Financing in power sector in India

Rengarajan S 221,
Saurabh Singh 225,
Sonal Dubey 229,
Uday Purohit 233,
Vikas Nair 236,
Vikash Kumar 237
S Title Author Objective Sampli Dat Statistic Variabl Findin Conclusion
no ng a al Tools es used gs
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use used
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framework, restructured the
China’s power
price and sector.
investment
mechanism
s, and
associated
legislation
and policy
settings at
each of the
five stages
in the
evolution
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electric
utility
 sector

20 Foreign Direct Allen To assess China will

the volume need a
Investment in Blackm and significant
China's Power an ,Xun characteris infusion of FDI
Sector: Trends, Wu tics of FDI to meet
Benefits and in China's extremely
power ambitious
Barriers sector, its capacity
impact on expansion and
energy energy
efficiency, efficiency
and the targets. FDI is
factors that having a
limit this significant
impact and positive
are the impact on
major energy
barriers to efficiency as
FDI . the FDI power
plants
enhance
average
efficiency
when they
come on line
and have the
potential to
speed the
transfer and
diffusion of
advanced
generating
technologies
in the future.

21 The Application of KPMG The study Financial

discusses reporting for
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accounting specific issues.
issues like Power and
regulatory utility
assets and companies
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emissions numerous
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companies
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address
them.

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 (1) Managing Global Competitiveness in Indian Industry: A case of Power Sector

Author : Ram kumar Kakani , Satish K Sehgel , K M Rajesh

ABSTRACT:

This paper attempts to present an approach for global competitiveness by achieving sustainable corporate growth in the
Indian power sector. Sustainable growth is a processs through which managers ensure the long term growth of their firm
in its environment. Indian power sector is beset with a huge loan supply gap and hence presents a scope for endurable
development for a firm with a right kind of attitude. Energy infrastructure policies that balance the demand and supply in
the context of ecological concerns will have a critical impact on the development of the sector. The trade-off between the
benefit of economies of scale appropriate vertical integration and appropriate geographical coverage will determine the
sustainable growth of the enterprise. The firm will have to develop and/or acquire the desired characterstics for the
growth, like finacing , arrangements, strong assest base and effective external relations. While deciding in expansion , the
firm will have to analyse the competition and density and consider the important determinants for business
responsiveness like resource optimization, organisation effectiveness and feedback.

(2) Regulatory Institution and Regulatory Practice: Issues in Electricity Tariff Determination in Reformed
Electricity Industry In India

Author : Devendra Kodwani

ABSTRACT :

This paper examines the practice of tariff determination process in a newly created regulatory institutional framework in
India. The Indian electricity regulation provides an opportunity to do comparative analysis of the approaches taken by
state (provincial) regulators while fixing prices for electricity distribution. I analyse the process of price determination for
electricity distributors by the State Electricity Regulatory Commissions (SERCs) in four different states. This covers 12
distribution companies. Impact of regulatory practice on the operating costs of the distributors and consequently on the
prices paid by consumers is addressed. The findings suggest that prices for consumers have increased but not in the
same proportion as the costs have been allowed to increase. The main reasons for increasing costs in addition to normal
inflation rates are substantial distribution loss which are added to power purchase costs and little improvement in the
operating and financing costs enforced by the regulators. The regulators limited success to effect significant
improvements in two periodic reviews analysed here can be partly attributed to information asymmetry, lack of
appropriate databases and regulatory approach resorting to simplistic historical analysis of distributors‟ cost rather than
relying on more sophisticated cost analysis and benchmarking. I argue that limited success is partly attributed to
regulators because wider institutional changes in property rights institutions (the industry operators remain in public
sector), entrenched subsidies and political interests have not been addressed at state level leaving regulatory
commissions with limited real power to influence the behaviour of players. However, a key but limited positive
development is stakeholder participation encouraged by regulators.

(3) India Guide: Financing Ultra Mega Power Projects in India

Author : Shroff, Cyril

ABSTRACT :

With India's GDP continuing to grow at 8%, the appetite for power has rapidly overtaken supply and this shortage has
been described as one of the key constraints to further growth. State utilities, despite restructuring undertaken in various
Indian states, have not been able to develop enough generational capacity to meet the demand for electricity in the
country.Ultra Mega Power Projects (initially envisaged to be five in number, but now nine are in the pipeline) were
conceived with capacities in excess of 4000 MW each, to be awarded through a tariff-based competitive bidding
process.The total capital cost of each UMPP is estimated to be in excess of US$4 billion. With at least five such UMPPs
at various stages of implementation, financing commitments in excess of US$20 billion will have to be forthcoming in the
next 12 to 24 months. This quantum of financing would certainly require the participation of foreign lenders.Coal is the fuel
of choice for UMPPs, due to the super-critical technology used by them. The cost of coal has risen tremendously in the
previous few months, with the astronomical price rise mirroring that of crude oil.
(4) Mundra UMPP: A first on many levels

Author : Business Source Complete

ABSTRACT-

The financing of the Mundra UMPP in India created a number of precedents. The financing represents the single largest
foreign debt and the largest limited recourse financing to date in India; the largest financing ever done for a power plant in
India; and the largest ever financing by the IFC. It is also the single largest facility by the Korean Exim Bank and Korea
Export Insurance in India, and the first private sector power project in India to be based on energy efficient supercritical
technology. The 4,000MW 'ultra mega' power plant (consisting of five units of 800MW each) is fed by imported coal and is
located at the port city .of Mundra in the state of Gujarat in India. The project is the first of the four large scale power
projects awarded to private bidders by the Government of India under the UMPP program designed to fast track its
electrification program. The $3.2 billion financing, levered 75:25, comprises an offshore facility of $1.727 billion and a
rupee loan worth $1.377 billion. The dollar financing component was split among multilateral institutions: International
Finance Corporation, Asian Development Bank and Korean Export Import Bank and Korea Export Insurance Corporation.
BNP Paribas was the sole arranger for the ECA facilities. The identification and mitigation of risks was a complex affair
given that Mundra was the first "open bid" power project of its kind - as compared to the traditional "assured return" types
- and due to the key infrastructure being provided by third party operators.

(5) Financing Renewable Energy in India: A Review of Mechanisms in Wind and Solar Applications

Author : Akanksha Chaurey,a M. Kamal Gueye,b** and N. Yuvaraj Dinesh Babu

ABSTRACT-

Development of markets for, and large-scale use of, renewable energy products and technologies have been hindered by
their high up-front capital costs; the renewable energy industry’s inadequate access to credit; subsidies for fossil fuels;
and low purchasing capacity among potential consumers. While conventional funding and financial instruments such as
capital subsidies, donor grants, and tax rebates and similar fiscal incentives have been able to achieve a certain level of
penetration, the large-scale use and commercialization of renewable energy products and technologies requires
innovative approaches to the selection and delivery of financial instruments and mechanisms. This research note
explores four instruments that are likely to be primary sources of finance for the development and commercialization of
renewable energy technologies and products in the mid to long term: government finance; international funding (including
the Clean Development Mechanism); private-sector finance (including financing through energy service companies); and
micro-credit and community-based finance. The challenge of financing is addressed under a life-cycle approach, which
looks at financing mechanisms for the phases of: (1) research and development; (2) demonstration; (3) early
commercialization; and (4) demand-driven commercialization on two renewable energy sectors that are particularly
relevant for developing countries: solar and wind power. Case studies from India are examined in each of the four
categories of financing.

(6) Key Inputs for XIIthPlan Financing of Power Sector

Author : cea.nic.in

ABSTRACT :

This paper put forward the outlines of financing in power sector in India in XII five –year plan. It presents the facts of
current scenario of power sector in India, investments in XI plan and that amounts projected for XII plan. It also covers the
issues involved in funding in the power sector through banks and NBFC’s and also foreign direct investment (FDI).
.
(7) Investments to promote electricity supply in India: Regulatory and governance challenges and options

Author: Subhes C. Bhattacharyya

Abstract:
This paper analyses the electricity capacity expansion needs, investment requirements and the challenges faced by the
country in funding its power sector investments. It also considers regulatory and governance challenges facing India’s
electricity sector and suggests options to ensure a reliable, affordable and secure electricity supply in the future.
The paper then analyses the investment needs for capacity expansion and highlights the challenges related to funding
considering the present regulatory framework and industry Governance structure.
The paper finds that India’s electricity capacity would increase to 250 GW by 2015 and can reach between 500 to 900
GW by 2030. To ensure such a capacity growth, between 15 and 30 GW of capacity has to be added annually over the
next 25 years. This would involve an investment between $30 to 55 billion per year in power supply infrastructure.
As this size of investment is significantly higher than the present level, and given the poor financial condition of the
electric utilities in India, funding such investments would be a major challenge.

(8)India's Power Sector Liberalisation: An Overview

Authors: AntonetteD'Sa, K.V.Narasimha Murthy and AmulyaK.N.Reddya

Abstract:

The Indian Power Sector was opened toprivate participation in 1991 to hasten the increase ingenerating capacity and to
improve the system efficiency aswell.

Although several plants are mushroomed up over the past few years, generation had commenced at private plants
totalling less than 2,000 MW. Independent power producers (IPPs) claim that their progress has been hindered by
problems such as litigation, financial arrangements, and obtaining clearances and fuel supply agreements due to the
bureaucracy involved. Meanwhile the State Electricity Boards have been burdened by power purchase agreements
(PPAs) that favour the IPPs with such clauses as availability payment irrespective of plant utilization, tariffs reflecting high
capital costs and returns on equity, etc.

The process of inviting private participation in the power sector and the problems experienced seem to have led to the
restructuring of the power sector, including the formation of Central and State Electricity Regulatory Commissions.

However, some important problems have not been addressed. Most important among which is that investment in
infrastructure has been a state responsibility because the intrinsically long gestation coupled with the relatively low returns
from serving all categories of consumers have rendered such projects commercially unprofitable.

This paper gives an overview of how Liberalisation has affected the Power sector in India and if it privet participation has
improved the efficiency in the sector or has it brought along more problems.

(9) Power Sector Financing in India and key Issues

Author: Yasir Altaf

ABSTRACT:

The Indian Power Sector has been weighed down by the political and regulatory environment along with the inefficiencies
of the State Electricity Boards (SEBs) and chronic shortages and pressures to meet demand. This has deterred private
investment from flowing into the sector. But with the passage of Electricity Act 2003, new rays of hope have opened for
growth. The Electricity Act has an overall positive impact on the profitability of the power sector and encourages
investment and efficiency. The new power strategy visible in India has much more of a domestic flavor even though
bidding is open to foreign players. By this the government hopes to attract to attract significant private capital into its
power sector, which is facing a huge demand-supply gap. This power shortage is holding back industrial growth and
corresponding economic development.

Domestic sponsors raising cash on the stock market, and using this source of funding as the project equity component for
competitive bids. In this new environment, Project Finance will be the key financing mechanism for growth. Also the
investment will have to be directed towards all the components of the electricity delivery chain i.e. Generation,
Transmission and Distribution. The financing also needs to move to the next level of Public Private Participation with the
Financial Institutions providing equity to the sector and not just debt. The sector also needs incentives in the form of lower
duties, tax holidays and measures such as a higher return on equity (RoE) to attract more investments.
Given the excellent commercial potential of merchant power plants, the equity market is a good source of raising funds. In
any case, the Indian equity and especially debt market is too narrow and does not have the required depth and breadth to
finance these huge requirements. It is therefore inevitable that Foreign Direct Investment (FDI) be incentivized, so as to
meet the huge investment requirements.

10) Power Sector in India

Author : KPMG research paper

ABSTRACT:

While the power sector in India has witnessed a few success stories in the last 4-5 years, the road that lies ahead of us is
dotted with innumerable challenges that result from the gaps that exist between what’s planned versus what the power
sector has been able to deliver. This document highlights and quantifies some of these gaps and attempts to analyse the
problem. The document builds on the risks prevalent in the industry, some prominent hurdles that the power sector has
already crossed, and more importantly - others that various players have to overcome. Understanding these core issues
& risks of the power sector help in identifying the opportunities that lie ahead
Objectives
The overall intent of this paper is to highlight the opportunities and challenges of the power sector, and the project
management and financial management drivers that are required to address these challenges.
Findings
The key challenges lying ahead of the Indian Power sector were identified and the measures to be adopted are listed out
in the article. The resulting issues from the measures and the drivers for determining success are also present in the
findings.

(11) Financing of Power Projects in India

Author : SutanuPati

ABSTRACT:

The article mainly is divided into three parts as:

 IL & FS in Power Sector
 The Power Sector scenario in India
 Investment Climate
In the part of IL & FS in Power Sector
- Captive Power for Clusters, Managing Tariff Bidding, Financial Advisory, Syndication of Debt & Equity, Allocation
Support, Transaction Advisory, Financial Services and Bid Process Management for Generation , Transmission
and Distribution Sectors are discussed
In the part of The Power Sector scenario in India
- Findings and implications from the statistical data regarding Reforms in Power Sector, Legislative Enactments
Supporting Reform, Demand – Supply Scenario, Capacity Addition, Demand Estimates and Business
Opportunity are provided
In the part of Investment Climate
The impacts of Off take issues, Backward linkages and the Financing issues are discussed

(12)Financial Risk Management Instruments

Author : Fatma Ben Fadhl

ABSTRACT:

Financial risk management instruments are an integral part of commercial deals in conventional energy and infrastructure
projects. Their application to the renewable energy sector to date, however, has been limited, especially in emerging and
developing economies. Project developers and investors take many risks, including the risks of failing to complete a
project or the project not meeting financial goals. To reduce these risks, developers often employ a number of financial
instruments, including insurance and reinsurance policies, alternative risk transfer instruments, contingent capital, and
credit enhancement products.
The Project’s focus areas include
 Identifying the main challenges faced by the insurance and renewable energy industries
 Assessing current risk management mechanisms, and developing new ones
 Analysing Public-Private approaches to financial risk management for the renewable energy sector
 Encouraging greater engagement by private financial institutions to finance renewable energy projects in
emerging markets and developing countries
Recommendations and Conclusions
 Regional or global renewable energy insurance facilities;
 Renewable energy specific insurance packages
 Weather hedged insurance and financial instruments such as weather derivatives and futures contracts
Education and training programmes for project developers, public institutions, insurers and investors

(13) Scope of Securitisation and Indian Experience

Author : RBI Publication report

ABSTRACT :

Various public sector units (PSUs) have a high financial exposure to state electricity boards (SEBs), some of which are
sub-standard loans since several SEBs have inadequate solvency for meeting obligations on the due date. This chapter
lays emphasis on three potential areas of securitisation in Indian Infrastructure Sector.
Securitisation in the power sector can be divided into the following segments:
- Receivables of PSUs such as National Thermal Power Corporation, Cola India Ltd., Power Finance Corporation,
Rural Electrification Corporation, National Hydel Power Corporation, etc. from various SEBs can be securitised to
reduce/rebalance financial exposure of these PSUs.
- Securitisation of SEB revenues for resource raising.
Findings are in the form of Future Prospects as:
- Securitised paper is rated more creditworthy than the FI itself
- Strict capital requirements are imposed on the FIs
Because of which Securitisation will grow in future

(14) The India Nuclear Deal Implications

Author : David G. Victor

ABSTRACT :

Objective of the study:

To analyse the economic growth, electric power supply meeting the demands by the Nuclear deal and contemplating with
the other options for supply and the proliferation risks stemming from this deal
Findings:
For nuclear, the future is really wide open. So long as India’s nuclear industry remains isolated, it is hard to see that India
will build more than the occasional reactor as the cost basis for nuclear equipment will be too high and fuel needed for
such reactors will not be available. It is hard to predict with certainty how the costs of the different options will unfold. The
estimates of the main contenders nuclear, coal, and natural gas are tabulated. The estimates for evaluating nuclear
power in developed countries (“high” and “medium cost” estimates) and also from a study that focuses on nuclear power
options in the Indian context (“low cost”) but used a notably low capital cost estimate.

(15) Generation of finances for power sector. Is it a challenge? Is finance really not available? Or are we being
unable to tap the right and available resources?

Author :Harjot Kaur

ABSTRACT :

Objective: To address the twin problem-one, of lack of investment in

infrastructure sector and the other, of financial inclusion and unbankability.
can we bridge the gap by a single strategy?
The paper addresses the twin problem of lack of investment in infrastructure on
one side and proper channelization and utilization of rural savings due to “unbankability” andabsence of financial inclusion
on the other. There is a unique problem associated with each of the bodies which renders the investment made by them
inappropriate and nsuitable forinfrastructure sector. And despite the fact that a huge investment is made in frastructure or
power sector, it is still inadequate.The other problem being focused is financial inclusion. Unbanked areas are being
tapped andcovered, but they pose challenges and problems due to their nature. Also it takes resources inform of time,
finances, manpower and commitments on the side of the financial bodyundertaking such a project or task, which, more or
less the concerned agency is not willing doinput.Why not instead issue mid term infrastructure bonds backed by the
government for residents of unbanked areas. This would solve the problem of financial inclusion to some extent. The
finances generated through this channel can be invested in infrastructure thus solving the problem of lack of investment in
the subject sector also. By the time the mid-term is over the infrastructure would have acquired a status of ‘industry
posing risk of undertakablequantum’.When the mid term is over the bonds can be purchased by private players who will
be ready toundertake those measurable risks posed by the industry then. Since by then the base supportsystem and the
initialization would have been over the private players would be in a position totake the investment to further levels .

(16) Indian Power Sector: The Need for Demandand Supply Convergence

Author: Ipshita Basu and Renuka Garg

ABSTRACT :

Objective: to corroborate the identified and documented issues and

challenges faced by the Indian Power sector, to identify the possible solutions for the same (if any), and also to ascertain
whether there is any consensus of perspective on the issues. There is a fine interconnection between the availability of
power and economic development of the masses of any country. Power leads to industrialization and helps in the creation
of jobs. Industrialization and power lead to automation, improvement in the banking and communication system, and
further affects the money markets and financial
institutions. The funds that are generated could be used for further development of power and other core infrastructure
sectors. The paper gives a general opinion of the participants about the prevailing condition of the sector, issues and
challenges and whether the measures already undertaken are adequate.
The paper starts with a basic introduction, followed by a brief overview of the Indian power sector, literature review in
general and reforms in India and a concise comment on the research methodology. The paper then deals with the issues
and challenges afflicting the sector, based on the outcome of the empirical study. It gives a brief on global power sector
reform and reforms in power sector in selected states.It gives comments and suggestions to meet the challenges.

(17) Is the level of financial sector development a key determinant of private investment in the power sector?

Author: Lika Ba,FaridGasmi,Paul Noumba Um

ABSTRACT :

Objective: To assess the extent to which a country’s overall level of development and that of its financial sector, in
particular, are factors that attract private capital into infrastructure projects.

This paper assesses the extent to which a country’s overall level of development and that of its financial sector, in
particular, are factors that attract private capital into infrastructure projects. The authors investigate these effects in a
1990–2007 dataset on the power sector in 37 developing countries. The results suggest that economic growth is a key
determinant of private investors’ investment in infrastructure projects, and that investors tend to take countries’
governance quality into account in their decisions to invest. The empirical results highlight that the development of the
financial sector also plays a significant role in private investors’ decisions to enter infrastructure sectors. In particular, the
degree of country risk and exchange rate volatility is found to be negatively related to the volume of private sector
investment in power projects. Furthermore, when the banking sector and the capital market are separately treated in the
analysis, the existence of a well-functioning capital market is the main attracting factor. In addition, the existence of an
independent energy regulatory authority significantly improves the level of private investors’ implication in energy projects.
When accounting for the interactions between the overall economic development and the financial sector development
variables, the effects of these variables are still significant and the results also confirm the importance of an independent
energy sector.
(18) Private Power Financing—From project finance to corporate finance

Author: Karl G. Jechoutek ,Ranjit Lamech

ABSTRACT :

Objective: To assess the benefits of transformation form project finance to corporate finance in IPP (independent power
producers).

The report argues that project financing is more costly in IPP(independent power producers) and for better reports sector
should transform from project finance to corporate finance. The report argues that, to achieve substantive progress in
IPP(independent power producers) financing, limited recourse project financing will have to evolve toward structures with
greater balance sheet support. The need for corporate balance sheet support for private power sector investments is
gradually being recognized, and the benefits of this shift in financing structure are worth reflecting on. First, balance sheet
support by the main partners in an IPP financing offers greater security to lenders and provides easier (and perhaps
cheaper) access to long-term debt—critical to sustainable power sector financing given that IPPs typically depend on debt
for 60 to 75 percent of their financing requirements. Second, while equity in limited recourse project finance is almost
exclusively private, balance sheet support by IPP sponsors can open access to public equity markets, which are deeper
and generally cheaper. Third, increased corporate balance sheet support is a corollary to the restructuring in the world’s
power sectors. As sector unbundling and self-generation expand choice for wholesale and (potentially) retail consumers,
and thus increase demand uncertainty, balance sheet support by IPPs will play an important role in sharing demand risk
among key participants

(19) The Application of IFRS: Power and Utilities

KPMG STUDY

ABSTRACT :

The global adoption of International Financial Reporting Standards (IFRSs) began in 2005 with the adoption of these
standards in the European Union, and has continued since then with a huge number of countries either applying IFRSs
directly or converging local standards with IFRSs. Privatization has come into effect, with deregulation and competition in
areas such as wholesale generation and customer supply; this in turn has required the development of energy trading
activities to buy and sell in wholesale markets and to balance power supplies against customer demands. The need for
massive new investment in capacity and infrastructure has prompted cross-border investment in the previously purely
domestic operations. Financial reporting for the industry presents a range of specific issues. This survey discusses many
of these industry accounting issues and provides illustrations of how companies have sought to address them.Most
aspects of the utility value chain – generation, transmission and distribution, if not necessarily customer supply – are
capital intensive, and hence the accounting for property, plant and equipment is a key issue for the sector. a significant
minority of companies had measured property, plant and equipment at “deemed cost” upon the adoption of IFRSs.

A number of companies recognise contributions from customers towards infrastructure or transmission facilities
as deferred income. A significant minority of companies had measured property, plant and equipment at “deemed cost”
upon the adoption of IFRSs .Many companies presented the grants as deferred income in the balance sheet .The
costs associated with decommissioning of plants and restoring sites are likely to be a significant item of expenditure,
with the process of estimating the provision being complicated by the long lives of the plants and changing regulatory
requirements. In any capital-intensive industry leasing can be an attractive method of acquiring assets for tax or
financing reasons. The excerpts illustrate examples of industry-specific accounting disclosures, including in some
cases detailed explanation of the business and regulatory context in which accounting judgements are made.

(20) Foreign Direct Investment in China's Power Sector: Trends, Benefits and Barriers

Author:Allen Blackman ,Xun Wu

ABSTRACT :
China opened its doors to foreign direct investment (FDI) in electricity generation. Using data from an original survey of
US private investors, official Chinese statistics, and other sources, the volume and characteristics of FDI in China's
power sector are assessed, its impact on energy efficiency, and the factors that limit this impact. The size ,type and
location of power plants in China ,volume FDI in China's power sector and discusses the need for foreign investment in
the power sector; popular institutional structures for FDI,the volume, origin, and location of FDI and finally, the most
important barriers to FDI generally are uncertainty associated with the approval process of FDI projects, electricity sector
regulation, and the risk of default on power purchase contracts has been discussed. In this paper, requirements
,institutional arrangements ,volume, origin, size, and location of FDI plants and institutional barriers are discussed .The
results of a survey are discussed under the subjects of institutional factors influencing respondents' equipment, location,
and scale choices and perceived institutional barriers to FDI in the chinese power sector.

(21) From state monopoly to renewable portfolio:Restructuring China’s electric utility

Author :Chunbo Ma, Lining He

ABSTRACT:

There has been deregulation and decentralization in the electricity sector of China and also started restructuring its
electricity industry since the mid-1980s. The reform shares many common features with restructuring practices in other
countries and exhibits some unique characteristics as well.The paper discusses about the reform stages of China’s power
sector,the pre-reform state monopoly ,the generation promotion ,the state entrepreneurism wherein the focus at this
stage was to clarify and separate the responsibilities of governmental administration and business operation, and it
included two key components: (1) separation of the government and enterprise and (2) separation of the ownership and
operation.and the monopoly dismantlement and then the further progress .How organizational restructuring was done in
this sector and the important reforms that were introduced in the price scheme to simplify and control prices and how the
total assets were divided into11 new corporations including two grid operators—State Power Grid and China South Power
Grid, five IPPs .The introduction of competition mechanisms through the construction of wholesale and retail markets and
their impact on the power sector is discussed.

(22) Multi-Period VaR-Constrained Portfolio Optimization with Applications to the Electric Power Sector.

Author: Kleindorfer, Paul R

ABSTRACT:

This paper considers the optimization of portfolios of real and contractual assets, including derivative instruments, subject
to a Value-at-Risk (VaR) constraint with special emphasis on applications in electric power. The focus is on translating
VaR definitions for a longer period of time, say a year, to decisions on shorter periods of time, say a week or a month.
Thus, if a VaR constraint is imposed on annual cash flows from a portfolio, translating this annual VaR constraint into
appropriate risk management/VaR constraints for daily, weekly or monthly trades within the year must he accomplished.
The paper first characterizes the multi-period VaR-constrained portfolio problem in the form Max {E - kV} subject to a set
of separable constraints over the decision variables (the level of assets of different instruments contained in the portfolio),
where E and V are, respectively, the expected value and variance of multi-period cashflows from operations covered by
the portfolio. Then, assuming the distribution of multi-period cashflows satisfies a certain regularity condition (which is a
generalization of the standard Gaussian assumption underlying VaR), we derive computationally efficient methods for
solving this problem that take the form of the standard quadratic programming formulations well-known in financial
portfolio analysis

(23)ENERGY EFFICIENCY POLICY FOR POWER SECTOR IN DELHI

Author: Paras Malhotra and Shivraj Singh Negi

ABSTRACT:

Delhi needs an energy efficiency policy for its power sector. Power consumption has grown by leaps and bounds,
requiring capital investments in additional generation capacity. Rising and uncertain peak demand requires purchase of
power at high costs, or very often discoms take resort to power cuts. Though several large power projects are coming up,
adding significant amounts to total power available for Delhi, prudence dictates that we should take steps to reduce the
rate of growth of demand.Demand can be controlled, without affecting the economic growth rate, through some simple
measures, largely policy changes and changing the economic incentive structure. Due to the very short time available to
us, we have not been able to add any new perspective or measure, but we tried to look for some of the most simple, tried
and tested measures and technologies, which have been implemented in many different parts of the world.

(24) Privatisation& project financing for better performance

Author :
Scott Cawrse, director, Nirvanum Consulting

ABSTRACT

This paper considers the effects of privatization and project financing hydropower producers in the Philippines. It provides
a brief background to electricity industry reforms and explores the effects of privatization. The paper also examines the
influence of project finance on hydropower plant operations and rehabilitation programs. Discussion explores the
challenges of attracting investment, watershed management and governance of tax windfalls. The legacy risks and
cumulative impacts of other development projects are also considered.
The paper shows that privatization and project financing of power assets can improve performance. It also identifies
opportunities to achieve more through wider engagement of stakeholders, holding Government accountable for revenues
and developing partnerships with other development actors to improve public welfare and broader economic growth.

(25)Implications of Carbon Tax on Generation Expansion Plan & GHG Emission

Author :
Gaurav Nanda, SangeetaYamgar, S.C. Srivastava, S.N. Singh,
Praveen Gupta, Dharam Paul, and Ram M. Shrestha
ABSTRACT:

Concentration of greenhouse gases in the atmosphere is steadily increasing leading to global warming. India is expected
to be one of the major contributors to Green House Gases (GHGs) due to increased share of thermal power generation,
which is a major contributor to carbon dioxide (CO2) emission. One way to limit these emissions is by implementing some
economic instruments like carbon tax or energy tax. This study has been carried out to analyze the impact of carbon tax
on the complete Indian power sector network. An Integrated Resource Planning and Analysis (IRPA) model and CPLEX
software has been used to carry out the present study.