Half of India’s power plants to become obsolete soon, mjunction comes to aid

Out of 396 power plants, 188 are past the 25-year-mark – the ideal economic life. In fact, most of them are inching towards the 40-year mark. This alarming data came out of a research conducted by mjunction services limited, India’s largest B2B e-commerce company, and one which specialises in the inspection, valuation and e-sale of idle assets and hazardous scrap for power utilities.

After power utilities cross their ideal economic lives, they become inefficient and cost of producing per unit of power increases. In a developing country like India, where demand for power is increasing, this increase in cost of producing power also contributes to rise in power tariff.

These power utilities are required to be decommissioned like developed countries and disposed using the right approach and qualified domain experts.

mjunction has stepped in with an efficient e-solution for disposal using their experience and domain expertise. The service is initiated by onsite inspection, inventorying, segregation and estimation. All of which culminate into an online sale to qualified and credible buyers which fetches the optimum price for the power plant. mjunction CEO, Vinaya Varma said, “Our focus is on transparency and price discovery of such assets, which are not only economically unviable but also a hazard for the environment.”

According to mjunction statement, a power plant spokesperson quoted as saying, “Considering that we need working capital to expand our operations, it is imperative that we sell our defunct units and scrap at a competitive price in the shortest possible time. mjunction’s online mechanism thus works the best for us. From identifying the right buyers to devising the right auction strategy, it is an efficient package.”

He adds, “Manual system was time-consuming, constrained by location and most often did not fetch the right price, as often they would not be able to identify credible buyers. mjunction’s holistic services addresses and resolves all these issues.”

The mjunction team’s inspection and estimation services entails visiting the plants, segregating the items into scrap, assets that can be refurbished, unused assets and hazardous items. It also involves inventorying the assets and sorting them it onto various categories based on its type and use. This service not only helps to recognise the life cycle time of the machineries but also identifies the hazardous items.

Some events
mjunction offered valuation and estimation service to a power utility company – to sell its 4 x 120MW decommissioned thermal power plant by recognising the value of the plant and assets. This was followed by an online sale on a PAN India basis using sealed bid and forward auction among credible buyers. Assets worth Rs 105 crore were sold at a premium of 23.5 per cent over its expected price through the auctions.

To cope with the falling market, another company forwarded a mandate to mjunction to sell its de-commissioned thermal power plant using a transparent mechanism. mjunction adoptedoffline and online marketing initiatives for reaching out to eligible buyers. The company only wanted people with strong financial background to participate in the buying process so as to achieve best possible price. mjunction’s forward auction fetched a quote of Rs 77.75 crore for the power plant and a better price realisation.

Power plant life cycle
After surpassing the ideal life cycle tenure, the efficiency of power plants usually goes down. As per the survey conducted by mjunction, the production capabilities of a thermal power plant get reduced by 40 per cent after surpassing its operational age of 25 years. The requirement of coal also keeps increasing thereby calling for derating of such plants.

The Central Electricity Authority (CEA) identified 57 coal based power units in India in 2015 which needed to be upgraded to become more efficient and reduce emission or be made to retire. Most power units marked by CEA, which were operating beyond 25 years of age, had a capacity of 36,000 MW only.

The thermal power plants are an essential backbone of the country fulfilling a large portion of the current power demand. Therefore it is essential to manage its assets and inventory in an effective way. De-commissioning plants will not mitigate the risk of accumulation of obsolete stock which is hazardous and leads to contamination. Resourceful use of such expensive assets by putting them up for auctioning allows them to be re-cycled and used efficiently, thus preventing environmental hazards.