29-July Kind Attention. Chairman, Executive Board UNFCCC

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1 29-July-2008 Kind Attention Chairman, Executive Board UNFCCC Subject: Clarification on request for review for GCL biomass gasification based power generation by Garg Casteels Pvt. Ltd.; (Reference No 1760) Dear Sir, This is with reference to the request for review raised by Executive Board members for the project GCL biomass gasification based power generation by Garg Casteels Pvt. Ltd. (Reference No 1760). We are enclosing herewith our clarifications on the comments raised for your consideration. Undersigned shall be the focal point of communication during the review process, in case any clarification is required. Thanking you, Yours sincerely, Bineet Kumar Jain Director Garg Casteels Pvt Ltd Sihor, Bhavnagar Gujarat Mobile:

2 Reasons for Request 1, 2 & 3: 1. The DOE should clarify with appropriate evidence the starting date of the project activity Reply from PP: Starting date of the project activity as given in the PDD (30/09/04) is the date on which purchase order for WBG 850 (one of the two gasifiers) was placed to equipment supplier (Annex 1). The project was successfully commissioned and started generating power on 100% producer gas mode only on 25 th August 2007 (Annex -5). It may be noted here that the validation had started even before the complete commissioning of the project as explained in reply to Question 2 of the review request below. 2. The PP/DOE should explain the delay of nearly three years between project start date and submission of the project for validation to show that CDM revenues were considered essential in the decision to invest in the project activity. The response should provide a detailed timeline of project implementation with relevant, preferably third-party, evidences of the prior consideration of CDM. Reply from PP: Mr. Arun Jain (Chairman GCL) attended State Level Capacity Building Workshop on Clean Development Mechanism organized by Winrock International India, New Delhi and Institute for Global Environmental Strategies, Japan at Ahmadabad on March 23 24, 2004 (Attachment 1). During technical Session Four of the workshop, Ankur Scientific and Agrocel Industries jointly presented a case study on biomass gasifiers. During this presentation Mr. Arun Jain became aware that Prosopis juliflora, a biomass that was abundantly available in the state could be used as fuel in biomass gasifier and DG sets could run on producer gas generated in these gasifiers. GCL explored the possibility of utilizing the gasifier technology to run their DG sets with the producer gas. Thereafter further discussions were held on this matter with board members of the company and in July 2004 the board decided to go ahead with the project activity (Annex 2). The company started facing hiccups right since the conception. First, GCL was unable to find biomass gasifier manufacturers who could provide gasifiers of such large capacity as installed in project activity. The other barrier that they faced was that most of the technology suppliers conveyed them that it would be very difficult to run the DG sets on 100% producer gas mode and that the gasifier manufacturers were only providing the gasifiers and were not offering solutions for running the DG sets on it. These issues took a lot of company s time and efforts. After months of continuous search and several visits/meetings with technology suppliers M/s Ankur Scientific Energy Technologies P Ltd.

3 (ASETPL) expressed their willingness to manufacture and supply gasifiers of large capacity. It was for the first time that ASETPL was going to manufacture gasifiers of such large capacity (Annex 3). The other problem that GCL faced was of organizing sustainable availability of biomass for the gasifiers. Though the biomass was available in the region in abundance, there was no collection and delivery network in place. There was no established market for biomass from where GCL could procure the fuel. Later on GCL had to procure land from local government and develop its own fuel resources dedicated to the project. GCL applied to local government bodies in November 2004 to procure land on lease where GCL could develop dedicated fuel resources. GCL started the CDM process along with the implementation of project activity and in the process, awarded CDM project development to M/s Netpeckers Consulting P Ltd (NCPL) in April 2005 (Annex 4) precisely within six months from purchase order date of first gasifier, which NCPL later abandoned (Annex 14). The project was lying with NCPL for more than a year with no substantial progress for project s registration. During this time, a lot of efforts were being put in to streamlining the entire project by GCL. There were issues in retrofitting the DG sets, making biomass availability sustainable and also making the raw biomass usable in the gasifiers. First gasifier was received in October 2005 at the project site and in November 2005, purchase order for the second gasifier was also placed (Annex 15). GCL realized that fuel preparation for these large gasifiers cannot be done manually and they needed to have a mechanized system for fuel preparation. Fuel preparation systems were also not available with the technology supplier; GCL again had to start hunting for someone who could manufacture a fuel preparation unit for the plant. GCL came into contact with M/s Surya Energy and Engineering Services (SEES) that was ready to manufacture fuel preparation unit specially suited to GCLs need. GCL placed order for the fuel preparation unit in March 2006 and received the unit in June 2006 (Annex 7). Both the gasifiers were could only be installed in February 2007 (Annex 3). Meanwhile in January 2006 land on lease by the local government authorities (Annex 13) was provided to GCL for sustainable biomass harvesting (It took more than 2 years for GCL to procure land to get assured supply of fuel wood). Developments on the CDM front were going slow during this period. In June 2006, GCL Board reviewed CDM registration process and decided to award the project to a consultancy which had already gone through the CDM cycle and had at least a few registered projects. During the same meeting it was also decided that help of external DG experts be taken for make DG sets run on 100% producer gas, hence M/s Bijendra Heavy Electricals (BHE) were appointed for the task (Annex 9). At the same time, GCL consulted a few CDM advisory firms for about three months and then awarded the project to EVI in November 2006 (Annex 8). Project documents were made ready in 3 4 months time. Thereafter DOE proposals for the project were invited in February 2007 and project related documents were submitted to DNA. Project was considered by DNA in its monthly meeting in April 2007 (Annex 10) and in May 2007, M/s TUV Nord were appointed as validator for the project. HCA for the project was received In June 2007 (Annex 10) and the project was webhosted in August 2007 for global stakeholder consultation by TUV Nord 1. The project was successfully commissioned on 100% producer gas mode on 25 th August 1

4 2007 (Annex 5) after years of continuous efforts. GCL took help of expertise of a number of agencies/consultants enumerated below for making this happen: 1. Ankur Scientific Energy Technologies Pvt. Ltd 2. Bijendra Heavy electrical Ltd 3. Surya Energy and Engineering Services 4. Miyakawa Drives and Control Pvt. Ltd Prior CDM consideration proofs provided 1. Extracts of board meeting (Annex 2) 2. Directors report which is part of the Annual report audited by Chartered accountants (Jain Seth & Co, Bhavnagar) and submitted to the Registrar of Company (RoC 2 ) (Annex 16) 3. Letter from Gram Panchayat (Government body) to District collector for allotting land on lease for harvesting biomass fuel along with translated copy (Annex 11) (Third Party) 4. Undertaking (Annex 4) from NCPL that they were awarded CDM consultancy services and invoice as proof of payment against their services respectively (Annex 14). (Third Party) 5. Workshop proceedings State Level Capacity Building Workshop on Clean Development Mechanism (CDM) published by WII (Attachment 1). (Third party) Detailed timeline of the Project activity: March 2004 (23/03/04 to 24 /03/04) July 2004 (12/07/04) September 2004 (30/09/04) October 2004 November 2004 April 2005 (29/04/05) October 2005 Attended workshop on State Level Capacity Building Workshop on Clean Development Mechanism (CDM) by Winrock at Ahmedabad 3 GCL board decided to install the project and avail CDM benefits to cover the costs and risks. Purchase order for WBG 850 placed with ASETPL Consultation on CDM registration for the project began with NCPL GCL filed application to local government body for providing land on lease where GCL could develop dedicated fuel source for the power plant CDM Registration work awarded to NCPL and advance against the same released WBG 850 installed 2 Registrars of Companies (ROC) appointed under Section 609 of the Companies Act covering the various States and Union Territories are vested with the primary duty of registering companies floated in the respective states and the Union Territories and ensuring that such companies comply with statutory requirements under the Act. These offices function as registry of records, relating to the companies registered with them, which are available for inspection by members of public on payment of the prescribed fee. The Central Government exercises administrative control over these offices through the respective Regional Directors. 3

5 November 2005 (07/11/05) January 2006 (06/01/06) March 2006 (24/03/06) June 2006 (22/06/06) June 2006 (20/06/06) June 2006 (20/06/06) July 2006 November 2006 (11/11/06) January 2007 February 2007 (28/02/07) February 2007 March 2007 (12/03/07) April 2007 (25/04/07) May 2007 (28/05/07) June 2007 (27/06/07) August 2007 (03/08/07) August 2007 (25/08/07) April 2008 (02/04/08) Purchase order for WBG 1800 placed with ASETPL Land for biomass procurement allotted by District Collector on lease Purchase order for Fuel preparation unit placed with SEES Fuel preparation unit received from SEES GCL Board decided to employ another consultant for CDM registration as NCPL were unable to provide them the services GCL Board decides to take services of BHE to run DG sets on 100% gas mode. Negotiations with CDM consultants started Contract was signed with EVI for CDM advisory services Stakeholder consultation took place Installation of gasifiers complete Documents submitted for Host Country Approval Validation quotations invited from DOEs Project considered by MoEF in the NCDMA meeting TUV Nord appointed as validator for the project HCA granted to the project activity Project documents uploaded on the UNFCCC website Project was successfully commissioned on 100% producer gas mode after CDM validation of the project began. Request for registration of the Project activity submitted to CDM EB Summary: There is a difference of about three years between project start date and submission of documents for validation because of following reasons: 1) The start date of the project activity has been chosen as date when purchase order for first gasifier was placed (though P.O. for second gasifier was given in November 2005 and the power plant got commissioned in August 2007).

6 2) Gasifiers were delivered after one year of placing purchase orders. The primary reason for the delay was that it was for the first time that such large capacity biomass gasifiers were being manufactured 3) CDM consultants appointed during initial phase of project development failed to provide consultancy services to GCL in time, which led to further delays 4) Primary concern of GCL was towards successful commissioning of power plant on 100% gas mode, without which CDM benefits could not be accrued. Commissioning took a lot of time because no technology provider could provide GCL with end to end solution and GCL had to depend on various technology suppliers to commission its power plant on 100% gas mode. 5) Even for getting land on lease for fuel procurement it took almost two years time 3. Relevant information on the remaining operation life of the DG is required. Reply from PP: An assessment was carried out by M/s Bijendra Heavy Electricals (an ISO: certified company) who are known experts of DG sets. They were associated with the operation of DG sets for approximately a year at GCL. It has been certified that the DG sets can run for almost 15 years time subject to proper operation and maintenance (Annex 12). It may also be noted here that the same DG sets would be used in the project activity as were being used in the baseline case prior to the installation biomass gasifiers.

7 Annex 1 Purchase order of WBG 850 (First gasifier)

9 Annex 2 Extracts of Board Meeting held on 29 th July

10 Annex 3 Certificate from technology supplier Uniqueness of the technology and commissioning dates

11 Annex 4 Invoice of Netpeckers Ltd against CDM consulting services

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13 Annex 5 Commissioning Certificate

14 Annex 6 Statement of account Punjab National Bank Payment to BHL 03/09/07