during July 5-7. Another official level meeting was held in Yangon on 29-30 August 2005. India is not yet formally involved in TAP project. However. The TCWC has finalized draft MoU proposed to be signed by the three oil Ministers. Minister (P&NG) discussed this matter with Pakistani side during his visit to Pakistan 4th to 8th June 2005. the major importers are Japan. A high level delegation led by Minister. Indonesia. It is received at the LNG receiving terminals and is regassified to be supplied as natural gas to the consumers. Turkmenistan-Afghanistan-Pakistan (TAP) pipeline Daulatabad area of Turkmenistan has reported to have sufficient gas reserves. The MOU would be signed at Dhaka at the earliest mutually convenient date. .9. including the Myanmar-Bangladesh-India gas pipeline project. South Korea. India is also exploring the other option of import of natural gas from Myanmar. whereas. 2005. The option of getting Bangladesh on board is also being simultaneously pursued. where two sides agree to take definite steps for gas supply from Myanmar. Minister (P&NG) has been invited to the next Steering Committee Meeting to be held in Ashgabat in early December. The matter is being pursued vigorously and the proposed gas imports from Myanmar would be finalized shortly notwithstanding the response of Government of Bangladesh. ADB has carried out the study and approached India for participating in the project. The Governments of Turkmenistan-Afghanistan-Pakistan (TAP) proposed the transnational gas pipeline to exploit the available gas reserves in Turkmenistan. The First Meeting of the TCWC was held on 24-25 February. They designated ADB as the lead development partner. Taiwan and Western Europe. The whole process consists of five elements: Dedicated gas field development and production. This was also discussed by Secretary (P&NG) with President ADB during the latter's visit to New Delhi on 1.cooperation among the three Governments.  Liquefaction plant. LNG supply contracts are generally of long term nature and the prices are linked to the international crude oil prices. 2005. a Techno-Commercial Working Committee has been constituted by the three Governments. Qatar. Energy. In 1992 it was around 80 Billion Cubic Metres (BCM) per annum and crossed the 100 BCM mark in 1996. LNG Imports to India The LNG trade started in mid 60's and has increased rapidly. Australia.  Transportation in special vessels.  Regassification Plant. The major exporting countries of LNG are Algeria. Simultaneously. LNG projects are highly capital intensive in nature. 2005. India is very strategically located and is flanked by large gas reserves on both the east and west. At this price. At present the selling price of LNG in Gujarat is $4. Furnace Oil. Light Diesel Oil. Contracts have been awarded for the . Qatar. In order to encourage gas imports. BPCL and ONGC was formed for import of LNG to meet the growing demand of natural gas. Shell's 2. upto December 2008 and a floating floor and ceiling price thereafter. transportation.e. naphtha. etc. Mangalore in Karnataka and Krishnapatnam/Ennore in Tamil Nadu are also under active consideration and may fructify in next 4-5 years time. Dabhol LNG terminal (total 5 MMTPA capacity. 100% Foreign Direct Investment (FDI) is allowed through the FIPB route for both LNG projects and natural gas pipeline projects. 1962 (P&MP Act. distribution and marketing of natural gas. Under the existing policy. India is relatively close to four of the world's top five countries in terms of proven gas reserves. viz.88/MMBTU (Rs. 8800/MCM). LNG terminals at Kochi in Kerala. If an entity requires the acquisition of Right of User (ROU) in land. The draft natural gas pipeline policy covering transmission pipelines and local or city gas distribution networks is under formulation.9 MMTPA available for merchant sales) may also become operational by 2006 subject to availability of LNG for the project. PLL is planning to expand this terminal to 10 MMTPA capacity by 200809 to meet the growing demand of LNG. The production of crude oil and natural gas is currently the responsibility of two public sector undertakings (PSUs). The setting up of a Petroleum & Natural Gas Regulatory Board is under the consideration of the Government and the bill is being drafted. etc. IOCL. the Government of India has kept import of LNG under Open General License (OGL) category and has permitted 100% FDI. Import of LNG and natural gas is on OGL. Iran. PLL has constructed a 5 MMTPA capacity LNG terminal at Dahej in Gujarat. 8777/MCM) and outside Gujarat is $4. i.87/MMBTU (Rs. The terminal was commissioned in February 2004 and commercial supplies commenced from March 2004. ONGC and OIL. The price of LNG for the Dahej project is linked to the JCC crude oil price. Around 75% of the gas is produced in the Western Offshore fields. REGULATORY FRAMEWORK FOR THE GAS INDUSTRY The Ministry of Petroleum & Natural Gas (MOP&NG) has been regulating the allocation and pricing of gas produced by ONGC and OIL by issuing administrative orders from time to time. with the balance coming mostly from Gujrat and the North-Eastern States. it approaches MOP&NG for the acquisition under the Petroleum & Mineral Pipelines (Acquisition of Right of User in Land) Act. The large natural gas market of India is a major attraction to the LNG exporting countries. with proposed provision in line with those under the draft regulatory board bill. with about 2. a PSU. LNG Projects Petronet LNG Limited (PLL). (GAIL). of natural gas. LSHS.Geographically. Present Scenario The distribution of natural gas reserves in the country is not uniform. and OIL are engaged in transportation. LNG is comparatively cheaper than alternative fuels/feedstock's e. The gas produced by the JVs and by NELP operators is governed by the respective production sharing contracts (PSC) between the Government and the producers. LPG. The Government of India is keen to attract private investment in the production. The Gas authority of India Ltd. a JV promoted by GAIL. 1962). It has a fixed price for the first five years.5 MMTPA capacity LNG terminal at Hazira has been commissioned. Saudi Arabia and Abu Dhabi.g. development of some medium/smalll sized fields and it is expected that in 1997-98 about 6 MMSCMD of gas would be produced from the private/joint venture fields. Two private sector companies and the Municipal Corporation of Baroda are at present engaged in the distribution of the natural gas in the domestic/commercial sector in Gujrat and Mumbai. Two State Government undertakings are doing the same work in the North-Eastern states in a number of small towns. City gas for Delhi and a project for supply of gas to reduce pollution in and around Taj Trapezium area are being implemented. The GAS Linkage Pricing, Contracts & Inventory Control Tariff setting in Gas Transmission- A view of Methodologies Gas consumption in any substantial manner in India began with the formation of GAIL and setting up of the Hazira-Bijaipur-Jagdishpur (HBJ) pipeline. This ling line actually boosted natural gas consumption in the country. Major consumers of gas in the country happen to be the power and fertilizer sector consuming about 40 and 34%, respectively. Domestic and household usage of gas is yet to develop. The discovery of gas in the Krishna –Godavari (KG) basin and other places and setting up of LNG terminals on the west coast of the country has suddenly changed the gas scenario in the country. And the future is likely to see a much larger share of gas in the overall energy consumption pattern. The tenth plan projects a demand of about 180 mmscd from the present level of 145 mmscd and a shortfall of about 100 mmscd and domestic supply of about 80 mmscd. This can change with the exploitation of the KG gas recourses. Natural gas, unlike other commodities, cannot be transported by road or rail. There has to be a network of pipelines for gas transmission and a local distribution zone where it can be retailed or solid in bulk. A good gas transportation network is a prerequisite for development of free market in gas. As capital costs are high, construction risk very high, and because there are network externalities. The business of gas transportation tends to be natural monopoly. Unbundling in this sector means the separation of the “pipes business”(natural monopoly), from supply which can be competitive. The pipes business, therefore, needs to be regulated and “open access common carrier” principle will have to be enforced on the lines of what obtains in the electricity sector. In such a scenario, tariffs become an important feature for selling of natural gas as a competitive fuel. Tariff will also determine the geographic spread of usage of gas. Regulation today Postage stamp tariff GAIL is the major transporter today and it has, since inception, followed postal stamp tariff. This means that tariff at any place in the country remains the same irrespective of distance. This tariff recovers capital costs, variable costs like gas consumption for pressure boosting and manpower costs, and a post tax return of 12% on network. Perhaps this kind of regime was justified because of shoratge of gas with no alternative than the allocation of gas by the central goverment. It was perhaps also the vestigial idea of equalization of cost of transport similar to freight equalization for coal and steel. With few users there could not have been a gas market. The need to corret the regional imbalances and, therefor, siting of industries in backward regions became necessary. This has led to fertilizer factories being set up in uttar pradesh while gas was available on the west coast. However, in a scenario where gas was being “allocated” , cost recovery was not really difficult. Presently this tariff is in the range of Rs 1150 per thousand SCM. APM for petroleum products has already been dismanted and it will not be long before this momentum catches up with gas also. Already, for the new discoveries the price of the commodity, that is , gas, is being marked to market. Industrial policy has long been liberalized and siting of central PSU units is more on the basis of locational economics. In such a regime, a postage stamp tariff defies economic logic.once gas sales are driven more by market consideration, fixing transmission tariffs on postage stamp principle would not be possible. In a deregulated scenario, the tariff system must: a) Allow for cost recovery so that the system is bankable b) Be transparent, stable and practicable c) Enable transition to the market-based system on gas transactions d) Send economically appropriate signals to foster greater utilization of capacity and permit gas to be a competitive fuel. This would imply the unbundling of the tariff with respect to the pressure and area that is,the pricing regime would be different fora local distribution zone and different for a trunk transmission line. Similarly, pricing would be differnt for high and low pressure lines. There are two important components in the gas transmission tariff: They are : Capacity charge to recover fixed cost and variable charge to cover the through put costs. A third element of costs which includes inter alia connection charge and system gas charges, would be subsumed in the above two categories. In practice, one has seen in that capacity charge/variable cost split can be as high as 90/10. But, at this split level, it would be difficult to sell transmission capacity except for very large buyers with firm demands for long perionds. Therefore, an appropriate tariff methodology needs to be developed. Transmission lines have fairly long lives. Once the loan is fully paid out the tariff structure would change. Average accounting cost Here, the total cost of setting and operating the system is allocated over the entire capacity and average unit cost is developed from that.it is transparent and strainght forward system and charges customers for excess capacity. And also distant customers paying high tariff. Long run marginal cost(LRMC) This approach takes into account incremental capital and operating cost required to meet sustained increase in throughtput. It provides an economically sound basis for tariff setting and users do not have to pay for surplus capacity.it also requires an incremental capacity to be defined over which LRMC would be applied. Therefore, a pure LRC has better applicability in a mature market, where demand patterns have stabilized and stabilized and investment pattern in pipelines over a period of time is more or less known a priori. When applied to gas pipelines the following methods are important in leading to the appropriate regulation: Virtual pipeline method: While the transmission company may like to set up a large system to cater for full demand, the user may not like to pay the capital charge for the full capacity. Therefore, one basis for tariff setting is to assume only the capacitytaht the user is likely to use. In this method we assumed as if a line is actually being set up for taht user and for the capacity that he wants to use within the main line. Thus the entire line gets divided into a large number of virtual pipelines. This permits the user to pay for a limited capacity even if the pipeline size is large.this is a tendency for the transporter to incentivize additional usage of capacity and thus permit an aggressive pricing regime.in a virtual pipeline methodology, since the user virtually owns part of the line, the capacity charges tend to be on the higher side, about 85% of the total charges. Such pipelines normally set up with higher equity and around 50-70 % of the total project cost. Cluster approach: Also known as entry/exit pricing. For such demand centre uniform pricing is done relative to an entry point. If there are more tahn one entry poiunts, than those many different slabs of rates would exist with respect to entry and exist points. An attempt is made to capture all the costs pertaining to one demand centre within the tariff itself. Thus, costs for each demand centre is effectively segregated. This policy also helps in reducing tariffs for distant demand centres. No single tariff methodology can capture all the requiremnets of both the users and the transmission company. Factors as demand,demand pattern, cost of laying impact on the choice of tariff methodology. Gas transmission lines are seen as natural monopolies. It is diffecult for the user to shift from one line to the other.the west coast has seen multiple operators, signalling a certain amount of contestability at the entry point of the value chain. Here the risk is high and revenue is shaky, so the relationship between user and the transmission entity is normally maintained through a contractual framework known as Gas Transmission Agreement(GTA). Some saliant features of a normal GTA are: 1. It specifies the capacity that is offered to the user. It also specifies the uptime for the system. These are backeds by penalties if these requirements are not met.normally, the shortfall or the excess use of the capacity is measured on a daily basis and penalities are determined at the end of the month. 2. There is a mix of slightly different gases,therefore, what the user puts in and gets out of the system is the energy per and this remains a unit of transcation.however, the properties of gas on entry are regulated on such parameters as such parameters as waxing properties, dew point, pressure, etc. 3. Depending upon the type of tariff methodology used, there are invariably incentives for using larger volumes of capacity. However, where capacity is a constraint the pricing methodology may be reversed. 4. Capacity charges ensure that even non-usage of the capacity does not impact the revenues of the transmitting entity. However, in case the user reneges on his promise to use the capacity, then most of the contacts make a provision for a lump-sum compensation to ythe transmitting entity. . . . . Petroleum Minister Murli Deora launched the ninth edition of New Exploration Licensing Policy. .CURRENT NEWS:India launches ninth edition of NELP Hoping to attract more foreign companies to explore its vastly unexploited sedimentary basin. made up mostly of previously discarded areas. almost half of the previous round in 2009. offering 34 exploration blocks. India launched its ninth round of oil and gas block auction. the largest bidder in the previous eight rounds of NELP. This time in the new policy. 2011. which does not club sale of commodity along with transmission and follows coman carrier principles with a tariff regime that is appropriate to the development of markets. So transmission entity. One is also witnessing a slow shift from a single source of gas to . Calgary. A total of 87 oil and gas discoveries have been made in 26 blocks under NELP during this period. five are discards of state-owned Oil and Natural Gas Corporation. Tripura (1) and Uttar Pradesh (1).34 billion for 36 blocks that received offers. In the first eight rounds of NELP. exactly five months from the date of first roadshow to be held in Mumbai. which is 2. impact of absence of seven year holiday or exemption from payment of income tax from profits earned from the oil and gas produced from the areas awarded in NELP-IX. The 8th round. 2 in shallow waters and 10 onland blocks. Last date of bidding for blocks offered under NELP-IX is March 18. which closed on October 12. There are various components of costs in usage of gas when unbundled. The government has hired UK-based Furgo Data Solutions Ltd to market the blocks. The “allocation” based system is changing to markets for gas. Perth and Singapore are planned to promote NELP-IX. 7 shallow water and 19 onland. Rest 15 (1 in deep water. Rajasthan (2). Gujarat (11). An investment commitment of more than $1. 5 in shallow water and 9 onland blocks) are recycled blocks .7 in deep sea. the government had awarded 33 blocks to successful bidders. Under NELP-VIII. The discoveries made under the NELP have resulted in in-place hydrocarbon reserve accretion of a staggering 642 million tonnes of oil and oil equivalent gas.1 billion in NELP-VIII is expected for the current blocks being offered.3 billion.1 billion investment was committed but actual investment so far has been $14. Of the 36 areas bid for.This has resulted in enhancement of exploration coverage from 11 per cent to about 58 per cent of Indian sedimentary basin between 2000 and 2010. Conclusion Gas market in india is still in its infancy. The seven shallow water and eight deep water blocks on off the east and west coast but no area in the prolific Krishna Godavari basin is on offer. $11. The onland blocks fall in Assam (2). The road shows/investors Meets at Moscow Houston.Out of 34 blocks. to be implemented from April 2012. 19 blocks are totally new areas -. ONGC relinquished the areas it had won in first and second round of NELP.9 per cent of Indian sedimentary basin area. Instead an investment linked incentive will be available. In the eight rounds of NELP since 1999. Of the recycled blocks. 70 areas or blocks for exploration were offered. The discoveries have added over 640 million tonnes of oil equivalent reserves. after it made no discovery.807 square kilometer. Out of 87 oil and gas discoveries made in NELP rounds. has done away with profit-linked incentives for all sectors. which users will have to consider before ruling out alternative fuels. 235 blocks have been awarded till date. Virtual pipelines and cluster methods are possible otins. natural gas production in Reliance Industries eastern offshore KG-D6 block commenced from April 2009.The proposed Draft Tax Code. Market of gas only improved by the transmission system is in place. The blocks offered in NELP-IX include 8 deep-sea. the biggest licensing round in India. The onland blocks include 8 small blocks for which there is technical qualifying criteria for companies to bid. 2009 attracted investment commitment of $1. Madhya Pradesh (2).These 34 blocks cover a sedimentary area of about 88. . This would mean short term pricing of transmission capacity as well. This will provide additional cash flow streams to the gas transportation entities and we might soon see a tariff regime for short term users and one for long-term users.multiple entry points. This would also facilitate short-term and spot contracts in gas apart from standard long-term contracts. 778MW is coal-fired. rehabilitation and relocation. • To estimate the extent of annual water availability at the site at 75% and 90% dependable surface flow. who didn’t want to be identified. • To identify a suitable location on the river near the plant site for constructing a water harvesting structure. We have to create dams for different seasons. 108.290MW will be gas-based and around 46.” Nath said. “Reservoir creation leads to issues relating to environment. • To estimate the extent of water volume needing storage. metres (bcm). “For all new projects. There has to be a comprehensive plan for setting up water resource facilities in states having potential for thermal development. The water cess is paid in advance for the one quarter of a year.” said Rakesh Nath.000 billion cu.Water resources The Central Electricity Authority (CEA) is worried that securing water linkages for thermal power plants is becoming tougher and could hurt plans to boost India’s power generation capacity. but said: “States are diverting water meant for agricultural use for power generation. • To conduct Topographical survey of the area to estimate area of submergence for the above storage and height of structure. • To indicate location of Intake and Pump house for withdrawal of water for the Plant area. While signing the memorandum of understanding government of the concerned state agrees to supply the water for the upcoming power plant. They have no option but to go for coastal projects by using sea water for the purpose.577MW by 2012. Of this.000MW coal-based thermal power project. while the average annual rainfall in India is 4. • Allocation of water by the WRD (water resource department) of the concerned district. • To conduct geological and geotechnical survey of proposed site for fixing suitability of structure.278MW installed capacity. to meet the requirements during lean flow periods in the river at 75% & 90% dependable surface flow. The committee here decides the amount of water to be allocated for the power plant from the total amount of water allocated for that district for the industrial purpose. According to the Central Water Commission. An official in the ministry of water resources confirmed the problem that thermal power plants are facing.” said another CEA official. While it takes 40 cu. Only in monsoons there is water in the rivers.602 MW. Of this 108. if any. 4.600MW is expected to come from coal-based projects.602 MW is thermal-power based. around 89. . chairman of CEA. Cusec is a measure of the flow rate. • To indicate the route of raw water main from the Intake to Plant site. while the remaining is fuelled by gas & diesel. the estimated utilizable surface water resources are 690bcm. • To conduct soil test for designing of structure. Of India’s 167. there is no water linkage available.” PROCEDURE TO GET WATER LINKAGES: • Signing up of MoU between the state government & the private entity. ft per second (cusec) of water for a 1. The country plans to add 78. “Already we are having problems in setting up some projects. the requirement is 20cusec for a gas-based thermal power unit. the country’s apex power sector planning body. We have already taken up the issue with our ministry (power ministry) to take up the issue with the ministry of water resources. • To analyze the available monthly and yearly surface flow at the specified location. After this we have to determine the following aspects of the reservoir • • • • Submergence area. No such settlement (Housed) would come under submergence. • • • Dead storage is taken as 2 MCM for the plant capacity of 2000 MW. Water requirement for township & other miscellaneous uses= 6 MCM So total amount of water required for 1000 MW capacity coal based power plant is = 42 MCM The monthly requirement of water=42/12 =3. Height of the structure. . DETERMINATION OF THE PARAMETERS OF THE STRUCTURE: In order to determine the height of the structure first of all we have to calculate the storage capacity of the reservoir. ESTIMATION OF ANNUAL WATER DEMAND: The coal based thermal power plant of capacity 100 MW requires 3.g.SELECTION OF WATER HARVESTING SITE: • • • • • • The catchment area should be sufficient to fulfill the plant requirement of water. FRL (Full Reservoir Level). Evaporation / seepage loss taken as 10% of Storage need.5 MCM STORAGE REQUIREMENT: The storage requirements at 90% dependability site have been estimated keeping following points in view. It should be at the optimum distance from the proposed plant site. For e. Barrage with radial width. Route loss @ 3% is also considered. The bed of the river is likely to provide a suitable foundation for providing water harvesting structure.6 X 10 MCM.  Increase in length of pipe line and its cost. The Gross storage is calculated keeping all points in view. So it comes out to be= 36 MCM.: A coal based power plant of capacity 1000 MW will require = 3. Other sites than this proposed site have few disadvantages like  Increase in Pumping cost due to more level difference.6 MCM of water annually for its successful operation. The site should be approachable through existing road. disposes effluents into a river or lake.industrial or domestic -. on river. • Power generation/industrial and other uses. But the government has let the NIPFP recommendations lie in its cupboards. none of the units surveyed in the Ganga basin practised water conservation measures. and charged accordingly. WATER is priced far too cheaply in India to prompt industrialists into conserving or recycling it. due to inadequate information on production and distribution costs in the case of most local bodies. "In most of the municipalities and boards. was very low -. Madras-based Tamil Nadu Petro Products Ltd spends about Rs 47 a kilolitre to conserve water for cooling purposes Water pricing in India depends more on socio-economic and political factors rather than on the cost of production and distribution or the willingness of people to pay. MWL (Maximum Water Level). Water allocation & charges In the planning and operation of system water allocation priorities shall be as under: • Drinking water supply • Irrigation and afforestation. The few cases where it has been revised. • Tourism Water resources department shall be made a nodal department for permitting different uses of water resources. For instance. Not surprisingly. water tariffs have not been revised for years. Pricing of water for industrial use is based on ad hoc criteria.• • • • MDDL (Minimum Draw Down Level). it is not possible to analyse the tariff structure. has been without any guidelines. because of its good ground and surface water resources. The study. says the NIPFP study. air and land." Murty and his fellow-researchers say there should be no free-riding on public goods such as water. . HFL (High Flood Level). there were several good examples of water conservation. in the dry regions of the country where water is priced higher. Water prices cannot be determined by market forces alone as water is more or less freely accessible to everyone. found that the production cost of water in this region. DSL (Dead Storage Level). In fact. which was undertaken by a group of researchers led by M N Murty and D B Gupta. tanks etc. Consumers are usually classified as domestic.about 20 paise a kilolitre. On the other hand. says a detailed study prepared by the National Institute of Public Finance and Policy (NIPFP) for the Ganga Project Directorate. Clear provision for reservation of drinking water shall be made in proposed irrigation projects of the state. The study assessed the water pollution caused by a dozen types of industrial units situated in the Ganga basin in Uttar Pradesh and West Bengal. it affects all of society and this social cost is difficult to estimate. reservoirs. And when the user -. commercial and industrial. So. However. Studies have shown the social cost of controlling water pollution per tonne of paper produced is Rs 145 for a mill with a daily capacity of 10 tonnes. say the researchers. more stringent standards should be imposed depending upon local water quality requirements. For instance. industries either get their water supply from the local municipal administration or make their own arrangements. national standards can be set based on technological and economic considerations alone and applied to all industries. While costs can be dealt with by water supply authorities. The researchers point out effluent standards can be fixed in two stages. depending on the quantity and nature of pollutants released. it is better to treat higher volumes of effluents. The government should levy taxes that take into account pollution control costs. pollution control boards will have to levy different pollution taxes on different industries. pollution taxes should provide industries with an incentive to recycle effluents and conserve water.Tax-based approach Given that environment is a public good and the polluter a free-rider. but not that of the victims. The CPCB standards correspond only to the first stage. The cost of such plants can be realised through a pollution tax on these units. . the pollution tax should aim only at ensuring factory effluents are of the desired quality. The study also shows that the cost of treatment of polluted water varies across industries. Two components Generally. and only Rs 30 for a mill with a daily capacity of 115 tonnes. the polluter should be asked to pay for pollution control. the municipality charge should consist of its pollution abatement cost. In the second stage. it may be useful to separate water costs from pollution taxes. Instead. Any pollution standard fixed without ascertaining the views of pollution victims cannot be regarded as a national standard. The minimum national standards developed by the Central Pollution Control Board (CPCB) try to keep the cost of pollution control to within one per cent of the annual turnover of a firm. is a political process that should involve both the victims and perpetrators of pollution. Since there are economies of scale in the treatment of polluted water. in the water-rich Gangetic basin. fixed on the basis of each kilolitre of water used. to recover the full cost of providing effluent treatment services. the combined effluents of a number of small units should be treated by the water pollution control board or a local administration unit. In the first. If the factory uses its own tubewell. which means the interests of polluters have been taken care of. The researchers suggest the price of water should include two components: its production cost and a pollution tax. without considering local conditions. Only standards developed in the second stage will relate directly to the damages borne by the victims. the researchers argue. however. But in drier areas. for practical purposes. or use a combination of both. factories drawing water from their own tubewells do not pay any charge. it is not economical for small units to have their own effluent treatment plants. taxes ought to be based on the pollution loads of different industries and pollution standards. At the moment. Therefore. The researchers also point out that the objective of the pollution tax could vary depending on the region in which it is being levied. Setting standards. 2) Heat recovery equipment: It includes the economizer. heat transfer surface fouling and poor operation and maintenance. like efficiency and evaporation ratio reduces with time due to poor combustion. air preheater & feed water heater. Even for a new boiler. flue gas & ash heat losses. = [ma (h-hf )]/C Where. Boiler Efficiency related to the boilers energy output to the boilers energy input The Boiler Efficiency is defined as “The ratio of heat actually utilized in generation of steam to the heat supplied by the fuel in the same time” i. 5) Properties & characteristics of fuel burnt. 3) Built in losses: It includes the heat transfer properties of the settings & construction materials. the arrangement of flues. can result in poor boiler performance. The variable factors are 1) 2) 3) 4) 5) 6) 7) Actual firing rate Fuel condition as it is fired The condition of heat absorbing surfaces Excess air fluctuations Incomplete combustion & combustibles in the refuse Charge in draught from the rated due to atmospheric conditions Humidity & temperature of the combustion air .e. the shape & volume of the furnace. reasons such as deteriorating fuel quality.e. in the simplest terms. ma = Mass of water actually evaporated into steam per Kg of fuel at the working pressure h = Enthalpy of steam per Kg under the generating conditions hf = Specific enthalpy of water at a given feed temperature C = Calorific value of the fuel in kJ/Kg The boiler efficiency depends on following factors: 1) Fixed factors 2) Variable factor The Fixed factors are: 1) Boiler design: It includes the arrangement & effectiveness of the heating surfaces. Boiler efficiency tests help us to find out the deviation of boiler efficiency from the best efficiency and target problem area for corrective action. the furnace volume & heating surface. represents the difference between the energy input and energy output. Boiler efficiency= Heat gained by the steam from the boiler per unit time/Calorific value of the fuel in kJ/Kg i. superheater. Boiler efficiency.Boiler Efficiency The performance parameters of boiler. the arrangement of steam & water circulation. water quality etc. 4) Rated rate of firing. it is easier to estimate the overall savings potential by taking efficiency action in that area.indicates the overall efficiency of the boiler inclusive thermal efficiency of the heat exchanger. including: • Number of boiler passes ( Normally we have two pass boiler) • Burner / boiler compatibility • Repeatable air/fuel control • Heating surface • Pressure vessel design Boiler efficiency calculations that are accurate and representative of actual boiler fuel usage require the use of proven and verified data. This image shows a typical boiler energy balance for a boiler in good running condition with no energy efficiency measures added. Boiler efficiency tests help us to find out the deviation of boiler efficiency from the best efficiency and target problem area for corrective action. By first identifying the areas of energy loss and roughly quantifying it.indicates the burners ability to burn fuel measured by unburned fuel and excess air in the exhaust • Thermal Efficiency . like efficiency and evaporation ratio reduces with time due to poor combustion. radiation and convection losses . exclusive radiation and convection losses • Fuel to Fluid Efficiency . Even for a new boiler. water quality etc. Boiler efficiency.The performance parameters of boiler.indicates the heat exchangers effectiveness to transfer heat from the combustion process to the water or steam in the boiler.output divided by input. including: • Proven stack temperature . reasons such as deteriorating fuel quality. represents the difference between the energy input and energy output. in the simplest terms. Boiler Efficiency may be indicated by • Combustion Efficiency . can result in poor boiler performance. Boiler Efficiency related to the boilers energy output to the boilers energy input . heat transfer surface fouling and poor operation and maintenance. High boiler efficiency is the result of specific design criteria which directly effects the fixed factor for boiler efficiency. • • • • Accurate fuel specification Actual operating excess air levels Proper ambient air temperature Proper radiation & convection losses Boiler Efficiency Thermal efficiency of boiler is defined as the percentage of heat input that is effectively utilized to generate steam. 2) The Indirect Method: Where the efficiency is the difference between the losses and the Energy input. 1) The Direct Method: Where the energy gain of the working fluid (water and steam) is compared with the energy content of the boiler fuel. There are two methods of assessing boiler efficiency. The Direct Method of testing: This is also known as ‘input-output method’ due to the fact that it needs only the useful output (steam) and the heat input (i. fuel) for evaluating the efficiency.e. This efficiency can be evaluated using the formula Boiler efficiency= Merits and Demerits of Direct Method Merits • Plant people can evaluate quickly the efficiency of boilers • Requires few parameters for computation • Needs few instruments for monitoring Demerits . 1. 1 The Various heat losses occurring in the boiler are: .e.6 TPH : 4000 kCal/kg 0 Boiler efficiency = = 72. by subtracting the heat loss fractions from 100. Here the efficiency is the difference between the losses and the energy input. The efficiency can be arrived at.1) = 90 + 0. i. Thus if boiler efficiency is 90%. The efficiency can be arrived at. by subtracting the heat loss fractions from 100.9 = 89. 1% error in measurement of losses will result in Efficiency = 100 – (10 + 0.9. an error of 1% in direct method will result in significant change in efficiency.5% 1 The Indirect Method of testing: Indirect method is also called as heat loss method.90 + 0.1 to 90. An important advantage: In this method the errors in measurement do not make significant change in efficiency. The standards do not include blow down loss in the efficiency determination process. In indirect method.1 = 89.9 to 90.• • Does not give clues to the operator as to why efficiency of system is lower Does not calculate various losses accountable for various efficiency levels Type of boiler: Coal fired Boiler Heat output data Quantity of steam generated (output) Steam pressure / temperature Enthalpy of steam (dry & Saturated) at 10 kg/cm2(g) pressure Feed water temperature Enthalpy of feed water Heat input data Quantity of coal consumed (Input) GCV of coal : 8 TPH : 10 kg/cm2 (g)/ 180 0C : 665 kCal/kg : 85 C : 85 kCal/kg : 1. Fuel 3. Combustion air c) Temperature measurements for 1. Boiler feed water d) Pressure measurements for 1.Measurements Required for Performance Assessment Testing The following parameters need to be measured. Condensate water 5. Combustion air 6. Condensate return 5. Temperature of flue gas b) Flow meter measurements for 1. Steam 3. Percentage of CO in flue gas ( also given by oxygen indicator) 3. Fuel 7. a) Flue gas analysis 1. Fuel 2. Feed water 4. Combustion air. Flue gas 2. as applicable for the computation of boiler efficiency and performance. Steam 3. Percentage of CO2 or O2 in flue gas 2. both primary and secondary . Steam 2. Makeup water 4. L1. M – kg of moisture in 1kg of fuel Cp – Specific heat of superheated steam (0. gas and solid fired boiler 1. Total dissolved solids (TDS) 2.Specific heat of superheated steam (0.Loss due to dry flue gas (sensible heat) This is the greatest boiler loss and can be calculated with the following formula: 2. L2. This water is converted to steam and this carries away heat in the form of its latent heat.45 kCal/kg)°C . This loss can be calculated with the following formula Where.45 kCal/kg °C) 3.4. and the superheat required to bring this steam to the temperature of the exhaust gas. pH 3. H2 . Draft e) Water Condition 1.Loss due to moisture in fuel (H2 O) Moisture entering the boiler with the fuel leaves as a superheated vapour. This moisture loss is made up of the sensible heat to bring the moisture to boiling point. Where. the latent heat of evaporation of the moisture.kg of H2 in 1 kg of fuel Cp .Loss due to hydrogen in fuel (H2) The combustion of hydrogen causes a heat loss because the product of combustion is water. L3. Blow down rate and quantity 1 The following losses are applicable to liquid. 4 to 1% Radiation and unaccountable loss An empirical formula for determining this loss is Log10B = 0. Total radiation and unaccounted loss = 1.4238 log10C Where. 5. H2. it must be included as a boiler loss. L6.8167 – 0. B= radiation and unaccounted loss C= specific boiler capacity in kg/s.5 to 2. AAS. Since this heat passes up the stack. L4. Normally surface loss and other unaccounted losses is assumed based on the type and size of the boiler as given below For industrial fire tube / packaged boiler = 1.5 6.Heat loss due to unburned carbon in fly ash and bottom ash Heat loss due to unburnt in fly ash (%) .584 is the latent heat corresponding to the partial pressure of water vapour.5B + 0. L5.Actual mass of air supplied/kg of fuel.5% For industrial water tube boiler = 2 to 3% For power station boiler = 0. Carbon monoxide is the only gas whose concentration can be determined conveniently in a boiler plant test. L7.Heat loss due to radiation and convection The other heat losses from a boiler consist of the loss of heat by radiation and convection from the boiler casting into the surrounding boiler house. and various hydrocarbons and are generally found in the flue gas of the boilers. is superheated as it passes through the boiler. 7.Loss due to moisture in air (H2 O) Vapour in the form of humidity in the incoming air. 4.Heat loss due to incomplete combustion Products formed by incomplete combustion could be mixed with oxygen and burned again with a further release of energy. Such products include CO. 8.63 = 31.6 = 41. L8.65 = 2.5 kCal/kg Ratio of bottom ash to fly ash = 90:10 Fuel Analysis (in %) Ash content in fuel Moisture in coal Carbon content Hydrogen content Nitrogen content Oxygen content GCV of Coal SOLUTION = 8.5 kg/hr Steam pressure = 43 kg/cm2(g) Steam temperature = 377 oC o Feed water temperature = 96 C %CO2 in Flue gas = 14 %CO in flue gas = 0.55 Average flue gas temperature = 190 oC Ambient temperature = 31 oC Humidity in ambient air = 0. Find the boiler efficiency by indirect method.6 = 14.17 kg/hr Steam generation rate = 21937. Fuel firing rate = 5599.48 = 3501 kCal/k Boiler efficiency by indirect method .5 m/s Total surface area of boiler = 90 m2 GCV of Bottom ash = 800 kCal/kg GCV of fly ash = 452.Heat loss due to unburnt in bottom ash (%) Boiler Efficiency by indirect method =100 –(L1+L2+L3+L4+L5+L6+L7+L8) Example: Efficiency Calculation for Coal Fired Boiler The following are the data collected for a boiler using coal as the fuel.0413 = 1.0204 kg / kg dry air Surface temperature of boiler = 70 oC Wind velocity around the boiler = 3. 8 x (2.48/8)} +(4.Step – 1 requirement Find theoretical air = Theoretical air required for complete combustion = kg/kg of coal [(11.6 x 41.4165/12 = 0.0% % Excess air supplied (EA) = = = 45.37% Step – 3 To find Excess air supplied Actual CO2 measured in flue gas = 14.0413 – 14.65) + {34.17 % Step – 4 To find actual mass of air supplied Actual mass of air supplied = {1 + EA/100} x theoretical air . Moles of N2 = 4.0347 20.91 kg / kg of coal = Moles of N2 = 77% of nitrogen in air Where moles of C ( CO2)t ( CO2)t = = = 0.35 x 0)] / 100 = Step – 2 Find theoretical CO2% % CO2at theoretical condition ( CO2)t Where. % Heat loss in dry flue gas (L1) = = L1 = 7.91 % 4.29 % .44 % 3.91 7. % Heat loss due to formation of water from H2in = fuel (L2) = L2 = 3.= = {1 + 45.17/100} x 4.54 kg / kg of coal Step – 6 To find all losses 1.88 % combustion air 2. % Heat loss due to moisture in fuel (L3) = L3 = = 5. % Heat loss due to moisture in air (L4) = = L4 = 0.13 kg/kg of coal Step –5 To find actual mass of dry flue gas Mass of = Mass of CO2 +Mass of N2content in the fuel+ Mass of N2 in the dry flue supplied + Mass of oxygen in flue gas gas Mass of = dry flue gas = 7. 9 x 0.63 90:10 452.25x sq.136 x 100 / 3501 1.77 % 100 – (L1+ L2+ L3+ L4+ L5+ L6+ L7+ L8) =100–(7.64 x 90 49017.86 544.3 x 0.55)4] + 1.136 kCal/kg of coal 62.58+ 0.5.9) /68.77) Heat loss in bottom ash % Heat loss in bottom ash L8 Boiler efficiency by indirect method .00863 kg 3.905 kCal / kg of coal = = = = = = = = 800 kCal/kg 0.1 x 0.58 % 0.17 0.6 kCal 49017.55)4– (304/55.905 x 100 / 3501 0.957 x(343 304)1.6 x 100 3501 x 5599.077 x 800 62.00863 x 452. % Heat loss due to unburnt in fly ash % Ash in coal Ratio of bottom ash to fly ash GCV of fly ash Amount of fly ash in 1 kg of coal = Heat loss in fly ash = % heat loss in fly ash L7 8.44+5.85 x 3. Heat loss due to radiation and convection (L6) = = = = Total radiation and convection loss per hour % radiation and convection loss L6 7.077 kg 0.548 x [ (343/55.11+1.88+3.5 3.25 % = = = = = = = 8.64 kCal / m2 544. % Heat loss due to unburnt in bottom ash GCV of bottom ash Amount of bottom ash in 1 kg of coal = = = = = = 2.25+ 0.rt of [(196.9] 633.0863 0.5 kCal/kg 0.91+0.0863 0.29+ 2.3 w/m2 633.5 + 68.11 % 0. % Heat loss due to partial conversion of C to CO (L5) = L5 6. L4 = 10. Loss due to hydrogen in fuel. L2 = 120. the optimum efficiency of boilers occurs at 65–85% of full load.58 0. replacement must be carefully studied. The discussion on Boiler efficiency would not be over without discussing about the Technical standards for construction of electric plants and lines. to operate a fewer number of boilers at higher loads. Surface heat losses. A change in a boiler can be financially attractive if the existing boiler is : • Old and inefficient • Not capable of firing cheaper substitution fuel • Over or under-sized for present requirements • Not designed for ideal loading conditions The feasibility study should examine all implications of long-term fuel availability and company growth plans. Partial combustion of C to CO. on the whole. than to operate a large number at low loads. as guaranteed by the manufacturer shall be not less than the value as arrived with the following formulae for the quality of performance of coal and lignite: Minimum steam generator efficiency (%) = 92.=100-22. L1 = 275. A=% ash in fuel.88 2.77 % Since.15 5.91 0. L6 = 8. L3 = 206. Loss due to moisture in air.25 0.44 5.97 Boiler Efficiency= 100 – (L1+ L2+ L3+ L4+ L5+ L6+ L7+ L8) = 77. L7 = 3. L8 = 61. Loss due to Unburnt in fly ash. Regulations 2010.91 4.77 % Input/Output Parameter kCal / kg of coal % loss 100 7.5 – ((50*A+630(M+9*H))/HHV) Where. Boiler Replacement The potential savings from replacing a boiler depend on the anticipated change in overall efficiency. L5 = 90. Loss due to Unburnt in bottom ash.75 7. Dry flue gas. .77 Heat Input = 3501 Losses in boiler 1. issued by CEA.11 1. Since boiler plants traditionally have a useful life of well over 25 years.23 =77. All financial and engineering factors should be considered. According to theses regulations the efficiency of the steam generator (on high heat value basis) in %.29 2. it is usually more efficient.85 8. Loss due to moisture in fuel.43 3.88 3.32 6. M=% moisture in fuel. the station heat rate is specified as follows Existing Thermal Generating Station . STATION HEAT RATE According to “Terms and Conditions of Tariff Regulations 2009-14”. HHV= High heat value of fuel in Kcal/Kg. H=% hydro in fuel and. . Provided that the design heat rate shall not exceed the following maximum design unit heat rates depending upon the pressure and temperature ratings of the units: Provided further that in case pressure and temperature parameters of a unit are different from above ratings. Provided also that if one or more units were declared under commercial operation prior to 1.4. the heat rate norms for those units as well as units declared under commercial operation on or after 1.2009.065 X Design Heat Rate (kCal/kWh) Design Heat Rate of a unit means the unit heat rate guaranteed by the supplier at conditions of 100% MCR. zero percent make up.2009 shall be lower of the heat rate norms arrived at by above methodology and the norms as per the regulation 26 (ii) A (a) of existing thermal power plants. the maximum design unit heat rate of the nearest class shall be taken Provided also that where unit heat rate has not been guaranteed but turbine cycle heat rate and boiler efficiency are guaranteed separately by the same supplier or different suppliers.4. the unit design heat rate shall be arrived at by using guaranteed turbine cycle heat rate and boiler efficiency.200/210/250 MW Sets 500 MW Sets (Sub-critical) 2500 KCal/kWh 2425 kCal/kWh In respect of 500 MW and above units where the boiler feed pumps are electrically operated.2009 (a) Coal-based and lignite-fired Thermal Generating Stations = 1.4. design coal and design cooling water temperature/back pressure. the gross station heat rate shall be 40 kCal/kWh lower than the gross station heat rate specified above New Thermal Generating Station achieving COD on or after 1. During this step (A to B on Figure) the expanding gas causes the piston to do work on the surroundings. 2. The gas expansion is propelled by absorption of quantity Q1 of heat from the high temperature reservoir.TURBINE EFFICIENCY The Carnot cycle The Carnot cycle when acting as a heat engine consists of the following steps: 1. TC. The gas continues to expand. so that no heat is gained or lost. (D to A on Figure) Once again we assume the piston and cylinder are thermally insulated. At this point the gas is in the same state as at the start of step 1. Isentropic compression of the gas. The gas expansion causes it to cool to the "cold" temperature. TC. causing quantity Q2 of heat to flow out of the gas to the low temperature reservoir. doing work on the surroundings. TH (isothermal heat addition). Isentropic (Reverrsible adiabatic) expansion of the gas. the surroundings do work on the gas. . Reversible isothermal compression of the gas at the "cold" temperature. During this step. For this step (B to C on Figure) we assume the piston and cylinder are thermally insulated. 4. 3. (isothermal heat rejection) (C to D on Figure) Now the surroundings do work on the gas. compressing it and causing the temperature to rise to TH. Reversible isothermal expansion of the gas at the "hot" temperature. • Process 3-4: The dry saturated vapor expands through a turbine. as the fluid is a liquid at this stage the pump requires little input energy.p2 Equations . • Process 2-3: The high pressure liquid enters a boiler where it is heated at constant pressure by an external heat source to become a dry saturated vapor. dimensionless The "specific enthalpies" at indicated points on the T-S diagram The final "specific enthalpy" of the fluid if the turbine were isentropic The pressures before and after the compression process ηtherm ηpump. • Process 1-2: The working fluid is pumped from low to high pressure. These states are identified by number in the diagram to the right.h3. each changing the state of the working fluid. Variables Heat flow rate to or from the system (energy per unit time) Mass flow rate (mass per unit time) Mechanical power consumed by or provided to the system (energy per unit time) Thermodynamic efficiency of the process (net power output per heat input. generating power.h2.ηturb h1. dimensionless) Isentropic efficiency of the compression (feed pump) and expansion (turbine) processes.h4 h4s p1. The pressure and temperature of the condenser is fixed by the temperature of the cooling coils as the fluid is undergoing a phase-change. This decreases the temperature and pressure of the vapor. • Process 4-1: The wet vapor then enters a condenser where it is condensed at a constant pressure and temperature to become a saturated liquid. and some condensation may occur.Rankine cycle Processes of the Rankine cycle There are four processes in the Rankine cycle. After the vapor has passed through the first turbine.Rankine cycle with reheat In this variation. . The first accepts vapor from the boiler at high pressure. it re-enters the boiler and is reheated before passing through a second. this prevents the vapor from condensing during its expansion which can seriously damage the turbine blades. two turbines work in series. lower pressure turbine. and improves the efficiency of the cycle. Among other advantages. How regeneration works Figure 4: a Rankine cycle with regeneration Choosing regeneration assumptions With the design layout complete. We will look at each of these in turn. . the splitter (SPL1). For this example. The High-Pressure Turbine Outlet (S2) What pressure do we choose for the extracted feedwater? We don't know yet. we will see if another pressure works better. which is the highest temperature in the cycle. we turn to adding the assumptions which allow CyclePad to solve the cycle. and the inlet of the high-pressure pump (PMP1). the outlet of the low-pressure pump (PMP2). The Carnot cycle is maximally efficient. in part. which gives the two turbines pressure ratios of 25 and 20. Similarly. there are four places where we have to make new assumptions: the outlet of the high-pressure turbine (S2). when we have the cycle solved and we can let CyclePad do sensitivity analyses.The Rankine Cycle with Rengeration Improving cycle efficiencies Improving cycle efficiency almost always involves making a cycle more like a Carnot cycle operating between the same high and low temperature limits. because it receives all of its heat addition at the same temperature. This makes them roughly equal and keeps either one from having an astronomically high pressure ratio. it rejects all of its heat at the same low temperature. The T-s diagram below details the working of a Carnot cycle operating between the same temperature limits as our Rankine cycle. so we'll choose 200 kPa. (The original Rankine cycle had a turbine PR equal to 500!) Later. 0% quality and a 0. The term Brayton cycle has more recently been given to the gas turbine engine. • isobaric process . How high can we heat the water to improve this? Brayton cycle Brayton-type engine consists of three components: • A gas compressor • A mixing chamber • An expander In the original 19th-century Brayton engine. This also has three components: • A gas compressor • A burner (or combustion chamber) • An expansion turbine Ideal Brayton cycle: • isentropic process .The heated.4 kg/sec. a constant-pressure isobaric process. if we make it higher. The compressed air then runs through a mixing chamber where fuel is added. The water exiting the low-pressure pump is only at 46 C and the water entering the heater in the original Rankine cycle was at about the same temperature (adding pressure to an incompressible fluid doesn't raise its temperature much). causing the heated air and combustion products to expand through a piston/cylinder. 60% quality stream into a pair of 0. needs to be pumped up to the pressure of the water extracted from the high-pressure turbine. The Low-pressure Pump Outlet (S5) What pressure should the water at this state have? This water. the higher pressure extract water will flow backward through the low-pressure pump and. where fuel is burned. This allows each stream to have different specific properties (v. which enters the pump at the cooler pressure. we could split 1 kg/sec. though they still have the same temperature and pressure. • isobaric process . where it is compressed. The heated (by compression). the low pressure pump water will flow backward through the splitter. expanding through a turbine (or series of turbines). and so on). where it is pressurized. another theoretically isentropic process. h. This is a matter of simple hydrostatics: if we make it lower. Quick Note This simulates situations when we use a special splitter that allows us to separate the saturated mixture into two streams that each have different proportions of liquid and vapor. For instance. 100% quality streams. pressurized air and fuel mixture is then ignited in an expansion cylinder and energy is released.The compressed air then runs through a combustion chamber. Some of the work extracted by the piston/cylinder is used to drive the compressor through a crankshaft arrangement. • isentropic process . .Ambient air is drawn into the compressor.6 kg/sec. ambient air is drawn into a piston compressor.Heat Rejection (in the atmosphere). Some of the work extracted by the turbine is used to drive the compressor. pressurized air then gives up its energy.The Splitter (SPL1) The splitter is used to draw some of the working fluid from the high-pressure turbine stage and direct it towards the mixer. This means that the stuff exiting the splitter is the same as the stuff entering it. The High-Pressure Pump Inlet (S6) Our whole purpose in adding heat to this water is to raise its temperature before it enters the heater and improve the cycle efficiency. heating that air—a constant-pressure process. since the chamber is open to flow in and out. ideally an isentropic process. • isobaric process . • isobaric process . In general. losses through the compressor and the expander represent sources of inescapable working inefficiencies. Since neither the compression nor the expansion can be truly isentropic. Figure 1 and Figure 2. Figure 1: Brayton cycle efficiency .Compression. while the other indicates how the specific power output changes with an increase in the gas turbine inlet temperature for two different pressure ratio values.Heat Rejection. • adiabatic process .Heat Addition. increasing the compression ratio is the most direct way to increase the overall power output of a Brayton system Here are two plots. for the ideal Brayton cycle.Expansion.Actual Brayton cycle: • adiabatic process . One plot indicates how the cycle efficiency changes with an increase in pressure ratio. • Intercooling. wherein the working fluid—in most cases air—expands through a series of turbines. wherein the still-warm post-turbine fluid is passed through a heat exchanger to preheat the fluid just entering the combustion chamber. is the air refrigeration cycle or Bell Coleman cycle. This has the advantage of increasing the power output possible for a given compression ratio without exceeding any metallurgical constraints (typically about 1000°C).Figure 2: Brayton cycle specific power output Methods to increase power The power output of a Brayton engine can be improved in the following manners: • Reheat. with an attendant decrease in the amount of work needed for the compression stage overall. • A Brayton engine also forms half of the combined cycle system. Reverse Brayton cycle A Brayton cycle that is driven in reverse. Its purpose is to move heat. The Otto cycle The Otto Cycle consists of adiabatic compression. heat addition at constant volume. then a cooler. This air cooling technique is used widely in jet aircraft. It allows also results in less power lost as waste heat. then a second stage of compressors before entering the combustion chamber. this allows for a reduction in the specific volume of the fluid entering the second stage of compressors. which combines with a Rankine engine to further increase overall efficiency. • Cogeneration systems make use of the waste heat from Brayton engines. typically for hot water production or space heating. adiabatic expansion and rejection of heat at constant volume. rather than produce work. or reciprocating movements of a piston in a cylinder: . and when air is the working fluid. • Regeneration. While this requires an increase in the fuel consumption of the combustion chamber. wherein the working fluid passes through a first stage of compressors.. via net work input. characterized by four strokes. This directly offsets fuel consumption for the same operating conditions improving efficiency. then is passed through a second combustion chamber before expanding to ambient pressure through a final set of turbines. The resulting pressure of burning gases pushes the piston through the power stroke. On the intake or induction stroke of the piston. and the compression stroke compresses the fuel–air mixture.): • Process 1 to 2 is isentropic compression (blue) • Process 2 to 3 is reversible constant pressure heating (red) • Process 3 to 4 is isentropic expansion (yellow) • Process 4 to 1 is reversible constant volume cooling (green) The diesel is a heat engine: it converts heat into work. the piston descends from the top of the cylinder. A mixture of fuel and air is forced (by atmospheric or greater pressure) into the cylinder through the intake (inlet) port. where P is pressure and v is specific volume. The image on the left shows a P-v diagram for the ideal diesel cycle. The ideal diesel cycle follows the following four distinct processes (The color references refer to the color of the line on the diagram.intake (induction) stroke 2. In the exhaust stroke. power stroke 4. . reducing the pressure inside the cylinder. 1. compression stroke 3. The air–fuel mixture is then ignited near the end of the compression stroke. exhaust stroke The cycle begins at top dead center (TDC). The cycle follows the numbers 1-4 in clockwise direction. The intake (inlet) valve (or valves) then close(s). usually by a spark plug (for a gasoline or Otto cycle engine) or by the heat and pressure of compression (for a Diesel cycle or compression ignition engine). the piston pushes the products of combustion from the cylinder through an exhaust valve or valves. Diesel cycle The Ideal Diesel Cycle P-v Diagram for the Ideal Diesel cycle. when the piston is furthest away from the axis of the crankrshaft. The flame temperature can be approximated to the adiabatic flame temperature of the fuel with corresponding air-to-fuel ratio and compression pressure. Thermodynamic cycle A thermodynamic cycle is a series of thermodynamic processes which returns a system to its initial state. The Otto cycle by comparison has both the heat addition and rejection at constant volume. The actual thermal efficiency will be significantly lower due to heat and friction losses. The formula is more complex than the Otto cycle (petrol/gasoline engine) relation that has the following formula. but rather are process dependent. The additional complexity for the diesel formula comes around since the heat addition is at constant pressure and the heat rejection is at constant volume.Work in (Win) is done by the piston compressing the working fluid Heat in (Qin) is done by the combustion of the fuel Work out (Wout) is done by the working fluid expanding on to the piston. T1 can be approximated to the inlet air temperature. P3. Properties depend only on the thermodynamic state and thus do not change over a cycle. It has the following formula: • • • Where ηth is thermal efficiency α is the cut-off ratio (ratio between the end and start volume for the combustion phase) r is the compression ratio γ is ratio of specific heats (Cp/Cv) The cut-off ration can be expressed in terms of temperature as shown below: T2 = T1rγ − 1 T3 can be approximated to the flame temperature of the fuel used. The first law of thermodynamics dictates that the net heat input is equal to the net work output over any cycle. The repeating nature of the . This formula only gives the ideal thermal efficiency. this produces usable torque • Heat out (Qout) is done by venting the air Maximum thermal efficiency The maximum thermal efficiency of a diesel cycle is dependent on the compression ratio and the cut-off ratio. Variables such as heat and work are not zero over a cycle. which supply most of the world's electric power and run almost all motor vehicles. Thermodynamic cycles often use quasi static processes to model the workings of actual devices. which models gasoline engines and the Diesel cycle. is: . Equation (2) makes a cyclic process similar to an isothermal process: even though the internal energy changes during the course of the cyclic process. Cycles that model external combustion engines include the Brayton cycle. when the cyclic process finishes the system's energy is the same as the energy it had when the process began. The clockwise thermodynamic cycle indicated by the arrows shows that the cycle represents a heat engine. For example the pressure-volume mechanical work done in the heat engine cycle. Heat engine Thermodynamic power cycles are the basis for the operation of heat engines. The cycle consists of four states (the point shown by crosses) and four thermodynamic processes (lines). and the Rankine cycle. which models diesel engines. Power cycles can be divided according to the type of heat engine they seek to model. The area enclosed by the loop is the work (W) done by the process: . This work is equal to the balance of heat (Q) transferred into the system: . Example of P-V diagram of a thermodynamic cycle. which models steam turbines.process path allows for continuous operation. which models gas turbines. consisting of 4 thermodynamic processes. Thermodynamic power cycles Heat engine diagram. The most common cycles that model internal combustion engines are the Otto cycle. making the cycle an important concept in thermodynamics. Effect of operating conditions on steam turbines A condensing turbine system is shown in figure below. equation (3) simplifies to: STEAM TURBINE Steam are a major energy consumer. The jet impinges on the turbine's curved blades which change the direction of the flow. which in turn will significantly reduce energy requirement. B) Reaction turbine--.Small blades. tip clearance 0.Load tip leakage ratio is smaller.If no volume change happens in process 4->1 and 2->3. Newton's third law describes the transfer of energy for reaction turbines. Ratio is smallest. Low Pressure Turbine efficiency-85% Reason. turbine exhaust vacuum is controlled/ maintained by vacuum ejector system of the surface condenser. Intermediate Pressure Turbine efficiency (IPT)-95% Reason.Big blade size. Newton's second law describes the transfer of energy for impulse turbines. Ratio of blade size to tip clearance is highest. Various operating parameters affect condensing and back pressure turbine steam consumption and efficiency.Reaction turbines are acted on by steam. tip clearance 4mm. tip clearance 0.5 mm.Impulse turbines change the velocity of a steam jet.Very big blades. Vacuum in the surface condenser i. Turbine exhaust operating below atmosphere.5 mm. which changes pressure as it moves through the turbine and gives up its energy.e. Other forms of the turbine are --a) Impulse turbine b) Velocity compounding c) Pressure compounding d) Pressure – Velocity compounding Turbine efficiency High Pressure Turbine efficiency (HPT)-80% Reason. The resulting change in momentum (impulse) causes a force on the turbine blades. There are two type of the steam turbineA) Impulse turbine-. They must be encased to contain the water pressure (or suction). or they must be fully submerged in the water flow. . Optimizing process operating conditions can considerably improve turbine water rate. Low tip leakage. is condensed in a shell and tube exchanger called surface condenser. Condensate flows in the shell side of the condenser and steam is condensed by the cooling water. Turbines are designed for a particular operating conditions like steam inlet pressure.Figure . All the turbines are designed for a specified steam inlet pressure. Lowering the steam inlet pressure will hampers the turbine efficiency and steam consumption in the turbine will increase. . Effect of various operating parameters is illustrated in the succeeding paragraphs. Variations in these parameters affects the steam consumption in the turbines and also the turbine efficiency. 2. Similarly at higher steam inlet pressure energy available to run the turbine will be high. which in turn will reduce the steam consumption in the turbine.1 Effect of Steam inlet pressure Steam inlet pressure of the turbine also affects the turbine performance. Efforts are made to show the impact of various operating conditions by considering the following steam conditions as illustration.2a & 2b represents the effects of steam inlet pressure on steam consumption and turbine efficiency respectively. steam inlet pressure shall be maintained at design level. 1 % reduction in steam consumption saves around $ 47000 annually for condensing turbines and around $ 84000 annually in back pressure turbine. For obtaining the design efficiency. which affects the performance of the turbines in a significant way. keeping all other factors constant for the condensing type turbine. steam inlet temperature and turbine exhaust pressure/ exhaust vacuum. LHV of the fuel for generating steam is considered as 10500 kcal/kg and boiler efficiency is taken as 87 %. Theoretical turbine efficiency is calculated as workdone by the turbine to the heat supplied to generate the steam. In the above referred turbines. 7 % and improves the turbine efficiency by about 0. at higher steam inlet temperature. Improvement in back pressure type turbine is more than the condensing type turbine.1 % respectively. In other words.4a & 4b represents the effects of steam inlet temperature on steam consumption and turbine efficiency respectively. keeping all other factors constant for the condensing type turbine. work done by the turbine will be low. enthalpy will be low. Effect of Steam inlet temperature Enthalpy of steam is a function of temperature and pressure.Figure .3 % and improves the turbine efficiency by about 0. heat extraction by the turbine will be higher and hence for the required output. At lower temperature.3a & 3b .2a & 2b indicates that increase in steam inlet pressure by 1 kg/cm2 in condensing type turbine reduces the steam consumption in the turbine by about 0. steam consumption will reduce. .16 % as shown in figure . Figure . hence steam consumption for the required output will be higher. In case of back pressure type turbine increase in steam inlet pressure by 1 kg/cm2 reduces the steam consumption in the turbine by about 0. turbine efficiency will be low. Exhaust pressure lower than the specified will reduce the steam consumption and improves the turbine efficiency.6a &6b.4a & 4b indicates that increase in steam inlet temperature by 10 deg C in condensing type turbine reduces the steam consumption in the turbine by about % and improves the turbine efficiency by about 0. keeping all other operating parameters constant. .12 % as shown in figure . will lower the turbine efficiency and reduces the steam consumption. Similarly exhaust vacuum lower than the specified.5 % and improves the turbine efficiency by about 0.12 % respectively. Improvement in back pressure type turbine is more than the condensing type turbine.Figure . Effect of exhaust pressure/ vacuum Higher exhaust pressure/ lower vacuum. increases the steam consumption in the turbine. Figure 6a & 6b represents the effects of exhaust vacuum on steam consumption and turbine efficiency respectively. In case of back pressure type turbine increase in steam inlet temperature by 10 deg C reduces the steam consumption in the turbine by about 1. keeping all other factors constant for the condensing type turbine. The leaving velocity is proportional to the specific volume. Main thing to realize is that when there is ingress. Motive steam condition shall be . the condensate temperature lies lowered below that corresponding to the total pressures since it is corresponding the partial pressure of the steam only.Figure 6a & 6b indicates that improvement in exhaust vacuum by 10 mm Hg. The turbine manufacturer’s curves should give some indication.8 % and improves the turbine efficiency by about 0. therefore this temperature differential is also of important . The gain in available energy due to higher vacuum is partly offset by the increase in specific volume hence of exhaust losses.1 %. In case of back pressure type turbine reduction in exhaust pressure by 1. Improvement in turbine efficiency varies significantly from 0. the specific volume increases rapidly with improvement in vacuum. as accumulation of this hampers the performance of surface condenser. Removal of air/ inerts ingress is important. which reduces the surface condenser vacuum.4 %.Because of partial pressure of the air at the bottom of the condenser. reduces the steam consumption in the turbine by about 0.7a & 7b.0 kg/cm2. therefore temperature differential increases by way of increase in condensing temperature in order to get heat across air barrier.A high value of TTD is an indication of contamination of CW side of the tubes by lime and dirt and also that of air ingress in steam space. Under cooling of the condensate is due to air leakage only. The terminal temperature difference (TTD) which is defined as the temperature difference between steam and saturation to outgoing to CW water is intact a measure of its log mean temperature differential (LMTD). the turning point is well below the reach even with coldest CW water in winter. This makes the vacuum worst.24 % to 0.14 % as shown by figure . the heat transfer coefficient become poor. reduces the steam consumption in the turbine by about 1. In our country. Factors affecting the exhaust vacuum in the condensing type turbines · Vacuum ejector system Vacuum ejector system creates and maintains the vacuum in the surface condenser by removing the air/ inerts ingress. It can be minimize when we put inter stage glands between shaft and glands between shaft and diaphragm.At the exhaust of the turbine the steam loss its pressure and there is loss of the velocity of the steam. f) Exhaust loss . Due to the friction the heat is generated and the heat is taken away by the cooling oil.Due to this loss the head of the pressure drop it mean that there is loss in the pressure. · Higher size of exhaust pipe In many condensing turbines it is observed that the exhaust vacuum of these turbines is much less than the vacuum at the condenser. This loss is called as the Partial admission loss. b) Journal and thrust bearing. Pay back period of replacing the exhaust pipeline was 6 months with investment of $ 40000. TURBINE LOSS Internal loss Nozzle friction loss. In one of the turbine. it is due to the higher pressure drop in the exhaust pipeline from turbine exhaust to the condenser. Inter-after condenser shall be cleaned in the available opportunity. steam condensate into the water and due to the water’s weight there is the loss of the velocity of the turbine shaft. · Exhaust side of the turbine shall be properly steam sealed to avoid any ingress of air. e) Partial admission loss. as they get choked due to foreign material coming with cooling water.In the bearing there is loss due to the friction of the shaft and the bibet material. · Flange joints shall be tightened properly to avoid any ingress of air. .e.Due to friction there is the loss of the pressure in the each blade this loss decrease the pressure of the steam turbine. b) Blade friction loss. vacuum at the turbine exhaust improved by 50 mm Hg.In the turbine there is arrangement that steam should not go out of the turbine and air should not enter in the bearing oil of the turbine so there is system called gland which used to protect the turbine from the above problem. c) Disc friction loss – d) Diaphragm glad and blade tip leakage.maintained as specified. But due to leakage in the balancing disc there is loss of the pressure in the high pressure side. Mainly. There is also balancing hole in disc to equalize the pressure on the both side. Let assume that at the exhaust hood the steam having the velocity = V Exhaust loss = 0. exhaust line size of 900 mm was replaced with 1300 mm. The pressure drop in the exhaust pipe reduced by 50 mm Hg i. External loss a) a) Shaft gland leakage. In order to improve the vacuum at turbine exhaust so as to reduce steam consumption in the turbine.5 X (M V2) g) Wetness – At the exhaust of the turbine.To improve the load bearing capacity the steam is to inter at the three or four stage.Pressure compounding turbine there is a pressure drop across each fixed nozzle that is across diaphragm so the gap between the diaphragm and shaft is source of the steam leakage. Due to this the there is loss in the steam head. exhaust pipeline of these turbines can be replaced with higher size. and electricity generation are all . GAS TURBINES In a gas turbine.35 meters thick. Loss due to air ingress This loss can be eliminated and steps should be taken to locate and stop any air ingress into the system under the vacuum as soon as the condition occurs. Loss due to incorrect cooling water quantity This is a loss which can normally be eliminated. If the cooling water temperature rise across the condenser is less than optimum. f) Condenser losses 1 . so he should always be informed. and manufacturers use the terms interchangeably. hence the term “gas turbine. Industry groups.” Gas turbines are also referred to as combustion turbines. this give smaller cooling water.254mm thick is approximately the same as that offered by a slab o copper 3. then he opening of the condenser cooling water outlet valve should be reduced. fuel delivery. The effect of this loss on vacuum can be minimized by increasing the flow of cooling water through the condenser. 4. temperature rise across the condenser than optimum. or combustion gas turbines. This condition may also be shown u when the condensate temperature is lower that the saturated steam temperature. expansion of combustion gas through a turbine. FACTOR AFFECTING THE OPERATING EFFICIENCY OF THE TURBINE a) b) c) d) Nozzle governing Throttle governing Overload governing Effect of the vacuum e) Effect of mean steam and reheat temperature. The thermal resistively of a layer of air 0. It is possible. little can be done to eliminate the cause of this loss. the working medium for transforming thermal energy into rotating mechanical energy is the hot combustion gas. this loss must be accepted to some extent. as the tubes must normally be cleaned when the unit is of f load. However soon as loss due to dirty tubes is determined it should be ascertained that the chlorine injection to the affected condensed is satisfactory.c) Governing and oil pump – For the operating of the governing there is requirement control oil and the function of the control oil is to control the operation of the system properly such that the turbine should having continuous supply of the load. Excessive air in the condenser may lead to an increased reading on the condensate oxygen meter. 3. of course to minimize the loss by having abnormal quantity of cooling water flowing through the condenser.Losses due to high cooling water temperature Cooling towers when installed are performing satisfactory. Air compression. Loss due to dirty tubes Operationally. Gas turbine generators are self-contained packaged power plants. 2. users. It may be that the station chemist will wish to have the dosage increased. combustion. Standardization and modularization combine to provide product benefits of relatively low capital cost and fast installation of power generation capacity. The modular concept of the package power plants made gas turbines relatively quick and easy to install. metallurgy improvements and cycle innovations. Future enhancements in gas turbine technology can be expected from higher firing temperatures.accomplished in a compact combination of equipment. An economic screening of power plant is shown in fig1. the manufacturers of gas turbines have a defined product. Gas turbine technology can be used in a variety of configurations for electric power generation. Most gas turbine applications rely on natural gas or fuel oil for fuel. either strictly for power generation or in conjunction with an industrial company as cogeneration power plants. Cogeneration cycles use the steam generated from exhaust gas for process or heating requirements. multi-staged combustion techniques and emission control capability. Improvement in efficiency and reliability and application of combined cycles have added to the economic benefits of the technology and now give gas turbine-based plants a wider range of application on electric systems. Combined cycles combine the gas turbine and steam turbine cycles into more efficient power plants by utilizing the gas turbine exhaust gas heat. Therefore. . allowing for substantial standardization and assembly line manufacturing. usually provided by a single supplier under a single contract. Gas turbine products and applications are changing rapidly. Of the conventional applications. early utility applications of gas turbine generators were strictly for peak load operation for a few hundred hours per year. simple cycle operation is generally the least efficient and is used primarily for peaking power generation. project specific comparison will depend on fuel costs. increased pressure ratios. In contrast to steam turbine-generators. Fuel flexibility and efficient thermodynamic cycles have become important characteristics for gas turbine applications. capital costs and maintenance requirements. Conventional applications are simple cycle. which are designed for a particular application. During the late 1980s and early 1990s the availability and economics of natural gas made gas turine-based power plants the preferred choice for the majority of new power generation additions in the United States. combined cycle or cogeneration. The gas turbine generator will continue to play an important role in meeting power generation requirements as technology advances and as the product and cycle designs respond to changes in fuel economics and allowable plant emissions. The benefits of low capital cost and fast installation were initially offset by higher operating costs when compared to other installed capacity. Electric utility companies use gas turbines predominantly in simple cycle and combined cycle applications. cycle efficiency and reduced exhaust gas emissions are the primary technical challenges to advancing gas turbine technology. Further improvements in the areas of fuel flexibility. Non-utility generator companies predominantly use combined cycles. The technology continues to evolve through innovations in component cooling techniques. improved materials. Typically.Thermodynamic fundamentals: The simple open cycle gas turbine is shown schematically in fig2. The gas turbine consists of compressor section. The remaining work (Wnet) is available to drive an electric generator or for mechanical drive applications. combustor and turbine section. . As indicated in fig 2. The expansion process produces useful shaft work. over 50% of the turbine shaft work produced is required to drive the compressor. Fuel is added and combusted in the combustor. The combustion products exit the combustor at state 3 and expand from state point 3 to state point 4 (atmosphere) in the turbine section. ambient air is first compressed from state point 1 to state point 2 in the compressor section. reviewing the characteristics of the Brayton cycle provides useful insights into the operating and performance characteristics of an actual gas turbine system. the working fluid of the Brayton cycle. is assumed to be an ideal gas. Air.Fu el Igniti on Work Out Compre ssor Turbine Air In Fig 2: Typical open cycle gas turbine system Flue Gases Operation of and actual gas turbine approaches that of an idealized thermodynamic cycle called the airstandard Brayton cycle. and the specific heat of the air . It is further assumed that the mass flow rate through the cycle is constant. Consequently. the air is of fixed composition. . The compression and expansion portions of the cycle are internally reversible and adiabatic ( isentropic) processes. heat addition at constant pressure. A comparison of figs 2 and 3 highlights the major differences between an open cycle gas turbine and air-standard Brayton cycle. expansion and heat rejection at constant pressure.is constant. Four thermodynamic processes make up the Brayton cycle: compression. Fu el Heat Excha nger Compr essor Turbine Work Out Air In Heat Excha nger Fig 3: Air-Standard Brayton Cycle A Typical Air Standard Byayton Cycle Flue Gases Figure 3 depicts the air-standard Brayton cycle. the direct combustion process of an actual gas turbine is conceptualized by heat exchanger that transfers heat to the working fluid from an external source. Because the mass flow rate is assumed to be constant throughout the process. The actual inlet and exhaust processes of the gas turbine are conceptualized by a heat exchanger that rejects heat at constant pressure to the surroundings to complete the cycle. Figure 4 shows the generalized pressure-volume (P-v) and temperature-entropy (T-s) diagrams for the airstandard Brayton cycle. and QL= heat rejected from the system. Eq 2 can be simplified and thermal efficiency can be written as follows: ηth=1. • Heating of the compressed air by direct combustion rather than an indirect heat exchanger. • Thermal. Fig 4 P-v and T-s diagrams for the Brayton cycle Actual gas turbine performance would approach that of the Brayton cycle if not for the following: • Irreversibilities that occur in the compressor and turbine..T4/T3 ………………….5 . The state point numbers in fig 4 correspond to the numbers shown in fig 3. T3/T4=T2/T1 or T3/T2=T4/T1 …………………. • Pressure losses that occur in the flow passages and the combustor.T1(T4/ T1-1)/ T2(T3/ T2-1) ………………….. QH= heat added to the system.T1/ T2 or ηth=1.. ηth=1.3 ………………….1 where Wnet= useful work available.. thereby increasing the mass flow rate throughout the system downstream if the combustor. mechanical and electrical losses. Since the specific heat is assumed constant..4 Consequently.2 reffering to fig4 and noting that P3/P4=P2/P1 And also noting that. Referring to fig 3 the thermal efficiency of Brayton cycle is defined as follows: ηth= Wnet/QH=(QH-QL)/QH= 1-(QH-QL)=1-{CP(T4-T1)/CP(T3-T2)}…………. the expression may be simplified such that thermal efficiency is solely a function of cycle temperatures.. the compressor pressure ratio is related to the temperature ratio by.for an ideal gas undergoing isentropic compression. T4. P2/ P1=( T2/T1)^k/(k-1) ………………6 Where k= ratio of specific heats for air If eq. From this. is constant. it is clear that cycle efficiency increases as the pressure ratio increases.5 and eq. By inspecting the generalized T-s diagram shown in fig 6 and referring to eq.7 it can be seen that if turbine exhaust temperature. it is quite understandable why many research and development efforts by gas turbine manufacturers continue to focus on improving hot gas path component metallurgy and cooling methods to increase the allowable turbine inlet temperatures and thereby increase cycle efficiency. Fig 5 Brayton cycle thermal efficiency versus pressure ratio at constant temperature. ηth=1-1/( P2/ P1)^(k-1)/k ………………7 if eq.4.6 is solved for T1/T2 and the results submitted into eq. Fig 6: Generalized T-s diagram .in actual gas turbines. increasing the combustion temperature and the resultant turbine inlet temperature from T3 to T3A will increase the cycle’s thermal efficiency. these temperatures cannot be increased indefinitely because of temperature limitations of the materials. However. Fig 5 shows the relationship of pressure ratio to cycle thermal efficiency of the Brayton cycle assuming a ratio of specific heats for air of 1. then the resulting equation defines thermal efficiency as a function of compressor pressure ratio.5.7 is evaluated for various compressor pressure ratios. the specific work produced by the turbine section increases more rapidly than the specific work that the compressor consumes. As the pressure ratio is increased from 8 to 16. shaft specific work output (turbine specific work produced minus compressor specific work consumed) decreases. the shaft specific work output decreases because compressor specific work consumed is increasing faster than turbine specific work output. the turbine specific work produced and the compressor specific work consumed increase at the same rate. A typical performance curve for a real (non-ideal) turbine is shown in fig. As the compressor pressure ratio increases. The maximum shaft specific work for the example of fig. The result is an increase in shaft specific work output and efficiency as pressure ratio increases. At the point corresponding to the maximum shaft specific work output. After a point. the combustor heat input decreases and cycle efficiency increases. As pressure ratio increases further (beyond the point where the shaft specific work output is a maximum).7. increasing the pressure ratio (P2/ P1) increases the cycle efficiency. fuel consumption is reduced and overall thermal efficiency increases. the increase in compressor specific work consumed more than offsets the advantage of higher compressor outlet . the efficiency continues to increase as pressure ratio increases. Fig 7: Typical (non-ideal) real gas turbine simple cycle performance curve-efficiency vs specific work at various pressure ratios at constant temperature. Both thermal efficiency and specific work are strongly influenced by pressure ratio and turbine inlet temperature. As the compressor pressure ratio (P2/ P1) increases from 4 to 8. Therefore in designing gas turbines. the temperature rise across the compressor also increases. As a result. as a result the shaft specific work output actually decreases. the design pressure ratio must be a compromise between the maximum thermal efficiency and the maximum specific work. However. the maximum net specific work and maximum thermal efficiency do not occur at the same pressure ratio. the net specific work per unit mass of working fluid also changes. However. However. This in turn reduces the combustor temperature rise necessary to achieve a given turbine inlet temperature. thermal efficiency of rea gas turbines will begin to decrease. Therefore.As previously mentioned. because the combustor heat input continues to decrease.7 occurs at a pressure ratio of 8. However with further increases in pressure ratio. However because higher compressor outlet temperature occur at the higher pressure ratios. as pressure ratio changes. the compressor specific work consumed increases at a greater rate than the turbine specific work produced and. In fig.8 the compressor and turbine efficiencies are as follows: Fig 8 T-s diagram for an isentropic and non-isentropic cycle ηcomp=(h2s-h1)/(h2-h1)……………………8 where h1= enthalpy at compressor inlet h2s=enthalpy at constant entropy and compressor discharge pressure. . and h2= actual enthalpy at compressor discharge pressure and ηturb=(h3-h4)/(h3-h4S)…………………….7 this occurs at pressure ratios greater than 16.9 where h3= enthalpy at turbine inlet.temperature and overall efficiency begins to decrease. h4S= enthalpy at constant entropy and turbine exit pressure and h4= actual enthalpy at turbine exit pressure. Considering the state points for isentropic and non-isentropic cycle fig. The actual pressure ratio at which this occurs depends on the specific gas turbine considered. The efficiencies of the compressor and turbine for an actual cycle are typically defined in relation to isentropic and non-isentropic processes. 7. Heat rate is the ratio of heat consumption to generator output and usually expressed in units of British thermal units per kilowatt-hour (Btu/kWh) heat consumption represents the thermal energy consumed by the gas turbine and can be calculated as the product of the fuel mass flow rate and the heating value of the fuel. For gas turbines. Generator output is the electrical generation of the turbine generator and typically is measured at the generator terminals.It is these process inefficiencies which cause real devices to depart from the ideal behavior described by eq. heat rates for gas turbines are typically expressed on a lower heating value basis. . Performance parameters: Gas turbine generator performance is characterized by generator output and heat rate. the compressor inlet temperature is equal to the ambient dry bulb temperature. In equation form.9 and is defined in following paragraphs: Compressor inlet temperature is dry bulb temperature of the inlet air to the compressor section. with their English units of measure in parentheses: • Compressor inlet temperature (˚F) • Compression ratio • Turbine inlet temperature (˚F) • Exhaust temperature (˚F) • Exhaust gas flow (lb/h) • Exhaust heat (Mbtu/h) • Inlet pressure loss (in. A lower heat rate value indicates a higher thermal efficiency. When the gas turbine is not equipped with an evaporative cooler or an inlet chiller. the convention is to use the lower heating value. Other principal gas turbine performance parameters are listed below.H2O) Each performance parameter is shown in fig. Generator output is measured in units of kilowatts or megawatts. Likewise. a higher heat rate value indicates a lower thermal efficiency. the heat rate for a combustion turbine generator is calculated as follows: Heat rate (Btu/kWh) = Heat consumption (Btu)/Generator output (kW) Or Heat rate (Btu/kWh) = fuel consumption rate (lb/h) X fuel lower heating value ( Btu)/ Generator output (kW) Heat rates are inverse form of thermal efficiency. Therefore.H2O) and • Exhaust pressure loss (in. Higher exhaust temperatures allow higher steam temperatures and pressure results in significantly lower . improved turbine cooling technology has allowed increases in turbine inlet temperatures. a lower exhaust temperature indicates higher thermal efficiency and higher specific output. The turbine inlet temperature sometimes referred to as the turbine firing temperature is the average temperature of the combustion gases entering the turbine section of the gas turbine.Fig 9: Gas turbine generator performance parameters. In addition. higher turbine inlet temperatures are limited by the material properties of the turbine.350˚F. In practice. For aero-derivative gas turbines is toward higher compression ratios to achieve lower heat rates. compression ratios of 10-18 are most common. the most advanced heavy-duty gas turbines have turbine inlet temperatures of approximately 2. By contrast. Theoretically. higher compression ratios are limited by the costs associated with the additional compressor stages required to reduce the temperature of the compressed inlet air. Currently. an increase of about 350˚F over the preceding generation of heavy-duty gas turbines. The exhaust temperatures is the average gas temperature leaving the turbine. current heavy-duty units generally have exhaust temperatures of 950 to 1100˚F. In recent years. For heavy-duty industrial gas turbines. Higher turbine inlet temperature result in higher specific outputs ( kilowatts per pound of fuel ) and lower heat rates. For a given turbine inlet temperature. When the gas turbine is equipped with an evaporative cooler or an inlet chiller the compressor inlet temperature is equal the outlet temperature of the cooler or chiller. Aero-derivative units generally have exhaust temperatures in the range of 800 to 950˚F and are therefore more efficient in simple cycle. The compression ratio or pressure ratio is a measure of the compressor discharge pressure to the compressor inlet pressure. The maximum temperature and pressure of steam generated in an HRSG are limited by the gas turbine exhaust temperature (assuming that the HRSG is not supplmentally fired). Firing temperature may be defined differently by various manufacturers. Exhaust temperature is significant for heavy heat recovery applications where an HRSG generates steam from gas turbine exhaust gases. higher turbine inlet temperatures have been achieved by using ceramic and composite materials. combined cycle heat rates. Because of this effect, heavy-duty gas turbines are more commonly used in combined cycle units. Exhaust gas flow is the mass flow rate of exhaust gases from the turbine. Since leakages are minimal and bleed air flow is ultimately redirected into the main turbine flow, the exhaust gas flow is essentially equal to the sum of the inlet air mass flow, the fuel mass flow and any water/steam injection. The mass flow rate of steam that can be generated in an HRSG is directly proportional to the gas turbine exhaust gas flow. Exhaust heat is a measure of the thermal energy contained in the exhaust gas flow. Exhaust heat is the product of the exhaust gas flow and the exhaust gas enthalpy. Exhaust heat can be estimated by calculating a heat balance around the gas turbine. By this method, exhaust heat is calculated as the heat input from fuel, inlet air, and injection water/steam, minus the thermal equivalent of the generator output and miscellaneous losses (including generator losses and turbine/generator bearing friction). Some manufacturers do not guarantee exhaust heat. This guarantee is of significance for heat recovery applications only. Inlet pressure loss is the pressure loss associated with the inlet air flow through the inlet air filter, silencer, evaporative cooler (if used), and inlet ductwork to the compressor section of the gas turbine. Inlet pressure loss typically is measured in units of inches of water. For “new and clean” performance, inlet pressure loss values of 3.0 to 4.0 inches of water are common. Exhaust pressure loss is the pressure loss associated with the exhaust gas flow from the exit of the turbine section of the gas turbine through the exhaust ductwork, silencer, and stack. In heat recovery applications the exhaust gas flow through the HRSG results in additional exhaust pressure losses. For simple cycle applications exhaust pressure losses of 4.0 to 5.0 inches of water are typical. For heat recovery applications exhaust pressure losses of 10.0 to 17.0 inches of water are typical, depending on the HRSG configuration and the presence of emission-reduction or noise-abatement equiopment. Factors that Influence Performance: Factors that influence performance include the following: • Ambient conditions, • Inlet/exhaust pressure losses, • Fuels and • Water/steam injection flow rates Ambient conditions: Because gas turbines are open cycle internal combustion engines, their performance is significantly affected by ambient conditions. Ambient conditions that directly affect performance include dry-bulb temperature, specific humidity, and barometric pressure (or elevation). Ambient dry-bulb temperature has a pronounced effect on electrical output. Lower air temperatures provide higher air densities which result in higher mass flows, and turbine output is directly proportional to higher mass flow. Higher air temperatures, which provide lower air densities and mass flows, which result in lower output. Lower ambient air temperatures also result in lower heat rates and better efficiency due to an increase in compressor pressure ratio. Likewise, higher ambient air temperatures result in higher gas turbine generator heat rates. A typical correction curve showing the effect of ambient air temperature on output, heat rate and other parameters is shown in fig 10. Specific humidity affects gas turbine performance through the slight variance in water mass flow. For higher specific humidities, more moisture is contained in the inlet air flow stream, making the air less dense and resulting in a lower electrical output and a higher rate. Typical correction curves showing the effect of specific humidity on output and heat rate are shown in fig 11. Fig 11 correction curves for humidity Barometric pressure of site elevation has an effect on output because of the variance in air-density. Lower barometric pressure which occurs at higher elevation, result in lower air density, lower inlet air mass flow rates, and lower electrical outputs. Barometric pressure has no effect on heat rate since the compressor pressure ratio and turbine inlet temperature are unaffected. A typical correction curve showing the affect of site elevation output is shown in fig 12. Fig 12: correction curves for output and exhaust flow vs. site elevation Inlet and exhaust pressure losses: Higher inlet pressure losses reduce the air flow through the unit and thereby reduce output. A typical correction curve showing the effect of inlet pressure loss is shown in fig 13. Fig 13: Gas turbine generator correction curves for inlet pressure drop In practical terms inlet pressure loss is a function of the inlet air system design and cleanliness of the inlet air filters. Lower inlet air pressure losses can be achieved by designing for lower inlet air velocities through the filter, silencer and duct. The improved operating performance associated with a lower inlet air velocity design must be evaluated against the associated higher capital cost. A similar cost evaluation determines the optimum point that dirty air filters which have higher pressure losses, should be changed out. Higher exhaust pressure losses increase the turbine back pressure, thereby reducing power output and increasing heat rate. A typical correction curve showing the effect of exhaust pressure loss on performance is shown in fig 14. Fig 14: Gas turbine generator correction curves for exhaust pressure drop. Higher exhaust pressure losses are primarily a function of the exhaust system design. For simple cycle applications, the exhaust system typically consists of an exhaust duct, silencers, and a stack. Exhaust pressure losses of 4.0 to 5.0 inches of water are typical for simple cycle gas turbines. For combined cycle or cogeneration applications, the exhaust gases pass through an HRSG with the associated additional pressure loss. Exhaust pressure losses of 10.0 to 17.0 inches of water are typical for combined cycle and cogeneration applications depending on the complexity of the cycle arrangement, exhaust emission control, or noise-abatement. Fuels: gas turbine output and heat rate are also affected by the type of fuel burned. The two most common fuels used today are natural gas and fuel oil. Turbine output and heat rate are both slightly better for operation on natural gas than for operation on fuel oil, assuming no water or steam injection is used for NOX control or power augmentation. Coal gasification combined cycle technology is being developed for future large-scale commercial use. The coal gasification process produces low to medium Btu gas which can be used as gas turbine fuel. Using the coal gas as the fuel results in the higher fuel mass flow rate to achieve the same heat consumption rates as for conventional fuels. As a result of the higher fuel mass flow rates, higher electrical outputs can be generated, depending on the fuel heating value. Water and Steam Injection: The most common method of controlling gas turbine NOX emissions rates is to inject water or steam into the combustor to reduce the peak flame temperature. Besides reducing the rate of formation of NOX, water or steam injection results in higher mass flow rates through the turbine section, electrical output is increased. Water injection increases gas turbine generator heat rate because of the additional heat consumption required to vaporize the water. Steam injection improves gas turbine generator heat rate because of its higher entering the combustion zone. Water or steam can be injected into gas turbine at rates beyond what is required for NOX control. For these applications, water or steam is injected for power augmentation (power boost). For power augmentation, the effect of water or steam injection on gas turbine generator output and heat rate is identical to the effect of water or steam injection for NOX control. To obtain higher thermal efficiency, it is essential to have a thermodynamic cycle using a high temperature heat source and a low temperature heat sink. The higher the temperature differences the greater the cycle efficiency (average temperature at which the heat is transmitted to the working medium~ average temperature at which the heat is rejected to the cooling medium). Neither the Brayton Cycle nor the Rankine Cycle can have much difference in temperature to have higher efficiency due to technical limitations. The gas turbine cycle is having the high source temp. of 1000 to 1200 c hence it could be the best option for the topping cycle. The rankine cycle working on steam is the most techno economic solution to use as bottoming cycle since it could maintain the sink temp close to the cooling water temperature. In a combined cycle power plant, the gas turbine cycle (brayton) is combined with that of steam turbine cycle (rankine). The combination of the two makes it possible to achieve the highest efficiency rates obtainable in the current state of the art technology, with values up to 47% for the overall plant. With certain new generation gas turbines, it is possible to attain efficiencies even upto 58-60%. This is much higher than the efficiency of the best available fossil fuel fired conventional thermal power plant. To achieve the best efficiency it is necessary for the optimization of combined cycle plant and heat rate. The following factors are to be considered in the optimization of combined cycle power plant.. A.Cycle Optimisation:• Configuration of combined Cycle Plant. • Number and capacity of gas turbine units • Number and Capacity of HRSGs • HRSG sizing viz :• Increase in HRSGs cost • Derating of gas turbine power due to increase gas pressure drop across HRSGs 2. B. Heat rate = Heat added to the cycle / Power generated = Fuel input x LCV of the fuel ( power generated in the gas turbine generated + power generated in the steam turbine generated) . Corrosion may result on the HRSG point corresponding to the fuel being burn. of HRSG) 3) Select stack temperature 4) Select pitch point 5) Perform heat & mass balance in HRSG 6) Size of HRSG 7) Compute GT output & TG output 8) Compute total capital cost 9) Compute output at CCP 10) Compute capitalize differential output 11) Compute total evaluated cost Heat Rate of CCP: Heat rate is defined as unit of heat added to the cycle per unit electric energy. Combined Cycle Performance The site output of a gas turbine unit depends on ambient conditions and type of fuel whereas the steam turbine generator output primarily depends on the turbine throttle flow. but this advantage has to be balance against to detrimental factors. The maximum amount of heat that can be expected from the HRSG is limited by the lowest stack temp possible for a given type of fuel. Temperature & Feed water temp. the steam inlet condition (pressure & temperature) and condenser back pressure. Again for a specify stack temp more heat can be extracted by providing more surface area ( by adjusting lower pinch point temperature differences) resulting in higher steam production and steam turbine power. Combined Cycle Optimization:The optimization combined cycle can be broadly carried out as follows: 1) Fixed configuration of GT HRSG & STGs 2) Seclect steam parameters ( Pressure. Combined Cycle Plant Heat Rate The following are the optimizations of combined cycle power plant are as 1.• Combined cycle plant optimized cost. Formulae CERC norms for calculation of heat rate of a CCGT . . Corrosponding.75 kJ/ kw hr. 1 Cal = 4. Efficiency n = = ( 3600 x 100) / 5671.Q.1856 = 5671. What will be the heat rate of turbine? Turbine effieciency 85%. Soln:Given: Enthalpy of steam = 825 kcal/ kg Enthalpy of water = 283 kcal/ kg Flow = 1250 Tonnes/hr Turbine effieciency = 85% Heat Rate = = = = = kcal / K W hr { Qs ( Hs – Hf ) x 100 / kw hr } { 1250 ( 825 – 283 ) x 100 / ( 500 x 103 kw hr) } { 1250 ( 542 ) x 1000 / 500 x 103 1355 kcal / kw hr.47 % .185 J = 1355 x 4.25 63.A A steam trubine opening at a presssure of 170kg/cm2 and temperature of 560`C (Enthalpy 825 kCal/kg of steam) at electrical load of 500MW with final feed temperature of 270`C (Enthalpy 283 kCal/kg of water) and flow of 1250 Tonnes/hr of economizer inlet. Used water is carried through pipelines. 4. Generators . Giant magnets rotate past copper coils. A turbine can weigh as much as 172 tons and turn at a rate of 90 revolutions per minute (rpm). producing alternating current (AC) by moving electrons.Out of every power plant come four wires: the three phases of power being produced simultaneously plus a neutral or ground common to all three. The most common type of turbine for hydropower plants is the Francis Turbine. called tailraces. 5. 6.000 MW. and re-enters the river downstream.6 billion barrels of oil. A hydropower plant is basically an oversized water wheel. Often. so do a series of magnets inside the generator. this reservoir is used as a recreational lake. Outflow . a pipeline that leads to the turbine. Transformer .water flowing through a dam turns a turbine.Most hydropower plants rely on a dam that holds back water. Water builds up pressure as it flows through this pipe.The water strikes and turns the large blades of a turbine. the energy equivalent of 3. according to the National Renewable Energy Laboratory.As the turbine blades turn. Turbine . but the idea of using water for power generation goes back thousands of years. . 2. The world's hydropower plants output a combined more than 675. hydropower plants produce about 24 percent of the world's electricity and supply more than 1 billion people with power. Hydropower plants are actually based on a rather simple concept -.Efficiency of Hydro Power Plant Worldwide. Hydropower plants harness water's energy and use simple mechanics to convert that energy into electricity.Gates on the dam open and gravity pulls the water through the penstock. Here are the basic components of a conventional hydropower plant:1. Power lines . Use of hydropower peaked in the mid-20th century. which looks like a big disc with curved blades. 7. Dam .701 MW and at 60% load factor.The transformer inside the powerhouse takes the AC and converts it to highervoltage current. it can meet the demand of around 84.48. creating a large reservoir. Hydropower supplies at least 50% of electricity production in 66 countries and at least 90% in 24 countries. which turns a generator. 3. such as Lake Roosevelt at the Grand Coulee Dam in Washington State. Intake . which is attached to a generator above it by way of a shaft. ± 2700 TWH is generated every year.000 megawatts and The hydro power potential of India is around 1. Some hydropower plants just use a small canal to channel the river water through a turbine. The power is sent from a power grid into the electric generators. activating the generators to produce electricity. This spins the turbines forward. activates a generator to produce electricity. uses a dam to store river water in a reservoir. the water is released from the upper reservoir back down into the river or lower reservoir. But hydropower doesn't necessarily require a large dam. which causes the turbines to pump water from a river or lower reservoir to an upper reservoir. Classification of Hydro Projects based on Installed Capacity in following types:Micro: upto 100 KW Mini: 101KW to 2 MW Small: 2 MW to 25 MW Mega: Hydro projects with installed capacity >= 500 MW Thermal Projects with installed capacity >=1500 MW Types of Hydropower Impoundment An impoundment facility. The water may be released either to meet changing electricity needs or to maintain a constant reservoir level. Water released from the reservoir flows through a turbine. which. Another type of hydropower plant—called a pumped storage plant—can even store power. The most common type of hydropower plant uses a dam on a river to store water in a reservoir. This is called hydropower. in turn. The generators then spin the turbines backward. where the power is stored.Hydropower Basics Flowing water creates energy that can be captured and turned into electricity. To use the power. spinning it. Diversion . typically a large hydropower system. The first pass is when the water flows from the outside of the blades to the inside. or volume of water. efficiency. The type of hydropower turbine selected for a project is based on the height of standing water—referred to as "head"—and the flow. An impulse turbine is generally suitable for high head. sometimes called run-of-river. and the water flows out the bottom of the turbine housing after hitting the runner. The runner is placed directly in the water stream flowing over the blades rather than striking each individually. the water is released back to the lower reservoir to generate electricity. a pumped storage facility stores energy by pumping water from a lower reservoir to an upper reservoir. Turbine Technologies There are two main types of hydro turbines: impulse and reaction. facility channels a portion of a river through a canal or penstock. There is no suction on the down side of the turbine. Reaction . and cost. the second pass is from the inside back out. goes across the blades and exits on the other side. The cross-flow was developed to accommodate larger water flows and lower heads than the Pelton. Other deciding factors include how deep the turbine must be set. It may not require the use of a dam. at the site. During periods of high electrical demand. A guide vane at the entrance to the turbine directs the flow to a limited portion of the runner. low flow applications. Pelton A pelton wheel has one or more free jets discharging water into an aerated space and impinging on the buckets of a runner. A Turgo Wheel is a variation on the Pelton and is made exclusively by Gilkes in England. Draft tubes are not required for impulse turbine since the runner must be located above the maximum tailwater to permit operation at atmospheric pressure. The water stream hits each bucket on the runner. Reaction Turbine A reaction turbine develops power from the combined action of pressure and moving water. rectangular-section nozzle directed against curved vanes on a cylindrically shaped runner. It resembles a "squirrel cage" blower. Cross-Flow A cross-flow turbine is drum-shaped and uses an elongated.A diversion. Pumped Storage When the demand for electricity is low. The water stream is applied on one side. The Turgo runner is a cast wheel whose shape generally resembles a fan blade that is closed on the outer edges. Impulse Turbine The impulse turbine generally uses the velocity of the water to move the runner and discharges to atmospheric pressure. The cross-flow turbine allows the water to flow through the blades twice. the runner would be out of balance. Straflo The generator is attached directly to the perimeter of the turbine. The major components besides the runner are a scroll case. wicket gates.turbines are generally used for sites with lower head and higher flows than compared with the impulse turbines. Through the pipe. allowing a straight line connection to the generator. allowing for a wider range of operations. The pitch of the blades may be fixed or adjustable. if it isn't. Tube turbine The penstock bends just before or after the runner. . Picture a boat propeller running in a pipe. Propeller A propeller turbine generally has a runner with three to six blades in which the water contacts all of the blades constantly. Kaplan Both the blades and the wicket gates are adjustable. There are several different types of propeller turbines: Bulb turbine The turbine and generator are a sealed unit placed directly in the water stream. and a draft tube. the pressure is constant. also called free-flow turbines. generate electricity from the kinetic energy present in flowing water rather than the potential energy from the head. Water is introduced just above the runner and all around it and then falls through. and draft tube.Francis A Francis turbine has a runner with fixed buckets (vanes). although they might have applications in such conduits. however. they can use existing structures such as bridges. Besides the runner. the other major components are the scroll case. wicket gates. which may reduce the capability of the reservoir to deliver the benefits in course of time. manmade channels. riverbeds. tidal waters. Kinetic systems utilize the water stream's natural pathway. They do not require the diversion of water through manmade channels. Major Effects of Reservoir Sedimentation • It reduces the active storage capacity. The systems may operate in rivers. or pipes. • Damages to turbines and other under water parts due to abrasive action of silt. • It makes the flood management in the reservoir more difficult. causing it to spin. Approaches to Tackle Sedimentation Problem of reservoir • Catchment Area Treatment (CAT) for reduction of silt load includes forestations of the catchment area . Kinetic systems do not require large civil works. usually nine or more. Kinetic Kinetic energy turbines. or ocean currents. tailraces and channels. and rivers carry more sediment from the land to the oceans every year . to enable migration of fishes and by promoting reservoir fisheries. • Silt resistant equipments of withstanding the silt. Soil Erosion due to Water Erosion. • Health Management Plan for the worker population and affected population to prevent epidemics and maintain optimum health standards. • Conservation measures for flora and fauna. • Fishery Management by construction of fish ladders wherever possible. • Resettlement & Rehabilitation of Project Affected Population. removal of sediment. • Subsidized Fuel Distribution to worker population and project affected population to minimise fuel demands on the adjacent forests. • Dam Break Analysis and Disaster Management Plan for downstream areas vulnerable to flooding in case of Dam breach. New diversion Tunnel-Preliminary study indicates it is beneficial. and soil from the landscape. • Effective desilting arrangements for prevention of silt.Green Belt Plan to make the surroundings of project construction areas green.and constructions of check dams on the tributaries and upstream of the river. During transportation the sediment further erodes the landscape by battering and rubbing against the surfaces over which it passes. The fragments also knock against each other. and break into smaller pieces. Water is probably the most significant agent of erosion today. resulting in the formation of new landforms and the lowering of the land surface. to conserve flora and fauna native to the ecosystem of the area. Thrust areas in the field of Environmental Conservation & Management for developing Hydropower Following safeguards/management plans are implemented at various NHPC projects to ensure development of hydropower in an environmentally sustainable manner: • Compensatory Afforestation in lieu of forest land diverted for the project. • Restoration of Dumping Sites and Quarry Sites using engineering and biological measures. • Effective operation of the reservoir to minimize silt deposition. • Reservoir Rim Treatment plan to stabilise reservoir periphery. further model studies & detailing of proposal has been advised. Important Recommendations for Silt Control SHORT TERM Experiment with reservoir Operation-Optimization of gate operation advised by study on model and prototype. rock. LONG TERM Catchment area treatment to reduce bank erosion. MEDIUM TERM Dredging pumps at intake-Recommended for Silt removal near intake gate. thereby reducing siltation in the reservoir. a process known as denudation. • Catchment Area Treatment (CAT) to minimise erosion in the catchment of the reservoir. United States.00 Balance (MW) 49912. These include: • higher budgetary allocation for the hydel sector. This can also cause gullies to form as material is removed. Water can erode sediment on slopes where overland flow or runoff occurs. rivers cut into valley floors and sides as they meander. or deforestation. World Bank assistance for survey. During transport sediment helps aggrade the bed and banks.00 . Slope angles reduce and valley cross-sections become wider downstream. As rivers become larger. fire. Weathered material washes downslope and enters river channels directly. • promoting State Sector projects which were languishing or could not progress due to Inter-State disputes. When rivers meet resistant rock. Gullying is most effective where vegetation is sparse. States with substantial undeveloped Hydro potential Region/State Arunchal Pradesh Himachal Pradesh Assessed (MW) 50328. and gorges.00 18820.00 3453.50 13835. Human activities can increase the erosion process where vegetation has been removed by agriculture. rapids. and the sediment becomes more denuded. and sporadic intense rainfall occurs.P. Policy measures The Union Ministry of Power has taken several steps to accelerate capacity addition from hydroelectric projects.05 U. investigation and preparation of DPRs of the projects in Sutlej and Ravi basins is being considered.than either ice or wind. cutting downward. and accelerated soil erosion results. while downstream rivers erode laterally. • simplification of procedure for transfer of clearance. The landforms of river valleys therefore represent stages in the denudation of the landscape. Some dramatic erosional landscapes have occurred as a result of this process. • improving tariff dispensation for hydel projects. Rivers move sediment downstream as part of their load. reworking deposits laid down in earlier periods. Vertical erosion predominates near the source.50 1609. such as the Badlands of North and South Dakota and Nebraska.85 3822.95 405. and attrition of the particles causes them to be reduced in size. Sediment transport becomes more important as the debris is removed from the drainage basin. • investment approval of new hydro-electric projects./Uttaranchal 18898.00 In Operation Under (MW) Construction 10. • levy of 5% development surcharge to supplement resources for hydro electric projects by NHPC allowed by CERC.00 1926. When they flow through floodplains. Basin-wise Policy The policy measures undertaken to accelerate hydro power development inter-alia lay emphasis on basinwise development. overgrazing. unique and distinctive features may develop including waterfalls. thus widening their valleys. they are able to carry more sediment from the landscape. open floodplains. developing from steep V-shaped upland valleys to wide. • identification of new projects in the Central Sector for advance action.15 13071. 50 300.00 2999.00 THE SURVEY AT A GLANCE The surveyoutlines the approach and provides a road map for development of the balance untapped potential of the country by the year 2025-26. cleared by CEA. 0 519. hydro capacity additions in different Plan periods till 2025-26 have been so planned as to develop complete hydro potential by the year 2025-26 which would gradually improve the share of the hydro in the system to about 32% by 2025-26.00 6602.00 12282. under Survey & Investigation etc.00 1475.21 20.00 30.e.Jammu Kashmir Sikkim Karnataka Meghalaya Mizoram & 14146./Chhattishg 4485.50 M. under examination in CEA.00 1837. projects under construction.50 1589.00 1684.2% 936.60 2208. which were examined earlier in CEA and returned to project authorities for resubmission. It stresses upon the need to complete the on-going projects and to develop the projects already cleared by CEA expeditiously.00 2841.25 1684.75 3683. The Paper discusses about status of hydro schemes under various stages of Development i. and suggests their quick development by addressing the involved issues at appropriate level. Based on the above. The paper analyses the Anticipated Demand-Supply scenario likely to prevail in the country by making use of the results of Long term Perspective Plan Studies carried out by CEA (up to the end of 11th Plan i.00 24. The surveyanalyses projects languishing due to various reasons like funds constraints.10 1799.00 2196. by resolving the pending issues. Further. 42 schemes with installed capacity of about 13250 MW.50 105. 2011-12) as well as Demand Forecasts available up to the end of 12th Plan (2016-17) as per 16th Electric Power Survey The Demand Projections for the period beyond 2017 have been made by extrapolating the projections made in 16th EPS. Inter-state aspects etc.00 1784. The surveysuggests the Action Plan/ Methodology for preparation of Pre-Feasibility Reports for balance about 400 schemes and broadly discusses criteria for carrying out prioritisation / ranking study for their development in order to provide a shelf of HE Projects in each basin which could be developed in a systematic manner starting from sites which are ranked to be attractive.00 1574.P.00 0. and outlines various factors inhibiting the growth of hydro potential in the country.20 0.00 65.25 1604.00 60. In addition. It also stresses upon the need to carry out Survey and Investigations works in a time bound manner by the year 2016-17 in order to ensure development of the balance hydro potential in the country by the year 2025-26.00 90.00 222.80 2136.25 84.00 3590.00 4286. the demand for power by the year 2025-26 is likely to be of the order of 353000 MW with corresponding probable installed capacity of 463000 MW.50 469.40 185.00 1394.00 2394.00 66. .e.00 arth Kerala West Bengal Manipur Nagaland Orissa 3514.00 2789. can also be taken up for implementation with minimal of S&I works.00 098.00 1095. 14522Crs. while requirement of funds by 2016-17 for carrying out S&I activities would be of the order of Rs. .000 Crs.e. the "Returned" projects could be taken up for implementation which would lead to an addition of about 13268 MW of Hydro capacity in the Indian system at a cost of about Rs.20. These S&I activities have been proposed to be completed in next 10-15 years so as to accomplish development of entire untapped potential in the country by 2025-26. The survey also calls for review of studies carried out for Re-assessment of Hydro Electric Potential of major/ medium HE Schemes to bring out most realistic features of the sites by making use of updated hydrological/ topographical data with inter-action with MOEF.000 MW from the entire identified hydro potential of the country (excluding about 25. by resolving inter-state aspects.000Crs. the paper impresses upon the need to immediately explore all avenues for mobilisation of funds.000Crs. • The sources / agencies for raising necessary funds need to be identified well in advance to arrange large fund requirement of the order of about Rs. about 4797 MW of capacity could be added to the system at an estimated cost of about Rs.000Crs.5.35. Crs.00.The Paper proposes carrying out of Survey and Investigation of the selected schemes by Central Agencies like CWC.1. In view of the massive fund requirements over next 20 to 25 years. The cost of development of the remaining untapped potential in the country has been estimated as about Rs. • In order to achieve development of an installed capacity of about 150.000Crs. 5000 Crs. 5.) 23200 9th Plan (1997-2002) (Balance) 5800 10432 41728 10th Plan (2002-2007) 11th Plan (2007-2012) 12th Plan (2012-2017) 13th Plan (2017-2022) Part 14th Plan (2022-2026) 01288 2300 31000 35000 85152 92000 124000 140000 Total : 126520 506080 • The total requirement of funds for development of entire untapped potential in the country is likely to be around Rs. The paper contains following recommendations for expeditious development of the balance hydro potential in the country by the year 2025-26: • About 4759 MW of hydro capacity can be added without much of efforts.00. in the next 25 years at present price level. on an average per annum. so that implementation of these projects could be undertaken expeditiously. these projects could be taken up immediately for implementation and are likely to yield benefits during the next 10-15 years. • By expeditious resolution of pending issues. Since preliminary surveys and investigations for most of these schemes have already been carried out for preparation of DPR.00. 13500 Crs. if funds to the tune of Rs. Planwise additions of hydro capacity has to grow substantially from present levels to comparatively much higher additions during the subsequent Plans as given below: Likely Hydro Likely funds Plan Period Capacity Addition requirement (MW) (Rs. NTPC. NHPC and WAPCOS etc. about Rs. are tied up. In addition.000 MW already developed). per plan period on an average i. These include projects languishing due to funds constraints and those projects that are awaiting Planning Commission/ CCEA clearance. 000 MW by 2025-26 would involve an expenditure of around Rs.P. • Prioritisation studies would be carried out for ranking of the schemes for their implementation considering their relative attractiveness in terms of their location.P Uttarakhand Uttarakhand Sikkim Sikkim J&K J&K Arunachal Pradesh Capacity (in MW) 540 300 231 800 520 120 280 60 510 480 390 2000 6231 Submergence area ha) 175 25 29. which has to be fulfilled along with other conditions imposed by MOEF while according forest clearance to a project. this land may include river bed and degraded forests. where forest cover is comparatively better than plain areas.90 27 21. The following table shows that project catering only to hydro power needs. Survey & Investigation activities have to be completed by the end of 12th Plan i. A sample of following 12 projects contributing 6231 MW of power required submergence of only 4850 ha of land i. the area of submergence per MW is only 0.P H.P. Forest land diverted for a project may be a notified forest land.50. cause little submergence. diversion of forest land is sometimes unavoidable. NHPC aims at minimum utilization of forests. However. due to the hydropower projects is sometimes exaggerated. Compensatory Afforestation is mandatory in accordance with Forest (Conservation) Act.5. minimal civil works etc. double the forest area diverted. In .000Crs.e. Inspite of the fact.e. H. H.51 ~ 4850 ( in Hydropower Projects cause huge Destruction of Forests Due to virtue of being located in hilly areas.78 ha. however. H. by 2016-17. Massive afforestation has been undertaken at the commissioned as well as ongoing projects of NHPC. Submergence of Land Thereby loss of flora and fauna and large scale displacement.• In order to develop the entire potential by the year 2025-26. The actual forest cover in such type of land may be quite low.P. NHPC undertakes compensatory afforestation either on equal non forest land or on degraded forest land.61 140 29 13 68 Nil 85 3436 4849. This would provide classification of schemes to be undertaken for implementation in a systematic manner starting from sites of less problems/ risks to others having difficult terrain and accessibility. Completion of Survey & Investigation activities by the year 2016-17 for development of balance out of 1. 1980. l. cost effectiveness. based on the available data. Jo Name of the project 1 2 3 4 5 6 7 8 9 10 11 12 Total Chamera-I Chamera-II Chamera-III Parbati-II Parbati-III Tanakpur Dhauliganga-I Rangit Teesta-V Uri Dul Hasti Subansiri Lower State H. b) Environmental Benefits • Uses Renewable and pollution free source of Energy i. afforestation has been undertaken over an area of 3875.44 350.71 5 Rangit 37.10 6 Dhauliganga 138. It saves scarce fossil fuel resources of the country. S.50 140. Rangit.00 177700. Teesta-V.00 291. in lieu of diversion of 2156.00 8124.49 962.50 3 Chamera-II 78. Catchment Area Treatment.00 69979 17495. In these 10 projects.62 10 TLDP-III 302.00 3981186.00 239100.00 102826.10 Sub total (A) 1586.62 7 Dulhasti 1.00 1517.00 32847.73 18. Tanakpur. non polluting and environmentally benign source of energy. Hydropower projects have certain distinctive advantages over other sources of electricity generation. Chamera-I.00 421.49 3875. as discussed below: a) Technical Benefits Hydropower projects are known to have much longer life and provide cheaper electricity as there is no fuel cost and as the recurring cost involved in generation. which are non renewable.00 62.00 4000. Parbati-II.00 7228.17 9 Parbati-II 145.seven commissioned projects of NHPC viz. With enhanced .93 250. Uri. • Flood Mitigation through large storage dams. which ultimately improves the environmental quality of the project area. Voluntary Afforestation etc. • Involve large scale afforestation activities under various schemes like Compensatory Afforestation. Dul Hasti and three under construction projects viz. NHPC has planted more than 78 lakh trees under Compensatory Afforestation.00 40000.00 287887. Dhauliganga.00 7842595. economic.00 645634.00 666165. against 102826 affected trees.42 17368. • Avoided Green House Gas (GHG) emissions from equivalent thermal and other fuel based power projects. operation and maintenance is lower than that in case of other sources of energy.e water • Increase in Agriculture Productivity through development of irrigation and multipurpose schemes.00 2912.00 6619261 400000. having generation of electricity as one of the objectives.. TLDP-III.00 785673.16 Under-construction Projects 8 Teesta-V 122.42 ha.49 Sub total (B) 570. Green Belt Development.44 ha of forest land required. • Source of Drinking Water c) Social Benefits Hydro projects are a boon to the society and the population at and around the projects.00 321000.00 1223334.00 173.28 Total (A+B) 2156.00 2000.00 5027.No Project Forest affected(ha) Area Afforested (ha) Trees affected Trees planted Commissioned Projects 1 Tanakpur 293.00 338250.00 Benefits of Hydropower Projects Hydropower is a renewable.00 687.70 4 Uri 54.00 1380. of degraded/non forest land. wherever possible and feasible.35 2 Chamera-I 982. Chamera-II.70 168. There are other direct benefits accruing from hydro projects and dams such as increased water for improved irrigation. and drinking water to villages and people living in and around the project area. The shaft power developed by the water passing through the prime mover is given by: kW(power)=mgH x ηh x ηm x ηg 1000 Where m = rate of water flow in kg/sec H = height of fall in meters ηh= hydraulic efficiency of prime mover ηm= mechnical efficiency ηg= generating efficiency kW(power)=mgH x ηoverall 1000 Where ηoverall= ηh x ηm x ηg Keeping other parameters constant we find:kW = constant x H Therefore:kW1 = H1 kW2 H2 100000 = 50 kW 10 power developed = 20MW . it is given that the installed capacity is 100MW when the height is 50meter. Reservoir area is an ideal place for recreation and source of eco-tourism promotion in the area.employment opportunities. Que:. increased earnings. the people in these localities experience an economic and social upliftment. The reservoirs are also used for promoting pisciculture.What will be the installed capacity if the height is reduced to 10meter? Ans:-The energy of flowing water can be converted into shaft work passing through hydraulic prime mover and ultimately into electrical energy.Assuming constant discharge of water of a flowing river. enriched life style and improved standard of living. Determine which aspects of maintenance apply to the project deliverables.” determine when you should begin writing a maintenance plan in your project cycle. Purpose of the Maintenance Process:  Sustain and monitor system capability to provide services. The major project deliverables require ongoing support from the company. Maintenance planning needs to occur while a system is in the development stage. “Maintenance Planning Overview—Types and Timing. For the success of the product or system in the field. the project deliverable simply enters a new phase of its lifecycle. have a maintenance planning meeting so discussions and planning information can benefit any associated design work. perfective.Maintenance planning Maintenance Planning Guideline Although the development project may be completed and released. 3.  Take corrective. As you move through the project. 7. maintaining the system hardware. 4. adaptive. thoroughly planning ahead for proper maintenance support is crucial. and performing preventative maintenance. 5.  Record problems for analysis. If your project is in its early stages. Maintenance Planning Guidelines and Plan Outline Introduction to Maintenance Maintenance refers to ongoing support and evolution of a system once it is released to users/customers. 8. If your project has already started and there is no maintenance plan. 1. yielding a detailed maintenance plan later in the project to ensure all aspects of personnel and processes are in place when the product or system is released to production/deployment. add maintenance planning activities to your project schedule. thus. 6.  Confirm restoration capability. and preventive actions. That support includes such activities as responding to user issues. incorporating enhancements. Read the guidelines starting on page 2:  Introduction to Maintenance  Defining the “Maintenance Concept”  Maintenance Planning Overview—Types and Timing 2. Using the information on page 3. . Ensure that maintenance planning includes a specific “owner” going forward who continues to be a regular part of your project and has adequate inputs to development and test reviews. Adapt the Maintenance Plan outline (starting on page 5) to your specific projects. update the plan iteratively. g. It is really the high-level design of the approach to system maintenance. or what types of maintenance are covered (see list below). guidelines for acceptable life-cycle costs that will drive maintenance approaches and budgets. prioritization. escalation.  Failure and lifetime data is recorded. e.  Services meeting stakeholder requirements are sustained. spares requirements.Expected Outcomes of Maintenance Process:  A maintenance strategy is developed.g.  Ongoing monitoring of maintenance effectiveness and customer satisfaction with the system. an overview of covered hardware and software systems/subsystems. releases. and deployment communication.  Replacement system elements are made available. It should cover:  The scope of the maintenance. Maintenance Planning Overview: Types and Timing The Maintenance Plan must address detailed processes for the development of changes as well as their deployment. and control. Major aspects of maintenance which must be addressed in maintenance planning:  Maintaining control over the system's day-to-day functions. .  The need for corrective design changes is reported.  Perfecting existing acceptable functions. e.  Preventing system performance from degrading to unacceptable levels. including for issues recording.  Budgets. and deployment of updates or whether any tailoring from standard company processes is necessary or allowable. change reviews.  Maintaining control over system modification. a detailed maintenance plan can be developed.  Overall responsibilities for maintenance. Defining the Maintenance Concept The maintenance concept is developed first. defect tracking. what group(s) will be responsible for fulfilling which aspects of the maintenance processes. Based on the overall guidelines established in this maintenance concept. whether maintenance of third-party system elements is included.  Estimates of life-cycle costs. and test equipment. This concept sets the overall parameters for doing more detailed maintenance planning.  Maintenance processes and techniques.  Organizational responsibilities and staffing. change control. It addresses subjects such as:  Scope of maintenance effort.  Types of maintenance releases allowed.  Tools and equipment including configuration management.  Schedule for any regular maintenance releases.  Post-delivery processes.  Processes for acceptance testing. an overview of the approach to problem resolution.  Maintenance constraints are provided as inputs to requirements.  System requirements definition and alternatives investigation: Maintenance concept development and planning must be done in parallel with the development of the system to be maintained. analysis of loads and trends and any emerging issues with system performance. Hardware maintenance could include regular checks of performance and physical inspection for wear and resulting adjustments as necessary. How Maintenance Planning and Preparation Fit in the System Development Life Cycle:An inherent element of the system requirements is the maintainability of the system. consideration of maintenance implications leads to this typical involvement of support personnel during development of the system. For example. By its nature. and adjustments of the system to ensure that operations are not disrupted.Categories of maintenance:  Corrective Maintenance – Changes necessitated by actual errors/bugs or design deficiencies. deletions. utilities. and (4) system software. Taking it phase by phase. and enhancements made to a system to meet the evolving and/or expanding needs of the user. local printers. The cross-cutting activity of system validation assessment during the operation phase would also be paralleled by a validation that the maintenance concept was captured in the management of the system and the verification that maintenance requirements were being met. compilers. (3) data formats and file structures. operating systems. (2) hardware configuration. These environmental changes are normally beyond the control of the maintainer and consist primarily of changes to the: (1) rules. and finally concurrent operations and maintenance activities. or in an attempt to augment or fine-tune the existing software/hardware operations/performance.. modifications.g. maintained as part of the configuration management of the system. how much time and money will be spent developing highly automated diagnostic tools to ease troubleshooting and contain costs of field visits? Or developing sophisticated online automated code update capabilities to reduce physical shipment of new software versions to the field? Those who will be responsible for maintenance should be involved in such trade-off . The maintenance concept above leads to high-level and detailed maintenance requirements. (2) logic errors.  Adaptive Maintenance – Changes initiated as a result of changes in the environment in which a system must operate. and regulations that affect the system. and (3) coding errors. The three main causes of corrective maintenance are (1) design errors. It is generally performed as a result of new or changing requirements. etc. e. Starting with the overall requirements definition and investigation of design alternatives. This can be captured in the design alternatives analysis. new terminals. extensions.g. Corrective maintenance is related to the system not performing as originally intended. and verified during the operational phase of the project.. Software maintenance in this category could include regular review of performance metrics. The overall concept of maintenance may drive tradeoffs in system development. Activities designed to make the code easier to understand and to work with.  Perfective Maintenance (also known as enhancements and upgrades) – All changes. Corrective maintenance consists of activities normally considered to be error correction required to keep the system operational. corrective maintenance is usually a reactive process. insertions. verification that the system is as maintainable as hoped. Implementation of the system would also result in implementation of the maintenance management program. e. such as restructuring or documentation updates. laws. etc..  Preventive Maintenance – Changes required avoiding or detecting problems before they cause operational problems. are included in the Perfective category. 2. the issue of intellectual property rights and source code ownership has a tremendous impact on maintenance issues and costs. electronics. maintenance personnel can begin to learn a new system. and potential incompatibilities between COTS and other hardware and software in the system.  Deployment: System deployment marks the official beginning of transition to ongoing maintenance and support. 4. Word.. including enclosures. In addition. MAINTENANCE PLAN OUTLINE: Typical Items Covered in a Maintenance Plan  Overview and Scope 1. software maintenance contracts. and/or spreadsheets. They can also review and help hone technical publications such as user manuals and installation guides.  Testing and documentation: As the time for deployment nears. features that influence or implement directly the maintenance concept are created by the development team. and perfective maintenance is covered by this plan. and third-party modules or systems. Those responsible for maintenance and support should be included in appropriate reviews and prototyping. user and operator administration. even assisting with testing to learn hands-on about installation. preventive. upgrades or “patches” to the latest version. configuration. word processing. backup and disaster recovery. Items Included in Hardware Maintenance:Calls out all hardware (electronic. 3. Types of Maintenance included:Provide brief overview statements of how/whether corrective. is there a transition period during which Development or other .discussions early in the project so that the life-cycle costs associated with maintenance are considered in the initial system design. and system security. Examples include Oracle. upgrades. Systems Included in Software Maintenance:Calls out the types of software included in the maintenance and corresponding systems or subsystems. etc. mechanical) elements of the product/system that must be maintained. this includes commercially available applications that are part of the overall operation. such as relational database management systems.  Application Software: Maintenance issues include system configuration management. such as:  Operating System: Maintenance issues include system administration.  Development: As elements of the system are developed (detailed design and implementation performed). network security. Release and Maintenance Phase Schedule Provides a timeline view showing key milestones and release cycles.  Commercial Off-the-Shelf: Sometimes called COTS software. software maintenance contracts. including the following items:  Initial deployment: The schedule should show the start of ongoing maintenance with respect to initial deployment—for example. and system troubleshooting. Maintenance issues include configuration and user administration of COTS implementations. and Excel. any features that did not make the release. as well as readiness of the maintenance organization and processes and any need for initial support from development. adaptive. etc. The handoff between development and maintenance personnel should be done with attention to understanding of state of the system—open issues. They will have detailed input on how to make the system most easily diagnosed maintainability of sub-systems. and dealing with potential incompatibilities between the OS and other hardware and software in the system. Regular patch releases: e. definitive testing is completed). All types appropriate for your company should show up in the Maintenance Schedule. This tool. The linkage of maintenance activities to ongoing development programs should be shown. i. The team will continue to use a custom Clear Case tool developed that controls and documents the delivery of engineering software to the field. maintenance involves supporting evolving systems. small. TEs are also only provided at the specific request of a user location. Test Executables (TEs): Definition and purpose: Test executables are software deliveries designed to fix a specific problem with the smallest possible delivery footprint. For example. timely fixes for urgent problems. in a form that can be promoted into operations by the internal receiving group as quickly as possible. the ability to quickly release engineering or test level code to quickly address emergency situations. accessible only by senior developers (subsystem leads) who are authorized to send engineering software. It is only provided at the specific request of an internal group. External milestones: For example. specifically. The goal within sustaining engineering will be to merge corresponding fixes (tested and approved) to the appropriate baseline within 48 hours of sending the engineering software. the maintenance plan can specify constraints and guidelines for each type of release. Also. with either hard timing or estimates of frequency. releases of new versions of operating systems or third party components that must be migrated into the system. Engineering software is built in a developer’s view from source code that is not yet merged to the baseline and typically only unit tested by the developer.g. The following paragraphs are examples of software releases: Engineering Software: Definition and purpose: Engineering software is software delivered in response to an emergency. hardware-related timelines can show regular preventive maintenance trips. with the goal of mitigating a critical operations problem within hours of the onset of the problem  Approach: Engineering software may be delivered at any time of the day or day of the week. Full system deliveries: Driven by integration activities that requires the establishment of a new maintenance baseline. captures and documents what engineering software has been sent. The goal of a TE is to provide a fix for an urgent problem as soon as it is available (possibly before final. show the schedule for the types of maintenance releases covered by this plan. Regularly-scheduled/ongoing maintenance: Summarize and provide an overview timeline of the overall maintenance cycle. Types of Maintenance Releases:Some companies will define different levels of releases allowable under various circumstances. larger subsystem roll-up patches for the delivery of less time critical fixes. Types of Maintenance Releases. Linkage with company development plans: By definition. Software-related timelines can show regular back-up schedules and database maintenance. If such cases are to be allowed. See next section.      non-maintenance personnel are expected to stay involved or continue to lead efforts? The schedule should define at which point each responsible group is assuming ownership of support. for software. Ad hoc individual patches: e.e. is there a cycle by which maintenance items are fed into development portfolio planning? 5.g. The footprint of a change is the number of delivered components required to implement the change. TEs are normally . and inter-relationships between fixes among subsystems. Full system deliveries will be performed only as necessary to deliver capabilities and upgrades that require changes in a majority of the subsystems. Feedback from this exercise is incorporated into installation and transition instructions prior to deployment to all locations. Drop/Release The delivery of the full system is usually referred to as a drop or a release. A detailed transition plan is developed and the users are provided hands-on transition training. multiple subsystem patches are generated. Scripts are provided to perform these activities. and distribute the technical data package for the delivery. A change control record is executed to deliver the software. and generates draft installation instructions. the list of program mission milestones. but can be built and delivered during off hours for especially urgent problems. including any changes in operational procedures or troubleshooting methods required by the fixes. document the receipt of the delivery by each site. usually covering an entire subsystem. and delivered as a group. Deliveries are planned and scheduled by the Deployment team. When testing is completed. building of a database index or updating values in a database table) either before or after installation of the software.delivered during the standard work week. identifies the issues fixed in the patch. when this happens. The delivery of TEs will be planned and managed on a daily basis by the lead of the Deployment team. . either from the maintenance baseline or from an Emergency Bug Fix branch. Software CM uses custom tools to send the TE tar files. providing redlines to the installation instructions as required. but this testing may be done in parallel with the delivery to the user site depending on the urgency of the request. Additional functional regression testing is performed as required. tested. The Custom Software Delivery process governs the delivery of Test Executables as well as Patches. document the receipt of the delivery by each site.  Approach: TEs are delivered from the controlled baseline (after a merge and build). development progress in merging fixes for specific problems.  Approach: Patch delivery follows a rigorous process. and software CM uses custom tools to send the patch tar files. taking into account the program priority list. and verifies the issues fixed in the patch. and distribute all of the technical data to all interested parties. TEs are installed and tested by the test group in the test environment.g. Extensive regression and performance testing precede full system deliveries. For new capabilities not requiring the scope of support described above. With proactive support from sustaining engineers. the patch is presented at a pre-ship review by the DPT. deliveries will require a set of transition activities to be performed (e. the primary development engineer is invited to one of the bi-weekly deployment team meetings to discuss the new capability. The installation instructions and the issues are discussed with the receiving user sites. Patches: Definition and purpose: Patches are larger software deliveries. The Software Integration and Test Team sends a request to software CM to build tar files for the patch. the customer will test the installation. and is accompanied by the transition to a new maintenance baseline. We will provide a subsystem patch for each major subsystem every 6 to 8 weeks. The test group tests the installation of the patch in the code control system. Sometimes the fix to a problem will require the simultaneous delivery and installation of components from multiple subsystems. Transition/Training Occasionally. TEs are delivered under a configuration change request routed through the change control board. The goal of a patch is to deliver all of the fixes that have been applied to the maintenance baseline for an entire component or subsystem. 1. For example. 3. e. A quantitative estimate for spare parts may be calculated if certain variables are known or can be estimated with confidence.e. for planning cutin of new releases. Developing and testing changes  Analyzing and verifying a problem.  Test Equipment and Test Beds: Specify test equipment or environments that must be available to support debugging of problems and testing of changes before they are released to production. Maintenance Staffing and Environment 1. Those customer/user contacts should include specific contacts for different maintenance activities. the contact for escalation of user issues. Maintenance Procedures Handling change requests:The following procedures must be developed and documented in the Maintenance Plan (or the Maintenance Plan would reference company processes for these items). developing implementation options  Performing reviews of implementation options. if not by name).g. 2. and choosing an option . Fielding change requests  Submitting modification requests  Reviewing and prioritizing requests 1. etc. 95% of all cameras online at any given time). it is possible to calculate how many spares will be required to have on hand to meet a desired level of availability (i. assessing system and company impacts. proper back-ups). if the MTBF and MTRR are known. Staffing and Roles and Responsibilities  Overall responsibilities and required skills and resources: This section makes clear who has responsibility for what maintenance activities. Training Required  Maintenance/support personnel: Define what training the company’s support personnel should receive (usually prior to release) min maintenance procedures. 4. Many maintenance contracts and even some procurement contracts use a rule of thumb of between 5 and 10 percent spares. 5 to 10 percent times the total installed base of certain critical items. as well as any primary contacts for user groups or customer sites.  User/Customer training: Define what training the users of the product or system should receive related to their role in maintaining the system (for example. and what resources in the support organization(s) are involved (at least by skill set and number of resources. that is.  Spare Parts: Specify inventory of spare parts to replace failed or damaged equipment during ongoing operations and maintenance. Tools and Equipment Needs for Maintenance Activities  “Infrastructure” inherent to the Maintenance process: Internal tools such as configuration management software and defect and enhancement request tracking databases.  Leads and customer contacts: This section identifies key leads. Life-cycle Costs and Maintenance Budgets Based on the staffing. there are several measures of performance that can be used to determine the state of the original system when released. including developing and communicating migration plans  Implementing configuration management of the system and changes to the system  Deciding on retirement of particular elements of a system. The Maintenance Plan can identify what approaches will be used to communicate deployment of system changes. This might include referencing specific User Acceptance Test plans that must be run or Customer Acceptance Checklists that must be executed by sites accepting new hardware or software releases. the maintenance concept and process details may require that specific diagnostic tools be created or certain error codes are included in the software. and processes to be included in maintenance. such as:  Teleconferences: Releases can have a standard release communication teleconference scheduled. Performance Monitoring and Management during the Maintenance Phase 1. equipment needs. to understand how often the system is being updated.  “Patch plans”: The maintenance organization can generate and distribute a regular patch plan communicating a look-ahead schedule for all deliveries to the field. These include: . System/Product Design Implications from the Maintenance Concept and Processes As this plan is developed. This planning process will provide insights that must be communicated to the design team. with what kinds of changes. it can document the 3-month plan. to keep it current with any changes in priorities. this plan should be updated more frequently than the look-ahead period. For example. i. as well as the effectiveness of ongoing maintenance. Both delivery plans and distribution notices should be communicated. 4. planning and communicating the retirement. Deployment Communication Delivery plans for software updates need to be flexible and clearly communicated. For example. 5. 3. 6. Acceptance Testing and Signoff The plan can indicate what acceptance testing processes will be employed and signoffs required for different types of releases. and executing switchover 2.  Email: Notification to a standard distribution list of affected groups as well as other parties who need to stay informed about the big picture. Performing technical reviews of changes and approving those changes  Implementing and testing the changes Release planning and configuration management  Allocating problems and fixes to specific releases  Defining deployment of changes. where representatives from affected groups can hear a summary of the upcoming release and deployment plans and ask questions about how their environment is affected.e. this section summarizes expected life-cycle costs for the product or system and outlines the budget requirements for executing the maintenance. the team is thinking through how the system will be maintained and supported. Measures of Performance:-Whether the maintenance activities are conducted by in-house personnel or contracted out. but expressed as the probability that the system will be available. and funded. typically this includes the response time. Managing Execution of the Maintenance Plan With the maintenance plan developed. Monitoring of Customer Satisfaction – Regular Reviews This section documents how customer satisfaction with system performance will be assessed as part of the maintenance process. User help-desk inquiries – measure of how much support users required. Although it is expected that users will raise issues through the issues reporting or enhancement request system. The basics of plan management are similar to other practices and should include:  Performance Monitoring: Regular checking of plan metrics and budgets against the maintenance plan projections. this excludes scheduled downtime due to maintenance or system administration activities. there must be a structured practice for managing the plan. but also any new needs for training or documentation  How issues or requests raised in these forums will be prioritized and assigned and how results communicated to the customer. 2. Mean time to repair – the average time to repair (or replace) a device. expressed in hours. the goal of this section is to also identify a regular overarching review process with the users—periodically scheduling a time to review status and solicit input for improvements. Defects reported – measure of how many problems were discovered after release. expressed in hours. and staffing issues  On-going Multi-year Planning: Plan for changes in system components. what they should contain.  Operational Needs: Check that the maintenance concept is consistent with operational concept. approved. Typically. . 4. What is Maintenance  Function of system/equipment is to provide desired output at desired quality with control on hazards to safety of man / machine / environment. and who should receive them. Performance Reports This section calls out what reports should be produced regularly as part of the above processes. as documented in 5. System Availability – the time that the system provides its designed functionality. the perceived performance of the current system. The goal is to have up-to-date understanding of the needs of the customer. changes in the process and new or evolving needs of stakeholders. This section of the plan should include:  How the measures of performance above will be measured at customers  Frequency of reviewing enhancement request database  Frequency and types of regular reviews with customers. including not only system functionality. Check that the level of effort and resources are appropriate to support a multi-year maintenance program plan.1 above  Oversight Support: Support of the plan over time and its relationship to training. and to identify possible future applications to incorporate into future releases. 3. usually expressed in      hours. System Reliability – similar to Availability. emerging issues. Mean time between failures – the average time between device failures. . Basic element of a general Management System 1) Establishing policies & objective 2) Defining responsibilities and authority.  Increased scrap of off-standard unit. at a min. What is Maintenance Management “Organizing Maintenance Operation” Objectives of a Maintenance Management System:1. To provide a means of collecting cost and other information that will be useful in improving maintenance and other performance.  Quality loss.  Loss of production.  Idle man power . 2. Maintenance is the combination of all technical and associated administrative actions intended to retain an item in. a state in which it can perform its required function throughout its life cycle. or restore it to.stopping of the further lines. 4) Setting up accounting and budgeting procedures.  Loss of potential sales. 4. 3. To improve safe working conditions for both operating department and maintenance personnel by establishing and keeping proper maintenance standards. maintenance cost and with proper protection of capital investment. as user wants them to do under present operating context. To establish methods of evaluating work performance which will be useful to management in general and to maintenance engineer in particular. Customer's dissatisfaction possible delays  Loss of goodwill and Actual cost of repair of equipment. These are –  Increase in machine down time. 7) Detailing and defining work groups. To provide a Maintenance Management programme that will allow maximum operating time and use of facilities.direct and indirect labours  Feeding delays . 3) Planning actions. Cost ImProper Maintenance Effect of improper maintenance is reflected in terms of financial loss due to many factors. 6) Staffing and training. 5) Securing and controlling funds. EAM: In the long term & present requirement of  the integration of various function. WMS/CMMS: Tried at generation (CMMS was implemented at SBI & CCPP during 1990) but  could not sustain primarily due to its non-linkage  of data entry with the direct business process. a mid range  solution (EAM) allowing to fulfill present needs & remaining scalable for future enhancement &  further seamless integration. ERP: Present implementation & design shall be  adaptable to migrate to ERP solution in future. non  integration with associated business processes &  subsequently software functional limitation &  technology obsolescence.8) Conducting performance review and evaluation. Streamlining CMMS Broad Interface for CMMS . safety permits & line clearance permit details. history details for defect or equipment. Standard operating/maintenance procedures.shut down jobs/ project work details.analysis & review.Features  Maintenance requests/orders can be created online by operation/production operators manually. equipment details.  Work completion can be notified online  Data related to manpower used.spares used are entered in to a system by maintenance staff to create maintenance history for the equipment Advantages-CMMS Facilitates  Work order management  Work crew planning & scheduling  Resources planning & scheduling  Maintenance schedule/period planning  Authorization planning  Ready details available from system for parameters.contract work details.drawing details.work execution & completion details.(Condition based maintenance request)  Maintenance requests/orders can be viewed/accepted by maintenance crew from their computer node.actual resource consumption. work carried out.safety guidelines. trouble shooting.  “Or” are triggered based on the operating parameters or Measurement data entered going beyond specified limits.inspection/lubrication schedules.  “Or” are triggered automatically by time based preventive maintenance schedules already fed to the system. grouping structure.  Further Isolation/permission required to work with operating staff is communicated on their nodes. critical spares details.planned cost v/s actual cost for work order . material planning. . . . 8. Chapter-3 highlights the role of the license and states the limits for the area of supply for the licensee. 1910 in order to regulate the generation. The IE Rules. it is necessary to discuss Article 3 (2A). 2003. Chapter-8 deals with the technical requirements to be met by the laying down of the overhead lines. Chapter-10 deals with the additional precautions to be adopted in mines and oil fields. but such a date shall not be later than a period of 4[6 years 2 months] from the date this rule comes into force. transmission. 6. while Chapter-7 deals the same for high and extra high voltages. relax the conditions stipulated in clause (a) of this sub-rule for any engineer and such other person who have already sufficient experience in the operation and maintenance of a generating station. 1956 The Indian Electricity (IE) Rules. Chapter-11 discusses the various miscellaneous activities. Chapter-4 and Chapter-5 envisages upon the general safety requirements and general conditions relating to the supply and use of electricity respectively. Chapter-1 highlights the preliminary definitions to be used hereby in the document. Provided that the provisions contained in this sub-rule shall have effect in respect of the persons already authorized to operate or undertake maintenance of any part or whole of a generating station as aforesaid from the date to be specified by the appropriate Government. Article 3 (2A): “a) No person shall be authorized to operate or undertake maintenance of any part or whole of a generating station of capacity 100MW and above together with the associated sub-station unless he is adequately qualified and has successfully undergone the type of training specified in Annexure XIV. Some of the salient features of IE rules are being discussed below: Salient Features of Indian Electricity Rules. on the recommendations of the owner of such generating station. Chapter. 1956 is a 143 rules document with eleven chapters and fourteen Annexure. 3. 7.STATUTORY REQUIREMENTS FOR TRAINED MANPOWER Introduction About the Indian Electricity Rules. 1956: 1. 4. Chapter-9 gives the rules to be followed for lying down of electric traction. 2. . supply and use of electrical energy and generally to carry out the purposes and objects of the above said Act. systems and apparatus for low and medium voltages.6 deals with the electric supply lines. 9. ranging from relaxation by government and inspector to various penalties to be imposed for the breach of rules. Chapter-2 highlights the functions and responsibilities of an electrical inspector and the requirements for the same. (b)The appropriate Government may. 5. 1956 was enacted as per section 37 of the Indian Electricity Act. In lieu with the captive generation being taken up after the enactment of Indian Electricity Act. (2) There shall be separate training courses for the persons to be engaged in operation and maintenance of thermal power stations and hydro power stations together with associated sub-stations. (b) Any institute where such training is arranged shall have been recognized by the Central Electricity Authority. (3) Refresher courses shall be arranged periodically for the persons who have already undergone training under and those who have already sufficient experience in the operation and maintenance of a generating station and are engaged in its operation and maintenance under clause (b) of sub-rule 2(A) of rule 3 to familiarize with modern practices of operation and maintenance.(c)The owner of a generating station. The duration and contents of the refresher course shall be determined jointly by the owner of the generating station and the training institute.(186 hours) The duration of the training course for the skilled person to assist the operators and supervisory staff in a thermal power stations shall not be less than nine month. in the manner specified below:(1) (A) The training may be arranged in his own institute or any other institute established for this purpose. The content and duration of training in the thermal power stations is discussed in the later part of the Annexure. separate course may be arranged for the operating and supervisory staff and other skilled persons who are to assist them. 1956. Trained manpower is required at every stage of planning. Annexure.” The training aspects of the personnel in various generating stations are discussed in the Annexure XIV of the IE rules.” Article. In respect of thermal stations. engineering. commissioning. in consultation with Central Electricity Authority may alter the duration and manner of training in respect of those persons who have already been engaged in the operation and maintenance of a generating station or a substation. Trained Manpower in Power Sector: The main objective of electricity industry is to achieve customer satisfaction through generation of electricity of the right quality and quantity at an affordable cost and supply to the consumers efficiently whenever and wherever required.3 (2B) “The provisions contained in rule 3(2A) will also be applicable in respect of other sub-stations of 132KV and above from a date to be specified by the appropriate Government but such a date shall not be later than 3 years from which this rule comes into force. procurement. design. operation and maintenance of power • • • • • .(124 hours) The duration of the training course for operation and maintenance of the sub-station associated with the generating station shall not be less than six months.XIV: The duration of the training courses for the operating supervisory staff (both electrical and mechanical) shall not be less than 12 months. handling and storage.XIV “The owner of every generating station of capacity of 100MW and above shall arrange for training of personnel engaged in the operation and maintenance of his generating station.(82 hours) The duration of the training course for the operation and supervisory staff to work in hydro power stations shall not be less than nine months. 0 in the Ninth plan. Due to the introduction of more sophisticated technology and automation. established a Centre for Advanced Management & Power Studies (CAMPS) at Faridabad. In addition to a number of short-term courses on Technology-Management interface./B. HINDALCO. In the hydro sector too. (U. Himachal Pradesh State Electricity Board.71 in the Sixth plan to less than 2. These institutes mostly cater to the training needs of the thermal power stations. NPTI also conducts professional courses. a 45% decrease in eight years.) Thermal 08/2008 Field Type Recognized up to HPSEB 2 T&D 08/2005 . This indicates the increasing importance of each individual. organizations will have to challenge the existing core beliefs. in Power Engineering etc. Northern Region HINDALCO 1 Technical Training & Management Development Centre. which in turn makes manpower quality criteria more demanding. processes and methodologies and focus on hands-on learning to inculcate the necessary knowledge. The Man/MW ratio in thermal sector in India has declined from 4. Decentralization of training. Training Institutes in Power Sector recognized by CEA Region Owning Agency SL Name of the Institute A.Tech. skills and attitudes in their personnel. The same trend is evident in terms of the number of personnel/million units supplied . especially for the operational staff would be necessary. it also conducts a two-year full time MBA Program in Power Management. ii) Lineman Training Institutes iii) Other Training facility (Class/board rooms for refresher/management programs) including networking with academic/training institutions outside power sector.6 in 1992-93 to 2. To survive in this competitive market.E. sale of energy and collection of revenue. Renusagar.0 in the Ninth plan. Excerpts from the National Training Policy Basically three types of training infrastructures/facilities are available: i) Training institutes recognized by CEA for imparting statutory induction training. The growing concern over environmental degradation and depletion of the conventional energy sources has made the task more challenging. expensive infrastructure need not be created at each plant level. There are thirty eight training institutes recognized by the Central Electricity Authority (CEA).P.04 in the Sixth plan to 2. At the same time. This necessitates the operation of the plants and equipment in the most safe and efficient manner to minimize the cost of supply. Solan (H. Other Training institutes at the National level includes National Power Training Institute.plants.5 in 2000-2001.declining from 4. Added to this is the fact that electricity industry is a highly capital intensive industry. These products should be gainfully utilized in the reforming power sector. integrating power-training experience with academics.P) Linemen Training Centre. the Man/MW ratio is declining. the Man/MW ratio has come down from 6. like PDC & PGDC in Power Plant Engineering and B. Singrauli (U. Rihand (U.) Thermal Training Institute.P. U.P. Lucknow (U. Thermal. Baramulla (J&K) Training Centre. Chamba (H.) Employees Development Centre.P.) Employee Development Centre. 800/400/220 KV Sub-station. Faridabad (Haryana) All Fields All Fields 10/2006 10/2009 Training Centre. Kishenpur Thermal Training Institute. Dadri (U. GGSSTPS. Ballabgarh (Haryana) Name of the Institute Employee Development Centre. Obra Thermal Power Station T&D 02/2005 NPTI (NR). Thermal 05/2009 National Capital Power Station. Badarpur (Delhi) NPTI. 400KV Ballabgarh Sub-station.P.P. Power Corporation Ltd. Ropar (Punjab) Electricity Training Institute.) Employees Development Centre.NHPC 3 4 5 6 NPTI 7 8 NTPC 9 10 11 12 13 Power Management Institute (PMI). Thermal 08/2008 Singrauli STPS.P.) Power Management Employee Development Centre. Salal HEP Udhampur (J&K) Training Centre Tanakpur Power Station.P. Champawat (Uttaranchal) Hydro Hydro Hydro Hydro 01/2008 04/2008 12/2007 12/2007 PGCIL 14 Region Owning Agency SL 15 Field Type T&D Recognized up to 02/2007 PSEB 16 UPPCL 17 UPRVUNL 18 B.) Training Centre Uri HEP. Hydro & 12/2007 Noida (U. Western Region Autonomous Society 19 Thermal 02/2007 T&D 02/2008 Thermal 04/2008 Centre for Research and Industrial Staff Performance Hydro 01/2008 . Thermal 08/2008 Rihand STPS. Chamera Power Station -I. PSEB. Thermal 06/2009 Badarpur (Delhi) Employee Development Centre. 31 Thermal 01/2009 Thermal 04/2007 32 33 Hydro Thermal 09/2007 04/2007 Torrent Power AEC .Kordi (Maharashtra) Training Research and Development Centre. Koradi TPS.CSEB 20 Power Generating Training Institute. Itarsi (MP) Name of the Institute Thermal 03/2010 MAGAGENCO 21 MAHADISCOM 22 Thermal &T&D 07/2007 Thermal 03/2009 NPTI 23 NTPC 24 25 26 PGCIL 27 T&D 01/2007 Thermal Gas Thermal 06/2009 04/2007 08/2008 All Fields 05/2006 Region Owning Agency SL Field Type Recognized upto REL 28 Technical Training Centre. Nagpur (Maharashtra) Employees Development Centre. Korba . Bhira Hydro Generating Station. Bhira Plant Training Centre at Dharvi Receiving Station. Mumbai (Maharashtra) Thermal 09/2007 29 Power Management 05/2008 30 Tata Power Co. Mumbai (Maharashtra) Plant Training Centre.P. Reliance Energy Ltd. MSPGCL . Korba STPS. Reliance Energy Ltd. Dahanu TPS. Kawas GPS.) Employee Development Centre 400 KV Itarsi Sub-station. Vindhyachal STPS. Tata Power Company. Korba (East) (Chattsgarh) Koradi Training Centre..495 450 Employees Development Centre. Chattsgarh SEB.Sidhi (M. Thane (Maharashtra) Reliance Energy Management Institute. Distt. Korba TPS. Mumbai Main Training Center Trombay Thermal Power Station. Nashik TPS. Nashik (Maharashtra) NPTI (WR).Surat (Gujarat) Employee Development Centre. MSEDCL. Distt. Mumbai (Maharashtra) Versova Technical Training Centre. Reliance Energy Ltd. Tata Power Company. N.P. Vijay Wada TPS APGENCO. TNEB Hydro Training Institute.N. Eastern Region CESC Ltd. Karim Nagar (A. Vallur Camp North Chennai TPS. 400KV Sub-station.. Kolkata (WB) Training Institute at Chandrapura TPS. Neyveli (T. Distt. Distt. Bangalore (Karnataka) NPTI (SR).) Name of the Institute Thermal 11/2009 Thermal 11/2009 Thermal 05/2008 T&D Thermal and T&D Thermal 04/2007 07/2006 12/2008 Region Owning Agency SL Field Type Recognized upto PGCIL 41 TNEB 42 43 44 Thermal Training Institute.) Power System Training Institute. CESC Ltd. Hyderabad (A. (AP) Power Engineers' Training & Research Centre. Torrent Power AEC.) Employee Development Centre. Southern Region APGENCO 35 KSEB 36 NLC 37 NPTI 38 39 NTPC 40 Training Centre Sabarmati PS. Bokaro (Jharkhand) Power Training Centre at Chandaka. Ahmadabad (Gujarat) Thermal 03/2007 Training Institute.34 C. Power Grid Corporation of Orissa Ltd.) T&D 10/2006 D.) Transmission and Sub-station Training & Development Institute.N. Madurai (T. Bhubaneshwar (Orissa) Thermal 12/2006 Thermal 05/2009 T&D 12/2007 . TNEB Kuthiraikalmedu.P. Ramagundam STPS..N.) Thermal Hydro T&D 03/2010 08/2009 06/2008 Employee Development Centre. Moolamattom (KSEB) Thermal Power Station Training Centre. Neyveli (T. Kolkata 45 DVC 46 OPTCL 47 O&M Training Centre. TNEB. Distt. Erode (T. excitation systems. the training is provided for the maintenance of all the auxiliaries in the power stations. construction details of various boilers and turbines. • Basic flow diagrams in a power plant. auxiliaries and other major equipments of a thermal power plant. Murshidabad Thermal 07/2007 NPTI(ER). Factory Act. Also. The main thrust in the training of operating and supervisory staff lies in the conceptual orientation of modern thermal power stations. Orissa Hydro 02/2008 Employee Development Centre. Distt. turbines.reservoirs.NPTI 48 NTPC 49 Orissa HPCL 50 SAIL 51 WBPDCL 52 Power Plant Training Simulator Centre at Bakreswar Thermal Power Station Thermal 05/2008 Central Power Training Institute at Rourekela (Orissa) Thermal 11/2008 OHP Training Centre.fuel cycle. Along with major equipments. Indian Electricity Act. Farakka STPS. • Training for the lineman engaged in mechanical works of the thermal power stations. the focus will be on the conceptual orientation of generators. penstocks. air and gas cycle. • Training for the lineman engaged in the operation and maintenance of hydro-electric generating station. water tunnels. • Specialized training for the personnel engaged in the extra high voltage sub-station. 1910. Also. • Training for the lineman for assisting the operation and maintenance of thermal power stations. its layout. fault analysis and protection of transformers. the trainee is well equipped with the Indian Boiler Rules. control and supervision of boilers. • Hydraulic systems. Durgapur All Fields 06/2006 Categories of Training: • Training for the Foreman engaged in the operation and maintenance of thermal power stations. surge tanks. bearing cooling systems • Principles of material management and inventory control. • Types of water turbines. • Training for the Foreman engaged in the mechanical works of the thermal power stations. turbines. The training for the operating personnel in a hydro station undergoes a specialized course of which the following are the highlights: • Concept of a modern hydro station. . • Details of switchgear engineering. • Training for the Foreman engaged in the electrical works of the thermal power stations. The other part of the training revolves around the following areas: • Coal Handling Plant. The main thrust in the training of a foreman lies in operation. The principles of marketing a service effectively hence. Training Institutes should evolve a mechanism to be in constant touch with the customer organizations to continuously upgrade. firms would invest heavily in manpower. the training and development programs will be accounting for at least 1. • Protection of generators and transformers • Excitation systems.• Specifications of generators. The second step will be to highlight the contribution of training towards improving productivity of individuals and thereby organizations. Looking Ahead in the Eleventh Plan (2007-2012): With the enactment of the Act. Creation of awareness about availability of training facilities shall be the first step in this direction. Training for Franchise Development: The training institutes/organizations have often not taken up the task of marketing training as a major element of personnel management system aimed at raising the productivity within an organization. need to be used extensively by them. • Statutory Electricity Acts and Rules The assessment for all the training courses is on the basis of 100 marks. which need to be marketed like any other service. Therefore. the message is clear that major emphasis would be laid on private developers and to mitigate the challenges posed by the competitors. match the course contents with the specific needs of the organization and use innovative methods to deliver the training inputs.5 % of the total investment in the power sector.Types and ratings. . Training Institutes and training managers must consider training as a service they are offering to the various customers. The detailed provisions on the above aspects are fairly exhaustive. and 8 hours per day spread over 10½ hours in a day. It also seeks to prevent haphazard growth of factories through the provisions therein relating to the approval of the plans by the chief inspector of factories before the erection of a factory building is started. Factories employing 500 or more workers are required to appoint Labor Welfare officers to look after the welfare of workers. inter alia. (iv) annual leave with wages. 1934. (vii) enforcement. qualifications & service conditions of these officers. The state Govt. (v) occupational diseases. Hence the comprehensive factories act was enacted in 1948 to ensure adequate safety measures & to promote the health & welfare of the workers employed in factories. (ii) hours of work. It is also empowered to order the management of any factory or class of factories to associate the representatives of employees in matters relating to provision of welfare facilities. was found unsatisfactory & its provision inadequate in the changed conditions of growing industrial activities. The extends to the whole of India & applies to all establishments employing 20 or more workers where power is used & to establishments employing 20 or more workers where power is not used. Under the act. safety & welfare. (vi) administration. the maximum hours of work for adult workers have been fixed at 48 hours per week. Employment of women and children (below 17 years) is prohibited during the night (7pm to 6pm) . is empowered to prescribe the duties. (iii) employment of young persons & women. inclusive of intervals. The main provisions of the act.Factory Act The workings of the factories act. which was in operation prior to 1948. relate to (i) health. and (viii) penalties for offences. Energy Conservation and its Importance Coal and other fossil fuels. For sustainable development. is the result of several processes or developments. etc. it has today assumed even more importance because of being the most cost-effective and reliable means of mitigating the global climatic change. For example. In the last two hundred years. energy efficiency means using less energy to perform the same function. Today. Promotion of energy efficiency will contribute to energy conservation and is therefore An integral part of energy conservation promotional policies. Energy Conservation can. replacing traditional light bulbs with Compact Fluorescent Lamps (CFLs) means you will use only 1/4th of the energy to light a room. we have consumed 60% of all resources.). Energy conservation is achieved when growth of energy consumption is reduced. Recognition of that potential has led to high expectations for the control of future CO2 emissions through even more energy efficiency improvements than have occurred in the past. but related concepts. Very simply. On the other hand Energy efficiency is achieved when energy intensity in a specific product. Pollution levels also reduce by the same amount. are likely to deplete soon. therefore. we need to adopt energy efficiency measures. which have taken three million years to form. oil or natural gas. 85% of primary energy comes from non-renewable and fossil sources (coal. such as productivity increase or technological progress. The industrial sector accounts for some 41 per Cent of global primary energy demand and approximately the same share of CO2 emissions. It provides additional economic value by preserving the resource base and reducing pollution. consumption or comfort levels. energy efficiency has been in practice ever since the first oil crisis in 1973. but in most cases our products and manufacturing processes are still a long way from operating at this theoretical limit. Although. oil. Nature sets some basic limits on how efficiently energy can be used. These reserves are continually diminishing with increasing consumption and will not exist for future generations What is Energy Conservation? Energy Conservation and Energy Efficiency are separate. process or area of production or consumption is reduced without affecting output. measured in physical terms. . Energy efficiency is often viewed as a resource option like coal. Feed Water Preheating using Economiser Typically. there is a potential to recover heat from these gases. with a flue gas exit temperature of 260 °C.Energy Conservation Act . Thus. It also indicates the scaling of heat transfer/recovery equipment and hence the urgency of taking an early shut down for water / flue side cleaning. Bureau of Energy Efficiency has been established with effect from 1st March 2002 by merging erstwhile Energy Management Centre of Ministry of Power. an economizer could be used to reduce it to 200 °C. avoidable losses. high auxiliary power consumption.2001 With the background of high energy saving potential and its benefits. LPG or gas oil is used. heat transfer. and to effectively overcome the barrier. it should not be so low that water vapour in the exhaust condenses on the stack walls. so that the sulphur oxides in The flue gases do not condense and cause corrosion in heat transfer surfaces. reducing environmental emissions through energy saving. However. The Act provides the much-needed legal framework and institutional arrangement for embarking on an energy efficiency drive. The potential for energy saving depends on the type of boiler installed and the fuel used. Stack temperatures greater than 200°C indicates potential for recovery of waste heat. The flue gas exit tempera-true from a boiler is usually maintained at a minimum of 200 °C. Examining the following factors can indicate if a boiler is being run to maximize its efficiency: 1. bridging the gap between demand and supply. This is important in fuels containing significant sulphur as low temperature can lead to sulphur dew point corrosion. 2. the flue gases leaving a modern 3-pass shell boiler are at temperatures of 200 to 300 °C. the economy of heat recovery must be worked out. Energy Conservation Opportunities in Boiler The various energy efficiency opportunities in boiler system can be related to combustion. Under the provisions of the Act. For a typically older model shell boiler. Stack Temperature The stack temperature should be as low as possible. When a clean fuel Such as natural gas. water quality and lowdown.2001. the Government of India has enacted the Energy conservation Act . and as the flue gas temperature may be well below 200 °C. The Bureau would be responsible for implementation of policy programmes and coordination of implementation of energy conservation activities.Policy Framework . increasing the feed water temperature by 15 . Most gas and oil Burners used in a boiler plant are not designed for high air preheats temperatures. but will increase to around 6%. irrespective of the boiler output. to allow for the Normal variations in combustion and to ensure satisfactory stack conditions for some fuels.°C. carbonization on tips and deterioration of diffusers or spinner Plates. In the case of oil and gas fired systems. thus causing poor air distribution. 6. The optimum excess air level for maximum boiler efficiency occurs when the sum of the losses due to incomplete combustion and loss due to heat in flue gases is minimum. Non uniform fuel size could be one of the reasons for incomplete combustion. fuel distributors. With modern boiler designs. Reduction of Scaling and Soot Losses In oil and coal-fired boilers. Increase in overall thermal efficiency would be in the order of 3%.5% on the gross calorific value at full rating. Elevated stack temperatures may indicate excessive soot build-up. type of burner. so it is possible to consider such units as heat exchangers in the exit flue as an alternative to an economizer. 3. Radiation and Convection Heat Loss The external surfaces of a shell boiler are hotter than the surroundings. and must be corrected immediately. stoker grate condition. soot build-up on tubes acts as an insulator against heat transfer. A 10% blow down in a 15kg/cm2 boiler results in 3% efficiency loss. . This level varies with furnace design. 8. Automatic blow down controls can be Installed that sense and respond to boiler water conductivity and pH. In sprinkler stokers. fuel and process variables. Any such deposits should be removed on a regular basis. For a modern 3-pass shell boiler firing natural gas with a flue gas exit temperature of 140 °C a condensing economizer would reduce the exit temperature to 65 °C increasing thermal efficiency by 5%. large lumps will not burn out completely. Increase in the fines in pulverized coal also increases carbon loss. The heat loss from the boiler shell is normally a fixed energy loss. CO or smoke (for oil fired systems only) with normal or high excess air indicates burner system problems. Incomplete Combustion Incomplete combustion can arise from a shortage of air or surplus of fuel or poor distribution of fuel. It can be determined by conducting tests with different air fuel ratios. this may represent only 1. Modern burners can withstand much higher combustion air preheat. 7. the combustion air temperature must be raised by 20 °C. It is usually obvious from the colour or smoke. In order to improve thermal Efficiency by 1%. Repairing or augmenting insulation can reduce heat loss through boiler walls and piping. when neither pace or a high feed water return temperature make it viable. Excess Air Control Excess air is required in all practical cases to ensure complete combustion. 4. 5. Also same result will occur due to scaling on the water side. In chain grate stokers. Combustion Air Preheat Combustion air preheating is an alternative to feed water heating. worn tips. wind box air regulation and over-fire systems can affect carbon loss. Automatic Blow down Control Uncontrolled continuous blow down is very wasteful. It occurs as grit carry-over or carbon-inash and may amount to more than 2% of the heat supplied to the boiler. Poor oil fires can result from improper viscosity. A more frequent cause of incomplete combustion is the poor mixing of fuel and air at the burner. The surfaces thus lose Heat to the surroundings depending on the surface area and the difference in temperature Between the surface and the surroundings. unburned carbon can comprise a big loss. With coal firing. while small pieces and fines may block the air passage. if the boiler operates at only 25 percent output. Effect of Boiler Loading on Efficiency The maximum efficiency of the boiler does not occur at full load. it is usually more Efficient. 9. Steam is generated at pressures normally dictated by the highest pressure / temperature requirements for a particular process. reducing the sensible heat loss. Pressure should be reduced in stages. the efficiency of the boiler is zero. If the load on the boiler decreases further. The energy manager should consider pressure reduction carefully. Adverse effects. Waterside deposits require a review of water treatment procedures and tube cleaning to remove deposits. Boiler Replacement The potential savings from replacing a boiler depend on the anticipated change in overall Efficiency. This condition can result from a gradual build-up of gas-side or waterside deposits. boiler Tube banks. Periodic off-line cleaning of radiant furnace surfaces. to operate a fewer number of boilers at higher loads. therefore. efficiency also tends to decrease. efficiency of the boiler reduces significantly below 25% of the rated load and as far as possible. they lack accuracy. When the flue gas temperature rises about 20 °C above the temperature for a newly cleaned boiler. In general. It is. but at about two-thirds of the full load. Lower steam pressure gives a lower saturated steam temperature and without stack heat Recovery. 13. This increases the sensible heat loss In general. In some cases. Stack temperature should be checked and recorded regularly as an indicator of soot deposits. Blowers and Pumps Variable speed control is an important means of achieving energy savings. the process does not operate all the time. than to operate a Large number at low loads. giving poor control characteristics at the top and bottom of the operating range. a similar reduction in the temperature of the flue gas temperature results. by as much as 1 to 2%. the possibility of replacing the dampers by a VSD should be evaluated. recommended to install a dial type thermometer at the base of the stack to monitor the exhaust flue gas temperature. This reduction in flow rate for the same heat transfer area reduced the exit flue gas temperatures by a small extent. Variable Speed Control for Fans. the optimum efficiency of boilers occurs at 65–85% of full load. A change in a boiler can be financially attractive if the existing boiler is: . It is estimated that 3 mm of soot can cause an increase in fuel consumption by 2. if the load characteristic of the boiler is variable. and there are periods when the boiler pressure could be reduced. if permissible. Though dampers are simple means of control. and any fuel fired is used only to supply the losses. An estimated 1% efficiency loss occurs with every 22 °C increase in stack temperature. The factors affecting boiler efficiency are: • As the load falls. Proper Boiler Scheduling Since. most combustion appliances need more excess air to burn the fuel Completely. so does the value of the mass flow rate of the flue gases through the tubes.High exit gas temperatures at normal excess air indicate poor heat transfer performance.5% due to increased flue gas temperatures. • Below half load. economizers and air heaters may be necessary to remove stubborn deposits. on the whole. before recommending it. such as an increase in water carryover from the boiler owing to pressure reduction. Generally. Reduction of Boiler Steam Pressure This is an effective means of reducing fuel consumption. 11. At zero output. and no more than a 20 percent reduction should be considered. may negate any potential saving. combustion air control is affected by throttling dampers fitted at forced and induced draft fans. and operation of boilers below this level should be avoided 12. it is time to remove the soot deposits. 10. the following points have to be observed: Condensate discharge––Inverted bucket and thermodynamic disc traps should have intermittent condensate discharge. All financial and engineering factors should be considered. The users sometimes get confused between a flash steam and leaking steam. 2._ Old and inefficient _ Not capable of firing cheaper substitution fuel _ Over or under-sized for present requirements _ Not designed for ideal loading conditions The feasibility study should examine all implications of long-term fuel availability and Company growth plans. 3. by plugging all leakages. the discharge from the trap should be observed. Flash steam––This shall not be mistaken for a steam leak through the trap. valves. When the test valve is opened. In fact. Avoiding Steam Leakages Steam leakage is a visible indicator of waste and must be avoided. It has been estimated that a 3 mm diameter hole on a pipeline carrying 7 kg/cm2 steam would waste 33 KL of fuel oil per year. sluggish heating. Indeed. Also water forms a wet film on heat transfer and overloads traps and . one may be surprised at the extent of fuel savings. it is a flash steam. steam loss. A step-by-step analysis has to be carried out mainly with reference to lack of discharge from the trap. Float and thermostatic traps should have a continuous ondensate discharge. If inverted bucket traps are used for extremely small load. which may reach upto 5% of the steam consumption in a small or medium scale industry or even higher in installations having several process departments. Steam leaks on high-pressure mains are prohibitively costlier than on low pressure mains. Providing Dry Steam for Process The best steam for industrial process heating is the dry saturated steam. Thermostatic traps can have either continuous or intermittent discharge depending upon the load. Any steam leakage must be quickly attended to. to find out whether it is a system problem or the mechanical problem in the steam trap. it is a leaking steam. the plant should consider a regular surveillance programme for identifying leaks at pipelines. 4. Monitoring Steam Traps For testing a steam trap. Continuous steam blow and no flow indicate. continuous flow. Wet steam reduces total heat in the steam. it will have a continuous condensate discharge. Energy Saving Opportunities in steam 1. The flash steam and the leaking steam can be approximately identified as follows: • If steam blows out continuously in a blue stream. there should be an isolating valve provided in the downstream of the trap and a test valve shall be provided in the trap discharge. replacement must be carefully studied. flanges and joints. To avoid leaks it may be worthwhile considering replacement of the flanged joints which are rarely opened in old plants by welded joints. • If a steam floats out intermittently in a whitish cloud. Since boiler plants traditionally have a useful life of well over 25 years. there is a problem in the trap Whenever a trap fails to operate and the reasons are not readily apparent. Proper Utilization of Directly Injected Steam The heating of a liquid by direct injection of steam is often desirable. For example.Condensate equipment. there is a limit to the reduction of steam pressure. At best. due attention must be paid to the boiler operation and lagging of the pipelines. the injected steam should be condensed completely as the bubbles rise through the liquid. The dryness fraction of steam depends on various factors. However.) direct steam injection is applied. and can cause damage to most items of plant and equipment. Super heated steam is not desirable for process heating because it gives up heat at a rate slower than the condensation heat transfer of saturated steam. As steam flows through the pipelines. the lowest possible steam pressure with which the equipment can work should be selected without sacrificing either on production time or on steam consumption. there may even be an increase in steam consumption at lower pressures due to increased processing time. 6. The heating is quick. It is only the latent heat of steam. Therefore. it is important that its value be kept as high as possible. however.)direct steam agitation are not acceptable. Thus. The equipment required is relatively simple. 5. cheap and easy to maintain.e. it can deliver only 95% dry steam. the lower will be its temperature.e. the extent of the condensation depends on the effectiveness of the lagging. separators are installed in steam pipelines. the velocity of the steam bubbles will also be high and they will not get sufficient time to condense before they reach the surface. heating is done by blowing steam into the liquid (i. with poor lagging. Wet steam can reduce plant productivity and product quality. In processes where dilution is not a problem. making the process thermally efficient. Utilising Steam at the Lowest Acceptable Pressure for the Process A study of the steam tables would indicate that the latent heat in steam reduces as the steam pressure increases. If the dilution of the tank contents and agitation are not acceptable in the process (i. such as the level of water to be a part of the steam. There are. and the sensible heat of the steam is also used up along with the latent heat. If pressures are high. Whilst careful drainage and trapping can remove most of the water. No condensate recovery system is necessary. the steam can become excessively wet. the rate of heat transfer will be slower and the processing time greater. 7. even as simple a thing as improper boiler water treatment can become a cause for wet steam.g. indirect steam heating is the only answer. This is possible only if the inlet steam pressures are kept very low-around 0. Since dry saturated steam is required for process equipment. it may also be seen from the steam tables that the lower the steam pressure. It must be remembered that a boiler without a super heater cannot deliver perfectly dry saturated steam. big drying cylinders). it undergoes progressive condensation due to the loss of heat to the colder surroundings. but utilized at as low a pressure as possible since it then has higher latent heat. To remove these suspended water droplets. Since temperature is the driving force for the transfer of heat at lower steam pressures. it will not deal with the water droplets suspended in the steam. This can only be achieved if we go in for lower steam pressures. the steam should always be generated and distributed at the highest possible pressure. Depending on the equipment design. which takes part in the heating process When applied to an indirect heating system. As a guide. Ideally. Minimising Heat Transfer Barriers . In equipment where fixed losses are high (e.5 kg/cm2 -and certainly not exceeding 1kg/cm2. several equipment in certain industries where one can profitably go in for lower Pressures and realize economy in steam consumption without materially affecting production time. Indeed. although the proportions of these gases are normally very small compared with the steam. The plant should be made . Automatic air vents for steam systems (which operate on the same principle as thermostatic steam traps) should be fitted above the condensate level so that only air or steam/air mixtures can reach them. flash steam from high pressure equipments is made use of directly on the low pressure equipments to reduce use of steam through pressure reducing valves. In many cases. a layer of iron 2 mm thick or a layer of copper 15 mm thick. A layer of air only 1 mm thick can offer the same resistance to heat as a layer of water 25 μm thick. It is very important therefore to remove air from any steam system. 10. and will be added to the pressure of the steam to give a total pressure. The consequence of not removing air is a lengthy warming up period. Proper Air Venting When steam is first admitted to a pipe after a period of shutdown. It is common to see leaving flanges uncovered.The metal wall may not be the only barrier in a heat transfer process. whilst regular cleaningon the product side should reduce the scale. Insulation of Steam Pipelines and Hot Process Equipments Heat can be lost due to radiation from steam pipes. Rock wool and Asbestos. Air will exert its own pressure within the system. Condensate Recovery The steam condenses after giving off its latent heat in the heating coil or the jacket of the Process equipment. a condensate line falling towards a vented receiver can accept the discharge from an air vent. Precautions should be taken to discharge them. Further amounts of air and other non-condensable gases will enter with the steam. If a 0. In addition to air venting at the end of a main. An uncovered flange is equivalent to leaving 0. The remedy is to provide easily detachable insulation covers. The discharge from an air vent must be piped to a safe place. On the product side there may also be baked-on product or scale. which can be easily removed when necessary.6 metre of pipe line unlagged. 12. there would be a loss of heat equivalent to wasting 5 tons of coal or 3000 litres of oil a year. and a reduction in plant efficiency and process performance. these gases will accumulate in pipes and heat exchangers. Agitation of the product may eliminate the effect of the stagnant film. the actual steam pressure and temperature of the steam/air mixture will be lower than that suggested by a pressure gauge. When the steam condenses. 11. the pipe is full of air. A sizable portion (about 25%) of the total heat in the steam leaves the Process equipment as hot water. There is likely to be a film of air. Flash Steam Recovery Flash steam is produced when condensate at a high pressure is released to a lower pressure and can be used for low pressure heating. Glass wool. Reducing the Work to be done by Steam The equipments should be supplied with steam as dry as possible. The various insulating materials used are cork. In practice. 8. Therefore. condensate and scale on the steam side. and a stagnant film of product.15 m steam pipe diameter has 5 uncovered flanges. Air in a steam system will also affect the system temperature. The higher the steam pressure and lower the flash steam pressure the greater the quantity of flash steam that can be generated. This is usually done to facilitate checking the condition of flange but at the cost of considerable heat loss. air vents should also be fitted 9. Of more importance is the effect air has upon heat transfer. As an example while lagging steam pipes. Thus. • Burn wastes if permitted. strainers. automatic draining is essential and can be achieved by steam traps. • Inspect for scale and sediment on the water side. to avoid water hammer. then make a boiler efficiency-maintenance program a part of your continuous energy Management program. if any product is to be dried such as in a laundry. • Inspect door gaskets. Start with an energy audit and follow-up. air and other non-condensable gases from steam mains and steam using equipment. • Insulate exposed heated oil tanks.limit excess air to less than 10% on clean fuels).g. (A 3 mm thick soot deposition on the heat transfer surface can cause an increase in fuel Consumption to the tune of 2.efficient. . • Improve oxygen trim control (e. • Inspect oil heaters for proper oil temperature. fly ash. The trap should also evacuate air and other non-condensable gases. Recover boiler blow down heat. • Optimize deaerator venting. (5% reduction in excess air increases boiler efficiency by 1% or: 1% reduction of residual oxygen in stack gas increases boiler efficiency by 1%) • Automate/optimize boiler blow down. • Study part-load characteristics and cycling costs to determine the most-efficient mode for Operating multiple boilers.) • Inspect for soot. • Consider multiple or modular boiler units instead of one or two large boilers.5%) • Optimize boiler water treatment. as they reduce the heat transfer efficiency and also corrode the equipment. • Add an economizer to preheat boiler feed water using exhaust heat. Steam System • Fix steam leaks and condensate leaks. while preventing the loss of steam in the distribution system or equipment. • Establish a boiler efficiency-maintenance program. For example. to take care of the above factors. (A 1 mm thick scale (deposit) on the water side could increase fuel consumption by 5 to 8%. therefore. thermal shock and reduction in heat transfer area. a press could be used to squeeze as much water as possible before being heated up in a dryer using steam. -. nozzles. • Recycle steam condensate. (22°C reduction in flue gas temperature increases boiler efficiency by 1%) • Use variable speed drives on large boiler combustion air fans with variable flows. • Close burner air and/or stack dampers when the burner is off to minimize heat loss up the stack. • Use boiler blow down to help warm the back-up boiler. and slag on the fire side. TIPS FOR ENERGY EFFICIENCY IN THERMAL UTILITIES Boilers • Preheat combustion air with waste heat. etc. • Clean burners. a steam trap is an automatic valve that permits passage of condensate. The trap must drain condensate. -. • Use waste steam for water heating. combustion control and instrumentation.25 mm thick air film offers the same resistance to heat transfer as a 330 mm thick copper Wall) • Inspect steam traps regularly and repair malfunctioning traps promptly. • Use more-efficient steam desuperheating methods. • Remove or blank off all redundant steam piping. (A bare steam pipe of 150 mm diameter and 100 m length. • Recover boiler blow down. • Use an absorption chiller to condense exhaust steam before returning the condensate to the boiler. • Consider recovery of vent steam (e.(A 3 mm diameter hole on a pipe line carrying 7 Kg/cm2 steam would waste 33 Kilo litres of fuel oil per year) • Accumulate work orders for repair of steam leaks that can't be fixed during the heating season due to system shutdown requirements. • Maintain lowest acceptable process steam pressures. • Reduce hot water wastage to drain.g.on large flash tanks). Furnaces • Check against infiltration of air: Use doors or air curtains • Monitor O2 /CO2/CO and control excess air to the optimum level • Improve burner design.000 litres furnace oil in a year) • Insulate any hot or cold metal or insulation. • Ensure condensate is returned or re-used in the process. then make a steam efficiency-maintenance program a part of your continuous energy management program. . (6°C raise in feed water temperature by economiser/condensate recovery corresponds to a 1% saving in fuel consumption. • Replace wet insulation. in boiler) • Preheat boiler feed-water. Tag each such leak with a durable tag with a good description. • Check operation of steam traps. • Use back pressure steam turbines to produce lower steam pressures. • Ensure process temperatures are correctly controlled. • Use electric pumps instead of steam ejectors when cost benefits permit • Establish a steam efficiency-maintenance program. carrying saturated steam at 8 kg/cm2 would waste 25. Start with an energy audit and followup. • Remove air from indirect steam using equipment (0. • Ensure that the furnace combustion chamber is under slight positive pressure • Use ceramic fibres in the case of batch operations • Match the load to the furnace capacity • Retrofit with heat recovery device • Investigate cycle times and reduce • Provide temperature controllers • Ensure that flame does not touch the stock Insulation • Repair damaged insulation. For the purpose of this sub-section.• Use an infrared gun to check for cold wall areas during cold weather or hot wall areas during hot weather. • Use thermal wheels. after giving not less than two months' notice of its intention so to do. valves and couplings • Insulate open tanks (70% heat losses can be reduced by floating a layer of 45 mm diameter polypropylene (Plastic) balls on the surface of 90°C hot liquid/condensate) Waste heat recovery • Recover heat from flue gas. • Use waste heat for fuel oil heating. • Use heat pumps. or (ii) if it is of a seasonal character and is performed for more than sixty days in a year. boiler blow down. unless the context otherwise requires. extent. 37 OF 19701 [5th September. (b) to every contractor who employees or who employed on any day of the preceding twelve months twenty or more workmen: Provided that the appropriate Government may. (2) It extends to the whole of India. apply the provisions of this Act to any establishment or contractor employing such number of workmen less than twenty as may be specified in the notification. engine exhaust. (3) It shall come into force on such date 1* as the Central Government may. Explanation. and its decision shall be final. by notification in the Official Gazette. (4) It applies-(a) To every establishment in which twenty or more workmen are employed or were employed on any day of the preceding twelve months as contract labour. appoint and different dates may be appointed for different provisions of this Act. by notification in the Official Gazette. PRELIMINARY 1. engine cooling water. (b) If a question arises whether work performed in an establishment is of an intermittent or casual nature. 1970. etc. -. Definitions. • Use chiller waste heat to preheat hot water. etc. a State Board. and air-to-air exchangers. boiler feed water heating. (5) (a) It shall not apply to establishments in which work only of an intermittent or casual nature is performed. as the case may be. low pressure waste Steam. run-around systems. • Recover heat from incinerator off-gas. drying oven exhaust. 2. work performed in an establishment shall not be deemed to be of an intermittent nature: (i) if it was performed for more than one hundred and twenty days in the preceding twelve months.(1) In this Act.-- . • Use absorption refrigeration. 1970 ACT NO. Short title. . heat pipe systems. outside air heating. • Ensure that all insulated surfaces are cladded with aluminium • Insulate all flanges. 1970. THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT.] An Act to regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith. the appropriate Government shall decide that question after consultation with the Central Board or. commencement and application (1) This Act may be called the Contract Labour (Regulation and Abolition) Act. (ii) in a factory. (i) "workman" means any person employed in or in connection with the work of any establishment to do any skilled. the Central Government. functions mainly of a managerial nature. (e) "establishment" means-(i) any office or department of the Government or a local authority. supervisory. or (C) who is an out-worker. either by the nature of the duties attached to the office or by reason of the powers vested in him. or clerical work for hire or reward. other than a mere supply of goods of articles of manufacture to such establishment. finished. any person responsible for the supervision and control of the establishment. (h) "wages" shall have the meaning assigned to it in clause (vi) of section 2 of the Payment of Wages Act. the Government of the State in which that other establishment is situated. may specify in this behalf. 1936 (4 of 1936). as the case may be. business.2[(a) "appropriate Government" means. ornamented. (c) "contractor". not being premises under the control and management of the principal employer. 1948 (63 of 1948) the person so named. that is to say. (iv) in any other establishment. being employed in a supervisory capacity draws wages exceeding five hundred rupees per mensem or exercises. means a person who undertakes to produce a given result for the establishment. manufacture or occupation is carried on. or (B) who. trade. or (ii) any place where any industry. in relation to an establishment. (iii) in a mine. whether the terms of employment be express or implied. the owner or agent of the mine and where a person has been named as the manager of the mine. THE ADVISORY BOARDS 3. adapted or otherwise processed for sale for the purposes of the trade or business of the principal employer and the process is to be carried out either in the home of the out-worker or in some other premises. semiskilled or un-skilled manual. 1947 (14 of 1947). a person to whom any articles or materials are given out by or on behalf of the Principal employer to be made up. (d) "controlled industry" means any industry the control of which by the Union has been declared by any Central Act to be expedient in the public interest. (ii) in relation to any other establishment. the head of that office or department or such other officer as the Government or the local authority. Central Advisory Board. with or without the knowledge of the principal employer. the owner or occupier of the factory and where a person has been named as the manager of the factory under the Factories Act.- . altered.] (b) a workman shall be deemed to be employed as "contract labour" in or in connection with the work of an establishment when he is hired in or in connection with such work by or through a contractor. (g) "principal employer" means-(i) in relation to any office or department of the Government or a local authority. cleaned. repaired. but does not include any such person-(A) who is employed mainly in a managerial or administrative capacity. is the Central Government.-(i) in relation to an establishment in respect of which the appropriate Government under the Industrial Disputes Act. through contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor. (f) "prescribed" means prescribed by rules made under this Act. washed. the person so named. not exceeding eleven but not less than nine. ought to be represented on the State Board. (3) The number of persons to be appointed as members from each of the categories specified in sub-section (2).(1) The State Government may constitute a board to be called the State Advisory Contract Labour Board (hereinafter referred to as the State Board) to advice the State Government on such matters arising out of the administration of this Act as may be referred to it and to carry out other functions assigned to it under this Act. the term of office and other conditions of service of. State Advisory Board. the mining industry. the members of the State Board shall be such as may be prescribed: Provided that the number of members nominated to represent the workmen shall not be less than the number of members nominated to represent the principal employers and the contractors. REGISTRATION OF ESTABLISHMENTS EMPLOYING CONTRACT LABOUR 6. (2) The committee constituted under sub-section (1) shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed. 4. (3) The members of a committee shall be paid such fees and allowances for attending its meetings as may be prescribed: Provided that no fees shall. the opinion of the Central Government. ought to be represented on the Central Board. constitute a board to be called the Central Advisory Contract Labour Board (hereinafter referred to as the Central Board) to advise the Central Government on such matters arising out of the administration of this Act as may be referred to it and to carry out other functions assigned to it under this Act. 5. and the manner of filling vacancies among. Power to constitute committees. (3) The number of persons to be appointed as members from each of the categories specified in sub-section (2). may constitute such committees and for such purpose or purposes as it may think fit. Appointment of registering officers. the Railways. the procedure to be followed in the discharge of their functions by. (c) such number of members. (b) the Labour Commissioner. be payable to a member who is an officer of Government or of any corporation established by any law for the time being in force. and the manner of filling vacancies among. the contractors. the contractors. (c) such number of members. the workmen and any other interests which. as the State Government may nominate to represent that Government. (2) The State Board shall consist of-(a) a Chairman to be appointed by the State Government. the term of office and other conditions of service of. the members of the Central Board shall be such as may be prescribed: Provided that the number of members nominated to represent the workmen shall not be less than the number of members nominated to represent the principal employers and the contractors. the procedure to be followed in the discharge of their functions by. the coal industry. as the case may be. ex-officio. (2) The Central Board shall consist of-(a) a Chairman to be appointed by the Central Government. not exceeding seventeen but not less than eleven.- . the industry.(1) The Central Board or the State Board. or in his absence any other officer nominated by the State Government in that behalf. ex-officio. as the Central Government may nominate to represent that Government.(1) The Central Government shall. the workmen and any other interests which. (b) the Chief Labour Commissioner (Central). as soon as may be. in the opinion of the State Government. (2) If the application for registration is complete in all respects. therefore. 9. or that for any other reason the registration has become useless or ineffective and. prohibit. Registration of certain establishments. revoke the registration. a State Board. business. employ contract labour in the establishment after the expiry of the period referred to in clause (a) or after the revocation of registration referred to in clause (b).. make an application to the registering officer in the prescribed manner for registration of the establishment: Provided that the registering officer may entertain any such application for registration after expiry of the period fixed in this behalf.(1) Every principal employer of an establishment to which this Act applies shall. as the case may be. to which this Act applies. the appropriate Government may. either on a reference made to him in this behalf or otherwise. by an order notified in the Official Gazette-(a) appoint such persons. employment of contract labour in any process. Revocation of registration in certain cases. being Gazetted Officers of Government. within which a registering officer shall exercise the powers conferred on him by or under this Act.The appropriate Government may. or necessary for the industry.(1) Notwithstanding anything contained in this Act. but which has not been registered within the time fixed for the purpose under that section. and (b) define the limits.If the registering officer is satisfied. it is of sufficient duration having regard to the nature of industry. the appropriate Government shall have regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors.No principal employer of an establishment. Effect of non-registration. the registering officer may. by notification in the Official Gazette. after giving an opportunity to the principal employer of the establishment to be heard and with the previous approval of the appropriate Government. LICENSING OF CONTRACTORS . as the case may be. the registering officer shall register the establishment and issue to the principal employer of the establishment a certificate of registration containing such particulars as may be prescribed. trade. manufacture or occupation carried on in that establishment. operation or other work in any establishment. (d) whether it is sufficient to employ considerable number of whole-time workmen.. 7. that is to say. that the registration of any establishment has been obtained by misrepresentation or suppression of any material fact. (b) in the case of an establishment the registration in respect of which has been revoked under section 8. such as-(a) whether the process. within such period as the appropriate Government may. (c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto. operation or other work is incidental to. 10. by notification in the Official Gazette. Prohibition of employment of contract labour. after consultation with the Central Board or. business. 8. as it thinks fit to be registering officers for the purposes of this Chapter. requires to be revoked. trade. if the registering officer is satisfied that the applicant was prevented by sufficient cause from making the application in time. fix in this behalf with respect to establishments generally or with respect to any class of them. manufacture or occupation that is carried on in the establishment: (b) whether it is of perennial nature. shall-(a) in the case of an establishment required to be registered under section 7. (2) Before issuing any notification under sub-section (1) in relation to an establishment. (2) Subject to any rules that may be made in this behalf. 13. without prejudice to any other penalty to which the holder of the licence may be liable under this Act. fixation of wages and other essential amenities in respect of contract labour as the appropriate Government may deem fit to impose in accordance with the rules. after giving the appellant an opportunity of being heard dispose of the appeal as expeditiously as possible. without reasonable cause. section 8. (2) The licensing officer may make such investigation in respect of the application received under subsection (1) and in making any such investigation the licensing officer shall follow such procedure as may be prescribed.-(a) appoint such persons. Grant of licences. suspension and amendment of licences. within which a licensing officer shall exercise the powers conferred on licensing officers by or under this Act. or (b) the holder of a licence has. as it thinks fit to be licensing officers for the purposes of this Chapter. failed to comply with the conditions subject to which the licence has been granted or has contravened any of the provisions of this Act or the rules made there under. then.(1) If the licensing officer is satisfied. Revocation. prefer an appeal to an appellate officer who shall be a person nominated in this behalf by the appropriate Government: Provided that the appellate officer may entertain the appeal after the expiry of the said period of thirty days.(1) Every application for the grant of a licence under sub-section (1) of section 12 shall be made in the prescribed form and shall contain the particulars regarding the location of the establishment.(1) With effect from such date as the appropriate Government may. appoint. the licensing officer may. Appeal. shall undertake or execute any work through contract labour except under and in accordance with a licence issued in that behalf by the licensing officer. the appellate officer shall. if he is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time. by an order notified in the Official Gazette. Appointment of licensing officers. (2) On receipt of an appeal under sub-section (1). conditions as to hours of work. if any. being Gazetted Officers of Government. a licence under sub-section (1) may contain such conditions including. or any portion thereof deposited as security for the due performance of the conditions subject to which the licence has been granted. 14. the licensing officer may vary or amend a licence granted under section 12.-. and (b) define the limits. . no contractor to whom this Act applies. by notification in the Official Gazette.The appropriate Government may. made under section 35 and shall be issued on payment of such fees and on the deposit of such sum. if any. as security for the due performance of the conditions as may be prescribed. (2) Subject to the provisions of this Act. if any. revoke or suspend the licence or forfeit the sum. after giving the holder of the licence an opportunity of showing cause. section 12 or section 14 may. the nature of process. in particular. that-(a) a licence granted under section 12 has been obtained by misrepresentation or suppression of any material fact. 12.(1) Any person aggrieved by an order made under section 7. operation or work for which contract labour is to be employed and such other particulars as may be prescribed. 15. Licensing of contractors. either on a reference made to him in this behalf or otherwise.11. within thirty days from the date on which the order is communicated to him. (3) A licence granted under this Chapter shall be valid for the period specified therein and may be renewed from time to time for such period and on payment of such fees and on such conditions as may be prescribed. and the standards in respect of construction. such amenity shall be provided by the principal employer within such time as may be prescribed. and (c) wherein contract labour numbering one hundred or more is ordinarily employed by a contractor. (b) a sufficient number of latrines and urinals of the prescribed types so situated as to be convenient and accessible to the contract labour in the establishment. Other facilities. 20.(1) If any amenity required to be provided under section 16. (b) wherein work requiring employment of contract labour is likely to continue for such period as may be prescribed. (2) The rest rooms or the alternative accommodation to be provided under subsection (1) shall be sufficiently lighted and ventilated and shall be maintained in a clean and comfortable condition. (2) All expenses incurred by the principal employer in providing the amenity may be recovered by the principal employer from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor. (2) Without prejudice to the generality of the foregoing power. 18. (b) the number of canteens that shall be provided. section 18 or section 19 for the benefit of the contract labour employed in an establishment is not provided by the contractor within the time prescribed thereof. there shall be provided and maintained by the contractor for the use of the contract labour such number of rest-rooms or such other suitable alternative accommodation within such time as may be prescribed.(1) In every place wherein contract labour is required to halt at night in connection with the work of an establishment-(a) to which this Act applies.(1) The appropriate Government may make rules requiring that in every establishment-(a) to which this Act applies. Canteens. and (b) in which work requiring employment of contract labour is likely to continue for such period as may be prescribed. . furniture and other equipment of the canteens. one or more canteens shall be provided and maintained by the contractor for the use of such contract labour. accommodation. 21.WELFARE AND HEALTH OF CONTRACT LABOUR 16.(1) A contractor shall be responsible for payment of wages to each worker employed by him as contract labour and such wages shall be paid before the expiry of such period as may be prescribed. Responsibility for payment of wages. First-aid facilities. to provide and maintain-(a) a sufficient supply of wholesome drinking water for the contract labour at convenient places. such rules may provide for-(a) the date by which the canteens shall be provided.. Rest-rooms. section 17.It shall be the duty of every contractor employing contract labour in connection with the work of an establishment to which this Act applies. 19. Liability of principal employer in certain cases. and (c) washing facilities. and (c) the foodstuffs which may be served therein and the charges which may be made thereof.There shall be provided and maintained by the contractor so as to be readily accessible during all working hours a first-aid box equipped with the prescribed contents at every place where contract labour is employed by him. 17. (2) Every principal employer shall nominate a representative duly authorized by him to be present at the time of disbursement of wages by the contractor and it shall be the duty of such representative to certify the amounts paid as wages in such manner as may be prescribed.. (4) In case the contractor fails to make payment of wages within the prescribed period or makes short payment. shall be punishable with imprisonment for a term which may extend to three months. or contravenes any condition of a licence granted under this Act. or with both. or a contractor to whom. or with fine which may extend to one thousand rupees. this Act applies. then the principal employer shall be liable to make payment of wages in full or the unpaid balance due. the company as well as every person in charge of. to the contract labour employed by the contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.. managing . or with fine which may extend to five hundred rupees. examination. he shall be punishable with imprisonment for a term which may extend to three months. Contravention of provisions regarding employment of contract labour. (3) It shall be the duty of the contractor to ensure the disbursement of wages in the presence of the authorized representative of the principal employer.(1) Whoever obstructs an inspector in the discharge of his duties under this Act or refuses or wilfully neglects to afford the inspector any reasonable facility for making any inspection. Offences by companies. and in the case of a continuing contravention with an additional fine which may extend to one hundred rupees for every day during which such contravention continues after conviction for the first such contravention. and responsible to. managing agent or any other officer of the company. shall be punishable with imprisonment for a term which may extend to three months.Whoever contravenes any provision of this Act or of any rules made there under prohibiting. manager. such director. (2) Notwithstanding anything contained in sub-section (1). 24. the company for the conduct of its business at the time of the commission of the offence shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. Other offences. PENALTIES AND PROCEDURE 22. or with both. inquiry or investigation authorized by or under this Act in relation to an establishment to which. or with fine which may extend to five hundred rupees.If any person contravenes any of the provisions of this Act or of any rules made there under for which no other penalty is elsewhere provided. or with fine which may extend to one thousand rupees. Obstructions. restricting or regulating the employment of contract labour. 25. manager. or with both. or that the commission of the offence is attributable to any neglect on the part of any director. as the case may be. 23.(1) If the person committing an offence under this Act is a company. where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of. or with both. (2) Whoever wilfully refuses to produce on the demand of an inspector any register or other document kept in pursuance of this Act or prevents or attempts to prevent or does anything which he has reason to believe is likely to prevent any person from appearing before or being examined by an inspector acting in pursuance of his duties under this Act. shall be punishable with imprisonment for a term which may extend to three months. Cognizance of offences. MISCELLANEOUS 28.3 29. (3) Any person required to produce any document or thing or to give any information required by an inspector under sub-section (2) shall be deemed to be legally bound to do so within the meaning of section 175 and section 176 of the Indian Penal Code (45 of 1860). (c) require any person giving out work and any workman. the rates of wages paid to the contract labour and such other particulars in such form as may be prescribed. for and from whom the work is given out or received. or with the previous sanction in writing of. Inspecting staff. with such assistance (if any). 30. any premises or place where contract labour is employed. at all reasonable hours. Registers and other records to be maintained. apply to any search or seizure under sub-section (2) as they apply to any search or seizure made under the authority of a warrant issued under section 98 of the said Code. (2) Every principal employer and every contractor shall keep exhibited in such manner as may be prescribed within the premises of the establishment where the contract labour is employed. 26.No court shall take cognizance of an offence punishable under this Act unless the complaint thereof is made within three months from the date on which the alleged commission of the offence came to the knowledge of an inspector: Provided that where the offence consists of disobeying a written order made by an inspector. and (e) exercise such other powers as may be prescribed. (4) The provisions of the Code of Criminal Procedure. shall.- . Limitation of prosecutions. record of wages or notices or portions thereof as he may consider relevant in respect of an offence under this Act which he has reason to believe has been committed by the principal employer or contractor.(1) The appropriate Government may. and require the production thereof for inspection.No court shall take cognizance of any offence under this Act except on a complaint made by.agent or such other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. he has reasonable cause to believe. being persons in the service of the Government or any local or other public authority as he thinks fit. (2) Subject to any rules made in this behalf. Effect of laws and agreements inconsistent with this Act. for the purpose of examining any register or record or notices required to be kept or exhibited by or under this Act or rules made there under.. (b) examine any person whom he finds in any such premises or place and who. complaint thereof may be made within six months of the date on which the offence is alleged to have been committed. which is in his power to give with respect to the names and addresses of the persons to. within the local limits for which he is appointed-(a) enter. notices in the prescribed form containing particulars about the hours of work.(1) Every principal employer and every contractor shall maintain such registers and records giving such particulars of contract labour employed.. 1898 (5 of 1898). the inspector and no court inferior to that of a Presidency Magistrate or a magistrate of the first class shall try any offence punishable under this Act. the nature of work performed by the contract labour. to give any information. (d) seize or take copies of such register. by notification in the Official Gazette. appoint such persons as it thinks fit to be inspectors for the purposes of this Act. and define the local limits within which they shall exercise their powers under this Act. 27. so far as may be. and with respect to the payments to be made for the work. nature of duty and such other information as may be prescribed. is a workman employed therein. an inspector may. make such provisions not inconsistent with the provisions of this Act. the term of their office and other conditions of service. (b) the times and places of the meetings of any committee constituted under this Act. such rules may provide for all or any of the following matters. Power to remove difficulties. 33. Protection of action taken under this Act. and without prejudice to the generality of the foregoing power. Power to make rules.(1) The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any 3 other law or in the terms of any agreement or contract of service. licensing officer or any other Government servant or against any member of the Central Board or the State Board. as the case may be. in the case of an emergency. namely:-(a) the number of persons to be appointed as members representing various interests on the Central Board and the State Board. all or any of the provisions of this Act or the rules made there under shall not apply to any establishment or class of establishments or any class of contractors.. for anything which is in good faith done or intended to be done in pursuance of this Act or any rule or order made there under.(1) The appropriate Government may. (d) the form of application for the grant or renewal of a licence under section 13 and the particulars it may contain. as may be specified in the notification. the Central Government may. and for such period or periods. as the case may be. if any. which are more favourable to them than those to which they would be entitled under this Act.The Central Government may give directions to the Government of any State as to the carrying into execution in the State of the provisions contained in this Act.If any difficulty arises in giving effect to the provisions of this Act. for granting them rights or privileges in respect of any matter. by order published in the Official Gazette. the procedure to be followed in the discharge of their functions and the manner of filling vacancies. by notification in the Official Gazette. the levy of a fee thereof and the form of certificate of registration.The appropriate Government may. and the fees and allowances that may be paid to the members of a committee. 31. 35. contract of service or standing orders the contract labour employed in the establishment are entitled to benefits in respect of any matter which are more favourable to them than those to which they would be entitled under this Act. or in any standing orders applicable to the establishment whether made before or after the commencement of this Act: Provided that where under any such agreement. direct. (2) In particular.. (2) Nothing contained in this Act shall be construed as precluding any such contract labour from entering into an agreement with the principal employer or the contractor. (2) No suit or other legal proceeding shall lie against the Government for any damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of this Act or any rule or order made there under.(1) No suit. as appears to it to be necessary or expedient for removing the difficulty. prosecution or other legal proceedings shall lie against any registering officer. 32. notwithstanding that they receive benefits in respect of other matters under this Act. 34. subject to the condition of previous publication. make rules for carrying out the purposes of this Act. . Power to give directions. the contract labour shall continue to be entitled to the more favourable benefits in respect of that matter. the procedure to be followed at such meetings including the quorum necessary for the transaction of business.. that subject to such conditions and restrictions. (c) the manner in which establishments may be registered under section 7. Power to exempt in special cases. rest rooms. (g) the circumstances under which licences may be varied or amended under section 14. latrines and urinals that should be provided and maintained. . may be submitted. (m) the form of registers and records to be maintained by principal employers and contractors. (j) the number and types of canteens. and (p) any other matter which has to be. by the principal employer. before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or in two successive sessions. (f) the form of a licence which may be granted or renewed under section 12 and the conditions subject to which the licence may be granted or renewed. (n) the submission of returns. and if before the expiry of the session in which it is so laid or the session immediately following. and the authorities to which. the rule shall thereafter have effect only in such modified form or be of no effect. (o) the collection of any information or statistics in relation to contract labour. (k) the type of equipment that should be provided in the first-aid boxes. forms in which. as the case may be. so. prescribed under this Act. (i) the time within which facilities required by this Act to be provided and maintained may be so provided by the contractor and in case of default on the part of the contractor. (h) the form and manner in which appeals may be filed under section 15 and the procedure to be followed by appellate officers in disposing of the appeals. (l) the period within which wages payable to contract labour should be paid by the contractor under subsection (1) section 21. however. (3) Every rule made by the Central Government under this Act shall be laid as soon as may be after it is made. such returns. both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made. the fees to be levied for the grant or renewal of a licence and the deposit of any sum as security for the performance of such conditions.(e) the manner in which an investigation is to be made in respect of an application for the grant of a licence and the matters to be taken into account in granting or refusing a licence. that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule. or may be. the business will eventually run out of cash and expire. around and out of a business. Net working capital Gross working capital: Gross working capital refers to the firm’s investment in current asset. in theory. Current liabilities are those claims of outsiders which are expected to mature for payment within accounting year and include creditors. WORKING CAPITAL = CURRENT ASSETS .Working Capital Management Working capital is defined as the portion of assets used in current operations. Current asset are the assets which can be converted in to cash within accounting year and include cash.CURRENT LIABILITIES Net working capital can be positive or negative or negative. It is the business's life blood and every manager's primary task is to help keep it flowing and to use the cash flow to generate profits. bill receivables and inventory. . outstanding expenses. Working capital is cardinal part of power station management. generate cash surpluses. debtors. The adequacy of cash and other current assets together with their efficient handling determine the survival or demise of the company. short term securities. The movement of funds from working capital to income and profits and back to working capital is one of the most important characteristics of the business. then it should. Sufficient liquidity is important and must be achieved and maintained to provide the funds to pay off obligations as they arise or mature. Positive net working capital will arise when current asset exceeds current liabilities and vise a versa. If a business is operating profitably. Cash flows in a cycle into. bill payable. There are two concept of working capital 1. A businessman should be able to judge the accurate requirement f working capital and should be quick enough to raise the required funds to finance the working capital needs. Gross working capital 2. If it doesn't generate surpluses. Net working capital: Net working capital refers to difference between current asset and current liabilities. collect monies due from debtors more quickly) or reduce the amount of money tied up (e. Good management of working capital will generate cash will help improve profits and reduce risks. reduce inventory levels relative to sales). Similarly. then time is money. Inventory  Finished goods  Work in process  Raw materials  Stores and spares • Current liabilities 1. As a consequence. you effectively create free finance to help fund future sales. if you can negotiate improved terms with suppliers e.g. you could reduce the cost of bank interest or you'll have additional free money available to support additional sales growth or investment. The main sources of cash are Payables (your creditors) and Equity and Loans. Short term borrowings 4. the business will generate more cash or it will need to borrow less money to fund working capital. Cash 2. get longer credit or an increased credit limit.Inventory and Receivables (debtors owing you money). Each component of working capital (namely inventory. Short term investments 4.g.The faster a business expands the more cash it will need for working capital and investment. then their strengths and weaknesses will have significant bearing on the short run liquidity of . There are two elements in the business cycle that absorb cash . The cheapest and best sources of cash exist as working capital right within business. Provision for taxes 5. Bank balance 3. When it comes to managing working capital. Components of Working Capital The elements of working capital are as follows: • Current assets 1. Trade creditors 2. receivables and payables) has two dimensions time and money. If you can get money to move faster around the cycle (e.g. Bank overdraft or cash credit 3. Trade debtors 5. Provision for dividends If current assets are the source from which current liabilities are to be met during the course of business operations. Bear in mind that the cost of providing credit to customers and holding stocks can represent a substantial proportion of a firm's total profits. Strategies for The Working Capital Management  RECEIVABLES MANAGEMENT If we are getting trade credit to fund our needs. Such companies should. 4. inflation has a very significant bearing on the working capital needs. they will have no bearing on working capital to the extent they may hold back distribution of dividends. the following factors need to be taken into consideration: 1. In case the product or service requires government approval or is administered as far as the price is concerned. Factors Influencing Working Capital To determine the quantum of required working capital. long term credits available from suppliers and minimal customer’s credit outstanding. The importance of preserving this short term liquidity need not be emphasized and hence the need to manage the working capital. If this is achieved then the quantum of working capital required will be naturally reduced. Operating efficiency of the company The operating efficiency of a company plays a major role in working capital management. Dividend policies and retained earnings Dividend policy and retained earnings are directly related. It depends to a large extent on the companies’ ability to readjust its own prices to cover the increase in cost. Expansion/diversification plans Addition of fixed assets to produce new products. it is unwise to strain the internal resources for avoiding external funding. however. resorting to multiple shifts. 3. Depreciation policy The extent to which depreciation provision is made during the course of making financial statements has a direct bearing on the dividend policy and retained earnings. An efficient company will have a shorter manufacturing period. There are several affects of extending credit to the customers on various operating parameters of the company. This is because higher depreciation would leave lesser profits resulting in reduced retained earnings and dividends. 5. or marginally adding to the plant and machinery are some of the common known ways to expand or diversify. Profit levels A company earning huge amount of profits can add to the working capital pool a large quantum of funds. 2. In such situations. 7. Dividends once declared become a short term liability which has to be paid for in cash and this impact should be recognized in the working capital budget. Some companies with high profit levels become lax in management of funds and usually mismanage by blocking funds excessively in stocks and debtors. guard against the temptation of expanding beyond necessity and tying up the funds in unproductive capital expenditure or allow unnecessary increase in overheads. As provisions for depreciation are actually only book entries and represent no cash flow at that time. Price level changes in raw material and finished goods Inflation has got a direct bearing on working capital. 6. Tax levels and planning Income tax laws provide for payment of advanced tax in installments.the company. Any working capital must make adequate and timely provision for Excise and sales tax as all of them involve cash outlays. then we also have to extend credit to our customers. Reserves in the form of retained earnings are a very important source of augmenting working capital. These include: . so that if the value of orders in any period were t exceed the original forecast this might not become until after invoicing. It is not always easy t decide whether a particular customer is credit worthy in the sense that he has both the ability and the inclination to pay at the due date. • Conditions: relevant economic conditions Implementing the system Vetting incoming orders The amount appearing on the customer’s ledger account at any time will result from the invoicing the orders he has placed. 2. Establishing credit limits for the individual customers: Business has a credit policy does not mean that credit terms will be granted to every customer. To safeguard against this possibility an order register may be kept for each customer. ii) Cost effects: extending credit means that the company has to maintain a credit department. payment for goods is received later giving the customers time to generate sales from the goods and pay back the company. This provides an overall confirmation that the business is effective in carrying out its own credit policy. iii) The cost of debt: if the company has to extend credit it must finance these receivables from its own money from borrowings. or one for which demand exceeds supply. Long credit period may be offered to the customers if this enables the business to capture a larger share of the available market. Also collecting receivables has its own costs associated in it.Revenue effects: as the customers are extended credit. there is a probability that the customer may not pay. v) The cash discount: the cash discount affects payment patterns and amounts that the company receives early. This means that the company may not get its payments resulting in a loss to the company. Shorter credit may be imposed if demand is elastic. Each incoming order will then be checked against the register to confirm that it will not cause the credit limit to be exceeded. This means that the credit control involves three types of action: Deciding the normal credit period to be allowed: if a business is offering a unique product or service. Debtors expressed in relation to sales. This may allow the company to charge a higher price and also the quantity sold may increase. If the cash discount is high then there is high probability that the company will get more cash up front and vice versa. so that the quantity sold will not be affected simply by changes in credit terms. This involves costs. At that time the outstanding balance on the ledger would suddenly be found to be in excess of the agreed limit. Bad debts as a percentage of sales value. showing the value of orders placed for delivery in particular months. There are three ways of management control in connection with credit policy: 1. Five Cs of credit that should be looked after: • Character: willingness to pay back the credit • Capacity : ability to pay back • Capital: financial reserves including cash • Collateral: what assets could be pledged or are pledged to others that hinder payments.either as a percentage or as a number of weeks sales. 3. Credit control sales. the credit terms of the particular business will be developed. or reported otherwise in detail. there may be no need to offer credit terms at all. This could be a cumbersome procedure and it would only be used in respect of: • New customers whose compliance with credit limits has not been established i) . iv) The probability of nonpayment: the company always gets paid if it sells for cash but if it extends credit. or the break into a new market. In other cases the starting point in deciding credit policy is a review of the credit terms offered by competitors and from this basis. it is necessary to consider the effects of its use both when: • a company fails to take its cash discounts but nevertheless pays within the net period • A company fails to take its discounts and allows its payable to become overdue. There should be early personal contact with the customer either by telephone or salesman’s visit or by a letter addressed to a named person in the customer company.  PAYABLES MANAGEMENT: When the company gets the trade credit. The value of personal guarantees varies considerably and they are likely to present two problems: • It may be more difficult to assess the creditworthiness of an individual guarantor than of the trade customer. and there may be difficulties in obtaining money from him when the need arises. because these are the funds that require no interest payments and are free of cost. Following points needs to be taken into consideration: • Cost Of Trade Credit: for purpose of measuring the true cost. and decisions should be minuted on the action to be taken in each case and the people responsible for taking it. • The guarantor does not normally expect to be called upon to pay.• Customers who had consistently failed to adhere to their credit limits in the past. the company’s credit period does not begin until he receives an invoice. there may be a follow up at higher level of authority and this should be followed by a threat to cut off supplies. it would like to pay back as late as possible. If necessary. Debt collection There must be no slackness in pursuing the collection of debts. It is therefore important that delays in invoicing be kept to minimum. It is important to bear in mind that: • Customers who normally pay promptly will now become entitled to discount • Some late payers will nevertheless deduct discount from their settlements. The causes of delay are nearly all within the control of the company and may include: • An inflexible routine in the sales invoicing department • A requirement for approval or signature of sales invoices • Failure to agree prices for special work • Slow procedures for calculating costs. Overdue debts should be the subject of formal discussion between sales and financial managers. Cost of credit control The cost of credit control includes the cost of: • Assessing and reviewing creditworthiness • Checking incoming orders • Sales ledger keeping and invoicing • Debt collection Cash discount An alternative or supplement of a formal credit policy is to offer discount for prompt payment. or the effective annual rate of interest associated with use of trade credit as a discretionary source of short term business funds. The reasons for delayed payment should be noted. Sales invoicing So far as the customer is concerned. Personal guarantees An alternative form of protection against bad debts is to take a personal guarantee in support of the customer’s account. . the next problem is to decide how much stock is needed to meet that requirement. EOQ =√ (2×FC ×S) ÷ (I×P) There are 4 assumptions for an EOQ model: • Sales can be forecasted perfectly • Sales are evenly distributed throughout the year • Orders are received as soon as they are placed This set of assumptions mean is perfectly restrictive. semi finished goods. The inventory holding costs will go up very steeply. in the sense of percentage of order which can be satisfied immediately from stock. To correct for random delays in supply. a company’s financial officer while assuring that his company benefits from the availability of trade credit in every legitimate way should always maintain the business liquidity required to pay all his company’s bills as they come due. there is likely to be a range f order quantities within which total costs remain at a low level. When the required level of service has been defined.• Proper Use of Trade Credit: as compared with other kinds of short term business credit-bank loans.  To order at regular intervals but in varying quantities determined by the current rate of demand. This will depend on the nature of the business. It is calculated on the basis of differential calculus.  INVENTORY MANAGEMENT: Inventory contains finished goods. this is the fixed interval or periodic review system. as. The choice f order quantity within this low cost range may not significantly affect the overall financial plan. o Safety Margins in Stockholding: we always assume that the company will be placing an order at regular intervals of time for a fixed quantity of any particular item. The financial decisions relating to stockholding have certain special features but it can be used as an object of increasing sales and object of increasing sales is to increase profit. And because it may be much more readily acquired. and not the average holding which will be influenced by the stockholding costs. trade credit is almost automatic. There are 2 important things to note about EOQ: Although a precise EOQ can be calculated. Another could be that with the existing range the business was offering the better level of service that is it was less frequently out of stock of an item when it was required. The inventory management can be done by taking care of following: • Stock Service Levels: in deciding an inventory policy it is necessary to define the level of service to be offered to the customer. This will be the minimum holding. Trade credit is exceedingly useful and valuable precisely because business companies can usually obtain it when. and one’s conclusion will be that stockholdings should be kept to the lowest figure possible having regard to any practical difficulties in obtaining frequent replacement supplies. Why should increased stocks give rise to increase in sales? One reason would be that the business may offer a wider range of gods and it diversifies its range. raw materials. Thus. and to the extent that it is needed. . business companies must exercise continuing care to avoid falling into the habit of using trade credit to excess. The key factor in the calculations is usually the cost of capital. it may be possible to anticipate changes in the trend of demand and to modify the purchasing procedure to meet them in one of the following ways:  To order in economic order quantities but at varying time intervals according to the rate of demand currently being experienced or anticipated in the near future known as fixed order quantity or reorder level system. • Economic Order Quantity: the economic order quantity is defined as the point where the total costs of restocking and carrying costs are the lowest. The possibility of doing this depends on demand remaining constant from period to period and on supplies being available as and when required. A big problem with work in progress is that work passes in sequence through series of operations. What is economic batch for lathe work may not be economic for drilling. This would correspond to the normal peak holding under stable conditions. • The Total Inventory: the techniques described above all relate to single line items of stock. The minimum stock level provides a warning of a potential out of stock position. however. The operation of reorder level system include the use of:  A maximum stock level. number of simple pragmatic approaches t inventory reduction and these include: o Modifying the service level offered o Letting the company’s suppliers act as stockholders o Disconnecting those items which are the least profitable having regards to their marginal contribution and relevant fixed costs per unit of the limiting factor. o Neither condition is likely to be fulfilled in practice. it may reflect purely short term or random fluctuations in sales. This would be true provided that the two conditions were satisfied. It is in fact a common experience that the reorder system level gives slightly lower average stock levels and it is sometimes thought to be the cheaper system to operate because reordering is triggered automatically at the reorder levels. o . The assumption is such that of each item is held at its own economic level then the overall holding of stock will be correctly balanced. we have been discussing saleable stocks but the same principles apply to stocks of raw materials. There are. so some form of mathematical program might be used to constrain the ideal unit quantities within the limiting factors. milling or assembly operations. • Raw Materials Stocks and Work In Progress: so far in considering inventory control. A categorization method known as ABC analysis is used for the same purpose. The idea behind ABC analysis is that attention is focused on the highest value items that are usually less in number categorized as A category items and the lowest value items are categorized as C and are ordered in more quantities so that less attention is required there.  A minimum stock level which is probably the amount of the safety margin. When the stockholding falls to that level. requires reviewing in the light of changes in the rate of demand. Any system can appear cheap in the short run if it is operated in a slovenly manner. The system thus responds quickly to variations in demand though there is a danger that in doing so. Applying EBQ(economic batch quantity) to one operation in isolation can cause bottlenecks in the flow or production creating excessive holdings of partly completed work because it could be produced cheaply in a large batch even though there will be no demand for that work for some time ahead. As the number of items could be very large in case of raw materials it is necessary to find ways to selectively pay attention to those items that represent the highest value. and an order for that quantity will be placed whenever stock falls to the pre-determined order level. o That there was enough space available to hold all the stocks required.Modified Ordering Systems: the reorder level system involves deciding a level of stockholding at which new purchase orders shall be placed. If the stockholding exceeds the peak level this provides a warning that demand has been running below the rate expected when the EOQ was fixed. the sock controller will review his outstanding purchase orders and their due dates and also the current level f demand and can then decide whether additional emergency procurement is necessary. however. The quantity to be ordered is constant. o That enough money could be found to finance them. The main difference is that demand for raw materials is not direct from the outside customers but indirect through the production plans of the factory using the raw materials. o warehousing costs. o damage o Obsolescence. ordering costs. Inventory management is an important aspect of working capital management because inventories themselves do not earn any revenue.6. work in progress or finished goods-waiting to be consumed in production or to be sold. • Ordering cost:  freight  order administration  loss of quantity discount a. o As evidence to support the balances used in financial reports. in figure 6. There is a trade-off to be made between carrying costs. Holding either too little or too much inventory incurs costs.Results into shut down of power plant and lots of sale. Costs of carrying too little inventory are: • Stock out costs: . Stock records are needed: o To provide an account of activity within each stock line. b. . The best ordering strategy requires balancing the various cost factors to ensure the department incurs minimum inventory costs. The optimum inventory position is known as the Economic Reorder Quantity (ERQ). The total balance of inventory is the sum of the value stock. Analytical review of inventories can help to identify areas where inventory management can be improved. 100 (PERCENT OF INVENTORY VALUE) 80 GROUP A 60 40 20 0 20 40 60 80 10% 40% 57% GROUP B GROUP C 27% 16% 50% ABC INVENTORY ANALYSIS 100 (PERCENT OF INVENTORY ITEMS) Inventories are lists of stocks-raw materials. and stock out costs.For example . While C category items represent 50% of the total items but only 16%of the value. o Insurance. In case of power plant inventory is stock of coal needed for daily operation. By concentrating more on the A category items the company is able to manage its raw material inventory better. Costs of carrying too much inventory are: o opportunity cost of foregone interest.the A category items represent only 10% of total inventory items but represent 57% of the total value. electronic payments are likely to be used in conjunction with. cheque payments. Placing the responsibility for collecting the debt upon the center that made the sale. rather than as a replacement for. but in view of the substantial cost advantage (and the advantages to the suppliers themselves) departments may wish to encourage suppliers to accept this option. offering cash discounts for early payment and/or imposing penalties for late payment.STRATEGIES TO CONTROL DEBTORS AND CREDITORS Debtors: Debtors (Accounts Receivable) are customers who have not yet made payment for goods or services which the department has provided. Cost of coal or lignite 2. Working Capital According To CERC Guidelines As per central Electricity Regulatory commission (CERC) guidelines on tariff calculation (2009-2014) for generating stations. Regular weekly or fortnightly payment of all due accounts is the simplest technique for creditor management. 4. Post-sale strategies include: 1. • Bad debts Debtor management includes both pre-sale and debt collection strategies. Identifying long overdue balances and doubtful debts by regular analytical reviews 3. 2. However. considering that transaction fees and overheads more than balance the advantage of delayed presentation. 5. Receivables . working capital shall cover: For coal based/Lignite fired generating stations 1. Maintenance spares 5. The objective of debtor management is to minimize the time-lapse between completion of sales and receipt of payment. Electronic payments (direct credits) are cheaper than cheque payments. Organizations often regard the amount owing to creditors as a source of free credit. agreeing payment terms in advance. Having an established procedure for late collections. Operation and Maintenance expenses 4. billing as early as possible. 3. setting credit limits. The costs of having debtors are: • Opportunity costs (cash is not available for other purposes). Cost of secondary fuel oil 3. Some suppliers are reluctant to receive payments by this method. such as a reminder a letter cancellation of further credit telephone calls legal action Creditors: Creditors (Accounts Payable) are suppliers whose invoices for goods or services have been processed but who have not yet been paid. Requiring deposits and/or progress payments. While it is unnecessary to pay accounts before they fall due. Pre-sale strategies include: 1.. it is usually not worthwhile to delay all payments until the latest possible date. 2. • Cost of secondary fuel oil for two months for generation corresponding to the normative annual plant availability factor. corresponding to target availability. if applicable. The cost of fuel shall be based on the landed cost incurred (taking into account normative transit and handling losses) by the generating company and gross calorific value of the fuel as per actual for the three . Calorific value of Indian coal is less as compared to imported coal due to high ash contents. duly taking • Operation and maintenance expenses for one month. HYDRO GENERATING STATION • Receivables equivalent to two months of fixed cost. OPEN-CYCLE GAS TURBINE/COMBINED CYCLE THERMAL GENERATING STATIONS • Fuel cost for one month corresponding to the normative annual plant availability factor. • Maintenance spares @ 15% of operation and maintenance expenses specified in regulation 19. d. As per CERC guidelines. • Receivables equivalent to two months of capacity charges and energy charges for sale of electricity calculated on the normative annual plant availability factor. Cost of coal consumes highest part of working capital in coal based generating stations. cost of main liquid fuel. and • Operation and maintenance expenses for one month. • Receivables equivalent to two months of capacity charge and energy charge for sale of electricity calculated on normative plant availability factor. a. • Maintenance spares @ 20% of operation and maintenance expenses specified in regulation 19. and in case of use of more than one secondary fuel oil. Gross station heat rate for coal base Thermal power plant 200/210/250 MW sets 500 MW and above sets During stabilization period 2600 Kcal/Kwh 2550 Kcal/Kwh Subsequent period 2500 Kcal/Kwh 2425 Kcal/Kwh Gross Calorific Value: Gross calorific value in relation to thermal power generating station means heat produced in Kcal by complete combustion of solid fuel or one liter of liquid fuel or standard cubic meter of gaseous fuel. c. Cost of coal depends upon following parameters. for 1½ months for pit-head generating stations and two months for non-pit-head generating stations. duly taking into account mode of operation of the generating station on gas fuel and liquid fuel. cost of fuel oil stock for the main secondary fuel oil. for generation corresponding to the normative annual plant availability factor. • Liquid fuel stock for ½ month corresponding to the normative annual plant availability factor. As per CERC guidelines cost of coal or lignite for 1. b. • Maintenance spares @ 30% of operation and maintenance expenses specified in regulation 19. and in case of use of more than one liquid fuel. • Operation and maintenance expenses for one month.• Cost of coal or lignite and limestone.5 months for pit head generates stations and two months for non pit head generating stations. Capacity of power plant Gross station heat rate Market price of coal Calorific value of coal Gross station heat rate: Gross station heat rate means the heat energy input in kcal required to generate one kWh of electricity energy at generator terminals. Badarpur TPS of NTPC and Bokaro TPS.75 2010-11 15. other than the generating stations: 200/210/250 MW 300/330/350 500 MW sets 600 MW and sets MW sets above sets 2009-10 18.00 13.60 29.74 19.52 2013-14 18.24 16.59 35. in lakh/MW) Gas Turbine/ Combined Small gas turbine power Agartala GPS Year Cycle generating stations generating stations other than small gas turbine power generating stations 2009-10 14.37 2011-12 20.36 13.70 31.70 2010-11 19.79 35.00 11.82 2013-14 22.25 31.65 24.66 (Rs.21 33.08 2012-13 21. Tanda TPS.53 13.88 14.24 14.months preceding the first month for which tariff is to be determined and no fuel price escalation shall be provided during the tariff period. in lakh/MW) Year Talcher TPS Tanda and Badarpur.57 2011-12 16.91 15.25 2011-12 36.49 27.02 34.54 25.09 Open Cycle Gas Turbine/Combined Cycle generating stations (Rs. OPERATION AND MAINTENANCE EXPENSES Coal based and lignite fired (including those based on CFBC technology) generating stations.80 22. in lakh/MW) Year .99 16.62 Talcher Thermal Power Station (TPS).91 32.17 2012-13 38.62 27.61 39.92 13.49 28. Chandrapura TPS and Durgapur TPS of DVC (Rs.20 16. Bokaro Chandrapura TPS and Durgapur TPS 2009-10 32.90 31.75 32.34 17.49 2012-13 17.12 2013-14 40.75 26.35 2010-11 34.34 33.51 18.74 12.06 37. operation and maintenance expenses in first year of commercial operation shall be escalated @5. based on the audited balance sheets. operation and maintenance expenses shall be fixed at 2% of the original project cost (excluding cost of rehabilitation & resettlement works) and shall be subject to annual escalation of 5. • The operation and maintenance expenses for the year 2009-10 shall be escalated further at the rate of 5.36 52. in such case.34 30. for the years 2003-04 to 2007-08.72% to arrive at the operation and maintenance expenses for year 200910: Provided that operation and maintenance expenses for the year 2009-10 shall be further rationalized considering 50% increase in employee cost on account of pay revision of the employees of the Public Sector Undertakings to arrive at the permissible operation and maintenance expenses for the year 2009-10.73 .40 38. shall be escalated at the rate of 5.72% per annum for the subsequent years. which have not been in commercial operation for a period of five years as on 1.70 81.00 29.4.82 32.17% per annum up to the year 2007-08 and then averaged to arrive at the O&M expenses at 2007-08 price level.92 43.68 61.57 41. operation and maintenance expenses shall be fixed at 2% of the original project cost (excluding cost of rehabilitation & resettlement works). if any.68 26. excluding abnormal operation and maintenance expenses. Further.40 36.20 77.46 45.99 58. • The normalized operation and maintenance expenses after prudence check. shall be derived on the basis of actual operation and maintenance expenses for the years 2003-04 to 2007-08.4.96 91.64 65. • In case of the hydro generating stations declared under commercial operation on or after 1.2009.56 55.72% per annum to arrive at permissible operation and maintenance expenses for the subsequent years of the tariff period • In case of the hydro generating stations.72% per annum to arrive at operation and maintenance expenses in respective year of the tariff period.2009.78 27. The average normalized operation and maintenance expenses at 2007-08 price level shall be escalated at the rate of 5.28 86.17% to arrive at the normalized operation and maintenance expenses at the 2007-08 price level respectively and then averaged to arrive at normalized average operation and maintenance expenses for the 2003-04 to 2007-08 at 2007-08 price level. TRANSMISSION SYSTEM • Norms for operation and maintenance expenses shall be as under: Norms for substation (rupees lakh/bay) 765kv 400kv 220kv 132kv and below 73. after prudence check by the Commission. for the existing generating stations which have been in operation for 5 years or more in the base year of 2007-08.HYDRO GENERATING STATION • Operation and maintenance expenses. It shall be thereafter escalated @ 5. 00 .994 .00 1699.537 .378 .783 . d) Maintenance spare @ 15% of operation and maintenance expenses Interest on Working Capital shall be at interest rate equivalent to average State Bank of India short term PLR during the previous year plus 100 basis points.701 .635 .Norms for AC and HVDC lines (Rs lakh/km) Single Circuit (Bundled conductor with four or more sub-conductors) Single Circuit (Twin & Triple Conductor) Single Circuit (Single Conductor) Double Circuit (Bundled conductor with four or more sub-conductors) Double Circuit (Twin & Triple Conductor) Double Circuit (Single Conductor) Norms for HVDC stations HVDC Back-to-back stations (Rs lakh per 500 MW) Rihand-Dadri HVDC bipole scheme (Rs Lakh) Talcher-Kolar HVDC bipole scheme (Rs lakh) .741 .00 1796.400 .111 .00 The total allowable operation and maintenance expenses for the transmission system shall be calculated by multiplying the number of bays and kms of line length with the applicable norms for the operation and maintenance expenses per bay and per km respectively.940 .318 523.00 2008.00 .336 553. c) Maintenance spare @ 15% of operation and maintenance expenses The Working Capital requirement in respect of biomass power projects and non-fossil fuel based co-generation projects shall be computed in accordance with the following clause : Biomass Power and Non-fossil fuel Co-generation a) Fuel costs for four months equivalent to normative PLF. solar PV and Solar thermal power projects shall be computed in accordance with the following Wind Energy / Small Hydro Power /Solar PV / Solar thermal a) Operation & Maintenance expenses for one month. b) Receivables equivalent to 2 (Two) months of energy charges for sale of electricity calculated on the normative CUF. the working capital needs to be managed effectively for the growth of the company and industry as whole.00 1621.671 . Solved questions on working Capital .00 2122.00 .224 1. small hydro power.00 1811.568 .301 495.627 .663 .00 . b) Operation & Maintenance expense for one month.447 .00 1713.189 .174 .00 1533.212 1.179 .269 443.00 1899.051 .600 .423 .358 .00 1450. c) Receivables equivalent to 2 (Two) months of fixed and variable charges for sale of electricity calculated on the target PLF.200 1. Depending upon the above mentioned values and strategies. Interest on working capital in case of renewable energy sources The Working Capital requirement in respect of wind energy projects.284 468. 80= 24800000 The cost of financing the investment I receivables is : Cost of financing A/R = 24800000 * . The appropriate after tax discount rate is evaluating accounts receivable policy changes is 9%.60)=219000 ∆NIAT ( 195120-219000)= 23880 rupees NOTES: The financing cost of carrying receivables is based on the cost sales since the cost of sales represents the cash paid out in advance of collections. Average investment in A/R = 31000000 * .000/day. The average accounts receivable collection period is 50 days.09= 2232000 Reducing the collection period by 4 days will free up: Cash freed up= 4*620000*.80) (46)=22632000 New financing cost of A/R = (22632000)(. Classic Petrochemical company offers trade credit to its customers of net 30. N the company marginal tax is 40%.09=178560/year If sales decrease and the average collection period is reduced. Credit sales average rs 620. What is the average balance in accounts receivable? What is the average investment in accounts receivable? What is annual financing cost associated with the investment in receivables? The sales manager believes she can implement a credit policy change that will reduce the average collection period by 4 days without affecting the level of sales.09)=2036880 There are two effects on sales: Dfinancing cost of A/R= (2232000-2036880)=195120 Dnet profit from lower sales = (5000/day)(365)(.000/day on which the company earns a contribution margin of 20%. The cash paid out creates a financing need. What would be company’s investment in accounts receivable? What will be the expected effect of this policy change on the company’s after tax net income? Solution The average balance of accounts receivable is: Average A/R balance = rs 620000 * 50= 31000000.80= 1984000 The net advantage is reduced financing cost of the cash freed up: Reduced financing cost = 1984000*.20)(. new investment in A/R = 615000/(. .1. If this policy works as expected then what will be company’s investment in accounts receivables? What will be the net annual after tax advantageto the company of adopting this policy? Suppose the credit policy change will also reduce sales by rs 5. sasan). So total cost= 2675*30000*40=3210000000 rupees. is considering a change in the company’s credit terms from net 60 to net 30.05)(50. reduce daily sales by rs 2000 and lower bad debts from 5% of sales is 40 % and its use an after tax discount rate of 12% to evaluate accounts receivable policy changes.85)= 1632000 ∆Investment in A/R = Rs 1555500 There are three expected changes in after tax net income: ∆Financing cost of A/R investment = (1555500) (.15)(.5/tone/day.Here D means additional.5*50= 325/tone/day. the coal rate is 1000. Coal charge =$47=47*50=2350 Total charge = 2350+325=2675/tone/day For international coal we use only 30000tonne/day for 4000mw.85)= 3187500 New investment in A/R = (40) ( 48000/day)(. Let’s compare the coal consumption in two different UMPP( mundra. For domestic coal. and we use 40000 tonne/day for 4000 mw plant. Rupesh.000 and its variable cost ratio is 15%. Tightening credit standards would reduce the average collection period from 75 days to 40 days. coal consumption is 40000tonne/day.60)= 65700 ∆Net profit= 232140-65700= 353100 3. So the total cost= 1000*40000*40= 1600000000 rupees. that using international coal. Mundra using international coal and sasan using domestic coal so how both utilizing the working capital management. $6. credit manager of shell company. 2. Solution According to CERC 40 days cerc should be allowed. So shipment charge.03)(48000)(365)](60)= 232140 ∆profit on sales= (2000)(365)(. For 4000 MW. 6. So by comparing the two we come to an conclusion . Shell has daily credit sales of rs 50.000)(365)-(.20)= 186660 ∆bad debt expense [(. Shipment charge for the international coal. tariff is increasing but the gross calorific value is better in case of international coal. How would be be changes in credit terms affect shell’s after tax income? Solution Old investment In A/R = (75)(50000)(. HRM AT POWER STATIONS . business sectors or even whole nations. In addition under JVs. The total installed capacity of the company is 32. the power generation portfolio is expected to have a diversified fuel mix with coal based capacity of around 53000 MW. Forbes Global 2000’ ranking of the World’s biggest companies.INTRODUCTION Human resources is a term used to describe the individuals who comprise the workforce of an organization. located across the country. NTPC is emerging as a diversified power major with presence in the entire value chain of the power generation business. about 2000 MW from nuclear sources and around 1000 MW from Renewable Energy Sources . Fig: HR Hierarchy (A) National Thermal Power Station Overview of the Organisation India’s largest power company. 9000 MW through Hydro generation. 10000 MW through gas. ash utilisation and coal mining. Apart from power generation. By 2017. power trading. Under this topic we do the comparative study of HR practices at power stations. For this a comparative analysis of HR policies of NTPC and TNEB has been done. although it is also applied in labor economics to. which is the mainstay of the company. 3 stations are coal based & another station uses naptha/LNG as fuel. Following diagram shows the general HR hierarchy of a power plant. 694 MW (including JVs) with 15 coal based and 7 gas based stations. NTPC was set up in 1975 to accelerate power development in India. NTPC has already ventured into consultancy. Human resources is also the name of the function within an organization charged with the overall responsibility for implementing strategies and policies relating to the management of individuals. NTPC ranked 317th in the ‘2009. for example. At NTPC people before Plant Load Factor is the mantra that guides all HR related policies.60% of total power generation due to its focus on high efficiency. NTPC has been awarded No. expansion of existing stations. Although the company has 18. related products and services at competitive prices. with increasing global presence“ Mission "Develop and provide reliable power. India Chapter in collaboration with The Economic Times. NTPC has adopted a multi-pronged growth strategy which includes capacity addition through green field projects.79% of the total national capacity it contributes 28. NTPC has been operating its plants at high efficiency levels. subsidiaries and takeover of stations. powering India’s growth.1. integrating multiple energy sources with innovative and eco – friendly technologies and contribute to society" Corporate Objectives • • • • • • • • Business portfolio growth Customer focus Agile corporation Performance leadership HRD Financial soundness Sustainable power development R&D Manpower Profile . NTPC has taken initiative to develop and implement viable DG projects in remote villages and ensure sustainability for integrated growth of the village. Best Workplace in India among large organisations for the year 2008. by the Great Places to Work Institute.(RES). Vision "A world class integrated power major. joint ventures. To align individual and organizational needs and develop business leaders by implementing a career development system. Code of Conduct • The Company currently has Conduct.8/MW To enhance organizational performance by institutionalizing an objective and open performance mgmt system. Discipline & Appeal Rules (“CDA Rules”). To enhance commitment of employees by recognizing and rewarding high performance. 1946.• • • HRD • • • Installed Capacity Total Human resources Executive Non Executive Man-MW ratio 32694 MW 25944 9500 16444 0. • Competence Building • • • • • • • • Talent induction through ET Recruitment system Leadership Development Integrated Career Development system Training infrastructure at CC/Regions/Projects Comprehensive Training System Foreign training Long term education Knowledge Generation & Sharing Culture Building • • • • • Creating a sense of higher purpose by emphasizing Actualization of Vision and Core Values Effective two way Communication System System for Employees’ Participation in Management Partners in Progress workshops Culture of celebration . which govern the conduct of all permanent employees of the Company including Whole-time Directors but excluding Non Whole-time Directors and those governed by the Standing Orders under the Industrial Employment (Standing Orders) Act. This Code for Board Members has now been framed specifically in compliance with the provisions of Clause 49 of the Listing Agreements entered into by the Company with the Stock Exchanges. In respect of Whole-time Directors this Code is to be read in conjunction with the CDA Rules. HR POLICIES FOR WELFARE AND HEALTH • Demonstrating its high concern for people. Culture building and Systems building. • . NTPC offers best quality-of-life through beautiful townships with all amenities such as educational. health & well-being and social security systems leading to high level of commitment. Competence building. NTPC has developed strong employee welfare. NTPC Flag) Sparsh. Team building Culture of creativity Building HR Competencies amongst Line People Commitment Building • • • • • NTPC Rewards and Recognition systems Strong social security net Mentoring Corporate identity (NTPC geet. All HR initiatives are undertaken within this broad framework to actualize the HR Vision • HR Vision “Enabling the employees to be a family of committed world class professionals making NTPC a learning organization”. medical and recreational opportunities for employees and their family members.• • • Programs on attitudinal change. Commitment building. Human Resources Function has formulated an integrated HR strategy which rests on four building blocks of HR viz. Business Excellence Model • Performance Management System • Simplification of policies/Single window • Cost control measures • IT enabled KM system(Proposed) Human Resource Policies • • Powering India's Growth : Through people NTPC believes in achieving organizational excellence through Human Resources and follows "People First" approach to leverage the potential of its 25.caring culture Systems Building • Benchmarking • TQM tools such as QC.944 employees to fulfill its business plans. HR and Finance disciplines also. Pilani (B. (M. Control & Instrumentation and now encompasses Computer Science. Besides a comprehensive one year training comprising theoretical inputs as well as on-the-job training. 2 simulator training centres and an apex institute namely 'Power Management Institute' (PMI). MDI. • .Tech) etc. • • HR Policies For Continued Learning • In order to realize the HR Vision of making NTPC a learning Organization by providing opportunities to continually learn new capabilities a number of initiatives have been taken. Civil. BITS. Besides opportunities for long term education are also provided through tie ups with reputed Institutions like IIT. Chemistry. Similarly "Professional Circles" have been formed department-wise where Executives of the department meet every fortnight to share their knowledge and experiences and discuss topical issues. NTPC has set up 15 project training centres. NTPC Open Competition for Executive Talent (NOCET) is organized every year in which teams of executives compete annually through oral and written presentation on a topical theme. While the project training centres (Employee Development Centres) have specialized in imparting technical skills and knowledge. through a HR POLICIES IN TRAINING • To induct talent and groom them into a dedicated cadre of power professionals "Executive Trainee" Scheme was introduced in the year 1977 for recruitment in the disciplines of Mechanical. as well as specific need-based interventions based on scientific Training Needs Analysis. Delhi. a systematic Training plan has been formulated for ensuring minimum seven man days training per employee per year and includes level-wise planned intervention designed to groom people for assuming positions of higher responsibility. Electrical. Gurgaon (Executive MBA programme). PMI places emphasis on management development. the new recruits are also attached with senior executives under a systematic and formal 'Mentoring System' of the company to integrate them into the Culture of the company. • HR Policies • As part of post employment training and development opportunities.Tech in Power Generation Technology).• The motivation to perform and excel is further enhanced comprehensive NTPC Rewards and Recognition system. etc. the gaps in their competencies which they can bridge through suitable support from company. A culture of celebrating achievements and a strong focus on performance are a way of life in NTPC. Directives regarding recruitment & promotion of SC/ST Directives regarding recruitment of OBC. Human Resources Development & Community Development i) Training Policies ii) Guidelines for Community Development. These Centers give a good insight to the employees about their strengths and weaknesses. Besides a management journal called "Horizon" is published quarterly to enable employees to share their ideas and experiences across the organization. Due to innovative people management practices there is a high level of pride and commitment amongst employees as reflected in the various external surveys including “Great Places to Work for in India” in which NTPC was rated third Great Place to work for in the country in 2005. Rules pertaining to House Building Advance. NTPC has institutionalized "Development Centers" in the company to systematically diagnose the current and potential competency requirements of the employees with the objective of enhancing their development in a planned manner. Conveyance Advance. Physically Handicapped. donation to charities. Promotion Policies. In order to institutionalize a strong Culture based on Values a number of initiatives are taken to actualize the Vision and Core Values (BCOMIT) across the company. Post-Retirement Medical Scheme. iii) Scholarship schemes for SC/ST students Awards • • • Analysis of HR metrics (Business Today) o NTPC ranked:-1 National award for welfare of person with disability in best employer category Greentech safety award for 2003-04 .• In order to tap the latent talent among non executives and make use of their potential for creativity and innovation. etc. Leave Rules Medical Attendance and Treatment Rules. • • • • • Establishment matters pertaining to NTPC employees i) ii) iii) iv) iv) v) vi) vii) Employees’ (Conduct. Women and minorities. Quality Circles have been set up in various units/offices in NTPC. Discipline and Appeal) Rules. house capability rather than depending on outside experts or resources. exclusively for the regular employees of the TNEB. In-House Training Programme A training programme is designed. not exclusively for the employees of the company to which one or more employees of the TNEB may be nominated. with or without the assistance of external agency. External Training Programme A training programme is designed.• • Golden peacock award for excellence in corporate governance Ranked 3rd best employer in business today (B) TAMIL NADU ELECTRICITY BOARD (TNEB) HR practices at TNEB PHILOSOPHY The basic philosophy of the Training is to make training an effective instrument to the personnel of Tamil Nadu Electricity Board in providing the updated knowledge and upgraded skill with positive attitude for consumer delight oriented service. Integrate Organizational and individual development needs. workshop. Training Year Training Year shall mean a period of one year commencing from 1st April till 31st March of the subsequent year. . Greater emphasis on improving performance with positive attitude rather than merely increasing individual change. Individuals trained as members of a group so that they will learn to function together in their organizational relationships. OBJECTIVES The Objectives of the Training Policy are to: Make learning one of the fundamental requirements in TNEB Ensure value addition through training for overall efficient performance. Training Abroad Whenever necessity is felt absolute.site field oriented training programme.More training is done to deal with situations as contrasted to improving the skills of individuals only. by an outside agency. Provide linkages of training activity with overall Human Resource function. Building in . Learning is self motivated by learner instead of being imposed upon him. Enable employees to keep abreast with the latest knowledge and skills and enable them to undertake current and future responsibilities in a more effective manner. but construed as an investment. Provide linkages between the different functionaries of training activity.Institutionalise learning opportunities that supplement work experience. contact programme with manufacturers or development programme based on organizational Needs and / or Training needs analysis. seminar. training to upgrade special skill on latest technologies introduced may be imparted abroad for a selected group of employees. developed and conducted with in TNEB. It is viewed that training is no longer expenditure. DEFINITIONS Training Training shall include on . developed and conducted with in India. TRAINING COVERED UNDER POLICY Training shall be imparted once in five years for all technical personnel and once in eight years for all nontechnical personnel. normally based on a template course design. the employee shall serve in the selected field of training for a specified period. identified for the employees concerned in the Training Needs form. The Training Calendars of the various Training Centres and Institutes would be widely made available to all circles. Planned Intervention A grade/level/category . a Training Calendar. Each Training Institute / Centre shall bring out. Need-based Programme A training programme. specifying the schedules of the programmes. Copies of training calendar shall be kept in the Training Centres and in the circles. and conducted to improve competency base of employees as felt necessary by the organization. planned to be conducted by it during the following training year. calendar of programmes scheduled for the next two months to all circle heads (Superintending Engineer).House training programme. by 15th February every year. It shall be the endeavor of the TNEB to provide one week of training in a year to every employee Training in some important areas: i) Reforms in Energy Sector ii) Training for trainers iii) Human Resources Development iv) APDRP Programmes TRAINING CALENDAR All the Deputy Directors shall meet in the Regional Head quarters during first week of January to share training calendars.On Completion of training abroad. Each Training centre shall circulate on bi-monthly basis. They would also provide inputs to Training Institutes out of the training needs identified by the employer of their respective projects. Distance Education The employees may be permitted to undergo distance education. Specified Intervention An external programme or an In-House Training Programme other than a Planned Intervention or a Needbased Programme is conducted to improve certain specified competencies. Finance and Project Management etc. designed. for imparting special managerial skills like HRM. both planned interventions and need-based interventions. as felt necessary by the Organization. Continuance of Education at employees own cost : A percentage of a particular category of employees at a location as decided by TNEB may be permitted to undergo continuance of education on part time basis at their cost provided. Continuance of Education Selected meritorious employees may be deputed to continue education on Technical and managerial courses with an under taking to serve in the board for a specified period after completion of course. developed and conducted on the basis of the developmental needs felt.wise In . such continuance shall not affect their normal duties expected. NOMINATION SYSTEM The Objectives of the Nomination System are: . NITIE / IIT at Mumbai NPC / New Delhi & PSTI / CPRI / HLTC at Bangalore and at Manufacturer’s works like ABB/Vadodhara. ii) Engineers are to be imparted training on special field at various Management Institutions. iii)Engineers are imparted training on Special field of Engineering at various Technical Training Institutes. as far as possible try to provide training to the employees in house. ASCI. the Training Centre / Institute shall send confirmation. which have been identified as their development needs (Regular and Special programmes at Institutes and Centers) To ensure that opportunitites to attend training programmes are made available to all employee to achieve the Training Target of average of one week of training in a training year for each employee (Enmass Knowledge Updating Programmes at division level). NTPC / NPTI / PMI / Noida. An employee interested in attending any of the training programmes included in the training calendar of the training center of respective area should forward his / her request for nomination through the reporting officer. Madras Productivity Council etc. Employee will normally be nominated for external programmes only for advanced programmes or where conducting the programme In-house is not feasible. Need Based The training centers will ensure that employees are normally nominated to programmes related to training needs identified. Training Abroad Engineers are sent for training abroad at the Manufacturers Works as per PO terms. NOMINATION FOR TRAINING PROGRAMMES Planned Interventions The training Centre / Institute would send the schedules for the next three programmes of a planned intervention to the Circle Heads. Educational Institutions. Regular interaction may be held between TNEB & Faculties of Anna University in solving the problems. IIT / Chennai. On the basis of the preferences received for nomination. whether Within the State i) Engineers are to be imparted training on special field at Appadurai Chair for Power System. Outside the State i) Engineers / Officers are to be imparted training on special field at various Management Institutions. External Training Employees may generally be considered for nomination to training programmes only in the areas identified in the Training Needs Analysis and after verifying. at least two weeks before the commencement of the programmes to the circle heads . Educational Institutions like Anna Institute of Management. who will decide considering the merit of candidature. ESCI. Engineering Colleges. Training centers shall.turn shall seek preference for nomination from the list of employees to the Training Centres / Institutes. Easun Reyrolle. Chennai. like BHEL / Trichy.To ensure that employees are nominated to training in areas which are relevant to their duties. Technical Training Institutes like. CIRE at Hyderabad. etc. Indo-Tech Transformers. Constituted by TNEB at Anna University. BHEL/Hardwar etc. who in. . The authorities competent to nominate persons for the training programmes are as given below. Crompton Greaves / Nasik.ALSTOM. NTPC / Neyveli and at Manufacturer’s works like M/s. This amount of unawareness often leads to heavy losses in terms of unwanted breakdowns. 3. filling of log-sheets. Training programmes nominated / attended / absented. Each section has a contractor & various Gangs working under him. This structure is almost the same as above but the change lies at the Bottom most level of the hierarchy. Training details will be periodically up-dated in the personal files of the employees. etc.. CATEGORISATION OF PROGRAMMES On the basis of duration. This . Therefore they have least awareness of the amount of gravity of particular equipment in a Thermal power plant.Deputation for Higher Education Engineers are deputed for doing post graduate courses Like . marking attendance of contractors & shift labors. Turbine. Here the Chief Engineer is the head of the Unit below which there are a number of Superintendent Engineers for Coal section. improper maintenance of equipments & even accidents in the plant. 1. for which the Training agency would forward the details of nomination / attendance / absence of employees to the Head of personnel concerned. O & M etc. To overcome this problem NTPC designed a special job structure in all of its power plants. MBA in power Management at NPTI / faridabad and ME/M.. Below section engineer lies the shift Engineer in the Hierarchy. For this. Cooling Tower etc. which shall include. There are various sections in a thermal power plant which includes Boiler. 5. Generally these contractors are Diploma holders & the contract labor is uneducated. The training Centers should also maintain details of the programmes conducted. Chennai. training cost and all other similar information. He is responsible of all the shift level activities in the power plant operations which includes running of equipment. 2. here the contractor is replaced by an Engineer with one or two contract labours working with him. different training agencies should forward training details to Director of Training & Development on a monthly basis. training programmes would be captioned as hereunder • Short-duration Up to four days • Medium-duration one week or two weeks • Long-duration above two weeks TRAINING DATABASE Training Centers should maintain a database of training details of all employees of the respective unit. This is the general hierarchy of a Power Generating plant.Tech courses at Anna University. The section engineer is the person responsible for the day-to-day generating activities in his section. monitoring of parameters. Specified interventions The Authorities competent to approve specified training programmes are as given below • Plant-level Intervention at Thermal Stations • Training Programmes as per annual calendar Member-Gen. This engineer is trained & fully aware of the problem & issues which will hamper the availability of the power plant. Training Needs identified. Director of Training & Development would maintain the training database for all executives. A couple of Section Engineers are reporting to the Superintendent Engineer & are responsible for their respective sections. delegating jobs to electrical & mechanical depts. 4. . Conclusion Both the companies follow similar type of policies. which constitutes almost 85% of the Breakdowns & about 95% of the accidents in the Thermal Power plant. planning. In NTPC one engineer replaced four staff members in the recent years.engineer is coming in shift & is responsible for all the maintenance activities in his area in the shift. Now a days more stress is laid on providing various technical/managerial training to the employees to make them more responsible and growth oriented. Transmission & Distribution Management Information System (MIS): Management Information System (MIS) is defined as a system that collects and processes data (information) and provides it to managers at all levels who use it for decision making. and control. They also have a collaboration under which the TNEB employees are trained at various NTPC branches. There is also the Job rotation in the work which means that the engineer in the Boiler section working for a month will work in the control room for the next month & the person in the control room will work in the respective section replacing the person there. MIS in Power Generation. NTPC has engineers. program implementation. as its main manpower strength. This way NTPC inculcated a sense of urgency & importance among the Bottom most level of the working hierarchy. The reforms have brought about various improvements in operational structure.780 MW as on today. affordable and quality power for all by 2012” It is aimed at bringing about sustainable improvements in the operations of the utilities and making them viable businesses. Power Sector… a glance • • • • • The Indian power sector has grown manifold in size and capacity since independence.The components of the MIS are: 1. The overall quality of data will improve and thereby an overall improvement in the flow of information for decision support. The overall quality of data will improve and thereby an overall improvement in the flow of information for decision support. The reform process is in progress in several states under the overall guidance of MoP to achieve vision of “reliable. To enable the core business operation at the transaction level. commercial orientation. transparency in operation and overall customer orientation in several states. INFORMATION SYSTEM would lay the foundation for sustainable reforms. Communications systems such as telephone lines and data itself. Information technology (IT) would thus become the key enabler in the initiatives under the reform process. This will ensure world-class practices and controls at the operational level and would enable substantial improvement in the overall health of the utilities. The efficiency of the thermal plants has improved over the years with the plant load factor (PLF) for thermal power plants at the national level improving to 69% during 2000-01 with approximately 530 billion units generation in the same period. Hardware 2. The per capita power consumption has increased to approximately 384 kWh by 2000-01 and 660 kWh in 2006-07. • • • MIS In Power Sector . People 4. The capacity of transmission and distribution lines has also increased. Software 3. • • • The Role of IT in Reforms • • • To enable the core business operation at the transaction level.35. INFORMATION SYSTEM would lay the foundation for sustainable reforms. Information technology (IT) would thus become the key enabler in the initiatives under the reform process. The generation capacity has increased from 1. The access to electricity has improved tremendously with electrification of almost 87% villages and energisation of 65% pump sets. This will ensure world-class practices and controls at the operational level and would enable substantial improvement in the overall health of the utilities.362 MW in 1947 to 1. It should generate information for grid management and control. Requirements of MIS . customer satisfaction and development/ investment including that of human resources. The structure of MIS should be SEB-specific to address the differences in organizational structures and responsibilities at various levels.• • • • • • Management Information System (MIS) for the power sector should provide relevant information at various decision-making levels. operations. The real-time information flow requires networking within the organisation. but at the same time should be generic enough to provide standard information at the national level. For MIS. MIS should provide relevant information at each level of the organisation in a timely and accurate manner. for monitoring agencies like regulatory commission and other central agencies like CEA and PFC. information flow is required from lower level to higher level partly in real-time and in batch mode. MIS for power sector will include information on finance. For SEB management. and for internal management of SEBs. Figure below gives the information requirements for some key areas for different levels of management in Distribution companies/SEBs. . Information Requirement at Top Level MIS in Generation The major system for power plant monitoring and control are :  Process control system  Plant monitoring system  Operational monitoring system  Power plant maintenance  Automatic generation control  Load frequency control  Economic dispatch Process control system  Closed loop control system that takes it direction from the energy management system (EMS) and automatically collect plant data by reading various measuring instruments.  No control action are performed . turbine and generator are monitored on a continuous cycle basis. valves and switches for routine functions and for start ups or shutdowns are provided. Plant Monitoring system  Includes Data collection system for fuel monitoring and performance calculation.  Alarms and events are logged for getting any indication of any unwanted conditions.  Controls of pumps.  Physical and electrical parameters associated with the boiler. controlled access and chemical analysis. Economic dispatch  The system includes an Economic Dispatch Calculation program that dispatches the system generation required to supply a given load in a manner that minimizes the cost of production.Steam water mixture control.  In addition to this. net power interchanges with the neighboring control areas at the scheduled values and power allocation among generating units at economically desired values.Temperature control.  Turbine Operation => Valve control . . constantly looking for imbalances. Power plant maintenance  It stores pertinent information for analysis of maintenance cost and evaluation of equipment performance.  The interactive portion of the system provides plant personnel with the capability to enter problem data. report writing and analysis. Data is stored and retrieved as required to prepare reports and performance analysis Operational monitoring system  Used by plant operators to enter manually collected operational data for record keeping. the power plant may also use computers for security. planning data and work execution data.  The dispatcher also selects the appropriate economic parameter set to match the fuel that the generator is currently burning. .  As the load varies rapidly throughout the day.  The LFC system needs to maintain frequency at the scheduled value.Pressure control. Automatic Generation Control  Automatic Generation Control (AGC) is a feedback control system that regulates the power output of electric generators to maintain a specified system frequency and/or scheduled interchange. . Control valve . it is imperative to have a system that will maintain continuous and reliable flow of power within the system. Load frequency control  LFC system monitors generation load. Emergency stop valve.Main steam valve.  This system takes into account not only per unit generating cost of power plants but also their geographical location. MIS in Operation  Boiler Operation .  Different generating units that are online have different cost of generation.Water level control. MIS Reports from LDC  Energy Import/Export from one state to other. and switch stations.After the fault. operation. information management required for monitoring and decision-making will be different at various levels in hierarchy. Load Dispatch Centre  The objectives of LDCs are the increasing of the network security and reliability of grid operation. The structure of MIS should be SEB specific because of difference in their organizational structures and responsibilities at various levels across the organization.  With the implementation of Availability Based Tariff (ABT).  Feasibility studies for setting up new Sub Station/Transmission line & Generating Stations. . and maintenance of grids. transmission substations.commercial aspects of grid operation has become prominent and inter-regional and intra-regional power trading is being done with surplus/ deficit of power. The transmission of power is monitored by LDC owned by State/Central. This is very essential for time stamping of the happenings of the system and analysis of the data being acquired through SCADA system. For real time information flow. Otherwise huge data generated from MIS will not be of any significant use. networking within the organization is needed. Microwave) through which the real time data of whole region system is being displayed. and the accelerating of the information exchange for economical energy and plant management. the Techno.  Reliability Index of each EHT line and Sub Station  Load flow studies  Gap between demand and supply MIS in Distribution Sector  For MIS. transmission and distribution.Before the fault. information flow is required from lower level to higher levels with some information in real time and some in batch mode. the promoting of the Energy Management Functions and Scheduling.Preventive measures. Hence the role of Load Dispatch Centre becomes more vital in trading this power on the basis of frequency of the system. MIS in Power Transmission  Power Transmission manages the construction. • Preventive Maintenance .MIS in Maintenance • Breakdown Maintenance . . Corrective measures. MIS should be able to take care of different needs at various levels. the supporting of grid control with high developed software functions for higher efficiency of generation.  The LDCs have modernized SCADA including RTU in sub-stations and the required telecommunication equipment and links (PLC. In addition to this. like operations.  MIS should not only cover Money Matters but all those major aspects of Power Business. development / investment. human resources. A generalized framework of MIS is presented which may be tailored to suit the needs of specific SEB/utilities. Flow of Information in Power Distribution Sector Requirement for Implementation of MIS • Periodically collect. collate and convert data into a standard format • Store and analyse the collated data • Identify deficiencies in the existing system by analysing the data • Strategic planning for bringing improvements in the system Benefits of MIS  Availability of accurate and timely information  Effective mechanism for decision Support  Enables pro-active decision making (Such as load planning and demand management)  Identifies possible areas of energy loss (through analysis of consumption and billing patterns) . customer service. but a generic institutional framework in a national perspective. can specifically be tailored to suit the prevailing culture in each of the utilities leaving ample scope for information concentration and comparison. information for decision support etc.  Not a standard can be adopted across all utilities.     Target based monitoring mechanism for increased accountability Transparency in administration Aids strategic planning in areas Such as tariff structuring management Develops what if Scenarios Such as analyzing the impacts in tariff plans on the revenue and financial health of the organization . air ingress.87.5% Turbine efficiency.90% (max.Thumb Rules Bolier efficiency. capital cost-28% Cycle work done heat rejected Carnot 60% 40% Rankine 33% 67% Rankine+reheat 37% 63% Rankine+reheat+regeneration 41% 59% For producing 1 unit of electricity – 620 gms of coal + 5 kg of air is required MW= MVA * power factor 1 MW of plant will require 1 acre of land for coal stacking . efficiency of IPT out of three modules) Condenser efficiency-50%(reasons for imperfect vaccum. operating cost-6%. tube deposits) Fuel cost -66% . POWER CONSUMPTION 1.5 % Output Sharing by Turbine Cylinders are around HPT IPT LPT 28% 23% 49% .16% 0. 2000 / TON  LOSS INCREASES WITH MACHINE SIZE Impact of Turbine Efficiency on HR/Output Description Effect on Effect on TG HR KW 1% HPT Efficiency 1% IPT Efficiency 0.50.0% Deviation in findings means 25000 tons of coal loss/annum for 200 MW Unit or approx Rs.5 IN PER TURBINE CYCLE HEAT RATE TG OUTPUT BOILER EFFICIENCY AUX. fuel saving & CO2 emission reduction -15% DM water cost = cost of petrol in market Coal washing charge= 249/.3% 0.0% 5.0 % NOTE:  TG CYCLE HEAT RATE IS TAKEN AS 2000 KCAL / KWh  COAL CV IS TAKEN AS 4000 KCAL / Kg  PRICE OF COAL TAKEN AS Rs./ ton At same heat content.5 % 0.75 2.0 1. efficiency . ECONOMIC ASPECTS OF INEFFICIENT MACHINES (200 MW) SHORT FALL LOSS CRORES ANNUM 5.2000/ton coal cost) Difference in cost of Energy Audit between B & A is 12 to 14 lacs as against 6 to 8 lacs.0% 1.10 meters Subcritical condition = 170 kg/cm² & 535 ºC supercritical condition = 247 kg/cm² & 535 ºC ultra supercritical condition = 270 kg/cm² & 585 ºC AD 700 technology = 375 kg/cm² & 700-725 ºC. price of gas= 60% ( price of oil) 1.0 5.Maximum height of coal stack. 5 crores / year (4000Kcal coal GCV & Rs.16% 0.52%.0 % 1.16% 1% LPT Efficiency 0. 5 4.0 deg C IPT inlet temperature by 10. 7. 4. 3.0% 6.0 deg C Condenser pressure by 10.0 5. 6. 2. 5.25 6.0% IPT Cylinder efficiency by 1.0% HPT Cylinder efficiency by 1.0 4.0 TO 20 Kcal/kwh .0 mm of Hg Re spray water quantity by 1.0 3. HPT inlet press.Effect of Condenser Vacuum on Heat Rate 10 MM HG IMPROVEMENT IN CONDENSER VACUUM LEADS (1%)IMPROVEMENT IN HEAT RATE FOR A 210 MW UNIT EFFECT ON HEAT RATE FOR PARAMETER DEVIATION (500MW UNIT) DEVIATION IN PARAMETER EFFECT ON HEAT RATE (KCAL/KWH) 1.6 9. by 5.0 ata HPT inlet temperature by 10.