Mega sized coal fired power projects in West Coast (Part – I)

- Socio-environmental impacts and viable alternatives

ecently the govt. of India has taken a policy decision to locate two ultra mega coal based power stations of capacity 4,000 MW each (out of seven such projects) in coastal Uttara Kannada district of Karnataka and in coastal Rathnagiri district of Maharastra. The West Coast of India and the Western Ghats are very rich in bio-diversity, ecologically very sensitive, and hence are very important to a healthy environment on a sustainable basis.  In view of the serious implications associated with large size coal fired power stations, especially on such eco-sensitive areas, there is an urgent need to review the implications of the proposal, and also to consider the viable alternatives available to us to meet the electricity demand in the region.

Impact on the natural habitat:  The West coast of India in the states of Kerala, Karnataka, Goa and part of Maharastra has the Western Ghats, with evergreen and rich forests, running close to it for most of the length.  UN has declared the Western Ghats as one of the 8 most important bio-diversity hot spots in the world.  The narrow strip of coast between the Western Ghats and the sea has a rich habitat for millions of people living contentedly for centuries. The proposed large projects like the two ultra mega coal based power stations of capacity 4,000 MW each in coastal Rathnagiri district of Maharastra, in coastal Uttara Kannada district of Karnataka; 1,500 MW coal power project at Nandikur near Mangalore; the proposed 1,200 MW gas fired power station by ONGC etc. will have huge deleterious impact on the local flora, fauna, people, and general environment of the whole region. In this regard the following points should be objectively considered in any proposal to set up coal fired/gas fired power stations in the West coast:

·          The known ability of these forests to attract rainfall to the main land India.

·          Western Ghats are the source of a large number of rivers like Godavari, Narmada, Cavery, Krishna, Tunga Bhadra, Sharavathy, Kali etc.

·          They are the habitat for a large number of rare and endangered species of Flora and Fauna.

·          Reportedly decreasing rainfall in these areas due to a number of projects affecting the forest cover in recent decades;

·          Large number of stake holder groups (estimated to be few millions in number) relying on these habitats with or without any legal land holdings;

·          The West coast area has a large number of rivers draining into sea; these deltas are of immense importance to the ecology, food chain and life sustenance to a large number of people.  The proposed location in Karnataka is between the delta of two important rivers providing such life sustenance.

·          A large number of industries/projects in recent decades have affected the Flora and Fauna: a number of polluting industries near Mangalore and Karwar; Konkan Railway; Kaiga Atomic Power Station; Sea Bird Naval Base; a number of hydro electric power stations on the rivers like Sharavathy, Kali and Varahi etc;

·          Some additional projects are also reported to be in the pipeline: a large size petro-chemical complex, including a gas fired power station, near Mangalore by ONGC (Rs. 50,000 crore investment); earlier approved coal fired station at Nandikur by Nagarjuna Power Company Ltd.

·          Large scale felling of trees under various pretexts is continuing.

·          Environmental scientists believe that the Western Ghats have had more than their share of abuse, and cannot take anymore without damaging the ecology irreversibly.

·          There are a large number of agricultural, fishing and salt making sites in these areas.

·          While the West Coast and the Western Ghats have been the source of livelihood for millions of people for centuries, the proposed projects are likely to deny such source of income to a large number of families by a combination of factors like displacement, reducing access to sea, destroying many species of plants and vegetation, polluting rivers and sea vicinity etc.  The statement by the project authorities and the governments that the projects will provide employment to the locals will fall short of expectations, because such mega projects employing advanced technology cannot employ the locals, who are generally not equipped adequately. If at all few local people are absorbed in low end jobs, the number is likely to be much less when compared to those who will loose their livelihood because of the projects.

Suitability of coal fired power stations to the West Coast:  Without any known coal reserves of its own the coastal region on Western India has to import large quantity of coal, which can devastate the local ecology and quality of life.  An objective assessment of all the direct and indirect costs of such a proposal may reveal that the real cost of electricity produced could be many times higher than the projected cost of Rs.1.90 per Unit.  Some of the major issues in this regard are:

·          Even a high-grade imported coal will pose huge problems of dust and ash for the rich green vegetation of the coast: coconut, banana, rice, fruits and vegetables etc.

·          The flue gases like Carbon-di-oxide and Sulphur-di-oxide, fly ash and heat can have devastating impact on the local Flora and Fauna.

·          As per the guidelines of Central Electricity Authority, on an average, about 3,000 to 4,000 acre of land will be required at each of these sites, and most of it will have to be carved out of fertile agricultural lands or thick forest land.

·          A considerable percentage of the proposed site in Karnataka appear to be surrounded by low lying wet lands and may need a lot of investment to make it suitable for a power station site.

·          Both these sites in Karnataka and Maharastra appear to be within the Coastal Regulation Zone (CRZ), which is against the restrictions imposed on coastal area preservation.

·          Thousands of acres of forest have to be pulled down to provide the right of way for the required transmission corridor, which has to climb over the Western Ghats; once these dense virgin forest are opened up there will be accelerated deforestation due to various reasons.

·          The estimated area of forest land, which needs to be cut for the purpose of transmission line for each of the two projects, will be about 200 Metres wide for a length of few hundred KM in Karnataka alone.  This is a huge forest area to loose.  For the quantity of power to be transmitted there may not be any other alternative other than this much of forest destruction.

·          Karnataka has already lost a lot of dense/unique forest areas because of the projects like Sharavathy, Kali, Varahi, Bhadra, Kaiga etc.  In the opinion of the environmental scientists the Western Ghats have already taken more abuse than they deserve, and cannot take anymore.

·          The people, who are likely to be displaced, may not have any where else to go on the narrow strip of coast, and may have to put up with totally unfamiliar territory after displacement; Sea Bird Naval base and Kaiga project have already displaced a large number of families.

·          Unless Sea water is to be used for the project purpose, there will be a severe stress on the already stressed fresh water resources.

·          Atmospheric pollution generally associated with coal fired stations will destroy the clean green image enjoyed by the coast so far. 

·          The acid rains associated with such highly polluting industries will be much more pronounced in the West coast because of the high levels of humidity prevailing throughout the year, due to which the thick forests of Western Ghats and the fertile agricultural lands nearby will be at serious risk.

·          Tall chimneys (one for each generator) of a height of about 250 meters will scar the skyline and obstruct the flying paths of many bird species.  In addition the tall transmission pylons (corresponding to the highest transmission voltage in the country) and the switchyard will destroy the clean green image of the coast.

·          The transmission corridors needed for these projects will lead to the fragmentation of the natural habitat of certain animal species, and is likely to lead to reduction in number or extinction of those species.

·          The Karnataka state forest department is reported to be earning revenue of over Rs. 100 crores per annum from the forests of Uttara Kannada district alone. Destruction of such forests would lead to loss of such useful revenue on a perpetual basis.  A large number of medicinal plants would be lost for ever, whose economic value is difficult to accurately determine.

·          The proposed project would not be of any direct benefit to the locals, but only result in huge loss, which cannot be compensated adequately even with the best intention of comprehensive rehabilitation.

·          Whereas on one hand, the governments are talking about the urgent need to increase the forest cover from the present level of 19.1 per cent of the total geographical area to 33 per cent, the destruction of thick forests through such ill-conceived projects can only add to the public apprehension that the governments are not serious about the upkeep of our environment.

·          Whereas on one hand thick forests and fertile agricultural lands are being destroyed in the name of various other developmental schemes, the governments seem to be paying only lip sympathy to increase their coverage.

·          The proposed project site in Karnataka is very close to many culturally important locations like the Shiva temple in Gokarna.

·          The rich fishing sites, and a rare agricultural environment in this region, where rice can be grown in both salty water and fresh water, are the only source of lively hood to a large number of people, who will be devastated by the proposed projects.

·          The proposed tax holiday for the developers of these ultra mega projects can only be seen as a tragedy of errors, in addition to the devastation of the local socio- environmental conditions.

To be concluded (Views are personal)

 

Low - Voltage performance by discoms for financial year ended March 2006

 

Company	Net sales	% Change	PAT	% Change
NTPC	26143	15.9	5820	0.2
Tata Power	4563	16.1	610.5	10.7
Reliance Energy	3905	-3.1	650.3	25.0
CESC	2508	8.1	179.0	21.8
Torrent Power*	2425	8.2	177.8	21.2
NHPC	1663	12.9	742.8	8.5
Aggregate	43227	12.43	8434	6.2

*AEC and SEC Combined

Source: The Economic Times

India’s Hydrocarbon Scenario: A Journey from Protected Past to Competitive Future – Part IX

Dr. Samir Ranjan Pradhan®

ver the last two decades, import of petroleum products soared ten-fold from over 2.2 MTS in 1975 to nearly 18 MTS in 1995. Given the high level of imports in the Indian economy, the APM, which insulated the oil economy from the global market, had lost its utility. Further, it was estimated that during the 9^th Plan Period, an investment of about Rs 1, 24,000 crores would be required to create the necessary infrastructure to meet the surging demand, it was recognised that such a scale of investment was not possible to be initiated by the public sector. Participation of the private sector was therefore imperative, as before the APM was not attractive to the private investors.

So in 1995, the Ministry of Petroleum and Natural Gas (MoPNG) set up the Oil Industry Restructuring Group ('R' Group) to come up with a time bound program for reforms in the petroleum sector. The Group prepared a blueprint for phased reform of the petroleum sector. As a follow up of the 'R' group recommendation, the government had appointed an Expert Technical Group (ETG), an inter-ministerial committee, which was required to examine the various scenarios reflecting the impact of different levels of duty structure on various sectors. The ETG recommended a time bound program of reforms to move towards a market driven pricing mechanism for petroleum products in the country.

In addition, the refining sector was delicensed in 1998. Further, while naphtha exports were decanalised with effect from June 1998, furnace oil imports were decanalised under the provision of the export-import policy in July 1998. Freight under-recoveries on HSD to the extent of 20 per cent were passed on in the selling prices in January 1999. However, it may be noted that HSD prices are not being fixed at import parity, despite the government notification on the subject. Subsidies on HSD have, thus, inflated the deficit in the oil pool account. Administered HSD prices constitute a major distortion of the reform agenda[1].

In a significant move towards deregulation, the GOI in 2001 announced decontrol of ATF prices and the disinvestment in IBP with bidders being required to commit themselves to an investment of Rs 2,000 crores in exploration and marketing, refining, pipelines or terminals.

Features of Deregulation

Main features of deregulation as per the Gazette Notification[2] are as follows:

·          Crude price payable by refineries will be on import parity.

·          Retention price concept will be abolished for existing and new refineries.

·          The tariff on crude and petroleum products will be rationalized in phases by 2001-02.

·          Refineries will be free to decide their product prices except for LPG, MS, SKO, ATF and HSD. The refinery gate price for these five products till 2001-02 will be fixed by OCC at adjusted import parity for existing refineries. The government in the beginning of every year will announce the adjustment factor.

Impacts on different aspects of the oil-gas sector

As a result of deregulation the oil industry in India is witnessing penetration of private players and there is also indication of intense competition in the future as and when the reform process became fully operational. This can be substantiated from the developments in the sector. When the Indian lubricants market was decontrolled in 1993 to parallel marketing, there were 20 new entrants who captured about 12% of the market share in just five years, eating in to the market share of established players like IOC and BPCL. The market also witnessed a spate of joint ventures as the Indo Mobil between Mobil and IOC to blend, package, distribute and market Mobil brand lubricants throughout India. Similar restructuring of the industry may be expected with the decontrol of transportation fuels- while the increase in number of new players may not be as high as in the case of lubes, primarily on account of the conditional marketing rights, the degree of competition in this sector would be more severe. In fact some of the private companies have now marketing super quality transport fuels for two-wheelers in the metro cities of the country.

Another impact of the deregulation can be noticed in the sourcing of crude oil. Till 2001, all PSU refineries had to source crude through IOC, which was the sole canalizing agent. Only the joint sector and private refineries had freedom in crude sourcing and importing. On March 14, 2001 the government extended this freedom to all PSU refineries. The move was welcomed by the industry as imports could now be tailored to suit the exact requirements of a particular refinery.

External Policy Initiatives

With regards to the external policy initiatives, two things can be considered. One is the attempt to diversify the source of oil imports either through holding oil equity in areas outside the Gulf or through joint ventures. Second are the policy initiatives for the import of LNG. In case of the first, except some achievement in the form of joint sector development in Sudan and Russia's Sakhalin Project, nothing substantial has been achieved so far. This implies that India's dependence on its traditional supplier- the GCC countries- is most likely to continue for long.

Considering the burgeoning gap between demand and supply of natural gas, the government has started to promote the utilization of natural gas. For this, in 1996, Petronet LNG was formed to facilitate imports of LNG. Four public sector hydrocarbon majors - IOC, BPCL, ONGC and GAIL promote this company. The LNG projects have been proposed by companies like Shell at Hazira, CMC Energy/Unocal/Grasim at Ennore, IOC/Petronas at Kakinada, Tata/Totalfina/GAIL at Mumbai and British Gas at Pipavav.

Views are personal

 

Excise duty on petrol diesel in Asia-Pacific

 

(Rates in local currency per unit)

Country	Retail price	% of excise to retail	Retail price	% of excise to retail
Pakistan	57.70	2	38.73	0
Thailand	30.20	12	27.25	8
Philippines	41.24	11	36.24	0
China	5803*	5	5021*	2
Indonesia	4500	4	4300	4
Bangladesh	42.00	11	30.00	11
India	47.51	32	32.47	16

*Median guidance price

Source: The Economic Times

NEWS BRIEF

OIL & GAS

GSPC strikes oil & gas in KG basin

June 8, 2006. Gujarat State Petroleum Corporation has, for a second time, struck a huge amount of recoverable oil and gas reserves in the Krishna-Godavari (KG) basin. The Gujarat government-owned company struck gas bulk at the rate of 4.8 million standard cubic feet per day and oil bulk of 862 barrels per day in the KG basin. The newly-discovered stock of gas and oil is expected to spread over a wide area of 60 to 90 kilometres. The natural gas and oil obtained from KG# 17 is comparatively of lesser depth and temperature than from KG#8.

Ratnagiri project running short of naphtha

June 13, 2006. Naphtha stocks at the Ratnagiri power project in Maharashtra are likely to run out within a month. About 30,000 tonne of naphtha left at the plant and talks with Indian Oil for naphtha supplies until the time company has switch over to liquefied natural gas. The 2,184 MW Ratnagiri project is trying to negotiate on the price of Naphtha. The Ratnagiri plant will be able to secure LNG supplies sometime in the first quarter of 2007. Till that time the plant will have to procure naphtha.  The current cost of the power generated by Ratnagiri is Rs 4.75 per unit. Ratnagiri power project is in the process of building a LNG receiving terminal. Post the completion of the terminal LNG will be sourced at a considerably lower price than the current spot price. Most recently Punj Lloyd Ltd, along with its joint venture partner, Whessoe UK, was awarded the contract for completing the Dabhol LNG terminal by Ratnagiri Gas and Power Private Ltd. The value of the contract is $93.02 million on EPC basis. The contract constitutes EPC package for completion of balance works of the LNG terminal and top of the jetty facilities for Ratnagiri (Dabhol) LNG Terminal project.

Reliance oil retail plans go awry

June 13, 2006. The nationwide rollout of petroleum outlets by India’s largest private sector company Reliance Industries Ltd could be in jeopardy as it faces intense resistance from its 880-odd dealers over declining sales and unviable operations.  RIL has permission to open 5,500 outlets, but has been able to set up 1,266 so far — 381 of which are company-owned and company-operated. Most of its 885 dealers are complaining of a decline in sales from an average of 20,000 litres a day to 2,000 litres a day across various states. With dealer margins of just Re 1 a litre in case of petrol and 55 paise for diesel, they find it difficult to pay salaries of the mandatory minimum staff strength of 17.

Sales have plummeted because Reliance’s diesel currently costs about Rs 3 a litre, more than the price charged by public sector oil companies. Petrol costs Rs 2.50 a litre more (Re 1 more in premium petrol). Reliance has had to price its products higher to cut its losses in selling fuel below cost. Even though losses are mounting, dealers cannot shut the outlets either. A clause in tripartite agreements among dealers, the company and bankers prohibits closure. If an outlet is shut, RIL can take it over and will need to pay only Re 1 a month for 20 years as rental for the land.

Pollution board sets tough norms for refineries

June 8, 2006. The Central Pollution Control Board (CPCB) has proposed stringent standards for effluent disposal and emission by petroleum oil refineries. Accordingly, the system design, level of automation and operation should ensure minimum oil carry over during the water drainage operation. For avoiding constant leakage from tanks, the refineries should follow regular tank inspection, leak detection from tank bottoms, provision of double tank bottoms or impervious membrane liner below the tank bottom, ground water monitoring.

To avoid major oil spills from storage tanks, impermeable tank farm bund containment system would have to be implemented across the industry.  These standards would be applicable to the existing 18 refineries having a total capacity 127.37 million metric tonnes per annum. According to these standards, leakage, regardless of concentration (liquid dripping, visible vapor leak) or presence of bubbles using soap solution should be considered as leak.

The percentage of leaking components should not be more than 2 per cent for any group of components monitored excluding pumps/compressors. In the case of pumps/compressions, it should be less than 10 per cent of the total number of pumps/compressors or three pumps and compressors, whichever is greater. The refineries are expected to minimise emissions from flare by reducing relief gas to flare through good housekeeping practices, balancing the refinery fuel gas system, installing a gas recovery system and using high integrity relief valves and applying advanced process control.  

GAIL, HPCL sign pact to supply gas

June 13, 2006. GAIL India and Hindustan Petroleum (HPCL) have set up a joint venture company, Aavantika Gas (AGL), to implement city gas projects for supply of piped natural gas (PNG) to domestic, commercial and industrial consumers and compressed natural gas (CNG) to automobile consumers in Madhya Pradesh.  Depending on availability of gas, AGL will commence the city gas project implementation initially in Indore.  The Jagoti-Pithampur pipeline being laid by GAIL is expected to provide pipeline connectivity for the Indore city gas project. The project implementation will be expanded to other cities such as Gwalior and Ujjain on the basis of financial viability and gas availability.

With the incorporation of the AGL, the supply of PNG and CNG in the cities of Madhya Pradesh will become a reality and residents of these cities will benefit by the use of clean, green and economical fuel for their energy requirements. GAIL has, so far, formed eight joint venture companies to implement the city gas projects in various parts of the country,including Mumbai and Pune. GAIL is planning to form state-wise JVs along with oil marketing companies for the states of Rajasthan, Gujarat, Kerala, Karnataka and West Bengal in near future. 

IndianOil to implement Panipat-Jalandhar pipeline

June 13, 2006. Indian Oil Corporation Ltd has initiated activities for the implementation of LPG pipeline from Panipat in Haryana to Jalandhar in Punjab. The pipeline project, being implemented at a cost of Rs 185 crore, (Rs 1.85 billion) will evacuate LPG from IndianOil's mega refinery at Panipat and transport it to the bottling plants at Nabha and Jalandhar.  The project involves installation of originating pump station at Kohand in Panipat, laying of a 275-km pipeline to Jalandhar and installation of delivery station at Nabha and a terminal station at Jalandhar. The company has LPG bottling plants at Kamal and Gurgaon in Haryana, at Jalandhar and Nabha (Punjab), at Una and Baddi (Himachal Pradesh) and at Jammu and Leh (Jammu and Kashmir).

The LPG requirement of these bottling plants is currently met from the Panipat refinery as well as from Loni Tap Off Point (TOP), which receives LPG through GAIL (India) Ltd's Jamnagar-Loni LPG pipeline. The pipeline would ensure cost-effective and uninterrupted transportation of LPG to the bottling plants particularly where demand concentrations are high. Amritsar, Ludhiana and Bhatinda are the three potential locations for the setting up of new bottling plants, which can be fed from Nabha or Jalandhar once the pipeline is installed. The availability of LPG along with other petroleum product would increase substantially with the expansion in capacity and other projects of Panipat refinery. The project, on augmentation of Panipat Refinery to 12 million tonnes per annum (mtpa) capacity, is nearing completion and further expansion of the capacity of Panipat Refinery to 15 mtpa is scheduled to be commissioned by March 2008. 

TN petro product pipeline is ready

June 10, 2006. The 680 KM long Chennai-Tiruchi-Madurai pipeline for transporting petroleum products will be formally inaugurated end of this month. The product pipeline, laid at a cost of Rs 450 crore, (Rs 4.5 billion) was commissioned in August 2005. It has a capacity to transport 1.8 million tonnes of products a year, and by 2010, when it will be fully completed, the capacity will go up to 2.3 million tonnes a year. As part of the pipeline, laid by Indian Oil Corporation, tankages have been built at three places. The pipeline is being used to transport diesel, kerosene and petrol. It is 30 per cent cheaper to transport these products by the pipeline than by rail.

Ginni Filaments scouts for gas supplier for Gujarat

June 9, 2006. Mathura-based textile company Ginni Filaments is scouting for natural gas suppliers for the captive power generation for its non-woven spunlace manufacturing facility at Panoli in South Gujarat.  The company has been talking to GAIL and ONGC for the gas supply for power generation for its proposed project at Panoli. The company also plans to foray in FMCG.  Ginni Filaments will invest around Rs 131 crore (Rs 1.31 billion) for the project, which will be commissioned by the end of December. 

MIDC to lay pipelines in state for gas supply

June 9, 2006. After Gujarat, Maharashtra is all set to lay gas pipelines across the state and the state's industrial infrastructure company Maharashtra Industrial Development Corporation (MIDC) has been appointed for the purpose.  A special purpose vehicle for distributing the gas in the industrial parks developed by the MIDC has been created which has been christened as Maharashtra Industrial Gas Transmission Company Limited (MIGTCL).  Currently, MIDC is holding talks with GAIL and Reliance whose pipelines are expected to laid in the state in 2007 and 2008, respectively, for souring gas. It is expected that GAIL's pipeline between Dahej and Uran will be completed by mid-2007 and it will be used by MIDC to distribute gas for industrial users and power generation in Raigad, Thane and Pune districts of the state.  The Reliance pipeline coming from Krishna Godavari basin is expected to enter in the state in Solapur and run through Marathwada region and enter into Gujarat from Dhule. 

Petronet to import cheapest LNG

June 8, 2006. India will import its cheapest ever spot cargo of LNG next month when it receives a ship load from Egypt that will be used to meet feedstock requirements of power and fertilizer plants. Petronet LNG Ltd, India's largest LNG importer, has contracted a 62,000 tonne cargo from Egypt at an ex-ship price of $7.60 per million British thermal unit (mbtu), the cheapest cargo every contracted by an Indian firm from spot market. The cargo from Idku terminal of Egyptian LNG is expected to reach Petronet's Dahej terminal in Gujarat between July 7 and 9. Petronet currently buys 5 million tonnes of LNG per annum from Qatar under a 25-year deal at a FOB price of $2.53 per mbtu. 

Gas cos importing LNG

June 8, 2006. After the successful spot LNG cargo buying and subsequent profit sale, Indian gas companies are eyeing international spot buying of LNG cargo to ensure energy security for the country at economical rates in comparison to skyrocketing crude oil prices. GAIL had imported the country’s first spot LNG cargo of 1.35 lakh cubic meter LNG from Algeria at an ex-shipment price of $ 9.28 mbtu, and again Petronet bought another spot LNG cargo of 62,000 ton from Egypt at an ex-ship price of $7.60 per mbtu.

Delhi Govt waives VAT on petrol, diesel price hike

June 13, 2006. Petrol and diesel users in Delhi will get a marginal relief from the recent price hike with the Delhi Government deciding to reduce petrol and diesel prices by 67 paise and 22 paise per litre respectively. The price reduction would be effected by removing value added tax (sales tax) on the incremental price increase effected on the two products from the midnight of June 5. The Centre had announced an increase of Rs 4 and Rs 2 per litre respectively in petrol and diesel prices.

RIL cuts domestic sales, to focus on exports

June 13, 2006. Unable to pass on the high cost of producing petrol and diesel in the backdrop of fuelling global oil prices, Reliance Industries (RIL) has deliberately kept prices of its fuels higher than the public sector oil firms, and reduced domestic sales considerably. The focus in the interim would be exports, where realisations are market driven unlike in India. The company has given the option to the dealers to close their petrol pumps after 8 pm to help them save on power and other miscellaneous costs. All Reliance petrol pumps were originally planned for 24x7 operations. Now, as a result of these developments, while Reliance is managing to reduce losses, the dealers are left gasping with significantly reduced business.

Reliance has 381 company-owned outlets, 126 of which are jointly operated and 759 dealer-owned outlets. While the company-owned outlets will remain open for 24 hours, the dealer-owned ones will have the option of closing early. Even after the prices of petrol and diesel were increased by the PSUs, Reliance’s diesel and petrol prices are higher than the public sector’s by around Rs 2 a litre. As a result, traffic is automatically getting diverted to the PSU pumps, much to the chagrin of the dealers.

India stiffen oil, gas discovery disclosure norms

June 12, 2006. The government has tightened the norms for announcing oil and gas discoveries to prevent exploration companies from over-reporting or drawing economic and political capital from new finds. Exploration regulator Directorate General of Hydrocarbons (DGH) has been assured by the petroleum ministry and the bourses that companies engaged in drilling would adhere to the new disclosure norms.

In the past, companies like Oil and Natural Gas Corp (ONGC), Reliance Industries and Gujarat State Petroleum Corp (GSPC) have strived to make economic or political capital of oil and gas discoveries without informing DGH and getting a proper appraisal done of the discovery. The new discovery disclosure norms were circulated to the oil exploration companies a fortnight back.

While it is up to the market regulator Securities and Exchange Board of India (SEBI) to take action against any commercially manipulative information, it has asked DGH to keep it informed of any violations. Exploration companies can now make announcements of oil or gas discoveries only if after it is vetted either by the market regulator or other designated authority. The discovery has to be informed simultaneously to DGH and the market regulator. In effect, the exploration companies have to fulfill both obligations simultaneously. The penalty for violation could be a crackdown by the market regulator, or, in the case of the petroleum ministry, a cancellation of the exploration license, which would need extreme provocation. The disclosure norms are in tune with India's keenness to follow international practices that make it mandatory for proper appraisal and expert verifications before announcements are made of any new oil or gas discovery.

No cut on investments abroad: ONGC

June 12, 2006. India's largest oil producer, state-run Oil and Natural Gas Corp Ltd, will not cut spending on foreign acquisitions even if it has to bear a higher subsidy burden.  ONGC's investments to acquire oil and gas assets abroad will take a hit of up to $1.5 billion this financial year because of the subsidy it provides to refiners. ONGC plans to spend up to $7 billion over the next few years to buy oil and gas assets abroad to feed energy-hungry India's growing economy. ONGC, along with state-run GAIL (India) Ltd and Oil India Ltd, have been directed by the government to compensate loss-making refiners for up to Rs 240 billion ($5.2 billion) for the full fiscal year to March 2007. 

Fuel price hike not a matter of choice: Deora         

June 10, 2006. Fuel price hike is not just about protecting oil marketing companies but also ensuring development objectives as the availability of petroleum products underpins the growth of economy. Taxes on petroleum products, the world over, tended to be high as governments viewed it as a revenue mobilisation exercise. Justifying the hike in petrol and diesel prices against the backdrop of steep increase in international crude prices, the Petroleum Minister, said that the "increase was not a matter of choice." The oil marketing companies - Indian Oil Corporation, Hindustan Petroleum, Bharat Petroleum and IBP - faced an under-recovery of Rs 73,500 crore (Rs 735 billion) and their combined net-worth of Rs 41,500 crore (Rs 415 billion) would have been eroded. The situation had turned critical and could only be resolved by equitable distribution of the burden.

The decision of States such as Tamil Nadu not to slash sales tax to partially mitigate the hike could also be attributed to the need to protect revenues to meet development expenditure. To Tamil Nadu, the recent hike in petrol and diesel cost brings in additional revenue of Rs 170 crore (Rs 1.7 billion) In India petrol was subsidised up to 23 per cent, diesel 33 per cent, kerosene 62 per cent and liquefied petroleum gas 30 per cent. The price of crude for India worked out to about $68 a barrel against $58 in September 2005. The hike today compensates for a price of $54.50 and $14 is still unmet.

Seeks $4-5 discount on Rajasthan oil

June 10, 2006. ONGC has sought a $4-5-a-barrel discount on Cairn Energy’s low grade Rajasthan crude oil, saying without concessions it was uneconomical to transport the oil to its subsidiary MRPL. Cairn’s Rajasthan crude had high wax content and needed specialised pipelines with intermittent heating to transport it 400 KM from Barmer district to Mundra port in Gujarat for further shipment to Mangalore Refinery for processing. Cairn has sought an international price for the 1,50,000 barrels per day Rajasthan crude expected from end-’08, but ONGC says Rs 2,000 crore (Rs 20 billion) it plans to sink in the pipeline needs to be compensated through discounts without which its was uneconomical to process Rajasthan oil at MRPL.

Himachal cuts down on petrol use

June 9, 2006. The hike in petrol prices has hit the Himachal Pradesh exchequer hard, forcing the state government to reduce the monthly petrol quota for vehicles used by its top state officials.  Now state government officials in the secretariat will be able to consume 70 litres of petrol per month instead of 75 litres which they consumed earlier. The fuel cuts will also apply to all other government run vehicles in departments and corporations of the Himachal government across the hill state.  Those exceeding this quota will have to pay from their pocket. The reduction of 5 litres of petrol quota per month for every vehicle used by the government officials would save Rs 75 lakh every year. 

Govt invites foreign firms to invest in PCPIRS

June 8, 2006. The government invited foreign companies to invest in the petroleum, chemicals and petrochemicals investment regions (PCPIRS) to optimise the gains that India offers in this sector. India's chemicals and petrochemicals industry was of 40 billion dollars size and was growing at nine per cent. Each region is proposed to be of 250 sq km in size. Five states of Andhra Pradesh, Gujarat, West Bengal, Orissa and Karnataka have been identified for setting up these regions. A task force on PCPIRS has already been constituted in the prime minister's Office to enable coordinated initiatives at the central and state government level for the development of requisite infrastructure. 

India may allow more fuel prices hikes

June 8, 2006. The Indian government has decided to give state-run oil companies limited ability to increase retail prices of gasoline and diesel if international crude-oil prices rise above $75 a barrel.  The government currently sets prices at which state-run oil companies - which control 90 per cent of the fuel market - can sell gasoline, diesel, kerosene and cooking gas, and the companies have for months complained of large losses because of high global crude prices. To help alleviate some of the pressure on the oil companies, the government is planning to allow them to increase prices if global crude hits $75 a barrel. Brent crude, which is most of what India buys, is currently selling for just under $70 a barrel.  Under the plan approved by the Cabinet, for every dollar crude rises beyond the $75 mark, oil companies could increase gasoline prices by 1.5 rupees (3.3 U.S. cents) a gallon and diesel by 1.15 rupees (2.5 U.S. cents) a gallon without government approval. India imports around 75 per cent of its crude oil.

Reliance hikes petrol, diesel prices

June 8, 2006. Reliance Industries has increased its retail prices of petrol and diesel by Rs 4 and Rs 2 per litre respectively, exactly the same amounts by which prices of these products were hiked for the public sector oil companies two days ago. RIL's petrol and diesel will still cost around Rs 2.50 per litre more than that of the public sector oil companies. This is because it is the second price hike by Reliance in four weeks. RIL has over 1,300 petrol and diesel outlets across the country.

POWER

Power ministry to add 75,000 MW by ’12

June 13, 2006. The Union power ministry has formed a group that will work towards ensuring that India can hit the target of adding a capacity of 75,000 MW during 2007-12, the 11th Plan period. The group will be headed by Union power secretary and will include the chairmen of NTPC Ltd, and the Central Electricity Authority (CEA). With the government expecting to add 44,000 MW during the current Plan period ending March 2007, taking the total capacity to 1,44,000 MW, the goal for the 11th Plan translates into an average growth of 15,000 MW a year, against the present capacity of 8000 MW.

Seven sub-groups have been formed to work out the details for key aspects like demand projection, hydro-thermal ratio, grid upgrade, energy conservation, rural electrification, transmission and distribution, and manpower training. The working group will submit a road map of the plan by October this year. Of the new capacity of 75,000 MW, 62,000 MW will be from conventional sources, 6000 MW from renewables and 7000 MW from captive power plants. Hydroelectricty will account for around 17,000 MW out of the total capacity for conventional sources.

NHPC to construct Kotli hydel project

June 13, 2006. The NHPC has signed an agreement with the Uttaranchal government for the implementation of the 1,045 MW Kotli Behal hydel project in three stages on the river Ganga and its tributaries.  The project now has been cascaded down to three stages, which include Kotli Behal-IA (195 MW), Kotli Bahal-IB (320 MW) and Kotali Bahal-II (530 MW). NHPC will invest nearly Rs 6,000 crore in this run-of-the-river project.  The Kotli Behal project-1A is being constructed between the Devprayag and Koteshwar areas of the Tehri district on the river Bhagirath, a tributary of the Ganga. 

 The Kotli Behal-1B is being constructed between Srinagar and Devprayag in the Pauri district on the Alaknanda river, a tributary of the Ganga.  The Kotli Behal-II is being constructed on the river Ganga between the Devprayag and Rishikesh areas.  The construction of these projects will be taken up simultaneously and these three projects would together generate 4,235 million units of power.  The NHPC has commissioned the 120 MW Tanakpur power plant at Banbassa in the Champawat district and the 280 MW Dhauliganga project in the Pithoragarh district. 

DVC plans new projects to generate 4,500 MW

June 12, 2006. Damodar Valley Corporation (DVC) intends to reposition itself in the same business. It has finalised a Rs 18,000 crore (Rs 180 billion) investment plan for setting up three new extension units adjacent to the existing thermal power plants and six greenfield thermal projects. The new projects together will create an additional total capacity of 4,500 MW. Three extension units, each with 500 MW capacity, are to be set up at Bokaro-A and Mejia-B, which will be completed in 3-4 years.

Six greenfield power projects with capacity of 500 MW each will be set up at Kodarma in Jharkhand (two), and Durgapur and Raghunathpur in West Bengal (two each). These projects will be ready within 2011-12.  Besides, DVC's ongoing capacity addition programme at Mejia and Chandrapura, totalling about 1,000 MW, will be ready within a year. About 30 per cent cost of the new projects will come from internal sources and the rest through borrowings. The corporation also has plans to set up two joint venture thermal power projects, teaming up with the Tatas and SAIL. The Tata-DVC combine would set up a 1,000 MW thermal power station at Maithon, while the DVC- SAIL combine will set up a 500 MW capacity thermal station at Bokaro. Both ventures would be ready for commercial generation within the 11th Plan (2011-12) period.

CESC to bid for ultra-mega power project in MP

June 11, 2006. Kolkata-based power utility CESC Ltd, seeking to expand its operations outside West Bengal, is keen to bid for the Rs 16,000 crore (Rs 160 billion) ultra-mega power project at Sasan in Madhya Pradesh. The main area of interest to participate in the project is ready supply of fuel, coal blocks. Moreover, the infrastructure to transport power for sale will be made available. The Centre had earlier announced its intention to facilitate setting up of seven ultra-mega power projects to put generation across the country on a fast track. Out of two projects, the CESC did not bid for the one at Mundra in Gujarat as it would depend on imported coal. CESC would rope in a partner to fund the project, if selected, to share the financial burden.

Bihar to get nuke plant

June 9, 2006. The Union energy ministry has approved in principle the Bihar government's demand for setting up a nuclear power plant in the power-starved state. The state government plans to allot a site for the 2,000 MW plant at Rajauli in Nawada district, but it is not rigid on this and will offer alternative sites in neighbouring Gaya and Aurangabad districts to the NPCIL team that is expected here soon. After selecting the site, the expert group will prepare a feasibility report that will be presented to the union cabinet for approval. 

REL to generate 16000 MW

June 8, 2006. Reliance Energy (REL) is planning to invest Rs 60,000 crore (Rs 600 billion) across various projects to generate a total capacity of 16,000 MW. The company was also planning to foray into nuclear power to set up a capacity of 2,000 MW.  The company had acquired 2,100 acre of land for the Dhirubhai Ambani Energy City at Dadri in Uttar Pradesh.  All important clearances for the project were in place and the process to select the EPC contractor was under way.  The company had zeroed in on a site in Raigad district in Maharashtra for its proposed 4,000 MW gas-fired power plant in the state.  Environmental impact assessment and other studies had been completed and land was being acquired. International bidding for EPC contracts had also been initiated. 

It will also invest Rs 1,700 crore (Rs 17 billion) to build a 340 MW hydel project at Urthing Sobla in the Pithoragarh district of Uttaranchal.  Through this project, Reliance Energy wants to make a foray into the hydro sector also.  The company has plans to set up a 280 MW hydro power project in northern India.  Reliance Energy is also pursuing wind energy projects and launched efforts to tap nuclear energy.  It has also signed a preliminary agreement to set up two hydro power projects of 1,000 MW and 700 MW in Arunachal Pradesh.  Reliance Energy was in the fray for the ultra mega power projects. The central government had invited expressions of interest for setting up five power projects, each of 4,000 MW capacity.  The company has filed for qualifying for the 3,500 MW Sasan project in Madhya Pradesh and the 3,800 MW project at Mundhra in Gujarat. Reliance Energy was involved in rural electrification and had earlier this year won contracts worth Rs 790 crore (Rs 7.9 billion) to electrify 17 districts in Uttar Pradesh.

Lanco bags Anpara 1,000 MW power project

June 7, 2006. Hyderabad-based Lanco Group has outbid Reliance Energy and Essar Group to bag the tariff based competitive bidding for the 1000 MW thermal power project at Anpara in Uttar Pradesh. The thermal power project “Anpara C”is a fast track project with all major approvals in place. The power-starved Uttar Pradesh government had already tied up the project’s coal and water linkages as also put in place, the evacuation line and power purchase agreement with distribution companies promoted by the UP state electricity board.  With the addition of the Anpara project, the company has emerged as the largest independent power project developer in the country. The company already had over 500 MW operating capacity and over 3000 MW at various stages of development. The significant new contracts secured by Lanco Group include three hydro electric power project in Uttaranchal and a 74 per cent stake in the 1015 MW Nagarjuna power project which is being set up in Mangalore, Karnataka. The Karnataka power project will be the first IPP to operate on imported coal while the Uttaranchal power projects will be country’s first to market energy on a merchant basis.

PTC to enter coal imports business

June 13, 2006. PTC India, the country’s leading power trading company, has firmed up plans to source coal for power projects. It will start with two projects with a total capacity of 500 MW. This will boost power project developers who are not able to secure coal supplies. PTC plans to enter into long-term tie-ups with mining companies for sourcing coal and delivering it for thermal power projects in the country. The company is in the process of floating a subsidiary for the venture. Imported coal will be increasingly used in future power plants. 

It is ready to work on thin margins and is studying the viability of sourcing coal from Indonesia, Australia and South Africa.  Given the targets for power generation, the company believes imported coal will play a bigger role in upcoming projects as the amount of coal mined in the country is insufficient to meet the demand of existing projects due to supply constraints and quality issues.  The size of the market for imported coal for power generation in India is pegged at around 20 million tonnes. When the PTC enters the business, it will have to slug it out with coal and oil group LLC Dubai, Adanis, Minerals and Metals Trading Corporation and Swiss Singapore among others.

Torrent to distribute power in Bhiwandi

June 12, 2006. In its first power foray outside Gujarat, the Torrent group has bagged the rights to distribute electricity in the power looms hub in Bhiwandi, north of Mumbai. Torrent Power (TPL) has won the 10 years franchisee bid from the Maharashtra State Electricity Board (MSEB) beating bigger players like Reliance and Tata. TPL is expected to get the letter of intent (LoI) from MSEB. The Bhiwandi circle’s estimated annual revenues are about Rs 500 crore (Rs 5 billion). Around 600 MW of power is distributed in this circle. It has also agreed to increase the collection efficiency from the current 62 per cent to 98 per cent. TPL is expected to generate additional revenues of Rs 150-180 crore (Rs 1.5 – 1.8 billion) in the first year itself and over the ten-year period, the company is going to add revenues of Rs 1500-2000 crore (Rs 15 – 20 billion).

Nepal may power up northern grid

June 8, 2006. Border trading of power from West-Seti in western Nepal to be taken up. The Centre is seriously considering the option of importing power from hydro potential-rich neighbour Nepal. The government has already identified the West-Seti project in western Nepal as a possible source to feed the power-hungry northern grid. 

The Centre has identified PTC India as the nodal agency for initiating power trading with Nepal and Bhutan. PTC would not buy power unless it was delivered across the border at Bareilly. PTC has already signed a PPA with West-Seti, which will evacuate its entire output to India. At present, India buys 50 MW power from Nepal and the two sides decide the tariff jointly at periodic intervals. A special transmission line was being planned to evacuate 750 Mw that would be available once the project began operations in 2010. PTC is also in discussions with other developers of private power projects in Nepal. 

It is already sourcing power from Bhutan, which is being fed into the eastern grid. PTC has signed long-term agreements with Bhutan’s department of energy for purchase of 336 MW from the Chukha Hydroelectric Project and 60 MW from the Kurichchu project. It has negotiated an agreement to purchase 860 MW of power from the Tala project.  A special transmission line is being laid from Tala in Bhutan right up to Delhi. The first phase of this line, which was being built as a joint venture between Tata Power and the Power Grid Corporation, was completed in April this year. 

M`shtra unveils high-voltage power plan

June 8, 2006. The three power utilities in Maharashtra plan to invest around Rs 60,000 crore on generation, distribution and transmission systems to make the state power surplus by 2012. Three power companies - Maha Genco, Maha Transco and Maha Vitaran - will invest around Rs 60,000 crore during the next five years in the power sector.  The state Cabinet has also cleared plans for generating 2,000 MW at a cost of Rs 10,000 crore (Rs 100 billion). PFC and REC will provide loans of up to 80 per cent of the total investment while the state government will contribute 20 per cent as its equity in the generation company. On the transmission network, take up a massive upgrade by replacing old high-voltage lines which have not been replaced for three decades, installing new transformers and equipping the transformer stations with capacitors. The modernisation of the transmission network would cost around Rs 17,000 crore (Rs 170 billion). 

Coal mine allotment to 28 PSUs soon

June 13, 2006. The Ministry of Coal would finalise allotment of coalmines to another 28 Government companies for captive use within the next few days.  The companies include several State Electricity Boards as well as Central Government undertakings like the National Thermal Power Corporation.  The objective is to give approximately 20 billion tonnes of reserves to companies other than Coal India Ltd (CIL) and the Singareni Collieries Company Ltd (SCCL) for undertaking mining operations.  Mines containing estimated reserves of around 17-18 billion tonnes have already been allotted to 94 companies in both the public and private sectors. Some of them have even started production. The Ministry is following up with the other allottees to expedite early production, failing which their allotments may even stand terminated.

AP tops in power sector performance

June 13, 2006. Andhra Pradesh has retained its top position in power sector performance, followed by Gujarat and Delhi. The report on 2005-06 performance, prepared for the Power Ministry, was released.  On the basis of report among the states that have improved their rankings from last year, Maharashtra moved up to eighth from 12 and West Bengal jumped to fifth from eighth a year ago. Karnataka remained unchanged at the fourth position. On the other hand, Tamil Nadu slipped from the fifth to tenth position, Chhattisgarh from 10 to 14, Uttar Pradesh from nine to 18 and Haryana from 14 to 19.

The report evaluated the performance of state electricity boards or utilities on the basis of progress in reforms, free power and subsidy, establishment of regulatory commissions, reduction in transmission and distribution losses and revenue collection among other factors.  The report also expressed concern over the high Aggregate Technical and Commercial Losses, while observing that only two states — Goa and Tamil Nadu — have losses below 20 per cent.  On restructuring of electricity boards, several states such as Tamil Nadu, Punjab, Uttar Pradesh, Kerala, Bihar and Chhattisgarh have still not unbundled their SEBs. Moreover, even in states where SEBs have been unbundled into separate entities, distribution companies have been given very limited autonomy in operational and financial matters.

`Energy service cos can play vital role in efficiency' - IREDA

June 13, 2006. Given the large potential that existed for industry wide savings through efficient energy management, the way forward is to join hands with energy service companies (ESCOs). From an overall industry perspective, vendor ESCOs, in particular, could play a big role in energy efficiency in the near future. Among the few such outfits in the country are names like the Thane-based Asian Electronics and Honeywell (formerly Tata Honeywell).

Ireda, which now wants to project itself as a "bundling agency", (a kind of one stop outfit for energy efficiency and conservation financing), undertakes energy efficiency projects involving waste heat recovery based power (sponge iron units) and energy efficient equipment in sugar mills and cement units. IREDA finances up to 80 per cent of project cost (and up to 75 per cent of equipment cost), at rates ranging between 5 per cent and 12.5 per cent, and a moratorium of up to 3 years.  During 2005-06, the agency disbursed Rs 300 crore (Rs 3 billion), and expects to take this to Rs 450-500 crore (Rs 4.5 – 5 billion) in the current fiscal. Ireda has launched an exercise towards capacity building and technical assistance for design and implementation of ESCO projects in West Bengal (in the buildings sector) through a performance contracting mechanism. The work also involves energy audit work to collect required baseline energy consumption data for a minimum of two buildings.

Make solar panels mandatory

June 12, 2006. The burden on conventional energy sources can be reduced if installation of solar panels is made mandatory for all flat promoters, hotels and power laundries. Use of bio-diesel could be seen as an effective and worthy alternative to arrest increasing oil prices.

AP power sector gets top rating

June 12, 2006. The Andhra Pradesh power sector has been assigned "First rank" for its overall performance in 2005-06 in the Crisil rating exercise commissioned by the Ministry of Power. For the third time, the State has been awarded top rank, following it up in FY 2003, 2005 and 2006. The rating is based on the performance of the power utilities. All utilities are in profit and the tariffs for consumers have not been increased. In fact, high-tension industrial consumer tariffs are lower and the tariff subsidy from the Government is decreasing. Massive reduction in T&D losses (at 20.1 per cent) by the end of 2005-06 was mainly responsible. During the rating exercise, AP utilities scored due to reduction in aggregate technical and commercial losses, improved cash coverage of costs, generation PLF, availability of transmission lines, employee productivity and timely debt servicing of loans.

Coal Ministry to proceed with CIL's subsidiary plan

June 12, 2006. The Ministry of Coal has decided to move ahead with the plan to allow Coal India Ltd (CIL) to set up a new subsidiary company Coal Videsh Ltd(CVL) for acquiring coal blocks abroad and is planning to place the proposal for Cabinet consideration next month. This is despite objections raised by the Ministry of Finance, which has stated that CIL itself should do the acquisitions and there is no need to have a separate company.  The Coal Ministry is now preparing a final proposal and plans to place it before the Cabinet Committee on Economic Affairs (CCEA) in July. According to the plans, the new company would have a paid-up equity capital of Rs 1 lakh and an authorised capital of Rs 500 crore (Rs 5 billion). Instead of setting up a new public sector company, the Ministry favours setting up the 10th subsidiary of Coal India mainly because of procedural and financial reasons. CIL already has eight coal producing subsidiaries and one planning and designing institute. If a new public sector unit is to be set up under the Ministry of Coal, then the shares of that company would be held by the President of India and the procedures are lengthy but if set up as a CIL subsidiary the shares of the new company would be in the name of CIL and involves simple procedures.

Singareni Collieries, CSIRO tie-up

June 12, 2006. The Singareni Collieries Company Ltd (SCCL) has entered into an MoU with the Commonwealth Scientific and Industrial Research Organisation (CSIRO), Australia to carryout geo-technical studies for adopting advanced mining technologies. Against this backdrop, the company has brought out training manuals on imparting environment education and human resource development. The SCCL is promoting environmental awareness among school children and employees regularly.

Nuclear Power may insure reactors, post Indo-US deal

June 12, 2006. Nuclear Power Corporation may insure its nuclear reactors soon after the Indo-US nuke deal is signed. Previously it had left all its reactors uninsured because security issues stood in the way. NPCIL is likely to insure reactors that are marked civilian and open for safeguards to International Atomic Energy Agency. Eight of NPCIL’s 220 MW thermal power reactors that are either operational or under construction may be opened for inspection. These reinsurers would have to be provided with data on each reactor. Being a sensitive sector, it stood against national security, forcing NPCIL to leave all its reactors uninsured. A nuclear power plant has two parts — the nuclear reactors and the conventional power generation part that includes the portion that generates heat, the turbine and the generators.  The 220 MW plants under operation are: one at Kalapakkam in Tamil Nadu and two each at Narora in Uttar Pradesh, Kaiga in Karnataka, as well as Rawatbhata in Rajasthan. Four 220MW reactors are under construction at Kaiga in Karnataka and Rawatbhata in Rajasthan. Tarapur 1 & 2, of 160 MW each, are already open for inspection. Two reactors at Rajasthan, Rawatbhata 1 & 2, with capacities of 100MW and 200MW are also in the civilian list. NPCIL does not intend to put Tarapur 3 & 4, both of 540MW capacity in Maharashtra under the civilian category.

Reliance opposes mandatory blending

June 10, 2006. Reliance Industries Ltd has opposed mandatory ethanol blending of petrol. This is even as the Petroleum Ministry has asked private oil retailers, including RIL and Essar, to join the gasohol programme effective from October 1. RIL's opposition to mandatory blending comes out clearly from the presentation made to the Union Agriculture Minister, regarding its planned foray into sugarcane processing. Till then, it was assumed that the company's proposed three plants of 10,000 to 12, 000 tonnes daily cane crushing capacity in Maharashtra were mainly to supply ethanol for its captive petrol blending requirements. But now it emerges that these plants would basically produce rectified spirit/ethanol for the mono-ethylene glycol (MEG) facility of SM Dyechem Ltd at Kurkumbh (Pune) that RIL had acquired in January 2005. As a result, RIL had to import about five crore litres in 2005-06. This, in turn, has become unviable with spiralling global prices.

Regulators rap discoms

June 10, 2006. Privatisation of power distribution is once again at the centrestage. Private players in the power distribution industry may need to now on pull up their socks on management of systems as regulators get set to make them more accountable. This follows the Appellate Tribunal appointing special officers in Orissa to take over the day to day running of the three Reliance Energy owned discoms in Orissa. The Orissa Electricity Regulatory Commission has held that the Reliance-owned discoms “are unable to discharge the functions and perform the duties imposed on them by or under the provisions of the Electricity Act, ‘03”. This led to a show cause notice issued by the state regulator in January. For the time being, the electricity Appellate Tribunal has given a 3-month breather, so that “full particulars and facts through an independent agency” of the situation can be procured. To this end, the Appellate Tribunal has stayed a show cause notice issued by the Orissa Electricity Regulatory Commission to the three Reliance Energy-owned discoms — NESCO, SOUTHCO, WESCO. Reliance Energy holds 51 per cent equity in these discoms.

Though not out of the woods, for Reliance Energy, the tribunal’s interim order provides a breather. The company claims that it has been doing the best it can in the circumstances, and have not violated the terms of the licencing agreement. In February, the three discoms had in a presentation to the Orissa government said that it had succeeded in improving cash flows, reducing AT&C losses, and were making payments for bulk supply as well. All this without a tariff revision for seven years. The tribunal has, however, appointed two special officers, in whose power the tribunal has placed, “the entire day to day management affairs, control, finance, manpower”. The special officers will have the authority to appoint, remove, dismiss, suspend all employees including senior managers of the discoms. They will work with a five-member advisory committee set up for each discom comprising the special officers, a representative of Gridco, REL and consumers.

NTPC signs MoU with IIT Delhi

June 9, 2006. State-run NTPC Ltd has signed an MoU with IIT Delhi for a two-year M. Tech programme on Power Generation Technology. The MoU was signed as part of collaboration between NTPC and IIT in the area of research, technical programmes and new ventures for 100 candidates over the next five years. NTPC had started the Master in Technology Programme at IIT Delhi for its employees in 1998.

NTPC urged to expedite gas procurement

June 8, 2006. Northern States are turning the heat on State-owned power major NTPC Ltd to expedite fuel procurement for its gas-based stations in the region, which have been operating below capacity since last year due to inadequate gas availability. Beneficiary states such as Punjab, which has already petitioned the Central Electricity Regulatory Commission (CERC) on the issue, have being voicing concerns at the practice of `mixed-firing' of NTPC's gas-based stations involving the use of expensive naptha for operations alternatively with gas, since this translates into the buyer State having to shell out a higher prices for power.

Gas, coal deficit causes power loss

June 8, 2006. A record generation loss of 25.65 billion units during 2005-06 mainly on account of uncertainty and inadequacy of gas and coal supplies. As many as 24 billion units were lost due to gas shortage and 1.65 billion units due to coal supply shortfall. The power ministry in its recent compilation for the fiscal 2005-06 admitted that lack of availability of gas and coal, the generation growth rate would have been 9.4 per cent and generation target would have been exceeded by 3.4 per cent. The country generated 617.38 billion units in 2005-06 at a growth rate of 5.1 per cent over previous year’s output of 587.3 billion units. Moreover, the overall plant load factor (PLF) marginally declined to 73.6 per cent in 2005-06 from 74.8 in 2004-05. This was largely due to a fall in state sector PLF, which was primarily because of a substantial backing down of thermal stations in south due to favourable monsoons.

In the four years of 10th plan, around 2,340 MW have been added and in 2005-06, 404 MW captive generation plants were installed by the state-run Bharat Heavy Electricals Ltd (Bhel) alone. In the transmission sector, 18 projects totaling 4,368 circuit kilometre (CKM) with a total investment of Rs 2,079 crore (Rs 20.79 billion) were completed. The Cabinet committee on economic affairs has approved 10 projects costing Rs 8,295 crore (Rs 82.95 billion). As far as implementation of accelerated power development and reform programme (APDRP) is concerned, over Rs 6,132 crore (Rs 61.32 billion) was released under its investment component for 583 projects costing Rs 19,180 crore (Rs 191.8 billion). Under the incentive component, Rs 1,537 crore (Rs 15.37 billion) was released. The collection efficiency of central power sector undertakings rose to 100 per cent.

Uttaranchal set to tide over power crisis

June 8, 2006. The power scenario will improve further in Uttaranchal by the end of this year with the commissioning of three major hydro-electric plants. These projects include the 1,000 MW Tehri, the second phase of the 304 MW Maneri Bhali, and the 400 MW Vishnuprayag.  All the four units (76X4) of the Maneri Bhali project, being built by the state agencies, will start by December.  Vishnuprayag, which is being built by the Jaypee Group, will also be commissioned by October this year though its first unit may start functioning by the end of June.  With the power scenario perking up, the state for power evacuation at Rs 30 crore and invite private players in this regard. The power generation capacity in Uttaranchal, which is being billed as energy state is expected to rise with the government stating that it would generate another 1,700 MW of power in the 11th Plan while it has set a target of producing 4,000 MW in the 12th Plan. Uttaranchal is producing 1,400 MW. The National Thermal Power Corporation, National Hydroelectric Power Corporation, Tehri Hydro Power Corporation, and Uttaranchal Jal Vidyut Nigam are the big government enterprises which are constructing big hydel projects in the state. The controversial Tehri hydel project alone will produce 2,400 MW.

OIL & GAS

Malaysia sees pumping 150,000 bpd

June 12, 2006. Malaysia's Gumusut deepwater oilfield will pump 150,000 barrels per day after it comes onstream in 2011. The production rate implies Gumusut, operated by Royal Dutch Shell, may have reserves greater than Malaysia's first deepwater find at Kikeh, estimated at 400-700 million barrels and due to pump 120,000 bpd from the fourth quarter of 2007. Gumusut was discovered by a joint venture of exploration and development arm Petronas Carigali, Shell and U.S. oil firm ConocoPhillips in March 2004, but the partners have kept silent on development details and plans since then. The deepwater field and neighbouring Kikeh, operated by U.S. oil producer Murphy Oil Corp. will help Asia's biggest net oil exporter offset declining production elsewhere. Shell Malaysia and ConocoPhillips each hold 40 per cent of the equity in Gumusut, located off the eastern state of Sabah in Block J, while Petronas Carigali has the rest.  

SK joins North Sea energy exploration project

June 12, 2006. SK Corp., South Korea's largest oil refiner has joined North Sea energy exploration project led by British oil developer Nautical Petroleum Plc. SK will work with Nautical Petroleum from this month to search for oil resources in four maritime blocks in waters where the British company has the right to explore oil and gas.

Petronas, Murphy find buyer for gas fields

June 10, 2006. U.S. oil producer and refiner Murphy Oil Corp. and Malaysian state oil company Petronas have found a buyer for their gas fields in the eastern state of Sarawak. The contract is for a period of 15 years at an initial rate of 300 mcf.  Murphy has an 85 per cent stake in the gas fields, with Petronas owning the rest.

Bolivia and Paraguay joint natural gas plan

June 9, 2006. Neighbors Bolivia and Paraguay announced ambitious energy cooperation plans that involve building a natural gas pipeline and gas processing plants that would require an investment of over $2 billion. The partnership opens the possibility for Bolivia which nationalized its energy industry last month to sell natural gas to a third country. It currently exports about 32 million cubic meters per day to Argentina and Brazil. The accord signed by the South American countries envisages transporting Bolivian gas to a duty-free zone in Paraguay where Bolivia would process the gas to produce electricity in a thermoelectric plant as well as liquid fuels to supply the Paraguayan market. The countries invited foreign companies interested in participating in the projects to submit formal expressions of interest within 60 days and present technical proposals in the following 180-day period. The construction of a pipeline with a capacity of 20 million cubic meters per day would cost at least $700 million. Bolivia has South America's second-biggest gas reserves after Venezuela. Its probable and proven gas reserves were certified at 48.7 tcf the end of 2005 about 27 tcf of which are proven.

Georgia to boost oil output to 90,400 bbl/d by ’20

June 9, 2006. The south Caucasus country planned to raise crude output to 90,400 bbl/d from current 1,000-2,000 bbl/d by 2020. In the 1980s Georgia had produced 66,000 bbl/d, satisfying 70 per cent of the then Soviet republic's oil demand. Natural gas output in the country, which is heavily dependent on Russian supplies, would reach an estimated 3.5-4 bcm a year by that time. Boosting gas production would allow the country to meet 25 per cent of domestic demand by 2010. the current production levels met only 4.2 per cent of domestic demand for oil, and 1.5 per cent of gas demand. the Baku-Tbilisi-Ceyhan oil pipeline would bring Georgia a total of $2.5 billion, or $62 million a year. The 1,000-mile pipeline enables Azerbaijan to supply crude from its fields off the Caspian coast via Georgia to Turkey, and on to Western markets.

Kinder Morgan to expand storage field

June 8, 2006. Kinder Morgan Energy Partners, L.P. announced expansion project at the company's Dayton natural gas storage field that will significantly increase capacity at the Liberty County, Texas, facility. The project, which involves development of a new underground cavern, will add an estimated 5.5 bcf of incremental working gas storage capacity. The two existing storage caverns currently provide 4.2 bcf of working gas capacity. Drilling the well for the new cavern will begin later this month, with the additional capacity expected to be available in the spring of 2009 after the cavern is completed to its target size. The process of creating storage space for natural gas involves injecting water to dissolve the salt formation. The $76 million initiative also includes additional compression, as well as dehydration and pipeline enhancements that will increase both injection and withdrawal capabilities at the complex. KMP's Texas Intrastate Pipeline system is currently comprised of more than 5,800 miles of pipeline with a peak transport capacity of about 5 bcf/day and approximately 120 bcf of natural gas storage capacity.

BHP Billiton to develop Shenzi oil and gas field

June 7, 2006. Global miner BHP Billiton Ltd./Plc its Shenzi oil and gas field in the deepwater Gulf of Mexico had been approved for development and the first oil was expected by mid-year 2009. BHP Billiton said the facility will have a design capacity to produce up to 100,000 barrels of oil and 50 million cubic feet of gas per day and that gross costs for the full field development to 2015 are estimated at approximately $4.4 billion. BHP Billiton, which has a 44 per cent interest in the project, said its share of the costs was $1.94 billion. The other co-venturers in the project are BP Plc and Hess Corporation who each have a 28 per cent stake.

CNOOC and BG join hands in offshore China

June 7, 2006. CNOOC Limited, its parent company, China National Offshore Oil Corporation has inked two production sharing contracts (PSC) with BG Group for deepwater blocks 64/11 and 53/16 in the Western South China Sea. In the meantime, a Geophysical Survey Agreement (GSA) on block 41/06 in the Eastern South China Sea has been signed between the two parties. Both of the PSC blocks are located in the Qiong Dong Nan basin, and block 41/06 is in the Pearl River Mouth Basin. These three blocks are on the list of 12 blocks CNOOC offered for cooperation in 2002, covering a total area of approximately 25,800 square kilometers in water depth ranging form 180 to 2100 meters. Under the terms of the contracts, BG will conduct 2D and 3D seismic in Block 64/11 and 53/16, and drill 1 exploration well during the first phase of the exploration period on each block. BG will retain 100 per cent interests during the exploration phase and the Company has the right to participate up to 51 per cent working interest in any commercial discoveries in the blocks.

Chevron drops effort to expand China gas stations

June 8, 2006. US oil firm Chevron Corp has been frustrated in a bid to expand its petrol station business in China after a venture with Beijing-backed Citic Resources Holdings failed to win government approval. The collapse of the agreement will deal a blow to the US company's plans to expand its operations in the country, where BP, ExxonMobil Corp, Royal Dutch Shell and Total have set up service station ventures with Chinese state oil firms. The Chinese government has only recently opened its market to allow the retail business of petrol stations to be run by wholly foreign-owned enterprises, as part of China's accession to the World Trade Organisation. Although, Chevron will continue to explore other opportunities to develop and grow its retail fuel business there.

Sinopec starts building gas pipeline in Brazil

June 12, 2006. China Petrochemical Corp., Asia's largest refiner, started the construction of a natural gas pipeline in Brazil to meet rising demand in the South American nation. China Petrochemical, parent of overseas-listed China Petroleum & Chemical Corp., will build the 1200- kilometer (746-mile) pipeline within 15 months. Petroleo Brasileiro SA, Brazil's state-controlled oil company, hired China Petrochemical, to build the gas pipeline for $239 million. The pipeline is part of a $6.5 billion investment plan by Petrobras to build pipelines linking the country's northeast and southeast to ease future gas shortage in the country.

Yemen to build new LNG project

June 10, 2006. An assessment of total gas resources in the country may lead to the expansion of an existing $3.7 billion LNG project being led by France's Total or the creation of a new LNG project. The Yemen LNG project, one of the main growth projects for French energy giant Total, is due to start by the end of 2008 with 2 trains and produce 6.7 million metric tonnes per year. Disruptions in Russian gas pipeline supplies early this year have raised concerns over the constraints on gas supplies in Europe, and LNG has been identified, as a key source for future energy needs. The survey of Yemen's resources would take another year and a decision on adding trains or launching a new project will be made at the time. The main factor in deciding the scale of expansion will be the location of newly identified gas resources.

BTC’s first cargo of Azerbaijani to world markets

June 9, 2006. The Baku-Tbilisi- Ceyhan (BTC) pipeline achieved a historic milestone with the delivery of its first cargo of crude oil to world markets. The inaugural shipment of about 600,000 barrels of crude oil was delivered by tanker to Savona, Italy, marking the start of export of Azerbaijan's crude oil via the BTC oil pipeline. The crude oil initially will come from the Azeri-Chirag-Gunashli (ACG) field in the Azerbaijani sector of the Caspian Sea and is expected to be joined by other volumes in the future, including production from across the Caspian region. The new pipeline is expected to bring significant benefits to the Caspian region. By opening another transit route for the region's growing production, BTC will create substantial revenues for the transit countries and also help to strengthen economic and political links between Azerbaijan, Georgia, Turkey and the West.

Kazakh oil group plans $4 bn link to Baku pipeline

June 9, 2006. The group running Kazakhstan’s huge Kashagan oil field plans a $4 billion transportation system to take its oil to the Baku-Ceyhan pipeline to the Mediterranean. This would involve building a 800 km pipeline from offshore Kashagan to the Kazakh shore, two terminals on the Kazakh and Azeri sides of the Caspian Sea, and tankers to take oil across the Caspian. The link would be operational by 2010, when Kashagan is due to start producing large quantities of oil.

Total will finance the link along with its partners in Kashagan, Italy’s Eni, US firm ConocoPhillips and Japan’s Inpex, all shareholders in the Baku-Ceyhan pipeline, which is due to be launched next month. The Kashagan field will start producing from its reserves of more than 2 billion tonne of oil and more than 1 trillion cubic metre of gas in 2008, but its production does not have an export route from the land-locked Caspian Sea. Kashagan, the world’s biggest discovery in the past 30 years, is expected to produce more than 10 lakh barrels per day (bpd) sometime next decade. The Baku-Ceyhan pipeline will also pump at least 10 lakh bpd, and most of its capacity is expected to be taken in early years by a group led by BP Plc, which is developing a big Azeri offshore field. Kazakhstan plans to transport 50,000 crore bpd of Kashagan oil through Baku-Ceyhan.

Inks $100 mn Malaysian pipeline deal

June 9, 2006. Engineering and construction major Larsen & Toubro a 60:40 joint venture with Malaysian drilling company, SapuraCrest Petroleum Berhad  to build, own and operate a derrick-cum-piplelaying barge valued at $100 million.  This barge, to be completed in the last quarter of 2008, will provide offshore installation services including sub-sea pipe laying, platform installation opportunities in India, west Asia, South East Asia, Australia and the Sakhalin region.

Three natgas pipelines plan Texas-Mississippi pipe

June 8, 2006. Three U.S. natural gas pipeline companies formed a joint venture to build a new interstate gas pipeline from north central Texas to Mississippi with an initial capacity of 1 bcf of gas a day. Boardwalk Pipeline Partners LP, Energy Transfer Partners LP and Oneok Partners LP signed a letter of intent for the pipeline project. It would cross Oklahoma and Arkansas and end in Cohoma County, Mississippi, at new interconnection with Texas Gas Transmission LLC.

Halliburton wins Saudi Khurais contract

June 7, 2006. U.S. Halliburton Co. awarded a multimillion-dollar oilfield services contract by Saudi Aramco for its Khurais project, expected to be a major boost to Saudi oil output.  State oil firm Aramco has called Khurais its biggest crude increment programme and Halliburton described it as the largest in the Gulf Arab region since the 1950s. The three-year contract would utilise up to 23 rigs to drill more than 300 wells. OPEC giant Saudi Arabia, the world's largest oil exporter, has speeded up oilfield expansion plans to boost its production capacity to 12.5 mn bpd by 2009 to meet world demand, and maintain spare capacity of at least 1.5 mn bpd.  The Khurais oilfield is expected to add 1.2 mn bpd of Arabian Light crude by June 2009. The project covers three oilfields - Khurais, Abu Jifan and Mazalij and involves building crude and gas facilities. It would produce 315 mcf per day of sour gas and 70,000 bpd of natural gas liquids. The estimated cost of the Khurais development project at $6 bn.

Venezuela-India trade to reach $1 bn

June 7, 2006. Trade between Venezuela and India will reach $1 billion this year boosted by Venezuelan crude exports to one of Asia's fastest-growing economies.  India has bought $400 million worth of crude so far this year and wants 'to buy more.  India is seeking energy security and Venezuela is a willing supplier. Venezuela plans to sign a deal that allow India to extract heavy crude here and would also include an agreement to supply oil to Indian refineries. 

Iran exports over 165 mn barrels of gas

June 7, 2006. More than 165 million barrels of gas condensates have been exported since the beginning of production at phases 1 to 5 of South Pars gas field. The Public Relations Department of Pars Oil and Gas Company noted that the last consignment of gas condensate which was exported from phases 1-5 of South Pars gas field comprised more than 430,000 barrels. Therefore, the said phases have exported a total of more than 165.973 million barrels of the profitable product.  In view of the value of condensate, Bandar Abbas refinery is being built to convert part of South Pars condensate into 30 million liters of gasoline. The refinery will be capable of annual production of 360,000 barrels and will take charge of refining condensate produced by various phases of South Pars gas field.

Uzbek, China ink oil and gas deal

June 12, 2006. Uzbekneftegaz, an Uzbek national holding, and Chinese oil and gas corporation CNODC have signed an agreement on joint prospecting and exploration of oil and gas deposits in the Central Asian republic. The Chinese company would conduct prospecting of five oil and gas fields, drilling 15 prospecting and 12 evaluation wells in various regions of Uzbekistan. The total volume of investment in the projects is estimated at $208.5 million during five years.

Iraq needs investment of $3 bn yearly to boost output

June 10, 2006. Iraq needed investment of $12 billion to $20 billion to raise its oil production to six million bpd, means $2-$3 billion of investment a year. Iraq owns the world's third largest proven oil reserves but the sector has been undermined by war, sanctions, lack of investment and mismanagement.

Norway sees record $17 bn investment

June 8, 2006. Investment in Norway's oil and gas sector is estimated at a record high of 102.3 billion crowns ($16.97 billion) this year. The 2006 investment forecast was raised by 9.6 billion crowns from an estimate of 92.7 billion crowns given in March. Investments (in 2006) for field development and fields on stream are now estimated at 64.8 billion crowns, raising its forecast by 4.1 billion.

Ethanol may help wean US of oil dependency: Greenspan

June 8, 2006. Ethanol made from the cellulose in switchgrass and other plants may help the US become less dependent on foreign crude oil. Surging energy demand in the US and China has eroded the cushion of excess crude oil production capacity that can make up for disruptions, and prices have doubled since the end of 2003. U S President this year has pushed for development of alternative fuels such as ethanol and diesel made from vegetable oil as a response to record oil prices.

Greenspan said that nuclear power and new technologies for cleaner coal-fired power plants, along with ethanol, are attractive alternatives to petroleum for meeting the country's energy needs. The need for new energy sources is underscored by the vulnerability of global crude oil supplies. The balance of world oil supply and demand has become so precarious that even small acts of sabotage or local insurrection can have a significant impact on oil prices. Attacks on facilities in Nigeria and the threat of a cutoff of supply from Iran because of the dispute over its nuclear research pushed prices to $75.35 a barrel in April, the highest since New York trading began in 1983. Oil averaged about $20 a barrel in the 1990s.

 

Singapore's Keppel wins $80 mn conversion order

June 7, 2006. Keppel Corp. has won S$127 million ($80 million) order to covert an oil tanker into a floating production storage offloading facility to be leased to Exxon Mobil by Single Buoy Moorings. The vessel is expected to be completed by the third quarter of next year.

House OKs bill to boost refinery capacity

June 7, 2006.  The House approved legislation that supporters said will make it easier for oil companies to build or expand refineries, although opponents said it could lead to more pollution and less local involvement in the siting of refineries. The bill's sponsors argued that refinery constraints have added to the tight gasoline market that has seen prices at the pump soar to more than $3 a gallon across most of the country. But they acknowledged the measure is not intended to address this summer's high gas prices.

Power

Northeast China's first nuke plant unveiled

June 9, 2006. Construction of northeast China's first nuclear power plant is expected to begin next year. Preparations have begun for construction of the first phase of the Hongyanhe Nuclear Power Plant, located at Donggang Town of Wafangdian City in Liaoning Province, Zhang Guobao. The first phase of the project will consist of two generating units each with an installed capacity of one million kilowatts. The project is scheduled to be completed in 2011 at an estimated cost of 23 billion yuan (US$2.875 billion). China Power Investment Corporation, China Guangdong Nuclear Power Holding Co. Ltd. and two local companies in Liaoning have jointly set up the Liaoning Nuclear Power Co.Ltd. which will be responsible for the construction and operation of the Hongyanhe Plant. Sitting on the eastern shore of Liaodong Bay on the Bohai Sea and covering a site of 380 hectares the Hongyanhe project is being designed, built and operated by China, state the Liaoning Provincial Development and Reform Commission. China plans to increase its nuclear power installed capacity to 40 million kilowatts by 2020 which would account for four percent of the country's total installed capacity by that time. To reach that goal China needed to build around 32 nuclear power units each with an installed capacity of one million kilowatts in the coming 15 years. Currently China has nine nuclear generators in commercial operation with a total capacity of approximately seven million kilowatts.

S. Korea launches new thermal power plants

June 9, 2006. South Korea unveiled its first super-critical thermal power plants on Friday as the country looks forward to improved fuel efficiency and lower gas emissions. Construction of the two 500,000-kilowatt power plants at the Dangjin Thermal Power Complex in South Chungcheong Province began in September 2002 and cost 1.08 trillion won, the Ministry of Commerce, Industry and Energy said.

Qatar to set up power project in Kerala

June 8, 2006. Qatar Investment Authority, the apex investment institution of Qatar, is in talks with NTPC for a joint venture to develop the 1,950 MW Kayamkulam power project in Kerala. The PSU power company, which has been scouting for a strategic investor to ensure long-term gas supplies for its plants, is willing to tie up and become co-promoters if gas can be procured at competitive rates. India has been importing LNG from Qatar for Petronet LNG’s Dahej terminal. The Qatar company is ready to pick up a 49 per cent stake. NTPC will formalise the joint venture only if LNG is assured for the plant at a reasonable rate. NTPC had drawn out a strategy of diversifying into upstream sectors to secure fuel for its planned capacities. So, while it is getting into coal mining on the domestic front, the company is planning to get into LNG business abroad.

Maui Electric to buy hydro power

June 9, 2006. Maui Electric Co. will buy hydroelectric energy from Makila Hydro. The electric company obtained approval from the Hawaii Public Utilities Commission to buy 500 kilowatts of power from renewable sources. While the 500 kilowatts that will be able to purchase from this renewable plant may not appear significant, it affirms commitment that when it comes to renewable energy to offset use of imported fossil fuels, every bit counts. The utility already purchases fuel from Hawaiian Commercial & Sugar, and has agreement to get 30 MW of wind energy, in order to reach the standard of 20 per cent renewable electricity by 2020.

Hydro Quebec to build transmission line to Ontario

June 8, 2006. Hydro-Quebec will build a $400 mn transmission line to Ontario to sell the energy-hungry neighbouring province electricity. The transmission line will be ready by the end of the decade. Ontario experienced a major power failure in 2003 along with the Eastern United States and has experienced energy crunches since then as the province's generating system has had troubles keeping up with growing power demand from industrial and residential customers. The construction of the 1,250 MW line had already been given regulatory approval but Quebec didn't have enough electricity to export at the time. Many expect the government to announce a plan to build a new nuclear generating station in Ontario, a province where nuclear power already accounts for more than half of all the electricity generated.

Iran only electricity exporter to Iraq

June 8, 2006. By connecting its electricity grid to Iran’s grid, Iraq would be able to address its electricity shortage problems while being connected to the electricity network of neighboring countries. The Islamic Republic of Iran is the only country that exports electricity to Iraq. The two countries have signed agreements for the export of 1,650 MW of electricity from Iran to Iraq, 150 MW of which has already been delivered over the past year. Iraq is currently facing serious electricity shortages, and with the hot season approaching, the lack of a reliable power supply has aggravated the situation for many Iraqi citizens.

DTE Energy studies building nuke plant

June 11, 2006. DTE Energy Co. is studying the prospects of building and buying a nuclear power plant. DTE could build a new plant next to its Fermi 2 nuclear plant near Newport in Monroe County. DTE also is considering bidding on CMS Energy Corp.'s Palisades nuclear plant in Van Buren County's Covert Township, about five miles south of South Haven.

France, Britain create nuke energy forum

June 10, 2006. France and Britain agreed to create a bilateral nuclear forum aimed at strengthening cooperation in the civil nuclear energy field. Both have agreed to explore in the short term and further develop the opportunities of working together in the civil nuclear field. The forum will provide a vehicle to discuss Franco-British nuclear cooperation, including research, skills, decommissioning and waste management. Britain government is due to publish a review of Britain's energy needs later this month, which is expected to back the creation of a new generation of nuclear power plants. Britain's nuclear power stations supply one-fifth of the nation's electricity. However, all but one is scheduled to close by 2025 as are a number of old, coal-fired power plants. In France nearly 80 per cent of electricity comes from nuclear plants.

Zimbabwe signs key energy deal with China

June 12 2006. Zimbabwe and China have signed a deal worth $1.3 bn that will see the development of thermal power stations in the southern African country in return for chrome. The MoU was signed in Beijing. Three thermal power stations will be developed in the Zambezi Valley and Hwange. Under the agreement, Chinese machinery and expertise would be provided in exchange for chrome. Zimbabwe is experiencing acute shortages of electrical power. Under the agreement signed with China National Machinery and Equipment Import and Export Corporation, a new thermal power station with an output of 600 MW will be built in Zimbabwe's remote northern Dande district. Presently Zimbabwe imports 30 per cent of its electrical energy requirements from neighbours South Africa and Mozambique, as well as the Democratic Republic of Congo.

New US investment in nuke power is risky -study

June 8, 2006. Energy conservation and renewable energy such as wind power would be a better investment for U.S. taxpayers than subsidies for new nuclear plants. The organizations, including Friends of the Earth, GRACE Policy Institute and the U.S. Public Interest Research Group, pointed to several problems that have plagued the industry, including higher-than-expected construction costs, terrorist threats and the unresolved issue of how to safely store spent radioactive fuel.  The $1.5 billion to $2 billion estimates of what it will cost to build the next generation of power reactors are "extremely optimistic and unlikely to be achieved" despite federal subsidies.

Rather than throw money at the nuclear industry, the environmental organizations recommended the U.S. invest more in conservation and renewable technologies, including wind power. To date, nine companies have announced plans to file for licenses to build up to 20 new reactors. But none of the companies has made firm plans to build a new reactor.   The environmental groups noted that the Three Mile Island accident in 1979 caused utilities to stop work on several units at high cost to ratepayers, and they warned that a terrorist attack or accident at a nuclear plant could halt construction of new power reactors.  The study opposing nuclear power also warned the United States has yet to decide on a way to store used nuclear fuel.  The groups said the industry cannot count on a federal plan to reprocess used fuel. The planned Yucca Mountain repository in Nevada is behind schedule and it may never open, while past attempts to reprocess fuel were not viable.

Russian cabinet backs power investment plan

June 8, 2006. The Russian cabinet cleared a plan by power monopoly RAO UES to attract up to $90 billion in investment in the country's strained electricity industry to sustain the country's economic growth. The cabinet's decision would pave the way for UES to split into a grid company and a number of different generating companies and attract up to 2 trillion roubles ($75 billion) of investment in generating capacity, including via share offerings by the individual generating companies from 2007. The power grid will remain fully state-owned and will need state support of up to 400 billion roubles ($15 billion). UES, which inherited all Soviet electricity grid and generation assets on Russian territory, has said the programme was key to avoiding the kind of major blackouts that have hit Moscow and St Petersburg in the past year.

China approved hydroelectric power

June 7 2006. Beijing has approved construction of a hydroelectric project in south-west China that will be the country's third largest. The approval for the Baihetan plant on the Jinsha River at the border of Sichuan and Yunnan provinces highlights the government's commitment to hydropower in spite of growing concerns about the environmental and social impact. The Baihetan project will be built by the China Three Gorges Project Corp, which built the Three Gorges Dam on the Yangtze River and is working on Xiluodu, another hydropower project along the Jinsha, a Yangtze tributary.  When completed, Baihetan was expected to have total installed capacity of 12 gigawatts and average annual output of 56bn kilowatt-hours.  The project is slightly smaller than the Xiluodu plant, China's second largest hydro project, which has an estimated capacity of 12.6 gigawatts and is planned for completion by 2015.  The Three Gorges Dam, which will have total installed capacity of 18.2GW, was completed well ahead of schedule in late May. The project has cost roughly Rmb180bn ($22bn) and taken well over a decade.

Kalam calls for national mission on biodiesel

June 10, 2006. The President, Mr A.P.J. Abdul Kalam, has favoured a special taxation policy for making biodiesel attractive to the producers, since it provides many social benefits like rural employment and creates clean environment. He called for national mission on biodiesel to realise 60 million tonnes of production per year by 2030. As a first step, plans should be ready to produce 6 million tonnes (5 per cent of present oil import) per year by 2010. Five large industries should be identified in biodiesel production and links established with 3-4 research and development labs to optimise the value chain. There was a need to create a national mission for biodiesel at the Centre and biodiesel boards at the State level, so that all stakeholders could work in a coordinated manner. Biodiesel plants using palm oil should switch over to Jatropha. A few States had started working with farmers and this model needs to be followed by others.

GOCL lines up Europe foray, deal with IOC off

June 9, 2006. Gujarat Oleo Chemicals (GOCL), Ankleshwar-based largest bio-diesel producer of India, has decided to explore bio-diesel market in Europe as it supply arrangement with Indian Oil Corporation has come to an end because of lower price.  Both the companies are based in UK and France respectively.  They will be exporting 30,000 tonne of bio-diesel to Europe. The first consignment will be dispatched in September 2006. IOC has expressed their inability to purchase bio-diesel at Rs 54 per liter. Gujarat Oleo, IOCL agreed to pay Rs 54 per liter for bio-diesel since 2004 when it bagged an order from IOCL. Currently, the company is supplying bio-diesel to ONGC at Rs 45 per litre and to Gujarat State Road Transport Corporation at Rs 36.  In order to safe guard the environment and develop alternative source of energy, the government had formulated a policy where the oil companies has to mix 5 per cent bio-diesel (B5) with petrol and diesel. 

B’desh sugar mills can produce 200 MW power: Experts

June 8, 2006. Energy experts suggested immediate measures to exploit potentials of the country’s 15 sugar mills to produce power alongside sugar saying they can generate nearly 200 MW electricity using sugarcane fibres or bagasse with minimal investment.  The per unit production cost of power from sugar cogeneration will be only Taka 1.5 compared to Taka 8 to 10 from diesel run plants. Through the cogeneration, the sugar mills could also produce ethanol, a petroleum product, while the country would save nearly Taka 400 crore in foreign currency required to import diesel for power generation.

Because of environment friendliness of the system, the sugar mills were also likely to earn an extra amount of Taka 30 to 45 crore through carbon trading, an international mechanism derived from the 1998 Kyoto Protocol. Under the mechanism also called Clean Development Mechanism (CDM) most developed countries other than USA are obligated to reduce emission of green house gases (GHG) in their own countries or pay the less developed ones for reducing the emission, particularly through generation of clean energy.

Bangladeshi sugar mills produce nine lakh tonnes of bagasse, which is equivalent to 4.70 lakh coal while the proposed cogeneration won’t require any extra cost for plant installation for generating power. The discourse proposed installation of a pilot project at Thakurgaon Sugar Mills as a model to be replicated later in 14 other mills.  Under the cost-effective cogeneration system, sugar became the secondary product in Indian sugar mills with electricity being the number one product while in Brazilian sugar mills, the sugar is the 3rd product after power and ethanol.

India, Nepal and Bhutan respectively fulfil five percent, seven percent and six percent of their total power demand from renewable sources including cogeneration while in Bangladesh, the contribution of such alternative sources in generating electricity is one percent.According to a study of the Power Cell of the Power Division, Bangladesh can immediately produce as high as 400-MW power from wind force, 200 MW from cogeneration in sugar mills, an extra amount of 100 MW from hydro power sources and 80 MW from poultry litters and 100 MW from Dhaka’s city garbage alone if appropriate measures were taken.

Qatar opens $950 mn Oryx GTL plant

June 7, 2006. Qatar opened the $950 million Oryx gas to liquids project, the world's largest commercial GTL plant, which will produce alternative cleaner fuels for the global market. Oryx, jointly owned by Qatar Petroleum (51 per cent) and petrochemicals company Sasol of South Africa (49 per cent) in the Ras Laffan industrial city, will be supplied with gas from Qatar's huge North gas field and will produce 34,000 barrels per day of liquid hydrocarbons. Production will include 24,000 barrels of diesel, 9,000 barrels of naphtha and 1,000 barrels of liquefied petroleum gas. Construction of the complex began in late 2003. Sasol Chevron, the London-based joint venture between Sasol and Chevron Corporation of the US, will start marketing the plant's diesel in Europe later this year.

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