MonitorsPublished on Oct 30, 2019
Energy News Monitor | Volume XVI; Issue 20


Monthly Power News Commentary: September - October 2019 


Following the failure of the first version of UDAY and unable to fully address industry woes, the government is working on the revised version of the scheme, where it will also cater to separating carriage and content in the distribution sector. With the country achieving electrification for all households, the Union power ministry is gearing up for another set of reforms – to improve the availability and quality of power. As the Centre passes the baton to the states to take forward the reforms, payment delay by power discoms, resulting in over dues to power generators, is a major cause of worry. At the same time, several states are reviewing or cancelling PPAs with renewable power projects. In its agenda note, the Centre has issued an advisory, asking states not to reopen power purchase agreements. To strengthen last-mile transmission and distribution network of the state to ensure seamless power supply, the Centre has set the deadline of March 2020 to complete all Integrated Power Development Scheme-related strengthening work. States must ensure metering of feeders and distribution transformers, along with centralised collection of the meter data for monitoring and analysis by next year. Union power ministry has directed the state governments to clear dues of power generation companies, a step which he said will boost investor sentiment and attract investments. State departments owe about ₹490 bn to electricity discoms.  If this amount is recovered then a large portion of dues will be cleared which will ultimately lessen the burden on the power producers.

AIPEF has demanded detailed discussion on draft Electricity Amendment Bill saying the government intends to privatise the power sector in the name of giving more rights or facilities to consumers. The government has been pitching separation of carriage and content businesses in the power distribution, which would eventually facilitate consumers to switch service providers as they do in case of mobile telephone service. AIPEF condemned the move of government to privatise the power sector in one go and that the bill is aimed to facilitate private houses in the name of consumers. The agency demanded that the power ministry must get comprehensive data and documents on franchise and privatisation experiments since 2003 and analyse them with engineers and employees and then only should finalise the draft proposals for electricity bill. AIPEF is of the view that India’s power sector is currently reeling under financial stress. The overall cost of electricity has increased in many parts of the country because of "must run" renewable energy projects and long-term power purchase agreements.

The Union government’s decision to cut the corporation tax is expected to generate savings worth ₹40 bn to discoms. Whether the savings will mean cheaper power or not, however, will depend on a host of regulations. The source of power, renewable or non-renewable, and the nature of the market, regulated or merchant, will be a factor in deciding whether the cost would go down. Conventional power producers are expected to see limited gains from the tax cut because PPAs require them to pass on tax changes. Renewable power producers, however, may be able to absorb the change and benefit from the reduction. According to an ICICI Securities Research note, the impact of these cuts is likely to be positive for the power sector as cash-flows of the entire value chain will improve. The biggest beneficiaries will be discoms, where annual savings resulting from the cut are estimated at ₹40 bn, the note said. It is not clear whether the pass-on of tax saving from power producers to distribution companies will translate into lower power tariffs. The rating agency ICRA has come up with a lower estimated annual savings of ₹25 bn for the power distribution segment on account of the tax reductions. As per ICRA’s estimates, the extent of benefit that would accrue to discoms from power generation and transmission segments (mainly from central and state utilities), would be about ₹25 bn annually. Central government entities like NTPC Ltd, NLC India, Damodar Valley Corp, Power Grid Corpof India and NHPC Ltd have cost plus tariff structures, leading to pass through of lower tax incidence to discoms, it said. Also, state-owned power generating companies and power transmission companies, would be benefited from the lower tax incidence, which would be passed on to discoms under the regulated cost-plus tariff structure, it said. Discom rating had improved on account of reduction in aggregate technical and commercial losses, timely finalisation of audit accounts, improvement in consumer service and increased power supply. Rating of all discoms, except Paschimanchal Vidyut Vitran Nigam Ltd covering west UP, had been upgraded by a notch. Rating of Purvanchal distribution company, covering east UP, has increased by two notches where around 46,000 consumer service centres for payment of electricity bills were running across the state to improve consumer service. Discoms successfully installed around 530,000 smart meters in urban areas.

The average spot power price fell to a two-year low of ₹2.77/kWh in September owing to factors like low demand, improved coal supply and higher power generation, according to the IEX. The price at ₹2.77/kWh was 41 percent lower than September 2018’s rate of ₹4.69, the IEX said. All-India peak demand at 173 GW in September 2019 declined 1 percent over the demand of 175.6 GW in the same month last year. Energy met at 105 bn units declined 5 percent year-on-year, according to data issued by National Load Dispatch Centre.

The NIIF has joined hands with EESL to implement, finance and operate the smart meter roll-out programme of power distribution companies. NIIF and EESL announced a new joint venture, IntelliSmart Infrastructure Private Ltd (IntelliSmart), for the smart meter roll-out programme. This comes against a backdrop of the government planning to install 250 mn smart meters in the next few years. With the replacement of 250 mn conventional meters with smart meters, billing efficiency can improve from 80 percent to 100 percent, and has the potential to increase revenues of electricity discoms by ₹1,104 bn. IntelliSmart will work collaboratively with all stakeholders to procure, deploy and provide operations and maintenance for the smart meter infrastructure.

AP government requested the Central government to constitute a committee to resolve the power-purchase related issues as it is incurring a financial burden on the state. AP government claimed that the abnormal integration of Variable Renewable Energy into the grid is causing heavy financial burden to the state government. Union power ministry has written a letter to Andhra Pradesh government over the government’s decision to review PPAs. While acknowledging the financial situation of discoms as a matter of concern, the centre said the financial woes of discoms are not because of power tariffs as agreed in PPAs, but for not increasing power tariffs as per UDAY norms in AP. Against the plan to increase the tariffs by 3.6 percent in 2016-17 and 5 percent each in 2017-18 and 2018-19, the actual increase was only 0.81 percent, 4.5 percent and 0 percent in respective years in AP.

There are three power discoms - BYPL, BRPL and TPDDL - providing electricity to over 6 mn consumers in Delhi. Power theft attracts heavy penalty along with jail term of up to five years. In August-September this year, the special electricity court of Karkardooma had directed attachment (and sealing) of 21 properties in East Delhi in connection with power theft cases. Since privatisation of power distribution in 2002 in Delhi, the discoms have been able to bring down aggregate technical and commercial losses from as high as 55 percent to 8 percent currently. The BSES discoms will let users recharge their pre-paid electricity metres through e-wallets or its mobile application and website. The BSES discoms—BYPL and BRPL have extended the facility to recharge pre-paid metres online through e-wallets like Paytm and PhonePe and also through company’s mobile app and website. The company is leveraging technology and digital platforms to provide a hassle free experience to its consumers in a big way. Consumers can connect with the discom and apply for a host of services, including applying for new connections, registering complaints, from their homes and offices using online platforms of the BSES.  As part of a crackdown on electricity theft that causes annual losses running into hundreds of crores of rupees, discoms in Delhi have filed over 5,500 complaints in the last one and half years leading to arrest of more than 2,500 violators. Over 4,500 FIRs were registered on the basis of the complaints and there have been more than 200 convictions in the same period, discom said. Two discoms BRPL and BYPL said that they would provide 'tatkal' temporary electricity connection for community and private festivities to ensure reliable power supply during the festival season. A consumer will be get a 'temporary' electricity connection the same day after completing the formalities. Normally, it takes up to seven days for a temporary connection. According to the BSES, a consumer will have to dial 19123/39999707 (BRPL) and 19122/39999808 (BYPL) or visit the customer care centre/Digi Seva Kendra at the division office and complete formalities for a 'tatkal' temporary electricity connection. One can also apply and make payment online on the BSES website ( and its mobile application. To ensure reliable power supply during festivals, BSES discoms are undertaking several measures, including putting its operations and maintenance teams on high alert. Discoms will be relying heavily on analytics to catch the power thieves. Consumers are requested to take legal 'temporary' connections whenever required.

With zero-tolerance against corruption, the Power Department in UP has ordered a special audit of the e-tenders in Bahraich, Balrampur, Shravasti and Gonda. Based on the audit reports of these districts, inquiries will also be ordered into e-tenders of other districts to ensure transparency in working. In order to ensure that inquiry in these cases of corruption is completed without any delay and strict action is taken against those found guilty, the department has done constant follow-up at the higher level as well. The Uttar Pradesh Power Corp Ltd has a vigilance unit working under an Additional Director General of Police, who has recommended registering of cases against those found guilty in different inquiries. The Power Department undertakes services through outsources in large number and in the past, there have been large number of complaints for payment of dues to such employees and labourers.

The Delhi government’s free-electricity scheme is claimed to be an example of "smart governance" as it is expected to encourage Delhiites to reduce their power consumption. In August, the government had announced free-electricity of up to 200 units for domestic consumers and later extended the scheme to tenants residing in the national capital. He said residents of the city were trying to consume less than 200 units of electricity to avail the benefit. 1.4 mn Consumers in the city who consumed less than 200 units of electricity received zero bill. There are around 4.8 mn domestic consumers in the national capital. Under the scheme, people consuming electricity between 201 units and 400 units are eligible to avail 50 percent subsidy from the government on their bills.  A similar programme in South Africa for water conservation resulted in reduction in water consumption but also a substantial reduction in revenue for the water utilities which were forced to reduce securing water supplies.   Although the government is subsidising power bills in Delhi, a look at tariff rates across the country, however, shows that some other states have lower tariff rates than the national capital. Data show that power tariffs in Goa, Arunachal Pradesh and the Union Territories of J&K and Ladakh are lower than Delhi for up to 400 units of consumption, the range generally consumed by most households. In the national capital, power tariffs as set by the DERC are: ₹3/kWh up to consumption of 200 units, and ₹4.5/kWh for the range of 201-400 units. This rate has been fixed by the DERC and has remained stagnant for the past three years. But with the subsidy announced this year, the tariff for FY20 has become nil for up to 200 units of consumption. In Goa, 1-100 units cost at the rate of ₹1.4/kWh and ₹2.1/kWh in the range of 101-200 units with an average rate of ₹1.75/kWh up to 200 units. In Arunachal Pradesh, people under the 'below poverty line' category have to pay ₹2.65/kWh and in general, tariff is charged at ₹4/kWh. Further, in the Union Territories of J&K and Ladakh, power tariff for the range of 1-100 units is ₹1.54/kWh and ₹2/kWh for the range of 101-200 units.

TNERC has clarified that a consulting room attached to a residence will attract commercial tariff if its size is more than 200 square feet. Commercial tariff is much more than domestic tariff. Professionals like advocates, doctors, engineers, chartered accountants and others have small rooms attached to their residence. Some have a separate meter for the consulting room. In most of the cases, the rooms are part of the residence and only domestic tariff is charged. In case of consulting rooms attached to a house, the substantial use of electricity would be for domestic use. In case of consulting rooms not attached to the residence of professionals, power is used for non-domestic purposes, according to TNERC. The clarification has been issued based on a directive from the Madras high court.

UP Power Corp Ltd has made an additional arrangement of 4,000 MW daily, mainly from energy exchange, to meet the demand, which is expected to touch around 20,000 MW in the festive season. Currently, power demand is around 16,000 MW, with the state government providing 24-hour supply to cities and 18 hours to villages. Significantly, the demand witnessed a dip this month due to fall in day temperature and humidity.

Various government departments in Goa owe approximately ₹1.45 bn to the state power department, which is reeling under financial crisis due to non-payment of total ₹3.5 bn dues by consumers. After going through the balance sheets of all the sub-divisions, it came to light that total ₹3.5 bn are outstanding from the power consumers, including the government agencies, individuals and private firms. From November, the power department will start filing RRC cases against the defaulters. The power department had disconnected the electricity supply of Panaji municipal market for non-payment of ₹50 mn dues pending since 2003.

The commissioning of the Edamon-Kochi corridor in the Tirunelveli-Madakkathara inter-state power transmission corridor has brought a drastic change in the electricity sector of the state. The power sector of the state has seen a change equivalent to the installation of a new 500 MW power station. After charging the line, the voltage has increased by 2 kV in Palakkad, Kochi and Kottayam. A total of 447 towers were needed for the Edamon-Kochi stretch. The PGCIL launched the work of the Tirunelveli-Madakkathara project in 2008 with the deadline of 2010. The Tirunelveli-Edamon portion was completed in 2010 and the Madakkathara (Thrissur)-Kochi (Pallikkara) component the following year. However, the remaining work on the Edamon-Kochi stretch was stalled due to the objection of people living in the area through which the transmission line passes through. According to Kerala State Electricity Board, the new power transmission network helps in increasing the power import capacity of the state by 800 MW.  It is also possible now to bring in power to Kerala from any part of India.

The Appellate Tribunal for Electricity has set aside UPERC’s order asking Tata Power-backed Renascent Power Ventures to cut the tariffs of its 1980 MW Prayagraj Power project by ₹0.14/kWh from ₹3.02/kWh adopted in the relevant PPA signed in 2010. The tribunal’s order could have a positive bearing on the debt-laden power sector in the country as many plants are under the threat of post-facto PPA revisions resulting from government policies that get reflected on regulators too. UPERC had in its order directed Renascent Power, which acquired a 75 percent stake in Prayagraj Power late last year, to lower tariffs on the sale deal negotiated by SBI for the plant in Bara tehsil in Allahabad. In order to recover their dues and salvage the project, the 18 lenders of the project, led by SBI, invited the bids to replace the existing promoters through transfer/sale of the pledged shares, in which Resurgent Power emerged as the successful bidder.

LDA has recently written to LESA authorities requesting them not to give new electricity connections to owners of houses or commercial units if they do not have their maps approved by the development authority. LESA has agreed to the proposal and issued an order making it mandatory for power connection applicants to submit registration number obtained from the development authority after getting their maps approved, along with other documents to get electricity connection. Madhyanchal Vidyut Vitran Nigam Ltd said the existing sub-stations were overloaded and could not bear more burden. In reply, LDA said that power authority should not provide electricity to houses and commercial units which have not been approved by it. The authority gave a list of 450 unauthorised units in Gomtinagar, Gomtinagar Extension, Jankipuram and Kanpur road saying such units were behind overloading of sub-stations.

The MP government is gradually trying to implement its plan to privatize power in state. In the past 20 days, two major firms have given presentation before the government and suggested their models that could help government cut down losses in the power sector. Two plans have been put up before the government — the first is to set up a franchise model and the second is to allow private firm to open its discom. In the franchise model, the government would give the distribution and revenue collection to a firm, while in the second model a new discom would be opened by the private firm in a region. Power tariff in MP is among the highest in the country, but the sector is still facing massive losses in transmission and distribution. A few days ago, MP Electricity Regulatory Commission allowed discoms to hike tariff by 7 percent.

NTPC Ltd said its 800 MW Unit-I of Lara Super Thermal Power Station in Chhattisgarh will become commercially operational. The NTPC Group’s total installed generation capacity will be 55,786 MW with beginning of commercial operations of first unit at Lara power station, the company said. With the addition of this unit, the commercial capacity of Lara Super Thermal Power Station, NTPC and NTPC Group will become 800 MW, 47,325 MW and 55,786 MW, respectively, it said. The second 800 MW unit of Lara power project is under construction and is expected to go on stream in next financial year. The company aims to achieve total installed capacity of 130 GW by 2032.

Tata Power Company that is awaiting a compensatory tariff nod from four procurer states — Punjab, Haryana, Rajasthan and Maharashtra — for the Mundra UMPP said the Punjab discom has agreed to the tariff plan recommended by the high level committee, and the matter is now awaiting state cabinet approval. The Supreme Court allowed the CERC to amend the PPAs of the imported-coal based power plants as per the recommendations of a HPC constituted by the Gujarat government in 2018. The HPC had recommended reduction in fixed charge by ₹0.20/unit, which would necessitate banks to reduce debts by ₹42.40 bn for Tata, ₹38.21 bn for Adani and ₹23.24 bn for Essar Power.

Adani Transmission Ltd has acquired Bikaner-Khetri transmission project in Rajasthan from PFC Consulting. Adani Transmission won the project linked to renewable power generation in Rajasthan through a tariff-based competitive bidding process. Adani Transmission signed a share purchase agreement with PFC Consulting for acquiring Bikaner-Khetri Transmission Ltd, a special purpose vehicle incorporated by PFC Consulting for the implementation of the project. The project is primarily being constructed to establish transmission system associated with Long Term Applications from Rajasthan Solar Energy Zone Part-0. The company will build, own, operate and maintain the transmission project for a period of 35 years. The project consists of approximately 480 circuit km of 765 kV line along with associated transmission system.

Rest of the World

China will boost electricity trading market and remove its current on-grid coal-fired power pricing mechanism from 1 January 2020, the country’s cabinet announced. The new pricing approach will be determined among power suppliers and users based on local benchmark on-grid prices and a floating price in a range of 10-15 percent, the cabinet said.

South Africa’s struggling power utility Eskom said it was challenging in court the regulator’s latest tariff decision, a move it said was necessary to avert financial disaster. Eskom, which produces more than 90 percent of the country’s electricity, implemented some of most severe power cuts in several years this year and is reliant on government bailouts to survive. In March, regulator Nersa granted Eskom tariff increases of 9.4 percent, 8.1 percent and 5.2 percent over the next three years, far below what the utility had sought. At the time Eskom said the tariff awards left it with a projected revenue shortfall of around 100 bn rand ($6.7 bn). Eskom said its board of directors had decided to challenge the tariff awards after reviewing the reasons for Nersa’s decision.

Hong Kong-listed VPower Group said its consortium with Myanmar’s Zeya & Associates had been provisionally awarded four of the five emergency power projects tendered by the energy ministry in June. The consortium said it won three projects that would use imported LNG in Rakhine’s Kyaukphyu, Yangon’s Thanlyin and Thaketa, totalling 900 MW. It also secured a 20 MW project that would use gas supplied by the government in Kyun Chaung. Letters of acceptance for each of the projects have been issued by the Ministry of Electricity and Energy’s Electric Power Generation Enterprise, VPower said. The consortium still needs to negotiate terms of the contract - including the power purchase agreement - with the government. As of 2018 Myanmar’s electricity generation capacity totalled 3539 MW, according to ministry estimates, making VPower an important player in the power market. After failing to attract private investment in power generation over the past few years, the government tendered these emergency projects to ensure Myanmar could avoid serious power shortages next hot season, which would be some months before the 2020 general elections. Demand for power consumption in the country is increasing annually by 15-17 percent, while less than 40 percent of the national population has access to electricity. VPower has already completed several emergency power projects in Myanmar and together with Zeya & Associates it started operating a 90 MW plant in Myingyan in March under a five-year contract.

Electricity was shut off to nearly 750,000 California homes and workplaces as PG&E imposed a string of planned power outages of unprecedented scale to reduce wildfire risks posed by extremely windy, dry weather. The power cut knocked out traffic signals, forced school closures and shut businesses and government offices across northern and central California. Some of California’s most devastating wildfires were sparked in recent years by damage to electrical transmission lines from recurring bouts of high winds that then spread the flames through tinder-dry vegetation into populated areas. California’s largest utility cut power to 24,000 northern customers as fall brings back dangerous weather conditions and the company tries to head off wildfires sparked by electrical equipment. The utility shut down power to areas of Butte, Nevada and Yuba counties in the Sierra Nevada foothills. The power will remain off until conditions are safer, and PG&E warned that it might expand the precautionary outages to El Dorado, Placer, Sutter, Lake, Napa and Sonoma counties if gusty winds and hot, dry weather continue. Meanwhile, Southern California Edison warned it might shut off power to 41,000 customers due to forecasts calling for gusty Santa Ana winds. The cuts could affect Los Angeles, Riverside, San Bernardino and Riverside counties. New York Transco, a consortium of major utilities, has received approval for up to $400 mn to add a new power transmission line to reduce grid congestion and allow lower-cost and renewable electricity produced in upstate New York to flow to downstate customers. The State Public Service Commission said the financing is needed for the New York Energy Solutions transmission project, which in the first phase includes a new 54 mile (87 km), 345 kV transmission line that begins at Rensselaer County and ends at Dutchess County. The project is expected to be operational by the end of 2023.

Zimbabwe hiked its average electricity tariff by 320 percent to ramp up power supplies at a time of daily blackouts, but the move will anger consumers already grappling with soaring inflation that is eroding their earnings. The southern African nation is experiencing its worst economic crisis in a decade, seen in triple-digit inflation, 18-hour power cuts and shortages of US (United States) dollars, medicines and fuel that have evoked the dark days of the 2008 hyperinflation. The second increase in the price of electricity inside three months follows sharp rises in fuel and basic goods prices. The ZERA said it had approved an application by Zimbabwe Electricity Transmission and Distribution Company to raise the tariff to 162.16 cents (10.61 US cents) from 38.61 cents.

Japan’s JERA Co has acquired a 22 percent stake in Summit Power International, a Singapore-based unit of Bangladesh’s Summit Group, for $330 mn, both companies said. The unit is a holding company of all power assets of Summit Group. The investment was finalised four months after a MoU was signed between JERA and Summit in Tokyo.

Kuwait plans to sell stakes of up to 44 percent in the Al-Zour and Khiran power projects to investors in the middle of 2020 and early 2021 respectively. Kuwait plans to sell at least 26 percent stakes in each project and not more than 44 percent. The government has not said how it will sell the stakes in the two power projects or whether they will be initial public offerings. Kuwait plans to begin the first phase of an initial public offering of shares in another power project, the Az-Zour North Independent Water & Power Project.

Finland’s introduction of a real-time electricity information system will be postponed by nearly a year amid technical delays in preparing for the startup, the government said. Known as Datahub, the centralised power market information exchange had originally been scheduled to launch in April 2021, but now faces the prospect of starting in February 2022 instead. Utilities and grids that fail to connect to the system by the new launch date will be fined and will lose their customers, the government said. Datahub will serve the power retail market, storing data from 3.7 mn electricity accounting points in Finland, enabling real-time information access to about 100 power retailers and 80 distribution system operators in the country.

Indonesian state power utility company PLN has signed a MoU with Malaysia’s Tenaga Nasional Berhad to potentially export 600 MW of electricity to Peninsular Malaysia, PLN said. The two companies plan to conduct study to build a power supply connection between the Indonesian island of Sumatra and Peninsular Malaysia, PLN said. PLN aims to start exports of 600 MW power in 2028, it said, where its projected reserve margin in Sumatra is estimated at around 33 percent.

Zambia’s state power utility said it had reached an agreement to import 300 MW of electricity from South Africa’s Eskom for a period of six month to ease shortages. Zambia has a power deficit of more than 750 MW because of low water levels at hydropower dams and announced it would increase the hours for power rationing as water levels continued to fall.

Israel’s national electricity company said it was cutting power to parts of the occupied West Bank due to outstanding payments amounting to nearly $483 mn. The Israel Electric Corp said it was owed 1.7 bn shekels in debts from the main Palestinian power distributor for the West Bank, which is based in east Jerusalem. It said it had found no alternatives to being paid. The Palestinian Authority said in the past two months it has repaid nearly $100 mn in debts accumulated by the east Jerusalem-based distributor of Palestinian municipalities. The Palestinian health ministry has warned the powers cuts could affect hospitals and medical centres.

Orsted has agreed to sell its Danish power distribution and retail businesses to energy firm SEAS-NVE for 21.3 bn Danish crowns ($3.15 bn) on a cash and debt-free basis, the Danish utility said. Orsted, 50.1 percent owned by the Danish state, put its divestment drive on temporary hold after politicians interfered to avoid a sale to foreign companies. SEAS-NVE is Denmark’s second-largest cooperatively-owned energy company. It owns a 9.54 percent stake in Orsted which it said it plans to reduce to around 5 percent over the next 12 months.

UDAY: Ujwal Discom Assurance Yojana, discoms: distribution companies, PPAs: power purchase agreements, mn: million, bn: billion, tn: trillion, MW: megawatt, GW: gigawatt, AIPEF: All India Power Engineers Federation, UP: Uttar Pradesh, kWh: kilowatt hour, IEX: Indian Energy Exchange, NIIF: National Investment and Infrastructure Fund, EESL: Energy Efficiency Services Ltd, BYPL: BSES Yamuna Power Ltd, BRPL: BSES Rajdhani Power Ltd, TPDDL: Tata Power Delhi Distribution Ltd, J&K: Jammu and Kashmir, AP: Andhra Pradesh, DERC: Delhi Electricity Regulatory Commission, TNERC: Tamil Nadu Electricity Regulator Commission, RRC: revenue recovery certificate, kV: kilovolt, PGCIL: Power Grid Corp of India Ltd, UPERC: UP Electricity Regulatory Commission, SBI: State Bank of India, LDA: Lucknow Development Authority, LESA: Lucknow Electricity Supply Administration, MP: Madhya Pradesh, UMPP: Ultra Mega Power Project, HPC: high-power committee, km: kilometre, PG&E: Pacific Gas and Electric Co, ZERA: Zimbabwe Energy Regulatory Authority, PLN: Perusahaan Listrik Negara, MoU: Memorandum of Understanding

To read article ‘Oil Markets: Demand Shock meets a Supply Shock’ please refer to India Energy Analysis


India’s September fuel demand slips to its lowest in over 2 yrs

16 October. India’s fuel demand fell to its lowest in more than two years in September, data from the Petroleum Planning and Analysis Cell (PPAC) showed. Consumption of fuel, a proxy for oil demand, totaled 16.01 million tonnes (mt) - its lowest since July 2017 - down about 0.3 percent compared with the same month last year. Meanwhile, consumption of diesel, which is widely used for transportation as well as for irrigation needs in India, slipped more than 3 percent year-over-year to 5.83 mt, its lowest since January 2017. Sales of gasoline, or petrol, were 6.3 percent higher from a year earlier at 2.37 mt. Cooking gas or liquefied petroleum gas (LPG) sales increased nearly 6 percent to 2.18 mt, while naphtha sales slumped 26 percent to 0.84 mt.

Source: Reuters


Construction begins for CNG-LNG dispensing station at Anayara

21 October. The construction work for combined compressed natural gas (CNG) and liquefied natural gas (LNG) terminal at Anayara is on full swing. Indian Oil Corp (IOC) is constructing the fuel-dispensing unit adjacent to KSRTC (Karnataka State Road Transport Corp) depot at Anayara. In March 2018, the government had allotted 1.78 acres at Anayara on lease for 30 years to IOC for constructing the fuel-dispensing station. In addition to CNG and LNG, the fuel station will also have electric vehicle-charging facility and petrol and diesel-dispensing unit. The LNG-dispensing station for heavy vehicles will be a separate unit inside the KSRTC bus stand as it is dedicated for transport corporation buses. The rest of the retail facility can be used by private vehicles also. V C Asokan, chief general manager and state head of IOC, said based on demand more units can be planned. After construction, Thiruvananthapuram will be the second district in the state to have a CNG-dispensing facility (Ernakulam is the first). A well-planned circulating area is proposed in the fuel-dispensing station for each unit. One vehicle can use the facility at a time.

Source: The Economic Times

RIL says on track to produce gas from new field in KG-D6 block by mid-2020

20 October. Reliance Industries Ltd (RIL) has said that it is on track to start production from a new gas field in the flagging KG-D6 block in the Bay of Bengal from mid-2020 even as output from its existing fields continued to fall. RIL and its partner BP Plc of the United Kingdom (UK) had in June 2017 announced an investment of ₹400 bn in the three sets of discoveries to reverse the flagging production in KG-D6 block. These finds were expected to bring a total 30-35 million cubic metres (1 billion cubic feet) of gas a day onstream, phased over 2020-22. The three sets of discoveries are R-Cluster, Satellite Cluster and MJ field. R-Cluster will be first to come on stream. Drilling of three out of the five wells on Satellite Cluster has been completed and engineering and fabrication for SPS was on track, it said. Satellite Cluster is to begin production in 2021. For MJ, first phase of drilling will commence in January-March 2021, it said. RIL has so far made 19 gas discoveries in the KG-D6 block. Of these, D1 and D3 -- the largest among the lot -- were brought into production from April 2009 and MA, the only oilfield in the block, was put to production in September 2008. The output from D1 and D3 has fallen sharply from 54 million metric standard cubic meter per day (mmscmd) in March 2010 to 1.68 mmscmd in the July-September. The fields had produced an average of 1.76 mmscmd of gas in April-June 2019. MA field ceased to produce last year. RIL is the operator of the block with 66.6 percent interest while BP holds the remaining stake in the block. MJ gas find is located about 2,000 metres directly below the currently producing D1 and D3 fields in the KG-D6 block and is estimated to hold a minimum of 0.988 trillion cubic feet of contingent resource. Besides MJ-1, four deepsea satellite gas discoveries -- D-2, 6, 19 and 22 -- are planned to be developed together with D29 and D30 finds on the block. The third set is the D-34 or R-Series find. The government had in 2012 approved a $1.529 bn plan to produce 10.36 mmscmd of gas from four satellite fields of block KG-D6 by 2016-17.

Source: Business Standard


IIT Bombay will pinpoint the amount of coal in Vasco air

22 October. The Indian Institute of Technology (IIT) Bombay, will complete the second phase of its source appropriation study at Vasco in November. The report will indicate the exact quantity of coal, bauxite and other dust particles present in the air and this will point out the reason behind the air pollution in the port town. The Goa State Pollution Control Board (GSPCB) chairman Ganesh Shetgaonkar chairman said that dust settles during the monsoon and it is impossible to quantify the dust particle in the air. Recently, the GSPCB had granted fresh consent to operate to South West Port Ltd (SWPL) a unit of Jindal Steel Work (JSW) to handle 4 lakh tonne coal per month at MPT (Mormugao Port Trust). It had also restricted coal handling by Adani Mormugao Port Terminal Pvt Ltd to 4 lakh tonne per month at MPT.

Source: The Economic Times

Unshackling coal sector: Commercial mining bid documents post Diwali

< style="color: #ffffff">QuIck Comment

< style="color: #ffffff">Commercialising coal mining will bridge demand supply gap! < style="color: #ffffff">Good!

21 October. After more than five-year wait, the government may finally throw open the doors of the regulated coal sector for commercial mining by the private sector Indian and overseas miners post Diwali. Government said that draft rules, bid documents and agreements for commercial mining has been prepared and it would be finalised by the first week of November with auctions starting soon thereafter in the first week of December. The decision would permit domestic mining firms like Essel Mining, Sesa Goa and global giants like Rio Tinto, BHP Billiton, PesBody, Glencore and Vale to mine and sell and help ramp up output from the country's huge reserves -- the world's fifth biggest. It will also offer an additional source of fuel for power producers, some of whom are facing low coal stocks at their plants. However, the success of the first bidding round for commercial mines would have to be weighted against lack of investor interest in the recent coal auctions for end user plants. Companies shied away from bidding for 27 coal mine put up for auctions in the recent eighth, ninth and tenth rounds of bids turning the exercise into into a damp squib. Only six blocks out of 27 received adequate bids to go under the hammer. The commercial mining auctions could see in all 15 large coal blocks with annual production potential of 5-10 million tonnes (mt) being put up for bidding in phases. The reserves in five of these mines could be in excess of 500 mt. These could fetch anywhere between ₹50 and 60 bn to the state government. As of now, power, steel and cement companies can mine coal but for their own consumption after getting blocks through auction. Coal India Ltd (CIL) dominates commercial mining in India. The commercial mine auction will offer coal blocks without end-use restrictions to the private sector with permission to sell their output to consumers in steel, power and cement sectors on commercial terms.

Source: The Economic Times

Adani, Tata Power plants among those seeking coal linkages without curbs

21 October. As many as 16 power plants, including those owned by Adani, Tata Power, Jindal Power and others, with a combined generation capacity of 14,700 MW have sought coal linkages without any usage restriction. The move would enable the commissioned projects to sell coal in the short term and day-ahead market to atleast meet a part of their debt service liability. The projects include Adani’s Raikheda TPP with a capacity of 1370 MW, which completely requires coal linkages. Similarly, Jindal Power with a capacity of 1000 MW also requires the entire capacity to have coal linkages. Prayagraj Power Generation Company Ltd, with a capacity of 1980 MW, has coal linkages of 1740 MW and requires 240 MW(for new projects).

Source: The Hindu Business L ine

Coal supply by CIL to power sector drops 7 percent to 218 mt in April-September

17 October. Supply of coal by Coal India Ltd (CIL) to the power sector registered a decline of 7 percent to 218.4 million tonnes (mt) in the April-September period of the ongoing fiscal. Fuel supply by CIL in the year-ago period was 235 mt. The supply of coal to power sector by CIL dropped by 21.1 percent to 28.3 mt, over 35.9 mt in September last fiscal. With torrential rains hitting coal production, CIL recently said it was keeping a close watch on the current situation to ensure smooth supplies to power plants. CIL, which accounts for over 80 percent of the domestic production, saw its output decline by 6 percent to 241 mt in April-September on account of monsoon.

Source: Business Standard


Bhopal: Bright Diwali ahead as discoms promise no power cuts

< style="color: #ffffff">QuIck Comment

< style="color: #ffffff">No power cut every day will make every day Diwali day! < style="color: #ffffff">Bad!

22 October. The city can look forward to a bright Diwaly this year. Ahead of the festival of lights, the state government has instructed all the three discoms (distribution companies) in the state to ensure uninterrupted power supply for the festival. As such, there would be no power cuts across the state between 25 and 29 October when the five-day festival is celebrated. All the three discoms namely Madhya Kshetra Vidyut Vitaran Company Ltd, Paschim Kshetra Vidyut Vitaran Company Ltd and Purv Kshetra Vidyut Vitaran Company Ltd, have been instructed by the government to ensure that all maintenance related works should be completed before 25 October and there should be no power cuts for maintenance this Diwali. Energy Minister Priyavrat Singh had instructed that during the festival, employees should be deployed at all the sub-stations and other important points to ensure that the complaints of the consumers, if any, are addressed instantly. Appealing to the consumers on Diwali, Singh had urged that people should avoid using firecrackers near power-supply lines.

Source: The Economic Times

BKU hits out at UP government for booking farmers over power dues

22 October. The Bhartiya Kisan Union (BKU) slammed the UP (Uttar Pradesh) government for registering cases against farmers over pending power bills. Addressing a farmers' meeting in Alipur Aterna village, its state president Naresh Tikait said that the organisation will not tolerate "atrocities" inflicted on farmers with the state’s power department officials registering cases for not paying electricity bills while sugar mills have not yet cleared dues of the farmers.

Source: Business Standard

Franchisees to offer choice of suppliers to power consumers

22 October. Unable to introduce amendments to Electricity Act, 2003 due to lack of concensus among states, the Centre has decided to push through next big reform in the power sector - to allow consumers to choose their electricity suppliers offering the lowest tariff - through an administrative order. The power ministry has drawn up a draft model plan for states that will allow multiple private franchisees to operate as power suppliers in a distribution area, with state-run distribution utilities becoming just owners of the network. The plan is akin to the earlier proposal of the ministry that suggested separation of the content (electricity supply business) and carriage (distribution network) business of distribution entities, thereby making discoms (distribution companies) aggregators of power and owners of the distribution network and allowing multiple suppliers in their area to offer competition to consumers. The government intended to do the changes through an amendment to Electricity Act 2003 but the changes have failed to get Parliamentary approval for last five years. The present plan would allow multiple franchisee to operate in distribution circle without any amendment to the Act. The franchisee model has been tried in states like Maharashtra, Odisha and Rajasthan, but has not made much headway. The franchisees would be offered the task of electricity supply in a circle on the basis of upfront payment to discoms. Though the franchisees would be free to source electricity directly from generators, they would have to commit 50-75 percent of power purchase from the discoms. The franchisee would earn their revenue from the payment made by the consumers for electricity use. They would, however, have to incur power purchase and network management costs. They will also have to bear the costs of aggregate technical and commercial (AT&C) losses if it goes beyond predefined levels. India’s power distribution sector is the last bastion where several attempts in the past to reform have not bore results. Despite numerous schemes to fine tune operations of discoms and clean their books, the financial losses of discoms have risen 89 percent year-on-year to ₹283.69 bn in FY19. Also, the discoms' over-dues to the generating companies are now close to ₹600 bn.

Source: The Economic Times

'BJP will give five times more relief to electricity, water consumers if voted to power in Delhi'

21 October. Delhi BJP (Bharatiya Janata Party) chief Manoj Tiwari said his party would give five times more relief to electricity and water consumers than the AAP (Aam Aadmi Party) government, if voted to power in the national capital. Tiwari was also asked whether his party was in favour of announcing subsidies for water and electricity consumers. Delhi Chief Minister Arvind Kejriwal had thanked the BJP for making its intentions clear that it would withdraw the electricity subsidy announced by his government if voted to power in Delhi, saying it would give a chance to people to choose between "two conflicting models". Subsequently, Delhi BJP leader Vijay Goel had said once the saffron party came to power in Delhi, it would provide electricity at cheaper rates than the AAP government. However, Tiwari clarified that the BJP was not against subsidies.

Source: Business Standard

Power Grid seeks to revive Chhattigarh-Tamil Nadu transmission line

21 October. The Power Grid Corp of India Ltd is trying to once again revive the transmission line project connecting Chhattisgarh and Pugalur in Tamil Nadu. The project plans to bring 800 kilovolt (kV) ultrahigh-voltage direct current (UHVDC) system to Tamil Nadu and the power will be shared with Kerala. The 1850 kilometre (km) transmission line project has been stalled in Tamil Nadu as farmers in the western districts are opposing setting up the towers on their land. The Power Grid would make efforts to convince the farmers. State Power Minister P Thangamani had held several rounds of talks with farmers' associations to get their support for the project. As farmers suggested laying of underground cables, Thangamani said it was not possible as the voltage in the line would be very high.

Source: The Economic Times

UP government set to draft an 'energy security'

20 October. The Uttar Pradesh (UP) government has said it would draft an ‘energy security’ blueprint to become self-reliant in its electricity needs by 2031. The state energy department has estimated the gross electricity demand in UP to overshoot 30,000 MW by 2031, which therefore needs proper planning to ramp up energy production capacity, signing new power purchase agreements (PPA) and economising on power transmission and distribution. Chief Minister Yogi Adityanath stressed on the urgent need to make UP energy self reliant and taking all possible measures, so that the developing state does not face any scarcity of power supply by 2031. He instructed the UP energy department principal secretary to prepare a blueprint after making an in depth analysis of the prevailing situation and future demand. The state government has already made sufficient provisions for meeting the projected energy demand till 2022, which includes short and long terms PPAs with private power producers. The CM also asked officials to set up new power plants, if needed, in advance, since a new project takes 4-5 years to commission and therefore requires meticulous pre-planning. In fact, the Adityanath government is planning to invest almost ₹200 bn in ramping up the state power transmission infrastructure in the next 5 years. So far, state power utility UP Power Corp Ltd has tied up for procuring 1,800 MW of solar energy from private companies, including Azure Power India, ReNew Solar Power, Hero solar Energy etc.

Source: Business Standard

Government continues to default on payment of power subsidies to PSPCL

18 October. The shortfall in power subsidy amount to be given by the Punjab government to the Punjab State Power Corp Ltd (PSPCL) on account of free power for the agriculture sector, subsidised power for industry and free power to SC/ST/BPL consumers is increasing every month. According to PSPCL website, the total subsidy amount payable up to 15 October was ₹86.29 bn and the subsidy received by the PSPCL is ₹33.97 bn. This included adjustment of interest of Ujwal Discom Assurance Yojana bonds amounting to ₹6.53 bn. The subsidy amount received against agriculture is ₹17.70 bn, for domestic consumers ₹9.23 bn and for industrial consumers, it is ₹500 mn. The PSPCL has also adjusted electricity duty of ₹8.79 bn and infrastructure development fund ₹5.14 bn payable to Punjab government and collected by PSPCL through electricity bills. The balance subsidy due after adjustments is ₹38.38 bn. Punjab State Electricity Regulatory Commission (PSERC) has assessed the power subsidy to be given to PSPCL at ₹149.72 bn including arrears of previous years amounting to ₹52.97 bn. The monthly subsidy to be paid by Punjab government in advance is ₹12.68 bn. Meanwhile, the seventh report of Union power ministry released mentions that delayed and very low yearly subsidy paid as the reasons for the lower grading of PSPCL.

Source: The Economic Times

UP Power Minister orders special audit of distribution companies

17 October. After ordering vigilance inquiry into tenders for various transmission and power distribution projects, the UP (Uttar Pradesh) Power Minister Srikant Sharma ordered special audit of finance department of all distribution companies. The orders were given during a review meeting on power purchase by the UP Power Corp Ltd (UPPCL). He said that strict action would be initiated in case any anomaly is found in purchase of power supply. Sharma said that the decision was taken after the department received complaints from MLAs, MPs and even local people about the prevailing corruption in the purchase of power. He also emphasised on curtailing power theft to increase the electricity supply, especially to the rural areas. He said that round the clock power supply be ensured in villages where line losses are less than 15 percent. The department, he said, was keen on 100 percent metering and laying of aerial bunch conductors to arrest the menace of power theft. He also directed that the payment of contractual staff be done on time and well before Diwali. He also directed the UPPCL officials to initiate a campaign and get smart meters installed in government buildings.

Source: The Economic Times 


Blue Wafer solar cells will not qualify under domestically manufactured category: MNRE

< style="color: #ffffff">QuIck Comment

< style="color: #ffffff">It is a bit too late to initiate domestic manufacture of solar cells! < style="color: #ffffff">Ugly!

21 October. In a major decision, the Ministry of New and Renewable Energy (MNRE) clarified that semi-processed solar PV (photovoltaic) cells, commonly called Blue Wafer cells, will not qualify under the domestically manufactured category for use in projects implemented under government schemes. Many flagship programmes of the government implemented by MNRE such as Kisan Urja Suraksha evam Utthan Mahabhiyan (PM-KUSUM) scheme have provisions for mandatory use of domestically manufactured solar PV cells. The MNRE has clarified that if diffused silicon wafer or Blue Wafer cells are imported and used as raw material for the manufacturing of solar PV cells in India, such solar PV cells will not qualify as domestically manufactured solar PV cells. The ministry issued an order stating the decision would cover programmes being implemented by MNRE where it is mandatory to use domestically-manufactured solar PV cells and domestically-manufactured solar PV modules and also the Manufacturing-Linked-PPA initiative by Solar Energy Corp of India Ltd (SECI).

Source: The Economic Times

Adani Green commissions 50 MW wind energy capacity in Gujarat

21 October. Adani Green Energy Ltd (AGEL) said it has commissioned 50 MW wind generation capacity at Kutch in Gujarat. The company through its subsidiaries is implementing 725 MW wind projects in Kutch. The company plans to commission another 225 MW wind capacity in the area by second half of 2020, for which the evacuation infrastructure is already in place. AGEL has partially charged the evacuation infrastructure for connecting its wind projects of 725 MW capacity.

Source: Business Standard

Second nuclear power plant at TN’s Kudankulam stops operation

20 October. The second 1,000 MW nuclear power unit at TN (Tamil Nadu)’s Kudankulam, owned by the Nuclear Power Corp of India Ltd (NPCIL) stopped power generation, Power System Operation Corp Ltd (POSOCO) said. The NPCIL has two 1,000 MW nuclear power plants at Kudankulam Nuclear Power Project (KNPP) built with Russian equipment.

Source: The Economic Times

Rays Power Infra to invest 17 bn to set up 450 MW renewable projects

20 October. Solar power developer Rays Power Infra will invest ₹17 bn to set up 450 MW of green energy projects in four major states of the country. The company will be selling the energy generated to private and industrial consumers in the states of Uttar Pradesh, Haryana, Karnataka and Andhra Pradesh, Rays Power Infra managing director Ketan Mehta said. He said the company has already started site activities of projects and expects to bring these projects online next year. The company recently commissioned a 50 MW solar power project in Vietnam.

Source: Business Standard

India’s 1st plant to convert paddy straw into biogas near Delhi to tackle pollution

20 October. India’s first plant to covert paddy straw into biogas that can be used as CNG (compressed natural gas) in automobiles will come up at Karnal in Haryana as agencies double effort to prevent burning of crop stubble that is said to be the main reason for pollution in the national capital region. The plant will deploy special machines that will chop and bundle paddy straw for transportation to a storage. This storage will used through the year to production CBG (compressed biogas). IGL currently supplies CNG and piped cooking gas to households in Delhi, Noida, Greater Noida, Ghaziabad, Rewari, Gurugram, Karnal and Muzzafarnagar. The plant will produce maximum of 10,000 kilogram (kg) CBG every day. The input of plant is majorly paddy straw. The plant has the capacity of consuming around 40,000 tonnes of paddy straw in a year which will be taken from 20,000 acres of farmland in Karnal district. CBG from the plant will run tractors and earth-movers as well as power gensets. Bio manure produced from the plant as a byproduct will be organic and can be used to grow organic food and vegetables. The project aims to convert paddy wheat straw into bio-CNG.

Source: Business Standard

Haryana’s power plants in NCR to be shut if emission norms not met by 2020

19 October. The Supreme Court-mandated Environment Pollution (Prevention and Control) Authority said Haryana’s two coal-based power plants in the national capital region (NCR) will be shut down if these failed to comply with emission norms by next year. The Ministry of Environment, Forests and Climate Change had in 2015 come up with new norms for coal-based power plants to cut down emissions of particulate matter (PM10), sulphur dioxide (SO2) and oxides of nitrogen. These norms are set to come into force by December this year. According to the Centre for Science and Environment estimates, these norms can help cut particulate matter emission by about 35 percent, oxides of nitrogen emission by about 70 percent, and SO2 emission by more than 85 percent by 2026-27. In October 2018, Delhi’s Badarpur thermal power plant, the city’s oldest power station, was shut down to curb air pollution.

Source: Business Standard

World’s first emissions trading scheme for particulate pollution starts in Surat

18 October. Surat in Gujarat has become the first city in the world to start implementing an Emissions Trading Scheme for controlling particulate matter pollution in a move that can cut pollution levels by as much as 29 percent. The pilot scheme is being implemented by the Gujarat Pollution Control Board in coordination with researchers from the University of Chicago, Yale University and The Abdul Latif Jameel Poverty Action Lab. Michael Greenstone, Director of the Energy Policy Institute at the University of Chicago, and his co-authors find that the programme can reduce particulate pollution by 29 percent by setting a cap on the amount of pollution plants can emit equivalent to the amount they would have emitted if they had complied with current regulations, and allots permits to plants. Plants that emit less pollution can sell their extra permits to plants that find it too costly to comply.

Source: The Economic Times

'India to add 20 GW of nuclear power generation capacity over next decade'

18 October. India is set to add around 20,000 Megawatt (Mw) of nuclear power generation capacity over the next decade, K N Vyas, Secretary at the Department of Atomic Energy (DAE) and the Chairman of Atomic Energy Commission (AEC) said. He said steady and un-interrupted power supply by nuclear power plants gives it an edge over solar and wind power. He said nuclear energy with its almost non-existent carbon footprint is one of the cleanest options for reduction of global warming and climate change mitigation. He said that fission-based nuclear power has historically been a large contributor to carbon-free electricity globally.

Source: The Economic Times

MP government plans floating solar power plant on Indira Sagar Dam

17 October. In a bid to produce green energy, the Madhya Pradesh (MP) government has decided to set up a 1,000 MW floating solar power plant on the Indira Sagar Dam in Khandwa district. At present, the state is meeting one-fourth of its power requirements through renewable energy. The project cost is estimated at ₹50 mn for each MW. The government is trying to enhance power generation through renewable sources available in the state. As of September 2019, the state produced 2,071 MW using solar power, 2,444 MW from wind power, 117 MW from biomass power and 96 MW from small hydro power plants.

Source: Business Standard

ICRA revises rating outlook for one-third of wind, solar portfolio

17 October. Rating agency ICRA has downgraded the rating outlook for nearly one-third of its wind, solar power rated portfolio, the agency said. The agency has downgraded rating for 20 percent of its rated portfolio for wind and solar, which is at 1.9 GW. The rating outlook for another 10 percent of such capacity has also been revised.

Source: Business Standard

India’s commitment on climate change best among several nations: Sitharaman

17 October. India’s commitment to fight the global challenge of climate change is “bold” and one of the best amongst the community of nations, Finance Minister Nirmala Sitharaman has said. Interacting with global investors at the headquarters of the International Monetary Fund, Sitharaman said that in a bid to fulfill its commitment to tackle climate change, India has focused on generation of renewable energy. Sitharaman said that while India can be found somewhere between 10 and 15 position or even further down in terms of carbon emission, it is the best among any set of countries in terms of commitment to fight against climate change. Noting that major solar parks are coming all over the country, Sitharaman said that India’s commitment to climate change is unmatched.

Source: The Hindu

India to build 30 GW of renewable plants along western border

17 October. India is considering building 30 GW of renewable energy capacity along a desert on its western border known for its sunny, windy and arid expanse. The projects, which will be spread across the states of Gujarat and Rajasthan, are part of efforts to expand the country’s renewable capacity and reduce the share of fossil fuels in its energy mix. The plan was discussed at a meeting in Gujarat. Land for renewable projects is a key challenge in India and the high cost of acquisition weighs on the price of electricity. The nation is increasingly looking at barren lands for building renewable projects so its energy goals don’t clash with its growing need for agricultural production. For that reason, India plans to install 25 GW of solar projects, combined with storage capacity, in the high-altitude region of Ladakh in the extreme north of the country, Power and Renewable Energy Minister R K Singh said. Prime Minister Narendra Modi has pledged to cut the emissions intensity of India’s gross domestic product by a third by 2030 from 2005 levels to fight climate change. The country recently announced a target to set up 450 GW of renewable power generation capacity by 2030, while it works on a nearer-term goal of 175 GW by 2022.

Source: Bloomberg


Petrobras, Brazil’s government near oil marketing deal

22 October. Brazil’s Petrobras could take over marketing of the government’s share of crude from offshore oilfields, adding significantly to the state-run oil firm’s trading operations. The head of Pre-Salt Petroleum, better known by its Portuguese acronym PPSA, José Eduardo Gerk said it is close to inking a deal in which Petrobras’ trading desk will manage the oil that Brazil’s government receives from private sector firms. The potential deal, being discussed ahead of a blockbuster season for oil bidding rounds in the South American nation, would significantly boost the volume of crude traded by Petrobras (Petroleo Brasileiro SA), as the firm is formally known. Following significant exploration work in the area, the fields are known to hold billions of barrels of untapped crude. All winners will hand a significant chunk of that oil over to the government, via the PPSA, as is standard practice within Brazil’s so-called “pre-salt” oil producing region. Due mainly to the upcoming rounds, the oil that the PPSA manages could soar from just a few thousands barrels per day (bpd) last year to around 500,000 bpd by 2028 according to preliminary estimates, Gerk said. That compares with Petrobras’ current exports of 583,000 bpd in the September quarter. Last year, the PPSA sold its oil on the spot market and via auctions. With the oil it receives set to skyrocket in the coming years, the PPSA is also set to grow.

Source: Reuters

Oil collected from Brazil's northeastern coast rises to 600 tonnes

22 October. Brazil has collected more 600 tonnes of oil from its northeastern beaches since 12 September, the government said, more than double an estimate of oil and sand collected by state-run oil company Petrobras (Petroleo Brasileiro SA). Oil has been washing up on the shores of northeastern Brazil for two months, but its origin has remained a mystery so far. More than 200 locations along the coast have been affected, threatening marine life, authorities said. Petrobras said it had collected 280 tonnes of oil and sand from the beaches.

Source: Reuters

Dubai’s Dragon Oil to invest $1 bn in Egypt’s Gulf of Suez after buying BP stake

21 October. Dubai’s Dragon Oil Ltd said it had completed the purchase of BP’s oil concessions in Egypt’s Gulf of Suez and will invest $1 bn over five years to boost and extend their production. Dragon, owned by Emirates National Oil Company (ENOC), said it had replaced BP as the partner of state-owned Egyptian General Petroleum Corp (EGPC) in the Gulf of Suez Petroleum Company (GUPCO), which has 11 offshore oil exploration and production concessions. GUPCO’s target had been to increase the concessions’ combined production to 75,000 barrels per day (bpd) of oil by 2021 from the current 60,000 bpd. But Dragon said it plans to boost production to above 75,000 bpd and maintain this level for 10 years by further drilling and investing $1 bn over the next five years.

Source: Reuters

Carlyle Group quits $1 bn US oil export project

18 October. Carlyle Group (CG.O) said it had dropped out as a stakeholder in Lone Star Ports LLC, which proposed a $1 bn crude oil export terminal near Corpus Christi, Texas. The project was one of at least nine crude oil export terminals proposed for the US (United States) Gulf Coast to load US shale oil onto supertankers that carry around 2 mn barrels apiece. The US (United States) shale boom has prompted a surge in oil exports, which hit 3.25 mn barrels per day (bpd) and continued to fuel a race to build new export terminals. Enterprise signed long-term agreements with oil major Chevron Corp that advanced its proposed offshore crude export project near Houston, it said in late July, making it the first to make a final investment decision on a proposed deepwater port.

Source: Reuters

Libyan government raises commercial price for kerosene as first step in reforms

16 October. Libya’s internationally recognised government said it was sharply increasing the price of kerosene for industrial and commercial use as a first step to reform costly fuel subsidies and tackle smuggling. The price will rise to 0.85 Libyan dinars ($0.6) per litre, which is also the production cost, the economy ministry of the Tripoli-based government said. The Tripoli ministry noted that kerosene was distributed through the Brega fuel distribution unit, a subsidiary of the National Oil Corp (NOC), but made no reference to a row over control of Brega.

Source: Reuters


In Brazil, Norway’s Equinor eyes natural gas infrastructure

22 October. Norway’s Equinor ASA is scouting locations on Brazil’s coast to install new natural gas infrastructure, as the firm’s gas-heavy offshore fields come on-line in the coming years. Many of the region’s assets have significant amounts of natural gas, but consumption is low among Brazilians and the nation has few pipelines and terminals to facilitate exports. As a result, firms have largely opted to “re-inject” the gas, in a process that increases crude output. That will only work for so long. Some fields coming on-line in the pre-salt have too much gas to re-inject. Two massive government auctions in early November in a gas-rich zone are likely to add to the conundrum.

Source: Reuters

US power utility DTE Energy expands pipeline unit with $2.2 bn gas network deal

18 October. US (United States) power utility DTE Energy’s midstream business said it would buy a natural gas gathering system and pipeline in Louisiana’s Haynesville shale formation for $2.25 bn in cash, expanding the unit’s operations to the Gulf coast. DTE Midstream, which currently focuses on the Midwest and Northeast of the US, will acquire M5 Louisiana Holdings from Momentum Midstream and Indigo Natural Resources, which is the main producer which feeds gas into the network. The deal, which also includes a $400 mn payment upon completion of a 150-mile gathering pipeline, currently under construction and due to enter service in the second half of 2020, will immediately add 15 cents to the company’s operating earnings per share in 2020, the company said.

Source: Reuters

Australia’s Santos revenue rises 5.9 percent on higher gas prices, sale

17 October. Australia’s No. 2 independent gas producer Santos Ltd reported a 5.9 percent rise in third-quarter revenue, benefiting from higher gas prices and domestic sales. Revenue stood at $1.03 bn for the three months ended 30 September, compared with $973 mn a year earlier. Production surged 32 percent to 19.8 million barrels of oil equivalent (mmboe), higher than the estimate of 18.9 mmboe by UBS.

Source: Reuters


China’s 2019 coal imports set to rise more than 10 percent

22 October. China, the world’s top coal buyer, is on track to boost imports of the fuel by more than 10 percent this year, traders and analysts said, countering earlier expectations that shipments would be capped by Beijing at the same level as 2018. China’s coal imports have already surged 9.5 percent in the first nine months of 2019 to 250.57 million tonnes (mt), customs data shows, and at least 18.84 mt of seaborne coal are due to arrive this month, according to vessel-tracking and port data. With China typically bringing in about 7 mt more a month on trucks and trains from Mongolia and Russia, total volumes are likely to reach 276 mt well before the end of the year. Energy consultancy IHS Markit expects that China may bring in around 320 mt of coal this year. Some Singapore-based coal traders forecast Chinese coal imports could reach at least 305 mt.

Source: Reuters

Australia’s hopes to expand coal exports in Southeast Asia ‘delusional’

22 October. The number of new coal-fired power plants starting construction across Southeast Asia has fallen markedly over the past two years as Australia has increasingly looked to the region to expand its thermal coal exports. Analysis by US (United States)-based climate research and advocacy group Global Energy Monitor found work on only 1.5 GW of new coal generation – equivalent to one large Australian plant – began in the region in the six months to June, all of it in Indonesia. It follows construction starting on plants with a capacity of 2.7 GW last year, a 57 percent fall below 2017 levels and 79 percent less than in 2016. The Global Energy Monitor analysis identified Vietnam as having the largest number of coal projects at pre-construction stage in south-east Asia, with 22.9 GW proposed. It found another 26.4 GW had been cancelled over the past five years before being built and work on only 1.5 GW had begun since the end of 2016.

Source: The Guardian

Australia’s South32 quarterly coking coal output rises 9 percent

17 October. South32 Ltd posted a 9 percent rise in coking coal production for the first quarter, as the miner ramped up output at its Illawarra project in New South Wales. Production of the steel-making ingredient, known as metallurgical or coking coal, was about 1.7 million tonnes (mt) in the September quarter, compared with 1.5 mt a year earlier. Production at Illawarra, South32’s biggest source of coal, rose about 9 percent.

Source: Reuters


Pakistan PM inaugurates 1.3 GW power plant under CPEC in Pakistan

22 October. Pakistan Prime Minister (PM) Imran Khan has inaugurated a 1,320 MW power plant in resources-rich Balochistan province that aims to generate low-cost electricity, an initiative under the ambitious $60 bn China-Pakistan Economic Corridor (CPEC). Pakistan has been grappling with power crisis in the recent years. The difference between demand and supply which was 5,000 MW in 2013, has reached up to the level of 6,000 MW in 2018. The Pakistani government had approved the processing of 1,320 MW imported coal-based power project at Hub in November 2014.

Source: The Economic Times

South African power generation plan keeps coal in the mix

18 October. South Africa’s plans to boost electricity generation over the next decade will be a mix of renewable energy and coal power, Energy Minister Gwede Mantashe said, as nationwide power cuts entered a third day. Mantashe said the new plan supported a diversified energy mix and could be a catalyst for economic growth. South Africa’s power generation problems have resurfaced with the first power cuts in around seven months, underlining the challenge President Cyril Ramaphosa faces in reviving the country’s economy and rescuing struggling state power utility Eskom. Eskom cut up to 2,000 MW of power from the national grid and would probably cut 1,000 MW. South Africa’s power generation is currently dominated by coal, which accounts for more than 80 percent of output and makes the country one of the top-20 emitters of carbon dioxide worldwide. Eskom resumed power cuts after unplanned breakdowns at some of its generating units reached more than 10,500 MW of its roughly 45,000 MW installed capacity.

Source: Reuters

China’s power generation sees faster growth

18 October. China's power generation rose 4.7 percent year on year in September, faster growth than the 1.7 percent rate recorded in August. Power generation hit 590.8 bn kWh (kilowatt hour) last month, according to the National Bureau of Statistics (NBS). In the first three quarters of 2019, power generation increased 3 percent year on year to 5.3 tn kWh, down 0.3 percentage points from the first half.

Source: Xinhua


UAE’s Masdar wins bid to develop Uzbekistan solar project

22 October. UAE (United Arab Emirates)’s Masdar, a subsidiary of Mubadala Investment Company, said it had won a bid to develop Uzbekistan’s first public-private partnership (PPP) solar project. Masdar, one of the world’s leading renewable energy companies, will develop the 100 MW utility-scale solar plant, under the International Finance Corp (IFC)’s Scaling Solar program.

Source: Reuters

Poland’s richest man to work with GE Hitachi on mini nuclear plant

22 October. Synthos, a chemical group owned by Poland’s richest man Michal Solowow, has agreed to work with GE Hitachi Nuclear Energy on developing technology for a small modular reactor (SMR), Hitachi said. Poland still generates most of its electricity from coal but more and more companies are exploring low-carbon options.

Source: Reuters

BHP switches to green power for Chilean copper starting 2021

21 October. BHP, the world’s biggest miner, said it had signed four renewable energy contracts to supply all of its Chilean copper operations beginning in 2021, cutting energy costs by 20 percent. Miners, which often use fossil fuels as the energy source in their operations, are shifting to renewable generation as the cost of wind and solar power drops, while social and shareholder pressure to address climate change mounts.

Source: Reuters

France may yet pursue 100 percent renewable power strategy: Environment Minister

21 October. France has yet to decide whether to build new nuclear reactors and could yet pursue a long-term strategy of 100 percent renewable energy, Environment Minister Elisabeth Borne said. EDF operates all of France’s 58 nuclear reactors, which account for more than 75 percent of the country’s electricity needs. Borne said that President Emmanuel Macron has reiterated that there will be no decision on new reactors until the commissioning of EDF’s Flamanville 3 EPR reactor under construction in the north of France.

Source: Reuters

Global renewable power capacity to rise by 50 percent in 5 yrs: IEA

21 October. Global renewable energy capacity is set to rise by 50 percent in five years’ time, driven by solar photovoltaic (PV) installations on homes, buildings and industry, according to the International Energy Agency (IEA). Total renewable-based power capacity will rise by 1.2 terawatts (TW) by 2024 from 2.5 TW last year, equivalent to the total installed current power capacity of the United States.

Source: Reuters

Indonesia allocates 9.59 mn kl biodiesel for 2020

18 October. Indonesia’s energy ministry allocated 9.59 mn kilolitre (kl) of unblended biodiesel for its mandatory biofuel program in 2020. That is 45 percent higher compared with the 6.63 mn kl allocation for this year. President Joko Widodo has proposed starting mandatory use of palm-based biodiesel with 30 percent bio-content in January, up from the current 20 percent content.

Source: Reuters

Czechs must build nuclear plants even if in breach of EU law: PM

16 October. The Czech Republic will have to build new nuclear power plants to replace aging coal and nuclear capacity even if they are in breach of European law, Prime Minister (PM) Andrej Babis said. The government wants CEZ to lead the nuclear projects but the 70 percent state-owned electricity producer has demanded state guarantees the plants would be both viable and deliver returns to shareholders.

Source: Reuters


Scenario of Petrol Consumption & Imports by India

Petrol imports in terms of volume

Million Tonnes

Fuel Type: Petrol 2016-17 2017-18 2018-19 (P) 2019-20 (April-June)
Consumption 23.8 26.2 28.3 7.8
Imports* 0.5 0.2 0.7 0.2
% imports 2.1 0.8 2.5 2.6

Petrol imports in terms of value

P: Provisional
*Imports for 2019-20 are for April to May only
Source: Parliament Questions for Ministry of Petroleum & Natural Gas

This is a weekly publication of the Observer Research Foundation (ORF). It covers current national and international information on energy categorised systematically to add value. The year 2019 is the sixteenth continuous year of publication of the newsletter. The newsletter is registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485.

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