8Energy News Monitor I Volume VIII, Issue 32

GCV and now Weakening of Rupee: Pressure Mounting on the Power Sector

Ashish Gupta, Observer Research Foundation

he problems in the power sector are multiplying. On the one-hand, there is uncertainty over pricing of coal because of the move by CIL to adopt Cross Calorific Value method but on the other there is the weakening of the rupee. The bills of companies have already increased by 30-40% because of GCV mechanism and weak rupee will increase it further. This will affect projects which are based on imported coal.

The near-20% rupee depreciation in the last six months has substantially increased generation costs of many power utilities that were forced to use imported coal because of stagnant domestic production, forcing them to cut generation. India’s power demand is increasing and since indigenous coal supply is not sufficient to cater the huge demand of power and therefore companies are looking for the imported coal. The coal supply deficit for the current year stands at 142 MT which is to be filled by the imports.

Imports looked favourable for Indian UMPP projects when South African coal prices were down by more than 16 percent from year-ago at around $105 a tonne. Since then the rupee has depreciated and reduced the attractiveness of imported coal. Huge amounts of imported coal are lying in the ports but companies are reluctant to buy at the spot prices despite acute fuel shortage. Electricity generation from the imported coal plants will come down in the coming months if the situation prevails.

The scenario is not looking conducive for the coal. Power tariff may not be increased for political reasons apart from economic reasons. This will directly impact power companies since they will not be able to pass on the costs to the consumers and will lead them to default on debt obligations. Perhaps there is no choice but for a review of the new pricing mechanism by CIL.

ENERGY

Energy Security Policy: Nature will decide our limits not Nations

Lydia Powell, Observer Research Foundation

nergy Ministers from Pakistan and India met in New Delhi this week to discuss the possibility of cooperation in joint development of the Yolotan-Osman gas field of Turkmenistan. If it materializes, it will significantly alter perceptions of energy security in India. The gas pipeline project from Turkmenistan through Afghanistan and Pakistan to India (TAPI) has been discussed for about two decade with little or no progress. The Iran-Pakistan-India (IPI) pipeline has been discussed for much longer. Neither has materialized because it was widely believed in India that this would be equivalent to giving one of the keys to India’s energy security to Pakistan. Out of the two proposed trans-national pipeline projects, TAPI has suddenly gained momentum as it is seen as a carrot to wean India away from its flirtation with the pipeline from Iran by the United States and its allies. The joint development of the gas field in Turkmenistan by India and Pakistan may also be an idea conceived by the political backers of the TAPI but it is worth pursuing purely on its economic merits.

The Yolotan-Osman gas field is part of a giant gas field seen to be the second largest in the world holding more than 26 Trillion Cubic Meters of gas. If it is allowed to flow southwards through a pipeline it is likely to be more affordable for both Pakistan and India compared to imported gas in the form of LNG. India and Pakistan are both running short of natural gas. Pakistan which is more dependent on natural gas than India, has been witnessing civil unrest in many key cities on account of gas shortages and gas price increases. India which is relatively less dependent on gas, has left many gas consuming segments un-served.

Rather than relinquishing every opportunity to secure gas supplies at reasonable prices citing Pakistan as a threat India must make a new beginning in Turkmenistan and decide to work with Pakistan and ensure that gas from Turkmenistan flows southwards towards India and Pakistan rather than towards Europe or China. India and Pakistan have consistently destroyed the ability to attract investors for trans-border pipelines by securitizing the discourse. In addition both India and Pakistan have made the mistake of pricing energy below cost that has limited their options in securing energy. Subsidies for electricity in India and Pakistan have meant that both countries are stuck illiquid utilities which cannot pay for power they procure or invest in generating more power. Both countries need to look inward and accept the fact that they are energy insecure because of the irrational economic and political choices they have made and that by securitizing the issue of cross border pipelines they are only gas inaccessible and expensive.

Climate change will limit the use of coal in India (or at least more expensive) and it will possibly affect hydro power generation in Pakistan. If Pakistan and India want to survive in a resource scarce world they need to understand that in the future threats to energy security or for that matter threat to resource security will come from nature and not from nations.

HYDRO POWER

Leaping into fray over ‘Nimoo Bazgo’ Hydroproject

Sonali Mittra, Observer Research Foundation

ndia leaves no opportunity to hijack the waters of Indus – a perception that Pakistan refuses to change. The lower riparian sensitivity is turning more into a ‘syndrome’ leading to construction of ‘false sense of scarcity’. The Nimoo Bazgo hydropower plant under construction in the Leh District in Kashmir has been surrounded by controversies similar to Baglihar and Chutak hydropower projects.

At the time where the glitches were removed for the projects earlier under contestation, another round of the controversies questioned the Indus Waters Treaty. Although in the media, it may seem like IWT can never see the end to such conflicts, the water commissions on both the sides have shown immense maturity to try and peacefully solve the issue in hand. Technically, the reasons raised over the pondage level and silt flushing outlet stands a logical reasoning. However, the media remains unsatisfied with the ‘positive’ meeting of the Indus Water Commissioners last year and instead is relying heavily on unqualified sources. One of the recent articles in Pakistani newspaper actually lists the number of hydropower projects India plans to build in Jammu and Kashmir. According to the Planning Commission, Central Water Commissions and Central Electricity Authority reports and resources, none of the listed dams have been commissioned, under-construction or even under investigation. Had there been a single point chance of dam getting constructed of the mentioned magnitude and behemoth engineering, it would have gathered attention and response from government, NGOs and other related bodies at a lot higher level, if not anything else.

Notwithstanding the concerns that Pakistan is raising, it is imperative for a country which is vitally dependent on one river system to be a bit belligerent on such issues, especially given the long drawn history of the two countries. Interestingly, adding fuel to the fire are the internal uncertainties going in Pakistan’s Indus Water Commission. With the former water commissioner, Mr. Sayeed Jammat AlI Shah, being investigated for having favoured India on the Nimoo Bazgo project, the whole dynamics of this probe has changed its position as compared to the other two hydro projects which were under contestation. This unfortunate allegation has snowballed the issue into a stand-off between India and Pakistan and within Pakistan, bringing the separation of technicalities and politics one degree farther. Furthermore, delay by the Pakistani’s IWC in approaching International Court of Arbitration for the Nimoo Bazgo project due to incomplete paper-work has further added to the worries and fears of Pakistan especially after losing the Baglihar and Kishanganga Hydropower project cases. To assume that this issue will be legally resolved without any conspiracy theories being circulated would be too naïve. Learning from the past and being the responsible upper riparian, India should try to balance the rambunctious behaviour of the neighbour by facilitating the sharing of data and information on the dam and keep the communication channels open and transparent.

Does Nuclear Energy Still Have a Future in Asia?

Nikhil Desai*

lmost exactly 25 years after Chernobyl, Japan’s nuclear disaster had ironic timing. But the building of nuclear plants has been in decline for years, and while the industry has pinned its hopes on developing nations’ energy thirst, so many improvements are still needed in safety, regulatory and compliance criteria that the prospects look bleak.

Is nuclear power necessary, and if so, at what cost? The images of the disaster at the Fukushima Daiichi nuclear plant in the aftermath of the March tsunami — coming just ahead of the 25th anniversary of the 1986 Chernobyl accident — revived these questions at a time when governments around the world are preparing to bet trillions of dollars on a technology whose signature contribution to the world has been, well, weapons of mass destruction.

Nearly 30 years ago, Alvin Weinberg — the father of the light water reactor used in more than half of all nuclear power reactors — predicted in the wake of the 1979 Three Mile Island accident in the US that environmentalists would re-discover nuclear power as they learned the risks of climate change. He speculated that a Second Nuclear Era would emerge.

Nuclear electricity has been losing market share for 20 years or more, with China the sole significant exception. Some 80 percent of the units are more than 20 years old. For a while, it did seem that the 21st century might ring in that Second Nuclear Era, with advocates talking about a “nuclear renaissance” that could save humanity from climate change. The World Nuclear Association (WNA) even prepared a visionary forecast of worldwide nuclear capacity expanding by as much as 30 times by the end of the century.

But in the countries that were the original nuclear energy pioneers — the US, France, and the UK — reactor-building essentially ended by 2000, with only one reactor under construction in France. Reactor vendors face bleak prospects elsewhere: Japan added three units in 2004 and 2005, and has only three others under construction that are now at risk of being abandoned. Germany has said it will abandon nuclear power completely. Since 2004, an average of fewer than two units a year have been put into service, compared to one per week of equivalent fossil fuel-based capacity, and about half have been in China. Construction starts have picked up somewhat, to about five units a year; but again, more than a half are from China.

Emerging Market Reincarnation?

Despite worries about carbon emissions, the upper-income OECD market that accounted for 86 percent of world nuclear generation in 1980 has been weak for quite some time, and the Fukushima accident has put new nuclear power on life support.

The industry has pinned its hopes on developing countries, reflecting in part the dramatic transformation of the world energy economy over the past two decades. From 1990 to 2010, electricity generation in China and India grew more than five-fold. The rest of developing Asia and the Middle East also had spectacular growth in electricity generation over the period — more than 240 percent. The demand has outpaced supply, though, and shortages continue.

As in the 1960s, nuclear vendors have drawn on their governments for help in making deals. The commercial nuclear co-operation agreement between the United States and India was hailed as a way for India to build more nuclear capacity — more than 450 GW — in the next 40 years than the whole world has built in the last 50 years. China also announced a 2050 target of 400 GW. Many other countries, too, have expressed concrete interest in new nuclear power plants, including Turkey, Nigeria and practically all countries in the Middle East. Even Afghanistan wants in. Unfortunately, a long history of delays, escalation in costs and pitiful performance has previously plagued many developing countries; Argentina, Brazil, and Iran are yet to commission plants on which they started construction more than 30 years ago.

Except for Taiwan and South Korea, nuclear power has not established itself as a significant, reliable electricity source in any other developing country — with its share of power generation ranging around 2-4 percent in China, India, Brazil, Mexico and Pakistan. Even dismissing the irrational exuberance of nuclear advocates, it is worthwhile asking whether the rosy nuclear future has any chance of success given inherent risks and the threat of the illegal trade in technology and materials.

Tough Times Coming Back?

The next decade is critical for Western nuclear vendors to survive in their home markets as well as establish a firm foothold in developing countries. To that extent, the Fukushima accident is not just a Japanese but a European disaster, in particular a French one. The US vendors are not as much at risk; General Electric (the supplier of the Fukushima Daiichi reactors) can sell other types of generating equipment. France, with the state holding the lion’s share of AREVA, will suffer the most if it does not make rapid gains in developing countries.

This is precisely where civic protests against new nuclear plant sites in India have sharpened since the Fukushima Daiichi accident. India, after all, is a developing country pioneer in both civilian and military nuclear technology; it installed a dual-purpose reactor in 1954, ordered a power reactor in 1963 and tested a nuclear bomb in 1974, the first to do so outside of the UN Security Council permanent members.

In the midst of rapid economic growth, the Indian debate has taken on the shades of similar debates in years gone by about safety, comparative economics and environmental impact — and about sheer “necessity,” as if accident risks and questionable economics do not really matter.

In fact, major nuclear accidents have occurred, nuclear economics have never proven decisively favorable, and “necessity” is now argued in terms of avoiding fossil fuel use, not because fossil fuels are in danger of exhaustion, but because of climate change. Of course, energy efficiency and renewable energy have also made significant strides; however, these are easily dismissed by nuclear advocates who ignore the fact that after nearly 60 years, the nuclear contribution to world electricity supply has yet to reach even 5 percent.

Unfortunately, in India or elsewhere, vested interests in government, scientists in nuclear bureaucracies and even some environmental activists possessed of the need to reduce CO₂ emissions at any cost and by any means have “tamper-proof” convictions. More importantly, that portion of the establishment does not even have to bother with the mundane realities of planning, running and regulating electrical systems; their convictions are even “evidence-proof.”

The reality that often gets ignored in the ideological debates and fanciful advocacy is that nuclear power poses formidable demands on institutional capacity. Technologies can be imported much more easily than institutions, which need to grow organically. While the risks of major accidents are real and staggering, the last 40-odd years of experience with nuclear power has confirmed three concerns that are beyond technological fixes: 1) the potential for diversion of materials to weapons of mass destruction; 2) the unpredictability and uncontrollability of costs and performance; and 3) the difficulty of planning and executing an emergency response, as was just seen in Japan.

Institutional capacities are generally weak in developing countries, even in India with its long nuclear experience. Nuclear safety agencies are not free of conflicts of interest, and power sector regulatory agencies often simply do not have the authority to mandate or enforce criteria concerning cost or performance.

Institutional challenges rapidly multiply with the scale of the nuclear enterprise. It is one thing to manage one or two reactors, quite another to deal with 20 or more sites distributed over a wide area. As for the capacity to cope with a major accident or terrorist event, especially with a massive expansion in nuclear sites, one only has to keep in mind that “an accident anywhere is an accident everywhere.”

Don’t Give In to Temptation

Unfortunately, nuclear dreams come in pairs: electric power and military power. And even where governments have no interest in the military option, potential diversion by non-state actors will remain a possibility, no matter how improbable. Major accidents will also remain a potential nightmare. True, governments have to plan for all manner of calamity, but what is different with the nuclear option is the sheer hubris of nuclear advocates. Their immodest assurances of safety and superiority make it more likely that even avoidable risks will not be avoided, and manageable risks will not be managed.

Therein lies the paradox of the nuclear choice — the alternatives carry minor excess cost or damage risk, whereas ambitious nuclear plans carry huge, unmanageable incremental risks that are simply avoidable.

Is the world prepared for an Asia-Pacific reincarnation of nuclear power in the 21st century? One option will be to establish and strengthen safety and regulatory institutions, build adequate and expensive emergency response systems, adopt stringent compliance criteria and put all new licensing under public scrutiny. These are huge undertakings with no assurance of success.

There is another option: resist the temptation. For now, fossil fuels are reliable enough to help in the transition to a post-carbon world. Renewable energy and energy efficiency will help enough in due course.

Views are those of the author

*Nikhil Desai is an energy economist and environmentalist based in Ahmedabad and can be contacted at [email protected].

Note: A longer version of the article is available from the author.

Courtesy: Article was originally published by Global Asia and is available at http://www.globalasia.org/V6N2_Summer_2011/Nikhil_Desai.html?PHPSESSID=325598a277561f56a4a634b369106737

DATA INSIGHT

Power Generation Targets & Achievements for 2010-11

Akhilesh Sati, Observer Research Foundation

A) Month wise Electricity Generation

in Billion Units

Month	Target	Thermal	Hydro	Nuclear	Bhutan Import	Total Actual	Actual as % of Target
Apr-10	65.1	56.7	8.5	1.8	0.2	67.1	103.08
May-10	68.6	56.5	9.5	1.7	0.3	68.0	99.12
Jun-10	65.8	53.3	9.8	1.8	0.6	65.4	99.41
Jul-10	69.1	52.4	10.8	1.7	1.0	65.9	95.33
Aug-10	70.5	51.5	12.4	1.9	1.0	66.8	94.82
Sep-10	70.0	47.3	14.5	2.0	1.0	64.8	92.56
Oct-10	71.2	57.1	10.5	2.3	0.7	70.6	99.18
Nov-10	66.9	52.3	7.4	2.3	0.3	62.3	93.08
Dec-10	70.4	57.7	7.0	2.4	0.2	67.3	95.63
Jan-11	72.4	61.1	7.6	2.8	0.1	71.7	98.97
Feb-11	66.7	55.7	7.2	2.7	0.1	65.7	98.51
Mar-11	74.1	63.2	9.3	3.0	0.1	75.5	101.82
Total	830.8	664.9	114.3	26.3	5.6	811.1	97.63

B) Region wise Electricity Generation

Region	2010-11			2009-10 Actual	% Growth w. r. t. Previous Year
Region	Target	Actual	Actual as % of Target	2009-10 Actual	% Growth w. r. t. Previous Year
Northern	231.3	230.49	99.65	213.95	7.74
Western	260.9	261.97	100.4	248.7	5.33
Southern	184.89	183.84	99.43	179.1	2.65
Eastern	138.58	120.84	87.2	113.58	6.39
North'–Eastern	8.53	8.35	97.85	7.75	7.75
Bhutan Import	6.55	5.61	85.68	5.36	4.69
Total (All India)	830.76	811.1	97.63	768.43	5.55

Source: Central Electricity Authority

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

ONGC to set up gas-based fertilizer plant

January 24, 2012. Oil and Natural Gas Corporation (ONGC) will set up a ` 5,000 crore, gas-based fertilizer plant in Tripura to meet the growing shortage of urea, the most commonly used soil manure in the northeastern region. The plant would be a joint venture with the Tripura government and a fertilizer company. The eight, predominantly agrarian, northeastern states have been facing an acute shortage of urea for the past many years. A large quantity of the fertilizer supplied from other parts of India to meet the demand get smuggled out to Bangladesh. ONGC has already sought "expression of interest" from companies with relevant experience and track record to be a partner in the proposed project.

‘Raniganj CBM block gas reserves at 55 bcf’

January 23, 2012. Essar Oil said that the verified in-place gas reserves at its Raniganj CBM block have more than doubled to 55 billion cubic feet. The total proven and probable reserves (2P) at Raniganj, evaluated as at September 1, 2011, are 113 billion cubic feet (bcf) gross, or 18.8 million barrels of oil equivalent (mmboe), while best estimate contingent resources (2C) are 445 bcf gross, or 74.1mmboe. This compares with the previous evaluation in December 2009 which showed 201bcf gross, or 34mmboe, of 2C resources. Current production at Raniganj is around 22,000 standard cubic metres of gas per day, reduced to minimise flaring, while test sales through a 48 kilometre pipeline to the Durgapur industrial estate are continuing. Raniganj is a block covering 500 sq km in which Essar Oil has a 100 per cent interest. Overall, Essar Oil has the largest acreage of CBM blocks in India, with a total of 10 tcf of gas resources across five blocks.

Cairn to ramp up output of Rajasthan block

January 18, 2012. The government has approved Cairn India's plan to ramp up crude oil output from its Rajasthan block by an additional 25,000 barrels per day from the Bhagyam discovery, the second biggest oil field in the block after Mangala. Bhagyam can commence production in less than one month and can reach a peak output of 40,000 barrels this year, depending on regulatory approvals and supporting infrastructure. Cairn is already producing 125,000 barrels per day from Mangala field in the same block which can be ramped up to 150,000 barrels per day. As per the approved development plan, Aishwariya, another discovery, can produce 10,000 barrels per day subject to regulatory approval.

Transportation / Trade

Sanctions will hurt India's Iranian oil purchases

January 24, 2012. India's purchase of oil from Iran has dropped slightly in last two years and is expected to drop further given the difficulties New Delhi might have in making payments through banks due to tough sanctions imposed by US-led international community against top Iranian banks. Indian Ambassador to the US Nirupama Rao said India was in touch with the US Government and closely monitoring the developing situation concerning Iran, when asked about the pressure from the US that India needs to reduce its dependency on Iranian oil. Noting that India was basically an energy importing country, Rao referred to the Mangalore refinery which imports Iranian oil. India is second largest importer of Iranian crude oil after China. Referring to growing tension in the region, in particular between Iran and the US, and Iran and Israel, Rao said India is against military confrontation and is for diplomatic resolution. Iran, she said, definitely has to hear the voice of the international community clearly, which should not come to a pass where it becomes difficult to retract positions.

Move to regulate margins on sale of LNG could hit Gujarat Gas valuation

January 23, 2012. The government's decision to regulate marketing margins for natural gas will hurt the deal valuation in BG's sale of its 65% stake in Gujarat Gas, which has attracted ONGC, Bharat Petroleum, GSPC, Adani, Torrent Power, Germany-based E.ON, Electricitie-De France and global private equity firms. Until now, marketing margins were negotiated between buyers and sellers and gas marketing companies like Gujarat Gas, Reliance Industries, GAIL, Adani, Petronet LNG, Indraprastha Gas, Mahanagar Gas. The government has now asked the Petroleum and Natural Gas Regulatory Board to intervene in the matter.

Aegis Logistics expands into marine bunkering sector

January 22, 2012. Oil and gas sector logistics company Aegis Logistics has entered the marine bunkering sector and will offer fuels and servicing solutions to clients. The listed firm launched its marine products division. The unit will offer a range of bunker fuels, marine lubricants and technical services. The division will operate at multiple ports across the country and will cater to the needs of ship owners, managers, charters and operators, ensuring cost reduction.

EGoM to step in to secure gas supplies to power projects

January 20, 2012. Close on the heels of the PMO stepping in to play a direct role in sorting out the fuel woes faced by coal-fired power project developers, a much-delayed ministerial panel meeting on gas allocations to upcoming projects is slated to take place later this month. The meeting of the empowered group of ministers (EGoM), which has been hanging fire for well over six months, is now expected to take decisive action by way of diverting gas supplies from “non-priority” sectors such as refineries, petrochemical and steel units to power and fertiliser rojects. Upcoming gas-based power projects are faced with a serious fuel crunch amid lower-than-expected output from key domestic gas fields. Half a dozen gas-based power units that are either in advanced stages of commissioning or have started operations are to be considered for fuel allocation in the meeting. The EGoM, which had last met on July 28 last year, is likely to take up the issue of allocation of gas to the power units on a priority basis so that all of them can be commissioned within the Eleventh Five-Year Plan period ending March 2012. The six plants have a requirement of 15.59 million standard cubic meters (mmscmd) per day of gas.

Gail backs out of race to acquire BG stake

January 18, 2012. Gail India finds the valuation of BG's stake in Gujarat Gas Co too high to make business sense to be in the race as the company has a market capitalisation of ` 5,000 crore and annual net profit is about ` 250 crore. Gail, which aspires to be a countrywide player in the city gas distribution domain through its subsidiary Gail Gas Ltd, had initially considered acquiring BG's 65.12% stake in Gujarat Gas. At current market price, BG's stake in Gujarat Gas is valued around ` 3,000 crore and the company would expect some premium over that, making it a costly buy. Gail is country's biggest gas utility company with stakes in several city gas distribution firms, including those supplying gas in Mumbai, New Delhi and National Capital Region.

Policy / Performance

Cabinet gives final nod to the Cairn-Vedanta deal

January 24, 2012. The Cabinet gave its final consent to the $8.5-billion Cairn-Vedanta deal after companies met all conditions set by the government to complete the transaction. The oil ministry had recommended to the Cabinet that the transaction that was conditionally cleared in June should get the final consent as the matter raised by the home ministry was not directly concerning the deal. The home ministry had cleared the deal, but along with the approval, it had placed on record various environmental, regulatory and human rights issues that Vedanta was facing in recent years.

EGoM on natural gas in mid-February

January 24, 2012. A high-level ministerial panel may in mid-February take up the Oil Ministry's suggestion of key changes in the natural gas allocation policy in view of sharp drop in output from Reliance Industries' eastern offshore KG-D6 block. The Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee may meet in the week beginning February 12, government said. The oil ministry has proposed to stop gas supplies to power producers that do not sell electricity at regulated tariff. Also, future gas allocations are to be made only to urea fertiliser plants and fuel allocation to phosphates and potassium fertiliser producers be stopped.

Govt extends contract area of GSPC in KG basin

January 24, 2012. The government has granted 20.5 square kilometre (sq km) additional area in the prolific KG basin to Gujarat State Petroleum Corp (GSPC), as the company's fields extend beyond its block located near gas discoveries of Reliance Industries and Oil and Natural Gas Corp. The government has extended the contract area of GSPC, as gas reservoir of the Deen Dayal West (DDW) fields spread beyond the block.

Oil Ministry calls for 100 pc depreciation on gas cylinders

January 23, 2012. With state-run oil marketing companies incurring huge under-recoveries, the petroleum ministry has demanded 100 per cent depreciation on LPG cylinders and regulators in the impending Union Budget 2012-13. In its wish list, the ministry said OMCs are incurring huge expenditure on procurement of new cylinders to meet supply of LPG for new customers, whose numbers have swelled by lakhs during the past three years. The ministry said that during 2008-09, 53.20 lakh new customers enrolled and another 86.20 lakh were registered in 2009-10, and 104.2 lakh in 2010-11. During April-September, 2011 PSU oil firms have provided 57.8 lakh new LPG connections. As on September 9, 2011, the total LPG customer base is approximately 66.73 per cent of country’s population as per census 2001. In the 2003 Budget, depreciation rate of LPG cylinders and regulators was reduced to 80 per cent and further to 60 per cent in the 2005 Budget. But, in view of the continued situation of high and volatile oil prices in the international market, the government continues to modulate the retail price of diesel and PDS kerosene and domestic LPG, below the required market price. In view of the alarming under-recoveries, a Empowered Group of Ministers in its meeting held on June 24, 2011 enhanced domestic LPG prices by ` 50 a cylinder. The under-recovery per unit of a LPG cylinder works out to ` 267. The aggregate under-recovery suffered by OMCs for such cylinders have been 17,600 crore for 2008-09, ` 14,257 crore 2009-10, ` 21,772 crore for 2010-11 and ` 7,465 crore (April-Sept, 2011). As of August1, 2011 there are 4,894 LPG markets and 10,183 regular LPG distributors.

RIL to pay VAT on UP gas sale

January 23, 2012. Reliance Industries Ltd (RIL) assured the Supreme Court that it would start paying Value Added Tax (VAT) to Uttar Pradesh government on sale of gas in the state from February 1 till a decision by the Allahabad High Court on its plea against the tax imposition. Taking note of RIL's submission, a Bench headed by Justice Altamas Kabir asked the high court to decide expeditiously the company's plea against state government's decision to impose VAT. The company also submitted that the VAT imposed on its product would be passed on to the consumers. The court's order came on an appeal by the state government challenging the high court's interim order staying imposition of the tax on the sale of gas by RIL. The UP government had challenged a July 26, 2011 order of the high court which granted stay on levy of ` 724 crore as VAT for sale of the gas during 2009-2010. The Supreme Court had on August 23, 2011 issued notice and sought responses of the Centre. According to the state, RIL, which is engaged in extracting and refining petroleum and petrochemical products, was supplying natural gas to various fertiliser companies in Uttar Pradesh and, hence, the state was entitled to levy VAT on the company. RIL had taken the plea in the high court that the transaction in question is central sale made by it from the state of Andhra Pradesh and it is not liable to pay local tax (VAT) to the state government.

PM to inaugurate the 7^th Asia Gas Partnership Summit

January 23, 2012. Prime Minister Manmohan Singh will inaugurate the 7^th Asia Gas Partnership Summit 2012 AGPS, scheduled to be held on March 23-24 in New Delhi. This is for the first time the Prime Minister will be inaugurating the AGPS. AGPS is promoted by GAIL and supported by International Gas Union. The event, organized by FICCI, is the biggest natural gas conference of the country. Over 50 speakers from 11 countries, including US, Europe, Russia, China, Korea and Japan have confirmed their participation, Gail said. The theme of the 7^th AGPS is "Evolving Dynamics of the Asian Gas Market: Challenges of Sourcing, Integration & Sustainability". Apart from the Prime Minister, other dignitaries to address the event are oil minister S Jaipal Reddy, Minister of State (Independent Charge) for Environment & Forests Jayanthi Natarajan and Minister of State for Petroleum and Natural Gas RPN Singh.

Oil prices may remain below $100 per barrel

January 22, 2012. Crude oil prices are expected to remain below $100 a barrel in 2012 due to slowing global demand amid an expected higher supplies, a report has said. Oil prices (World Bank average) are expected to decline from $104 per barrel in 2011 to an estimated $98 a barrel in 2012, the World Bank said in its report 'Global Economic Prospects 2012'. It said that slowing of global demand, growing supplies on efficiency improvements and availability of substitute for crude oil could weigh on prices. Nevertheless, the return of Libya`s oil production may necessitate accommodation by other OPEC members to keep prices from falling significantly.

India trying to find solution to pay for Iran oil: RBI

January 21, 2012. Reserve Bank of India deputy governor K C Chakrabarty said that efforts were being made to explore ways to pay for oil imported from Iran which has been subjected to international sanctions. Chakrabarty termed the issue as one arising purely out of international sanctions on Iran and not a financial one. Iran is the country's second largest supplier of crude after Saudi Arabia. Earlier, payments for the crude were made through multilateral settlement mechanisms which stopped about a year ago due to UN-imposed sanctions. Later, a novel way of payment was worked out wherein the Iranian Central Bank opened rupee accounts with Indian commercial banks, but that is also reportedly not working out well due to some issues. A report said Iran was exploring the idea of increasing imports from India to compensate for its export of oil.

Petrol, LPG outlets: OBCs get 27 pc quota

January 20, 2012. In a significant policy change, the government plans to reserve 27 per cent of new petrol pumps and LPG agencies for Other Backward Classes (OBCs). Presently, 25 per cent of the sites for new petrol pumps are reserved for Scheduled Caste (SC) and Scheduled Tribe (ST) persons. As per the guidelines under formulation, the quota for SCs/STs would be reduced to 22.5 per cent, while 27 per cent of new outlets and dealerships would be reserved for OBCs. The remaining 50 per cent of the pumps and dealerships would be alloted to open or general category candidates. 33 per cent of the locations in each category are reserved for women belonging to that category. Physically handicapped, paramilitary/police and defence personnel, freedom fighters and outstanding sports persons would also get reservation in each of the three categories -- SC/ST, OBC and General.

Outlook for Indian O&G sector stable in 2012: Fitch

January 20, 2012. Notwithstanding the huge subsidy burden and uncertain global economic environment, the outlook for the Indian oil and gas sector remains stable in 2012, according to global ratings agency Fitch. The agency also added that slow policy reforms along with high international prices were leading to burgeoning under-recoveries of oil and gas firms. It said the ratings of oil and gas PSCs have been linked with India's sovereign rating of BBB-/Stable, which denotes a moderate default risk, because of strategic importance of the sector and evidence of tangible financial support from the government to firms in the segment. According to Fitch, there is no likelihood of weakening of these ties. The report blamed slow policy reform for under-recoveries of oil and gas firms. Besides, it also cited high global crude prices and a depreciating rupee for compounding the problem. India imports around three-quarters of its oil and gas needs. The weakening rupee, which has fallen by over 15 per cent so far this fiscal, has made imports expensive. While the government has freed prices of petrol, other essential fuels like diesel and cooking gas continue to be in the controlled list. It, however, added that as ratings on public sector OMCs are based on expectation of continued government support, they are not likely to be affected. The first tranche amounting to ` 80,000 crore of the budgetary support was released in December 2011. The ratings agency also said refining margins are likely to soften in 2012 from the 2011 levels as global demand growth slows and further refining capacity is added.

Fuel prices unlikely to rise due to state elections

January 18, 2012. Fuel prices in India are unlikely to rise as there are elections coming up in several states in the country. India's most populous state, Uttar Pradesh, will hold an election in February. Elections are also due to be held in some other states, including Punjab. The Indian government caps prices of cooking gas and diesel, the most common fuel for transport and its large farm sector, to protect the poor and control inflation, but petrol prices were deregulated in 2010. The Finance Ministry is considering a new fuel subsidy sharing formula.

Oil Ministry proposes key changes in natural gas allocation policy

January 18, 2012. The Oil Ministry has suggested key changes in the natural gas allocation policy in view of sharp drop in output from Reliance Industries' eastern offshore KG-D6 block. The ministry has proposed to stop gas supplies to power producers that do not sell electricity at regulated tariff. Also, future gas allocations are to be made only to urea fertiliser plants and fuel allocation to phosphates and potassium fertiliser producers be stopped. Power producers wanted priority allocation of natural gas to meet energy deficit in the country. The fall forced the oil ministry to first apply a pro-rata cut in supplies to all consumers in July 2010 and with further dip in output it restricted supplies to only core sectors of fertiliser, LPG and power.

Oil Ministry seeks ` 220 bn cash subsidy

January 18, 2012. India's oil ministry has sought 220 billion rupees ($4.36 billion) of cash subsidy for fuel sales in the October to December quarter. The Indian government caps prices of cooking gas and diesel, the most common fuel for transport and its large farm sector, to protect the poor and control inflation, but petrol prices were deregulated in 2010.

Govt mulling cap on ONGC, OIL crude oil price

January 18, 2012. The government is mulling a cap on the price that Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) will get for crude oil they produce under a proposed new annual fuel subsidy sharing mechanism. Currently, ONGC and OIL are entitled to international oil prices for the 28 million tonnes of crude they produce annually. But they also have to make good at least one-third of the revenues that fuel retailers lose on selling diesel, domestic LPG and kerosene at government-controlled prices. Under the new dispensation being discussed, ONGC and OIL would get a capped price of USD 55-60 per barrel instead of the international rate of $ 110 a barrel. Price over-and-above the cap would be used to subsidise diesel, domestic LPG and kerosene. About ` 50,000 crore can be garnered through this formula, which would replace the existing system where ONGC and OIL give ad-hoc discounts on crude oil they sell to refiners to make up for one-third of fuel under-recoveries.

POWER

Generation

NTPC to tie up funds for Sri Lanka project

January 23, 2012. NTPC Ltd, India's No 1 power utility, expects to tie up funds for its 500 megawatts (MW) joint venture power project in Sri Lanka by September. The company also plans to sign a joint venture with Bangladesh Electricity Board to build a 1,320 MW project in Bangladesh and will start construction by May.

NTPC steps up work on hydel project to pip China

January 23, 2012. NTPC Ltd has wrapped up the pre-feasibility report for a proposed 9,750 MW Siang Upper hydroelectric project in Arunachal Pradesh. It is moving fast on the strategic project since India realises it is urgent to speed up building dams on the Brahmaputra and establish “lower riparian right”. This will help New Delhi create a strong bargaining position to detract China from building hydel projects on the upper reaches of the river. The completion of the pre-feasibility report sets the ball rolling on what could be the country’s largest hydel project and the second biggest in Asia after China’s Three Gorges. The Siang Upper project — part of a shelf of hydro stations the Centre hopes to build on the Brahmaputra — entails an investment of nearly ` 1,00,000 crore over a 10 year period.

Three power projects idle due to lack of gas

January 22, 2012. Three gas-based power projects, developed by Reliance Power, Lanco and GMR in Andhra Pradesh that are ready for regular power generation, are sitting idle due to lack of gas allocation from RIL-owned D6 Block in Krishna-Godavari basin in the East coast. While two power projects developed by Reliance Power and Lanco group separately may get gas for the trial run, GMR Rajahmundry Energy Ltd - located at Vemagiri with 384 MW capacity and already synchronised to the grid - is still waiting for the gas for its regular power generation. The government received requisitions from the power projects - Anil Ambani-led Reliance Power's 2,400 MW power project at Samalkot and 742-MW, Phase-III unit of Lanco Kondapalli Power for allocation of gas for trial purpose. As all the three projects are implemented under the 11th plan, it is necessary that they should be synchronised before the end of the plan-March 31.

Transmission / Distribution / Trade

Tata Power in talks to buy stake in MEC Coal

January 23, 2012. Tata Power is in talks to pick about 15% stake in MEC Coal, the Dubai-registered company that owns more than two billion tonnes of coal reserves in Indonesia. The Tata Group subsidiary, is negotiating with MEC co-promoter Ras-al-Khaimah Investment Authority, is keen on augmenting its foreign coal assets to reduce power generation costs at its plants in India, where fuel shortage often leads to outages. MEC Coal is developing coal concessions in Indonesia, along with an integrated heavyhaul rail transportation system and ship-loading jetty in the East Kalimantan province. The coal railway project is estimated to cost about $1 billion. The a deal would include a provision for an offtake arrangement. If the deal goes through, it will be the second time the Tatas will be buying stake in Indonesian coalmines.

Essar makes big foray into Indonesia's coal sector

January 22, 2012. Ruias-led conglomerate Essar plans to ship coal from one of its mines in Indonesia which has estimated reserves of 64 million tonnes (MT) to fuel its power projects in India, says a report. The move comes at a time when most of the power projects in India are grappling with acute coal shortages. Group's subsidiary Essar Energy has 1,600 MW of installed capacity and the same is expected to reach 9,670 MW by 2014. The entity is banking heavily on Indonesia and has purchased two more mines in the island nation. Essar had purchased Aries coal mine spread across 5,000 hectares and with an annual potential output of 4 MT in April 2010 for $118 million and is in the process of starting production.

Alstom Grid sees Indian transmission sector growth

January 20, 2012. Alstom Grid, the transmission business arm of French major Alstom, sees its India operations outperforming global market despite challenges such as poor health of state electricity boards, low private sector investment and delays in project execution. The company sees the Indian power transmission sector growing at around 8% as against a muted 3-4% growth abroad.

Govt for more private sector participation in power T&D sector

January 18, 2012. The government called for more participation by private players in the power transmission and distribution (T&D) sector. The shortage of coal has badly impacted the upcoming ultra-mega power projects at Krishnapatnam (AP) and Mundra (Gujarat). The Ministry of Heavy Industries has proposed to impose nearly 17 per cent import duty on Chinese power equipment. Under an initiative of the Power Ministry, several joint ventures have been formed to manufacture supercritical boilers and turbine generators for thermal plants. These JVs have been formed between L&T and Japan's Mitsubishi, Alstom and Bharat Forge, Toshiba and JSW, Ansaldo and GB Engineering and Thermax and Babcock and Wilcox. BHEL has entered into a collaboration with Alstom and Siemens to make supercritical boilers and turbine generators.

KEC bags order for transmission lines

January 18, 2012. Infrastructure company KEC International (KEC) has won a ` 340 crore order for construction of transmission lines in the states of Gujarat and Maharashtra. The project consists of 765kV single circuit transmission lines from Aurangabad to Dhule and Dhule to Vadodara and 400 kV double circuit transmission line. These lines are part of build-own-operate-maintain project awarded by Power Finance Corporation to Sterlite Technologies for transmission system strengthening in states of Madhya Pradesh, Maharashtra and Gujarat, the company said.

Policy / Performance

PM to soon launch PAT programme

January 24, 2012. The Power Ministry (PM) will soon launch the Performance Achieve Trade (PAT) programme aimed at reducing energy consumption of major industries such as steel and cement. The programme would focus on eight industries that consume large amounts of energy. Energy conservation and efficiency are important factors for country's energy initiatives. Besides steel and cement, other industries that would come under PAT programme include thermal power plants, pulp and paper, textile and fertiliser. The government is looking at various initiatives to improve energy efficiency. Among others, the power sector is grappling with high AT&C (Aggregate Transmission and Commercial) losses, estimated to be around 30 per cent. In the 12th Five-Year Plan (2012-17), the country is expected to see a capacity addition of about 1,00,000 MW.

Praful Patel seeks ban on import of power equipment

January 24, 2012. The heavy industries ministry has urged Prime Minister Manmohan Singh to ban foreign equipment in ultra mega power projects. The suggestion has not found favour with the power ministry, which is struggling to meet the country capacity addition target that has been pared twice during the current Eleventh Five-Year Plan. Of the four UPMMs approved so far, only one promoted by the Tatas has begun partial production. The heavy industries ministry has proposed to make it mandatory for UMPPs bidders to source equipment from domestic companies or entities that have an India presence. If the proposal goes through, foreign equipment suppliers to the mega projects will have to agree to set up manufacturing base in a phased manner.

‘CIL's formula may raise generation cost 40 pc’

January 23, 2012. NTPC joined the chorus of voices opposed to CIL's new coal pricing mechanism, asserting that it could lead to an increase in its generation costs by about 40 per cent. The power generation cost of NTPC could go up by about 40 per cent on account of the new pricing system. Power producers are opposed to the new pricing mechanism adopted by CIL and implemented from January 1, which is based on the gross calorific value (GCV) of coal, saying this has increased prices of certain grades by up to 179 per cent.

Govt may fix additional power target for 12^th Plan

January 23, 2012. The government may fix the power capacity addition target at around 1,00,000 MW for the 12th Five-Year Plan period (2012-2017). The Power Ministry had proposed a capacity addition target of 1,00,000 MW to the Planning Commission, which is likely to accept the proposal. The government had set a target of 78,577 MW during the 11th Five-Year Plan period, which was curtailed to 62,000 MW by the Planning Commission in its mid-term review citing coal shortage and environment reasons. The Power Ministry may only be able to achieve up to 52,000 MW capacity addition by March, 2012.

New power project launches to slow down in 2012: Fitch

January 19, 2012. Painting a gloomy picture of the power sector, Fitch Ratings said that a slew of factors, including pricier fuel and higher interest rates, will result in a slowdown in the launch of new power generation projects in 2012. Fitch said the power sector would remain exposed to both fuel availability and price risks during 2012. About 8,000 to 10,000 MW of new capacity is expected to be added this year. Furthermore, access to capital would be "restricted" for weaker entities, including State Power Utilities (SPUs) and greenfield projects, the report said. According to the report, domestic fuel availability would be low compared to the rising demand from power projects on account of environmental and land issues faced by Coal India.

‘Significant progress in 1.2 GW thermal plant’

January 19, 2012. Coastal Energen Private Limited, the power generating company of Coal and Oil Group, announced it had achieved "significant process" of its 1200 MW Mutiara Thermal at Tuticorin district and accorded top priority to sell power to the state-run TANGEDCO (Tamil Nadu Generation and Distribution Corporation Limited). Coal and Oil Group said, Phase I of the plant is expected to go on stream by next year.

Banks in talks on possible restructuring of loans to power sector: SBI

January 19, 2012. Country's largest lender State Bank of India has said that banks are in talks with the banking sector regulator on possible restructuring of loans to the power sector projects, which are facing problems in implementation. The bank which has over ` 32,000 crore exposure in the power sector has not yet received any "special request" from the power sector for restructuring of loans. The risk in power sector is micro not macro and in some cases they (power companies) have said that implementation of project got delayed due to reasons beyond their control.

‘CIL wage hike will not result in coal price hike’

January 18, 2012. The government said the upward revision in wages of Coal India Ltd (CIL) workers will not have any bearing on coal prices and there will be no hike in prices of the dry fuel. The development comes close on the heels of the PSU agreeing in-principle to increase the wages of its workers by 25 per cent, translating into an additional annual outgo of ` 4,000 crore for the company. The minister also expressed confidence that the public sector firm will absorb the wage increase. The minister said that CIL will achieve its revised target of 440 million tonnes of coal production for the 2011-12 financial year.

‘Govt may consider plea on fuel tariff hike’

January 18, 2012. The government is likely to consider power generators' plea for increase in tariff in view of higher coal prices and work out a solution, Minister of Power Sushil Kumar Shinde said. Shinde's comment at comes ahead of the meeting of power generators, led by Tata group's Chairman Ratan Tata with the prime minister on crucial issues plaguing the sector such as pricing issue, fuel availability, condition of the loss making state electricity boards and delays in clearances for projects. Tata Power's 4,000megawatt-ultra mega power project at Mundra and Reliance Power's similar project at Krishnapatnam, among other projects, have expressed concerns over their profits given that a policy change in Indonesia has made the cost of coal to be imported from the country almost 150% more expensive. Tata Power recently commissioned the first unit at Mundra despite concerns over profits, while Reliance Power has stalled work on its projects until the issue is resolved. The minister said that the government may also consider the request of the power equipment makers for imposition of import duty on core equipment such that they have a level playing field with respect to overseas manufacturers, particularly those from China and Korea. The likely duty on imports of power equipment may come through for projects coming up under the 12th Five year plan.

‘No fear of loan defaults’

January 18, 2012. Power producers fear fuel, tariff and land-acquisition hurdles can short-circuit private investment, but the chief of Power Finance Corporation, which sanctioned ` 75,000 crore for the sector last fiscal, takes the contrarian view to say it is not all gloom and doom and there is no fear of loan defaults. Power Finance Corp chairman Satnam Singh's views are in sharp contrast to what private entrepreneurs strongly feel. Top industrialists, including Anil Ambani, Ratan Tata, Cyrus Mistry and Anil Agarwal, are scheduled to meet Prime Minister Manmohan Singh and his cabinet colleagues to seek government support in securing fuel, funds and better tariffs as thousands of megawatts of capacity is stranded because of issues such as fuel scarcity and high costs.

India Inc's top executives see higher coal output easing power crisis

January 18, 2012. Some of India's biggest tycoons pushed the government to resolve the country's worsening electricity crunch by freeing access to fuel for power plants, adding pressure on Prime Minister Manmohan Singh, blamed for failing to push bold reforms. Tata group Chairman Ratan Tata, Reliance Power Chairman Anil Ambani, and Adani Power Chairman Gautam Adani met with Singh on a long day of meetings in the capital between top power industry executives and senior government officials. India does not produce enough power to meet the demands of a fast-growing economy and increasingly affluent population of 1.2 billion people. Outages in big cities, including the capital, are commonplace, and industrial users and office buildings must frequently rely on self-generated power. Coal and natural gas shortages and delays in acquiring land, have crimped the rollout of new plants by big producers such as Adani and left many existing units running below capacity. India has installed capacity of 187,000 megawatts (MW), about a fifth of what China has, and has a peak-hour deficit of about 12 percent. India's power output rose 8 percent to 72.7 billion kilowatt-hours in December from a year earlier. But halfway through a second five-year term, Singh's government has made little headway in pushing reforms in power and other areas, crimping investment and contributing to slowing growth. Stagnant domestic output by state-run Coal India, the world's largest coal miner, and lower-than-expected gas production coupled with the high cost of imports has thrown the business plans of generators into disarray. The inability to pass along the full cost of fuel price increases makes many units unprofitable. But as pressure builds on the government, India has raised its coal import target by over a third to about 114 million tonnes in the fiscal year ending in March, though further increases are unlikely because of a lack of rail capacity from key ports to end-users. Coal accounts for more than half of India's power generation and will be required for about 85 percent of the target of adding 75,000 MW of capacity by 2017, a government draft report said in late 2011. India has about 10 percent of the world's coal reserves but struggles to provide private players more access to coal blocks and swifter environmental clearances and land acquisition.

India’s rich halt power plans in setback to prosperity

January 18, 2012. Soaring coal prices across Asia have led India’s richest families to shelve plans for a record $36 billion investment in new power stations needed to fuel growth in the world’s second-fastest-growing major economy. Reliance Power Ltd., Adani Power Ltd. and JSW Energy Ltd. are among companies that mothballed plans to build 42 gigawatts of capacity, Association of Power Producers’ data show, equal to 68 percent of the government’s target for the five-year period that ends in March. While the government sets retail power prices, coal from Australia and Indonesia jumped 27 percent in the last two years, eroding profit margins at plants burning the fuel.

Govt to frame broader environment clearance rules for power projects

January 18, 2012. India plans to frame broader guidelines and prescribe timelines for issuing environment clearances to power sector projects. India holds about 10 percent of the world's coal reserves, but has struggled to provide enough fuel to its under-performing power sector, because of policy challenges. Coal India has said it may miss production targets this year because of delays in environmental clearances at some of its mines, even as demand rises from power plants and industries.

INTERNATIONAL

OIL & GAS

Upstream

Apache to buy Cordillera Energy Partners for $2.85 bn

January 24, 2012. Apache Corp. (APA) agreed to buy closely held Cordillera Energy Partners III LLC for $2.85 billion in cash and stock, adding to Oklahoma and Texas operations that use hydraulic fracturing to get oil and natural gas. The acquisition will more than double Apache’s holdings in the Anadarko basin and add estimated proved reserves of 71.5 million barrels of oil equivalent. The purchase will be paid for with $2.25 billion in cash and $600 million of stock and includes 18,000 barrels a day of existing production.

Britain’s oil grab in Falkland Islands seen tripling U.K. reserves

January 19, 2012. Thirty years after Margaret Thatcher fought a 74-day war with Argentina over the Falkland Islands, the prospect of an oil boom is reviving tensions. Oil explorers are targeting 8.3 billion barrels in the waters around the islands this year, three times the U.K.’s reserves. Borders & Southern Plc will drill the Stebbing prospect, one of three Falkland wells that Morgan Stanley ranks among the world’s top 15 offshore prospects this year. Meanwhile, Rockhopper Exploration Plc (RKH) is seeking $2 billion from a larger oil company to develop the Sea Lion field, the islands’ first economically viable oil find.

Cnooc targets assets, unconventional energy to boost oil, gas production

January 19, 2012. Cnooc Ltd., China’s biggest offshore oil and gas producer, plans to increase output by starting new deepwater fields, buying assets and accelerating development of unconventional energy resources. The energy explorer will maintain its goal of boosting production by 6 to 10 percent for the five years ending 2015. The company said it will increase capital spending by as much as 63 percent in 2012 as it develops more fields.

Downstream

China energy trader eyes $2.5 bn refinery in Burma

January 24, 2012. China's Guangdong Zhenrong Energy Co. Ltd, an oil and commodity trader partly owned by state-run Zhuhai Zhenrong Corp, is scouting for sites in Myanmar to build a 100,000 barrels-per-day (bpd) refinery, the company said. The project, estimated to cost $ 2.5 billion, is likely to be located in the southern port city of Dawei and built by 2015. The proposed refinery is tiny by Chinese standards but could meet 60 percent of the Myanmar market's demand for refined fuel. Myanmar has a total refining capacity of 51,000 bpd, and it imports almost all of its domestic fuel needs.

Petroplus prepares to file for insolvency after talks fail

January 24, 2012. Petroplus Holdings AG, the largest independent European refiner, said it plans to file for insolvency. The announcement marks a further decline in Europe’s refining industry after BP Plc and Royal Dutch Shell Plc cut capacity as margins thinned and fuel demand stopped growing. Petroplus had about $1 billion in credit lines frozen, preventing it from supplying plants with crude. It said last week it may sell three of its five European plants. BP and Shell, Europe’s biggest oil companies, said the supply of fuels to their services stations hasn’t been disrupted. BP sold the Coryton refinery in the U.K. to Petroplus in 2007, and Shell sold Petroplus the Petit Couronne plant in France. Essar Energy Plc said its Stanlow refinery in the U.K. would look to “fill gaps in the market” caused by Coryton’s closure. Petroplus said that it might sell refineries in France, Belgium and Switzerland, while continuing to operate the plants in the U.K. and Germany. As well as trying to renegotiate financing with its banks, Petroplus had also been seeking a crude supply deal on terms that would reduce the cash needed to keep refineries going.

China cuts Dec gasoline exports, imports more diesel before holiday

January 21, 2012. China cut gasoline exports to the lowest level in almost three years in December and diesel imports reached their 2011 high as fuel was stockpiled to meet increased demand for transport around the Lunar New Year break. Net gasoline exports fell to 164,392 metric tons last month, the lowest since March 2009, and net purchases of diesel were around 210,000 metric tons. One billion people travelled by rail and road in the nation in 13 days, in time to celebrate the weeklong holiday with their families, according to the central government. China also increased its oil processing to a record 9.28 million barrels a day, with both gasoline and diesel production rising to the highest monthly volumes ever. Diesel stockpiles rose 10 percent during December, the biggest jump since February, and gasoline inventory increased 1.4 percent. The nation’s gasoline exports fell 21.2 percent to 4.06 million tons, while diesel imports climbed 35.5 percent to 2.44 million tons. Coal imports totaled 21.38 million tons in December, bringing the year’s total to 182.4 million tons, up 10.8 percent from 2010. Imports of liquefied natural gas rose to a record 1.51 million tons last month with 2011’s total at 12.2 million tons, up 30.7 percent.

Transportation / Trade

Obama’s Keystone denial prompts Canada to look to China sales

January 20, 2012. President Barack Obama’s decision to reject a permit for TransCanada Corp.’s Keystone XL oil pipeline may prompt Canada to turn to China for oil exports. Currently, 99 percent of Canada’s crude exports go to the U.S., a figure that Harper wants to reduce in his bid to make Canada a “superpower” in global energy markets. Canada accounts for more than 90 percent of all proven reserves outside the Organization of Petroleum Exporting Countries. Most of Canada’s crude is produced from oil-sands deposits in the landlocked province of Alberta, where output is expected to double over the next eight years.

Poland opens new gas pipeline, sees higher imports from Germany

January 19, 2012. A new natural gas pipeline in southwestern Poland, inaugurated, will allow the country to import gas from Germany more cheaply than from Russia. The new pipeline, which expands the local pipeline system, will allow Poland to import 1.5 billion cubic meters of gas a year from Germany through a pumping station at the border point of Lasow. The gas will cost more than 20% less via the new link than gas from the Yamal-Europe pipeline from Russia. Poland's PGNiG SA and Russia's OAO Gazprom jointly own the Yamal-Europe pipeline. Poland will want to boost the capacity of the link with Germany in future and plans to eventually use the pipeline to export Polish gas. The ongoing work to upgrade and expand Poland's pipeline infrastructure is run by state-owned Gaz-System. The denser network will enable Poland to create a market for natural gas and will facilitate trade in shale gas, which many Polish and foreign firms are exploring in the central European country.

Policy / Performance

Scots independence cost may beat oil cash nationalists seek

January 24, 2012. Ever since oil was discovered in the North Sea off the British coast in December 1969, the Scottish National Party claimed it for Scotland. Now in power and closer than ever to a referendum on whether to break from the U.K. after more than 300 years, the SNP government in Edinburgh led by Scottish First Minister Alex Salmond is counting on tax revenue from the oil industry as a key pillar of the economy along with financial services. From 2005 to 2010, oil and gas revenue accounted for 6.8 percent to 10.8 percent of the Scottish economy.

EU hits Iran with oil ban, asset freeze as country pursues nuclear program

January 24, 2012. European Union foreign ministers agreed to ban oil imports from Iran starting July 1 as part of efforts to ratchet up pressure on the Persian Gulf nation’s nuclear program. The EU will freeze assets in Europe of the Iranian central bank as well as of eight other entities and ban trade in gold, precious metals, diamonds and petrochemical products from Iran. The Iranian Foreign Ministry called the decision “aggressive” and said it will have “negative consequences” in Europe, including higher oil prices. Among the entities are Bank Tejarat, the last major Iranian bank financing large-volume trade in Europe. Also sanctioned is port company Tidewater, owned by the Islamic Revolutionary Guard Corps, which operates about 90 percent of Iran’s container ports.

Sudanese govt downplays south Sudan's intention to build pipeline

January 23, 2012. The Sudanese government downplayed South Sudan's announcement of its intention to construct a pipeline through eastern Africa to export its oil, regarding the move as a kind of political pressure by South Sudan. The Sudanese minister held South Sudan responsible for stalling the negotiations in the Ethiopian capital of Addis Ababa, under the patronage of the African Union High-Level Implementation Panel on Sudan.

Iran says negotiations can resolve standoff

January 22, 2012. Iran said only negotiations and not sanctions can resolve the standoff over the Islamic Republic’s nuclear program. The comments come as European Union foreign ministers are set to meet in Brussels to consider an oil embargo and additional financial sanctions on the country. The U.S. and the European Union are urging Iran to return to nuclear talks.

US holds military talks with Israel on Iran as EU readies

January 21, 2012. Israeli leaders held talks with the top U.S. military commander, General Martin Dempsey, following the postponement of a joint exercise that was to be the biggest ever for the two allies. Dempsey, chairman of the Joint Chiefs of Staff, said he stressed common interests and the important partnership between the U.S. and Israel in his meetings with Israeli counterpart Lieutenant-General Benny Gantz, Defense Minister Ehud Barak and President Shimon Peres. He was also scheduled to hold talks with Prime Minister Benjamin Netanyahu. U.S. and Israeli officials have described Dempsey’s visit as a routine consultation between allies, dismissing speculation that it is focused on coordinating strategy against Iran. Barak said Jan. 18 that he doesn’t think the U.S. general’s trip is aimed at pressuring Israel against striking Iran’s nuclear facilities.

Iran confronts Saudis on oil offer

January 18, 2012. Iran warned Saudi Arabia against delivering additional oil to world markets to compensate for a drop in Iranian oil exports if they are hit by sanctions, as the U.S. continued to have mixed success in convincing Iran's major oil customers to reduce their purchases of Iranian oil. The warning from Tehran came a day after Saudi Arabia's oil minister publicly pledged to boost the kingdom's production by as much as 2.7 million barrels a day, more than Iran exports, if there was market demand for more oil.

POWER

Generation

EDL boosts power production to 1.5 GW

January 24, 2012. Electricite du Liban (EDL) said it had completed the maintenance work on the first gas turbine at the Zahrani power plant which in principle should beef up the electricity supply to 1,500 MW. However, EDL made it clear that even with the additional 210 MW, Lebanon still needs more to meet the growing needs of the entire country. Consumption exceeds 2,400 MW during the day while the current production is only 1,500 MW. Since the crisis emerged four weeks ago, most Lebanese regions experienced more than 14 hours of power rationing although Beirut still enjoys 21 hours of power every day.

Norochcholai coal power plant fails again

January 24, 2012. Sri Lanka's Norochcholai coal power plant has failed again for the third time in a period of two months. The authorities of the coal power plant are unable to say when the plant will resume operations. The power supplier, Ceylon Electricity Board (CEB) incurs heavy losses purchasing power from private sector at higher rates to meet the demand when Norochcholai coal plant fails. Power and Energy Minister Patali Champika Ranawaka has said that every non-operational day has cost the CEB ` 80 million. A Technical Engineering Union official of CEB, Senior Engineering Assistant U.R.A. Senarathna alleges that the coal power plant frequently fails due to disruptive activities of the Chinese company that wants a long term maintenance contract of the power plant. He said that around 100 employees sent to China for training to operate the plant have not been properly trained. The $ 450 million coal power plant that adds 300 megawatts to the national energy grid, commenced operations in March 2011. The plant has not been in operation for 35 days last year due to the failures.

Construction of new Zimbabwean power plant to start soon

January 24, 2012. The French consortium which has been granted a licence by the Zimbabwean government to build a $3 billion thermal power plant in the country is in the process of finalising preparations to commence construction. Revealing this to New Ziana, energy and power development minister Elton Mangoma said that when complete, the 2,000MW project which was being rolled out over the next four years was expected to alleviate the country's worsening power woes. Currently, the country's sole power utility, Zesa Holdings, is producing about 1,400MW against a national demand of over 2,000MW per day, leaving a shortfall which has to be imported. With the economy now recovering from a decade of contraction caused by sanctions by some Western countries, demand for power is rocketing.

J-Power restarts coal-fired 600 MW Isogo No.1 unit

January 23, 2012. Japanese wholesale power supplier J-Power said it restarted the 600-megawatt No.1 unit at its Isogo plant, almost two months after the plant was hit by a fire. The company, formally known as Electric Power Development Co, shut the coal-fired 1,200-MW Isogo plant in Yokohama, near Tokyo, on Nov. 24 after a fire started on a coal conveyor belt. The 600-MW No.2 unit was restarted.

Transmission / Distribution / Trade

Nairobi, Addis in landmark power purchase deal

January 22, 2012. Details of the high-stakes negotiations before Kenya signed a 400MW electricity deal with Ethiopia are emerging, revealing that Nairobi managed to talk down the initial charges proposed by Addis Ababa as too high. The deal, which analysts say presages a new era of power trading in the region, was arrived at after a great deal of haggling, with the Ethiopians pressing for a higher price on the grounds that Kenya is currently buying even more expensive power from thermal plants.

The deal ushers in one of the biggest power pool projects in the region, and will serve as a model for future arrangements under the Eastern Africa Power Pool. The deal is a take or pay contract, meaning that Kenya has to pay for the 400 MW supply even if it is not using it. It will pay US cents 7 per kilowatt hour. The transmission line is expected to be completed by 2016 at a total cost of $1.2 billion.

ATCO makes case for new transmission lines

January 21, 2012. Building two north-south power lines will help ATCO Power's plan to build large hydro projects on two northern Alberta rivers to replace aging coal-fired electricity plants, says the Calgary-based company. ATCO said that old coal plants are being phased out to meet new federal greenhouse gas regulations and the company hopes to replace them with hydro, natural gas and more cogeneration. The company has completed soil testing and other technical work on the two sites on the Athabasca River and is also considering an 800-megawatt plant on the Slave River, though the project is on hold after an area aboriginal band opposed hydro development. An 800-megawatt plant at each site on the Athabasca River is being considered.

China to have sufficient power supply during holiday

January 21, 2012. The State Grid Corporation of China (SGCC), the country's largest electric power transmission and distribution company, said that the power supply will be sufficient during the upcoming Spring Festival holiday. Thermal power plants currently have 89.34 million tonnes of coal, which is enough for 20 days of power generation. Meanwhile, the country's electricity consumption is expected to fall by 40 percent during the holiday which lasts from January 22 to January 28, as many factories suspend production during the period, SGCC said. The company said it will keep a close eye on the cold weather, strengthen inspections and maintenance of high-voltage grids, and take precautions to minimize the impact of snow and freezing rain on power transmission.

Policy / Performance

Energy turbines may be spinning in New York’s East River by 2013

January 24, 2012. The currents of New York City’s East River may soon be harnessed to produce electricity that can be sold to Consolidated Edison Inc. (ED) or the New York Power Authority. The U.S. Federal Energy Regulatory Commission awarded closely held Verdant Power Inc. of New York the agency’s first license for a tidal-energy project, which will generate power from turbines to be installed on the river’s floor. Verdant, which develops marine clean-energy technologies, plans to use the 10-year contract to “demonstrate the commercial viability” of the Roosevelt Island Tidal Energy Project.

Tokyo to build independent energy network

January 23, 2012. The Tokyo Metropolitan Government has adopted a policy to build a decentralized and self-supporting energy network that does not rely on the power generation and transmission facilities of the Tokyo Electric Power Company. The plan envisages the installation of a cogeneration facility with a total output of 47 MW on the reclaimed land in Tokyo Bay and setting up an independent transmission network, which would make it possible to supply power to affected areas in times of natural disasters or other emergencies. According to the plan developed by the Tokyo Metropolitan Government, it will start the operation of a 16 MW-scale cogeneration facility (7.8 MW x 2 units) in fiscal 2014 and supply power to nearby port facilities and public buildings through a transmission network owned by the government. It also aims to build and start operating an additional 31 MW scale cogeneration capacity (7.8 MW x 4 units) by the end of fiscal 2015. The business classification will be power producer and supplier. Heat produced through the cogeneration process will be supplied to offices and other buildings. The Tokyo Metropolitan Government plans to invite the participation of private power producers in the construction and operation of its power plant.

Cost of nuke phase-out 'could near €2 trillion'

January 18, 2012. Tech giant Siemens has warned that Germany’s nuclear phase-out could cost the country nearly €2 trillion by 2030, much higher than previously estimated. The estimate was based on the costs of expanding renewable energy sources. Costs could be reduced if Germans relied more on gas. Siemens built all of Germany’s 17 nuclear plants and offered technical support until the German government announced last spring it would begin phasing out nuclear energy in the wake of the Japanese Fukushima earthquake and tsunami disaster, with a shut down largely complete by 2022. German energy provider RWE, has previously estimated phase-out costs of up to €300 billion. State-owned investment bank KfW has estimated costs of about €250 billion over the next ten years. While green campaigners have hailed the end of German nuclear energy, industry leaders have repeatedly warned that the country’s power grid would be put at risk in future years.

China may soon resume approvals for nuclear power plants

January 18, 2012. China may soon resume approvals for the construction of nuclear power plants following the completion of safety checks on nuclear power facilities last August. Work on the nuclear power plants was suspended after the Fukushima nuclear disaster in Japan last March. According to the report, some domestic suppliers had begun to receive orders from nuclear power plant operators. Harbin Electric had recently received orders to supply nuclear power conventional island equipment to Lianyungang's Tianwan Nuclear Power Station's unit 3 and unit 4 in Jiangsu province. Construction had restarted at the Sanmen Nuclear Power Plant's unit 1 in Zhejiang province.

RENEWABLE ENERGY / CLIMATE CHANGE TRENDS

National

Gamesa bags 24.7 MW project from GAIL

January 23, 2012. Gamesa Wind Turbines, the Indian subsidiary of Gamesa, bagged an order from GAIL India, for supplying 24.7 MW of wind power turbines to the project in Palani, Tamil Nadu. The project is expected to be commissioned by March 2012. Gamesa has received an order for 29 units of G58-850 KW (24.7 MW) machines for the project. This is the first PSU order for Gamesa which is aggressively working towards expanding its operations in the Indian wind energy market. The order follows GAIL India`s decision to foray into commercial generation of wind energy. GAIL India plans to set up 100 megawatt (mw) of wind energy generator (WEG) spread over Tamil Nadu and Karnataka in the present financial year. As per the proposal discussed by Gail board, four modules of 25MW each will be installed in two southern states. Gamesa had launched its operations in India in February 2010 with setting up of an Indian subsidiary, Gamesa Wind Turbines Pvt. Ltd. The Indian venture of Gamesa has notched up an impressive turnover of about ` 10 billion in its first year in India and has exciting plans for the coming years. Gamesa has had a manufacturing presence in the Indian wind energy market since early 2010, when its first Indian factory began operating -- a nacelle assembly facility currently equipped for capacity of 500 MW.

AMC adopts green methods to bring down energy consumption

January 23, 2012. In an attempt to cut down on "soaring" electricity bills, the Ahmedabad Municipal Corporation has decided to use green and energy-efficient techniques to reduce power consumption by almost 35 per cent. The AMC has decided to construct all its new projects as green buildings, convert its main energy consuming establishment to solar powered one and change all the city street lights from high pressure sodium vapour lamps to energy efficient LED lights. The limits of the city which has been spreading far and wide due to rapid industrialisation in Gujarat were recently increased and the AMC now has 464.16 sq kms area under it with a population of 45 lakhs.

India misses solar target with 20-fold jump in capacity in year

January 20, 2012. Indian solar power capacity expanded 20-fold in the past year to at least 356 megawatts, a third of the targeted level, after infrastructure, financing and weather- related delays. The country planned to install 1,233 megawatts of central government, regional and pilot projects, the researcher said. Some are just being completed and more capacity is expected by March. The plans by the world’s third-largest energy consumer to boost capacity have provided relief for panel makers struggling with slowing growth in developed markets. Germany, the largest market for the technology, said it will cut subsidies for solar more rapidly to control costs, driving down shares of companies including Suntech Power Holdings Co. and LDK Solar Co. Gujarat, running India’s largest solar program, has only commissioned 186 megawatts of the 933 megawatts of photovoltaic plants due by Jan. 28. Of 140 megawatts awarded by central government auction, 75 are built. India had 17.8 megawatts of solar capacity in December 2010, according to the Ministry of New and Renewable Energy.

Suzlon's subsidiary bags orders worth 151 MW

January 19, 2012. Wind turbine maker Suzlon Energy said its German subsidiary REpower has bagged cumulative orders of 151 MW across Europe and North America over the last three months. REpower Systems has cumulative orders of 151 MW across Europe and North America over a three month period, excluding orders announced separately, Suzlon said. The orders are from various firms secured between October 22, 2011 and January 18, 2012 across Austria, Belgium, Canada, France, Germany, UK and the USA.

Govt: Okay with Chinese solar cells if they meet quality standards

January 19, 2012. The government says it has no objections to imports of low-priced Chinese solar cells as long as they meet prescribed quality standards. This comes as a setback to domestic manufacturers battling cheaper Chinese imports. The government rejected a plea of domestic players seeking imposition of import duty on finished solar equipment. The Indian government's stand is in contrast with the US policy, which has taken China to the World Trade Organisation over dumping of solar cells and panels. India's National Solar Mission gives preference to domestic manufacturers. However, this is only at the central level and states are not obliged to follow this policy. Low-priced Chinese solar cells and other solar equipments are flooding markets globally, riling local players. China, which exported solar panels worth $214 million last year, accounts for half the world market for solar cells. At present, India's solar cell and module capacity is around 700MW and 1,000MW, respectively. Industry expects the demand to grow to 3-5 gigawatts annually in six years. Ministry officials though inform that it's the thin-film technology in the solar cell market that is facing more threat, which often come with vendor-tied foreign financing.

Karnataka's renewable energy potential is far more than 28 GW

January 18, 2012. Studies conducted by the World Institute of Sustainable Energy, Pune, a UK government funded organisation working in the renewable energy area, has reported that Karnataka has a high renewable energy (RE) potential. The potential is for more than 28 GW, of which only 3.45 GW has been tapped till November 2011. Karnataka's RE base of 3.45 GW includes 1,929 MW of wind, 86 MW of biomass, 782 MW of bagasse co-generation, 646 MW of small hydro and 9 MW of solar. Wind offers the maximum potential, with an untapped capacity of 11 GW. Obviously the huge untapped RE potential also creates an investment opportunity. Significant potential also exists for solar, small hydro, bagasse co-generation and biomass sectors. Under the state's RE Policy, it is estimated that by 2014, there will be a generation of 6,600 MW of renewable electricity. The Renewable Purchase Specification in the state is for of 7%-10%.

Global

Green bond underwriters from Japan to Sweden top U.S. in $7 bn market

January 24, 2012. Skandinaviska Enskilda Banken AB and Daiwa Securities Group Inc. have underwritten the most green bonds since the securities were first issued in 2007, indicating the dominance of Swedish and Japanese banks in the market. Five of the 10 top underwriters on about $7 billion of the bonds issued by international finance institutions were drawn from the two countries. London-based HSBC Bank Plc and JPMorgan Chase & Co. of New York took third and fourth place. The findings reflect government incentives pushing investment for environmental projects in Scandinavia and Japan and the credit crunch across the U.S. and Europe that restrained banks’ appetite there for taking on additional risk.

Storage key to ‘round-the-clock solar’

January 24, 2012. Storing solar- and wind-generated energy may prove nearly as important as creating it, according to the chairman and chief executive officer of Idealab, a technology venture-capital firm. About one-third of the companies in Pasadena, California- based Idealab’s portfolio are linked to clean power, including the energy-storage startup Energy Cache, Gross said. Energy Cache is developing a “gravity-based storage system, like pumped hydro, that uses clean energy to move materials or water uphill to be released later to generate energy. A slideshow describing Energy Cache’s proposal was posted in November on thegatesnotes.com, along with a comment from Microsoft Corp. founder Bill Gates.

Alstom, Drax enlist BOC Group for carbon-capture project in England

January 24, 2012. Alstom SA and Drax Group Plc enlisted BOC Group Plc, a U.K. gas manufacturer, to help develop a carbon-capture and storage project in northern England. BOC Group, based in Guildford, will work on the 426- megawatt plant to trap and store power-generation emissions under development at Drax’s site in North Yorkshire, the companies said. BOC, a unit of Munich-based Linde AG, will contribute its air-separation technology as well as plant engineering. The project’s developers plan to apply for funding from a U.K. government contest to finance plants demonstrating so- called carbon-capture and storage technology. The plant already applied to receive funds under the NER 300 program devised by the European Commission to assist renewable technologies and carbon capture, the companies said.

Clean up world seas to boost economy, U.N. body says

January 24, 2012. Cleaner and better-managed seas and coasts would help boost economic growth and reduce poverty and pollution, a United Nations Environment Programme (UNEP) report said. The report, produced with several other U.N. organizations, highlights the huge potential of a marine-based economy some five months before world governments meet to discuss pathways to more sustainable development at a U.N. conference in Rio de Janeiro, Brazil. Around 40 percent of the global population lives within 100 kilometers of a coast so the world's marine ecosystems provide essential food, shelter and jobs to millions of people. But pollution from oil spills, fertilizers, waste, sewage and chemicals, as well as over-fishing, have damaged the health and productivity of the seas. By using oceans to generate renewable energy and eco-tourism and shifting to more sustainable fisheries and transport, that trend could be reversed and islands in Asia and the Caribbean could reduce their vulnerability to climate change, UNEP said. The report recommended key steps for "greening" the seas across areas such as tourism, fishing, transport, pollution, renewable energy and deep-sea mining.

Germany advised not to import food for biofuel

January 20, 2012. Germany should not increase imports of food to produce biofuels, because this could threaten the supply of food in developing countries, a report from a German government advisory body said. The council, an independent group which advises the government on ecological economic issues, called on Germany to review biofuel subsidies and undertake a more measured consumption of bioenergy, avoiding simultaneous expansion of uses in vehicle fuels, power and heating. Ten agencies, including the World Bank and World Food Programme, last June called on governments to scrap policies to support biofuels, saying they force up food prices. The German biofuels industry association attacked the report as "not digging deeply enough" and ignoring the real market situation. Biofuels bring cuts of at least 35 percent in polluting greenhouse gasses. The vast majority of German biofuels were produced from feedstock crops produced in Germany or the rest of the EU, which have to be certified as coming from sustainable farming. The EU biofuels industry has also been involved in a series of moves over the years to reduce imports of biofuels at dumping prices from developing countries.

Italy plans more renewable energy incentive cuts

January 20, 2012. Italy's government is preparing new cuts in production incentives for renewable energy, which would hit green power producers hard and may jeopardise efforts to reach its 2020 clean energy targets, renewable energy groups said. Last year Rome slashed spending on solar power incentives to help consumers who support the scheme through power bills. Now the government has drafted a decree on incentive cuts for power generation from wind, water and biomass, which is expected to be finalised by the end of February. The latest draft of the decree foresees a reduction of the maximum annual spending on support of renewable power generation to 5.0-5.5 billion euros ($6.5-$7.1 billion) from 6.0-7.0 billion euros under the earlier draft, renewable energy associations APER, ANIE and ANEV said in a joint letter. These figures do not include incentives for solar power generation, which are covered by the decree passed in 2011. Total spending on incentives for renewable power generation amounted to about 8 billion euros at the end of 2011, including 5.5 billion euros for solar power.

U.S. wind-farm boom set to bust in 2013 as Obama tax breaks end

January 20, 2012. A U.S. boom in wind farm projects is poised to bust in 2013 as tax breaks by President Barack Obama’s administration prompt developers to rush through construction of new sites this year. More than 9 gigawatts of turbines may be constructed by the close of 2012 when the Production Tax Credit ends. The U.S. Treasury Department’s cash grant, which expired on Dec. 31, also spurred financing for projects to be built this year.

Embrapa will charge less than Monsanto for modified sugar cane

January 19, 2012. Empresa Brasileira de Pesquisa Agropecuaria (Embrapa), Brazil’s state-owned agricultural research agency, plans to charge less than major seed companies including Monsanto Co., Bayer AG and Syngenta AG when it begins selling sugar cane that’s genetically engineered to resist drought. The agency expects to field-test the crop in two years and may have it certified for commercial use by the National Biosafety Technical Commission in five years. Monsanto, the world’s largest seed supplier, and other large agriculture companies are also developing genetically modified cane. Embrapa plans to sell the engineered, or transgenic, plant at lower prices than commercial providers to ensure the technology remains affordable for small farmers.

Solyndra to cancel auction again after failing to lure bids

January 19, 2012. Solyndra LLC, the failed solar-panel maker that got $535 million in government loan guarantees before filing for bankruptcy, will again cancel the auction after failing to draw any offers to continue operating the company. The auction was intended to keep the company operating and potentially resurrect the jobs lost by some of Solyndra’s former employees. The company set up a supplemental auction in case sale fell through. The piecemeal sale of the company’s assets will begin with the first round starting on Feb. 22. The solar-panel maker has twice delayed the auction of its business after failing to draw any acceptable bids.

Suez, Veolia, Saur probed by EU on water-services collusion

January 19, 2012. Veolia Environnement SA, the world’s biggest water utility, Suez Environnement SA and Saur SA face a formal probe by European Union antitrust regulators into possible collusion to fix the price of water and waste-water services in France. Regulators raided the three companies in 2010 over concerns that they colluded in public tenders for water distribution and treatment. The companies have a combined market-share of 69 percent for water distribution and 55 percent for water treatment. Both markets are worth about 12 billion euros ($15.3 billion) a year.

Renewable-energy growth to outpace oil, gas through 2030, BP says

January 18, 2012. Wind power, solar electricity and biofuels consumption will grow at a faster pace than demand for fossil fuels in the next 20 years as nations seek to meet rising energy needs without adding to carbon emissions, BP Plc said. Global renewables consumption will rise 8.2 percent a year through 2030, outstripping the annual 2.1 percent gain for natural gas, the fastest-growing fossil fuel, BP said. Total energy demand for power, transport and heating is forecast to advance 1.6 percent a year. New investment in renewable energy rose to a record $260 billion last year from $243 billion in 2010, which was the first year that fresh money flowing into wind and solar generation topped funds for new oil-, coal- and gas-fired output. Governments around the world have subsidized the expansion of cleaner power production to satisfy energy demand while curtailing polluting emissions.

Norway pledges $300 mn to green world's power

January 18, 2012. Norway will spend NOK 1.8 billion ($300 million) a year to devise ways to help some of the world's poorest people get better access to energy and to develop a new market-based system to limit emissions from global energy production. The Nordic nation expects to launch a plan by June that will see several richer states give money to nine poor countries to invest in new and more efficient power plants. The government hopes the scheme will be eventually used as a worldwide example for attracting private sector cash via a new type of carbon market. The Energy+ Partnership will see Norway, UK, France, Denmark, Switzerland, Netherlands and South Korea give money to Bhutan, Ethiopia, Kenya, Liberia, Maldives, Morocco, Nepal, Senegal and Tanzania. The cash will depend on how well the recipient countries can prove they are increasing public access to energy while cutting greenhouse gas emissions compared to unchecked levels. Norway has already started working with Ethiopia and the Maldives, and in February will meet with officials from Kenya and Liberia. Rich countries will source cash from their overseas aid budgets rather than use money pledged under the U.N. to help poor nations limit emissions and tackle the effects of climate change. The Energy+ Partnership is due to be launched at the Rio+20 summit in June, where world leaders will discuss global measures to provide universal access to energy - a goal the International Energy Agency said will cost at least $48 billion a year.

Gamesa builds electric-car unit to wring profit from wind plants

January 18, 2012. Gamesa Corp. Tecnologica SA, the Spanish wind-turbine maker with factories from China to Brazil, plans to grab a share of the market for electric-car charging as use of the low-emission vehicles expands. The company is using spare capacity at a turbine converter plant in Valencia to produce car-charging stations. Last month, it bought 20 percent of Madrid-based technology company N2S to gain software that monitors power use by electric vehicles.

Solar industry to ‘hope’ for German demand

January 18, 2012. Solar stocks rose on anticipation that lower-than-expected subsidy cuts in Germany will spur demand while an oversupply of panels may lead to consolidation. They helped boost the Bloomberg Global Leaders Solar Index of 37 companies to a 13 percent increase this year.

GE plans to complete wind project in Romania

January 18, 2012. General Electric Co. (GE) plans to complete the installation of 200 megawatts of wind turbines in Romania at a wind park developed by CEZ AS by the end of the year as scheduled. GE has already installed wind turbines with a combined capacity of 400 megawatts in the project in Romania’s southern Dobrogea region. The most recent installation will make it Romania’s biggest wind park with a capacity of 600 megawatts. Romania had an installed wind-energy capacity of about 982 megawatts at the end of last year, out of which about 850 megawatts were fully operational.

Dow makes third investment in NuvoSun

January 18, 2012. NuvoSun Inc., a closely held producer of thin-film solar cells, expanded its third funding round to $28.8 million with $10 million from Dow Chemical Co. (Dow), the largest U.S. chemicals maker. NuvoSun disclosed the financing in a Securities and Exchange Commission filing, which didn’t include the participants. Proceeds from the latest funding will be used for business operations. NuvoSun last year opened a 40-megawatt production facility in Milpitas, California, using funds acquired in September 2010 from Dow and Pearce.

‘First Solar panel reaches record 14 pc efficiency’

January 18, 2012. First Solar Inc., the world’s largest maker of thin-film solar products, beat its own record for making the most efficient panels. The company used factory equipment to produce cadmium telluride panels that convert 14.4 percent of the energy in sunlight into electricity. The results surpassed the previous record of 13.4 percent, also with a First Solar panel, and were confirmed by the U.S. Energy Department’s National Renewable Energy Lab.

Showa shell of Japan to supply solar panels for California power project

January 18, 2012. Showa Shell Sekiyu K.K. of Japan will supply as much as 150 megawatts of thin-film solar panels to a North American renewable energy unit of EDF Energies Nouvelles SA. The panel contract is worth more than 10 billion yen ($130 million). Solar Frontier is supplying the panels to enXco Inc. for a solar park project in Kern County, California, which will be built in two phases, the companies said. About 60 megawatts of generation capacity is targeted to go online by the end of the year and the rest of the project by June 2013. The plant will generate enough power for about 35,000 homes a year, the companies said. Solar Frontier will supply panels using copper, indium, gallium and selenium, known as CIGS, produced at a factory in Miyazaki prefecture in southwestern Japan. The company has annual capacity of about 1,000 megawatts at its three factories, all in Miyazaki.

Joule gets $70 mn in funding for biofuel plant

January 18, 2012. Joule Unlimited Inc., a closely held biofuel developer, received $70 million in venture funding to support the start of a test plant in New Mexico this summer. The funds are the third round for a total of $110 million in financing. Founding backer Flagship Ventures participated as well as other investors Joule didn’t identify. Proceeds also will support research and global expansion plans. The facility in Hobbs will help with testing of the company’s technology from its Massachusetts laboratory and Texas pilot plant. Joule, based in Bedford, Massachusetts, is developing a process that uses genetically modified photosynthetic microorganisms to make diesel, ethanol and chemicals from sunlight and carbon dioxide. The Hobbs plant will be as large as 5 acres (2 hectares) initially. It may be expanded to 1,000 acres to accommodate commercial production.

U.S. electricity price declines 50 pc as shale spurs natural gas glut

January 18, 2012. A shale-driven glut of natural gas has cut electricity prices for the U.S. power industry by 50 percent and reduced investment in costlier sources of energy. With abundant new supplies of gas making it the cheapest option for new power generation, the largest U.S. wind-energy producer, NextEra Energy Inc., has shelved plans for new U.S. wind projects next year and Exelon Corp. called off plans to expand two nuclear plants.

Renewable Energy tests U.S. IPO market in first deal of 2012

January 18, 2012. Renewable Energy Group Inc., the biodiesel maker that hasn’t posted an annual profit since 2008, will test investor demand for new shares in the first U.S. initial public offering this year. The Ames, Iowa-based company, which turns ingredients including soybean oil into biodiesel for cars and trucks, plans to raise as much as $108 million offering 7.2 million shares for $13 to $15 each. Renewable will use the proceeds to buy a factory it is currently leasing and to invest in new processing technologies.

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