Tuesday, September 30, 2008

European Commission Pledges Over $1 Million in Funding to Blacksmith Institute

The European Commission has pledged over $1 million in funding to Blacksmith Institute and the United Nations Industrial Development Organization (UNIDO) to develop a landmark comprehensive Global Inventory of polluted sites. The two organizations will identify and assess places around the world where pollution poses a threat to human health.

Estimates indicate that environmental factors contribute to as much as 33% of the global disease burden, with a particularly negative affect on children.

Most developing countries now have regulatory and institutional systems in place and are gradually improving the environmental performance of major industries. There however remain many abandoned and neglected “legacy” or “orphan” sites that continue to poison local communities.

The Global Inventory will be an invaluable tool for governments, non-profits and affected communities seeking to remove the severe health threat posed by pollution.

Funding will go toward researching new polluted sites and conducting on site assessments. The project will build upon the existing Blacksmith database of polluted sites, which currently lists more than 600 places around the world. An estimated 400 new sites will be assessed during the project by local staff.

The Inventory will include specific details about each site, including a description of the scale and scope of the pollution, as well as an overview of local efforts. 

This project is part of a larger effort of Blacksmith Institute to establish the Health and Pollution Fund. The Fund will be composed of contributions from governments and multi-lateral donors and will be used remove the health risk posed by some of the world’s most polluted places.
About Blacksmith Institute

Blacksmith Institute designs and implements solutions for pollution related problems in the developing world. Since 1999, Blacksmith has been addressing the critical need to clean up dangerous and largely unknown polluted sites where human health is most affected by pollution. Blacksmith has completed over 50 projects and is currently engaged in over 30 projects in 14 countries.

OneSteel lodges notice of intention to make $4.00 cash offer for Steel & Tube

OneSteel Limited (ASX: OST) today announced that its wholly owned subsidiary OneSteel NZ

Holdings Limited (“OneSteel”) has given notice to Steel & Tube Holdings Limited (NZX: STU)

(“Steel & Tube'”) of its intention to make a cash offer for all of the shares in Steel & Tube that it

Does not already own (the “Offer”). OneSteel is the largest shareholder in Steel & Tube and owns

50.27% of the shares on issue.

OneSteel’s offer price of NZ$4.00 cash per Steel & Tube share would provide all Steel & Tube

Shareholders with the opportunity to realise a very attractive value for their shares. OneSteel's

Offer is subject to limited conditions and, importantly, is not subject to OneSteel raising finance.

Peter Smedley, OneSteel Limited's Chairman, said:

"If OneSteel's offer proceeds, Steel & Tube shareholders will have the opportunity to sell their

Shares for cash at a significant premium. The opportunity for all Steel & Tube shareholders to be

Able to receive cash is attractive given the illiquid market for Steel & Tube shares and the current

Economic uncertainty and market volatility."

OneSteel is seeking a unanimous recommendation from the Steel & Tube Board, in the absence of

A superior proposal.

The Steel & Tube Board has indicated that it intends to obtain an Independent Adviser’s report in

Relation to the Offer before making a formal recommendation to Steel & Tube shareholders.

Consequently, OneSteel has today lodged a takeover notice, which will facilitate Steel & Tube’s

Appointment of an Independent Adviser that is approved by the New Zealand Takeovers Panel.

Assuming the Steel & Tube Board recommends the Offer, OneSteel expects to despatch the offer

Document within four weeks.

The Offer price of NZ$4.00 cash per share:

• represents a 33% premium to the last price of Steel & Tube shares traded on NZX on 26

September 2008, being the last trading date prior to this announcement;1

• represents a 17% premium to the volume weighted average price of Steel & Tube shares

Traded on NZX during the month ended on 26 September 2008;

• represents a 31% premium to the volume weighted average price of Steel & Tube shares

Traded on NZX during the 3 months ended on 26 September 2008;

• is significantly higher than the average of broker analyst price targets of NZ$3.66 per

Share2 and broker analyst valuations of NZ$3.82 per share;3 and

• values Steel & Tube at an enterprise value of NZ$437.9 million, which represents a 2008

EV/EBITDA multiple of 9.6x.4 This is significantly higher than other comparable steel

Distribution transactions.

1 Steel and Tube closing share price on 26 September 2008 was NZ$3.00.

2 Average of price targets published by 7 brokers, being ABN AMRO, Citi, Credit Suisse, Forsyth Barr,

Goldman Sachs JBWere, Macquarie and UBS, from reports published post 14 August 2008.

3 Average of valuations published by 7 brokers, being ABN AMRO, Citi, Credit Suisse, Forsyth Barr, Goldman

Sachs JBWere, Macquarie and UBS, from reports published post 14 August 2008.

Geoff Plummer, OneSteel Limited's Managing Director and Chief Executive Officer, said:

“If OneSteel's offer proceeds, it will allow OneSteel to simplify its corporate structure and efficiently

Manage the Steel & Tube business as part of the OneSteel group.”

“OneSteel's proposal confirms its commitment to the New Zealand market and to Steel & Tube’s

Business, employees, customers and suppliers. If OneSteel's offer proceeds, OneSteel intends to

Retain the Steel & Tube brand, grow the Steel & Tube business and maintain a quality product

Offering and high level of service.”

Based on the Offer price of NZ$4.00 per share and excluding transaction costs, OneSteel expects

The transaction to be EPS accretive in the first full year following its completion of the transaction

And thereafter.

OneSteel intends to fund the Offer entirely from existing debt facilities.

The Offer is subject to limited conditions, including OneSteel receiving sufficient acceptances to

Increase its shareholding in Steel & Tube to at least 90%, Overseas Investment Office approval

And the NZX50 does not close below 2,710 on three consecutive trading days between today and

The end of the period by which the offer must become unconditional.

Marc Faber's comment on US economy

Dr. Marc Faber concluded his monthly bulletin (June 2008) with the Following: 

''The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I've been doing my part ."  

Saturday, September 27, 2008

Doing the right thing by the climate

There's been a real buzz in the air since that surprising turn around at the Environment committee vote on CO2 emissions from cars this morning.

Everyone is talking about it.

It’s one of those all-too-rare days when things go your way, made even sweeter by the fact that the signs showed otherwise. There is a real sense that at last we have a chance to do something positive in the struggle against climate change.

“It came down to the line, but MEPs chose to resist strong pressure from the car industry lobby and supported most of the Commission’s proposed measures to cut emissions from cars,” Franziska Achterberg, Greenpeace EU transport campaigner told me earlier. “Today’s vote means that the car emissions legislation could still become the first effective EU
law to limit our impact on the climate.”

“MEPs held out against rapporteur Guido Sacconi’s recommendation by rejecting calls to delay the proposed 2012 target and to weaken penalties for non-compliance. And what’s more, the environment committee voted to go beyond the Commission proposal by introducing a second target in 2020, subject to a review.”

German Green group member Rebecca Harms called it "a big surprise. There was a big fight with industry and governments, and the Germans and French were adding a lot of pressure."

But we got there in the end. It’s still hard to take in that we managed to prevent the car lobby, with all its resources and access to high level politicians, from getting its way.

Chris Davis has called it “a big blow for corporate lobbying.” He’s my MEP, remember? So thanks, Chris. I can’t tell you how happy I am that you did the right thing.

But it’s not all over yet. The ball is in the Council’s court now - they have to approve the proposals before they can become law.

You know what Greenpeace wants. It wants EU ministers to take heed of the Parliament’s position and support effective legislation to limit emissions from cars and protect the climate.

And so far on this bumpy ride, everyone I’ve talked to wants it, too. The people want it.

It’s up to us now to keep an eye on our MEPs and make sure they do the right thing. - Greenpeace

Statement by Dr. Manmohan Singh, Prime Minister of India at the General Debate of the 63rd UN General Assembly

"May I first congratulate you on your election as the President of the 63rd UN General Assembly. I am sure that your wisdom and experience will guide us as we deliberate the many challenges that the world faces today. 

The United Nations is the embodiment of our faith in the benefits of collective action and of multilateral approaches in resolving global issues. 

At the 2005 World Summit, we pledged ourselves to an agenda for early and meaningful reform of the United Nations. However, we must acknowledge frankly that there has been little progress on the core elements of the reform agenda. 

We need to make more determined efforts to revitalize the General Assembly to enable it to fulfill its rightful role as the principal deliberative organ of the United Nations. 

The composition of the Security Council needs to change to reflect contemporary realities of the twenty-first century. 

It is only a truly representative and revitalized United Nations that can become the effective focal point for the cooperative efforts of the world community. We need to expeditiously hold negotiations towards this end. 

Globalisation has contributed to ever widening circles of prosperity and we in India have benefited from it. But its benefits have not been equitably distributed. Ensuring inclusive growth within nations, and inclusive globalization across nations, is a central challenge that faces us. 

The development gains that many countries have made are today threatened by a possible food crisis, a global energy crisis and most recently, unprecedented upheavals in international financial markets. 

The net impact of these problems is that both the industrialised economies and the developing economies face inflation and a slow down in growth after several years of robust expansion. Industrialised countries can afford periods of slow growth. Developing countries certainly cannot. 

There is therefore urgent need for coordinated action by the global community on several fronts. 

The explosion of financial innovation unaccompanied by credible systemic regulation has made the financial system vulnerable. The resulting crisis of confidence threatens global prosperity in the increasingly interdependent world in which we live. There is, therefore, a need for a new international initiative to bring structural reform in the world’s financial system with more effective regulation and stronger systems of multilateral consultations and surveillance. This must be designed in as inclusive a manner as possible. 

The world food crisis is the cumulative consequence of the neglect of agriculture in the developing world, exacerbated by distortionary agricultural subsidies in the developed world. Diversion of cultivable land for producing bio-fuels is compounding the problem. 

The world needs a Second Green Revolution to address the problem of food security. We need new technologies, new institutional responses and above all a global compact to ensure food and livelihood security. This will require transfer of technology and innovation from developed to developing countries. India is very keen to expand cooperation with Africa in Africa's quest for food and livelihood security for its people. 

Trade liberalization in agriculture can help provided it adequately takes into account the livelihood concerns of poor and vulnerable farmers in the developing and least developed countries. 

It is feared that many of the conflicts of the 21st century will be over water. We must reflect on how to use this scarce resource efficiently. We need to invest in new technologies and new production regimes for rainfed and dryland agriculture and explore cost effective desalination technologies. 

Poverty, ignorance and disease still afflict millions of people. The commitment to achieve the ambitious targets set as part of the Millennium Development Goals was an acknowledgement by the international community that global prosperity and welfare are indivisible and affluence cannot coexist with pervasive poverty. 

Unfortunately, solemn commitments made for transfer of financial resources from the developed to the developing world have remained largely unfulfilled. The commitment of developed countries to move to the long-set target of 0.7% of Gross National Income as ODA needs to be honoured as a matter of priority. In this context, special efforts have to be made to address the concerns of Africa for adequate resource flows to support its development. 

Poverty alleviation and livelihood security are closely linked to energy security. We need a much greater measure of predictability and stability in the oil and gas markets. We need to think of ways and means, such as early warning mechanisms, to help countries cope with oil shocks. 

We must put in place a global cooperative network of institutions of developed and developing countries engaged in R&D in energy efficiency, clean energy technologies, and renewable sources of energy. 

India is registering rapid economic growth and has combined it with declining energy intensity. However, our total demand will keep increasing and we are actively looking for all possible sources of clean energy. 

The opening of international civil nuclear cooperation with India will have a positive impact on global energy security and on efforts to combat climate change. 

This is a vindication of India's impeccable record on non-proliferation and to our long-standing commitment to nuclear disarmament that is global, universal and non-discriminatory in nature. The blueprint for this was spelt out by Prime Minister Rajiv Gandhi in this very august assembly twenty years ago. 

I reiterate India’s proposal for a Nuclear Weapons Convention prohibiting the development, production, stockpiling and use of nuclear weapons and providing for their complete elimination within a specified time frame. 

Climate change can be overcome successfully only through a collaborative and cooperative global effort. 

We support the multilateral negotiations taking place under the UN Framework Convention on Climate Change. The outcome must be fair and equitable and recognize the principle that each citizen of the world has equal entitlement to the global atmospheric space. 

I believe that the pursuit of ecologically sustainable development need not be in contradiction to achieving our growth objectives. As Mahatma Gandhi said, “The Earth has enough resources to meet people’s needs, but will never have enough to satisfy people’s greed”. 

India has unveiled an ambitious National Action Plan on Climate Change. Even as we pursue economic growth, we are committed to our per-capita emissions of greenhouse gases not exceeding those of the developed countries. 

The growing assertion of separate identities and ethnic, cultural and religious intolerance threatens our developmental efforts and our peace and stability. It is vital that we strengthen international cooperation to combat terrorism and to bring the perpetrators, organisers, financers and sponsors of terrorism to justice. We should conclude expeditiously the Comprehensive Convention on International Terrorism. 

In this context, the situation in Afghanistan is a matter of deep concern. The international community must pool all its resources to ensure the success of Afghanistan’s reconstruction efforts and its emergence as a moderate, pluralistic and democratic society. 

We welcome the return of democracy in Pakistan. We are committed to resolving all outstanding issues between India and Pakistan, including the issue of Jammu and Kashmir, through peaceful dialogue. We also welcome the coming to power of democratically elected governments in Nepal and Bhutan. We seek to expand areas of cooperation with all these countries to deal with the challenges of sustainable development and poverty eradication. 

The United Nations is a living symbol of pluralism. It has weathered many storms. It is the vehicle through which our combined will and efforts to address global challenges must be articulated and implemented. Unless we rise to the task, we would bequeath to succeeding generations a world of diminishing prospects.

Friday, September 26, 2008

Annual Energy Outlook Retrospective Review: Evaluation of Projections in Past Editions (1982-2008)

The Energy Information Administration (EIA) produces projections of energy supply and demand each year in the Annual Energy Outlook (AEO). The projections in the AEO are not statements of what will happen but of what might happen, given the assumptions and methodologies used. The projections are business-as-usual trend projections, given known technology, technological and demographic trends, and current laws and regulations. The potential impacts of pending or proposed legislation, regulations, and standards—or of sections of legislation that have been enacted but that require implementing regulations or appropriation of funds that are not provided or specified in the legislation itself—are not reflected in the projections. The AEO is based on only then current Federal and State laws and regulations. Thus, the AEO provides a policy-neutral reference case that can be used to analyze policy initiatives. The analyses in the AEO primarily focuses on a reference case, lower and higher economic growth cases, and lower and higher energy price cases. However, more than 30 alternative cases are generally included in the AEO. Readers are encouraged to review the full range of cases, which address many of the uncertainties inherent in long-term projections.

Each year since 1996, EIA’s Office of Integrated Analysis and Forecasting has produced a comparison between realized energy outcomes and the projections included in previous editions of the AEO. Each year, the comparison adds the projections from the most recent AEO and updates the historical data to the most recently available. The comparison summarizes the relationship of the AEO reference case projections since 1982 to realized outcomes by calculating the average absolute percent differences for several of the major variables for AEO1982 through AEO2008.1 The average absolute percent difference is the simple mean of the absolute values of the percentage difference between the reference case projection and the actual value. The historical data are typically taken from the Annual Energy Review (AER).2 The last column of Table 2 provides a summary of the most recent average absolute percent differences for 21 of the most important projection components. The detailed calculation of these differences is shown in Tables 3 through 23. These tables also provide the average absolute difference, which is the simple mean of the absolute value of the difference between the reference case projection and the actual value. The calculated absolute average differences can change from one year’s evaluation to the next as an additional year of data and projections are added to the evaluation series and also because of data revisions in the AER and the Monthly Energy Review (MER).

A set of world oil price and economic growth projections is defined at the beginning of each process leading to a new AEO. Due to the integrated modeling of energy markets by the National Energy Modeling System (NEMS), these initial world oil price and economic growth projections are linked to other projections; however any feedback response tends to be relatively small. Thus, the primary direction of influence tends to be from the world oil price and macroeconomic variables to the other variables solved in the NEMS. If these initial values deviate from their actual values, that deviation is propagated through all the other price and quantity projections. Generally, quantities move less rapidly than do prices, due to a variety of factors, including the inertia from energy-consuming capital stocks, lead times in capital purchase decisions, contract periods, and myopia. Consequently, quantities tend to be less affected by errors in the initial world oil price and economic growth projections than prices.

The metric for comparing projected GDP to actual is presented in terms of growth rates in real GDP. Earlier versions of the Retrospective used nominal dollars. The nominal dollar comparison table is provided for continuity, but it will be discontinued in future editions. More information on this change is given in the box describing the impacts of GDP revisions on the AEO historical comparisons, below.

The growth in GDP is a good measure of the growth of the aggregate economy over time. However, other concepts like disposable income, industrial output, vehicle sales, residential households, and commercial floorspace, to name a few, are the actual drivers of the energy projections. GDP is perhaps the single best summary metric to show how the aggregate economy grows; and the assessment of how projections of GDP compare to history is a good proxy for how projections of economic activity in general influence energy markets.

As indicated in Table 2, the reference case projections of energy consumption, energy production, and carbon dioxide emissions have been relatively close to realized outcomes, the projections of net energy imports have been moderately close to realized outcomes, and the reference case projections of energy prices have been the furthest from realized outcomes. Both Table 2 and the individual tables show marked improvement in the absolute average differences for energy prices and net energy imports over time.

The underlying reasons for deviations between the AEO reference case projections and realized history have tended to be the same from one evaluation to the next. The most significant are:
Because of the mid-term emphasis of the AEO, the projected growth rates in real GDP used in the AEO projections are trend projections rather than cyclic – that is, business cycles, more appropriate for short term projections, are not included in the AEO projections. Because of this, over-projections of the growth rate in real GDP tend to line up with economic slowdowns or recessions, whereas under-projections tend to occur during expansionary phases of the economy. Because GDP is a good indicator of the economic activity, which drives energy consumption, the differences between projected energy consumption and actual consumption are often similar to the differences between the GDP projections and actual GDP (Table 3).
Overestimation of world oil prices, particularly in publications prior to AEO1997 (Table 4), resulted in underestimation of petroleum consumption. The prices in the AEOs completed after 1997 tended to be underestimated, which led to overestimation of petroleum consumption (Table 5).
The fuel with the largest difference between the projections and actual data has generally been natural gas. As regulatory reforms that increased the role of competitive markets were implemented in the mid-1980s, the behavior of natural gas was especially difficult to predict. The technological improvement expectations embedded in early AEOs proved conservative and advances that made petroleum and natural gas less costly to produce were missed. After natural gas curtailments that artificially constrained natural gas use were eased in the mid-1980s, natural gas was an increasingly attractive fuel source, particularly for electricity generation and industrial uses. Historically, natural gas price instability was strongly influenced by natural gas resource estimates, which steadily rose, and by the world oil price. More recently, the AEO reference case has overestimated natural gas consumption (Table 9) due to the use of natural gas wellhead price projections that proved to be significantly lower than what actually occurred (Table 8).
Coal prices to the electric power sector were almost always overestimated prior to AEO1999 and underestimated thereafter (Table 12). In general, the AEO coal projections produced prior to the use of NEMS (AEO1982 through AEO1993) did not explicitly model coal mining productivity. From 1985 through 2000, coal mining productivity improved by an average of 6.4 percent per year, reducing the cost of production, and resulting in lower coal prices. As a result, there was a tendency for pre-NEMS coal models to overestimate future coal prices. An additional factor, contributing to the overestimation of delivered coal prices in earlier AEOs was a sharp decline in coal transportation rates that began in the mid-1980s and continued through the 1990s. For the AEOs produced using NEMS (starting with AEO1994), coal mining labor productivity is explicitly modeled. However, the rather sudden switch from steadily increasing coal mining productivity during the 1980s and 1990s to a flat to declining rate starting around 2000 and continuing though 2005 was not anticipated in most of the AEO projections generated using NEMS. As a result, there has been a recent tendency to underestimate coal prices especially post-2002.
For 2001 and beyond there is an initial pattern of underestimation of coal consumption (Table 13) then a series of AEOs with overestimation. This is consistent with the pattern of total electricity sales, the sector that accounts for the majority of U.S. coal consumption.
Since AEO2001, coal production (Table 14) is overestimated in nearly all AEOs. For AEO1991 through AEO2002, there was a tendency to overestimate coal exports and underestimate coal imports, both of which contributed to an overestimation of U.S. coal production. From the AEO2003 through AEO2008, reference case projections of U.S. coal production have aligned fairly well with actual production levels. Another confounding factor regarding projections of U.S. coal production is the mostly unpredictable pattern of annual coal stock withdrawals and builds. For example, a 38 million ton build-up of coal stockpiles in 2001 resulted in a higher production number than would have been projected in the AEO projections, contributing to an underestimation of coal production for 2001 in several AEOs. This result follows from the general AEO assumption that the supply and demand for all fuels will balance for all projection years not calibrated to EIA’s Short Term Energy Outlook projection. Historically, other notable changes in coal stockpiles include stock drawdowns of 44 million tons and 41 million tons in 1993 (a strike year) and 2000, respectively.
Electricity prices have generally been overestimated in the AEO reference case projections through the 1990s (Table 15). Electricity prices in the early AEOs assumed regulated, average cost pricing, where fuel costs make up roughly 40 to 50 percent of the total price. As discussed above, coal prices to electric generators were often overestimated in these AEOs, resulting in similar overestimation of electricity prices. In the more recent AEOs, electricity prices have been underestimated, again following the pattern in the coal price projections. Also, in more recent years, electric generators have become more dependent on natural gas and the price underestimation in recent AEOs coincides with natural gas price spikes that were not predicted by the AEO.
The level of future electricity sales was underestimated for nearly all projection years for the AEO 1991 through AEO1997 reference cases (Table 16). Since about 90 percent of the demand for coal results from electricity generation, the underestimation of electricity sales contributes to underestimation of coal consumption in those years (Table 13). The underestimation of electricity sales was particularly large in AEO1994 through AEO1996 and coal demand in those AEOs exhibit similar patterns of underestimation.
Over the last two decades, there have been changes in laws, policies, and regulations that were not assumed in the projections prior to their implementation because of EIA’s statutory requirement to be policy neutral. Many of these actions have had significant impacts on energy supply, demand, and prices. For example, the Powerplant and Industrial Fuel Act (FUA) of 1978 restricted the use of natural gas in power plants and industrial boilers. After FUA was repealed in 1987, use of natural gas for electric generation and industrial processing increased sharply. Consequently, those AEOs completed prior to or immediately after repeal of the FUA, e.g., AEO1986, AEO1987, and AEO1989, underestimated natural gas consumption in 2000 by considerably more than AEOs completed in more recent years. AEOs completed after the year 2000 have tended to overestimate natural gas consumption in the reference case. The overestimation since 2000 can be attributed to underestimation of natural gas prices in those projections.
Technological improvements in both the production and use of energy have had a significant impact on the price, supply, and consumption of energy. Earlier AEOs typically assumed much slower technology development than actually occurred. This tendency was identified, in part, by this type of evaluation exercise. Beginning with the AEO1994, the projections were produced using the NEMS, which was designed to represent technology in a more detailed fashion. This has lead to an improvement in the representation of technological change in the AEO. As NEMS has evolved, additional studies on technological improvement have led to more optimistic assumptions in the more recent projections. Further, the adoption of modeling innovations, such as learning-by-doing, have allowed the model to better reflect the impact on cost of experience with new technologies as they are adopted.
External factors such as severe weather, economic cycles, and other supply and/or demand disruptions have also had an impact on the accuracy of the projections, particularly in the short term. These types of events are not anticipated in a mid- to long-term projection like the AEO.
Total energy consumption by sector has been added to the comparison tables for this evaluation. Overall, the projection errors tend to be small; however, some pattern of overestimation is evident. In the transportation sector, this tendency can generally be explained by the economic, fuel-specific, and external factors discussed above. In addition, weather changes contribute to the overestimation for all end-use sectors. Also, another portion of the overestimation in the industrial sector results from underestimating the extent of structural shifts in the sector. The evolution of the U.S. economy away from energy intensive industries to less-energy intensive manufacturing and services has continued unabated for a few decades and has even accelerated in the many subcategories in the energy-intensive industries. Actual residential and commercial energy use have also been affected in the last 15 years by weather patterns that have been generally warmer than the 30-year average “normal” used in developing AEO projections. Similar to the impact of GDP revisions, updates to published AER data and changes in consumption surveys affect the magnitude of the apparent projection error.

Table 1 provides a summary of the percentage of years in which a particular data series is overestimated as well as the absolute percent projection differences for the entire series of Annual Energy Outlook reference cases as well as for just the NEMS AEOs by Table. The percentage of overestimates is calculated as the number of overestimates relative to the total number of projections made (i.e., for each AEO and each year projected). In an unbiased projection, we would expect the percentage of overestimates to be close to 50 percent. The percentage of overestimates in the NEMS AEOs has improved (i.e., moved closer to 50 percent) for 8 of the 21 concepts shown in Tables 3 through 23. In several of the cases, the percentage of overestimates for the series is only a few percentage points different from 50 percent. The absolute average differences are smaller in magnitude for the NEMS AEOs in all but 8 of the 21 comparisons.

Mechel OAO Announces the Acquisition of HBL Holdings

Moscow, Russia – September 24, 2008 – Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals companies, announces the acquisition of a 100% stake in HBL Holding GmbH by its Mechel Service OOO service and sales subsidiary.

The acquisition is consistent with Mechel Service OOO’s continued implementation of its program of expanding its sales network, enhancing and extending range of its services, and enlarging its client base. Ownership of the shares in HBL Holding shall pass to the buyer following the completion of all necessary legal and financial procedures.

HBL Holding, founded in 1976, is a group of German companies in the field of steel trading and distribution with a primary focus on of its activities in North Rhine-Westphalia, Bremen and the Eastern German federal states. In addition to steel wholesaling activities, HBL also processes steel parts according to customer requirements, and delivers products to its clients on a fast and reliable basis.

HBL Holding integrates eight service and trading companies in Germany. The main competitive advantage of the HBL Group is the wide range of its products: construction and tool steel, various rolled products for construction, various kinds of stainless steel pipes, steel sheets, including stainless steel sheets, and aluminum, brass and copper sections. Other advantages of the group include high value-added services surrounding steel wholesaling, and fast delivery of standard steel products due to an effective warehousing system. In addition, HBL offers sophisticated, customer-tailored services in the area of prefabrication and processing of metals, and precision (thermal) cutting such as plasma, laser, water jet and autogenous cutting. Major HBL customers include European companies in machinery and automotive manufacturing, and the construction industry.

“HBL Group is well positioned in its market segment and shows sustainable profitability and solid growth prospects. This purchase provides Mechel with greater access to attractive European markets and a more direct relationship to the users of our products. A wide range of available services and products and a group-wide logistics system enables HBL to offer utmost flexibility and just-in-time deliveries on short notice. The acquisition is the continuation of Mechel Service’s program aimed at entering the market of custom-tailored high margin steel products,” Mechel Management OOO Chief Executive Officer Vladimir Polin commented.

Sinclairs Hotels North East package in association with Air India

To encourage larger number of people to visit the North Eastern sector, the Government of India had recently announced entitlements of air fare to all its employees travelling to the North East under the LTC Scheme. Sinclairs with its presence in the region is offering a 7 night/8 days package covering Gangtok and Peling in Sikkim in association with Air India. The package has been structured in such a manner that while they are travelling to Sikkim, they can also experience Darjeeling and Dooars in the same route. These packages are offered to travelers from Kolkata, Mumbai, Delhi, Chennai, Bangalore, Hyderabad, Ahmedabad, Nagpur, Indore, Pune, Jaipur, Kochi, Trivandrum, Lucknow, Bhopal, Ranchi, Patna and Bhubaneswar.  

The package details are available on Air India’s website www.airindiaholidays.in where online booking can be made.

Balmer Lawrie shareholders approve dividend of 170%

The shareholders of Balmer Lawrie & Co. Ltd. have approved a dividend of 170% at the Annual General Meeting held today. This is the highest ever dividend declared by the company. The company achieved significant milestones in business and operations in the financial year 2007-08. 

It has recorded its highest ever turnover with net income crossing Rs. 1490 crore as against Rs. 1300 crore in 2006-07 marking an increase of 15%. The profit before taxation has increased from Rs. 106 crore to Rs.130 crore, reflecting an increase of 23% over the previous year. Following this rising trend is the net profit which increased from Rs. 70.22 crore in the previous year to Rs. 86.93 crore in 2007-08, a growth of 24%.

In terms of growth, four businesses, i.e. Travel & Tours, Industrial Packaging, Greases & Lubricants and Logistics Infrastructure & Services have been the main revenue drivers.

The Industrial Packaging Division which is the largest manufacturer of steel drums / barrels continued to hold its lead position in market share. Further rationalization and consolidation of manufacturing facilities have been planned during the current year to improve operational efficiencies and achieve reduction in costs as well as achieve higher volume of value added products with improved quality. Whereas a second production facility was operationalised at Chennai during last year to augment production capacity to meet requirement of the peak season, during the current year a new unit at Asaoti has been commissioned to cater to the North India requirements. 

In view of shrinking margins on industrial sales, the Greases & Lubricants Division has adopted the strategy to strongly promote retail and export sales to ensure growth and higher profitability. This has translated into the achievement of highest ever profit by the SBU last year. The SBU will continue to introduce value added high performance products for industrial and automotive applications.

During 2007-08, the Indian economy reflected a general upswing in the export-import trade and all indicators point to its accentuation in the next few years. To capitalize on this opportunity a concerted effort is being made to widen the client base by penetration into the Private Sector besides consolidating the public sector & government business. 

Foreign trade has shown around 20% increase in the last seven years and in turn has created a pressure on the existing port capacities. In this light the Logistics Infrastructure SBU has decided on exploring possibilities for expanding capacities of its Container Freight Stations (CFS) at Chennai and Kolkata and opening new CFSs & ICDs in upcoming ports and upcountry locations. Warehousing activities are also being pursued aggressively towards moving up the value chain in the logistics space.  

The Travel & Tours Division, which is one of the largest IATA affiliated travel agencies in the country, witnessed significant increase in business volumes during the year. The Lucknow and Ahmedabad branches gained recognition from IATA and new travel offices were commissioned at Kochi and Gurgaon. 

Despite the adversities in the market, the Leather Chemicals Division achieved volume growth over the preceding year in both fat liquors and syntans segments. 

The company, amidst its drive towards meeting the Mission 2010 targets has continued to pursue its Corporate Social Responsibility by dedicating upto 0.5% of its net profit towards social causes.

ThyssenKrupp VDM opens service center in China: Stainless group expands its range in Guangzhou to include nickel alloys

Customers can now also be supplied with nickel alloy products from Guangzhou in southern China, where ThyssenKrupp VDM today opened a new service center. "This step will strengthen our presence in Asia and shorten supply routes to our customers," said Dr. Jürgen Olbrich, Chairman of the Management Board of ThyssenKrupp VDM, at the official inauguration of the service center, which was also attended by government and business representatives from the Guangzhou region. Dr. Olbrich said that benefits would also result from close cooperation with sister company ThyssenKrupp Stainless International, which has been operating a stainless steel service center with surface treatment, cut-to-length and slitting lines and a warehouse with processing equipment at the same site since 2005. 

ThyssenKrupp VDM will offer a wide range of customer services from Guangzhou. "We want to establish new customer relationships in inland China for applications using nickel alloy sheet and bar," said Dr. Olbrich. "A further advantage of the new service center is that we can make fast supplies of standard sizes and customized materials to the markets in Japan, Korea and Australia. ThyssenKrupp VDM Guangzhou Trading also sees itself as a competent partner to other Group companies, such as ThyssenKrupp Titanium, for warehousing and the brokering of business in the Asian market."

ThyssenKrupp VDM has invested around 450,000 euros in setting up the new Chinese service center, whose operations will profit from collaboration with ThyssenKrupp Stainless International. Both ThyssenKrupp Stainless subsidiaries are using the same site, where ThyssenKrupp VDM has rented around 1,000 square meters of space in the ThyssenKrupp Stainless International warehouse. ThyssenKrupp VDM has recruited highly skilled Chinese employees. Additional support will be provided in the area of warehousing by staff from ThyssenKrupp Stainless International.

In addition to warehouse management, advising customers will be a key area of work for the new local employees. "Our aim is to strengthen existing customer relationships, but also to specifically address smaller users who are not being supplied by us at present," explained Dr. Olbrich. "The warehouse and service center put us in a position to supply high-quality nickel alloys in the required sizes and also in smaller volumes." 
ThyssenKrupp Stainless is represented at several locations in China: Shanghai Krupp Stainless produces stainless steel flat products at its plant in Shanghai. In addition to the distribution center with processing capacities in Guangzhou, ThyssenKrupp Stainless International maintains three sales offices in Hong Kong, Shanghai and Beijing. ThyssenKrupp VDM also has sales offices in these three cities.

ThyssenKrupp VDM GmbH has been developing high performance materials for particularly demanding applications and processes for over 75 years and is one of the world's leading producers of nickel alloys and high-alloy special stainless steels. The company is based in Werdohl and has further production sites in Unna, Altena and Siegen, all in Germany. In the USA ThyssenKrupp VDM has two plants in New Jersey and Nevada specializing in the production of high-temperature materials for the aerospace industry. A global sales organization ensures an optimum world market presence in the plant engineering, energy generation, oil and gas, electrical engineering, electronics, automotive and aerospace sectors. In fiscal 2006/2007 the company had a workforce of around 1,800 and generated sales of over €1.4 billion. 

’Corruption nourishes poverty'

Interview by Ramesh Jaura/IPS, Berlin - Launching the 2008 Corruption Perceptions Index (CPI) Tuesday, TI Chair Huguette Labelle said: "In the poorest countries, corruption levels can mean the difference between life and death, when money for hospitals or clean water is in play. . . but even in more privileged countries, with enforcement disturbingly uneven, a tougher approach to tackling corruption is needed."

Corruption is "robbing the people of their future" and their lives, Labelle said in an interview immediately after the launch of the CPI, that measures perceived levels of public sector corruption. The CPI is a composite index, drawing on different expert and business surveys.

The 2008 CPI scores 180 countries (the same number as in 2007) on a scale from zero (highly corrupt) to ten (very clean). Denmark, New Zealand and Sweden share the highest score at 9.3, followed immediately by Singapore at 9.2. Bringing up the rear is Somalia at 1.0, slightly trailing Iraq and Burma at 1.3 and Haiti at 1.4.

Asked what the wealthy nations could do to help low-income countries combat corruption, Labelle said: "I would like to say, they should start at home. And they should make sure that they do not practise double standards."

Labelle has been awarded honorary degrees by 12 Canadian universities, and has held several important positions in the Canadian government. She headed the Canadian International Development Agency (CIDA) from 1993 to 1999. She is currently Chancellor of the University of Ottawa. She took over as TI chair three years ago.

Excerpts from the interview:

What is corruption?

We see corruption as the abuse of public trust, abuse of entrusted power for personal gain. It’s a rather broad definition but that’s how we define it.

Why does fighting corruption matter?

It matters a lot. Because we feel, based on what we have seen around the world, that corruption really prevents countries from developing. It nourishes poverty. Because if the resources that should be going to the development of a country are diverted to fiscal havens, the people are robbed of their future, people are robbed of their lives.

In low-income countries, rampant corruption jeopardises the global fight against poverty, threatening to derail the UN Millennium Development Goals (MDGs). The TI’s 2008 Global Corruption Report pointed out that unchecked levels of corruption would add 50 billion dollars (35 billion euros) — or nearly half of annual global aid outlays – to the cost of achieving the MDG on water and sanitation.

Would you say that there is a link between corruption and poverty?

Personally I am convinced that poverty does not cause corruption, but corruption causes poverty because if you are in a country with a lot of natural resources, with a lot of money moving into the government, but that money is being diverted into fiscal havens instead of going in for the development of a country, that does mean that the school will not be built, the health system will not be there, and the infrastructure will be weak, so that we will have poverty as a result. So yes there is a direct link between corruption and poverty.

How would you explain that despite the link between corruption and poverty in the eight MDGs (agreed by heads of state and government in 2000), corruption is not mentioned?

Well. It has not been identified in the MDGs. And that’s very interesting. If we look back, prior to 1993, people did not even dare talk about corruption — for a variety of reasons. And it has only been in 1994, 1996, where it finally became part of the discussion, it became an issue nationally and internationally, and has been increasing. So to go back to the MDGs: when they were agreed the corruption issue had not been taken on yet.

But, on the other hand, if you look at the UN Global Compact and the ten principles, corruption was added after the other nine had been identified. (The Global Compact is a framework for businesses that are committed to aligning their operations and strategies with ten universally accepted principles on human rights, labour standards, environment and corruption). So we pushed a lot for that to happen and it has happened. And so it’s now part of that.

Look at the work of the (Vienna-based) UN Office on Drugs and Crime (UNODC) where they have got more resources – because money-laundering which is very often the result of corruption — is moving so fast in the world now. And it also feeds into illicit arms, into illicit drugs. That office has been strengthened.

We also saw the Secretary-General of the UN and President of the World Bank announce — I was invited to be with them — the co-called STaR (Stolen Asset Recovery) Initiative — to try to deal with restitution of all the money that is taken out of countries, that should belong to the people of countries from which it has been taken out, because of corruption by corrupt leaders. So there is a lot of things happening. As such StAR(*)represents a global drive to help developing countries recover assets stolen by corrupt leaders.

But at the end we’ve got to find ways to get the people of a country, the civil society, responsible media, to put constant pressure on all governments at all levels.

What do you think the industrialised countries could do to help the developing countries fight corruption?

First of all, I would like to say, they should start at home. And they should make sure that they do not practise double standards. The continuing emergence of foreign bribery scandals indicates a broader failure by the world’s wealthiest countries to live up to the promise of mutual accountability in the fight against corruption. That’s one kind of double standards which leaves a state of confusion at the other end. So what is important is to be consistent and coherent and not have double expectations.

Secondly, they should ensure that in all the support that they do, they build in transparency and integrity and that results be demonstrated.

Thirdly, they should ensure that they provide the kind of support that the countries desire. Because very often though the institutions are there, a country does not have the resources. To be able to ensure that these institutions are strong, especially the judiciary, the office of the auditor-general, for instance, support is required.

Would you say that the level of economic development has an impact on corruption one way or the other?

That’s a difficult question. Economic development should be something positive. It should increase the money available for the development of infrastructure, social, physical and so on. It should be there to insist on the creation of jobs, although GDP growth does not always translate into jobs. But in principle it should be positive.

One has to be very careful, though, where that money is going. Because it is positive only to the extent that people benefit and that it’s economic growth with equity as opposed to 20 families becoming extremely rich.

ThyssenKrupp Steel: 30 million euros to reduce particulates

ThyssenKrupp Steel is investing an additional 30 million euros to reduce particulate pollution in the north of Duisburg. By mid-2011 Germany's biggest steelmaker is to equip its sinter plant in Duisburg-Schwelgern with additional filters to capture particulates and dust-containing off-gases. The company is thus doing its bit to ensure that European Union emissions standards are met in the north of Duisburg. 

In the past ThyssenKrupp has made its contribution to improving air quality with a total of 41 measures. Their success is confirmed by measurements by the state environmental authority: Particulate pollution in the north of Duisburg has decreased by more than 20 percent since 2002, whereas in heavy traffic areas for example it has remained virtually constant. 

ThyssenKrupp Steel accounts for around 20 percent of the particulate pollution in the north of Duisburg. This was shown by an investigation program carried out jointly with the Ministry for Environment and Nature Conservation, Agriculture and Consumer Protection of the state of North Rhine-Westphalia. Other results of the two-year investigation: 60 percent of the particlate matter recorded at the measuring points in Duisburg-Marxloh and Duisburg-Bruckhausen is carried in by the wind from surrounding and more distant areas, while another 20 percent comes from traffic and domestic fuel combustion. Domestic fuel burning includes the coal stoves still used to heat an above-average number of homes in the north of Duisburg. 

The 30 million euro investment in the sinter plant will further reduce the company's share of the particulate emissions. Sinter plants convert fine ore into a coarse-grained material suitable for charging in the blast furnace. The plant at ThyssenKrupp Steel produces around twelve million tons of sinter per year. It already has filters with a total surface area of 150,000 square meters which clean approximately a hundred billion cubic meters of gas per year, with the captured iron-bearing dusts being cycled back to the sinter plant.

To improve control of particulate emissions still further, among other things ThyssenKrupp Steel will be installing an additional fabric filter downstream of the existing electrostatic gas cleaners. In addition, new high-voltage electrostatic precipitators are to be used to separate particulates inside the sinter belt areas. At the same time, further particulate sources will be connected to the improved dust collection systems. This action by ThyssenKrupp Steel goes beyond the measures recommended by the recently published Clean Air Plan for the western Ruhr. The filter concept for the sinter plant will reduce particulate pollution in the north of Duisburg by up to 3 micrograms per cubic meter.

"The aim behind this voluntary measure is to help achieve a sustainable improvement in the particulate situation in the north of Duisburg," says Dr. Gunnar Still, head of Environmental Affairs at ThyssenKrupp Steel. "However our company cannot bring about lasting compliance with the standards on its own. The background pollution from other sources is too great. 
Further efforts at federal and state level and an intensive dialogue among all parties are needed." 

Reducing dust emissions has always been an important issue for ThyssenKrupp Steel, not just since the decision to invest in the new filters. In recent years the company has launched wide-ranging programs which have led to a significant reduction in dust pollution. The most recent example is blast furnace 8, commissioned in December 2007, with its unique dust collection system for capturing emissions during rail car unloading. This system alone cost the company 20 million euros. Altogether, a quarter of the 250 million euro investment in the new blast furnace was spent on pollution control. Together with the North Rhine-Westphalia environmental agency it has been proven that the new blast furnace produces virtually no uncontrolled diffuse dust emissions.

Back in October 2004 ThyssenKrupp Steel began operation of a system to collect dust emissions from the casthouse and stockhouse of blast furnace 1. The 16.5 million euro unit cleans 1.8 million cubic meters of air per hour via 18 different extraction points. The investment was part of a 62 million euro program to reduce dust emissions from the Schwelgern plant unit, in the course of which the rotary coolers in the sinter plant were also enclosed at a cost of 33 million euros.

ThyssenKrupp Elevator to supply and install a total of 24 TWINs and 174 further systems for prestige projects in Moscow and Kiev.

ThyssenKrupp Elevator is demonstrating its technological know-how in Russia and Ukraine. The company has won a contract to supply a total of ten TWIN systems, 19 conventional elevators and three escalators for the new Mercury City Tower in Moscow, Russia. The 380-meter-tall multifunctional building is part of the new Moscow City district and will offer residential, office, retail and leisure space. The TWINs will transport passengers to a height of 185 meters at speeds of up to seven meters per second. A total of 15 high-rises are being built in the new district of the Russian capital, including the Moscow Federation Tower, which will also be equipped among other things with 22 TWIN elevators from ThyssenKrupp Elevator.

First TWIN elevators in Ukraine
ThyssenKrupp Elevator is supplying a total of 14 TWIN systems with 28 cabs as well as twelve conventional elevators for the new Mirax Plaza in the Ukrainian capital Kiev. The two-tower complex with residential, retail and office units will be the country's tallest building at 192 meters when completed. The elevators will have a maximum rise of 182 meters and serve up to 45 stops. The top speed for the TWIN cabs is six meters per second. Completion of tower A is scheduled for the end of 2009.

140 installations for new terminal at Vnukovo International Airport
ThyssenKrupp Elevator is to exclusively supply 41 elevators, 54 escalators and 38 moving walks for the new terminal A of Vnukovo International Airport in Moscow. Seven passenger boarding bridges have also been ordered by the Russian client. The new 250,000 square meter terminal will be the centerpiece of the airport and is designed to handle 20 million passengers a year. 

A total of 27 panoramic elevators will be installed in the two-section glass complex. The design of the escalators will also stand out: Transparent safety-glass balustrades and energy-efficient LED lighting will provide a pleasant and attractive atmosphere. The moving walks will transport travelers quickly and safely through the 360 and 520 meter halls to the gates.

ThyssenKrupp Elevator is one of the leading elevator companies in the world and represented at over 800 locations in more than 60 countries. With approx. 40,000 employees, the company generated sales of over 4.7 billion euros in the fiscal year to September 30, 2007. Its capabilities include passenger and freight elevators, escalators and moving walks, stair and platform lifts, passenger boarding bridges as well as quality service for all products. 

Harmony Silver Awards 2008 to honour 10 Silver Achievers on 7th October

Mumbai, September 25th, 2008: Harmony for Silvers Foundation, a NGO working to enhance the quality of life of elderly in India, has announced the Jury and commencement of selection process for Harmony Silver Awards 2008. Harmony Silver Awards 2008, to be held on 7th October, will honour 10 dedicated elderly men and women by bringing their work centrestage and showing the world what silvers can do. 

A five-member Jury comprising Justice Leila Seth, MP Priya Dutt, Veteran Actors Om Puri & Victor Banerjee, and Editor-in-Chief of The Indian Express Group Shekhar Gupta will choose Harmony’s 10 Silver Achievers for the Year 2008. Harmony for Silvers Foundation, founded by Mrs Tina Anil Ambani, believes that ageing doesn’t mean slowing down. And to celebrate this fact, the foundation honoured 10 Silvers for their irresistible momentum at the first annual Harmony Silver Awards in October 2007, in Mumbai.

“We are delighted to honour 10 silvers who have made the world a better place by recognizing their contributions at the Harmony Silver Awards 2008,” said Mrs. Tina Anil Ambani, Chairperson, Harmony for Silvers Foundation. “The winners are intrepid fighters who have overcome every obstacle with determination and zeal. In fact, the Harmony Silver Awards intends to drive home the fact that there is a hero within each one of us. Taking a cue from our winners, if we dare to step outside our comfort zones, we can experience new awakenings, craft our own destinies and touch the lives of countless others.”

The 10 heroes for Year 2008 would be men and women who continue to set benchmarks for themselves and the society. The thread that binds them together is their commitment to their chosen cause and determination to surmount every obstacle.

“Being on the Jury to select the most worthy has been a humbling experience and I don't mean that to sound like a cliché. The extraordinary work being done by ordinary people like you and me; their resolute commitment, their tireless efforts, their ability to nobly absorb frustration, insult and rejection is what sets a select few of us apart and elevates them to divinity. They are a blessing not just to a community but also to humanity at large. I am grateful to the Harmony for Silvers Foundation for making me aware of the existence of such wonderful people—the real role models, the real “celebrities” that our youth must be tutored to emulate”, Jury Member & Actor Victor Banerjee said. 

The selection process for the Harmony Silvers Awards 2008 entailed seeking nominations from the readers of Harmony Magazine, social scientists, gerontologists and representatives of NGOs. From an impressive list of over 100 silvers, Harmony for Silvers Foundation shortlisted 50 people. The Jury will select 10 Silver Achievers from a list of 25. This year’s winners are being chosen after a month-long process of deliberations. The recipients will be felicitated with a cash reward and citation, followed by an entertainment programme that showcases the potential of silvers. Dev Anand, the guest of honour at the event, will give away the awards.

Prominent senior citizens, social activists, media and marketing professionals, people from the entertainment industry and leading minds from across India will attend this select gathering. Besides distribution of awards, the event will include an entertainment programme that showcases Harmony’s motto: Celebrate Age. 

Jury for Harmony Silver Awards 2008
LEILA SETH, who was featured on the cover of Harmony magazine in September 2006, was the first woman to be appointed a judge of Delhi High Court and a chief justice of a state
SHEKHAR GUPTA is editor-in-chief of The Indian Express and anchors the popular Walk the Talk programme aired on NDTV 24×7 
OM PURI, who was featured on the cover of Harmony magazine in June 2005, is an award-winning actor and has received an honorary OBE
VICTOR BANERJEE is an award-winning actor and human rights activist 
PRIYA DUTT is a Lok Sabha MP from Maharashtra 
About Harmony for Silvers Foundation: Harmony for Silvers Foundation, founded in 2004 by Mrs. Tina Anil Ambani, is a non-government organisation working to enhance the quality of life of the elderly in India. It envisages India’s elderly as ‘Silver Citizens’—vital and proud. Harmony’s mission is to create an environment where silvers, irrespective of their culture beliefs, can retain their dignity, self-respect, pride and self-confidence.

Tuesday, September 23, 2008

Reliance Power : Chairman's Statement

My dear fellow Reliance Power shareowners 

I am delighted to welcome each one of you to our first Annual General Meeting since the listing of the Company on the stock exchanges though, for the record, it is our 14th AGM. 
It is a matter of great pleasure for me that I am here today to report on an exceptional year for Reliance Power a year when we took important steps forward in our  journey to emerge as the leading power generation player in the country.
The Reliance Power Shareowner family is now the largest in the world, with over 40 lakh members. Over 90 per cent of them are small retail shareholders, with holdings of 100 shares or less.

These investors are the foundation and bedrock of Reliance Power. Despite the massive recent turmoil in the capital and financial markets across the world, our retail shareholder base has continued to grow, with more than one lakh new members joining the family.Our retail shareholding has gone up from over 12 crore to 18 crore shares, an increase of more than 50 per cent. Over half of our non-promoter shareholding now is in the hands of the small investors.

This unprecedented support is a reflection as much of the trust and faith that millions of investors have in us as it is an endorsement of the growth and earnings potential of our young company. We will do our utmost to uphold this trust. Let me take you through the strategic vision that will drive Reliance Power and and share with you our long term objectives.
Our visionary founder and my father, Shri Dhirubhai Ambani, believed that India's social and economic resurgence would depend upon the creation of quality infrastructure, especially in the power sector. 

Infrastructure alone would give millions of ordinary Indians the chance to realize their true potential and make the most of the economic opportunities that exist in our great nation.
The remarkable journey of Reliance Power has been inspired by Dhirubhai's foresight and vision.
It reaffirms our quest for value creation and reemphasizes our mission of nation building.
I would like to take this opportunity to thank each one of you personally for the trust and faith you have reposed in Reliance Power and the Reliance Anil Dhirubhai Ambani Group.
As a public listed company, we now have a much larger canvas on which to innovate, perform and deliver.Backed by an exceptional management team, we are confident of building world-class generation assets in India and fulfilling the nations urgent and growing need for quality and reliable power.

Group Highlights 
Our Company is an integral member of the Reliance Anil Dhirubhai Ambani Group; we are the bearers of a proud name, but an even prouder legacy.We have a strong presence across a wide array of high-growth consumer-facing businesses:
! Telecom
! Financial services
! Energy
! Power
! Infrastructure
! Media and entertainment
Across different companies, we touch the lives of over 150 million customers, or over 1 in every 8 Indians every single day.Our group enjoys the unparalleled trust, faith and confidence of nearly 12 million shareowners - the largest such family in the world.We are among the largest employers in the country, with a young, highly trained and motivated workforce of nearly 130,000-strong. In a short span of three years, our group market capitalization has crossed Rs 180,000 crore (US$ 43 billion), ranking us amongst the top 3 business houses in India.
Our group net worth is in excess of Rs 58,000 crore (US$ 13 billion).Our cash flows across the Group are approximately Rs 12,000 crore (US$ 3 billion) and Net profit is over Rs 8,000 crore (US$ 2 billion).My fellow shareowners, we have embarked on a journey of rapid growth and value creation. I seek your continued trust and support in this endeavour.

Performance Review 
The Company's accounts for the year ended March 31, 2008, along with the Directors' report, letter to shareowners and the Management Discussion and Analysis have been circulated to you. 
With your permission, I would like to take them as read. 

The Market Environment 
The Indian economy showed strong momentum in the past 5 years, clocking an average annual growth rate of 9 per cent a clear break from the past. This new structural trend of higher growth rate will, I believe, continue long into the future.Speedy creation of infrastructure will be the catalyst.The growth of any economy has an integral link with the growth of the Power sector. In order to achieve annual GDP growth rate of 8 -10 per cent, the generation capacity must grow at a minimum of 8 to 9 per cent every year.

The story in India over the last few years, unfortunately, has been different. While the GDP growth has been 9 per cent, the power sector has grown at an annual rate of just 5 per cent.
This has, undoubtedly, created a huge mismatch in the demand and the supply of power.

Power is one area of infrastructure where India lags far behind even in comparison to other developing countries.The per capita annual consumption of electricity in India is one of the lowest in the world at a little over 670 kwh, which is less than a fourth of the world average of
3,000 kwh. India does not figure in the top 100 countries of the world in per capita consumption of power.

We consume 2.5 times less power than China, which has a per capita consumption of 1802 kwh, and 20 times less power than the US, which has a per capita of 4,000 kwh.These numbers, stark as they are, tell only part of the story. There are, at present, over one lakh villages and 40 per cent of people in the country who have no access to electricity at all. Even the villages, which have so far been electrified, get, at best, 8 hours of power supply per day. The situation is not very different in our top cities.

Among the large Indian cities, Mumbai, which Reliance Infrastructure has the privilege of serving, is perhaps the only city which has a track record of uninterrupted and 
reliable power supply. In all other major cities, from Chennai to Bangalore, from Hyderabad to Lucknow, from Delhi to Jaipur indeed, a vast majority of our 100 biggest cities demand far exceeds supply, leading to a lack of power, and affecting the quality of life of millions.Power in the 21st century is not a luxury. It is a necessity, perhaps even a fundamental right as essential as the air we breathe, the water we drink & the food we eat.From televisions to mobiles, from computers to refrigerators, from schools to hospitals, from railway stations to airports, from malls to multiplexes, nothing in our lives would work without power. Practically nothing.

Power is the great economic multiplier, driving growth, creating jobs, raising productivity. The weight and influence of this sector in the economy can be gauged by the fact that 3 of the top 5 companies in India by market cap belong to the power and energy sectors.Even at our current low levels of electrification, power sector has an annual revenue of over Rs 1,50,000 crore. If we reach the per capita consumption levels of China, the industry size will nearly triple to over Rs 4,00,000 crore.

According to the Expert Committee on Integrated Energy Policy, we would have to install nearly 8,00,000 MW of power capacity by 2031-32 if we are to sustain an annual GDP growth rate of 8 per cent. This translates into a capacity addition of around 40,000 MW every year for the next 20 years.Unfortunately, we have been adding a mere 4000 MW per annum over the last many years and managed to achieve barely 50 per cent of the capacity addition target for the 10th plan. In contrast, China has been adding nearly 1,00,000 MW every year.
In the first 60 years of Independence, India added nearly 1,40,000 MW of power. We now need to install the same capacity in less than 10 years, indeed, if possible, in 5 years.India plans to add 16,000 MW annually over the next few years. Compare this to the projected long-termrequirement of 40,000 MW of capacity addition and Rs 1,20,000 crore worth of investment every year and one gets some idea of the magnitude of the challenge that lies ahead.
But every challenge as we know is also an opportunity. The greater the challenge, the greater the opportunity.
Take the case of Telecom where the gap between India and the rest of the world was perhaps as stark a few years ago as it is with regard to power today.After the first 55 years of Independence, India had just over 6 crore phone connections. In the next 5 years, we added four times that number to reach nearly 30 crore phone users.

India's telecom revolution was spearheaded by Reliance Communications and has made us the fastest growing telecom market in the world, even ahead of China in terms of monthly net subscriber additions.I have no doubt that we as a nation have what it takes to replicate the telecom story in other core infrastructure areas, including Power. What is required is the right 
mix of policy reforms, initiatives, and investment support.

Regulatory Framework 

Over the past few years, the Government of India has undertaken several legislative measures and carried out extensive policy reforms with a view to accelerating the growth of the power sector and encouraging greater private participation. Some of these measures are:

! Electricity Act

! National Electricity Policy

! National Tariff Policy

! National Electricity Plan

! Competitive Bidding Guidelines, and

! Ultra Mega Power Projects 

Electricity Act 
Arguably the single most important piece of legislation in the history of power reforms in India, the Electricity Act is a comprehensive framework for the liberalization of the sector, and aims at a gradual shift towards a competitive market. The Key features of the Act include: ! Making Power Generation licence free ! Promoting Competitiveness in the sector ! Allowing Non-discriminatory Open access in transmission ! Establishing Regulators at the Central and State levels ! Placing strong emphasis on consumer protection ! Enforcing mandatory metering of all electricity supplied 
National Electricity Policy 
The National electricity policy, announced by the Government of India in 2005, sets out the following long-term objectives for the country:
! Provide all households with access to available Electricity in the next five years.
! Meet the domestic Power Demand fully by 2012.
! Supply Reliable and Quality Power of specified standards in an efficient manner and at reasonable rates.
! Increase Per capita availability of electricity to over 1,000 units by 2012.
! Ensure financial turnaround and commercial viability of the Electricity Sector.
! Protect the interests of consumers.

National Tariff Policy 
The National Tariff Policy reiterates the objectives of the Electricity Act 2003 to promote competition and to improve efficiency. 
The policy aims to achieve competition and efficiency through:
! Competitive procurement of power
! Multi-year tariff framework
! Reduction of Aggregate Technical and Commercial (AT&C) losses

! Linking of retail tariffs to cost of supply of electricity for different consumer categories
! Introduction of transmission pricing that is sensitive to distance and direction
The policy represents a quantum leap from the earlier cost-plus, regulated returns regime and allows better value creation through higher efficiencies, innovative practices and control over expenditure.

National Electricity Plan 
The National Electricity Plan outlines the first comprehensive road map towards the optimum growth of the Power Sector. It envisages a capacity addition of around 200,000 MW by the end of the 12th plan or in the next 10 years. 
The plan also details the requirements of the power sector in terms of trained manpower, equipment, research & development, and the likely environmental impact. 
Competitive Bidding Guidelines 
In order to ensure further competitiveness in power procurement, the Government brought in competitive bidding guidelines in 2005. These guidelines outline the process to be followed for competitive bidding and have led to the standardization, among others, of bidding documents and power purchase agreements. 
Ultra Mega Power Projects
And most recently, the Government of India, initiated the move to set up Ultra Mega Power Plants (UMPPs) of 4000 MW capacity each, to harness economies of scale and generate cheaper power. Such a project typically require an investment of Rs 16,000 to 20,000 crore and are awarded by a process of transparent international competitive bidding process based on tariffs. 
Of the 10 proposed UMPPs, three projects have been awarded so far. I am delighted to say that two of them domestic coal based Pit head project at Sasan in Madhya Pradesh, and imported coal based coastal project at Krishnapatnam in Andhra Pradesh have been awarded to our company and are in different stages of execution. 

Agenda For Future Reforms 
We believe that economic reforms are a continuous, ongoing process rather than an event. While the broad policy framework for the power sector is place, a larger number of changes are needed to accelerate the growth momentum. Some of these are: 
Action on Recommendations of Integrated Energy Policy 
The Government set up an expert committee to work out an integrated energy policy in 2006. The recommendations of this committee cover a wide range of areas and issues, including how to ensure the availability of coal and natural gas for the power sector, bolster energy security and comprehensively address the concerns on climate change. 
India needs to urgently consider and act upon these recommendations and adopt an end-to-end approach for the entire energy value chain. 
Two of the largest sources of primary fuel for the generation of power, namely, coal and natural gas, are perhaps in the greatest need of reforms. 
India has the 4th largest coal reserves in the world. This black gold has not only the potential to light up the nation but also generate large-scale revenues and 
With almost the same size of proven reserves as India, China has managed to produce 5 times more coal for power than us.
If we focus on increasing our production, we can generate up to 400,000 MW of power from domestic coal alone, generating unprecedented value for the country.
The Coal sector has been opened up for private participation with a view to facilitating captive use. While this is an important step forward, more needs to be done. 
To guarantee assured supply of coal, a number of initiatives need to be taken. These include revamping, wherever necessary, existing legislation governing the sector, 
some of which date back to the colonial era, and introducing an appropriate mechanism for fast-track allocation of coal blocks. We need to raise our level of
productivity in the coal sector to international standards and dramatically expand our annual production.

The Government of India is considering setting up an independent regulator for the coal industry. This will bring in greater efficiency and help the sector to grow at an 
accelerated pace.

Natural Gas 
The opening up of the natural gas sector to private and foreign participation has led to substantial investment in the area of exploration and production. This has 
resulted in the discovery of major gas finds on our East Coast a development that has the potential of transforming the future energy scenario of our country.
The use of natural gas for power will yield huge environmental benefits while substantially cutting down the gestation period for capacity addition.
There is a case, in line with global trends, for higher allocation of natural gas to priority sectors such as power and fertilizers.

Market Creation 
I firmly believe that the power sector is still at an evolving stage and development of a thriving power market will help it mature and flourish, resulting in uninterrupted, economical and quality power for all. 
This can be achieved by bringing clarity to the outstanding issues of transmission sector and adopting market-driven pricing philosophy. 
Planning for and setting up adequate transmission infrastructure as well as a robust policy for the pricing and allocation of transmission open access is a must. 
I am happy to note that the Central Electricity Regulatory Commission (CERC) has taken up the task of bringing clarity to the unresolved issues in the transmission sector, and will, hopefully, evolve a fair and transparent policy framework. The recent announcement, clearly demarcating the role of the central transmission utility and the transmission provider is an important step in the right direction. 
Considering the huge demand-supply deficit, the need of the hour is a fair, market-determined pricing mechanism that gives the right price signals both to suppliers & consumers and helps in long time price discovery. This will act as an incentive to power suppliers and attract surplus power into the system rather then discouraging it. 
Single Window Approach 
Despite the slew of recent reforms in the power sector, the setting up of a project still requires numerous clearances from multiple sources. The lack of coordination among these agencies is continuing to cause significant but entirely avoidable delays. There is an urgent need to put in place a single-window clearance system to expedite the process of implementation. 
Increasing financial resources for Power Sector Power is a capital intensive industry, which requires a huge mobilization of resources at competitive rates. Considering the ambitious roadmap that lies ahead, it is necessary that the power sector receives ready support from the banking sector. Some of the existing rules governing the banking sector need to be changed. These include:

! Modifying the norms of group exposure by banks to recognize the fact that power projects are financed without support of group's balance sheets.
! Enhancing the lending limits of banks for the infrastructure sector such as power.
! Modifying the existing External Commercial Borrowing guidelines to permit the use of foreign currency resources for rupee expenditure in India
! Considering loans to the power sector as priority sector lending.

A supportive framework in the financial markets will go a long way in enabling the power sector to grow rapidly.

Reliance Power Vision - Nation Building & Sustainable Value Creation 
With the power sector playing a critical role in determining the long-term future of the Indian economy, Reliance Power has emerged as a key player. It is expected to play a pivotal role in contributing to the growth of power generation capacity in the country.We are working at an accelerated pace to set up power plants across the country, with a commitment to provide energy at affordable prices and bridge the demand-supply gap. The success of these projects will substantially mitigate the current energy crisis facing the nation.

Our projects will also generate huge employment opportunities, create vast pools of skilled manpower and improve the living standards of the local community.We are, I believe, privileged to be playing such a defining role in the growth of our nation something that will forever remain at the core of our vision and commitment.The gestation period for power projects is long certainly longer than for many other industries. But patience will bring rewards. Given our organizational DNA, our core competence in large-scale project execution and management, I am confident that we will create exceptional long-term value for all our stakeholders.

We are currently the 16 largest private sector company in the country based on market capitalization. As our various projects come on stream, we will endeavour to be one of the top 10 most valuable companies in the private sector. 

Guiding Principles 
Reliance Power has the ability to execute its projects with the highest regard for safety, quality, reliability and timeliness. These core principles will form the basis of our execution. ! Clean & Green Power ! Sustainable & Inclusive Growth ! Intellectual Capital ! Fuel Security ! Cost Leadership 
Clean and Green Power 
For us, climate change or global warming is neither a politically correct slogan, nor a passing fad. It represents our commitment to the future generations to minimize any long-term adverse impact on its environment. 
Our generation portfolio includes run-of-the-river hydroelectric projects in Uttarkhand and Arunachal Pradesh and large combined cycle gas plants that generate clean and green power. We have ensured that coal based plants at Sasan and Krishnapatnam, among others, are also designed to use 'Super Critical Technology' that reduces the impact on environment considerably. 
In addition, the company continues to examine opportunities in wind, solar and other renewable energy at suitable locations in India to reduce its carbon footprint.  

Sustainable & Inclusive Growth 
Our founder Shri Dhirubhai Ambani believed that our efforts should raise the quality of life for all people who have contributed to our growth and success.

We therefore regard rehabilitation, relief and resettlement as an integral part of setting up a power plant. Our approach seeks to ensure the development of the entire community and a qualitative improvement in their living standards.We not only focus on providing the required civic infrastructure in terms of schools and hospitals, and giving one-time compensation at the start of the project, but also in ensuring on-going support and assistance for the long-term sustainability of the local community.
Some of the measures taken up by us are:
! Deployment of Mobile medical vans, with a capacity to treat upto 60-70 people daily, to serve the local villages.
! Organization of regular medical camps for the treatment of local people. We have till date treated over 3,000 people in such camps.
! Training of local youths at Industrial Training Institutes (ITIs) for enhancing their skill sets and helping them contribute to the successful implementation of our

projects. ! Provision of clean drinking water to villagers near our project sites. Our approach is simple: We want to integrate with the local community, and be part of their development. 
Intellectual Capital 
The past year has seen our team grow in skill, expertise and numbers. We have added considerably to our human and intellectual capital this year.
We expect this process to continue apace, and hope to be 3500- people strong in the next 3-5 years.This is in addition to the over 100,000 people who will work at our project sites during construction. Ours is one of the best trained work forces in the country, consisting of engineers, management graduates and Chartered Accountants. We have attracted the best talent from state utilities and public sector companies. More recently, we have begun to cast our hiring net wider to draw in global talent.

We have sought to emphasize workforce diversity because we believe that people with very different cultural backgrounds make for a dynamic and innovative work
environment that encourages agility and innovation.Our projects are spearheaded by industry veterans who have vast experience in the timely execution of large power projects, both in India and abroad.Like any other growth industry in India, power too faces its share of talent crunch. There is an emerging gap in demand and supply with respect to project managers, system operators and engineers. With an additional 140,000 skilled professionals required in the power sector alone over the next 5 years, the situation is unlikely to ease any time soon.
To meet this challenge, we are investing heavily in human capital. Apart from hiring top-of-the-line professionals in areas where we don't have any prior business experience, we are putting in place strong training mechanisms to address our need for technical and managerial competence.

In order to attract, retain and motivate the best human talent across the industry, we are setting up robust HR practices.We will also implement an Employee Stock Option Plan across all businesses of Reliance Power and its associate companies this year.

Fuel Security 
Ensuring long-term supplies of fuel for our projects at competitive prices will differentiate us from others and lead to reduced risks and superior results. In order to achieve this goal, we have embarked on a group-wide backward integration drive aimed at securing coal blocks/concessions both in India and abroad.I am happy to share with you that we have one of the largest coal reserves in India for any private sector power company - in excess of one billion tonnes. In addition, we have secured the entire beneficial interests in 3 coal concessions in south Sumatra, Indonesia, which will supply coal to our Krishnapatnam UMPP and Shahapur Projects. These coal concessions have total estimated resources of over 2 billion tonnes, substantially more than the projected requirement of all the imported coal-based projects that we are currently developing. Our group companies have secured natural gas and Coal Bed Methane (CBM) blocks, which will also help to meet fuel requirements of our prospective plants. 
Our captive mines will ensure that we are insulated from the escalating coal prices in the global markets. Further, the performance of our plants will not be impacted due to the non-availability of fuel. 
Cost leadership 
I have been asked by many of you about the global uptrend in commodity prices in the last few years and its impact on our company.

We have taken adequate steps to minimize the impact of the spike in commodity prices. We have a commercial strategy in place for large value purchases which enables us to minimize the impact of price variations.We have made use of technology to develop innovative procurement processes and carry out better material planning.Our materials are procured in a phased manner to minimize the carrying cost. We continually monitor the emerging price trends of commodities with a view to optimizing our costs.

The recent meltdown in the global financial markets points to a slowdown in the leading economies of the world. As a result, the prices of most construction materials and equipment are likely to soften.In every adversity, as they say, there is an opportunity. 

Project Portfolio 
We are currently developing a diversified portfolio of generation projects of over 28,000 MW capacity, including two ultra mega power projects awarded by the Government of India. This amounts to 20 per cent of the current installed capacity in the country and is by far the largest portfolio under development in India. Our project portfolio includes domestic coal-fired projects, imported coal-fired projects, gas-based and hydroelectric projects. Just about 5,000 MW of our total over generation portfolio of over 28,000 MW is based on imported fuels thereby reducing our coal supply risks. We have a presence across all regions of the country: North 9080 MW, South 4000 MW, North-East 2900 MW and West 12,220 MW. The power generated by these projects will be sold under a combination of long term and medium term Power Purchase Agreements (PPAs). A portion of the capacity will also be reserved for merchant sale. So far, long-term PPAs to the tune of 10,000 MW have been committed.

Our portfolio gives us a significant competitive advantage over others because it incorporates fuel diversity, fuel source diversity, geographical diversity, diversity of power sale arrangements, and a multiplicity of off-takers, substantially de-risking our business and revenue model.We plan to bring on stream a total generation capacity of over 28000 MW over the next 8 years, which is equivalent to what the country's largest power producer has achieved in nearly 30 years.We are fully aware of the sheer magnitude of the challenge that lies ahead, ad are working round the clock to make it happen.We continue to look out for new opportunities in the power generation sector. I am happy to inform you that we have been qualified to bid for the next 4000 MW Ultra Mega power project at Tilaiya in the state of Jharkhand, which will come up shortly.

Emerging Opportunities 
Nuclear Power Projects 
Across the world, nations are looking for alternative sources of energy that are safe, reliable, and economical.Under the visionary and dynamic leadership of our Prime Minister Dr Manmohan Singh India too has been looking at strengthening its long-term energy security. It is this quest which was behind the government's major thrust on civil nuclear energy.The recent historic waiver by the 45-nation Nuclear Supplier Group (NSG), permitting India to engage in nuclear trade, is a resounding endorsement by the world community of our prime minister's vision.

The waiver has removed what has been greatest stumbling block in setting up nuclear energy plants, namely, the refusal by NSG countries to supply nuclear fuel to India. This will open up the sector for investment.While the initial per MW investment in nuclear energy is higher, nuclear power plants have an economic life of over 50 years -- much longer than coal and gas based power projects.
Across the world, many developed countries depend significantly on nuclear energy for their power needs. The figure ranges from as high as 75 per cent in France to about 20 per cent in the US. Taking this global cue, China too is investing heavily into nuclear energy, with a target of an additional 40,000 MW power over the next 10 years.
In sharp contrast, India has a little over 4,000 MW of nuclear power plants, indicating the potential headroom for growth.The road ahead is long and it will take a minimum of 8 to 10 years before the first private nuclear power project takes shape.
Apart from making suitable amendments to the Atomic Energy Act, the Government will need to make at least 15 other policy changes to permit the entry of private players into the nuclear domain.

These include redefining the role of the regulatory board, enacting national legislations on civil liabilities, safety and operation of nuclear plants in line with international conventions and practices.Other areas of change include policies for advance selection and investigation of nuclear sites, spent fuel handling and its long term storage and transportation, and guidelines for decommissioning of plants.

We have had a dedicated team working on the Nuclear opportunity for the past three years, and have conducted a series of discussions with the leading international players in the nuclear power industry.We will watch the emerging scenario in the nuclear space closely and hope to play a meaningful role when the sector is eventually opened up for private participation.

Wind / Solar / Fuel Cells 

We are exploring the emerging opportunities across alternative environment-friendly generation technologies such as Wind, Solar, and Fuel Cell based power. The recent incentives announced by the Government of India for Grid Interactive Multi Megawatt Solar Thermal Power has given a phenomenal boost to the market. As part of our energy initiatives, we are considering the possibility of setting up a one-of-a-kind 100 MW Grid Interactive Concentrating Solar Power (CSP) Plant through an exclusive relationship with a technology provider. This will, among other things, accelerate the development and commercialization of CSP technology in India. We are evaluating the techno-commercial feasibility of commercially producing reformer based fuel cell / hydrogen technology in India. As a part of this initiative, we are currently engaged in advanced discussions with a global pioneering company on the design, development and manufacture of reformer based fuel cells. We, in the group, are currently setting up 150 MW of wind power in Maharashtra and plan to add 500 MW over the next 3 years at suitable locations across the country.  

Projects Under Construction/ Development 

Let me now take you though the progress we have made on our individual projects: 
1. 1200 MW Rosa Power Project, Uttar Pradesh The 1200 MW Rosa power project holds a special place in our hearts because it was the first project to be developed in our portfolio.
The project which was languishing for more then a decade prior to our take over, has made substantial progress over the last 18 months.
Rosa will entail an investment of over Rs 5,000 crore and will be one of the largest private sector investments in UP.Phase I of the project has already achieved financial closure the first coal-based IPP in North India to do so. More than 5,000 workers are currently working at the site round the clock to beat the deadline and we expect to come on stream six months ahead of schedule.Work on Rosa Phase II has also commenced, and will be completed by Financial Year 2010.Rosa project is critical for the development of India's largest state, which is facing a power shortage of more than 3000 MW. 2. 3960 MW, Sasan Ultra Mega Power Project, Madhya Pradesh We won the country's first pit-head coal-based Ultra Mega Power Project at Sasan through International Competitive Bidding at a tariff of Rs.1.19 per kwh, setting a new benchmark for competitively priced power. With an installed capacity of 3960 MW, this would be the largest pit head coal based power project in the country. Located in Singrauli district of Madhya Pradesh, the power capital of India, it would cater to the requirements of seven states. 
Sasan is the largest integrated power project in the country and involves the development of three captive coal mines viz. Moher, Moher-Amlori Extension and Chhattrasal these will be the largest coal mines in the country in terms of volume handled. 
With annual coal production of 17 Million tonnes, the mines rank among the top 10 mines in the world. We have entered into a strategic partnership with North American Coal Corporation, one of the largest coal producers in the US and an acknowledged global leader in productivity and safety. This would allow us to deploy the latest mining technology and equipment, enabling us to extract coal in a highly efficient and economical manner. 
Keeping in mind the acute shortage in the country and the contribution of power to economic growth, we have set ourselves the challenge of advancing the commissioning of the project by as many as three years. 
All major clearances and approvals for the project have been obtained, and all preliminary studies completed.
All the major contracts for the project have been awarded.
We are working closely with a number of international consultants, including Black & Veatch, Toshiba and HOK (Singapore), on various aspects such as basic and detailed engineering, global sourcing and project management.In an important milestone for the project, the Hon'ble Supreme Court has recently accorded its clearance for the forest land.
In keeping with our Group philosophy of responsible corporate citizenship, we have initiated a number of welfare and development measures in and around the project area. We are working with the community to upgrade skills and generate larger share of employment for the locals.
The rehabilitation package, announced after intensive consultation with the villagers and local authorities, aims at promoting sustainable development. We are 
partnering with The Energy Research Institute (TERI) in this endeavour.Sasan is the first integrated power project with captive coal mines being financed in India.I am happy to report that we are likely to achieve financial closure for a project of Sasan's size and complexity, requiring nearly Rs 20,000 crore worth of investment, this year.

3. 4,000 MW Krishnapatnam Ultra Mega Power Project, Andhra Pradesh 
We emerged as the successful bidder in securing the imported coal based Krishnapatnam Ultra Mega Power Project through International Competitive Bidding at a levelized tariff of Rs. 2.33 per kwh. This is the second ultra mega power project being executed by us in addition to Sasan UMPP.The Project will supply Power to the States of Andhra Pradesh, Maharashtra, Tamil Nadu and Karnataka. Maharashtra will offtake 800 MW from this Project. Most of
the land required for the project is already in possession.
All key clearances are in place. 
Leading international Engineering consultants Black & Veatch, USA, have been appointed to carry out the basic design for the Project. The boiler, turbine and generator
package is at an advanced stage of negotiation.
Preliminary construction work has begun.
The financial closure for the project is expected later this year.

4. 300 MW Butibori Group Captive Power Project, Maharasthra 
The 300 MW Butibori project is located in Nagpur district, Maharashtra, and will supply reliable and quality power to the industrial consumers of the state. A pioneering concept introduced by the Government of Maharashtra, Butibori is a Group captive power plant which caters to industrial consumers with a view to ensuring reliable and competitive power and reducing power outages. We are happy to partner with the State Government and industries in this project and hope that this model will be replicated in other states as well. We are in the process of signing PPAs from over 250 industrial consumers.The project has received all major statutory clearances, including the environmental clearance. The project has also secured coal linkage from Western Coalfields Ltd.Land acquisition has already been completed, and site enabling works are in progress.We have appointed Axis Bank as Lead Arranger and the project will achieve financial close this year.We hope to commission the project in 3 years' time.Keeping in mind the power situation in Maharashtra, we are seeking to double the project capacity from the current 300 MW to 600 MW.

5. 3960 MW Chitrangi Power Project, Madhya Pradesh 
Reliance Power Limited is setting up a 3960 MW power project at Chitrangi, Madhya Pradesh, in the vicinity of Sasan UMPP. A Memorandum of Understanding (MOU) has been signed with the State Government of Madhya Pradesh for this project.The project will be a significant value enhancer for Reliance Power as it will reap tremendous economies of scale.This project also offers strategic locational advantage in so far as it is situated at the boundary of Western and Northern Regions and will meet the requirement of both.

Of the total project capacity, 1241 MW of capacity has already been committed to MP from this at a levelized tariff of Rs 2.45 per kwh and the remaining will be tied up through a combination of long term and medium term contracts. The process of acquiring land and obtaining the various clearances and permits has already been initiated.

6. 7480 MW Dadri Gas based Power Project, Uttar Pradesh 

The proposed 7,480 MW gas-fired power project to be located at the Dhirubhai Ambani Energy City in Dehra village, Uttar Pradesh, will be the world's largest at a single location. The Dadri project will employ Combined Cycle Gas Turbine technology. The Dadri project which figures on the lists of both Planning Commission and the UP government as regards future capacity addition in the state -- has already received all statutory Central and State clearances, including the environmental clearance. The company is already in possession of over 2,100 acres of land required for the Project. As per our State Support Agreement with the Government of Uttar Pradesh, we intend to set aside at least 40 per cent of the Dadri capacity for distribution and consumption in the state by way of long-term PPAs. The remaining power will be sold through an appropriate mix of short-term, medium-term and long-term contracts. Further progress on the project is being held up because of the dispute with Reliance Industries on gas supply, a matter which is currently before the Bombay High Court.  

7. 4000 MW Shahapur Gas & Coal fired project, Maharashtra 
The Shahapur Project located at Raigad district in Mahrashtra, comprises a 2,800 MW gas-based project and a 1,200 MW imported coal-based project.It has obtained major statutory clearances, including the consent to establish from the Maharashtra Pollution Control Board, and the Environmental and CoastalRegulatory Clearance from Ministry of Environment and Forests.
Land acquisition is currently in progress with the help of the District administration and the State Government.We are working for the welfare of the local community, focusing our efforts on peripheral area development, training of local youth, and sustenance allowance for landless labourers.We have proposed an attractive R&R Package to the Government of Maharashtra that aims at long-term sustainable development of the local community and improving their quality of life.

8. Hydro-electric Power Projects in Uttarakhand and Arunachal Pradesh 
While India offers a huge potential for generation of hydro electric power, the actual capacity created so far is only 36,000 MW, or 25 per cent of the country's totalinstalled capacity.
Hydro-electric projects take a longer lead time in construction compared to thermal projects, but have the unique advantage of meeting the peak power requirements and balancing the load curve.

Hydro Projects are the largest source of renewable energy, have a long economic life of over 60 years, and carry zero fuel cost.The Hydro potential for the country is estimated at 300,000 MW and the Central Electricity Authority (CEA) has already identified suitable locations for projects with a total capacity of 50,000 MW.

All our hydro electric projects (HEPs) 280-MW Urthing Sobla in Uttarakand, 1000-MW Siyom and 700-MW Tato II in Arunachal Pradesh -- are located at sites identified by CEA. These sites are best suited in terms of hydrology, load factors, geology and the cost of generation.We have focused on the Northern-eastern region for our hydro projects not only because of the locational and resource advantages that it offers but also because ofour commitment to inclusive growth. These projects, we believe, will bring much needed economic development to the area and help in facilitating its integration into the economic mainstream of a new, prosperous India.

We have made considerable progress on our Hydro projects during the year. A number of internationally reputed consultants, including Halcrow of United Kingdom (UK), SNC Lavalin of Canada, and SMEC of Australia have been engaged to assist in various aspects of our hydro projects.We believe our company will derive tremendous long term value from our hydro projects. 

Carbon Credits 
Launched under the United Nations Framework Convention on Climate Change (UNFCCC) and Kyoto Protocol, the Clean Development Mechanism (CDM) is an ongoing global initiative aimed at reducing global Greenhouse Gases (GHG).The CDM encourages developers to adopt new and environmental friendly technologies by awarding internationally tradable Certified Emission Reductions (CERs), which can be used to improve the financial viability of power projects.Most of our Projects are eligible for carbon credits, and the current status of our various initiatives in this direction is given below: 
! Appointment of internationally reputed consultants for our various projects, including Perspectives CC, Germany, for Krishnapatnam and Ernst & Young for Sasan.
! Appointment of TUV SUD GmbH, Germany, and TUV India Pvt. Ltd. as the Designated Operational Entities for Krishnapatnam and Sasan respectively.
! Progress has been made to secure Host Country Approval for Sasan from the National CDM. Similar initiative for Krishnapatnam will follow shortly. 

We expect over 10 million carbon credits per year from our projects which will significantly contribute to our net revenues.

Issue of Bonus Shares 
During and after our Initial Public Offering, we were confronted with an orchestrated and malafide campaign of false and motivated complaints, court cases, petitions, letters perhaps the biggest smear campaign in the history of corporate India - across the full spectrum of regulatory and legal forums from SEBI to the Ministry of Company Affairs, and right up to the Supreme Court. I am happy to say that we countered this extraordinary onslaught with courage and resolve, overcoming every hurdle, and winning every battle. In the end, our stand was vindicated in the highest courts of the land, and the Supreme Court intervened to allow our IPO to proceed. The Securities Appellate Tribunal too dismissed all petitions filed against the IPO. 
Unfortunately, just after the conclusion of our IPO, there was an unprecedented meltdown in global financial markets, caused by spiraling commodity prices and the onset of a multi-dimensional credit crisis. In line with the global trend, the benchmark BSE stock index Sensex plummeted from 21,000 to 14,000 in a matter of a few short weeks, and all frontline stocks lost 50 to 60 per cent of their value.The total erosion of market capitalization ran into thousands of crore of rupees. Naturally, Reliance Power was no exception, and our stock too fell below the IPO price. The fall in our share price was entirely due to market conditions and didn't in any way relate to the company's fundamentals or growth prospects. 
Capital markets routinely witness situations where stocks fall below their IPO issue price and no obligation is cast on promoters to take any remedial measures in this regard. Nor has any promoter done anything about such a situation in the history of the capital markets, whether in India or elsewhere. But we decided to firmly stand by our investors, especially our nearly 40 lakh small shareowners. 
Consequently, we issued “Bonus Shares” to all non-promoter shareholders of Reliance Power at an attractive ratio of 3 shares for every 5 held. This brought down the acquisition price for retail shareholders from Rs 430 to Rs 269. 
Further, in order to protect the shareholders of Reliance Infrastructure from any dilution in the equity of Reliance Power and to keep my personal commitment to our group shareholders, I decided to voluntarily gift, from my own personal holding, 2.57 per cent of the post bonus equity share capital of Reliance Power, comprising 6.15 crore shares, to Reliance Infrastructure. 
This decision, unparalleled in corporate history in India or elsewhere, was for me simply a natural corollary to what I have learnt and imbibed from my father and our founder: As an entrepreneur, protecting shareholder interest is one's first and most important duty. 

This has been, in many ways, an extraordinary year for our company a year in which we have made rapid and substantial progress in all our projects. It has also been a year in which our resilience and strength as an organization have shown through. This gives me the confidence to believe that we are well on our way to achieving our mission of being a leading power generation company, and one of the most valuable business enterprises in the country. 

Our Commitment 
Dhirubhai gave us a simple entrepreneurial mantra: to aspire to the highest global standards of quality, efficiency, operational performance, and customer care.We remain committed to upholding his vision.Dhirubhai exhorted us to think big.We will think bigger.Indeed, not just bigger but better, creating ever greater value for all our stakeholders.

Before I conclude, I wish to acknowledge and appreciate the contributions of several individuals, institutions and organizations, who have partnered us in our quest for creating a world-class power generation company in India. My profound sense of gratitude to our millions of stakeholders who have stood by us and reposed confidence in our capabilities. To all colleagues for their professionalism, dedication and unmatched commitment to organizational objectives. 
To members of the Board for their guidance and support. To financial institutions, banks, vendors and regulatory authorities for their unstinted support and co-operation. But, most of all, to each one of you, my fellow shareholders. It is your faith, trust and commitment that has been the single most important factor in our quest for ever higher growth and ever greater excellence. 

Thank you, ladies and gentlemen, for your time, attention and patience -- and here's wishing you all a very happy festive season ahead.


Anil D Amban

i September 23, 2008