A Welcome Nightmare ?

While addressing the cadets of NCC last Sunday , Shri Modiji said :

“ People used to believe that the rich and powerful are never touched…… it is no longer so

   They are being brought to book . People who served as Chief Ministers are rotting in jail for corruption

No one guilty of corruption will be spared

Youths of India refuse to accept corruption. 

The fight against corruption and black money will not stop

This is a fight for the future of India’s youths  “

Dear Shri Modiji ,

For people who have lost all capacity – and desire – to dream , even a nightmare is welcome !

And if you manage to bring about the kind of nightmare that my following email ( sent to you earlier ) describes, then people of India will reward you with 400 + seats in 2019 Lok Sabha elections :

2019 :Nightmare Year ?

https://myblogepage.blogspot.com/2017/12/2019-nightmare-year.html

In his book “ 1984 “ ,George Orwell imagined the nightmare of the State surveillance of private lives of the citizens of the World

I envisage year 2019 as a nightmare year for the politicians of India

Look at following news appearing in today’s Times of India :

https://timesofindia.indiatimes.com/india/courts-for-netas-will-have-to-dispose-of-4-6-cases-per-day/articleshow/62044470.cms

“ Govt to set up 12 spl courts to try 1,581 MPs and MLAs “

Highlights :

·         228………. Members of Parliament to be tried in two special courts

·         13,500 … Approx number of total pending cases

·         1,125 ….. Number of cases that each special court will have to decide in a year

·         242……..  Number of days trial courts normally function in a year

·         4.6………  Ave number of cases per day, each special court will have to dispose off

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I assume that ,

·         it will be May 2018 , by the time these Special Courts start working – more than 4 YEARS after the Supreme Court directed the Centre to set up these courts

·         these “ Super Efficient “ courts will refuse to grant any “ Postponement Dates “ to the accused and not only conclude within ONE HOUR ( whether the accused was guilty or not ) but also announce the VERDICT , on the spot ( remember , 4.6 cases / day ? )

·         there cannot be any “ Appeal “ against the judgements of these special courts

·         some 365 MPs / MLAs ( out of those 1581 accused ) will be found GUILTY

·         the Speakers of the Lok Sabha / Rajya Sabha , will get court order copies within 7 days

·         the Speakers will disqualify , within 7 days , those MPs / MLAs who are declared guilty and who have been handed out sentences of 5 years or more

·         the Election Commission will receive these “ Disqualification Notifications “ in 7 days

·         the Election Commission will announce re-election dates within 30 days for seats falling vacant

·         these Elections will start from Dec 2018  and stretch throughout 365 days of 2019

·         to ensure proper / timely availability of Election officers / police / EVMs / polling booths / presiding officers / school-teachers / transport etc , spread over 28 States , no more than ONE ELECTION will be conducted PER DAY ( - for each of 365 days of 2019 ! )

I had envisaged this scenario , as far back as MAY  2014 , in :

All Seasons AreElection Seasons 

https://myblogepage.blogspot.com/2014/05/all-seasons-are-election-seasons.html

2019 will be a nightmare year , not only for the politicians but also for the voters !

But it will be a bonanza year for :

·         Newspapers ( Advt earnings )

·         Outdoor Publicity Companies ( Hoardings )

·         Helicopter Companies ( to ferry candidates / campaigners )

·         Truck Rental Companies ( to ferry voters )

·         Event Management Companies ( organizing Sabhas / Rallies )

·         Printing Presses ( printing of pamphlets / brochures / posters )….etc

Karl Marx may have said , " Religion is the opium of Masses "

In India , it seems , " Elections are the opium of the Masses " !

In 2019 , expect  DEMOCRACY  to  be working  24*365 !

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Only cause for worry :

In all of these cases against the “ Rich and Powerful “ , will CBI do a better job than what it managed in 2G cases against Raja / Kanimozi  ?

30  Jan  2018

www.hemenparekh.in / blogs

Finding Bakra getting more difficult ?

Today’s LiveMint carries following news :

“ Air India Debt could be 40 % higher than estimated 

: Raju “

http://www.livemint.com/Companies/fKqit7b0DhbR3V07a3PDKM/Air-Indias-debt-could-be-40-higher-than-estimated-says-As.html

Air India’s debt could turn out to be 40% higher than previously expected as the airline’s books are combed even as the government has received the first foreign interest in the airline, civil aviation minister Ashok Gajapathi Raju said.

“When our exercise of calculating Air India’s debt began, we found that the sum was hovering around the Rs 50,000 crore mark. But I won’t be surprised if the total debt reaches Rs70,000 crore. Since people are looking at the books carefully, they may find more,” the minister told Network 18 in an interview published on Sunday.

Air India had been estimated to have a total debt of about Rs 48,877 crore at the end of March 2017, of which Rs 17,360 crore is aircraft loans and Rs 31,517 crore is working capital loans.

“According to me, Air India is a debt trap. I said as much in Parliament as well. As far as our account books are concerned, we held an internal meeting where we saw that this accounting year is sorted for us as a part of our own dividends that we get will be used up. The next accounting year needs to be looked into,” he added.

“Another foreign operator has also shown interest in buying 49% stake. So there is certainly a lot of interest” in Air India, the minister said, without disclosing the name.

Civil aviation secretary R.N. Choubey told Mint that a foreign firm has sent “unsolicited” letter of interest for Air India. Foreign firms can own 100% of an Indian airline but foreign airline firms can own only 49% of an Indian airline.

This month, the government had also eased rules allowing foreign airlines to buy a stake of up to 49% in Air India with prior government approval but with the caveat that substantial ownership and effective control of Air India will remain with Indian nationals as is the case with all domestic airlines.

IndiGo, run by InterGlobe Aviation Ltd, and Tata group have shown interest in Air India’s operations.

Turkey’s Celebi Aviation Holding, Bird Group, Menzies Aviation Plc and Livewel Aviation Services Pvt. Ltd have also shown interest in the national carrier’s subsidiaries.

Air India has a fleet of about 140 planes, with a 17% share of traffic on routes linking India to international destinations and about 13% share of the domestic market.

The national carrier, which is part of the world’s biggest airline grouping Star Alliance, also has prime slots at airports across the world along with land banks and buildings, among its assets.

The government hopes to invite expressions of interest from companies after Union Budget 2018, Mint reported on 9 January.

Consulting firm CAPA Centre for Aviation said this month that it expects “significant interest from foreign airlines” as also “4-6 serious bids for AI, subject to bid conditions”.

Last June , Shri Raju had told a TV anchor :

“ There are hardly any bakras around, so to get one is difficult and businessmen are businessmen “

After his today’s revelation about Air India’s debt position , I will not be surprised if Shri Raju fails to find that proverbial “ Bakra “ , who is willing to buy Air India, unless the government goes beyond the tinkering ( eg : splitting Air India into 4 smaller entities ) and accepts suggestions that I made in my following blog / email :

Findinga Bakra ?  Possible ?   [  04  June  2017  ]

https://myblogepage.blogspot.com/2017/06/finding-bakra-possible.html

29  Jan  2018

www.hemenparekh.in / blogs

  

Solar Power : Internal Rate of Return

Indian Express ( 26 Jan ) carries following news :

“ Govt estimates 9 – 11 per cent IRR for renewable projects “

The Ministry of New and Renewable Energy ( MNRE ), has proposed Internal Rate of Return ( IRR ) of major renewable energy projects to be in the range of 9 – 11 %

While computing IRR for “ Utility scale Solar “ projects , following have been assumed :

=================================

ASSUMPTIONS :

·         Zero government incentives

·         No subsidy

·         No market Risks ( Payment delays / curtailment )

·         Capacity Utilization = 20 %

·         Capital Cost ( Rs Cr / MW ) =  4.10

·         Average Tariff ( Rs / kwh )  =  3.0

·         Weighted Average Cost of Capital  =  10.5 %

·         Corporate Income Tax rate  =  34.61  %

·         For details, read : http://mnre.gov.in/file-manager/UserFiles/Draft-Report-Study-on-ERR-for-RETs.pdf

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MY OWN INPUTS :

·         Target for Solar                 =    100  GW  by 2022

·         Achieved till Dec 2017        =      15  GW

·         Remaining by Dec 2022      =      85  GW  ( app. 1.5 GW per month for each of next 60 months )

·         Capital cost / GW               =      Rs  4,100 Cr  (  @ Rs 4.1 cr / MW assumed in MNRE study )

·         Capital needed per month  =  Rs  6.150 Cr   ( for 1.5 GW per month )

·         Current maximum installation of solar PV ground mount projects done in a year is 3700 MW

QUESTIONS :

Given the following “ Negative Factors “ , are Private Indian businesses likely to come forward with investment of Rs 6,150 Cr , every month , month after month , for next 60 months ?

·         Solar tariff have already hit Rs 2.4 / kwh and continue to drop year after year @ 15 %

·         Will any bank come forward to lend huge amounts to Solar projects whose IRR is only 10 % - and might further go down as Solar Tariff drop ?

·         How will IRR work out when DISCOMS back out of legally binding PPA  ?

·         What happens if proposed “ Safe-Guard Duty “ ( of 70 % ) on imported Chinese PV panels , push up the Capital Costs ? or , when projects are constrained to buy locally manufactured panels at much higher prices ?

·         What would it do to demand situation if Roof Top Solar become a cheaper alternative to the consumers ( as compared to  Utility Solar Projects ) , since there is no “ Transmission Costs “ involved and there is possibility to sell the surplus power to DISCOM under “ Reverse Metering “ ?

Despite these “ Negative Factors “ , is there some way , by which Private Sector can be motivated to come forward to invest Rs 6,100 cr / month , month after month , for next 60 months ?

I believe , there is  !

If the IRR , instead of hovering around 10 % , can be raised to 50 % , then we can expect Private Sector to put up 1.5 GW projects, EVERY WEEK , instead of every month !

Now , calculating IRR is a bit lengthy / trial-and-error process , employing formulas comprising “ variables “ such as :

·         Weighted Average Cost of Capital, adjusted with the long-period consumer price index for the past 20 years to arrive at the real discount rate. (  Taken at 10.5 % by MNRE study )

·         Corporate Income  Tax rate ( taken at 34.61 % by MNRE study )

·         Initial Amount of Capital

·         Potential Opportunity Costs

·         Initial Cash Flow

·         Subsequent Period-wise Cash Flows ( Future stream of benefits )

QUESTIONS :

How would the IRR look if ,

·         Weighted Ave Cost of Capital was  “ 0 % ( Zero per cent ) “ instead of 10.5 %  ?

·         Corporate Income Tax rate was “ 0 % ( Zero per cent ) “ instead of 34.61 %  ?

In such a case , could IRR become 50 %  ?  (  MNRE study does not provide enough data for figuring out )

But if IRR  does really turn out to be somewhere near 50 % , will Private Sector rush in to set up 1.5 GW of Solar projects EVERY WEEK ?

And , would they be bothered even if Solar Tariff drops to  ONE RUPEE  per kwh ?

This is NOT a fantasy !

Masdar and EDF Energies consortium recently placed the lowest-ever bids for a solar PV project. The consortium placed a bid of 1.78¢ / Kwh for a 300 megawatt project in Saudi Arabia. ( ie : approx. Rs 1.17 / kwh )

https://www.thenational.ae/business/energy/world-s-cheapest-prices-submitted-for-saudi-arabia-s-first-solar-project-1.663842

One of the reasons , is :

The lending rate in Saudi Arabia has remained constant at 2% since 2009 !

Chile recently awarded 2.2 GW in renewables tenders at an average LCOE of $ 32.5/MWh (  approx. Rs 2.11 / kwh  )

HOW CAN WE GET “ RISK-FREE “ CAPITAL AT “ 0 % “ INTEREST RATE ?

Besides showing “ how “ , in my following blog / email , I also suggested that the Govt approved Solar Power Project SPVs , be exempted from payment of Corporate Income Tax for 10 years :

Solar Power at Rs 1 per Kwh ?  [  29  Jan  2017  ]

https://myblogepage.blogspot.com/2017/01/solar-power-at-rs-1-per-kwh.html

 

I hope , Shri Dipesh Pherwani, Scientist-B, Ministry of New and Renewable Energy (Email: dipesh.mnre@gov.in) , gets to read my suggestion

 

28  Jan  2018

www.hemenparekh.in / blogs

 

Whose Interest ?

Government officers are often faced with following difficult questions, while taking decisions :

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While taking this decision, whose interest am I protecting ?

 

·         Interest of   “ 1 million “  persons or of  “ 1,000 million “  persons ?

·         The “ Vested interest of a small minority “ and for a “ short duration “ , as against the “ Social interest of a vast majority “ which is of a “ long term duration “ ?  

            [  Ignore the numbers - figures will vary from case to case  ]

-----------------------------------------------------

Following are some recent examples :

·         French President Macron announced at WEF – Davos , two days back :

“  France will shut down ALL of its coal-based Power plants, by year 2021 “

President Macron said he wanted to “make France a model in the fight against climate change,” as one of five pillars in his plans to reform the economy.

I have a feeling that he will be followed by similar announcements by leaders of other EU countries , for the following reasons :

Across the European Union, the economic tide is already turning against coal power : more than half of the bloc’s 619 coal-powered plants are losing money, according to a report. A combination of rapidly falling prices for renewables and air pollution laws are pushing them out of business.

·         US President, Trump levied a 30 % import duty on Solar Panels

.

·         Closer at home in India :

o    The Directorate General of Safeguards Duty (DGS), in its preliminary report investigating the dumping of solar cells, (whether or not assembled in modules or panels), has suggested a 70 per cent safeguards duty on imports from China. The DGS has identified ‘serious injury’ to the domestic industry caused due to increasing imports and declining prices of Chinese solar panels.

o    NTPC , whose coal-based power plants are the chief culprit in causing air pollution ( and most of which are operating well below the optimum PLF – Plant Load Factor – and producing power at Rs 3.19 / kwh ), has come out with a tender to buy-out another 12-18 coal-based power plants , which are “ stressed assets “ !

o    A Parliamentary Committee wants to stop sale of Air India and wants it to continue making losses ( approx. Rs 6000 cr / year ) for another 5 years !

How come neither our legislators , nor our administrators , are asking :

·         What is the trade-off between ,

     #   Imported Solar Panels / Cells, helping India to bring down Solar Power tariff

          to ( say ) Re 1 / kwh by 2022 and turning India into a “ Low Cost Economy “

          Vs:

         Protecting the jobs of a few thousand persons employed by local

         manufacturers of Solar Cells – Modules – Panels ?

    #   Saving the NPA of a few banks which have lent money to those stalled / idling

         Coal-based power plants of Private Sector,

         Vs :

         Continuing to supply dirty power to homes / industries for Rs 3.19 / kwh ?

It seems to me that when it comes to “ Globalization  vs  Protectionism “, we have different standards !

For thousands of years, Indian Ethos has been :

·         A person must sacrifice for saving his family

·         A family must sacrifice for saving the community

·         A community must sacrifice for saving the country

It is high time we introduce this VALUE SYSTEM in our school syllabus

27  Jan  2018

www.hemenparekh.in / blogs