MonitorsPublished on Aug 01, 2018
Energy News Monitor | Volume XV; Issue 7
POWER SECTOR STRESS CAUSING BANKING DISTRESS

Power News Commentary: June – July 2018

India

Rating agency ICRA has estimated a subsidy dependence of ₹ 850 billion amid low tariff hikes allowed for discoms in 2018-19, and expects improvement in thermal plants capacity utilisation or PLF in near to medium term. The all India electricity demand growth slowed down to 3.1 percent on a year-on-year basis in the first two months of FY2019 against the growth of 7.5 percent reported in Q4 FY2018 and lower than the growth of 5.9 percent witnessed in the first two months of FY2018, it said. However, May-2018 witnessed the highest ever monthly electricity demand at all India level. With respect to the distribution segment, the SERCs in 21 out of the 29 states have issued tariff orders for FY2019 so far, reflecting reasonable progress in the issuance of tariff orders for the year, it said. According to ICRA, the median tariff hike based on the tariff orders issued in the 21 states remained low at 2 percent, with the SERCs in seven states not approving any tariff hike and the downward revision in tariff in two states.

Gujarat, Maharashtra, Rajasthan, Bihar and Jharkhand together want to buy 3,000 MW of power under a government scheme to promote purchases from plants without PPAs. Under the scheme, PFC Consulting will conduct the auction for 2,500 MW capacity and PTC India will sign three-year (mid-term) PPAs with successful bidders and contract with discoms sell electricity. The development comes at a time when states are buying more power from the spot markets, indicating a rise in demand. The power ministry has recently suggested to make it mandatory for electricity discoms to tie up long- or medium-term PPAs to meet their ‘annual average power requirement’ in their areas of supply. Short-term power volumes grew 8% year-on-year to about 129 billion units, comprising about 15 GW capacity in FY18, and the spot market trading at the Indian Energy Exchange grew at 14%, trading more than 46 billion units from 5.3 GW of power plants. Maharashtra, Tamil Nadu, Bihar, Gujarat and Uttar Pradesh were the largest buyers from the short-term market. The Central Electricity Authority has reported that there was a more than 10% annual increase in electricity demand in Uttar Pradesh, Chhattisgarh, Telangana, Arunachal Pradesh, Manipur and Tripura in FY18. The pilot plan proposes that a single entity, which quotes or matches the lowest bid in the auction, will be allocated a maximum capacity of 600 MW. A company cannot quote part capacity from different power stations in the same bid. If PTC procures power less than 55% of contracted capacity in a month, the plant would be paid compensation, the quantum of which would be linked to spot power prices at the Indian Energy Exchange.

Stressed power projects of Adani, Tata and Essar groups may get a favourable package soon as a panel headed by a former Supreme Court judge has been appointed to resolve issues of ₹ 400 billion of projects idling or underutilised because they are unviable. The panel’s recommendations, which may include making tariffs viable by reviewing the power purchase agreements, or acquisition of the projects, are expected in two months. The government of Gujarat, where the plants are located, says reviving these plants will help consumers get much cheaper electricity and has asked the panel to submit its recommendations in two months. With such a large capacity shut down, Gujarat, Haryana, Punjab, Rajasthan and Maharashtra, which would together get 8,000 MW of power from these plants, are facing a huge shortage. Gujarat had to purchase costly electricity from the spot market at an additional cost of ₹ 30 billion in the last few months.

NTPC Ltd announced it has acquired two power projects with combined capacity of 2,590 MW at Nabinagar and Muzaffarpur in Bihar. The 1,980 MW Nabinagar Super Thermal Power Project is being set up in Aurangabad district by Nabinagar Power Generating Company Pvt Ltd in which NTPC and BSPGCL already own equal stake. NTPC has now acquired BSPGCL’s 50 percent stake in the project. The currently operational 610 MW Muzaffarpur Thermal Power Station is developed by Kanti Bijli Utpadan Nigam Ltd, a subsidiary of NTPC in which BSPGCL holds 27.36 percent stake. NTPC has now bought BSPGCL’s entire equity interest.

The government is looking at a proposal to allow neighbouring nations like Bhutan to participate in domestic electricity exchanges including Indian Energy Exchange, the largest platform for spot power trade. The idea is to deepen the country’s market for sale and purchase of electricity by boosting volumes. The government expects more supply to come into the system and an increase in the number of registered consumers on the exchange. The country generates around 1,200 billion units of power annually, around 10 percent of which is transacted in the short-term market. This includes bilateral trade (4.7 percent); day-ahead transactions on the exchanges (4 percent) and Deviation Settlement Mechanism accounting for 1.7 percent. India imported 5,600 million units of power from Bhutan last financial year.

MERC has given its approval to the proposed 100% stake sale of Reliance Infrastructure’s integrated Mumbai power business to ATL. Following the commission’s nod, the transaction is expected to be closed in July 2018. MERC had concluded its hearing into the matter and reserved its order on 14 June 2018. Reliance Infrastructure has already received the approval of Competition Commission of India and its share-holders for the deal. Reliance Infrastructure and ATL had signed Definitive Binding Agreement for 100% stake sale of the integrated business of generation, transmission and distribution of power for Mumbai in December 2017. The total consideration value of the deal is estimated at ₹ 188 billion.

Axis Bank has put up for sale Lanco Kondapalli Power, which owns and operates 1476 MW gas based power plants as the power producer failed to pay dues. Without mentioning the name of the company Axis Bank called EoI for the sale of three gas-based power projects with a combined capacity of 1476 MW. The power projects are of Lanco Kondapalli, which was once a subsidiary of beleaguered Lanco Infratech Ltd. The lenders have to find a suitable resolution for their debts before September 16, lest the creditors approach the National Company Law Board for a resolution. Lanco Kondapalli a 368 MW gas-based plant is operational since October 2000. Phase-II 366 MW is operational since December 2009 and Phase-III 742 MW is operational since January 2016. While Phase-I is operating with limited gas supplies, Phase II and III are not producing any power due to lack of gas supplies. Axis Bank sought in case of strategic investors, sought bids from parties who have net worth of ₹ 3 billion as on March 2017 or later. It wanted the financial investors with ₹ 10 billion worth of Assets Under Management or ₹ 5 billion committed funds available for investment in future on the plants.

The power ministry is mulling a reward of ₹ 500,000 for state utilities employees and a grant of ₹ 500 million for discoms which will meet household electrification target under Saubhagya scheme at the earliest. Under the ₹ 163.20 billion Pradhan Mantri Sahaj Bijli Har Ghar Yojana – ‘Saubhagya’ scheme launched last year in September, the government aims to electrify all 36 million un-electrified households by December-end. The ministry will form different group of states based on the parameters like geography and number of households to be electrified. Among each group, the state completing the task of 100 percent household electrification at earliest will be rewarded. In each group, only the top performer will be rewarded. The move is aimed at incentivising state discoms to compete against each other to give a push to achieve the objective of 100 percent household electrification under ‘Saubhagya’ Scheme. According to the Saubhagya portal, 81,41,950 families have been provided electricity connection so far under the scheme, while the work is on to energise 27,846,217 households across the country. The largest number of 14.9 million unelectrified households are in Uttar Pradesh out of which 1,999,000 have been provided electricity connection so far. At the second place, there are 3,344,000 un-electrified households in Bihar, out of which 1,555,000 have already been electrified.

TPDDL will start its ambitious project to install smart meters covering all its 160,000 consumers in the national capital from this month. The discom (distribution company) is set to install smart meters and also launch a mobile app for consumers to access real time energy consumption. In the first phase, 200,000 smart meters would be installed in North and North-West Delhi in the next one year. 500,000 meters are planned to be installed in the next two years and in the third phase all 1.6 million consumers are to be covered by 2025, said a spokesperson of TPDDL. The project has already started with installation of communication and back-end IT infrastructure last year and now metre deployment is commencing from this month, the discom said. A smart meter is equipped with a display screen that shows consumption of power and also communicates with the power supplier for metering and billing.

Tata Power Company has filed a mid-term review petition before the electricity regulator, proposing to reduce tariff for high-end consumers by up to 20% and increasing rates for low-end residential users by 7%. For the first time, the utility firm has proposed a new category for ‘electric vehicle’ (EV) charging instead of clubbing it under a different category. Tata’s petition indicated that the special tariff will be ₹ 5.16/kWh which includes basic energy charge of just ₹ 3/kWh — applicable for those wanting to drive battery operated cars / two-wheelers in Mumbai. A single full charge of battery can run a car for as long as 120 kilometre (km) and the cost could come to  ₹0.60-0.70/km. The MERC petition indicated that the tariff for low-end residential users, especially in the 101-300 units consumption category will go up by 0.44/kWh from the existing ₹ 6.44-₹ 6.88/kWh (7% increase). This cost will include the wheeling charges and the RAC. The RAC is a charge for past recoveries of Tata Power, which could not be recovered since the approved tariff was not sufficient to recover the costs incurred. If one goes by the break-up of the charges that all residential users will pay, the basic energy charge has not been hiked at all. In fact, the proposed energy charge component has dropped by an average 5.5%, but there is a corresponding increase of 19% in wheeling charges and another increase in the RAC, which consumers will have to pay in their bills.

Ahead of assembly polls scheduled to be held this year end, Madhya Pradesh government waived power bills and dues amounting to ₹ 51.79 billion and announced the implementation of fixed power tariff scheme in a bid to benefit 16 million labourers and BPL families. Poor families can avail electricity connection at a fixed rate of ₹ 200 per month. Besides this, the government has also waived off their power dues and announced to withdraw cases of power theft and illegal connections against them. Consumers availing flat rate power benefit of ₹ 200 per month will be allowed to use four bulbs, two fans, a water cooler and a television. Those who have not applied for new electricity connections will be given connections free of charge.

Himachal Pradesh sought the Centre’s intervention in settling electricity arrears with neighbouring Punjab and Haryana pending for over half a century in three Bhakra Beas Management Board projects in compliance with a Supreme Court order. The differential energy quantum of 13,066 million units would fetch ₹ 32.66 billion to the hill state at an average rate of ₹ 2.50/kWh.  The Union government was urged to help provide state’s royalty of ₹ 32.66 billion on the water used for power generation on rivers flowing through the state. Major power projects such as the Bhakra and Pong dams were located in the state but it was unfortunate that it had been deprived of its legitimate share from these projects as compensation. Special grants and liberal financial assistance was sought from the centre for mini and micro hydroelectric projects in remote areas. Of the total 27,000 MW power generation potential, Himachal has tapped only 10,547 MW till date mainly due to limited resources.

Power production in the 800 MW seventh unit of KTPS in Telangana has commenced. The construction of the plant at an estimated cost of ₹ 5700 billion commenced on February 1, 2015 and the project has created a record of sorts with its completion within 40 months. Telangana State Power Generation Corp Ltd formally launched the power production in Paloncha and synchronised to the power grid last night. The Central Electricity Agency has stipulated a condition that any new power plant that is taken up shall be completed in all aspects within 48 months of its commencement. This plant was completed in less than that period and within 40 months and thus created a record. With commencement of power at the seventh phase of KTPS, the total availability of power in Telangana crossed 16,000 MW. The state government is all determined to take the state from a deficit power state to surplus state and with the same spirit the Bhadradri and Yadadri plants will be completed.

NTPC said it has recorded its highest quarterly power generation of 69.2 billion units in April-June this fiscal which is 7.45 percent more than that in the year-ago period. NTPC Group recorded the highest quarterly generation of 76.9 billion units against the previous highest of 76.1 billion units (in Q4 of FY2017-18). NTPC joint venture stations also recorded the highest quarterly generation of 7,701 million units. The company’s highest renewable energy generation of 411.24 million units is also a highlight of this quarter. The company has total installed capacity of 53,651 MW from its 21 coal based, 7 gas based, 11 solar PV, 1 hydro, 1 small hydro, 1 wind and 9 subsidiaries/joint venture power stations. NTPC is currently implementing an additional capacity of over 20,000 MW at multiple locations across the country.

Electricity consumers across the country will soon be able to pay their bills in small instalments. Prepaid meters are said to be a pro-poor step as smart prepaid meters will enable the poor to pay in small instalments as per convenience without the fear of connection being cut. The move will also eliminate the issue of wrong bills.

Haryana has accorded approval for installation of 1 million smart power meters in five districts of the states. A Memorandum of Understanding between EESL, a joint venture of PSUs under Union Ministry of Power, and Haryana Power Distribution Utilities would be signed soon. The decision was taken to improve the financial condition of power distribution companies, to encourage energy conservation and to tackle problems relating to payment of electricity bills. In the first phase old meters of five districts–Panipat, Karnal, Panchkula, Faridabad and Gurugram would be replaced with smart meters by EESL. Under the prestigious Mhara Gaon Jagmag Gaon scheme initiated by the state government in 2015, 400 feeders of 2,310 villages including district Panchkula, Ambala, Faridabad, Gurugram and Sirsa are getting round-the-clock power supply.

The PSPCL and the Haryana power utilities have improved their ranking in the sixth integrated rating for state power discoms that have been issued by the union power ministry. Punjab has been placed at the 11th position rising two slots from 13th the previous year and is yet to regain A+ grade which it held for two consecutive years 2014 and 2015. In 2016 was at the fifth slop and slipped to 13 in 2017. In the case of Haryana, there has been a marked improvement from 22nd and 24th to 9th and 13th Positions (B to B+ grade). Earlier these power utilities had been in C grade in a list of 41 state power utilities across the country. The previous year, their number was at 28th and 31st and was placed in the C+ category. For the sixth year in a row, the four state power utilities of Gujarat along with Uttarakhand Power Corp topped the annual rankings. At the same time, four out of five power distribution companies of Uttar Pradesh have not moved out of the lowest grade as per the report. All the three discoms of Rajasthan are in the B category due to high power purchase costs and low bill collection efficiency. The PSPCL performed well in the key area of lowering the AT&C losses while it floundered in revenue collection because of its absolute dependence on the state government for the release of subsidy being given in lieu of free power to agriculture and delay in receipt of same. Besides, it also lost points due on account of high employees cost. However, the utility consolidated its standing with the timely revision of power tariffs. In case of Haryana’s UHBVN and DHBVN, the key concerns were high AT&C losses which were calculated at 32% for UHBVN and 29.09% for DHBVN. Besides, low billing efficiency, high power purchase cost at ₹ 4.76/kWh and high employees cost pushed the two power utilities down on the ranking. The strength of the power utility was the timely collection of subsidy amount and reduction in its debt liabilities. Out of 41 state power utilities, there are five utilities with A+ grade, two with A grade 13 with B+ grade 11 with B grade, two with C+ grade and 8 with C grade.

Punjab government was accused by the federal BJP government of discontinuing free electricity scheme for ‘gaushalas’ (cow shelters). PSPCL is apparently sending bills worth ₹ 53.2 million to the 472 gaushalas registered in the state despite getting cow cess on electricity bills. The bills should have been waived off according to the state policy.

In a city that loses much of its electricity in theft, the PSPCL has shown a way out by pushing distribution cables underground and deploying technology to track illegal connections. With the introduction of underground cables, illegal usage of electricity and power losses will reduce. PSPCL is undertaking many projects to make Ludhiana a smart city and more efficient in terms of power. The reason why the electricity department wanted to go for an underground cable network is to prevent instances of electrocution, which are common when cables snap during rains and windy conditions. Underground cables also help avoid low voltage complaints, a persistent issue among residents of suburbs in the city. Underground cables are one of the major tasks undertaken by the PSPCL department. Now, 66Kb cables are installed underground from Amlathas to Kakowal — a distance of around 2 kilometre. This is the first time this type of project has been completed in Ludhiana city. The reason for starting underground cables is because there are many problems that occur when high wattage wires start functioning on poles. The central government has sanctioned ₹ 370 million under the Smart City project for better infrastructure in terms of electricity in Ludhiana. In this project — expected to begin soon — the distribution of underground cables will take place on National Road, Ghumar Mandi, and Phase 2 within a few months.

While the Delhi government has raised an alarm over an imminent power crisis in the capital due to depleting coal reserves, sources in the NTPC said that coal rakes had started coming in and enough power was available in the grid to tackle any crisis. The coal stock availability at Delhi’s thermal power stations increased a bit and stood at 101,985 mt. Delhi requires 56,000 mt coal daily for generation from the Badarpur, Aravali and Dadri thermal plants. Ideally, the coal stock should be for 15 days, i.e 840,000 mt. But NTPC said the stock situation was improving.

DERC has slapped a ₹20,000 penalty on a distribution company for “violation” of rules in a 10-year-old case of power theft. DERC imposed the penalty on BRPL on a petition filed by director of A K Mehta and Company, alleging violations of provisions of the Delhi Electricity Supply Code and Performance Standards Regulations, 2007. The Commission in its order on June 14 found that respondent BRPL has violated provisions of Regulations 52(viii) and 53(ii) of the Delhi Electricity Supply Code and Performance Standards Regulations, 2007. Regulation 52 (viii) of Supply Code, 2007, said that in case of suspected theft of power, the authorised officer will remove the old meter under a seizure memo and seal it in the presence of the consumer or his representative. The Commission observed that the personal hearing was held on October 06, 2009. However, the speaking order was issued on December 4, 2009 -after one month and 28 days from the date of personal hearing. However, the Commission observed that the regulation must be complied with whether it contains a mandatory or a directory direction.

An SNDL survey has found out that over 5,000 government and civic employees are not paying power bills and some are also pilfering power. SNDL said the survey was done in Tajbagh Teachers’ Colony, Borkar Colony, Sweeper Colony, Thakkargram, Police Line Takli, CPWD Quarters and Gandhibagh Police Colony. Not only were these employees not paying bills, many of them were pilfering power too. MSEDCL also faces problems due to erring government employees. Many of them stop paying power bills when they get transferred and then MSEDCL has problems in recovering the amount. Meanwhile, a serious failure by SNDL has come to light. There are over 4,600 old electro-mechanical meters still in use in the city. These meters are slow and cause a huge revenue loss to SNDL. On its failure to replace them with electronic meters, SNDL said the consumers had resorted to violence when franchisee teams went to their residence to install new meters.

The use of LED bulbs and tube lights has been made mandatory in all offices of Haryana. In this direction, all Administrative Secretaries, Head of Departments and Managing Directors of Boards, Corporations and Public Undertakings have been directed through a written communication to ensure replacing all inefficient lighting with LED lamps or tube lights by August 15, 2018, the new and renewable energy department said. All halogen, sodium bulbs and tube lights will be replaced with energy-efficient LED bulbs and tube lights. Use of incandescent lamps and purchase of sodium vapour lamps by government sector, government aided sector, boards and corporations and autonomous bodies have already been banned.

The government will consider making 24 degrees Celsius as mandatory default setting for air conditioners within a few months. AC makers were also advised to have labelling indicating the optimum temperature setting for the benefits of consumers both from financial and their health points of view, the power ministry said. The temperatures settings in ACs will be in the range of 24 to 26 degrees Celsius. Singh launched a campaign to promote energy efficiency in the area of air-conditioning. Some countries like Japan have put in place regulation to keep the temperature at 28 degrees Celsius. Under the guidance of ministry of power, the BEE has carried out a study and has recommended that the default setting in the air-conditioning should be at 24 degrees Celsius. The new campaign will result in substantial energy savings and also reduce greenhouse gas emission. After an awareness campaign of 4 to 6 months, followed by a survey to gather public feedback, the power ministry would consider making this mandatory. The power ministry estimates indicate that if all the consumers adopt, this will result in savings of 20 billion units of electricity in one year alone. BEE informed that, considering the current market trend, total connected load in India due to air conditioning will be 200 GW by 2030 and this may further increase as today only about 6 percent of households use ACs. As per the BEE’s current estimate total installed air conditioner capacity is 80 million TR in the country, which will increase to about 250 million TR by 2030. Considering this huge demand, India can save about 40 million units of electricity usage every day. The targeted commercial buildings will include airports, hotels, shopping malls, officers and government buildings.

Rest of the World

The World Bank has approved a $455 million loan to Tanzania under its IDA programme to support financing of power projects in the East African nation. The financing from IDA, which gives grants or low-interest loans to the world’s poorest countries, will also fund construction of high voltage transmission infrastructure to connect Tanzania to regional power markets in southern and eastern Africa. Tanzania boasts reserves of over 57 trillion cubic feet of natural gas, but faces periodic power shortages as it relies on hydropower dams in a drought-prone region. Last year President John Magufuli said the country needed to invest $46.2 billion over the next 20 years to revamp its ageing energy infrastructure and meet soaring electricity demand. Tanzania plans to boost power generation capacity from around 1,500 MW currently to 5,000 MW over the next three years by building new gas-fired and hydroelectric plants, according to the country’s energy ministry.

Zambia plans to introduce electricity tariffs that reflect the cost of power production by the end of 2018 and move away from a flat tariff of 9.30 US cents/kWh for mining companies. The permanent secretary for energy Emelda Chola said that the government had implemented the first phase of the migration by raising the price of electricity last year.

Nigeria has raised $1.57 billion for the rehabilitation of its transmission infrastructure from international backers. TCN was acquiring Supervisory Control and Data Acquisition System, a new energy management platform, which would help in providing transparency, as the industry activities can be monitored by operators of distribution, generation firms and other stakeholders, including online real-time fault detection and clearance. Two attempts by previous administrations failed but he raised a committee in 2017 to review the process and engaged EDF of France which raised a feasibility report on their installation and is being reviewed at the two day workshop. The company’s goal is to achieve 20,000 MW, through its Transmission Rehabilitation and Expansion Programme in the next four years was going according to plan and that the funding was raised from the World Bank, Japan International Cooperation Agency, African Development Bank among others. TCN had standardized its procurement process as incompetent contractors had abandoned 800 container shipments of transmission equipment for about 15 years at the ports. The transmission wheeling capacity had risen to 7,124 MW from the 5,000 MW. The Federal Government has called on international customers who receive electricity from Nigeria to either pay their bills or be disconnected. Nigeria sells power to the Republics of Togo, Niger and Benin, and classifies the West African countries as international customers. International customers, who pay for the power they receive from Nigeria in dollars, owed the country. Nigerian Bulk Electricity Trading Company has been approved to go ahead and collect its money from the international customers.

ADB will provide Bangladesh a $500 million loan to set up an 800 MW power plant in the southwestern region of Khulna. The plant, operating on the latest technology, will help meet the south Asian country’s growing demand for clean energy, ADB said. The total cost of the project is $1.14 billion, with the Islamic Development Bank contributing $300 million in financing and the government contributing $338.5 million over and above the ADB loan. Peak demand in Bangladesh, which faces recurring power generation shortages, is estimated at 10,400 MW while available capacity in 2017 was 9,479 MW. Net peak demand is expected to exceed 13,300 MW by 2020 and 19,900 MW by 2025, while existing generation facilities will gradually retire and need replacement. The plant, due to be completed by end-June 2022, will use the most advanced water treatment processes to purify and recycle liquid waste, leaving zero discharge. So far, ADB has provided around $5 billion in loans to Bangladesh’s energy sector.

Dubai Electricity and Water Authority has started testing the turbines in the M-Station expansion project in Jebel Ali, which is the largest electricity generation and water desalination plant in the UAE. The cost of the expansion project is AED1.47 billion and testing includes an initial operation of turbines and power generators and connecting them to the grid. Tests are scheduled to continue until the completion of the project in the fourth quarter of 2018. When completed, the project will increase the station’s total capacity to 2,885 MW, adding 700 MW.

Flying robots that can travel dozens of kilometres without stopping could be the next big thing for power companies. Utilities in Europe are looking to long-distance drones to scour thousands of miles of grids for damage and leaks in an attempt to avoid network failures that cost them billions of dollars a year. However the technology faces major safety and regulatory hurdles that are clouding its future in the sector.  Snam and EDF’s network subsidiary RTE have tested prototypes of long-distance drones that fly at low altitudes over pipelines and power lines. Italy’s Snam, Europe’s biggest gas utility, said it is trialling one of these machines – known as BVLOS drones because they fly ‘beyond the visual line of sight’ of operators – in the Apennine hills around Genoa. It hopes to have it scouting a 20 km stretch of pipeline soon. France’s RTE has also tested a long-distance drone, which flew about 50 km inspecting transmission lines and sent back data that allowed technicians to virtually model a section of the grid. The company said it would invest €4.8 million ($5.6 million) on drone technology over the next two years. At present, power companies largely use helicopters equipped with cameras to inspect their networks. They have also recently started occasionally using more basic drones that stay within sight of controllers and have a range of only about 500 metres. Power grid companies are expected to spend over $13 billion a year on drones and robotics by 2026 globally, from about $2 billion now, according to Navigant Research.

The negotiations with the Turkish energy company, Unit International, to build two natural gas combined cycle power plants in Iran are in the final stage. The projects, with an investment of $1.2 billion, include building a 1,200 MW plant in the central city of Saveh, and an 800 MW plant in Zahedan near the Pakistani border. Negotiations have dragged on since June 2016 when Unit International reached a deal to build seven natural gas power plants in Iran before the two sides cut down the scope of the agreement to two plants.

Ethiopia inaugurated a 458 km 230 kV electricity transmission line that will transport electricity from Alamata in the north to Legetafo in central Ethiopia near the capital city Addis Ababa. The transmission line was built jointly by two Chinese firms, including Sichuan Electric Power Transmission & Transformation Construction Ltd and Jiangsu ETERN Company Ltd. Li Xiaodong, Project Manager of SPTTC, said the project will help Ethiopian consumers receive reliable power supply. Girma Zeleke, Transmission, Substation, Rehabilitation and Upgrading Project Manager of Ethiopia Electric Power on his part, said the 230 kV electricity transmission line built by the two Chinese firms is a first of its kind as it will work alongside another nearby 230 kV transmission line, helping end sporadic power cuts in Addis Ababa and other major cities.

Azerbaijan has been hit by a massive blackout affecting most of the country, the worst power outage since the 1991 collapse of the Soviet Union.  A government commission has been set up to investigate the accident at a power plant in Mingechavir that caused the blackout. The emergencies ministry said a transformer’s breakdown in Mingechavir sparked a fire that was put out in 20 minutes and inflicted no casualties. The blackout came amid a heat wave in the Caspian Sea nation, with temperatures exceeding 40 degrees Celsius (104 degrees Fahrenheit) resulting in a power consumption surge that plunged the capital, Baku, and nearly 40 other cities and regions into pitch darkness. It took several hours to fully restore power in Baku but efforts to restore power in other regions continued.

The ERC of Kenya has restructured the subsidised tariff currently targeted at low income electricity consumers in a move that will see many that have enjoyed the low-priced power locked out. They will instead pay higher charges. Under a new billing structure by ERC, the lifeline tariff has been capped at 15 units of power per month from the current regime where low-income earners had a leeway of up to 50 units, and pay at subsidised rates. Poor households will also pay a higher rate for energy consumed in the new harmonised tariff of Sh12 per unit, compared to the current rate of Sh2.50 per unit. ERC has however scrapped the fixed charge that currently stands at Sh150 per month. It has instead factored it in the per unit cost of power. The new tariff, which ERC expects to be used for August billing, has also reduced power prices for the wealthy domestic power consumers. Households that consume over 1,500 units a month are charged Sh20 per unit but will now pay Sh16.50 a unit. The same charges will apply for people with less spending capability – consuming more than 15 units. The new tariff that will take effect in a month’s time is expected to be much simpler, and will give clarity to power consumers on how they are charged for their electricity. Under the proposed tariff, the energy industry regulator said prepaid customers would not get varying number of tokens whenever they spent the same amount. For example, if one spends Sh1,000 for the prepaid units, they will always get a constant number of units. The regulator however does not expect the changes to affect revenues for Kenya Power and the other sector players. It projects an average 10 percent increase in revenues for the sector, growing to Sh131.4 billion in the 2018/19 financial year. This is adequate to meet the financial obligations of the sector, including power infrastructure expansion and returns to shareholders that own power companies.

Norway will force big power consumers and producers to pay more for grid upgrades and extensions under a new regulation from 2019, the country’s water resources and energy directorate (NVE) said. The plan is widely opposed by Norway’s energy industry, which says it will have to foot a significant part of the bill, with grid investments of around $17 billion planned between 2016 and 2025. NVE decided to adopt the regulation in an amended version, effective from 1 January 2019, for consumers and producers of more than 1 megawatt per hour. The new regulation requires big consumers and producers to pay up to half the cost of any grid investment they require, in a move to encourage building power facilities in locations that already have strong grids, cutting the overall connection cost. In its amended version, NVE said grid companies can ask for an advance payment of up to 15 percent of the construction fee and a transition period will only include projects already granted a license. Existing customers that have filed requests for connection or increased capacity before July 1, 2018, will also be included in the transition period. In the amendments adopted, NVE has waived the requirement that the customer must have entered into a binding financial agreement with a network company or third party. The regulator has the authority to impose the changes unilaterally. Norway’s largest power consumer Norsk Hydro warned that the regulation would make grid costs a challenge for new project investments.

The leaders of the Baltic states and Poland signed a long-awaited deal to connect their power grids to the EU by 2025 and break their dependence on Russia, a Soviet legacy. Nearly ten years in the making, the politically fraught, technically challenging and costly plan to unplug Estonia, Latvia and Lithuania from Russia comes amid mounting concerns over Russian posturing in the region. The Baltic States, once ruled from Moscow but members of the EU and NATO since 2004, view being linked into Russia’s power network as a threat to their national security. Under the deal, states would use the existing overland LitPol Link between Lithuania and Poland, as well as a new high-voltage direct current cable to run under the Baltic Sea, looping around the territorial waters of Russia’s Kaliningrad exclave. The underwater cable will offer 700 MW capacity and could be completed by 2025. It will be used both for power trading and synchronisation purposes. Brussels is to negotiate with Moscow over how to maintain the power supply to Kaliningrad, which is currently synchronised with mainland Russia through the Baltic states. The deal proposes connecting Kaliningrad with two back-to-back power converters. Russia, on which the Baltic states currently rely to balance their power flows, has never cut power or threatened to do so, but the three EU nations fear it might and say there is a lack of transparency on upkeep of the network in Russia. Lithuania expects Baltic states to test their ability to work autonomously from Moscow in June 2019, before formally switching by 2025.

Britain’s exit from the EU could leave companies planning to build more power interconnections at the mercy of possible new trading arrangements and potential tariffs, Norway’s state-owned grid operator Statnett said. Statnett and Britain’s National Grid agreed before the Brexit vote to construct the first interconnector between the two countries by 2021. A separate consortium of Norwegian energy companies and Sweden’s Vattenfall is seeking to build a second cable by 2022-2023 for about €2 billion ($2.33 billion). Brexit could mean that new trading arrangements may be required to sell power via the interconnectors as Britain might not be allowed to participate in the European spot and intra-day power trading market, according to the Norwegian grid. Brexit could also mean that Britain will no longer be bound by EU competition rules, which currently allow interconnectors to seek British subsidy payments for providing supply capacity. Statnett said that plans to build NorthConnect by 2022 were unrealistic given the time.

Spanish oil major Repsol said it had bought the electricity generation and marketing assets of fellow Spanish firm Viesgo for €750 million ($868.73 million). With the deal, Repsol will add 2,350 MW of production capacity, 1,650 MW of which will be in two combined cycle plants and 700 MW of which will be hydro-electric, the company said.

The organization responsible for reliability of the North American power grid issued a report that identified risks to the US and Canadian electric systems that have been driven in part by changes in the generation fuel mix. The NERC said in its State of Reliability 2018 report that the power grid overall was reliable in 2017. NERC, however, provided several recommendations for the electric industry and regulators to adopt to improve future resilience. Resiliency became an issue after US Energy Secretary Rick Perry in September 2017 asked federal energy regulators to adopt rules to protect so-called fuel secure coal and nuclear plants from early retirement. The US Federal Energy Regulatory Commission rejected that proposal in January and said they would conduct a study on grid resilience. As dependence on electric infrastructure increases daily, NERC said resilience will become a more critical element of bulk power system reliability.


FY: Financial Year, PLF: plant load factor, discoms: distribution companies, SERCs: state electricity regulatory commissions, PPAs: power purchase agreements, PFC: Power Finance Corp, MW: megawatt, GW: gigawatt, BSPGCL: Bihar State Power Generation Company Ltd, MERC: Maharashtra Electricity Regulatory Commission, ATL: Adani Transmission Ltd, EoI: Expressions of Interest, TPDDL: Tata Power Delhi Distribution Ltd, kWh: kilowatt hour, RAC: regulatory asset charge, BPL: below poverty line, KTPS: Kothagudem Thermal Power Station, EESL: Energy Efficiency Services Ltd, PSUs: Public Sector Undertakings, PSPCL: Punjab State Power Corp Ltd, AT&C: Aggregate Technical and Commercial, UHBVN: Uttar Haryana Bijli Vitran Nigam, DHBVN: Dakshin Haryana Bijli Vitran Nigam, mt: million tonnes, DERC: Delhi Electricity Regulatory Commission, BRPL: BSES Rajdhani Power Ltd, MSEDCL: Maharashtra State Electricity Distribution Company Ltd, LED: light emitting diode, BEE: Bureau of Energy Efficiency, TR: ton of refrigerator, IDA: International Development Assistance, US: United States, ADB: Asian Development Bank, UAE: United Arab Emirates, km: kilometre, kV: kilovolt, ERC: Energy Regulatory Commission, EU: European Union, NERC: North American Electric Reliability Corp


NATIONAL: OIL

IOC investing over Rs 119 bn in West Bengal for various projects

23 July. Indian Oil Corp (IOC) is investing over Rs 11,900 crore in West Bengal for various infrastructure and capacity enhancement projects. Around Rs 4,190 crore would be invested to augment the capacity of Haldia refinery while the investment requirement to make it BS VI compliant would be to the tune of Rs 3,415 crore. For setting up a LPG bottling plant at Kharagpur with an investment of Rs 160 crore, land has been taken over from the West Bengal Industrial Development Corp and the project is expected to be completed by March 2019. Augmentation of facility from 60,000 cylinders per day to 1 lakh cylinders a day with the commissioning of the third carosel at Kalayni bottling plant will make it the largest in Eastern India.

Source: Business Standard

Indian oil PSUs spend 20 percent of annual capex in first quarter

23 July. State oil firms have spent about Rs 18,000 crore in the first quarter of the current fiscal, nearly a fifth of their planned annual capex, on exploration and production and expanding their refining, transport and marketing infrastructure. Indian Oil Corp (IOC) spent Rs 5,852 crore in the April-June quarter, the maximum among state oil firms. Bharat Petroleum Corp Ltd (BPCL) finished about 28% of its annual capital outlay of Rs 7,400 crore in three months. Oil and Natural Gas Corp (ONGC) invested Rs 5,821 crore in its upstream activities, about 18% of its 2018-19 spending target. Overseas arm ONGC Videsh used up Rs 1,073 crore during the quarter against an annual target of Rs 5,886 crore. Hindustan Petroleum Corp Ltd (HPCL) spent less than 14% of its annual target of Rs 8,425 crore. GAIL (India) Ltd, which is currently building the country’s largest natural gas pipeline, spent about 18% of its annual capex target while Oil India Ltd (OIL) exhausted 16% of its annual capital outlay. Indian oil firms are investing heavily in exploration and production, and expanding refining, marketing and distribution facilities to cater to the rapidly rising oil consumption in the country. Consumption of petroleum products grew 5.1% in the April-June period, with petrol, diesel and cooking gas driving sales. The country, a net exporter of refined products, has been speedily adding refining capacity to cater to the expanding domestic demand as well as to retain its share in the export market. India’s refining capacity is planned to rise to 439 million tonnes per annum by 2030 from the current 248 million tonnes with state and private firms planning massive expansion.

Source: The Economic Times

Iran becomes India’s No. 2 oil supplier, ahead of Saudi

23 July. Iran was the second-biggest oil supplier to Indian state refiners between April and June, India’s Oil Minister Dharmendra Pradhan said, replacing Saudi Arabia as companies took advantage of steeper discounts offered by Tehran. India, Iran’s top oil client after China, shipped in 5.67 million tonnes (mt), or about 457,000 barrels per day (bpd), of oil, from the country in the first three months of this fiscal year, he said. He did not provide comparable numbers from the year-ago period. Data shows that India imported about 3.46 mt, or about 279,000 bpd, from Iran between April and June last year. The refiners – Indian Oil Corp, Chennai Petroleum Corp, Bharat Petroleum and its unit Bharat Oman Refineries Ltd, Hindustan Petroleum and Mangalore Refinery and Petrochemicals – shipped in 9.8 mt of Iranian oil in 2017/18, about a quarter less than a year ago, he said. For this fiscal year, the refiners had decided to almost double imports from Iran, which offered almost free shipping and extended credit period on oil sales. Iraq continued to be the top oil supplier to India in the April-June period. New Delhi shipped in 7.27 mt of oil from Iraq, while shipments from Saudi Arabia totalled 5.22 mt, making it the third largest supplier, Pradhan’s statement showed. India had asked refiners to prepare for drastic reductions or even zero Iranian oil imports. The first set of sanctions will take effect on August 6 and the rest, notably in the petroleum sector, following a 180-day “wind-down period” ending on November 4. India’s overall oil imports from Iran in June declined by about 16 percent from May as refiners started weaning their plants off crude from Iran to avoid US (United States) sanctions.

Source: Reuters

Modi government to achieve 50 mn LPG connection target by August 15

20 July. Prime Minister Narendra Modi’s flagship project Pradhan Mantri Ujjwala Yojana (PMUY) is set to provide 50 million free cooking gas connections by August 15, seven months ahead of the March 2019 target it had set earlier. Ujjwala Yojana was launched on May 1, 2016 at Ballia district in Uttar Pradesh and has so far covered 47.3 million consumers in 715 districts. This is likely to be one of the key highlights in the list of achievements that the Modi government will highlight in the run-up to next year’s Lok Sabha elections and may feature in his speech during the 72nd Independence Day celebrations. The price of subsidised liquefied petroleum gas (LPG), however, has increased by 18.4 percent from Rs 419.15 per cylinder to Rs 496.26 from May 2016 till now in Delhi. Oil Marketing Companies (OMCs) such as Indian Oil Corp (IOC), Hindustan Petroleum Corp Ltd (HPCL) and Bharat Petroleum Corp Ltd (BPCL) are speeding up the process to achieve the target before August 15, sources said. Moreover, the government has extended the ambit of the scheme to 80 million in the last Union Budget. However, safety remains one of the primary concerns for the scheme after a series of accidents in the last two years. Industry sources said that the rising LPG price too is a major concern for the poor. When a normal consumer is refilling at an average of 7.76 per year, the rate of refill on PMUY (Pradhan Mantri Ujjwala Yojana) comes to the tune of 3.8 per year. The number of consumers who have not come back for a second cylinder is only 15 percent. On the back of the scheme’s success, LPG consumption in India has increased continuously for the last 57 months in a row. Consumption saw a cumulative growth of 13.7 percent for the period of April to May this year. According to the Petroleum Planning and Analysis Cell (PPAC), the northern region had the highest share in consumption of 31.3 percent, followed by southern region at 28.3 percent, western region at 21.2 percent, eastern region at 16.5 percent and northeastern region at 2.8 percent during the period May 2018. In fact, the increase in the number of users had added pressure on companies as the government had to allow OMCs to have night shifts at bottling plants, raising safety concerns. Though the number of users went up, the number of bottling plants remained the same, resulting in the existing 180 plants working at a current capacity utilisation of about 120 percent. More than 30 bottling plant projects are still stuck at various stages of clearances, with an investment of around Rs 50 billion. There were also reports that extra pressure is there on OMCs to achieve the target on time.

Source: Business Standard

NATIONAL: GAS

Shell, BP for splitting GAIL’s gas transmission, marketing business

24 July. Amid talk of splitting GAIL (India) Ltd, global energy majors Royal Dutch Shell and BP plc have sought separation of natural gas marketing and transportation business before moving to a unified tariff for pipelines. At an Open House called by the sector regulator Petroleum and Natural Gas Regulatory Board (PNGRB) to discuss ‘unified or pooling’ method for computing gas transmission tariffs instead of current postal or distance based transportation rates, GAIL was pitched against formidable combination of Shell and BP on the issue of unbundling. The petroleum ministry is looking at splitting GAIL into two firms to resolve the conflict of interest in it being both the transporter and marketer of natural gas. GAIL had proposed ‘unified or pooling’ method for calculating pipeline tariff instead of having postal tariffs where customers near the source of the gas pay less and the furthermost pays most. The pooled tariff is to be computed by pooling capital expenditure and operating expenses of all cross-country pipelines of a company and apportioning them over the cumulative volumes in such a way that allows 12 percent post-tax return. Shell Energy Marketing & Trading India Pvt Ltd, at the Open House, said it supported the idea of the unified tariff as it will enable development of the market and consequently lead to matured market. BP India supported unified tariff for all cross country interconnected pipelines of all entities and not of a single entity as otherwise, it would create distortion in the transition from entity wise unified tariff.

Source: Business Standard

Indian Navy helps ONGC in stopping offshore gas leak at Bombay High

23 July. Around noon Indian Navy helicopter was deployed to fly with ONGC (Oil and Natural Gas Corp) technician to fix the gas leakage on an unmanned ONGC platform at Bombay High. The operation lasted almost 4-5 hours and the leakage was fixed and averted a major disaster. The Indian Navy received an alert from the ONGC about a gas leak reported onboard the offshore ONGC platform S1-6. The Indian Navy launched a Seaking 42C helicopter to transfer the ONGC technical team to the platform on 22 so that repairs could be undertaken.

Source: The Economic Times

RIL-ONGC dispute: KG basin order likely in next 10 days

23 July. An international arbitration tribunal is likely to come out with its final award in the next 10 days on the dispute relating to production of migrated gas by Reliance Industries Ltd (RIL). RIL is in an arbitration dispute with the government over a penalty for allegedly drawing gas from ONGC (Oil and Natural Gas Corp)’s block in the Krishna-Godavari (KG) basin. In March 2018, the government had revised the basic penalty claim to $1.46 billion based on its estimate of the migrated gas produced and sold by the contractor consortium — RIL, BP and Niko Resources.

Source: Business Standard

Rs 43 bn Ennore LNG terminal to become operational by October: IOC

19 July. Indian Oil Corp (IOC), the nation’s largest fuel retailer, expects its upcoming 5 million tonnes per annum (mtpa) Ennore Liquefied Natural Gas (LNG) terminal to start operations by October. The company is setting up the terminal at Ennore near Chennai in Tamil Nadu at a cost of Rs 4,300 crore and has also made a provision to scale up the capacity to 10 mtpa, if required. IOC’s Director-Finance A K Sharma said that the company has already tied-up off-take agreements for 1.5 million tonne gas with consumers. IOC plans to connect the terminal to its Chennai Petroleum Corp Ltd (CPCL) refinery apart from facilities of Madras Fertilizers, Tamil Nadu Petro Products, Manali Petrol Products and other customers in the area. The firm is also working on laying a 1,385 kilometre (km) natural gas pipeline originating from the Ennore terminal to Nagapattinam in Tamil Nadu via Puducherry. The fuel retailer is also laying branch pipelines to Madurai, Tuticorin, and Bengaluru to meet the demand from multiple LNG consumers in the region. The laying of the complete 1,385 km pipeline will be carried out in phases. IOC is working on a capital expenditure plan of Rs 22,862 crore, up 21 percent as compared to Rs 18,848 crore spent last financial year (2017-18). Sharma said the firm plans to spend 43 percent of the current fiscal’s capex on refinery segment, 11 percent on petrochemical projects, 12 percent on pipelines, 25 percent on marketing and the rest on exploration and production, gas projects and alternate energy.

Source: The Economic Times

IOC, BPCL, Adani top bidders for city gas licences

19 July. State-owned fuel retailers IOC (Indian Oil Corp) and BPCL (Bharat Petroleum Corp Ltd) as well as billionaire Gautam Adani’s group were the top bidders for gas retailing licences in the country’s biggest city gas distribution (CGD) bid round. Of the 86 cities offered for retailing of CNG to automobiles and piped cooking gas to households in the 9th CGD bid round, IOC bid for 34 cities on its own and another 20 in partnership with Adani Gas Ltd, according to final bid information provided by the Petroleum and Natural Gas Regulatory Board (PNGRB). Adani Gas on its own bid for 32 cities. Bharat Gas Resources Ltd, a unit of Bharat Petroleum Corp Ltd (BPCL), bid for as many as 53 cities while state-owned gas utility GAIL (India) Ltd’s retailing arm, GAIL Gas Ltd, put in offers for 34 cities. Gujarat-based Torrent Gas Pvt Ltd bid for 31 cities while Gujarat Gas Ltd put in offers for 21 areas. Petronet LNG Ltd, India’s largest liquefied natural gas (LNG) importer, sought to foray into CGD business by bidding for the licence in seven cities. Indraprastha Gas Ltd, which retails CNG in the national capital region, put in bids for 11 cities. According to PNGRB, a total of 400 bids were received for the 86 permits on offer. The government is targeting to raise the share of natural gas in primary energy basket to 15 percent, from 6.2 percent at present, within a few years. The bid round is also aimed at meeting Prime Minister Narendra Modi’s target of giving piped cooking gas connection to 1 crore households, roughly triple the current size, by 2020.

Source: Business Standard

Renegotiated Gazprom LNG deal to save India up to Rs 95 bn: Oil Minister

18 July. India’s renegotiated gas import deal with Russia’s Gazprom will save between Rs 85 billion and Rs 95 billion over the contract period ending 2040, Oil Minister Dharmendra Pradhan said. GAIL (India) Ltd had in January taken advantage of the Russian company’s inability to deliver liquefied natural gas (LNG) from the previously agreed Schtokman project in the Barents Sea, to renegotiate price agreed in 2012. Pradhan said the first cargo of Russian natural gas under the long-term contract between GAIL and Gazprom Marketing & Trading Singapore (GMTS) was received on June 4. Pradhan said the gas price was negotiated depending on many factors like project location, duration of contract and pricing formula. GAIL renegotiated the terms of the 20-year deal to import 2.5 million tonnes a year of LNG, including price and volume ramp up. The contracted volume has been lowered from 2.5 million tonnes to 0.5 million tonnes in the first year, 2018-19; 0.75 million tonnes in 2019-20 and 1.5 million tonnes in the third year 2020-21. The contract period has been extended by three years to accommodate the supplies not taken in initial years as well as getting an additional 2 million tonnes over-and-above the 50 million tonnes it had agreed to take in 2012 over the 20 year contract period. India has been making the most of its position as one of the world’s biggest energy consumers to strike better bargains for its companies. Last year, India got US energy major Exxon Mobil Corp to lower the price of 1.5 million tonnes a year of LNG from Gorgon project in Australia, saving Rs 40 billion in import bill. Pradhan said India currently has four operational LNG import terminals at Dahej and Hazira in Gujarat, Dabhol in Maharashtra and Kochi in Kerala with a total LNG import capacity 27.5 million tonnes per annum. After regasification, the imported LNG is distributed to industries and domestic consumers through existing pipeline networks, Pradhan said.

Source: Business Standard

GEECL plans to invest Rs 20 bn on Raniganj asset in West Bengal

18 July. Great Eastern Energy Corp Ltd (GEECL), a London Stock Exchange (LSE)-listed Indian coal-bed methane producer, plans to invest Rs 2,000 crore to complete drilling of the remaining 144 wells at its flagship Raniganj (South) license area located in West Bengal, Managing Director and Chief Executive Officer (CEO) Prashant Modi said. The company’s production from its Raniganj (South) license area last financial year ended March 2018 increased 19.5 percent to 19.61 million standard cubic feet per day (mmscfd) as compared to 16.41 mmscfd produced in the previous fiscal. He said that the company had already drilled 156 wells and the remaining ones could take around four years to drill from the date of commencement of work, adding the demand remained strong in the region. The firm’s sale of coal-bed methane gas in the first two months of the first quarter ended June 2018 rose 43 percent to 12.06 mmscfd. Modi said the company had over 30 customers and the increase in sales could be attributed to anchor customers buying more gas and new customers coming in the fold.

Source: The Economic Times

NATIONAL: COAL

CIL has taken various measures to improve coal supply: Chairman

24 July. Coal India Ltd (CIL) Chairman, Anil Kumar Jha said CIL was taking various measures to improve coal supply to power and steel sector. Effective measures are being taken to ensure supply of sufficient quantity of coal to meet the requirement of power and steel sector, so that they do not suffer any loss of production due to coal shortage, he said. He said that future of CIL is bright as government has taken various initiatives to increase coal output as well as supply of coal to meet requirement of coal in various industries in India.

Source: Business Standard

CIL earns 39 percent premium on 6.38 mt auctioned coal

24 July. Coal India Ltd (CIL) has managed an average premium of 39% on 6.38 million tonnes (mt) of coal it auctioned to sponge iron customers, helping the state-run coal monopoly get additional annual revenue of Rs 1,248 crore for five years. If these supply contracts were awarded on nomination basis, it would have earned about Rs 350 crore less, the company said. That is because the average price realised at the auction was Rs 1,955.8 per tonne, while the average notified price of the coal on offer was Rs 1,407.6 per tonne. The price is 59% higher than what is charged to power sector consumers. CIL sold 88% of the 7.27 mt in contracts for a minimum period of five years in the auction that spanned 18 days from June 26, the company said. Mahanadi Coalfields, one of the largest subsidiaries of the company, got a 50.6% premium over the notified price for 2 mt of coal that was offered and fully booked. This will help it raise sales by Rs 311.31 crore a year. South Eastern Coalfields, which offered 3 million tonnes of a higher grade coal, got a premium of 44.8% over notified price, which will help it add Rs 719.26 crore a year to its revenue. Eastern Coalfields managed a premium of 31.3% by offering half a lakh tonne of coal that would fetch the company around Rs 16 crore annually. It managed an average price of Rs 4,145 per tonne at the auction.

Source: The Economic Times

India’s Adani sees six-fold rise in coal mining volume despite challenges in Australia

24 July. India’s Adani Group expects an over six-fold rise in coal mining volumes by the end of fiscal year 2021, despite its struggle to develop a coal project in Australia. Adani’s coal mining volumes are expected to be 80 million tonnes (mt) by the end of March 2021, from 12.17 mt at the end of fiscal year 2017, Sudhir Kumar Agrawal, the techno-commercial head of Adani Ports And SEZ Ltd, said. The group’s coal handling volumes are expected to rise 57 percent to 127 mt by the end of 2021, he said. Higher consumption in China, along with rising Indian imports, has been a major driver behind the strong recovery seen in benchmark Australian coal prices this year. The capacity at Adani ports-operated Dhamra port, located in the mineral rich state of Odisha, will be quadrupled to 80 mt per year, he said.

Source: Reuters

Green panel rejects Bharat Coking Coal’s proposal to amend environment clearance

22 July. The government’s green panel has disapproved amendments to the environment clearance sought by Bharat Coking Coal for its Jharia Coalfields in Jharkhand due to the absence of forest clearance, as per the official document. The company’s proposal was to amend the existing environment clearance given for the cluster XI group of mines that has a peak production capacity of 6.6 million tonnes per annum (mtpa) and Moonidih water capacity of 1.6 mtpa. The amendment sought was for change in capacities of individual mines in the cluster and lease hold areas for implementation of the master plan. The company has sought amendment for increase in capacity of two individual mines namely, Gopalichak Colliery and Kendwadih colliery without any change in combined peak production capacity of 6.6 mtpa, and in the same mine lease area of 3527.58 hectare.

Source: Business Standard

Union Coal Secretary visits CCL mines in Jharkhand

22 July. Union Coal Secretary Inder Jit Singh, visited mines owned by the Central Coalfields Ltd (CCL) in Jharkhand’s Ramgarh district, CCL said. Singh witnessed various mining activities which include mining, washing coal with hi-tech system in coal washery, coal dispatch by from washery by rake and by road and coal exploration activities by Central Mine Planning & Design Institute (CMPDI), a subsidiary of Coal India Limited, CCL said.

Source: Business Standard

Godawari Power gets 1.15 lakh metric tonne of long-term coal supply

19 July. Godawari Power & Ispat said it has been awarded 1,15,900 metric tonne (mt) of long-term coal linkage to be used in its sponge iron unit in the recent auction of Coal India Ltd. With this, the aggregate quantity of coal supply for the company’s sponge iron division shall be 4,95,000 mt, it said. Moreover, the company has got 1,11,600 mt of coal linkage for its gasifier units; 98,064 mt for captive power plant and 13,900 mt for its biomass power plant, it said. Thus the total long-term coal linkage awarded to the company aggregates to 7,18,564 mt which fulfils the 80 percent of the total coal requirement of the company, Godawari Power said.

Source: Business Standard

Government affirms no shortage of coal for power sector

19 July. In the beginning of 2018-19, Coal India Ltd (CIL) had a pithead stock of 55.55 million tonnes (mt) and stock at Power House end was 16.27 mt. In the 1st quarter of 2018-19, CIL dispatched a record quantity of 122.2 mt coal to Power Sector, thereby achieving a growth of 15% over the dispatch in the corresponding period of last year. The growth in dispatch of coal to Power Sector has helped coal based generation to achieve positive growth of 5.3% in the 1st quarter of 2018-19. Coal supplies to Power sector is monitored regularly by an Inter Ministerial Sub Group comprising representatives of Ministries of Power, Coal, Railways, Shipping, Central Electricity Authority, NITI Aayog, CIL etc.

Source: Business Standard

India’s coal demand rose 7.5 percent to 900 mt in 2017/18: Coal Minister

18 July. India’s coal demand rose 7.5 percent to about 900 million tonnes (mt) in the year ending March 2018, Coal Minister Piyush Goyal said. Coal is expected to remain India’s main energy source for the next three decades, even as the country encourages the use of renewable power generation. Coal India Ltd (CIL) has been directed to boost production, Goyal said. India, the third world’s biggest greenhouse gas emitter and one of the world’s largest coal producers, depends on coal for about three-fifths of its energy needs. India’s coal imports are expected to rise in 2018 after two consecutive years of decline, in what would be a setback to the government’s plans to reduce dependence on foreign supplies. India’s thermal coal imports rose by more than 15 percent in the first three months of 2018.

Source: Business Standard

NATIONAL: POWER

Panel explores justifiable options for stressed power projects of Tata, Essar, Adani

23 July. A three member panel constituted by the Gujarat government will meet stakeholders, including Tata, Adani and Essar, in Mumbai to explore legal and commercial options for their three stressed power projects. The committee, which has former Supreme Court Justice R K Agrawal, former RBI Deputy Governor S S Mundra and former Chairman of Central Electricity Regulatory Commission Pramod Deo on its board, met power developers as well as officials of procurer states, including Maharashtra, Punjab, Rajasthan and Haryana. SBI Capital Markets and NTPC Ltd are assisting the panel to submit its report to the state government within a period of two month. The panel was set up earlier this year. The panel is still working out a solution for these developers who are struggling with high cost of imported coal for their power plants, and called a meeting on July 28, 2018 in Mumbai to explore legal and commercial options which could be taken forward to procurers. The panel has informed the developers that the procurers will not be able to take care of past losses, while lenders are flexible in dealing with the developers’ debt for the power plants so far. The developers will have to submit their views by July 26, ahead of another round of meeting of the panel with all stakeholders on July 28, 2018. In April last year, the Supreme Court had ruled that power distribution firms like Adani Power Ltd and Tata Power Ltd cannot charge “compensatory tariff” from consumers and set aside the appellate tribunal’s judgement in this regard. In June last year, Tata Power had offered to sell 51 percent stake in its 4,000 MW Mundra power project for Rs 1 to procurer states like Gujarat, which buy electricity from it, to tide over the financial crisis. Similar offers were also given by Adani Power and Essar Power to sell their stakes to procures for Rupee one in 4,620 MW power plant located at Mundra and 1,320 MW power plant at Salaya near Jamnagar in Gujarat, respectively.

Source: Business Standard

NTPC’s trading arm to supply power worth Rs 183.4 bn to Bangladesh over 15 yrs

23 July. NTPC Vidyut Vyapar Nigam (NVVN), the power trading arm of NTPC Ltd, will supply electricity worth Rs 18,343 crore to Bangladesh over 15 years through 2033. Under a short-term agreement, NVVN would supply power between 1 June 2018 and 31 December 2019 at a tariff of Rs 3.80 per unitleading to an estimated annual revenue of Rs 917 crore. The firm will also supply electricity under a long-term deal between 1 January 2020 and 31 May 2033 at Rs 5.3 per unit which would fetch Rs 1,259 crore every year. NVVN was incorporated in 2002 to tap the potential of power trading in India and promote optimum capacity utilisation of generation and transmission assets. The company traded 15,681 million units of power apart from Renewable Energy Certificates (RECs) equivalent to 68 million units of power in 2016-17. India currently supplies around 660 MW power to Bangladesh and plans to increase the volume to 840 MW after completion of additional transmission links, Power Minister R K Singh said.

Source: The Economic Times

1 lakh households still without electricity connections in Nashik zone in Maha

20 July. Though the Maharashtra State Electricity Distribution Company Ltd (MSEDCL) has successfully supplied electricity to 41,647 lakh households in Nashik and Ahmednagar districts in Nashik Zone, it is yet to provide electricity connections to 1.06 lakh households under the Saubhagya yojana. Under the Saubhagya Yojana launched by the Union power ministry which aims to provide power to every household by December 2018, MSEDCL has chalked out a massive plan to provide electricity connections at a cost of Rs 500 and free of cost to those who fall under the economically weak category. The ‘power to all’ programme undertaken by the Government of India aims at electrification of every household without bothering the beneficiary for the infrastructure costs—that may range from laying simple service wires to construction of poles. Most villages and hamlets are deprived of an electricity connection for two reasons— the cost of power connection and the inability to pay for the infrastructure. The state electricity utility said as per the targets set under the Saubhagya Yojana which was declared in October 2017, the company has achieved 98% of its target. Similarly in Ahmednagar district, the MSEDCL has already provided 11,926 connections. It needs to provide connections to 55,977 households to achieve 100% electrification.

Source: The Economic Times

Peak power deficit in April-June at 0.7 percent: Power Minister

19 July. Peak power deficit during April-June, 2018-19 was 0.7 percent while overall electricity deficit stood at 0.6 percent during the quarter, Parliament was informed. As much as 170.76 GW electricity was supplied during peak hours against the demand of 171.97 GW during the quarter, resulting in a deficit of 0.7 percent, Power Minister R K Singh said. Overall, 323.41 GW electricity was supplied against the demand of 325.42 GW during the quarter, which translated into a deficit of 0.6 percent, as per the provisional estimates of Power Ministry. In 2017-18, the peak power deficit was 2 percent while overall electricity deficit was 0.7 percent across the country. Last year, Central Electricity Authority (CEA) in load generation balancing report had projected that India would become a power surplus nation.

Source: Business Standard

Rs 100 bn project to check power theft, electrify villages in UP

18 July. Lending a push to power sector reforms ahead of the 2019 Lok Sabha elections due next year, UP (Uttar Pradesh) government announced Rs 10,000 crore UP Power Sector Improvement Project, envisaging minimization of line losses and wheeling in electricity to rural feeder which have not been served under the Centre’s ambitious Deendayal Upadhyay Rural Electrification Scheme. The decision was taken by a high-level committee headed by Chief Minister Yogi Adityanath. Principal Secretary (energy) Alok Kumar said that a formal proposal vis-avis scheme has been sent to the department of economic affairs for further perusal with the Asian Development Bank. The scheme will also be vetted by the Union power ministry and the Niti Aayog. The scheme proposes laying of Aerial Bunch Conductors (ABCs) across the state to put a check on power theft. The state has been witnessing line losses, essentially because of rampant power theft, to the tune of around 30%, despite the Central Electricity Authority mandating the limit to 15%. The project is proposed to be executed in two phases. In the first phase, the ABC will be laid out at a cost of Rs 4,500 crore, while in the second phase Rs 4,900 crore are proposed to be invested for rural electrification.

Source: The Economic Times

NATIONAL: NON-FOSSIL FUELS/ CLIMATE CHANGE TRENDS

Delhi CM announces solar energy scheme aimed at raising farmers income by 3-5 times

24 July. Delhi Chief Minister (CM) Arvind Kejriwal announced the ‘Mukhyanmantri Kisan Aaye Badhotri Solar Yojna’ which aims to increase the income of farmers by three to five times in the national capital. As per the scheme approved by the Delhi Cabinet, maximum of one-third surface area of the agriculture land can be used for installation of solar panels in such a way that agriculture activity is not affected. Talking to reporters here after the Cabinet meeting, Kejriwal said the present estimated annual income of farmers is Rs 20,000 to 30,000 per acre per year. He said the minimum height for installing solar panels will be 3.5 metres to ensure that agriculture activity is not affected. He said the Delhi government’s departments will also buy electricity from companies which have installed solar panels on the agriculture land. At present, departments buy electricity for Rs 9 per unit, but with this scheme, departments will buy electricity for Rs 4 per unit due to which government will save Rs 400 to 500 crore annually.

Source: Business Standard

Karnataka takes lead in renewable energy: IEEFA

24 July. Karnataka is the new national leader in renewable energy generation, US (United States)-based Institute for Energy Economics and Financial Analysis (IEEFA) said. It has overtaken Tamil Nadu that had long been India’s top renewables market. With a population of more than 60 million, Karnataka has a total of 12.3 GW of renewable capacity installed till March, after having added five GW in 2017-18 alone, it said.

Source: Business Standard

‘Railways installs solar panels to operate fans, lights in passenger coaches’

24 July. For the first time, coaches on the Indian Railways would be powered by solar energy, with the national transporter retrofitting its passenger trains with flexible solar panels. This will operate fans, light and mobile charging slots on the coaches. Developed by the Indian Railway Organization for Alternate Fuels (IROAF), such solar panels were earlier fitted in DEMU trains last year. After the success onthese coaches, it was felt that solar energy can also be harnessed in railway’s main line coaches for the comforts of common man. Such fitment of solar panels has started to operate in Sitapur-Delhi Riwari Passenger train. These panels are light weight and easy to fit and most of these panels have been manufactured in India by CEL Ltd. The total weight of solar panel on these coaches is approximately 120 kilogram. Along with generation of electricity, these coaches are also fitted with sensors which will monitor parameters of the solar energy being generated. Out of this, IROAF will undertake the fitment of flexible solar panels in three more passenger trains which face the problem of poor battery charging due to slow running.

Source: Business Standard

First tender for 1 GW solarcapacity in DSIR likely in August

22 July. The first tender for the 1,000 MW solar capacity in the Dholera Special Investment Region (DSIR) in Gujarat is likely to be issued next month, Dholera Industrial City Development Corporation (DICDC) managing director Jai Prakash Shivahare said. The DSIR is proposed to have a 5,000 MW solar park, at an estimated cost of Rs 25,000 crore, and spread across 11,000 hectare. He said the greenfield project is expected to generate more than 20,000 jobs. Gujarat Power Corp Ltd (GPCL), Gujarat Urja Vikas Nigam Ltd (GUVNL) and Gujarat Electric Transmission Corp (GETCO) along with the Solar Energy Corp of India (SECI) are implementing the project. Gujarat principal secretary to the Chief Minister, M K Das, said the state expects good response for the bids. Meanwhile, a 200 MWwind park has also been planned in Dholera, which would attract an additional investment to the tune of Rs 1,400 crore.

Source: Business Standard

Students exhibit solar-powered boat in Dal Lake

21 July. A group of engineering students have made an eco-friendly solar-powered motor-boat and demonstrated it in Dal Lake. The two-seater boat with a load capacity of 150 kg were developed by the 12 students — all Kashmiri — who are from a private college in Chandigarh. It was launched by Srinagar Deputy Commissioner Syed Abid Rasheed Shah. The idea behind the design was to minimise human fatigue and make effective usage of renewable energy sources. The boat can be recharged through electricity as well. Assuring the students of support from the administration for future endeavours, the Deputy Commissioner said such a project could bring a revolution. The government will also look for implementing the idea of solar-powered boats inside Dal lake to reduce pollution.

Source: Business Standard

Environment ministry expects approval for Rs 7 bn NCAP soon

19 July. The environment ministry expects approval from the expenditure department for the ambitious Rs 700 crore National Clean Air Programme (NCAP) to come within the next three months. The scheme is aimed at tackling air pollution by implementing steps to meet the prescribed annual average ambient air quality standards across the country. The government is concerned about the problem of air quality, not just in Delhi but in other parts of the country, too. The government has formulated NCAP as a medium-term national level strategy to tackle the increasing air pollution problem across the country. The overall objective is to evolve an effective ambient air quality monitoring network across the country apart from ensuring comprehensive management plan for prevention, control and abatement of air pollution. The programme focuses on a participatory approach covering all the sources of pollution and coordination between different central government ministries, state governments and local bodies. In order to ensure use of new technologies to combat air pollution, the scheme also has a separate component on ‘Technology Assessment Cell’.

Source: The Economic Times

No new ‘scheme’ to revive hydropower projects: Government

19 July. The Union power ministry is no longer looking at formulating a new scheme for reviving hydropower projects in the country. Power and New and Renewable Energy Minister R K Singh was responding to a query on whether the government proposed to launch any new scheme for hydropower projects in the country. The policy had involved a financial implication of ₹ 16,709 crore for 40 projects with a capacity of 11,639 MW. This response is starkly opposite to the earlier position that the government has had on a scheme for aiding stressed hydropower projects. According to the proposal, all hydropower (irrespective of size) will be categorised as Renewable Energy. Further, the scheme for revival of hydro power sector had provided for a 4 percent interest subvention during the construction period (maximum 7 years) and 3 years post the date of commercial operations (COD) to all hydropower projects above 25 MW. This benefit will be extended for all projects attaining COD for up to 5 years after the notification of this policy. During March this year, in its report tabled in the Parliament, the Standing Committee on Energy had also asked the power ministry to formulate a new hydro power policy.

Source: The Hindu Business Line

UP government subsidises rooftop solar plants

19 July. In order to make rooftop solar power plants more affordable to the people of Uttar Pradesh (UP), the state government has announced an additional subsidy of Rs 15,000 per kilowatt or a maximum of Rs 30,000 for installation of solar plants after the Centre announced 30 percent subsidy on the same. To take benefit of this scheme, one has to submit an online application form, which will be available from the website of UPNEDA (Uttar Pradesh New and Renewable Energy Development Agency). Also, the applicant has to take a no objection certificate (NOC) from a local power distribution company and the UPNEDA. Within one week of the submission of online application, the processing for installation of solar power plant will be initiated. Under the scheme, there is also scope for installation of a common solar power plant of up to 25 percent capacity of the electric transformer in residential areas. Moreover, the UPNEDA— with the help of power department, on orders of the state government— has identified 716 poor families in the district living without electricity. The agency is working on a plan to light by these houses with solar energy.

Source: The Economic Times

BYPL signs pact to source wind power

19 July. A power purchase agreement for 100 MW of wind power was signed between the Solar Energy Corp of India and BSES Yamuna Power Ltd (BYPL). BYPL said wind power will be procured by the distribution company at a tariff of ₹ 2.52 per unit for a period of 25 years. The SCEI is the government-appointed nodal agency for procurement of power from grid-connected wind power projects. The current deal will take the total wind power portfolio of the distribution company to 400 MW. Of the total 400 MW of wind power, 100 MW is expected to be in use from November 2018 and the remaining will be made available from November next year. Wind power will be procured from developers in Gujarat’s Kutch. The tariff is expected to be one of the lowest in case of wind power, said the BYPL.

Source: The Hindu

After SC pulls up UP government, Agra admin cracks down on polluting industries

19 July. A week after the Supreme Court (SC) reprimanded the UP government for the damage caused to the Taj Mahal due to high levels of pollution, the Agra administration sealed nine furnaces and dismantled another 33. The action came 24 hours after the Taj Trapezium Zone Authority passed an order to impose a hefty fine of Rs 1 lakh, along with five years of imprisonment, to industries causing pollution and violating the Environment Protection Act, 1986. The industry bodies in Agra, however, are not happy with the administration’s move and are calling it an ‘overkill’ in light of the SC observation. National Chamber of Industries and Commerce (NCIC) president Rajiv Tewari said that according to the order by the top court, the state government had to ensure 100% uninterrupted electricity supply in the TTZ to stop the use of generators which are a major source of air pollution. The Secretary of Tourism Guild Association, Agra, Rajiv Saxena, said that the apex court had directed for the construction of a bypass for diverting all traffic that passes through the city but the project has not been completed so far.

Source: The Economic Times

India’s renewable energy investments topple fossil-fuel for the first time in 2017: IEA

18 July. Investment in India’s renewable energy sector overtook those made in the country’s fossil-fuel based power generation projects for the first time in 2017, Paris-based International Energy Agency (IEA) has said in its World Energy Investment 2018 report. It added the investment case for thermal power generation has grown more uncertain and investments associated with coal plants coming on line in 2017 fell by one-third to under $15 billion. Investments in power projects using coal, gas and oil as a fuel in India was at $16 billion in 2017. China, along with US, Europe and India accounted for nearly two-thirds of global investment in electricity networks in 2017.

Source: The Economic Times

Bihar to soon conduct survey for solar power generation in flood-prone areas

18 July. State Energy Minister Bijendra Prasad Yadav said a survey would soon be conducted for generating solar energy in flood-prone areas of Bihar and assessing future possibilities. He said the perception of people towards renewable resources needed to be changed.

Source: The Economic Times

INTERNATIONAL: OIL

Colombia could create new system for oil round bidding amid delays

24 July. Colombia is preparing changes to its bidding process for oil areas in an effort to increase investment and find new reserves, the head of the oil regulator said, after repeated cancellations of its latest oil round. The changes, including contracts adjusted to international crude price fluctuations and the chance for companies to propose exploration on land not yet on offer, will help attract spending and nearly double reserves to at least 10 years of consumption, Orlando Velandia of the National Hydrocarbons Agency (ANH) said. Colombia is the third Latin American country hosting oil auctions this year, after Mexico and Brazil. Its bidding round comes after a four-year pause when low oil prices stopped many Latin American countries from offering acreage. Colombia could offer at least 20 onshore and offshore Caribbean blocks with the changes, Velandia said. The country has 1.78 billion barrels of reserves, equivalent to about 5.7 years of consumption. Colombia produces about 860,000 barrels per day (bpd) of crude, half for export.

Source: Reuters

Turkey’s Tupras to open London oil trading desk

24 July. Refiner Tupras is expanding its trading operations beyond Turkey for the first time with plans to open a London office. The company is currently advertising for trading positions on gasoline, fuel oil and derivatives in London. Tupras, which for now is Turkey’s sole oil refiner, operates four plants in Izmit, Izmir, Kirikkale and Batman, with a total annual crude oil processing capacity of 28.1 million tonnes (561,000 barrels per day). Azerbaijan’s Socar will launch a new 200,000 barrels per day refinery in Turkey in the last quarter of 2018.

Source: Reuters

Algeria in talks with oil firms to set up trading venture

24 July. Sonatrach is in talks with oil majors and trading firms to start a trading joint venture after the Algerian state energy company reached a deal this year to buy its first overseas refinery, its Chief Executive Officer (CEO) Abdelmoumen Ould Kaddour said. Potential partners, which have held talks with Sonatrach in recent weeks, include BP, Total, Royal Dutch Shell, Chevron, Repsol and Vitol, the world’s biggest independent oil trader. Sonatrach’s expansion into refining and trading reflects a shift among national oil companies that for decades focussed on producing oil and gas, while leaving marketing to third parties. Sonatrach’s move to form a venture is one of several steps aimed at easing the burden of its hefty fuel import bill that tripled year-on-year in 2017 to a record $2.5 billion. It signed a contract this year with Vitol to receive products in exchange for crude, the first such deal in decades, and said in May it had agreed to buy ExxonMobil’s 175,000 barrel per day (bpd) Augusta refinery in Sicily, Italy. One of the aims of Sonatrach’s new venture would be to supply crude to the Italian refinery and help manage the sale of oil products such as gasoline, diesel and jet fuel to Algeria and other markets.

Source: Reuters

Total boosting Port Arthur gasoline unit production

23 July. Total SA was boosting production on the gasoline-producing unit at its 225,500 barrel per day (bpd) Port Arthur, Texas, refinery. Total restarted the 76,000 bpd Fluidic Catalytic Cracking Unit 2 (FCCU 2). The unit was shut due to water in the feed from the 31,000 bpd Unibon hydrotreater.

Source: Reuters

Exxon expects more oil from Guyana’s offshore block

23 July. Exxon Mobil Corp and its partners now expect the large Stabroek oil block offshore Guyana to contain about 25 percent more recoverable resources than estimated, they said. Exxon and US-based partner Hess Corp said more than 4 billion barrels of oil equivalent could be recovered from the Stabroek block, which is part of one of the biggest oil discoveries in the world in the last decade. The previous estimate was 3.2 billion barrels of oil equivalent, Exxon, the world’s largest publicly traded oil producer, said. Exxon said production from Stabroek could reach over 750,000 barrels per day by 2025, which could place Guyana in the same league as South American peer Ecuador, a member of the OPEC (Organization of the Petroleum Exporting Countries) group of oil producing countries.

Source: Reuters

Russian oil producer Rosneft budget based on oil price of $63 a barrel

22 July. Russian oil producer Rosneft’s budget is based on an oil price of $63 a barrel, CEO (Chief Executive Officer) Igor Sechin said. The Organization of the Petroleum Exporting Countries and other producers led by Russia agreed to ease global output cuts, adding around 1 million bpd to the market from July 1 to curb a jump in the crude prices. Sechin said he was satisfied with oil prices rising to $70-$80 per barrel.

Source: Reuters

Mexico business group unhappy about delay in oil auctions

20 July. A decision to delay Mexican oil auctions until after the next president takes office does not augur well for opening the country’s energy sector to private investment. The government said it had postponed auctions scheduled for September and October until next February to give firms more time to consider the blocks on offer. Incoming President Andres Manuel Lopez Obrador, a leftist, has been a long-standing critic of opening up the oil and gas sector to private capital, and said before the election he would demand the auctions be halted. Lopez Obrador has said little about the oil auctions since his victory. Senior members of his campaign team did not respond to questions about whether the postponement was agreed between the incoming and outgoing administrations.

Source: Reuters

Brazil oil regulator rules out norms for fuel pricing frequency

20 July. Brazil’s oil regulator ANP said it would not establish a minimum frequency for fuel price adjustments, after a nationwide truckers’ protest over rising diesel prices in May cast a spotlight on the issue. The protests paralyzed Latin America’s largest economy and forced the government to lower diesel prices through tax cuts and subsidies. They also prompted ANP to launch a public consultation from June 11 to July 2, on a potential rule that could set limits on how often fuel prices change in the country. But Decio Oddone, ANP’s chief, ruled out such a move, instead promising that the agency would approve a resolution that would bring more transparency to the fuel sector. The resolution, which will also lay out rules about the timing of information on price changes, will be put to a public consultation in around 30 days and could go into effect in as little as 60 days, Oddone said.

Source: Reuters

UK union to ballot 2.5k offshore oil workers for strike

20 July. Offshore oil services workers will be balloted for potential strike action after they rejected a pay increase offer by the Offshore Contractors Association (OCA), Britain’s union Unite said. Unite said it has 2,500 members covered by the OCA and the decision would affect 106 North Sea oil platforms.

Source: Reuters

Japan’s last imports of Iranian oil could be in October

19 July. Japanese oil refiners will likely stop loading Iranian crude by mid-September with final shipments arriving in the first half of October, the head of the nation’s oil refiners association said, as the US (United States) pressures countries to halt such imports. US President Donald Trump’s administration has demanded nations cut all their imports of Iranian oil from November as it reimposes sanctions over Tehran’s nuclear programme. The president of the Petroleum Association of Japan (PAJ), Takashi Tsukioka, said that the industry is asking the Japanese government to push to maintain current levels of Iranian imports in talks with the US. PAJ had said that Japanese refiners would likely stop importing from Iran, but gave more details on potential timings. Many refiners in Japan, the world’s fourth-biggest oil importer, say they are resigned to completely halting imports from one of their historically important suppliers, unlike during a previous round of sanctions when they substantially reduced imports from the Middle Eastern country. Japan last year imported 172,216 barrels per day of Iranian crude, down 24.2 percent from a year earlier, with Iranian oil accounting for 5.3 percent of the nation’s total imports.

Source: Reuters

Saudi oil exports to drop by about 100k bpd in August: OPEC Governor

19 July. Saudi Arabia expects its crude exports to drop by roughly 100,000 barrels per day (bpd) in August as the world’s top oil exporter works to ensure it does not push oil into the market beyond its customers’ needs, the kingdom’s OPEC (Organization of the Petroleum Exporting Countries) Governor Adeeb Al-Aama said. Al-Aama said that Saudi Arabia’s crude oil exports in July would be roughly equal to June levels. Saudi oil exports in June were about 7.2 million bpd, while the latest official figures show May exports at 6.984 million bpd. Al-Aama said Saudi Arabia’s policy is to work on satisfying customers’ needs, but to do so while adhering to OPEC and non-OPEC supply agreements.

Source: Reuters

Russia, China delay US push for halt to refined petroleum to North Korea

19 July. Russia and China delayed a US (United States) push for a UN (United Nations) Security Council committee to order a halt to refined petroleum exports to North Korea, asking for more detail on a US accusation that Pyongyang breached sanctions, diplomats said. The US complained to the 15-member Security Council North Korea sanctions committee that as of May 30, there had been 89 illicit ship-to-ship transfers of refined petroleum products this year by Pyongyang. It asked the committee to notify all UN member states that North Korea has breached a refined petroleum cap of 500,000 barrels a year – imposed by the council in December – and order an immediate halt to all transfers. But Russia’s UN mission put a “hold” on the US request, telling the committee it is “seeking additional information on every single case of ‘illegal’ transfer of petroleum,” diplomats said. According to the Security Council North Korea sanctions committee website, only Russia and China have reported legitimate sales of some 14,000 tons of refined petroleum to North Korea in 2018.

Source: Reuters

Iraq extends bid deadline for Diwaniya oil refinery project

18 July. Iraq has extended the deadline for foreign companies and investors to bid for the construction of a 70,000 barrels per day oil refinery in Diwaniya, south of Baghdad, the oil ministry said. Documents for the bidding process will now be available until September 2 and the bidding will close on October 30 instead of July 31, the ministry said. The refinery is one of several oil-processing projects offered by Iraq as part of its plan to become self-sufficient in oil products.

Source: Reuters

OPEC, non-OPEC compliance with oil cuts fall to around 120 percent in June

18 July. OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC’s compliance with oil output curbs has declined to around 120 percent in June from 147 percent in May. OPEC and non-OPEC countries agreed to gradually bring compliance back to 100 percent at a meeting at the end of June. The move is designed to add more barrels to the market and reduce upward pressure on oil prices after unexpected outages in Venezuela and Libya pushed compliance to record high levels.

Source: Reuters

Nigeria’s Senate to investigate ‘anomalies’ in renewal of oil leases

18 July. Nigeria’s upper house of parliament will investigate anomalies in the renewal of oil leases by the ministry of petroleum, it said. Nigeria is Africa’s biggest crude oil producer and oil sales make up around two-thirds of government revenue. Oil companies must periodically renew their oil block licenses to continue extraction or exploration. The Senate voted for a committee to “report to the Senate the anomalies in the ongoing lease renewal process and identify appropriate measures to correct the said anomalies”.

Source: Reuters

Russia supplies North Korea with 200-400 tonnes of oil products a month

18 July. Russia supplies North Korea with between 200 and 400 tonnes of oil products per month, Russia’s ambassador to North Korea, Alexander Matsegora, said. North Korea relies on imported fuel to keep its struggling economy functioning. Quotas set by the United Nations allow over 60,000 tonnes of oil products from Russia, China and other countries to be delivered to North Korea per year, Matsegora said.

Source: Reuters

INTERNATIONAL: GAS

In first for UK, government clears Cuadrilla to frack shale gas site

24 July. Shale gas developer Cuadrilla became the first operator in Britain to receive final consent from the government to frack an onshore horizontal exploration well, paving the way for commercial production. The government said it had granted approval for so-called hydraulic fracturing to take place at Cuadrilla’s Preston New Road site in northwest England. Fracking involves perforating wells and fracturing rocks by injecting liquids, sands and chemicals to suck in oil and gas. Following fracking of the first two horizontal wells, Cuadrilla will run an initial flow test of the gas produced from both for about six months, the firm said. In May, the government announced plans to speed up planning applications to support development of the country’s shale gas industry. The British Geological Survey estimates shale gas resources in northern England alone could contain 1,329 trillion cubic feet of gas, 10 percent of which could meet the country’s demand for almost 40 years. However, it is impossible to know exactly how much shale gas might be underground – and more importantly, how much can be extracted – until fracking has started in earnest.

Source: Reuters

LNG import plan for South Australia targets first gas in mid-2020

23 July. A private firm is looking to import liquefied natural gas (LNG) to South Australia starting in 2020, around the same time as two other proposed import projects, looking to fill a supply gap as domestic gas gets sucked into LNG exports. Venice Energy plans to submit a development application to the South Australian government within the next month to park a floating storage and regasification unit (FSRU) in Port Adelaide, Managing Director Kym Winter-Dewhirst said. If regulatory approvals come through by March, construction could begin by June 2019, he said.  The LNG import plan is part of a three-stage project with a budget estimated at A$750 million to A$800 million ($556 million to $593 million). Australia’s government commodities forecaster said in a recent report that imports could help cap soaring gas prices, but the economics might not work as it might be tough to find cheap LNG beyond 2022. Energy consultants Wood Mackenzie forecast in a report last week that only one LNG import terminal would be needed until the 2030s.

Source: Reuters

Ohio’s EPA wants to delay Rover natural gas pipeline completion: ETP

23 July. Energy Transfer Partners LP (ETP) said that state environmental regulators in Ohio were using a notice of violation related to the unapproved disposal of industrial waste to delay completion of the company’s Rover natural gas pipeline. The Ohio Environmental Protection Agency (EPA) issued the violation to Rover after the company deposited spent drilling mud containing low levels of a chemical solvent, tetrachloroethene, known as PCE, without approval, according to the EPA’s July 11 filing with the Federal Energy Regulatory Commission (FERC). The $4.2 billion Rover project is designed to carry up to 3.25 billion cubic feet per day (bcfd) of gas from the Marcellus and Utica shale fields in Pennsylvania, Ohio and West Virginia to the US (United States) Midwest and Gulf Coast as well as Ontario, Canada.

Source: Reuters

Woodside exits Sempra Port Arthur LNG export project in Texas

21 July. Woodside Petroleum Ltd, Australia’s biggest independent oil and natural gas company, has decided to pull out of Sempra Energy’s Port Arthur liquefied natural gas (LNG) export project in Texas, Sempra said. Sempra and Woodside had agreed to share the cost of developing Port Arthur in February 2016. The project, which Sempra said could cost $8 billion to $9 billion, includes two liquefaction trains capable of producing about 11 million tonnes per annum (mtpa) of LNG, up to three storage tanks and facilities to load LNG onto ships.

Source: Reuters

Vopak inks deal with Engro to buy 29 percent of Pakistan’s first LNG terminal

20 July. Global independent tank storage company Vopak said it has inked an agreement with Engro Corp Ltd to buy a 29 percent stake in Pakistan’s first liquefied natural gas (LNG) import facility. Vopak will invest in Elenergy Terminal Pakistan Ltd, whose subsidiary Engro Elenergy Terminal Pte Ltd (EETPL) owns the LNG facility in the country’s Port Qasim, it said. The facility, which started operations in 2015, consists of an LNG jetty and a pipeline connected to a Floating Storage and Regasification Unit (FSRU) which has been chartered by EETPL for 15 years. The pipeline supplies gas directly to the grid of EETPL’s sole customer, state-owned Sui Southern Gas Company Ltd.

Source: Reuters

Shell’s top LNG trader moves to Japan’s JERA

19 July. The trading arm of Japan’s JERA, the world’s biggest buyer of liquefied natural gas (LNG), has hired Sarah Behbehani, the former head of short-term LNG trading at Royal Dutch Shell. Behbehani will lead the LNG team at JERA Trading, which was formed when JERA bought the trading business of France’s EDF, as JERA pushes to break down restrictions on trading cargoes secured under long-term deals. Behbehani, who joined Shell in 2009, was made head of LNG trading activities for the west in 2013, including key Indian, Middle East and North African, European and Latin American markets, according to her LinkedIn profile. JERA manages an LNG supply portfolio of 35 million tonnes a year primarily through long-term contracts with producers, but so-called destination restrictions prevent the firm from reselling any unwanted volumes to third parties. Backed by Japan’s Fair Trade Commission, JERA wants to end these restrictions and become a regional supplier. It also aims to cut reliance on long-term LNG deals as a share of its overall portfolio to half by 2030, from 80 percent now. Other major LNG buyers are also boosting their trading activities. PetroChina set up its own LNG trading desk to gather market intelligence and trade cargoes, while Azerbaijan’s state-run oil company Socar hired two LNG traders last year.

Source: Reuters

Russia’s Novatek ships first LNG cargo to China via Arctic

19 July. Russian natural gas producer Novatek delivered the first ever liquefied natural gas (LNG) cargo to China via the Northern Sea Route (NSR) alongside the Arctic coast, which drastically cuts delivery time to Asian consumers. The shipments of LNG from Yamal LNG project via the NSR to China cuts transportation time and costs in comparison to other routes such as Suez Canal. China’s National Energy Administration said China National Petroleum Corp (CNPC) will start lifting at least 3 million tonnes of LNG from Yamal starting in 2019. The passageway is important for Yamal because it cuts shipping times to its main customers in Asia by nearly half – to 15 days – and thus saving time and Suez Canal fees incurred on the westward route. The $27 billion Yamal LNG plant developed by Novatek and France’s Total despite US sanctions started exporting in December, but cargoes ferried on ice-class LNG tankers have only sailed to Europe so far. The NSR, which is crucial for Yamal LNG, typically opens for summer navigation from June until November but severe ice conditions this year have delayed the start of deliveries. Novatek plans to develop another large-scale project of producing the frozen gas – Arctic LNG 2, which is set to start producing LNG in 2022-2023.

Source: Reuters

INTERNATIONAL: COAL

German coal imports could fall 12 percent in 2018, trumped by green power

19 July. Germany’s hard coal imports may fall for the third year in a row this year and by 12 percent from 2017 levels, importers group VDKi forecast. The group forecasts imports of 45 million tonnes in 2018. Total imports of 51.2 million tonnes in 2017 were already down 10.2 percent from a year earlier, and well below a full-year prediction for 2017 of 54.6 million made by VDKi a year ago. Some 70 percent of the coal imported in Europe’s biggest economy goes to power utilities, a quarter to steelmakers and the remainder to heat providers, influencing global coal trade flows and prices at landing ports. Power generation based on coal declined 20.9 percent year-on-year in the first four months of 2018, VDKi managing director Franz-Josef Wodopia said. Coal suppliers to Germany, including Russia, the United States, Colombia, South Africa and Australia, stand to lose.

Source: Reuters

Australia’s South32 beats annual coking coal output guidance

19 July. Australian miner South32 Ltd beat its coking coal output guidance for fiscal 2018, boosted by better than expected production at its Illawarra project even as fourth-quarter output dipped 24 percent. Coking coal production fell to 1.1 million tonnes in the June quarter from 1.4 million tonnes a year earlier, but was ahead of a UBS estimate of 818,000 tonnes. South32, made up of non-core assets spun off by mining giant BHP in 2015, posted full-year coking coal output of 3.2 million tonnes. The miner had forecast full-year coking coal production of 3 million tonnes.

Source: Reuters

INTERNATIONAL: POWER

Tanzania secures loan for Nyakanaz–Kigoma power transmission project

24 July. Tanzania has been granted a loan worth $123.39 million to finance part of the country’s North-West Grid 400 kilovolt (kV) Nyakanaz–Kigoma power transmission line project. The funding was approved by the multilateral development finance institution, the African Development Bank (AfDB). The project aims to improve supply, reliability and affordability of electricity in the Kigoma Region in north-western Tanzania by providing main grid access for the socio-economic transformation of the region in line with the country’s 2025 vision. It is projected to increase electricity access from 16.2% to 20% in the region with over 483,000 households by 2024. Integration of existing Kigoma and Kasulu 33 kV distribution networks with the main grid including supply of last-mile connection materials to serve at-least 10,000 new consumers in Kigoma Region.

Source: ESI Africa

Gaza’s only power plant shuts down due to fuel shortage

23 July. The only power plant in the Palestinian Gaza Strip stopped operation due to shortage of fuel. The plant’s halt will affect all aspects of life in Gaza, Mohammed Thabet, media officer in Gaza’s energy distribution company, said. Thabet said that nine Israeli lines out of 10 are currently providing Gaza electricity with a capacity of 108 MW. The line, damaged a few days ago, provided 12 MW. The company will make efforts to provide a four-hour cycle of electricity per day, he said. The coastal enclave needs around 500 MW of power per day. The power plant operates with one turbine of 25 MW, while the Israeli lines provide 120 MW and the Egyptian lines, which have been idle for a week, provide 14 MW.

Source: Xinhua

Retailer Leclerc to sell electricity to French households

23 July. French retailer Leclerc said it planned to start selling electricity to French households in autumn, targeting a market share of 10 percent by 2025. Leclerc is the second major retailer to enter the power market following Casino, online subsidiary Cdiscount last year started offering retail customers a 15 percent discount to regulated electricity prices. In the 1980s, Leclerc started selling petrol and its CEO (Chief Executive Officer) Michel-Edouard Leclerc said his firm is now France’s second-largest gas station operator after oil group Total. France’s main independent power vendor, Direct Energie, in April agreed to sell itself to oil major Total, which will add 2.6 million new clients to the 1.5 million electricity clients Total already had. More than 30 alternative gas and electricity suppliers operate in the French retail market, including Italy’s Eni.

Source: Reuters

Plagued by cuts, Lebanon survives on floating power plants

22 July. Lebanon has for decades struggled with daily power cuts that leave residents sweating through their shirts summer after sticky summer. The bankrupt national power company, unable to build new power plants, has been buying electricity from Turkish barges docked off-shore. Lebanon received its third floating power station — the 235 MW Esra Sultan, built and operated by the privately owned Turkish Karadeniz Energy Group. Lebanese Energy and Water Minister Cesar Abi Khalil billed it as a temporary but thrifty measure to reduce part of Lebanon’s electricity deficit. It is the third so-called “power ship” to dock in Lebanon since 2013. Lebanon recently extended its contract with Karadeniz to ensure that at least two of the barges will continue serving the country for another one to three years. Blackouts have been a fixture of life in this Mediterranean country since the 1975-1990 civil war. Electricity from the Karadeniz barges costs more than producing it on land but less than the fees private operators charge for backup power during the daily outages. In the Beirut suburb of Dekwaneh, the media production company Final Cut purchased a $10,000 generator to provide backup power through 10-hour daily outages. Lebanon is consistently ranked among the world’s most corrupt countries, and the sprawling black market for private power has created a perverse power structure that many say politicians have little incentive to reform. Lebanon’s state-owned power company, Electricite Du Liban, is producing just 2,050 MW of electricity, or less than two-thirds of the summer demand, according to the energy ministry.

Source: Financial Post 

Italy’s Enel keen to acquire more than three power distributors in Brazil

19 July. Italy’s Enel SpA eyes more three electricity distributors in Brazil after acquiring a major stake in power company Eletropaulo Metropolitana Eletricidade de Sao Paulo SA, Chief Executive Officer Francesco Starace said. Starace said Enel was interested in the acquisition of Light SA, controlled by the state-run electricity company Companhia Energetica de Minas Gerais. Other targets include two Eletrobras distributors. Enel made a big move in Brazil to become the nation’s largest electricity distributor, acquiring a majority stake in Eletropaulo for 5.55 billion reais ($1.44 billion).

Source: Reuters

Israel passes law to break up electricity monopoly

19 July. Israel passed a law to open the electricity sector to new competition and break up the monopoly held by its state-owned power utility. The reform was approved by the cabinet in June after the government, Israel Electric Corp (IEC) and its workers agreed on changes to end a 22-year stand-off. IEC, which for decades has managed every aspect of electricity from running power plants to connecting households, agreed to sell 19 production units in five sites over five years and form a subsidiary to manage two yet-to-be-built power stations that will run on natural gas. System management and planning will be taken away from the utility and sold to a different government-owned company, Israel’s finance ministry said. IEC will remain a monopoly in distribution, but electricity supply will be gradually opened to competition.

Source: Reuters

INTERNATIONAL: NON-FOSSIL FUELS/ CLIMATE CHANGE TRENDS

France’s Avril raises biodiesel output on higher oil prices, demand

24 July. Strong oil prices and a spike in demand has allowed Avril’s biodiesel plants to run at full capacity since June but Argentine imports could force the European Union (EU)’s largest biodiesel maker to return to part-time work, its Chief Executive Officer (CEO) Jean-Philippe Puig said. Europe’s biodiesel industry has been struggling since the EU reduced duties on imports from Argentina last year after Buenos Aires mounted a successful challenge at the World Trade Organisation. Avril implemented a six-month plan to reduce production at its oilseed processing unit Saipol in March, blaming huge Argentine biodiesel imports for exacerbating poor market conditions. European producers are hoping that the European Commission will implement new taxes on biodiesel imports in September following renewed allegations that Argentina unfairly subsidised its biofuel sector. Avril produced of 1.4 million tonnes of biodiesel in 2017, from a capacity of 1.8 million. Production was expected to fall this year due to the reduced output implemented in March but the recent pick-up should allow it to make up for most of the shortfall, Puig said. The increase in biodiesel demand was also linked to growing diesel consumption and rising blending mandates in some EU countries, Puig said.

Source: Reuters

New biodiesel recipe can cut Indonesia’s fuel imports: Industry Minister

24 July. Indonesia, the world’s biggest palm oil producer, is offering incentives to developers of a new 100 percent palm oil-based “green diesel”, which the net oil importer hopes can replace costly fuel imports within three years, the country’s Industry Minister Airlangga Hartarto said. Biodiesel for land transportation in Indonesia currently consists of a 20 percent bio component that is mixed with petroleum diesel. That component is expected to be raised to 30 percent in 2020. In Indonesia, the bio portion of biodiesel is made with fatty acid methyl esters (FAME) from palm oil, but efforts to increase FAME concentrations in biodiesel have faced resistance from regulators as well as the automotive and oil industries. While biodiesel can cut fuel costs and reduce emissions, higher blends of FAME require special handling and equipment as the fuel has a solvent effect that can corrode engine seals and gasket materials, and it can solidify at cold temperatures. But according to Hartarto, Indonesia has found a new way to produce biodiesel that is not based on FAME that can avoid these problems. A biorefinery owned by Elevance Renewable Sciences and Wilmar International is currently producing “green diesel” in a pilot project, and has been given a corporate tax discount to develop full-scale output, Hartarto said. Indonesia’s biodiesel program was already reducing Indonesia’s fuel import demand by $21 million per day, Hartarto said. The Indonesia Biofuel Producers Association expects unblended biodiesel exports to reach 800,000 kilolitres this year.

Source: Reuters

Oil majors win dismissal of New York City climate lawsuit

20 July. A US (United States) judge dismissed a lawsuit by New York City seeking to hold major oil companies liable for climate change caused by carbon emissions from burning fossil fuels. In dismissing the city’s claims against Chevron Corp, BP Plc, ConocoPhillips, Exxon Mobil Corp and Royal Dutch Shell Plc, US District Judge John Keenan in Manhattan said climate change must be addressed through federal regulation and foreign policy. The oil companies moved to dismiss the case on numerous grounds, including that the federal Clean Air Act authorizes only the Environmental Protection Agency to bring lawsuits over pollution.

Source: Reuters

21 percent of Queensland’s power to come from renewable energy by 2019

18 July. Queensland’s Energy Minister Dr Anthony Lynham is responding to the detailed Australian Energy Market Operator released. Three Queensland coal plants will retire in 20 years taking 3780 MW from the Queensland energy grid. Renewable energy sources will add 2164 MW to the grid by mid-2019, meaning Queensland will be supplying 21 percent of energy needs by renewable energy by mid-2019. Queensland will have 2164 MW of renewable energy ready by mid-2019, equivalent to 21 percent of its total energy production, Energy Minister Dr Anthony Lynham said. According to the Clean Energy Council, that level of renewable energy would power more than 800,000 Queensland homes.

Source: Brisbane Times

UK to require big companies to report CO2 emissions from April 2019

18 July. Big companies will have to report their energy use, carbon dioxide (CO2) emissions and energy efficiency measures in their annual reports from next April under a new framework set out by the British government. The government said it wants businesses and industry to improve energy efficiency by at least 20 percent by 2030. A previous company reporting scheme, called the CRC Energy Efficiency Scheme, was too complex for businesses and will be closed. The new framework will simplify and streamline reporting requirements. Concerns in the investment community that assets are being mispriced because climate risk is not being factored into financial reporting have prompted demands for more transparent climate-related financial information.

Source: Reuters

China to open power trading to hydro, nuclear power generators: NDRC

18 July. China will open an electricity trading market for hydropower and nuclear power generators, and accelerate the process for coal-fired power plants to join the market, the National Development and Reform Commission (NDRC) said. The NDRC also urged local authorities and grid companies to remove barriers on cross-regional power trading and encouraged all types of power generators that can meet energy consumption and emission standards, including captive power plants at industrial plants, to participate in the trading market. China plans to remove power consumption and generation restrictions for coal, steel, non-ferrous and construction materials companies from this year, allowing them to fully trade in the power market. The NDRC also asked local authorities to reduce intervention during power trading, as it is part of the country’s years-long efforts to liberalize the country’s electricity market.

Source: Reuters

DATA INSIGHT

Coal Import Scenario in India

Types of imported coal Quantity (Million Tonnes) for 2017-18
Coking 47.00
Non-Coking 140.90
Others 20.37
Total 208.27

Coal Imports: 2016-17 Vs 2017-18

Source: Ministry of Commerce & Industry

Publisher: Baljit Kapoor

Editorial Adviser: Lydia Powell

Editor: Akhilesh Sati

Content Development: Vinod Kumar Tomar

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