POWER PERSPECTIVE OF INDIAN ALKALI INDUSTRY

1. POWER PERSPECTIVE OF INDIAN ALKALI INDUSTRY

2. 2 AMAI MISSION STATEMENT MISSION �Represent the Indian Chlor-Alkali industry nationally and globally and facilitate the industry�s commitment to technological and economic growth, and continuous improvement in protecting human health and environment, guided by sound science, technology and risk management principles, AMAI will achieve this by productively promoting the industry through practices that are fair, inclusive and sustainable.�

3. 3 THEMES COVERED

4. 4 CAUSTIC SODA- Vital Input For Aluminia, Textiles, Pulp & Paper, Soaps & Detergents, Pesticides & Pharmaceuticals. CHLORINE- Basic Building Block for PVC, Plasticizers, Host of Petro & Agro Chemicals, Polymers-- Polyurethanes, Synthetic Rubber, PTFE etc., Dyes & Disinfectant for Drinking Water. SODA ASH- Vital Input in Glass for Automobiles & Building Construction and input to Soaps & Detergent Industries. MAJOR PRODUCTS

5. 5 POWER � An important input for Alkali Industry � Comprises almost 60% cost of production of Caustic Soda. � Supply of Power in terms of Quantity, Quality & Price have serious impact. SALT � Comprises of 15-20% cost of production of Caustic Soda / Soda Ash. � Quality Salt availability at reasonable price is very important MAJOR RAW MATERIALS

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8. 8 CAUSTIC SODA INDUSTRY 21 out of 32 Caustic Soda Plants have CPPs ; Approx 980 MW. 27.14 Lac TPA out of 33.0 Lac TPA Caustic Soda Capacity have CPPs. Some Member Units with surplus capacity are exporting power and some are importing through Open Access. Few Member Units with CPPs have back-up emergency grid power connection for start-up. Out of this 27.14 Lac TPA capacity with CPPs, (980 MW) 54% capacity � 530 MW is based on Coal 22% capacity � 215 MW is based on Natural Gas 24% capacity � 235 MW is based on Alternate fuels like FO / LSHS / HSD / Wind Mills. SODA ASH INDUSTRY 5 out of 6 Soda Ash Plants have coal based CPPs. Surplus Power is wheeled by some units & some are accessing power through exchange.

9. 9 Most companies have ISO certifications on Quality, Environment & Safety thro� ISO 9001, 14001 & OHSAS 18001. Major part of the Industry Signatory to WCC Safety Commitment & many units follow Responsible Care For SHE issues, Industry represented at International level thro� Membership of Global Safety Team of WCC ; Joining World Chlorine Council Today. For SHE Compliance/ promote safe work practices, many training programmes organized on Safety & brochures / pamphlets / DVD on safe handling of Chlorine during production, transportation and at consumers end published & distributed. Chlorine Transport Emergency Response Network established in Western, Southern & Eastern India ; will cover Northern Region by May 2012. Member companies actively engaged in CSR activities in their locations. Industry committed to Energy Conservation thro� PAT Scheme constituted by Bureau of Energy Efficiency under Energy Conservation Act 2001. Association instituted Sir Shriram & Darbari Seth Award for Best Managed Caustic Soda & Soda Ash Plant from the year 2009 to encourage Industry to be committed towards & improve upon 3E Criteria (Economy, Ecology & Equity).

10. 10 POWER PERSPECTIVE OF ALKALI INDUSTRY IN INDIA

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12. 12 DUTIES & CESS ON CAPTIVE POWER IN VARIOUS STATES

13. 13 OPEN ACCESS POWER BENEFITS TO INDUSTRY Typical Examples of power accessed thro� Exchange.

14. 14 MAJOR CHALLENGES TO INDUSTRY

15. 15 Limiting production cost, in context of galloping energy costs, ever increasing salt cost, very high interest rates & transportation costs & to add infrastructure cost. Survival of industry today in an internationally competitive market with low customs tariffs. Safeguard and Anti Dumping Duty become irrelevant due to huge lead time. Indian produce becoming non-competitive vis-�-vis imported goods which will kill the domestic industry. Use of hydrogen in fuel cells to be encouraged through R & D Projects. Reasonable transport cost & free interstate movement of goods to be ensured.

16. 16 Most of the CPPs are co-gen plants based on coal �considered energy efficient, Hence: -Coal to be allocated on priority ; -In terms of Coal distribution policy released in Oct., 2007, CPPs should be grouped with IPPs for coal pricing. CPPs based on Co-gen, a form of RE ; RPO should not apply. With substantial increase in domestic coal prices for CPPs & imposition of significant Electricity duty & Cess, Captive Power has also become expensive ; Rationalize taxes & levies on captive power & make them cenvatable. Govt. support is required for import of fuels like coal, coke, LNG & other feedstocks at zero duty for making Indian Industry internationally competitive.

17. 17 In China, all Electricitysupplied by govt., very cheap at approx. Rs. 3/KWH for industrial units & just Rs. 2/KWH for under developed areas. Chlor Alkali Industry being Power Intensive, survival depends on Power at reasonable rates. Most SEBs have not been able to supply uninterrupted good quality at reasonable rates. Opportunity for Exchanges to offer power at reasonable rates to this industry ; Advantage � very Steady / Stable demand through out year with high power & load factor.

18. 18 ISSUES RELATING TO OPEN ACCESS & WHEELING OF POWER

19. 19 Very low cost offered by SEBs even less than variable cost of generation of power ; CPPs unable to sell its surplus power. Section 11 of Electricity Act 2003 invoked by Orissa & Tamilnadu Govt. during second half of 2011, to restrict selling power outside state. In many states, implementation of Open Access limited despite SERCs passing regulations. These states levy huge cross subsidy charges which nullifies the benefits of surplus power sale by a CPP or purchase thro� Exchange (e.g.,Punjab/Maharashtra/MP imposing cross subsidy charges on open access consumers). High Electricity Duty on Captive Power ; Maharashtra hiking from 40 paisa to Rs. 1.50 per unit & MP from 8% to 15% recently.

20. 20 RATIONALE OF THE SEMINAR

21. 21 This important Seminar � Planned to crystallize the ideas and evolve suggestions to help the industry to get uninterrupted power, at competitive rates. This will not only help in survival of the industry, but will give a boost to industrial growth. AMAI have invited Experts from CERC, Power Exchange Companies like IEX & PXIL, PTC, Distribution Companies and Experts from the Chlor Alkali Industry, dealing with the subject. The Deliberations & Open Discussions during next two days will help Industry, Govt. Regulatory Bodies, Discoms & Power Exchanges to understand & clarify the standing issues.

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